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( Aug 26, 2017 , www.unz.com )
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Jun 16, 2020 | www.youtube.com
Robert Schupp , 4 days ago"That's why they call it the American Dream, because you have to be asleep to believe it." -George Carlin
You can't just move to American cities to pursue opportunity; even the high wages paid in New York are rendered unhelpful because the cost of housing is so high.
Dingo Jones , 3 days agoDirtysparkles , 4 days ago@JOHN GAGLIANO Cost of living is ridiculous too.
Jean-Pierre S , 4 days agoOur country has become the American Nightmare
John Sanders , 3 days agoMartin Luther King, Jr. was vilified and ultimately murdered when he was helping organize a Poor People's Campaign. Racial justice means economic justice.
Adriano de Jesus , 4 days agoOld saying: A Recession is when your neighbor loses their Job. A Depression is when you lose your Job.
Ammon Weser , 4 days agoA lot of mega wealthy people are cheats. They get insider info, they don't pay people and do all they can to provide the least amount of value possible while tricking suckers into buying their crap. Don't even get me started on trust fund brats who come out of the womb thinking they are Warren buffet level genius in business.
crazyman8472 , 4 days agoThere's a documentary about Wal-Mart that has the best title ever: The High Cost of Low Cost
David Tidwell , 4 days agoNight Owl: "What the hell happened to us? What happened to the American Dream?"
Comedian: "What happened to the American Dream? It came true! You're looking at it."
-- Watchmen
D dicin , 4 days agoNailed it. As a millennial, I'm sick of being told to just "deal with it" when the cards have always been stacked against me. Am I surviving? Yes. Am I thriving? No.
farber2 , 4 days agoWhen the reserve status of the American dollar goes away, then it will become apparent how poor the US really is. You cannot maintain a country without retention of the ability to manufacture the articles you use on a daily basis. The military budget and all the jobs it brings will have to shrink catastrophically.
Michael D , 4 days ago (edited)American trance. The billionaires hypnotized people with this lie.
B Sim , 3 days ago...and sometimes you CAN'T afford to move. You can't find a decent job. You certainly can't build a meaningful savings. You can't find an apartment. And if you have kids? That makes it even harder. I've been trying to move for years, but the conditions have to be perfect to do it responsibly. The American Dream died for me once I realized that no matter the choices I made, my four years of college, my years of saving and working hard....I do NOT have upward mobility. For me, the American Dream is dead. I've been finding a new dream. The human dream.
Sound Author , 3 days agoThis is a very truncated view. You need to expand your thinking. WHY has the system been so overtly corrupted? It's globalism that has pushed all this economic pressure on the millennials and the middle class. It was the elites, working with corrupt politicians, that rigged the game so the law benefited them.
This is all reversible. History shows that capitalism can be properly regulated in a way that benefits all. The answer to the problem is to bring back those rules, not implement socialism.
Trump has:
- - Ended the free trade deals
- - Imposed Protective tarriffs to defend American jobs and workers
- - Lowered corporate taxes to incentivize business to locate within us borders.
- - Limited immigration to reduce the supply of low skilled labor within US borders.
The result? before COVID hit the average American worker saw the first inflation adjusted wage increase in over 30 years!
This is why the fake news and hollywood continue to propagandize the masses into hating Trump.
Trump is implementing economic policies good for the people and bad for the elites
Julia Galaudet , 4 days agoThe dream was never alive in the first place. It was always bullshit.
Scott Clark , 4 days agoMaybe it's time for a maximum wage.
Siri Erieott , 4 days agoPrivate equity strips the country for years! It's the AMERICAN DREAM!!!
andrew kubiak , 4 days agoA dream for 1%, a nightmare for 99%.
Globalism killed the American dream. We can buy cheap goods made somewhere else if we have a job here that pays us enough money.
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Jun 12, 2020 | www.youtube.com
Krystal Ball exposes the delusion of the American dream.
About Rising: Rising is a weekday morning show with bipartisan hosts that breaks the mold of morning TV by taking viewers inside the halls of Washington power like never before. The show leans into the day's political cycle with cutting edge analysis from DC insiders who can predict what is going to happen.
It also sets the day's political agenda by breaking exclusive news with a team of scoop-driven reporters and demanding answers during interviews with the country's most important political newsmakers.
poppaDehorn , 4 days agoDebt-free is the new American dream
Got my degree just as the great recession hit. Couldn't find real work for 3 years, not using my degree... But it was work. now after 8 years, im laid off. I did everything "right". do good in school, go to college, get a job...
I've never been fired in my life. its always, "Your contract is up" "Sorry we cant afford to keep you", "You can make more money collecting! but we'll give a recommendation if you find anything."
Now I'm back where i started... only now I have new house and a family to support... no pressure.
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Oct 12, 2017 | www.amazon.com
protestantworkethic on August 14, 2013
An excellent cultural/intellectual historyShort review:
Mirowski's book is one of the best on the crisis: he mixes the eye of an anthropologist or journalist examining our daily lives and then leaps up to 20,000 feet with ease to provide a wider intellectual and historical context. His take is novel, certainly from the Left, but well informed of debates on the Right. Empirical, but with a theoretical lens as well. If you want to understand not just the economics or politics of what happened, but to situate those events within a wider history of the ideas that played in a role in the Recession, Mirowski has an incredibly erudite account.
Long review:
Mirowski is a member of the "Institute for New Economic Thinking", an non-profit aimed to correct the orthodoxies of economics, "neoliberal" ideas in particular. He opens this book with a report from one of the first meetings, which happened to feature "bold and original thinkers" like Ken "Excel for Dummies" Rogoff, Larry Summers and Niall Ferguson. The meeting ended with a timid call to add an extra chapter to standard Econ101 textbooks briefly describing the crisis. Mirowski further rightly groans at hand-wringing over "happiness measurements", morality in markets and peevish complaints of "greedy bankers" (as if avarice has only existed in the past ten years.)
How did this rigidity come to be? Mirowski answers by suggesting that we must understand neoliberalism as a Russian doll. The innermost doll of experts emerged from the Mont Pelerlin Society, an organization that was by design very hierarchical. He describes, for instance, correspondence between Popper and Hayek. Popper, following his philosophy of open debate suggested that MPS should have at least one respectable socialist. Hayek shut down this idea, insisting that agreement on first principles was a necessary condition for membership. This tightly networked group of intellectuals slowly incubated neoliberalism and developed a political strategy for propagating it.
Mirowski further points out that the Neoliberal Thought Collective were excellent sloganeers. Friedman's most famous academic text, for instance, argues that a lack of government intervention caused the Great Depression: a series of rural bank failures caused by an overly tight supply of money. However, when Friedman penned his Newsweek column he claimed with a straight face that the government *caused* the Recession, that is, by a lack of action in expanding the supply of money and reducing interest rates. This is how the Russian doll works: nuance for the insiders, ignorance for the outsiders.
There is a further layer to the doll though. Pivoting off of Foucault's final lectures at the College of France, Mirowski argues that there is an everyday neoliberalism that has emerged. Beyond political theory and public policy, neoliberalism is experienced on a quotidian level and it is on that potent terrain that it has survived the crisis. I, right now, am taking time out of my day to write a book review which I will be paid nothing for, which is in the service of the Bezo empire to sell even more books and probably destroy more local bookshops and which will be used to further quantify me into some bits of data in the sky so I can be marketed to even more heavily. But but but: I am individually expressing myself! How free am I! The neoliberal self is a creature coerced into being a "free" entrepreneur. It is the poor un/underemployed soul who thinks himself to be a failure or inadequate because he was not lucky enough to ride the right wave. The old liberal arts dictum to "know thy self" becomes "express thy self, and monetize it too!" This middle chapter here is the most engrossing part of the book. Mirowski delves into a sundry of sources on our culture and then leverages a novel and erudite analysis of Foucault to bring it all into sharp focus.
In closing, it is truly ironic that the other review of this book is so gravely concerned that Mirowski might be a socialist. We have a wonderful little anthropological artifact here of the NTC at work: "Whatever this book says, it's got 'Red' in a chapter title. I am a Very Reasonable Person and thus must be suspicious." Let me assure him/her: there are no calls for a violent revolution of the proletariat. On the contrary, Mirowski heads out to the outermost layer of the doll and analyzes why neoliberalism won. In particular, he argues that the NTC provided a powerful account of the market as a natural entity that *cannot* be messed with. Consequently, the Recession had nothing to do with the structure of capitalism itself, it was just a "once in a lifetime" moment akin to a natural disaster. An act of God.
Mirowski's careful history here shows that just the opposite is true. There was a concerted effort to propagate a particular ignorance and the Recession itself is by no means removed from that particular effort.
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Feb 19, 2020 | angrybearblog.com
likbez , February 19, 2020 12:31 pm
Does not matter.
It looks like Bloomberg is finished. He just committed political suicide with his comments about farmers and metal workers.
BTW Bloomberg's plan is highly hypocritical -- like is Bloomberg himself.
During the stagflation crisis of the 1970s, a "neoliberal revolution from above" was staged in the USA by "managerial elite" which like Soviet nomenklatura (which also staged a neoliberal coup d'état) changed sides and betrayed the working class.
So those neoliberal scoundrels reversed the class compromise embodied in the New Deal.
The most powerful weapon in the arsenal of the neoliberal managerial class and financial oligarchy who got to power via the "Quiet Coup" was the global labor arbitrage in which production is outsourced to countries with lower wage levels and laxer regulations.
So all those "improving education" plans are, to a large extent, the smoke screen over the fact that the US workers now need to compete against highly qualified and lower cost immigrants and outsourced workforce.
The fact is that it is very difficult to find for US graduates in STEM disciplines a decent job, and this is by design.
Also, after the "Reagan neoliberal revolution" ( actually a coup d'état ), profits were maximized by putting downward pressure on domestic wages through the introduction of the immigrant workforce (the collapse of the USSR helped greatly ). They push down wages and compete for jobs with their domestic counterparts, including the recent graduates. So the situation since 1991 was never too bright for STEM graduates.
By canceling the class compromise that governed the capitalist societies after World War II, the neoliberal elite saws the seed of the current populist backlash. The "soft neoliberal" backbone of the Democratic Party (Clinton wing) were incapable of coming to terms with Hillary Clinton's defeat -- the rejection of the establishment candidate by the US population and first of all by the working class. The result has been the neo-McCarthyism campaign and the attempt to derail Trump via color revolution spearheaded by Brennan-Obama factions in CIA and FBI.
See also recently published "The New Class War: Saving Democracy from the Managerial Elite" by Michael Lind.
One of his quotes:
The American oligarchy spares no pains in promoting the belief that it does not exist, but the success of its disappearing act depends on equally strenuous efforts on the part of an American public anxious to believe in egalitarian fictions and unwilling to see what is hidden in plain sight.
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Jan 08, 2020 | lareviewofbooks.org
A FEW DAYS AFTER Donald Trump's electoral upset in 2016, Club for Growth co-founder Stephen Moore told an audience of Republican House members that the GOP was "now officially a Trump working class party." No longer the party of traditional Reaganite conservatism, the GOP had been converted instead "into a populist America First party." As he uttered these words, Moore says, "the shock was palpable" in the room.
The Club for Growth had long dominated Republican orthodoxy by promoting low tax rates and limited government. Any conservative candidate for political office wanting to reap the benefits of the Club's massive fundraising arm had to pay homage to this doctrine. For one of its formerly leading voices to pronounce the transformation of this orthodoxy toward a more populist nationalism showed just how much the ground had shifted on election night.
To writer Michael Lind, Trump's victory, along with Brexit and other populist stirrings in Europe, was an outright declaration of "class war" by alienated working-class voters against what he calls a "university-credentialed overclass" of managerial elites. The title of Lind's new book, The New Class War: Saving Democracy from the Managerial Elite , leaves no doubt as to where his sympathies lie, though he's adamant that he's not some sort of guru for a " smarter Trumpism ," as some have labeled him.
Lind cautions against a turn to populism, which he believes to be too personality-centered and intellectually incoherent -- not to mention, too demagogic -- to help solve the terminal crisis of "technocratic neoliberalism" with its rule by self-righteous and democratically unaccountable "experts" with hyperactive Twitter handles. Only a return to what Lind calls "democratic pluralism" will help stem the tide of the populist revolt.
The New Class War is a breath of fresh air. Many on the left have been incapable of coming to terms with Hillary Clinton's defeat. The result has been the stifling climate of a neo-McCarthyism, in which the only explanation for Trump's success was an unholy alliance of "Putin stooges" and unrepentant "white supremacists."
To Lind, the case is much more straightforward: while the vast majority of Americans supports Social Security spending and containing unskilled immigration, the elites of the bipartisan swamp favor libertarian free trade policies combined with the steady influx of unskilled migrants to help suppress wage levels in the United States. Trump had outflanked his opponents in the Republican primaries and Clinton in the general election by tacking left on the economy (he refused to lay hands on Social Security) and right on immigration.
The strategy has since been successfully repeated in the United Kingdom by Boris Johnson, and it looks, for now, like a foolproof way for conservative parties in the West to capture or defend their majorities against center-left parties that are too beholden to wealthy, metropolitan interests to seriously attract working-class support. Berating the latter as irredeemably racist certainly doesn't help either.
What happened in the preceding decades to produce this divide in Western democracies? Lind's narrative begins with the New Deal, which had brought to an end what he calls "the first class war" in favor of a class compromise between management and labor. This first class war is the one we are the most familiar with: originating in the Industrial Revolution, which had produced the wretchedly poor proletariat, it soon led to the rise of competing parties of organized workers on the one hand and the liberal bourgeoisie on the other, a clash that came to a head in the Bolshevik Revolution of 1917. Then, in the 1930s, while the world was writhing from the consequences of the Great Depression, a series of fascist parties took the reigns in countries from Germany to Spain. To spare the United States a similar descent into barbarism, President Franklin D. Roosevelt implemented the New Deal, in which the working class would find a seat at the bargaining table under a government-supervised tripartite system where business and organized labor met seemingly as equals and in which collective bargaining would help the working class set sector-wide wages.
This class compromise ruled unquestioned for the first decades of the postwar era. It was made possible thanks to the system of democratic pluralism, which allowed working-class and rural constituencies to actively partake in mass-membership organizations like unions as well as civic and religious institutions that would empower these communities to shape society from the ground up.
But then, amid the stagflation crisis of the 1970s, a "neoliberal revolution from above" set in that sought to reverse the class compromise. The most powerful weapon in the arsenal of the newly emboldened managerial class was "global labor arbitrage" in which production is outsourced to countries with lower wage levels and laxer regulations; alternatively, profits can be maximized by putting downward pressure on domestic wages through the introduction of an unskilled, non-unionized immigrant workforce that competes for jobs with its unionized domestic counterparts. By one-sidedly canceling the class compromise that governed the capitalist societies after World War II, Lind concludes, the managerial elite had brought the recent populist backlash on itself.
Likewise, only it can contain this backlash by returning to the bargaining table and reestablishing the tripartite system it had walked away from. According to Lind, the new class peace can only come about on the level of the individual nation-state because transnational treaty organizations like the EU cannot allow the various national working classes to escape the curse of labor arbitrage. This will mean that unskilled immigration will necessarily have to be curbed to strengthen the bargaining power of domestic workers. The free-market orthodoxy of the Club for Growth will also have to take a backseat, to be replaced by government-promoted industrial strategies that invest in innovation to help modernize their national economies.
Under which circumstances would the managerial elites ever return to the bargaining table? "The answer is fear," Lind suggests -- fear of working-class resentment of hyper-woke, authoritarian elites. Ironically, this leaves all the agency with the ruling class, who first acceded to the class compromise, then canceled it, and is now called on to forge a new one lest its underlings revolt.
Lind rightly complains all throughout the book that the old mass-membership based organizations of the 20th century have collapsed. He's coy, however, about who would reconstitute them and how. At best, Lind argues for a return to the old system where party bosses and ward captains served their local constituencies through patronage, but once more this leaves the agency with entities like the Republicans and Democrats who have a combined zero members. As the third-party activist Howie Hawkins remarked cunningly elsewhere ,
American parties are not organized parties built around active members and policy platforms; they are shifting coalitions of entrepreneurial candidate campaign organizations. Hence, the Democratic and Republican Parties are not only capitalist ideologically; they are capitalistically run enterprises.
Thus, they would hardly be the first options one would think of to reinvigorate the forces of civil society toward self-rule from the bottom up.
The key to Lind's fraught logic lies hidden in plain sight -- in the book's title. Lind does not speak of "class struggle ," the heroic Marxist narrative in which an organized proletariat strove for global power; no, "class war " smacks of a gloomy, Hobbesian war of all against all in which no side truly stands to win.
In the epigraph to the book, Lind cites approvingly the 1949 treatise The Vital Center by historian Arthur Schlesinger Jr. who wrote that "class conflict, pursued to excess, may well destroy the underlying fabric of common principle which sustains free society." Schlesinger was just one among many voices who believed that Western societies after World War II were experiencing the "end of ideology." From now on, the reasoning went, the ideological battles of yesteryear were settled in favor of a more disinterested capitalist (albeit New Deal–inflected) governance. This, in turn, gave rise to the managerial forces in government, the military, and business whose unchecked hold on power Lind laments. The midcentury social-democratic thinker Michael Harrington had it right when he wrote that "[t]he end of ideology is a shorthand way of saying the end of socialism."
Looked at from this perspective, the break between the postwar Fordist regime and technocratic neoliberalism isn't as massive as one would suppose. The overclass antagonists of The New Class War believe that they derive their power from the same "liberal order" of the first-class peace that Lind upholds as a positive utopia. A cursory glance at the recent impeachment hearings bears witness to this, as career bureaucrats complained that President Trump unjustifiably sought to change the course of an American foreign policy that had been nobly steered by them since the onset of the Cold War. In their eyes, Trump, like the Brexiteers or the French yellow vest protesters, are vulgar usurpers who threaten the stability of the vital center from polar extremes.
A more honest account of capitalism would also acknowledge its natural tendencies to persistently contract and to disrupt the social fabric. There is thus no reason to believe why some future class compromise would once and for all quell these tendencies -- and why nationalistically operating capitalist states would not be inclined to confront each other again in war.
Stourley Kracklite • 20 days ago • edited ,
Reagan was a free-trader and a union buster. Lind's people jumped the Democratic ship to vote for Reagan in (lemming-like) droves. As Republicans consolidated power over labor with cheap goods from China and the meth of deficit spending Democrats struggled with being necklaced as the party of civil rights.
The idea that people who are well-informed ought not to govern is a sad and sick cover story that the culpable are forced to chant in their caves until their days are done, the reckoning being too great.
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Apr 18, 2017 | www.nakedcapitalism.com
DJG , April 17, 2017 at 11:09 amNeoliberalism is creating loneliness. That's what's wrenching society apart George Monbiot, GuardianKatharine , April 17, 2017 at 11:39 amGeorge Monbiot on human loneliness and its toll. I agree with his observations. I have been cataloguing them in my head for years, especially after a friend of mine, born in Venice and a long-time resident of Rome, pointed out to me that dogs are a sign of loneliness.
A couple of recent trips to Rome have made that point ever more obvious to me: Compared to my North Side neighborhood in Chicago, where every other person seems to have a dog, and on weekends Clark Street is awash in dogs (on their way to the dog boutiques and the dog food truck), Rome has few dogs. Rome is much more densely populated, and the Italians still have each other, for good or for ill. And Americans use the dog as an odd means of making human contact, at least with other dog owners.
But Americanization advances: I was surprised to see people bring dogs into the dining room of a fairly upscale restaurant in Turin. I haven't seen that before. (Most Italian cafes and restaurants are just too small to accommodate a dog, and the owners don't have much patience for disruptions.) The dogs barked at each other for while–violating a cardinal rule in Italy that mealtime is sacred and tranquil. Loneliness rules.
And the cafes and restaurants on weekends in Chicago–chockfull of people, each on his or her own Powerbook, surfing the WWW all by themselves.
That's why the comments about March on Everywhere in Harper's, recommended by Lambert, fascinated me. Maybe, to be less lonely, you just have to attend the occasional march, no matter how disorganized (and the Chicago Women's March organizers made a few big logistical mistakes), no matter how incoherent. Safety in numbers? (And as Monbiot points out, overeating at home alone is a sign of loneliness: Another argument for a walk with a placard.)
DJG , April 17, 2017 at 11:48 amI particularly liked this point:
In Britain, men who have spent their entire lives in quadrangles – at school, at college, at the bar, in parliament – instruct us to stand on our own two feet.
With different imagery, the same is true in this country. The preaching of self-reliance by those who have never had to practice it is galling.
Katherine: Agreed. It is also one of the reasons why I am skeptical of various evangelical / fundi pastors, who are living at the expense of their churches, preaching about individual salvation.
So you have the upper crust (often with inheritances and trust funds) preaching economic self-reliances, and you have divines preaching individual salvation as they go back to the house provided by the members of the church.
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Mar 31, 2017 | economistsview.typepad.com
anne , March 30, 2017 at 12:47 PMhttps://www.nytimes.com/2017/03/29/world/middleeast/us-war-footprint-grows-in-middle-east.htmlilsm -> anne... , March 30, 2017 at 01:51 PMMarch 29, 2017
U.S. War Footprint Grows, With No Endgame in Sight
By BEN HUBBARD and MICHAEL R. GORDONIn places like Yemen, Syria and Iraq, the United States is deepening its involvement in wars while diplomacy becomes largely an afterthought.
14 years as if US were going strong on Hanoi in '79!mulp -> anne... , March 30, 2017 at 04:30 PMPutin is a Tibetan Buddhist compared to Obama and so forth
Well, sending US troops is a US jobs program.Why would you object to government creating more demand for labor? Over time, wages will rise and higher wages will fund more demand for labor produced goods.
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May 16, 2017 | www.nakedcapitalism.com
By Mark Ames, founding editor of the Moscow satirical paper The eXile and co-host of the Radio War Nerd podcast with Gary Brecher (aka John Dolan). Subscribe here . Originally published at The Exiled
I made the mistake of listening to NPR last week to find out what Conventional Wisdom had to say about Trump firing Comey, on the assumption that their standardized Mister-Rogers-on-Nyquil voice tones would rein in the hysteria pitch a little. And on the surface, it did-the NPR host and guests weren't directly shrieking "the world is ending! We're all gonna die SHEEPLE!" the way they were on CNN. But in a sense they were screaming "fire!", if you know how to distinguish the very minute pitch level differences in the standard NPR Nyquil voice.
The host of the daytime NPR program asked his guests how serious, and how "unprecedented" Trump's decision to fire his FBI chief was. The guests answers were strange: they spoke about "rule of law" and "violating the Constitution" but then switched to Trump "violating norms"-and back again, interchanging "norms" and "laws" as if they're synonyms. One of the guests admitted that Trump firing Comey was 100% legal, but that didn't seem to matter in this talk about Trump having abandoned rule-of-law for a Putinist dictatorship. These guys wouldn't pass a high school civics class, but there they were, garbling it all up. What mattered was the proper sense of panic and outrage-I'm not sure anyone really cared about the actual legality of the thing, or the legal, political or "normative" history of the FBI.
For starters, the FBI hardly belongs in the same set with concepts like "constitutional" or " rule of law." That's because the FBI was never established by a law. US Lawmakers refused to approve an FBI bureau over a century ago when it was first proposed by Teddy Roosevelt. So he ignored Congress, and went ahead and set it up by presidential fiat. That's one thing the civil liberties crowd hates discussing - how centralized US political power is in the executive branch, a feature in the constitutional system put there by the holy Founders.
In the late 1970s, at the tail end of our brief Glasnost, there was a lot of talk in Washington about finally creating a legal charter for the FBI -70 years after its founding. A lot of serious ink was spilled trying to transform the FBI from an extralegal secret police agency to something legal and defined. If you want to play archeologist to America's recent history, you can find this in the New York Times' archives, articles with headlines like "Draft of Charter for F.B.I. Limits Inquiry Methods" :
The Carter Administration will soon send to Congress the first governing charter for the Federal Bureau of Investigation. The proposed charter imposes extensive but not absolute restrictions on the bureau's employment of controversial investigative techniques, .including the use of informers, undercover agents and covert criminal activity.
The charter also specifies the duties and powers of the bureau, setting precise standards and procedures for the initiation ,and conduct of investigations. It specifically requires the F.B.I. to observe constitutional rights and establishes safeguards against unchecked harassment, break‐ins and other abuses.
followed by the inevitable lament, like this editorial from the Christian Science Monitor a year later, "Don't Forget the FBI Charter". Which of course we did forget-that was Reagan's purpose and value for the post-Glasnost reaction: forgetting. As historian Athan Theoharis wrote , "After 1981, Congress never seriously considered again any of the FBI charter proposals."
The origins of the FBI have been obscured both because of its dubious legality and because of its original political purpose-to help the president battle the all-powerful American capitalists. It wasn't that Teddy Roosevelt was a radical leftist-he was a Progressive Republican, which sounds like an oxymoron today but which was mainstream and ascendant politics in his time. Roosevelt was probably the first president since Andrew Jackson to try to smash concentrated wealth-power, or at least some of it. He could be brutally anti-labor, but so were the powerful capitalists he fought, and all the structures of government power. He met little opposition pursuing his imperial Social Darwinist ambitions outside America's borders-but he had a much harder time fighting the powerful capitalists at home against Roosevelt's most honorable political obsession: preserving forests, parks and public lands from greedy capitalists. An early FBI memo to Hoover about the FBI's origins explains,
"Roosevelt, in his characteristic dynamic fashion, asserted that the plunderers of the public domain would be prosecuted and brought to justice."
According to New York Times reporter Tim Wiener's Enemies: A History of the FBI , it was the Oregon land fraud scandal of 1905-6 that put the idea of an FBI in TR's hyperactive mind. The scandal involved leading Oregon politicians helping railroad tycoon Edward Harriman illegally sell off pristine Oregon forest lands to timber interests, and it ended with an Oregon senator and the state's only two House representatives criminally charged and put on trial-along with dozens of other Oregonians. Basically, they were raping the state's public lands and forests like colonists stripping a foreign country-and that stuck in TR's craw.
TR wanted his attorney general-Charles Bonaparte (yes, he really was a descendant of that Bonaparte)-to make a full report to on the rampant land fraud scams that the robber barons were running to despoil the American West, and which threatened TR's vision of land and forest conservation and parks. Bonaparte created an investigative team from the US Secret Service, but TR thought their report was a "whitewash" and proposed a new separate federal investigative service within Bonaparte's Department of Justice that would report only to the Attorney General.
Until then, the US government had to rely on private contractors like the notorious, dreaded Pinkerton Agency, who were great at strikebreaking, clubbing workers and shooting organizers, but not so good at taking down down robber barons, who happened to also be important clients for the private detective agencies.
In early 1908, Attorney General Bonaparte wrote to Congress asking for the legal authority (and budget funds) to create a "permanent detective force" under the DOJ. Congress rebelled, denouncing it as a plan to create an American okhrana . Democrat Joseph Sherley wrote that "spying on men and prying into what would ordinarily be considered their private affairs" went against "American ideas of government"; Rep. George Waldo, a New York Republican, said the proposed FBI was a "great blow to freedom and to free institutions if there should arise in this country any such great central secret-service bureau as there is in Russia."
So Congress's response was the opposite, banning Bonaparte's DOJ from spending any funds at all on a proposed FBI. Another Congressman wrote another provision into the budget bill banning the DOJ from hiring Secret Service employees for any sort of FBI type agency. So Bonaparte waited until Congress took its summer recess, set aside some DOJ funds, recruited some Secret Service agents, and created a new federal detective bureau with 34 agents. This was how the FBI was born. Congress wasn't notified until the end of 1908, in a few lines in a standard report - "oh yeah, forgot to tell you-the executive branch went ahead and created an American okhrana because, well, the ol' joke about dogs licking their balls. Happy New Year!"
The sordid history of America's extralegal secret police-initially named the Bureau of Investigation, changed to the FBI ("Federal") in the 30's, is mostly a history of xenophobic panic-mongering, illegal domestic spying, mass roundups and plans for mass-roundups, false entrapment schemes, and planting what Russians call "kompromat"- compromising information about a target's sex life-to blackmail or destroy American political figures that the FBI didn't like.
The first political victim of J Edgar Hoover's kompromat was Louis Post, the assistant secretary of labor under Woodrow Wilson. Post's crime was releasing over 1,000 alleged Reds from detention facilities near the end of the FBI's Red Scare crackdown, when they jailed and deported untold thousands on suspicion of being Communists. The FBI's mass purge began with popular media support in 1919, but by the middle of 1920, some (not the FBI) were starting to get a little queasy. A legal challenge to the FBI's mass purges and exiles in Boston ended with a federal judge denouncing the FBI. After that ruling, assistant secretary Louis Post, a 71-year-old well-meaning progressive, reviewed the cases against the last 1500 detainees that the FBI wanted to deport, and found that there was absolutely nothing on at least 75 percent of the cases. Post's review threatened to undo thousands more FBI persecutions of alleged Moscow-controlled radicals.
So one of the FBI's most ambitious young agents, J Edgar Hoover, collected kompromat on Post and his alleged associations with other alleged Moscow-controlled leftists, and gave the file to the Republican-controlled House of Representatives-which promptly announced it would hold hearings to investigate Post as a left subversive. The House tried to impeach Post, but ultimately he defended himself. Post's lawyer compared his political persecutors to the okhrana (Russia, again!): "We in America have sunk to the level of the government of Russia under the Czarist regime," describing the FBI's smear campaign as "even lower in some of their methods than the old Russian officials."
Under Harding, the FBI had a new chief, William Burns, who made headlines blaming the terror bombing attack on Wall Street of 1920 that killed 34 people on a Kremlin-run conspiracy. The FBI claimed it had a highly reliable inside source who told them that Lenin sent $30,000 to the Soviets' diplomatic mission in New York, which was distributed to four local Communist agents who arranged the Wall Street bombing. The source claimed to have personally spoken with Lenin, who boasted that the bombing was so successful he'd ordered up more.
The only problem was that the FBI's reliable source, a Jewish-Polish petty criminal named Wolf Lindenfeld, turned out to be a bullshitter-nicknamed "Windy Linde"-who thought his fake confession about Lenin funding the bombing campaign would get him out of Poland's jails and set up in a comfortable new life in New York.
By 1923, the FBI had thoroughly destroyed America's communist and radical labor movements-allowing it to focus on its other favorite pastime: spying on and destroying political opponents. The FBI spied on US Senators who supported opening diplomatic relations with the Soviet Union: Idaho's William Borah, chairman of the Foreign Relations Committee; Thomas Walsh of the Judiciary Committee, and Burton K Wheeler, the prairie Populist senator from Montana, who visited the Soviet Union and pushed for diplomatic relations. Harding's corrupt Attorney General Dougherty denounced Sen. Wheeler as "the Communist leader in the Senate" and "no more a Democrat than Stalin, his comrade in Moscow." Dougherty accused Sen. Wheeler of being part of a conspiracy "to capture, by deceit and design, as many members of the Senate as possible and to spread through Washington and the cloakrooms of Congress a poison gas as deadly as that which sapped and destroyed brave soldiers in the last war."
Hoover, now a top FBI official, quietly fed kompromat to journalists he cultivated, particularly an AP reporter named Richard Whitney, who published a popular book in 1924, "Reds In America" alleging Kremlin agents "had an all-pervasive influence over American institutions; they had infiltrated every corner of American life." Whitney named Charlie Chaplin as a Kremlin agent, along with Felix Frankfurter and members of the Senate pushing for recognition of the Soviet Union. That killed any hope for diplomatic recognition for the next decade.
Then the first Harding scandals broke-Teapot Dome, Veterans Affairs, bribery at the highest rungs. When Senators Wheeler and Walsh opened bribery investigations, the FBI sent agents to the senators' home state to drum up false bribery charges against Sen. Wheeler. The charges were clearly fake, and a jury dismissed the charges. But Attorney General Dougherty was indicted for fraud and forced to resign, as was his FBI chief Burns-but not Burns' underling Hoover, who stayed in the shadows.
"We want no Gestapo or Secret Police. FBI is tending in that direction. They are dabbling in sex-life scandals and plain blackmail This must stop."
With the Cold War, the FBI became obsessed with homosexuals as America's Fifth Column under Moscow's control. Homosexuals, the FBI believed, were susceptible to Kremlin kompromat-so the FBI collected and disseminated its own kompromat on alleged American homosexuals, supposedly to protect America from the Kremlin. In the early 1950s, Hoover launched the Sex Deviates Program to spy on American homosexuals and purge them from public life. The FBI built up 300,000 pages of files on suspected homosexuals and contacted their employers, local law enforcement and universities to "to drive homosexuals from every institution of government, higher learning, and law enforcement in the nation," according to Tim Weiner's book Enemies. No one but the FBI knows exactly how many Americans' lives and careers were destroyed by the FBI's Sex Deviants Program but Hoover-who never married, lived with his mother until he was 40, and traveled everywhere with his "friend" Clyde Tolson .
In the 1952 election, Hoover was so committed to helping the Republicans and Eisenhower win that he compiled and disseminated a 19-page kompromat file alleging that his Democratic Party rival Adlai Stevenson was gay. The FBI's file on Stevenson was kept in the Sex Deviants Program section-it included libelous gossip, claiming that Stevenson was one of Illinois' "best known homosexuals" who went by the name "Adeline" in gay cruising circles.
In the 1960s, Hoover and his FBI chiefs collected kompromat on the sex lives of JFK and Martin Luther King. Hoover presented some of his kompromat on JFK to Bobby Kennedy, in a concern-trollish way claiming to "warn" him that the president was opening himself up to blackmail. It was really a way for Hoover to let the despised Kennedy brothers know he could destroy them, should they try to Comey him out of his FBI office. Hoover's kompromat on MLK's sex life was a particular obsession of his-he now believed that African-Americans, not homosexuals, posed the greatest threat to become a Kremlin Fifth Column. The FBI wiretapped MLK's private life, collecting tapes of his affairs with other women, which a top FBI official then mailed to Martin Luther King's wife, along with a note urging King to commit suicide.
FBI letter anonymously mailed to Martin Luther King Jr's wife, along with kompromat sex tapes
After JFK was murdered, when Bobby Kennedy ran for the Senate in 1964, he recounted another disturbing FBI/kompromat story that President Johnson shared with him on the campaign trail. LBJ told Bobby about a stack of kompromat files - FBI reports "detailing the sexual debauchery of members of the Senate and House who consorted with prostitutes." LBJ asked RFK if the kompromat should be leaked selectively to destroy Republicans before the 1964 elections. Kennedy recalled,
"He told me he had spent all night sitting up and reading the files of the FBI on all these people. And Lyndon talks about that information and material so freely. Lyndon talks about everybody, you see, with everybody. And of course that's dangerous."
Kennedy had seen some of the same FBI kompromat files as attorney general, but he was totally opposed to releasing such unsubstantiated kompromat-such as, say, the Trump piss files-because doing so would "destroy the confidence that people in the United States had in their government and really make us a laughingstock around the world."
Imagine that.
Which brings me to the big analogy every hack threw around last week, calling Trump firing Comey "Nixonian." Actually, what Trump did was more like the very opposite of Nixon, who badly wanted to fire Hoover in 1971-2, but was too afraid of the kompromat Hoover might've had on him to make the move. Nixon fell out with his old friend and onetime mentor J Edgar Hoover in 1971, when the ailing old FBI chief refused to get sucked in to the Daniel Ellsberg/Pentagon Papers investigation, especially after the Supreme Court ruled in favor of the New York Times. Part of the reason Nixon created his Plumbers team of black bag burglars was because Hoover had become a bit skittish in his last year on this planet-and that drove Nixon crazy.
Nixon called his chief of staff Haldeman:
Nixon: I talked to Hoover last night and Hoover is not going after this case [Ellsberg] as strong as I would like. There's something dragging him.
Haldeman: You don't have the feeling the FBI is really pursuing this?
Nixon: Yeah, particularly the conspiracy side. I want to go after everyone. I'm not so interested in Ellsberg, but we have to go after everybody who's a member of this conspiracy.
Hoover's ambitious deputies in the FBI were smelling blood, angling to replace him. His number 3, Bill Sullivan (who sent MLK the sex tapes and suicide note) was especially keen to get rid of Hoover and take his place. So as J Edgar was stonewalling the Daniel Ellsberg investigation, Sullivan showed up in a Department of Justice office with two suitcases packed full of transcripts and summaries of illegal wiretaps that Kissinger and Nixon had ordered on their own staff and on American journalists. The taps were ordered in Nixon's first months in the White House in 1969, to plug up the barrage of leaks, the likes of which no one had ever seen before. Sullivan took the leaks from J Edgar's possession and told the DOJ official that they needed to be hidden from Hoover, who planned to use them as kompromat to blackmail Nixon.
Nixon decided he was going to fire J Edgar the next day. This was in September, 1971. But the next day came, and Nixon got scared. So he tried to convince his attorney general John Mitchell to fire Hoover for him, but Mitchell said only the President could fire J Edgar Hoover. So Nixon met him for breakfast, and, well, he just didn't have the guts. Over breakfast, Hoover flattered Nixon and told him there was nothing more in the world he wanted than to see Nixon re-elected. Nixon caved; the next day, J Edgar Hoover unceremoniously fired his number 3 Bill Sullivan, locking him out of the building and out of his office so that he couldn't take anything with him. Sullivan was done.
The lesson here, I suppose, is that if an FBI director doesn't want to be fired, it's best to keep your kompromat a little closer to your chest, as a gun to hold to your boss's head. Comey's crew already released the piss tapes kompromat on Trump-the damage was done. What was left to hold back Trump from firing Comey? "Laws"? The FBI isn't even legal. "Norms" would be the real reason. Which pretty much sums up everything Trump has been doing so far. We've learned the past two decades that we're hardly a nation of laws, at least not when it comes to the plutocratic ruling class. What does bind them are "norms"-and while those norms may mean everything to the ruling class, it's an open question how much these norms mean to a lot of Americans outside that club.
Huey Long , May 16, 2017 at 2:33 am3.14e-9 , May 16, 2017 at 3:04 amWow, and this whole time I thought the NSA had a kompromat monopoly as they have everybody's porn site search terms and viewing habits on file.
I had no idea the FBI practically invented it!
voteforno6 , May 16, 2017 at 6:06 amThe Native tribes don't have a great history with the FBI, either.
Disturbed Voter , May 16, 2017 at 6:42 amHas anyone ever used the FBI's lack of a charter as a defense in court?
Synoia , May 16, 2017 at 9:46 pmThe USA doesn't have a legal basis either, it is a revolting crown colony of the British Empire. Treason and heresy all the way down. Maybe the British need to burn Washington DC again?
Ignim Brites , May 16, 2017 at 7:55 amBritain burning DC, and the so call ed "war" of 1812, got no mention in my History Books. Napoleon on the other hand, featured greatly
In 1812 Napoleon was busy going to Russia. That went well.
Watt4Bob , May 16, 2017 at 7:56 amWondered how Comey thought he could get away with his conviction and pardon of Sec Clinton. Seems like part of the culture of FBI is a "above and beyond" the law mentality.
JMarco , May 16, 2017 at 2:52 pmBack in the early 1970s a high school friend moved to Alabama because his father was transferred by his employer.
My friend sent a post card describing among other things the fact that Alabama had done away with the requirement of a math class to graduate high school, and substituted a required class called "The Evils of Communism" complete with a text-book written by J. Edgar Hoover; Masters of Deceit.
Watt4Bob , May 16, 2017 at 4:47 pmIn Dallas,Texas my 1959 Civics class had to read the same book. We all were given paperback copies of it to take home and read. It was required reading enacted by Texas legislature.
Carolinian , May 16, 2017 at 8:35 amSo I'd guess you weren't fooled by any of those commie plots of the sixties, like the campaigns for civil rights or against the Vietnamese war.
I can't really brag, I didn't stop worrying about the Red Menace until 1970 or so, that's when I started running into returning vets who mostly had no patience for that stuff.
Katharine , May 16, 2017 at 8:37 amWe've learned the past two decades that we're hardly a nation of laws, at least not when it comes to the plutocratic ruling class. What does bind them are "norms"
Or as David Broder put it (re Bill Clinton): he came in and trashed the place and it wasn't his place.
It was David Broder's place. Of course the media play a key role with all that kompromat since they are the ones needed to convey it to the public. The tragedy is that even many of the sensible in their ranks such as Bill Moyers have been sucked into the kompromat due to their hysteria over Trump. Ames is surely on point in this great article. The mistake was allowing secret police agencies like the FBI and CIA to be created in the first place.
Carolinian , May 16, 2017 at 9:12 amSorry, my initial reaction was that people who don't know the difference between "rein" and "reign" are not to be trusted to provide reliable information. Recognizing that as petty, I kept reading, and presently found the statement that Congress was not informed of the founding of the FBI until a century after the fact, which seems implausible. If in fact the author meant the end of 1908 it was quite an achievement to write 2008.
Interesting to the extent it may be true, but with few sources, no footnotes, and little evidence of critical editing who knows what that may be?
Katharine , May 16, 2017 at 10:08 amDo you even know who Mark Ames is?
Petty .yes.
Bill Smith , May 16, 2017 at 12:00 pmWho he is is irrelevant. I don't take things on faith because "the Pope said" or because Mark Ames said. People who expect their information to be taken seriously should substantiate it.
Fiery Hunt , May 16, 2017 at 9:21 amYeah, in the first sentence
Interesting article though.
Katharine , May 16, 2017 at 10:13 amYeah, Kathatine, you're right .very petty.
And completely missed the point.
Or worse, you got the point and your best rejection of that point was pointing out a typo.
sid_finster , May 16, 2017 at 10:50 amI neither missed the point nor rejected it. I reserved judgment, as I thought was apparent from my comment.
JTMcPhee , May 16, 2017 at 9:21 amBut Trump is bad. Very Bad.
So anything the FBI does to get rid of him must by definition be ok! Besides, surely our civic-minded IC would never use their power on the Good Guys™!
Right?
Katharine , May 16, 2017 at 10:19 amAh yes, the voice of "caution." And such attention to the lack of footnotes, in this day when the curious can so easily cut and paste a bit of salient text into a search engine and pull up a feast of parse-able writings and video, from which they can "judiciously assess" claims and statements. If they care to spend the time, which is in such short supply among those who are struggling to keep up with the horrors and revelations people of good will confront every blinking day
Classic impeachment indeed. All from the height of "academic rigor" and "caution." Especially the "apologetic" bit about "reign" vs "rein." Typos destroy credibility, don't they? And the coup de grass (sic), the unrebuttable "plausibility" claim.
One wonders at the nature of the author's curriculum vitae. One also marvels at the yawning gulf between the Very Serious Stuff I was taught in grade and high school civics and history, back in the late '50s and the '60s, about the Fundamental Nature Of Our Great Nation and its founding fathers and the Beautiful Documents they wrote, on the one hand, and what we mopes learn, through a drip-drip-drip process punctuated occasionally by Major Revelations, about the real nature of the Empire and our fellow creatures
PS: My earliest memory of television viewing was a day at a friend's house - his middle-class parents had the first "set" in the neighborhood, I think an RCA, in a massive sideboard cabinet where the picture tube pointed up and you viewed the "content" in a mirror mounted to the underside of the lid. https://m.youtube.com/watch?v=5onSwx7_Cn0 The family was watching a hearing of Joe McCarthy's kangaroo court, complete with announcements of the latest number in the "list of known Communists in the State Department" and how Commyanism was spreading like an unstoppable epidemic mortal disease through the Great US Body Politic and its Heroic Institutions of Democracy. I was maybe 6 years old, but that grainy black and white "reality TV" content had me asking "WTF?" at a very early age. And I'd say it's on the commentor to show that the "2008" claim is wrong, by something other than "implausible" as drive-by impeachment. Given the content of the original post, and what people paying attention to all this stuff have a pretty good idea is the general contours of a vast corruption and manipulation.
"Have you stopped beating your wife? Yes or no."
Edward , May 16, 2017 at 9:22 pmIt is the author's job to substantiate information, not the reader's. If he thinks his work is so important, why does he not make a better job of it?
nonsense factory , May 16, 2017 at 11:16 amI think the MLK blackmail scheme is well-established. Much of the article seems to be based on Tim Wiener's "Enemies: A History of the FBI".
Andrew Watts , May 16, 2017 at 3:58 pmInteresting article on the history of the FBI, although the post-Hoover era doesn't get any treatment. The Church Committee hearings on the CIA and FBI, after the exposure of notably Operation CHAOS (early 60s to early 70s) by the CIA and COINTELPRO(late 1950s to early 1970s) by the FBI, didn't really get to the bottom of the issue although some reforms were initiated.
Today, it seems, the best description of the FBI's main activity is corporate enforcer for the white-collar mafia known as Wall Street. There is an analogy to organized crime, where the most powerful mobsters settled disputes between other gangs of criminals. Similarly, if a criminal gang is robbed by one of its own members, the mafia would go after the guilty party; the FBI plays this role for Wall Street institutions targeted by con artists and fraudsters. Compare and contrast a pharmaceutical company making opiates which is targeted by thieves vs. a black market drug cartel targeted by thieves. In one case, the FBI investigates; in the other, a violent vendetta ensues (such as street murders in Mexico).
The FBI executives are rewarded for this service with lucrative post-retirement careers within corporate America – Louis Freeh went to credit card fraudster, MBNA, Richard Mueller to a corporate Washington law firm, WilmerHale, and Comey, before Obama picked him as Director, worked for Lockheed Martin and HSBC (cleaning up after their $2 billion drug cartel marketing scandal) after leaving the FBI in 2005.
Maybe this is legitimate, but this only applies to their protection of the interests of large corporations – as the 2008 economic collapse and aftermath showed, they don't prosecute corporate executives who rip off poor people and middle-class homeowners. Banks who rob people, they aren't investigated or prosecuted; that's just for people who rob banks.
When it comes to political issues and national security, however, the FBI has such a terrible record on so many issues over the years that anything they claim has to be taken with a grain or two of salt. Consider domestic political activity: from the McCarthyite 'Red Scare' of the 1950s to COINTELPRO in the 1960s and 1970s to targeting of environmental groups in the 1980s and 1990s to targeting anti-war protesters under GW Bush to their obsession with domestic mass surveillance under Obama, it's not a record that should inspire any confidence.
Some say they have a key role to play in national security and terrorism – but their record on the 2001 anthrax attacks is incredibly shady and suspicious. The final suspect, Bruce Ivins, is clearly innocent of the crime, just as their previous suspect, Steven Hatfill was. Ivins, if still alive, could have won a similar multi-million dollar defamation lawsuit against the FBI. All honest bioweapons experts know this to be true – the perpetrators of those anthrax letters are still at large, and may very well have had close associations with the Bush Administration itself.
As far as terrorist activities? Many of their low-level agents did seem concerned about the Saudis and bin Laden in the late 1990s and pre-9/11 – but Saudi investigations were considered politically problematic due to "geostrategic relationships with our Saudi allies" – hence people like John O'Neil and Coleen Rowley were sidelined and ignored, with disastrous consequences. The Saudi intelligence agency role in 9/11 was buried for over a decade, as well. Since 9/11, most of the FBI investigations seem to have involved recruiting mentally disabled young Islamic men in sting operations in which the FBI provides everything needed. You could probably get any number of mentally ill homeless people across the U.S., regardless of race or religion, to play this role.
Comey's actions over the past year are certainly highly questionable, as well. Neglecting to investigate the Clinton Foundation ties to Saudi Arabia and other foreign governments and corporations, particularly things like State Department approval of various arms deals in which bribes may have been paid, is as much a dereliction of duty as neglecting to investigate Trump ties to Russian business interests – but then, Trump has a record of shady business dealings dating back to the 1970s, of strange bankruptcies and bailouts and government sales that the FBI never looked at either.
Ultimately, this is because FBI executives are paid off not to investigate Wall Street criminality, nor shady U.S. government activity, with lucrative positions as corporate board members and so on after their 'retirements'. I don't doubt that many of their junior members mean well and are dedicated to their jobs – but the fish rots from the head down.
verifyfirst , May 16, 2017 at 12:53 pmAs far as terrorist activities? Many of their low-level agents did seem concerned about the Saudis and bin Laden in the late 1990s and pre-9/11 – but Saudi investigations were considered politically problematic due to "geostrategic relationships with our Saudi allies" – hence people like John O'Neil and Coleen Rowley were sidelined and ignored, with disastrous consequences.
The Clinton Administration had other priorities. You know, I think I'll let ex-FBI Director Freeh explain what happened when the FBI tried to get the Saudis to cooperate with their investigation into the bombing of the Khobar Towers.
"That September, Crown Prince Abdullah and his entourage took over the entire 143-room Hay-Adams Hotel, just across from Lafayette Park from the White House, for six days. The visit, I figured, was pretty much our last chance. Again, we prepared talking points for the president. Again, I contacted Prince Bandar and asked him to soften up the crown prince for the moment when Clinton, -- or Al Gore I didn't care who -- would raise the matter and start to exert the necessary pressure."
"The story that came back to me, from "usually reliable sources," as they say in Washington, was that Bill Clinton briefly raised the subject only to tell the Crown Prince that he certainly understood the Saudis; reluctance to cooperate. Then, according to my sources, he hit Abdullah up for a contribution to the still-to-be-built Clinton presidential library. Gore, who was supposed to press hardest of all in his meeting with the crown Prince, barely mentioned the matter, I was told." -Louis J. Freeh, My FBI (2005)
In my defense I picked the book up to see if there was any dirt on the DNC's electoral funding scandal in 1996. I'm actually glad I did. The best part of the book is when Freeh recounts running into a veteran of the Lincoln Brigade and listens to how Hoover's FBI ruined his life despite having broken no laws. As if a little thing like laws mattered to Hoover. The commies were after our precious bodily fluids!
lyman alpha blob , May 16, 2017 at 1:14 pmI'm not sure there are many functioning norms left within the national political leadership. Seemed to me Gingrich started blowing those up and it just got worse from there. McConnell not allowing Garland to be considered comes to mind
JMarco , May 16, 2017 at 2:59 pmGreat article – thanks for this. I had no idea the FBI never had a legal charter – very enlightening.
Thanks to Mark Ames now we know what Pres. Trump meant when he tweeted about his tapes with AG Comey. Not some taped conversation between Pres. Trump & AG Comey but bunch of kompromat tapes that AG Comey has provided Pres. Trump that might not make departing AG Comey looked so clean.
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Oct 09, 2017 | www.amazon.com
skeptic on October 8, 2017
A solid book on neoliberal ideology and neoliberal rationality. Highly recommended
The book adhere to "classic" line of critique of neoliberalism as a new "secular religion" ( the author thinking is along the lines of Gramsci idea of "cultural hegemony"; Gramsci did not use the term 'secular religion" at all, but this is close enough concept) that deified the market. It stresses the role of the state in enforcing the neoliberal ideology much like was the case with Bolsheviks in the USSR:
Gramsci's question is still pressing: How and why do ordinary working folks come to accept a system where wealth is produced by their collective labors and energies but appropriated individually by only a few at the top? The theory of hegemony suggests that the answer to this question is not simply a matter of direct exploitation and control by the capitalist class. Rather, hegemony posits that power is maintained through ongoing, ever-shifting cultural processes of winning the consent of the governed, that is, ordinary people like you and me.
According to Gramsci, there was not one ruling class, but rather a historical bloc, "a moving equilibrium" of class interests and values. Hegemony names a cultural struggle for moral, social, economic, and political leadership; in this struggle, a field -- or assemblage -- of practices, discourses, values, and beliefs come to be dominant. While this field is powerful and firmly entrenched, it is also open to contestation. In other words, hegemonic power is always on the move; it has to keep winning our consent to survive, and sometimes it fails to do so.
Through the lens of hegemony, we can think about the rise of neoliberalism as an ongoing political project -- and class struggle -- to shift society's political equilibrium and create a new dominant field. Specifically, we are going to trace the shift from liberal to neoliberal hegemony. This shift is represented in the two images below.Previous versions of liberal hegemony imagined society to be divided into distinct public and private spheres. The public sphere was the purview of the state, and its role was to ensure the formal rights and freedoms of citizens through the rule of law. The private sphere included the economy and the domestic sphere of home and family.
For the most part, liberal hegemony was animated by a commitment to limited government, as the goal was to allow for as much freedom in trade, associations, and civil society as possible, while preserving social order and individual rights. Politics took shape largely around the line between public and private; more precisely, it was a struggle over where and how to draw the line. In other words, within the field of liberal hegemony, politics was a question of how to define the uses and limits of the state and its public function in a capitalist society. Of course, political parties often disagreed passionately about where and how to draw that line. As we'll see below, many advocated for laissez-faire capitalism, while others argued for a greater public role in ensuring the health, happiness, and rights of citizens. What's crucial though is that everyone agreed that there was a line to be drawn, and that there was a public function for the state.
As Figure 1.1 shows, neoliberal hegemony works to erase this line between public and private and to create an entire society -- in fact, an entire world -- based on private, market competition. In this way, neoliberalism represents a radical reinvention of liberalism and thus of the horizons of hegemonic struggle. Crucially, within neoliberalism, the state's function does not go away; rather, it is deconstructed and reconstructed toward the new' end of expanding private markets.
This view correlates well with the analysis of Professor Wendy Brown book "Undoing the Demos" and her paper "Neoliberalism and the End of Liberal Democracy" (pdf is freely available)
In this sense neoliberalism are just "Trotskyism for the rich" with the same utopian dream of global neoliberal revolution, but much more sinister motives. And is as ruthless in achieving its goals, if necessary bring neoliberal "regime change" on the tips of bayonets, or via 'cultural revolutions".
If we follow the line of thinking put forward by Professor Philip Mirowski's in his book "Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown," we can say that neoliberals essentially "reverse-engineered" Bolsheviks methods of acquiring and maintaining political power, replacing "dictatorship of proletariat" with the "dictatorship of financial oligarchy".
I would say more: The "professional revolutionary" cadre that were the core of Bolshevik's Party were replaced with well paid, talented intellectual prostitutes at specially created neoliberal think tanks. And later "infiltrated" in economic departments (kind of stealth coup d'état in academia financed by usual financial players).
Which eventually created a critical mass of ideas which were able to depose New Deal Capitalism ideology, putting forward the set of remedies that restore the power the financial oligarchy enjoyed in 1920th. Technological changes such as invention of computers and telecommunication revolution also helped greatly.
At the same time unlike Bolsheviks, neoliberals are carefully hiding their agenda. Funny, neoliberalism is the only known to me major ideology which the US MSM are prohibited to mention by name ;-)
The role of state under neoliberalism is very close to the role of state under Bolsheviks' "dictatorship of proletariats". It no way this still a liberal democracy -- this is what Sheldon Wolin called "inverted totalitarism". Less brutal then Bolsheviks' regime, but still far from real democracy. Under neoliberalism the state is a powerful agent needed to enforce markets on unsuspecting population in all spheres of life, whether they want it or not (supported by 12" guns of neoliberal MSM battleships):
As Figure 1.1 shows, neoliberal hegemony works to erase this line between public and private and to create an entire society -- in fact, an entire world -- based on private, market competition. In this way, neoliberalism represents a radical reinvention of liberalism and thus of the horizons of hegemonic struggle. Crucially, within neoliberalism, the state's function does not go away; rather, it is deconstructed and reconstructed toward the new' end of expanding private markets. Consequently, contemporary politics take shape around questions of how best to promote competition. For the most part, politics on both the left and right have been subsumed by neoliberal hegemony. For example, while neoliberalism made its debut in Western politics with the right-wing administrations of Ronald Reagan and Margaret Thatcher, leaders associated with the left have worked to further neoliberal hegemony in stunning ways. As we will explore in more depth below and in die coming chapters, both U.S. presidents Bill Clinton and Barack Obama have governed to create a privatized, market society. In other words, there is both a left and a right hegemonic horizon of neoliberalism. Thus, moving beyond neoliberalism will ultimately require a whole new field of politics.
One of the most interesting part of the book is the brief analysis of the recent elections (with very precise characterization of Hillary Clinton defeat as the defeat of the "neoliberal status quo"). The author claims that Trump supporters were mainly representatives of the strata of the US society which were sick-and-tied of neoliberalism (note the percentage of Spanish speaking electorate who voted for Trump), but they were taken for a ride, as instead of rejection of globalism and free movement of labor, Trump actually represented more right wing, more bastardized version of "hard neoliberalism".
In the period which followed the elections Trump_vs_deep_state emerged as a kind of "neoliberalism in one country" -- much like Stalin's "socialism in one country". It and did not care one bit about those who voted for him during election . As in classic "The Moor has done his duty, the Moor can go."
So in a way Trump represents the mirror image of Obama who in the same way betrayed his votes (twice) acting from "soft neoliberalism" position, while Trump is acting from "hard neoliberalism" position.
On the other hand, we saw' the rise of the Tea Party, a right-wing response to the crisis. While the Tea Party was critical of status-quo neoliberalism -- especially its cosmopolitanism and embrace of globalization and diversity, which was perfectly embodied by Obama's election and presidency -- it was not exactly anti-neoliberal. Rather, it was anti-left neoliberalism-, it represented a more authoritarian, right [wing] version of neoliberalism.
Within the context of the 2016 election, Clinton embodied the neoliberal center that could no longer hold. Inequality. Suffering. Collapsing infrastructures. Perpetual war. Anger. Disaffected consent. There were just too many fissures and fault lines in the glossy, cosmopolitan world of left neoliberalism and marketized equality. Indeed, while Clinton ran on status-quo stories of good governance and neoliberal feminism, confident that demographics and diversity would be enough to win the election, Trump effectively tapped into the unfolding conjunctural crisis by exacerbating the cracks in the system of marketized equality, channeling political anger into his celebrity brand that had been built on saying "f*** you" to the culture of left neoliberalism (corporate diversity, political correctness, etc.) In fact, much like Clinton's challenger in the Democratic primary, Benie Sanders, Trump was a crisis candidate.
... ... ...In other words, Trump supporters may not have explicitly voted for neoliberalism, but that's what they got. In fact, as Rottenberg argues, they got a version of right neoliberalism "on steroids" -- a mix of blatant plutocracy and authoritarianism that has many concerned about the rise of U.S. fascism.
We can't know what would have happened had Sanders run against Trump, but we can think seriously about Trump, right and left neoliberalism, and the crisis of neoliberal hegemony. In other words, we can think about where and how we go from here. As I suggested in the previous chapter, if we want to construct a new world, we are going to have to abandon the entangled politics of both right and left neoliberalism; we have to reject the hegemonic frontiers of both disposability and marketized equality. After all, as political philosopher Nancy Fraser argues, what was rejected in the election of 2016 was progressive, left neoliberalism.
While the rise of hyper-right neoliberalism is certainly nothing to celebrate, it does present an opportunity for breaking with neoliberal hegemony. We have to proceed, as Gary Younge reminds us, with the realization that people "have not rejected the chance of a better world. They have not yet been offered one."'
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Oct 08, 2017 | www.amazon.com
Quote from the book is courtesy of Amazon preview of the book Neoliberalism (Key Ideas in Media & Cultural Studies)
In Chapter 1, we traced the rise of our neoliberal conjuncture back to the crisis of liberalism during the late nineteenth and early twentieth centuries, culminating in the Great Depression. During this period, huge transformations in capitalism proved impossible to manage with classical laissez-faire approaches. Out of this crisis, two movements emerged, both of which would eventually shape the course of the twentieth century and beyond. The first, and the one that became dominant in the aftermath of the crisis, was the conjuncture of embedded liberalism. The crisis indicated that capitalism wrecked too much damage on the lives of ordinary citizens. People (white workers and families, especially) warranted social protection from the volatilities and brutalities of capitalism. The state's public function was expanded to include the provision of a more substantive social safety net, a web of protections for people and a web of constraints on markets. The second response was the invention of neoliberalism. Deeply skeptical of the common-good principles that undergirded the emerging social welfare state, neoliberals began organizing on the ground to develop a "new" liberal govemmentality, one rooted less in laissez-faire principles and more in the generalization of competition and enterprise. They worked to envision a new society premised on a new social ontology, that is, on new truths about the state, the market, and human beings. Crucially, neoliberals also began building infrastructures and institutions for disseminating their new' knowledges and theories (i.e., the Neoliberal Thought Collective), as well as organizing politically to build mass support for new policies (i.e., working to unite anti-communists, Christian conservatives, and free marketers in common cause against the welfare state). When cracks in embedded liberalism began to surface -- which is bound to happen with any moving political equilibrium -- neoliberals were there with new stories and solutions, ready to make the world anew.
We are currently living through the crisis of neoliberalism. As I write this book, Donald Trump has recently secured the U.S. presidency, prevailing in the national election over his Democratic opponent Hillary Clinton. Throughout the election, I couldn't help but think back to the crisis of liberalism and the two responses that emerged. Similarly, after the Great Recession of 2008, we've saw two responses emerge to challenge our unworkable status quo, which dispossesses so many people of vital resources for individual and collective life. On the one hand, we witnessed the rise of Occupy Wall Street. While many continue to critique the movement for its lack of leadership and a coherent political vision, Occupy was connected to burgeoning movements across the globe, and our current political horizons have been undoubtedly shaped by the movement's success at repositioning class and economic inequality within our political horizon. On the other hand, we saw' the rise of the Tea Party, a right-wing response to the crisis. While the Tea Party was critical of status-quo neoliberalism -- especially its cosmopolitanism and embrace of globalization and diversity, which was perfectly embodied by Obama's election and presidency -- it was not exactly anti-neoliberal. Rather, it was anti-left neoliberalism-, it represented a more authoritarian, right [wing] version of neoliberalism.
Within the context of the 2016 election, Clinton embodied the neoliberal center that could no longer hold. Inequality. Suffering. Collapsing infrastructures. Perpetual war. Anger. Disaffected consent. There were just too many fissures and fault lines in the glossy, cosmopolitan world of left neoliberalism and marketized equality. Indeed, while Clinton ran on status-quo stories of good governance and neoliberal feminism, confident that demographics and diversity would be enough to win the election, Trump effectively tapped into the unfolding conjunctural crisis by exacerbating the cracks in the system of marketized equality, channeling political anger into his celebrity brand that had been built on saying "f*** you" to the culture of left neoliberalism (corporate diversity, political correctness, etc.) In fact, much like Clinton's challenger in the Democratic primary, Benie Sanders, Trump was a crisis candidate.
Both Sanders and Trump were embedded in the emerging left and right responses to neoliberalism's crisis. Specifically, Sanders' energetic campaign -- which was undoubtedly enabled by the rise of the Occupy movement -- proposed a decidedly more "commongood" path. Higher wages for working people. Taxes on the rich, specifically the captains of the creditocracy.
Universal health care. Free higher education. Fair trade. The repeal of Citizens United. Trump offered a different response to the crisis. Like Sanders, he railed against global trade deals like NAFTA and the Trans-Pacific Partnership (TPP). However, Trump's victory was fueled by right neoliberalism's culture of cruelty. While Sanders tapped into and mobilized desires for a more egalitarian and democratic future, Trump's promise was nostalgic, making America "great again" -- putting the nation back on "top of the world," and implying a time when women were "in their place" as male property, and minorities and immigrants were controlled by the state.
Thus, what distinguished Trump's campaign from more traditional Republican campaigns was that it actively and explicitly pitted one group's equality (white men) against everyone else's (immigrants, women, Muslims, minorities, etc.). As Catherine Rottenberg suggests, Trump offered voters a choice between a multiracial society (where folks are increasingly disadvantaged and dispossessed) and white supremacy (where white people would be back on top). However, "[w]hat he neglected to state," Rottenberg writes,
is that neoliberalism flourishes in societies where the playing field is already stacked against various segments of society, and that it needs only a relatively small select group of capital-enhancing subjects, while everyone else is ultimately dispensable. 1
In other words, Trump supporters may not have explicitly voted for neoliberalism, but that's what they got. In fact, as Rottenberg argues, they got a version of right neoliberalism "on steroids" -- a mix of blatant plutocracy and authoritarianism that has many concerned about the rise of U.S. fascism.
We can't know what would have happened had Sanders run against Trump, but we can think seriously about Trump, right and left neoliberalism, and the crisis of neoliberal hegemony. In other words, we can think about where and how we go from here. As I suggested in the previous chapter, if we want to construct a new world, we are going to have to abandon the entangled politics of both right and left neoliberalism; we have to reject the hegemonic frontiers of both disposability and marketized equality. After all, as political philosopher Nancy Fraser argues, what was rejected in the election of 2016 was progressive, left neoliberalism.
While the rise of hyper-right neoliberalism is certainly nothing to celebrate, it does present an opportunity for breaking with neoliberal hegemony. We have to proceed, as Gary Younge reminds us, with the realization that people "have not rejected the chance of a better world. They have not yet been offered one."'
Mark Fisher, the author of Capitalist Realism, put it this way:
The long, dark night of the end of history has to be grasped as an enormous opportunity. The very oppressive pervasiveness of capitalist realism means that even glimmers of alternative political and economic possibilities can have a disproportionately great effect. The tiniest event can tear a hole in the grey curtain of reaction which has marked the horizons of possibility under capitalist realism. From a situation in which nothing can happen, suddenly anything is possible again.4
I think that, for the first time in the history of U.S. capitalism, the vast majority of people might sense the lie of liberal, capitalist democracy. They feel anxious, unfree, disaffected. Fantasies of the good life have been shattered beyond repair for most people. Trump and this hopefully brief triumph of right neoliberalism will soon lay this bare for everyone to see. Now, with Trump, it is absolutely clear: the rich rule the world; we are all disposable; this is no democracy. The question becomes: How will we show up for history? Will there be new stories, ideas, visions, and fantasies to attach to? How can we productively and meaningful intervene in the crisis of neoliberalism? How can we "tear a hole in the grey curtain" and open up better worlds? How can we put what we've learned to use and begin to imagine and build a world beyond living in competition? I hope our critical journey through the neoliberal conjuncture has enabled you to begin to answer these questions.
More specifically, in recent decades, especially since the end of the Cold War, our common-good sensibilities have been channeled into neoliberal platforms for social change and privatized action, funneling our political energies into brand culture and marketized struggles for equality (e.g., charter schools, NGOs and non-profits, neoliberal antiracism and feminism). As a result, despite our collective anger and disaffected consent, we find ourselves stuck in capitalist realism with no real alternative. Like the neoliberal care of the self, we are trapped in a privatized mode of politics that relies on cruel optimism; we are attached, it seems, to politics that inspire and motivate us to action, while keeping us living in competition.
To disrupt the game, we need to construct common political horizons against neoliberal hegemony. We need to use our common stories and common reason to build common movements against precarity -- for within neoliberalism, precarity is what ultimately has the potential to thread all of our lives together. Put differently, the ultimate fault line in the neoliberal conjiuicture is the way it subjects us all to precarity and the biopolitics of disposability, thereby creating conditions of possibility for new coalitions across race, gender, citizenship, sexuality, and class. Recognizing this potential for coalition in the face of precarization is the most pressing task facing those who are yearning for a new world. The question is: How do we get there? How do we realize these coalitional potentialities and materialize common horizons?
Ultimately, mapping the neoliberal conjuncture through everyday life in enterprise culture has not only provided some direction in terms of what we need; it has also cultivated concrete and practical intellectual resources for political interv ention and social interconnection -- a critical toolbox for living in common. More specifically, this book has sought to provide resources for thinking and acting against the four Ds: resources for engaging in counter-conduct, modes of living that refuse, on one hand, to conduct one's life according to the norm of enterprise, and on the other, to relate to others through the norm of competition. Indeed, we need new ways of relating, interacting, and living as friends, lovers, workers, vulnerable bodies, and democratic people if we are to write new stories, invent new govemmentalities, and build coalitions for new worlds.
Against Disimagination: Educated Hope and Affirmative Speculation
We need to stop turning inward, retreating into ourselves, and taking personal responsibility for our lives (a task which is ultimately impossible). Enough with the disimagination machine! Let's start looking outward, not inward -- to the broader structures that undergird our lives. Of course, we need to take care of ourselves; we must survive. But I firmly believe that we can do this in ways both big and small, that transform neoliberal culture and its status-quo stories.
Here's the thing I tell my students all the time. You cannot escape neoliberalism. It is the air we breathe, the water in which we swim. No job, practice of social activism, program of self-care, or relationship will be totally free from neoliberal impingements and logics. There is no pure "outside" to get to or work from -- that's just the nature of the neoliberalism's totalizing cultural power. But let's not forget that neoliberalism's totalizing cultural power is also a source of weakness. Potential for resistance is everywhere, scattered throughout our everyday lives in enterprise culture. Our critical toolbox can help us identify these potentialities and navigate and engage our conjuncture in ways that tear open up those new worlds we desire.
In other words, our critical perspective can help us move through the world with what Henry Giroux calls educated hope. Educated hope means holding in tension the material realities of power and the contingency of history. This orientation of educated hope knows very well what we're up against. However, in the face of seemingly totalizing power, it also knows that neoliberalism can never become total because the future is open. Educated hope is what allows us to see the fault lines, fissures, and potentialities of the present and emboldens us to think and work from that sliver of social space where we do have political agency and freedom to construct a new world. Educated hope is what undoes the power of capitalist realism. It enables affirmative speculation (such as discussed in Chapter 5), which does not try to hold the future to neoliberal horizons (that's cruel optimism!), but instead to affirm our commonalities and the potentialities for the new worlds they signal. Affirmative speculation demands a different sort of risk calculation and management. It senses how little we have to lose and how much we have to gain from knocking the hustle of our lives.
Against De-democratization: Organizing and Collective Coverning
We can think of educated hope and affirmative speculation as practices of what Wendy Brown calls "bare democracy" -- the basic idea that ordinary' people like you and me should govern our lives in common, that we should critique and try to change our world, especially the exploitative and oppressive structures of power that maintain social hierarchies and diminish lives. Neoliberal culture works to stomp out capacities for bare democracy by transforming democratic desires and feelings into meritocratic desires and feelings. In neoliberal culture, utopian sensibilities are directed away from the promise of collective utopian sensibilities are directed away from the promise of collective governing to competing for equality.
We have to get back that democractic feeling! As Jeremy Gilbert taught us, disaffected consent is a post-democratic orientation. We don't like our world, but we don't think we can do anything about it. So, how do we get back that democratic feeling? How do we transform our disaffected consent into something new? As I suggested in the last chapter, we organize. Organizing is simply about people coming together around a common horizon and working collectively to materialize it. In this way, organizing is based on the idea of radical democracy, not liberal democracy. While the latter is based on formal and abstract rights guaranteed by the state, radical democracy insists that people should directly make the decisions that impact their lives, security, and well-being. Radical democracy is a practice of collective governing: it is about us hashing out, together in communities, what matters, and working in common to build a world based on these new sensibilities.
The work of organizing is messy, often unsatisfying, and sometimes even scary. Organizing based on affirmative speculation and coalition-building, furthermore, will have to be experimental and uncertain. As Lauren Berlant suggests, it means "embracing the discomfort of affective experience in a truly open social life that no
one has ever experienced." Organizing through and for the common "requires more adaptable infrastructures. Keep forcing the existing infrastructures to do what they don't know how to do. Make new ways to be local together, where local doesn't require a physical neighborhood." 5 What Berlant is saying is that the work of bare democracy requires unlearning, and detaching from, our current stories and infrastructures in order to see and make things work differently. Organizing for a new world is not easy -- and there are no guarantees -- but it is the only way out of capitalist realism.
Against Disposability: Radical Equality
Getting back democratic feeling will at once require and help us lo move beyond the biopolitics of disposability and entrenched systems of inequality. On one hand, organizing will never be enough if it is not animated by bare democracy, a sensibility that each of us is equally important when it comes to the project of determining our lives in common. Our bodies, our hurts, our dreams, and our desires matter regardless of our race, gender, sexuality, or citizenship, and regardless of how r much capital (economic, social, or cultural) we have. Simply put, in a radical democracy, no one is disposable. This bare-democratic sense of equality must be foundational to organizing and coalition-building. Otherwise, we will always and inevitably fall back into a world of inequality.
On the other hand, organizing and collective governing will deepen and enhance our sensibilities and capacities for radical equality. In this context, the kind of self-enclosed individualism that empowers and underwrites the biopolitics of disposability melts away, as we realize the interconnectedness of our lives and just how amazing it feels to
fail, we affirm our capacities for freedom, political intervention, social interconnection, and collective social doing.
Against Dispossession: Shared Security and Common Wealth
Thinking and acting against the biopolitics of disposability goes hand-in-hand with thinking and acting against dispossession. Ultimately, when we really understand and feel ourselves in relationships of interconnection with others, we want for them as we want for ourselves. Our lives and sensibilities of what is good and just are rooted in radical equality, not possessive or self-appreciating individualism. Because we desire social security and protection, we also know others desire and deserve the same.
However, to really think and act against dispossession means not only advocating for shared security and social protection, but also for a new society that is built on the egalitarian production and distribution of social wealth that we all produce. In this sense, we can take Marx's critique of capitalism -- that wealth is produced collectively but appropriated individually -- to heart. Capitalism was built on the idea that one class -- the owners of the means of production -- could exploit and profit from the collective labors of everyone else (those who do not own and thus have to work), albeit in very different ways depending on race, gender, or citizenship. This meant that, for workers of all stripes, their lives existed not for themselves, but for others (the appropriating class), and that regardless of what we own as consumers, we are not really free or equal in that bare-democratic sense of the word.
If we want to be really free, we need to construct new material and affective social infrastructures for our common wealth. In these new infrastructures, wealth must not be reduced to economic value; it must be rooted in social value. Here, the production of wealth does not exist as a separate sphere from the reproduction of our lives. In other words, new infrastructures, based on the idea of common wealth, will not be set up to exploit our labor, dispossess our communities, or to divide our lives. Rather, they will work to provide collective social resources and care so that we may all be free to pursue happiness, create beautiful and/or useful things, and to realize our potential within a social world of living in common. Crucially, to create the conditions for these new, democratic forms of freedom rooted in radical equality, we need to find ways to refuse and exit the financial networks of Empire and the dispossessions of creditocracy, building new systems that invite everyone to participate in the ongoing production of new worlds and the sharing of the wealth that we produce in common.
It's not up to me to tell you exactly where to look, but I assure you that potentialities for these new worlds are everywhere around you.
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Mar 23, 2017 | economistsview.typepad.com
"Listening to this show by MSNB is so disguising that I lost any respect for it. "I actually jumped the gun. That's does not mean that it should not be viewed. There are some positive aspects of MSNBC http://www.msnbc.com/rachel-maddow-show
Here is an except from "A Colony in a Nation" by Chris Hayes that she recently discussed (Chris Hayes is also the author of Twilight of the Elites )
...we have built a colony in a nation, not in the classic Marxist sense but in the deep sense we can appreciate as a former colony ourselves: A territory that isn't actually free. A place controlled from outside rather than within. A place where the mechanisms of representation don't work enough to give citizens a sense of ownership over their own government. A place where the law is a tool of control rather than a foundation for prosperity.
... ... ...
A Colony in a Nation is not primarily a history lesson, though it does provide a serious, empathetic look at the problems facing the Colony, as well as at the police officers tasked with making rapid decisions in a gun-rich environment.
Hayes takes us through his less-than-successful experience putting himself in the latter's shoes by trying out an unusual training tool, a virtually reality simulator: "We're only one scene in, and already the self-righteous liberal pundit has drawn his weapon on an unarmed man holding a cinder block."
Elsewhere, Hayes examines his own experiences with the law, such as an incident when he was almost caught accidentally smuggling "about thirty dollars' worth of marijuana stuffed into my eyeglass case" into the 2000 Republican National Convention. Hayes got away without so much as a slap on the wrist, protected by luck, circumstances and privilege.
For black men living in the Colony, encounters with the police are much more fraught. Racial profiling and minor infractions can lead to "being swept into the vortex of a penal system that captures more than half the black men his age in his neighborhood... an adulthood marked by prison, probation, and dismal job prospects...."
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Oct 30, 2017 | www.nakedcapitalism.com
Not only Backhouse (2005) , but also Adam Curtis(2011) , the British documentary film-maker also researched how Fisher created his global think-tank network, spreading the libertarian values of individual and economic – but never social and political – freedom, and also the freedom for capital owners from the state.
According to Curtis (2011) , the „ideologically motivated PR organisations" intended to achieve a technocratic, elitist system, which preserves actual power structures. As he notes, the successful businessmen created The Atlas Economic Research Foundation in 1981, which established 150 think-tanks around the globe. These institutions were set up based on the model of Institute for Economic Affairs (IEA), a think tank founded in 1955 by Fisher, which is a good example how the marginalized group of neoliberal thinkers got into intellectual and political power.
Today, "more than 450 free-market organizations in over 90 countries" serve the "cause of liberty" through the network. The network of Fisher was largely directed by the members of Mont Pelerin Society (Djelic, 2014).
Enquiring Mind , October 29, 2017 at 10:48 am
Jeremy Grimm , October 29, 2017 at 3:50 pmThis think-tank network wasn't for creating new ideas, but for being a gatekeeper and disseminating the existing set of ideas, and the „philosophy of freedom".
Awareness of gatekeeper roles and their ramifications is one issue of grave concern to many citizens. There are variations of the role playing in different parts of society whether in the Ivory Tower, Think Tanks (self-designated with initial capitals), media or other areas. Recently, that role in media has come under scrutiny as seen during and after the US campaign and election. Who gets to control what appears as news , and will the NY Times editorial board cede any of that, for example?
The increasing impact of social media in dissemination of information and use of influencers represents a type of Barbarians at the Literal Gate. The boards and think tanks won't easily relinquish their positions, any more than the gatekeepers of prior eras would willingly do so.
This era is unsettling to the average person on the street, and particularly to those living on the street, because they have been told one thing with certainty and gravitas and then found out something else that was materially opposed. In the meantime, truth continues to seek an audience.
The assertion you selected from today's post seems clearly false to me. The think-tank organizations definitely create new ideas and often conflict with each other. Their topics and views also tend to dominate discussions and steal the oxygen from outside ideas.
They are schools of agnotology flooding discussion of every policy with their "answers" and contributing to the Marketplace of ideas.
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Aug 18, 2017 | ronpaulinstitute.org
Weapons Money Intended for Economic Development Being Secretly Diverted to Lobbying Alex Emmons Aug 18, 2017
The United Arab Emirates created a "slush fund" using money meant for domestic economic development projects and funneled it to a high-profile think tank in the United States, emails obtained by The Intercept show.
Last week, The Intercept reported that the UAE gave a $20 million grant to the Middle East Institute, flooding a well-regarded D.C. think tank with a monetary grant larger than its annual budget . According to an email from Richard Clarke, MEI's chairman of the board, the UAE got the money from offset investments -- development investments by international companies that are made as part of trade agreements.
The idea behind offset agreements is simple: When a country buys weapons from a firm overseas, it pumps a large amount of money out of its economy, instead of investing in its own defense industry or in other domestic projects. So to make large weapons deals more attractive, arms companies offer programs to "offset" that effect. As part of a weapons package, they often sign an agreement to invest in the country's economy, either in defense or civilian sectors.
Offsets provide a way to sell weapons at inflated prices, when companies offer juicier offset packages. Critics say the lack of transparency in how offset investments are carried out leaves a window open for a form of legalized corruption. The emails lift a veil on what has long been an obscure element of the arms trade.
According to an email from Clarke, the UAE accepted unpaid offset obligations as cash payments to a large financial firm called Tawazun Holding. Tawazun sent the $20 million to a UAE think tank called the Emirates Center for Strategic Studies and Research . ECSSR then began sending that money to the Middle East Institute, a prestigious D.C. think tank that has a history of promoting arms sales to Gulf dictatorships. ...
So essentially, in a roundabout way, the UAE took money from international firms that was meant for economic development and funneled it to a supportive think tank in the United States.
Fair use excerpt. Full article here .
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Jun 09, 2017 | www.amazon.com
It was during the spring of 2006 that I began this project. I wanted to investigate whether the growing volume of criticism toward Russia, sometimes by people who could hardly claim to be knowledgeable about the country, concealed a political agenda.
As I researched the subject, I discovered evidence of Russophobia shared by different circles within the American political class and promoted through programs and conferences at various think tanks, congressional testimonies, activities of NGOs, and the media. Russophobia is not merely a critique of Russia, but a critique beyond any sense of proportion, waged with the purpose of undermining the nation's political reputation.
... ... ....
Although a critical analysis of Russia and its political system is entirely legitimate, the issue is the balance of such analysis. Russia's role in the world is growing, yet many U.S. politicians feel that Russia doesn't matter in the global arena. Preoccupied with international issues, such as Iraq and Afghanistan, they find it difficult to accept that they now have to nego- tiate and coordinate their international policies with a nation that only yesterday seemed so weak, introspective, and dependent on the West. To these individuals, Russophobia is merely a means to pressure the Kremlin into submitting to the United States in the execution of its grand plans to control the world's most precious resources and geostrategic sites. In the meantime, Russia has grown increasingly resentful, and the war in the Caucasus in August 2008 has demonstrated that Russia is prepared to act unilaterally to stop what it views as US unilateralism in the former Soviet region.
And some in Moscow are tempted to provoke a much greater confrontation with Western states. The attitude of ignorance and self-righteousness toward Russia tells us volumes about the United States' lack of preparation for the twenty-first century's central challenges that include political instability, weapons proliferation, and energy insecurity. Despite the dislike of Russia by a considerable number of American elites, this attitude is far from universally shared. Many Americans understand that Russia has gone a long way from communism and that the overwhelming support for Putin's policies at home cannot be adequately explained by high oil prices and the Kremlin's manipulation of the public-despite the frequent assertions of Russophobic observers.
Balanced analysts are also aware that many Russian problems are typical difficulties that nations encounter with state-building, and should not be presented as indicative of Russia's "inherent drive" to autocracy or empire. As the United States and Russia move further to the twenty-first century, it will be increasingly important to redefine the relationship between the two nations in a mutually enriching way.
Political and cultural phobias are, of course, not limited to those of an anti-Russian nature. For instance, Russia has its share of America-phobia -- a phenomenon that I have partly researched in my book Whose World Order (Notre Dame, 2004) and in several articles. Anti-American attitudes are strongly present in Russian media and cultural products, as a response to the US policies of nuclear, energy, and military supremacy in the world. Extreme hegemonic policies tend to provoke an extreme response, and Russian nationalist movements and often commentators react harshly to what they view as unilateral encroachment on Russia's political system and foreign policy interests. Russia's reactions to these policies by the United States are highly negative and frequently inadequate, but hardly more extreme than the American hegemonic and imperial discourse.
The Anti-Russian Lobby
When the facile optimism was disappointed, Western euphoria faded, and Russophobia returned ... The new Russophobia was expressed not by the governments, but in the statements of out-of-office politicians, the publications of academic experts, the sensational writings of jour- nalists, and the products of the entertainment industry. (Rodric Braithwaite, Across the Moscow River, 2002)1....
Russophobia is not a myth, not an invention of the Red-Brovvns, but a real phenomenon of political thought in the main political think tanks in the West . .. [T]he Yeltsin-Kozyrev's pro-U.S. "giveaway game" was approved across the ocean. There is reason to say that the period in ques- tion left the West with the illusion that Russia's role was to serve Washington's interests and that it would remain such in the future. (Sergei Mikoyati, International Affairs /October 2006j)2This chapter formulates a theory of Russophobia and the anti-Russian lobby's influence on the U.S. Russia policy. 1 discuss the Lobby's objec- tives, its tactics to achieve them, the history of its formation and rise to prominence, and the conditions that preserved its influence in the after- math of 9/11.1 argue that Russophobia has been important to American hegemonic elites in pressuring Russia for economic and political conces- sions in the post-Cold War era.
1. Goals and Means
Objectives
The central objective of the Lobby has been to preserve and strengthen America's power in the post-Cold War world through imperial or hegemonic policies. The Lobby has viewed Russia with its formidable nuclear power, energy reserves, and important geostrategic location as a major obstacle in achieving this objective. Even during the 1990s, when Russia looked more like a failing state3 than one capable of projecting power, some members of the American political class were worried about the future revival of the Eurasian giant as a revisionist power. In their percep- tion, it was essential to keep Russia in a state of military and economic weakness-not so much out of emotional hatred for the Russian people and their culture, but to preserve American security and promote its val- ues across the world. To many within the Lobby, Russophobia became a useful device for exerting pressures on Russia and controlling its policies. Although to some the idea of undermining and, possibly, dismembering Russia was personal, to others it was a necessity of power dictated by the realities of international politics.
According to this dominant vision, there was simply no place in this "New American Century" for power competitors, and America was destined eventually to assume control over potentially threatening military capabilities and energy reserves of others. As the two founders of the Project for the New' American Century (PNAC), William Kristol and Robert Kagan, asserted when referring to the large military forces of Russia and China, "American statesmen today ought to recognize that their charge is not to await the arrival of the next great threat, but rather to shape the international environment to prevent such a threat from arising in the first place."4
Russia was either to agree to assist the United States in preserving its world-power status or be forced to agree. It had to either follow the U.S. interpretation of world affairs and develop a political and economic system sufficiently open to American influences or live as a pariah state, smeared by accusations of pernicious behavior, and in constant fear for its survival in the America-centered world. As far as the U.S. hegemonic elites were concerned, no other choice was available.
This hegemonic mood was largely consistent with mainstream ideas within the American establishment immediately following the end of the Cold War. For example, 1989 saw the unification of Germany and the further meltdown of the Soviet Union, which some characterized as "the best period of U.S. foreign policy ever."5 President Jimmy Carter's former national security advisor Zbigniew Brzezinski envisioned the upcoming victory of the West by celebrating the Soviet Union's "grand failure."6
In his view, the Soviet "totalitarian" state was incapable of reform. Communism's decline was therefore irreversible and inevitable. It would have made the system's "practice and its dogma largely irrelevant to the human conditions," and communism would be remembered as the twentieth century's "political and intellectual aberration."7 Other com- mentators argued the case for a global spread of Western values. In 1990 Francis Fukuyama first formulated his triumphalist "end of history" thesis, arguing a global ascendancy of the Western-style market democracy.®
... ... ...
Marc Plattner declared the emergence of a "world with one dominant principle of legitimacy, democracy."9 When the Soviet system had indeed disintegrated, the leading establishment journal Foreign Affairs pronounced that "the Soviet system collapsed because of what it was, or more exactly, because of what it was not. The West 'won' because of what the democracies were-because they were free, prosperous and successful, because they did justice, or convincingly tried to do so."10 Still others, such as Charles Krauthammer, went as far as to proclaim the arrival of the United States' "unipolar moment," a period in which only one super- power, the United States, would stand above the rest of the world in its military, economic, and ideological capacity.11
In this context of U.S. triumphalism, at least some Russophobes expected Russia to follow the American agenda. Still, they were worried that Russia may still have surprises to offer and would recover as an enemy.12
Soon after the Soviet disintegration, Russia indeed surprised many, although not quite in the sense of presenting a power challenge to the United States. Rather, the surprise was the unexpectedly high degree of corruption, social and economic decay, and the rapid disappointment of pro-Western reforms inside Russia. By late 1992, the domestic economic situation was much worsened, as the failure of Western-style shock ther- apy reform put most of the population on the verge of poverty. Russia was preoccupied not with the projection of power but with survival, as poverty, crime, and corruption degraded it from the status of the indus- trialized country it once was. In the meantime, the economy was largely controlled by and divided among former high-ranking party and state officials and their associates. The so-called oligarchs, or a group of extremely wealthy individuals, played the role of the new post-Soviet nomenklatura; they influenced many key decisions of the state and suc- cessfully blocked the development of small- and medium-sized business in the country.13 Under these conditions, the Russophobes warned that the conditions in Russia may soon be ripe for the rise of an anti-Western nationalist regime and that Russia was not fit for any partnership with the United States.14
The mid-1990s saw the emergence of post-Soviet Russophobia. The Lobby's ideology was not principally new, as it still contained the three central myths of Sovietophobia left over from the Cold War era: Russia is inherently imperialist, autocratic, and anti-Western. This ideology now had to be modified to the new conditions and promoted politically, which required a tightening of the Lobby's unity, winning new allies within the establishment, and gaining public support.15
... ... ...
The impact of structural and institutional factors is further reinforced by policy factors, such as the divide within the policy community and the lack of presidential leadership. Not infrequently, politicians tend to defend their personal and corporate interests, and lobbying makes a difference in the absence of firm policy commitments.
Experts recognize that the community of Russia watchers is split and that the split, which goes all the way to the White House, has been responsible for the absence of a coherent policy toward the country. During the period of 2003-2008, Vice President Richard Dick Cheney formed a cohesive and bipartisan group of Russia critics, who pushed for a more confrontational approach with the Kremlin. The brain behind the invasion of Iraq, Cheney could not tolerate opposition to what he saw as a critical step in establishing worldwide US hegemony. He was also harboring the idea of controlling Russia's energy reserves.91
Since November 2004, when the administration launched a review of its policy on Russia,92 Cheney became a critically important voice in whom the Lobby found its advocate. Secretaries of State Condoleezza Rice and, until November 2004, Colin Powell opposed the vice president's approach, arguing for a softer and more accommodating style in relations with Moscow.
President Bush generally sided with Rice and Powell, but he proved unable to form a consistent Russia policy. Because of America's involvement in the Middle East, Bush failed to provide the leadership committed to devising mutually acceptable rules in relations with Russia that could have prevented the deterioration in their relationship. Since the end of 2003, he also became doubtful about the direction of Russia's domestic transformation.93 As a result, the promising post-9/11 cooperation never materialized. The new cold war and the American Sense of History
It's time we start thinking of Vladimir Putin's Russia as an enemy of the United States. (Bret Stephens, "Russia: The Enemy," The Wall Street Journal, November 28, 2006)
If today's reality of Russian politics continues ... then there is the real risk that Russia's leadership will be seen, externally and internally, as illegitimate. (John Edwards and Jack Kemp, "We Need to Be Tough with Russia," International Herald Tribune, July 12, 2006)
On Iran, Kosovo, U.S. missile defense, Iraq, the Caucasus and Caspian basin, Ukraine-the list goes on-Russia puts itself in conflict with the U.S. and its allies . . . here are worse models than the united Western stand that won the Cold War the first time around.
("Putin Institutionalized," The Wall Street Journal, November 19, 2007) In order to derail the U.S.-Russia partnership, the Lobby has sought to revive the image of Russias as an enemy of the United States. The Russophobic groups have exploited important differences between the two countries' historical self-perceptions, presenting those differences as incompatible.
1. Contested History
Two versions of history
The story of the Cold War as told from the U.S. perspective is about American ideas of Western-style democracy as rescued from the Soviet threat of totalitarian communism. Although scholars and politicians disagreed over the methods of responding to the Soviet threat, they rarely questioned their underlying assumptions about history and freedom.' It therefore should not come as surprise that many in the United States have interpreted the end of the Cold War as a victory of the Western freedom narrative. Celebrating the Soviet Union's "grand failure"-as Zbigniew Brzezinski put it2-the American discourse assumed that from now on there would be little resistance to freedom's worldwide progression. When Francis Fukuyama offered his bold summary of these optimistic feelings and asserted in a famous passage that "what we may be witnessing is not just the end of the Cold War... but the end of history as such,"3 he meant to convey the disappearance of an alternative to the familiar idea of free- dom, or "the universalization of Western liberal democracy as the final form of human government."4
In Russia, however, the Cold War story has been mainly about sovereignty and independence, rather than Western-style liberalism. To many Russians it is a story of freedom from colonization by the West and of preserving important attributes of sovereign statehood.
In a world where neocolonialism and cultural imperialism are potent forces, the idea of freedom as independence continues to have strong international appeal and remains a powerful alternative to the notion of liberal democracy. Russians formulated the narrative of independence centuries ago, as they successfully withstood external invasions from Napoleon to Hitler. The defeat of the Nazi regime was important to the Soviets because it legitimized their claims to continue with the tradition of freedom as independence.
The West's unwillingness to recognize the importance of this legitimizing myth in the role of communist ideology has served as a key reason for the Cold War.5 Like their Western counterparts, the Soviets were debating over methods but not the larger assumptions that defined their struggle.
This helps to understand why Russians could never agree with the Western interpretation of the end of the Cold War. What they find missing from the U.S. narrative is the tribute to Russia's ability to defend its freedom from expansionist ambitions of larger powers. The Cold War too is viewed by many Russians as a necessarily defensive response to the West's policies, and it is important that even while occupying Eastern Europe, the Soviets never celebrated the occupation, emphasizing instead the war vic- tory.6 The Russians officially admitted "moral responsibility" and apolo- gized for the Soviet invasions of Hungary and Czechoslovakia.7 They may be prepared to fully recognize the postwar occupation of Eastern Europe, but only in the context of the two sides' responsibility for the Cold War. Russians also find it offensive that Western VE Day celebrations ignore the crucial contribution of Soviet troops, even though none of the Allies, as one historian put it, "paid dearer than the Soviet Union for the victory. Forty Private Ivans fell in battle to every Private Ryan."8 Victory over Nazi Germany constitutes, as another Russian wrote, "the only undisputable foundation of the national myth."9
If the two sides are to build foundations for a future partnership, the two historical narratives must be bridged. First, it is important to recognize the difficulty of negotiating a common meaning of freedom and accept that the idea of freedom may vary greatly across nations. The urge for freedom may be universal, but its social content is a specific product of national his- tories and local circumstances. For instance, the American vision of democracy initially downplayed the role of elections and emphasized selection by merit or meritocracy. Under the influence of the Great Depression, the notion of democracy incorporated a strong egalitarian and poverty-fighting component, and it was not until the Cold War- and not without its influence-that democracy has become associated with elections and pluralistic institutions.10 Second, it is essential to acknowledge the two nations' mutual respon- sibility for the misunderstanding that has resulted in the Cold War. A historically sensitive account will recognize that both sides were thinking in terms of expanding a territorial space to protect their visions of security. While the Soviets wanted to create a buffer zone to prevent a future attack from Germany, the Americans believed in reconstructing the European continent in accordance with their ideas of security and democracy. A mutual mistrust of the two countries' leaders exacerbated the situation, making it ever more difficult to prevent a full-fledged political confronta- tion. Western leaders had reason to be suspicious of Stalin, who, in his turn, was driven by the perception of the West's greed and by betrayals from the dubious Treaty of Versailles to the appeasement of Hitler in Munich. Arrangements for the post-World War II world made by Britain, the USSR, and the United States proved insufficient to address these deep-seated suspicions.
In addition, most Eastern European states created as a result of the Versailles Treaty were neither free nor democratic and collaborated with Nazi Germany in its racist and expansionist policies. The European post-World War 1 security system was not working properly, and it was only a matter of time before it would have to be transformed.
Third, if an agreeable historical account is to emerge, it would have to accept that the end of the Cold War was a product of mutually beneficial a second Cold War, "it also does not want the reversal of the U.S. geopolitical gains that it made in the decade or so after the end of the Cold War."112 Another expert asked, "What possible explanation is there for the fact that today-at a moment when both the U.S. and Russia face the common enemy of Islamist terrorism-hard-liners within the Bush administration, and especially in the office of Vice President Dick Cheney, are arguing for a new tough line against Moscow along the lines of a scaled-down Cold War?"113
Yet another analyst wrote "at the Cold War's end, the United States was given one of the great opportunities of history: to embrace Russia, the largest nation on earth, as partner, friend, ally. Our mutual interests meshed almost perfectly. There was no ideological, territorial, his- toric or economic quarrel between us, once communist ideology was interred. We blew it. We moved NATO onto Russia's front porch, ignored her valid interests and concerns, and, with our 'indispensable-nation' arrogance, treated her as a defeated power, as France treated Weimar Germany after Versailles."114
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It was during the spring of 2006 that I began this project. I wanted to investigate whether the growing volume of criticism toward Russia, sometimes by people who could hardly claim to be knowledgeable about the country, concealed a political agenda.
As I researched the subject, I discovered evidence of Russophobia shared by different circles within the American political class and promoted through programs and conferences at various think tanks, congressional testimonies, activities of NGOs, and the media. Russophobia is not merely a critique of Russia, but a critique beyond any sense of proportion, waged with the purpose of undermining the nation's political reputation.
... ... ....
Although a critical analysis of Russia and its political system is entirely legitimate, the issue is the balance of such analysis. Russia's role in the world is growing, yet many U.S. politicians feel that Russia doesn't matter in the global arena. Preoccupied with international issues, such as Iraq and Afghanistan, they find it difficult to accept that they now have to nego- tiate and coordinate their international policies with a nation that only yesterday seemed so weak, introspective, and dependent on the West. To these individuals, Russophobia is merely a means to pressure the Kremlin into submitting to the United States in the execution of its grand plans to control the world's most precious resources and geostrategic sites. In the meantime, Russia has grown increasingly resentful, and the war in the Caucasus in August 2008 has demonstrated that Russia is prepared to act unilaterally to stop what it views as US unilateralism in the former Soviet region.
And some in Moscow are tempted to provoke a much greater confrontation with Western states. The attitude of ignorance and self-righteousness toward Russia tells us volumes about the United States' lack of preparation for the twenty-first century's central challenges that include political instability, weapons proliferation, and energy insecurity. Despite the dislike of Russia by a considerable number of American elites, this attitude is far from universally shared. Many Americans understand that Russia has gone a long way from communism and that the overwhelming support for Putin's policies at home cannot be adequately explained by high oil prices and the Kremlin's manipulation of the public-despite the frequent assertions of Russophobic observers.
Balanced analysts are also aware that many Russian problems are typical difficulties that nations encounter with state-building, and should not be presented as indicative of Russia's "inherent drive" to autocracy or empire. As the United States and Russia move further to the twenty-first century, it will be increasingly important to redefine the relationship between the two nations in a mutually enriching way.
Political and cultural phobias are, of course, not limited to those of an anti-Russian nature. For instance, Russia has its share of America-phobia -- a phenomenon that I have partly researched in my book Whose World Order (Notre Dame, 2004) and in several articles. Anti-American attitudes are strongly present in Russian media and cultural products, as a response to the US policies of nuclear, energy, and military supremacy in the world. Extreme hegemonic policies tend to provoke an extreme response, and Russian nationalist movements and often commentators react harshly to what they view as unilateral encroachment on Russia's political system and foreign policy interests. Russia's reactions to these policies by the United States are highly negative and frequently inadequate, but hardly more extreme than the American hegemonic and imperial discourse.
The Anti-Russian Lobby
When the facile optimism was disappointed, Western euphoria faded, and Russophobia returned ... The new Russophobia was expressed not by the governments, but in the statements of out-of-office politicians, the publications of academic experts, the sensational writings of jour- nalists, and the products of the entertainment industry. (Rodric Braithwaite, Across the Moscow River, 2002)1....
Russophobia is not a myth, not an invention of the Red-Brovvns, but a real phenomenon of political thought in the main political think tanks in the West . .. [T]he Yeltsin-Kozyrev's pro-U.S. "giveaway game" was approved across the ocean. There is reason to say that the period in ques- tion left the West with the illusion that Russia's role was to serve Washington's interests and that it would remain such in the future. (Sergei Mikoyati, International Affairs /October 2006j)2This chapter formulates a theory of Russophobia and the anti-Russian lobby's influence on the U.S. Russia policy. 1 discuss the Lobby's objec- tives, its tactics to achieve them, the history of its formation and rise to prominence, and the conditions that preserved its influence in the after- math of 9/11.1 argue that Russophobia has been important to American hegemonic elites in pressuring Russia for economic and political conces- sions in the post-Cold War era.
1. Goals and Means
Objectives
The central objective of the Lobby has been to preserve and strengthen America's power in the post-Cold War world through imperial or hegemonic policies. The Lobby has viewed Russia with its formidable nuclear power, energy reserves, and important geostrategic location as a major obstacle in achieving this objective. Even during the 1990s, when Russia looked more like a failing state3 than one capable of projecting power, some members of the American political class were worried about the future revival of the Eurasian giant as a revisionist power. In their percep- tion, it was essential to keep Russia in a state of military and economic weakness-not so much out of emotional hatred for the Russian people and their culture, but to preserve American security and promote its val- ues across the world. To many within the Lobby, Russophobia became a useful device for exerting pressures on Russia and controlling its policies. Although to some the idea of undermining and, possibly, dismembering Russia was personal, to others it was a necessity of power dictated by the realities of international politics.
According to this dominant vision, there was simply no place in this "New American Century" for power competitors, and America was destined eventually to assume control over potentially threatening military capabilities and energy reserves of others. As the two founders of the Project for the New' American Century (PNAC), William Kristol and Robert Kagan, asserted when referring to the large military forces of Russia and China, "American statesmen today ought to recognize that their charge is not to await the arrival of the next great threat, but rather to shape the international environment to prevent such a threat from arising in the first place."4
Russia was either to agree to assist the United States in preserving its world-power status or be forced to agree. It had to either follow the U.S. interpretation of world affairs and develop a political and economic system sufficiently open to American influences or live as a pariah state, smeared by accusations of pernicious behavior, and in constant fear for its survival in the America-centered world. As far as the U.S. hegemonic elites were concerned, no other choice was available.
This hegemonic mood was largely consistent with mainstream ideas within the American establishment immediately following the end of the Cold War. For example, 1989 saw the unification of Germany and the further meltdown of the Soviet Union, which some characterized as "the best period of U.S. foreign policy ever."5 President Jimmy Carter's former national security advisor Zbigniew Brzezinski envisioned the upcoming victory of the West by celebrating the Soviet Union's "grand failure."6
In his view, the Soviet "totalitarian" state was incapable of reform. Communism's decline was therefore irreversible and inevitable. It would have made the system's "practice and its dogma largely irrelevant to the human conditions," and communism would be remembered as the twentieth century's "political and intellectual aberration."7 Other com- mentators argued the case for a global spread of Western values. In 1990 Francis Fukuyama first formulated his triumphalist "end of history" thesis, arguing a global ascendancy of the Western-style market democracy.®
... ... ...
Marc Plattner declared the emergence of a "world with one dominant principle of legitimacy, democracy."9 When the Soviet system had indeed disintegrated, the leading establishment journal Foreign Affairs pronounced that "the Soviet system collapsed because of what it was, or more exactly, because of what it was not. The West 'won' because of what the democracies were-because they were free, prosperous and successful, because they did justice, or convincingly tried to do so."10 Still others, such as Charles Krauthammer, went as far as to proclaim the arrival of the United States' "unipolar moment," a period in which only one super- power, the United States, would stand above the rest of the world in its military, economic, and ideological capacity.11
In this context of U.S. triumphalism, at least some Russophobes expected Russia to follow the American agenda. Still, they were worried that Russia may still have surprises to offer and would recover as an enemy.12
Soon after the Soviet disintegration, Russia indeed surprised many, although not quite in the sense of presenting a power challenge to the United States. Rather, the surprise was the unexpectedly high degree of corruption, social and economic decay, and the rapid disappointment of pro-Western reforms inside Russia. By late 1992, the domestic economic situation was much worsened, as the failure of Western-style shock ther- apy reform put most of the population on the verge of poverty. Russia was preoccupied not with the projection of power but with survival, as poverty, crime, and corruption degraded it from the status of the indus- trialized country it once was. In the meantime, the economy was largely controlled by and divided among former high-ranking party and state officials and their associates. The so-called oligarchs, or a group of extremely wealthy individuals, played the role of the new post-Soviet nomenklatura; they influenced many key decisions of the state and suc- cessfully blocked the development of small- and medium-sized business in the country.13 Under these conditions, the Russophobes warned that the conditions in Russia may soon be ripe for the rise of an anti-Western nationalist regime and that Russia was not fit for any partnership with the United States.14
The mid-1990s saw the emergence of post-Soviet Russophobia. The Lobby's ideology was not principally new, as it still contained the three central myths of Sovietophobia left over from the Cold War era: Russia is inherently imperialist, autocratic, and anti-Western. This ideology now had to be modified to the new conditions and promoted politically, which required a tightening of the Lobby's unity, winning new allies within the establishment, and gaining public support.15
... ... ...
The impact of structural and institutional factors is further reinforced by policy factors, such as the divide within the policy community and the lack of presidential leadership. Not infrequently, politicians tend to defend their personal and corporate interests, and lobbying makes a difference in the absence of firm policy commitments.
Experts recognize that the community of Russia watchers is split and that the split, which goes all the way to the White House, has been responsible for the absence of a coherent policy toward the country. During the period of 2003-2008, Vice President Richard Dick Cheney formed a cohesive and bipartisan group of Russia critics, who pushed for a more confrontational approach with the Kremlin. The brain behind the invasion of Iraq, Cheney could not tolerate opposition to what he saw as a critical step in establishing worldwide US hegemony. He was also harboring the idea of controlling Russia's energy reserves.91
Since November 2004, when the administration launched a review of its policy on Russia,92 Cheney became a critically important voice in whom the Lobby found its advocate. Secretaries of State Condoleezza Rice and, until November 2004, Colin Powell opposed the vice president's approach, arguing for a softer and more accommodating style in relations with Moscow.
President Bush generally sided with Rice and Powell, but he proved unable to form a consistent Russia policy. Because of America's involvement in the Middle East, Bush failed to provide the leadership committed to devising mutually acceptable rules in relations with Russia that could have prevented the deterioration in their relationship. Since the end of 2003, he also became doubtful about the direction of Russia's domestic transformation.93 As a result, the promising post-9/11 cooperation never materialized. The new cold war and the American Sense of History
It's time we start thinking of Vladimir Putin's Russia as an enemy of the United States. (Bret Stephens, "Russia: The Enemy," The Wall Street Journal, November 28, 2006)
If today's reality of Russian politics continues ... then there is the real risk that Russia's leadership will be seen, externally and internally, as illegitimate. (John Edwards and Jack Kemp, "We Need to Be Tough with Russia," International Herald Tribune, July 12, 2006)
On Iran, Kosovo, U.S. missile defense, Iraq, the Caucasus and Caspian basin, Ukraine-the list goes on-Russia puts itself in conflict with the U.S. and its allies . . . here are worse models than the united Western stand that won the Cold War the first time around.
("Putin Institutionalized," The Wall Street Journal, November 19, 2007) In order to derail the U.S.-Russia partnership, the Lobby has sought to revive the image of Russias as an enemy of the United States. The Russophobic groups have exploited important differences between the two countries' historical self-perceptions, presenting those differences as incompatible.
1. Contested History
Two versions of history
The story of the Cold War as told from the U.S. perspective is about American ideas of Western-style democracy as rescued from the Soviet threat of totalitarian communism. Although scholars and politicians disagreed over the methods of responding to the Soviet threat, they rarely questioned their underlying assumptions about history and freedom.' It therefore should not come as surprise that many in the United States have interpreted the end of the Cold War as a victory of the Western freedom narrative. Celebrating the Soviet Union's "grand failure"-as Zbigniew Brzezinski put it2-the American discourse assumed that from now on there would be little resistance to freedom's worldwide progression. When Francis Fukuyama offered his bold summary of these optimistic feelings and asserted in a famous passage that "what we may be witnessing is not just the end of the Cold War... but the end of history as such,"3 he meant to convey the disappearance of an alternative to the familiar idea of free- dom, or "the universalization of Western liberal democracy as the final form of human government."4
In Russia, however, the Cold War story has been mainly about sovereignty and independence, rather than Western-style liberalism. To many Russians it is a story of freedom from colonization by the West and of preserving important attributes of sovereign statehood.
In a world where neocolonialism and cultural imperialism are potent forces, the idea of freedom as independence continues to have strong international appeal and remains a powerful alternative to the notion of liberal democracy. Russians formulated the narrative of independence centuries ago, as they successfully withstood external invasions from Napoleon to Hitler. The defeat of the Nazi regime was important to the Soviets because it legitimized their claims to continue with the tradition of freedom as independence.
The West's unwillingness to recognize the importance of this legitimizing myth in the role of communist ideology has served as a key reason for the Cold War.5 Like their Western counterparts, the Soviets were debating over methods but not the larger assumptions that defined their struggle.
This helps to understand why Russians could never agree with the Western interpretation of the end of the Cold War. What they find missing from the U.S. narrative is the tribute to Russia's ability to defend its freedom from expansionist ambitions of larger powers. The Cold War too is viewed by many Russians as a necessarily defensive response to the West's policies, and it is important that even while occupying Eastern Europe, the Soviets never celebrated the occupation, emphasizing instead the war vic- tory.6 The Russians officially admitted "moral responsibility" and apolo- gized for the Soviet invasions of Hungary and Czechoslovakia.7 They may be prepared to fully recognize the postwar occupation of Eastern Europe, but only in the context of the two sides' responsibility for the Cold War. Russians also find it offensive that Western VE Day celebrations ignore the crucial contribution of Soviet troops, even though none of the Allies, as one historian put it, "paid dearer than the Soviet Union for the victory. Forty Private Ivans fell in battle to every Private Ryan."8 Victory over Nazi Germany constitutes, as another Russian wrote, "the only undisputable foundation of the national myth."9
If the two sides are to build foundations for a future partnership, the two historical narratives must be bridged. First, it is important to recognize the difficulty of negotiating a common meaning of freedom and accept that the idea of freedom may vary greatly across nations. The urge for freedom may be universal, but its social content is a specific product of national his- tories and local circumstances. For instance, the American vision of democracy initially downplayed the role of elections and emphasized selection by merit or meritocracy. Under the influence of the Great Depression, the notion of democracy incorporated a strong egalitarian and poverty-fighting component, and it was not until the Cold War- and not without its influence-that democracy has become associated with elections and pluralistic institutions.10 Second, it is essential to acknowledge the two nations' mutual respon- sibility for the misunderstanding that has resulted in the Cold War. A historically sensitive account will recognize that both sides were thinking in terms of expanding a territorial space to protect their visions of security. While the Soviets wanted to create a buffer zone to prevent a future attack from Germany, the Americans believed in reconstructing the European continent in accordance with their ideas of security and democracy. A mutual mistrust of the two countries' leaders exacerbated the situation, making it ever more difficult to prevent a full-fledged political confronta- tion. Western leaders had reason to be suspicious of Stalin, who, in his turn, was driven by the perception of the West's greed and by betrayals from the dubious Treaty of Versailles to the appeasement of Hitler in Munich. Arrangements for the post-World War II world made by Britain, the USSR, and the United States proved insufficient to address these deep-seated suspicions.
In addition, most Eastern European states created as a result of the Versailles Treaty were neither free nor democratic and collaborated with Nazi Germany in its racist and expansionist policies. The European post-World War 1 security system was not working properly, and it was only a matter of time before it would have to be transformed.
Third, if an agreeable historical account is to emerge, it would have to accept that the end of the Cold War was a product of mutually beneficial a second Cold War, "it also does not want the reversal of the U.S. geopolitical gains that it made in the decade or so after the end of the Cold War."112 Another expert asked, "What possible explanation is there for the fact that today-at a moment when both the U.S. and Russia face the common enemy of Islamist terrorism-hard-liners within the Bush administration, and especially in the office of Vice President Dick Cheney, are arguing for a new tough line against Moscow along the lines of a scaled-down Cold War?"113
Yet another analyst wrote "at the Cold War's end, the United States was given one of the great opportunities of history: to embrace Russia, the largest nation on earth, as partner, friend, ally. Our mutual interests meshed almost perfectly. There was no ideological, territorial, his- toric or economic quarrel between us, once communist ideology was interred. We blew it. We moved NATO onto Russia's front porch, ignored her valid interests and concerns, and, with our 'indispensable-nation' arrogance, treated her as a defeated power, as France treated Weimar Germany after Versailles."114
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RGC, June 27, 2017 at 07:27 AM
On April 6, United States President Donald Trump authorized an early morning Tomahawk missile strike on Shayrat Air Base in central Syria in retaliation for what he said was a deadly nerve agent attack carried out by the Syrian government two days earlier in the rebel-held town of Khan Sheikhoun.RGC -> RGC... , June 27, 2017 at 07:33 AMTrump issued the order despite having been warned by the U.S. intelligence community that it had found no evidence that the Syrians had used a chemical weapon.
The available intelligence made clear that the Syrians had targeted a jihadist meeting site on April 4 using a Russian-supplied guided bomb equipped with conventional explosives.
Details of the attack, including information on its so-called high-value targets, had been provided by the Russians days in advance to American and allied military officials in Doha, whose mission is to coordinate all U.S., allied, Syrian and Russian Air Force operations in the region.
Some American military and intelligence officials were especially distressed by the president's determination to ignore the evidence.
"None of this makes any sense," one officer told colleagues upon learning of the decision to bomb. "We KNOW that there was no chemical attack ... the Russians are furious. Claiming we have the real Intel and know the truth ... I guess it didn't matter whether we elected Clinton or Trump."
Within hours of the April 4 bombing, the world's media was saturated with photographs and videos from Khan Sheikhoun. Pictures of dead and dying victims, allegedly suffering from the symptoms of nerve gas poisoning, were uploaded to social media by local activists, including the White Helmets, a first responder group known for its close association with the Syrian opposition.
........................
https://www.welt.de/politik/ausland/article165905578/Trump-s-Red-Line.htmlJune 27, 2017RGC -> RGC... , June 27, 2017 at 07:37 AMHersh's New Syria Revelations Buried From View
by Jonathan Cook
.................
Hersh's investigations have not only undermined evidence-free claims being promoted in the west to destabilise Assad's goverment but threatened a wider US policy seeking to "remake the Middle East". His work has challenged a political and corporate media consensus that portrays Russia's Vladimir Putin, Assad's main ally against the extremist Islamic forces fighting in Syria, as another dangerous monster the West needs to bring into line.
For all these reasons, Hersh has found himself increasingly friendless. The New Yorker refused to publish his Syria investigations. Instead, he had to cross the Atlantic to find a home at the prestigious but far less prominent London Review of Books.
................
https://www.counterpunch.org/2017/06/27/hershs-new-syria-revelations-buried-from-view/
White House Says It Will Fake "Chemical Weapon Attack" In SyriaJohnH -> RGC... , June 27, 2017 at 07:38 AMThe White House claims that the Syrian government is preparing "chemical weapon attacks". This is clearly not the case. Syria is winning the war against the country. Any such attack would clearly be to its disadvantage.
The White House announcement must thereby be understood as preparation for another U.S. attack on Syria in "retaliation" for an upcoming staged "chemical weapon attack" which will be blamed on the Syrian government.
.................
http://www.moonofalabama.org/2017/06/white-house-says-it-will-fake-chemical-weapon-attacks-in-syria.html#moreWhen the going gets tough, the US fakes a chemical weapons attack...JohnH -> RGC... , June 27, 2017 at 07:37 AMSeymour Hirsh has been forced to get his stories published in Europe because the US and UK media have conspired to ban his exposes of their fake news.Hirsh has been a thorn in the side of the national security state ever since his expose of the My Lai massacre in 1969...and they're doing their best to shut him up.
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Jan 30, 2017 | economistsview.typepad.com
libezkova -> Fred C. Dobbs... January 29, 2017 at 08:31 AM , 2017 at 08:31 AMNeoliberal MSM want to control the narrative.libezkova -> libezkova... , January 29, 2017 at 09:24 AMThat's why "alternative facts" should be called an "alternative narrative".
https://opinionator.blogs.nytimes.com/2014/06/09/controlling-the-narrative/?_r=0
== quote ==
Maybe this is the same kind of clinical detachment doctors have to cultivate, a way of distancing oneself from the subject, protecting yourself against a crippling empathy. I won't say that writers or artists are more sensitive than other people, but it may be that they're less able to handle their own emotions.
It may be that art, like drugs, is a way of dulling or controlling pain. Eloquently articulating a feeling is one way to avoid actually experiencing it.
Words are only symbols, noises or marks on paper, and turning the messy, ugly stuff of life into language renders it inert and manageable for the author, even as it intensifies it for the reader.
It's a nerdy, sensitive kid's way of turning suffering into something safely abstract, an object of contemplation.
I suspect most of the people who write all that furious invective on the Internet, professional polemicists and semiliterate commenters alike, are lashing out because they've been hurt -- their sense of fairness or decency has been outraged, or they feel personally wounded or threatened.
"controlling the narrative" by neoliberal MSM is the key of facilitating the neoliberal "groupthink". Much like was in the USSR with "communist" groupthink. This is a step in the direction of the theocratic society (which the USSR definitely was).In other words "controlling the narrative" is the major form of neoliberal MSM "war on reality" as the neoliberal ideology is now completely discredited and can be sustained only by cult-style methods.
They want to invoke your emotions in the necessary direction and those emotions serve as a powerful filter, a firewall which will prevents you from seeing any alternative facts which taken as whole form an "alternative narrative".
It also creates certain taboo, such as "don't publish anything from RT", or you automatically become "Putin's stooge." But some incoherent blabbing of a crazy neocon in Boston Globe is OK.
This is an old and a very dirty game, a variation of method used for centuries by high demand cults:
"Why, of course, the people don't want war. Why would some poor slob on a farm want to risk his life in a war when the best that he can get out of it is to come back to his farm in one piece.
Naturally, the common people don't want war; neither in Russia nor in England nor in America, nor for that matter in Germany. That is understood.
But, after all, it is the leaders of the country who determine the policy and it is always a simple matter to drag the people along, whether it is a democracy or a fascist dictatorship or a Parliament or a Communist dictatorship
Voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same way in any country."
– Hermann Goering (as told to Gustav Gilbert during the Nuremberg trials)
You need to be able to decipher this "suggested" set of emotions and detach it from the set of facts provided by neoliberal MSM. It might help to view things "Sine ira et studio" ( https://en.wikipedia.org/wiki/Sine_ira_et_studio )
That helps to destroy the official neoliberal narrative.
Here skepticism (whether natural or acquired) can be of great help in fighting groupthink pushed by neoliberal MSM.
We are all guilty of this one sidedness, but I think that we need to put some efforts to move in direction of higher level of skepticism toward our own views and probably provide at least links to alternative views.
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Oct 01, 2002 | www.unz.com
Asked to name the defining attributes of the America we wish to become, many liberals would answer that we must realize our manifest destiny since 1776, by becoming more equal, more diverse and more democratic -- and the model for mankind's future.
Equality, diversity, democracy -- this is the holy trinity of the post-Christian secular state at whose altars Liberal Man worships.
But the congregation worshiping these gods is shrinking. And even Europe seems to be rejecting what America has on offer.
In a retreat from diversity, Catalonia just voted to separate from Spain. The Basque and Galician peoples of Spain are following the Catalan secession crisis with great interest.
The right-wing People's Party and far-right Freedom Party just swept 60 percent of Austria's vote, delivering the nation to 31-year-old Sebastian Kurz, whose anti-immigrant platform was plagiarized from the Freedom Party. Summarized it is: Austria for the Austrians!
Lombardy, whose capital is Milan, and Veneto will vote Sunday for greater autonomy from Rome.
South Tyrol (Alto Adige), severed from Austria and ceded to Italy at Versailles, written off by Hitler to appease Mussolini after his Anschluss, is astir anew with secessionism. Even the Sicilians are talking of separation.
By Sunday, the Czech Republic may have a new leader, billionaire Andrej Babis. Writes The Washington Post, Babis "makes a sport of attacking the European Union and says NATO's mission is outdated."
Platform Promise: Keep the Muslim masses out of the motherland.
To ethnonationalists, their countrymen are not equal to all others, but superior in rights. Many may nod at Thomas Jefferson's line that "All men are created equal," but they no more practice that in their own nations than did Jefferson in his
... ... ...
European peoples and parties are today using democratic means to achieve "illiberal" ends. And it is hard to see what halts the drift away from liberal democracy toward the restrictive right. For in virtually every nation, there is a major party in opposition, or a party in power, that holds deeply nationalist views.
European elites may denounce these new parties as "illiberal" or fascist, but it is becoming apparent that it may be liberalism itself that belongs to yesterday. For more and more Europeans see the invasion of the continent along the routes whence the invaders came centuries ago, not as a manageable problem but an existential crisis.
To many Europeans, it portends an irreversible alteration in the character of the countries their grandchildren will inherit, and possibly an end to their civilization. And they are not going to be deterred from voting their fears by being called names that long ago lost their toxicity from overuse.
And as Europeans decline to celebrate the racial, ethnic, creedal and cultural diversity extolled by American elites, they also seem to reject the idea that foreigners should be treated equally in nations created for their own kind.
Europeans seem to admire more, and model their nations more, along the lines of the less diverse America of the Eisenhower era, than on the polyglot America of 2017.
And Europe seems to be moving toward immigration polices more like the McCarran-Walter Act of 1950 than the open borders bill that Sen. Edward Kennedy shepherded through the Senate in 1965.
Kennedy promised that the racial and ethnic composition of the America of the 1960s would not be overturned, and he questioned the morality and motives of any who implied that it would.
Jason Liu , October 20, 2017 at 12:02 pm GMTYes. Fuck yes.TG , October 20, 2017 at 1:10 pm GMTLiberalism is the naivete of 18th century elites, no different than today. Modernity as you know it is unsustainable, mostly because equality isn't real, identity has value for most humans, pluralism is by definition fractious, and deep down most people wish to follow a wise strongman leader who represents their interests first and not a vague set of universalist values.
Blind devotion to liberal democracy is another one of those times when white people take an abstract concept to weird extremes. It is short-sighted and autistically narrow minded. Just because you have an oppressive king doesn't mean everyone should be equals. Just because there was slavery/genocide doesn't mean diversity is good.
The retreat of [neo]liberalism is very visible in Asia. All Southeast Asian states have turned their backs on liberal democracy, especially Indonesia, the Philippines and Myanmar in the last decade. This NYT article notes that liberalism has essentially died in Japan, and that all political contests are now between what the west would consider conservatives: https://www.nytimes.com/2017/10/15/opinion/liberalism-japan-election.html
Good riddance. The idea that egalitarianism is more advanced than hierarchy has always been false, and flies against the long arc of history. Time for nationalists around the world to smash liberal democracy and build a new modernity based on actual humanism, with respect to hierarchies and the primacy of majorities instead of guilt and pathological compassion dressed up as political ideology.
"Liberalism" is not dying. "Liberalism" is dead, and has been since at least 1970.Paul's Ghost , October 20, 2017 at 6:08 pm GMTWhat is today called "Liberalism" and "Conservatism" both are simply corrupted labels applied to the same top-down corporate-fascistic elite rule that I think Mr. Buchanan once referred to as "two wings of the same bird of prey."
Nobody at the top cares about 'diversity.' They care about the easy profits that come from ever cheaper labor. 'Diversity' is not suicide but rather murder: instigated by a small number of very powerful people who have decided that the long-term health of their nations and civilization is less important than short-term profits and power.
Its been dead for nearly 20 years now. Liberalism has long been the Monty Python parrot nailed to its perch. At this point, the term is mainly kept alive in right-wing attacks by people who lack the imagination to change their habitual targets for so long.Miro23 , October 20, 2017 at 6:17 pm GMTTo my eye, the last 'liberal' politician died in a susupicious plane crash in 2000 as the Bush Republicans were taking the White House by their famous 5-4 vote/coup and also needed to claim control of the Senate. So, the last authentic 'liberal' Senator, Paul Wellstone of MN was killed in a suspicious plane crash that was never properly explained.
Hillary and Obama are to the right of the President that Buchanan served in his White House. Richard Nixon was to the Left of both Hillary and Obama. I can't even imagine Hillary accepting and signing into law a 'Clean Water Act' or enacting Price Controls to fight inflation. No way. Heck would freeze over before Hillary would do something so against her Banker Backers.
And, at the root, that is the key. The 'Liberals' that the right now rails against are strongly backed and supported by the Wall Street Banks and other corporate leaders. The 'Liberals' have pushed for a government Of the Bankers, By the Bankers and For the Bankers. The 'Liberals' now are in favor of Endless Unconstitutional War around the world.
Which can only mean that the term 'Liberal' has been so completely morphed away from its original meanings to be completely worthless.
The last true Liberal in American politics was Paul Wellstone. And even by the time he died for his sins, he was calling himself a "progressive" because after the Clintons and the Gores had so distorted the term Liberal it was meaningless. Or it had come to mean a society ruled by bankers, a society at constant war and throwing money constantly at a gigantic war machine, a society of censorship where the government needed to control all music lyrics, the same corrupt government where money could by anything from a night in the Lincoln Bedroom to a Presidential Pardon or any other government favor.
Thus, 'Liberals' were a dead movement even by 2000, when the people who actually believed in the American People over the profits of bankers were calling themselves Progressives in disgust at the misuse of the term Liberal. And now, Obama and Hillary have trashed and distorted even the term Progressive into bombing the world 365 days a year and still constantly throwing money at the military machine and the problems it invents.
So, Liberalism is so long dead that if you exumed the grave you'd only find dust. And Pat must be getting senile and just throwing back out the same lines he once wrote as a speechwriter for the last Great Lefty President Richard Nixon.
reiner Tor , October 20, 2017 at 6:39 pm GMTIs Liberalism a Dying Faith?
Another question is whether this is wishful thinking from Pat or some kind of reality.
I think that he's right, that Liberalism is a dying faith, and it's interesting to check the decline.
It's sure that financial (neo)liberalism was in a growth phase prior to year 2000 (under Greenspan, the "Maestro") with a general belief that the economy could be "fine tuned" with risk eliminated using sophisticated financial instruments, monetary policy etc.
If [neo] Liberalism is a package, then two heavy financial blows that shook the whole foundation were the collapse of the dot.com bubble (2000) and the mortgage bubble (2008).
And, other (self-serving) neoliberal stories are now seen as false. For example, that the US is an "advanced post-industrial service economy", that out-sourcing would "free up Americans for higher skilled/higher wage employment" or that "the US would always gain from tariff free trade".
In fact, the borderless global "world is flat" dogma is now seen as enabling a rootless hyper-rich global elite to draw on a sea of globalized serf labour with little or no identity, while their media and SWJ activists operate a scorched earth defense against any sign of opposition.
The basic divide is surely Nationalism (America First) vs. Globalism (Neo-Liberalism), as shown by the last US Presidential election.
@RandalVerymuchalive , October 20, 2017 at 10:10 pm GMTA useful analogy might be Viktor Orbán. He started out as a leader of a liberal party, Fidesz, but then over time started moving to the right. It is often speculated that he started it for cynical reasons, like seeing how the right was divided and that there was essentially a vacuum there for a strong conservative party, but there's little doubt he totally internalized it. There's also little doubt (and at the time he and a lot of his fellow party leaders talked about it a lot) that as he (they) started a family and having children, they started to realize how conservatism kinda made more sense than liberalism.
With Kurz, there's the possibility for this path. However, he'd need to start a family soon for that to happen. At that age Orbán was already married with children
@Paul's GhostKenH , October 21, 2017 at 1:51 pm GMTLiberalism ( large L) is indeed long dead.
Neoliberalism, of which the Clintons are acolytes, supports Free Trade and Open Borders. Although it claims to support World Government, in actual fact it supports corporatism. This is explicit in the TPPA Trump vetoed. Under the corporate state, the state controls the corporations, as Don Benito did in Italy. Under corporatism, the corporations tell the state what to do, as has been the case in America since at least the Clinton Presidency.
Richard Nixon was a capitalist, not a corporatist. He was a supporter of proper competition laws, unlike any President since Clinton. Socially, he was interventionist, though this may have been to lessen criticism of his Vietnam policies. Anyway, his bussing and desegregation policies were a long-term failure.
Price Control was quickly dropped, as it was in other Western countries. Long term Price Control, as in present day Venezuela, is economically disastrous.
Let's hope liberalism is a dying faith and that is passes from the Western world. If not it will destroy the West, so if it doesn't die a natural death then we must euthanize it. For the evidence is in and it has begat feminism, anti-white racism, demographic winter, mass third world immigration and everything else that ails the West and has made it the sick and dying man of the world.But I recall that Pat B also said neoconservatism was on its way out a few years after Iraq war II and yet it's stronger than ever and its adherents are firmly ensconced in the joint chiefs of staff, the pentagon, Congress and the White House. It's also spawned a close cousin in liberal interventionism.
What Pat refers to as "liberalism" is now left wing totalitarianism and anti-white hatred and it's fanatically trying to remain relevant by lashing out and blacklisting, deplatforming, demonetizing, and physically assaulting all of its enemies on the right who are gaining strength much to their chagrin. They resort to these methods because they can't win an honest debate and in a true free marketplace of ideas they lose.
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Jul 07, 2017 | www.unz.com
Introduction
Throughout the US and European corporate and state media, right and left, we are told that ' populism' has become the overarching threat to democracy, freedom and . . . free markets. The media's ' anti-populism' campaign has been used and abused by ruling elites and their academic and intellectual camp followers as the principal weapon to distract, discredit and destroy the rising tide of mass discontent with ruling class-imposed austerity programs, the accelerating concentration of wealth and the deepening inequalities.
We will begin by examining the conceptual manipulation of ' populism' and its multiple usages. Then we will turn to the historic economic origins of populism and anti-populism. Finally, we will critically analyze the contemporary movements and parties dubbed ' populist' by the ideologues of ' anti-populism' .
Conceptual Manipulation
In order to understand the current ideological manipulation accompanying ' anti-populism ' it is necessary to examine the historical roots of populism as a popular movement.
Populism emerged during the 19 th and 20 th century as an ideology, movement and government in opposition to autocracy, feudalism, capitalism, imperialism and socialism. In the United States, populist leaders led agrarian struggles backed by millions of small farmers in opposition to bankers, railroad magnates and land speculators. Opposing monopolistic practices of the 'robber barons', the populist movement supported broad-based commercial agriculture, access to low interest farm credit and reduced transport costs.
- In 19 th century Russia, the populists opposed the Tsar, the moneylenders and the burgeoning commercial elites.
- In early 20 th century India and China, populism took the form of nationalist agrarian movements seeking to overthrow the imperial powers and their comprador collaborators.
- In Latin America, from the 1930s onward, especially with the crises of export regimes, Brazil, Argentina, Bolivia and Peru, embraced a variety of populist, anti-imperialist governments. In Brazil, President Getulio Vargas's term (1951-1954) was notable for the establishment of a national industrial program promoting the interests of urban industrial workers despite banning independent working class trade unions and Marxist parties. In Argentina, President Juan Peron's first terms (1946-1954) promoted large-scale working class organization, advanced social welfare programs and embraced nationalist capitalist development.
- In Bolivia, a worker-peasant revolution brought to power a nationalist party, the Revolutionary Nationalist Movement (MNR), which nationalized the tin mines, expropriated the latifundios and promoted national development during its rule from 1952-1964.
- In Peru, under President Velasco Alvarado (1968-1975), the government expropriated the coastal sugar plantations and US oil fields and copper mines while promoting worker and agricultural cooperatives.
In all cases, the populist governments in Latin America were based on a coalition of nationalist capitalists, urban workers and the rural poor. In some notable cases, nationalist military officers brought populist governments to power. What they had in common was their opposition to foreign capital and its local supporters and exporters ('compradores'), bankers and their elite military collaborators. Populists promoted 'third way' politics by opposing imperialism on the right, and socialism and communism on the left. The populists supported the redistribution of wealth but not the expropriation of property. They sought to reconcile national capitalists and urban workers. They opposed class struggle but supported state intervention in the economy and import-substitution as a development strategy.
Imperialist powers were the leading anti-populists of that period. They defended property privileges and condemned nationalism as 'authoritarian' and undemocratic. They demonized the mass support for populism as 'a threat to Western Christian civilization'. Not infrequently, the anti-populists ideologues would label the national-populists as 'fascists' . . . even as they won numerous elections at different times and in a variety of countries.
The historical experience of populism, in theory and practice, has nothing to do with what today's ' anti-populists' in the media are calling ' populism' . In reality, current anti-populism is still a continuation of anti-communism , a political weapon to disarm working class and popular movements. It advances the class interest of the ruling class. Both 'anti's' have been orchestrated by ruling class ideologues seeking to blur the real nature of their 'pro-capitalist' privileged agenda and practice. Presenting your program as 'pro-capitalist', pro-inequalities, pro-tax evasion and pro-state subsidies for the elite is more difficult to defend at the ballot box than to claim to be ' anti-populist' .
' Anti-populism' is the simple ruling class formula for covering-up their real agenda, which is pro-militarist, pro-imperialist (globalization), pro-'rebels' (i.e. mercenary terrorists working for regime change), pro crisis makers and pro-financial swindlers.
The economic origins of ' anti-populism' are rooted in the deep and repeated crises of capitalism and the need to deflect and discredit mass discontent and demoralize the popular classes in struggle. By demonizing ' populism', the elites seek to undermine the rising tide of anger over the elite-imposed wage cuts, the rise of low-paid temporary jobs and the massive increase in the reserve army of cheap immigrant labor to compete with displaced native workers.
Historic 'anti-populism' has its roots in the inability of capitalism to secure popular consent via elections. It reflects their anger and frustration at their failure to grow the economy, to conquer and exploit independent countries and to finance growing fiscal deficits.
The Amalgamation of Historical Populism with the Contemporary Fabricated Populism
What the current anti-populists ideologues label ' populism' has little to do with the historical movements.
Unlike all of the past populist governments, which sought to nationalize strategic industries, none of the current movements and parties, denounced as 'populist' by the media, are anti-imperialists. In fact, the current ' populists' attack the lowest classes and defend the imperialist-allied capitalist elites. The so-called current ' populists' support imperialist wars and bank swindlers, unlike the historical populists who were anti-war and anti-bankers.
Ruling class ideologues simplistically conflate a motley collection of rightwing capitalist parties and organizations with the pro-welfare state, pro-worker and pro-farmer parties of the past in order to discredit and undermine the burgeoning popular multi-class movements and regimes.
Demonization of independent popular movements ignores the fundamental programmatic differences and class politics of genuine populist struggles compared with the contemporary right-wing capitalist political scarecrows and clowns.
One has only to compare the currently demonized ' populist' Donald Trump with the truly populist US President Franklin Roosevelt, who promoted social welfare, unionization, labor rights, increased taxes on the rich, income redistribution, and genuine health and workplace safety legislation within a multi-class coalition to see how absurd the current media campaign has become.
The anti-populist ideologues label President Trump a 'populist' when his policies and proposals are the exact opposite. Trump champions the repeal of all pro-labor and work safety regulation, as well as the slashing of public health insurance programs while reducing corporate taxes for the ultra-elite.
The media's ' anti-populists' ideologues denounce pro-business rightwing racists as ' populists' . In Italy, Finland, Holland, Austria, Germany and France anti-working class parties are called ' populist' for attacking immigrants instead of bankers and militarists.
In other words, the key to understanding contemporary ' anti-populism' is to see its role in preempting and undermining the emergence of authentic populist movements while convincing middle class voters to continue to vote for crisis-prone, austerity-imposing neo-liberal regimes. ' Anti-populism' has become the opium (or OxyContin) of frightened middle class voters.
The anti-populism of the ruling class serves to confuse the 'right' with the 'left'; to sidelight the latter and promote the former; to amalgamate rightwing 'rallies' with working class strikes; and to conflate rightwing demagogues with popular mass leaders.
Unfortunately, too many leftist academics and pundits are loudly chanting in the 'anti-populist' chorus. They have failed to see themselves among the shock troops of the right. The left ideologues join the ruling class in condemning the corporate populists in the name of 'anti-fascism'. Leftwing writers, claiming to 'combat the far-right enemies of the people' , overlook the fact that they are 'fellow-travelling' with an anti-populist ruling class, which has imposed savage cuts in living standards, spread imperial wars of aggression resulting in millions of desperate refugees- not immigrants –and concentrated immense wealth.
The bankruptcy of today's ' anti-populist' left will leave them sitting in their coffee shops, scratching at fleas, as the mass popular movements take to the streets!
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Jul 07, 2017 | www.unz.com
Introduction
Throughout the US and European corporate and state media, right and left, we are told that ' populism' has become the overarching threat to democracy, freedom and . . . free markets. The media's ' anti-populism' campaign has been used and abused by ruling elites and their academic and intellectual camp followers as the principal weapon to distract, discredit and destroy the rising tide of mass discontent with ruling class-imposed austerity programs, the accelerating concentration of wealth and the deepening inequalities.
We will begin by examining the conceptual manipulation of ' populism' and its multiple usages. Then we will turn to the historic economic origins of populism and anti-populism. Finally, we will critically analyze the contemporary movements and parties dubbed ' populist' by the ideologues of ' anti-populism' .
Conceptual Manipulation
In order to understand the current ideological manipulation accompanying ' anti-populism ' it is necessary to examine the historical roots of populism as a popular movement.
Populism emerged during the 19 th and 20 th century as an ideology, movement and government in opposition to autocracy, feudalism, capitalism, imperialism and socialism. In the United States, populist leaders led agrarian struggles backed by millions of small farmers in opposition to bankers, railroad magnates and land speculators. Opposing monopolistic practices of the 'robber barons', the populist movement supported broad-based commercial agriculture, access to low interest farm credit and reduced transport costs.
- In 19 th century Russia, the populists opposed the Tsar, the moneylenders and the burgeoning commercial elites.
- In early 20 th century India and China, populism took the form of nationalist agrarian movements seeking to overthrow the imperial powers and their comprador collaborators.
- In Latin America, from the 1930s onward, especially with the crises of export regimes, Brazil, Argentina, Bolivia and Peru, embraced a variety of populist, anti-imperialist governments. In Brazil, President Getulio Vargas's term (1951-1954) was notable for the establishment of a national industrial program promoting the interests of urban industrial workers despite banning independent working class trade unions and Marxist parties. In Argentina, President Juan Peron's first terms (1946-1954) promoted large-scale working class organization, advanced social welfare programs and embraced nationalist capitalist development.
- In Bolivia, a worker-peasant revolution brought to power a nationalist party, the Revolutionary Nationalist Movement (MNR), which nationalized the tin mines, expropriated the latifundios and promoted national development during its rule from 1952-1964.
- In Peru, under President Velasco Alvarado (1968-1975), the government expropriated the coastal sugar plantations and US oil fields and copper mines while promoting worker and agricultural cooperatives.
In all cases, the populist governments in Latin America were based on a coalition of nationalist capitalists, urban workers and the rural poor. In some notable cases, nationalist military officers brought populist governments to power. What they had in common was their opposition to foreign capital and its local supporters and exporters ('compradores'), bankers and their elite military collaborators. Populists promoted 'third way' politics by opposing imperialism on the right, and socialism and communism on the left. The populists supported the redistribution of wealth but not the expropriation of property. They sought to reconcile national capitalists and urban workers. They opposed class struggle but supported state intervention in the economy and import-substitution as a development strategy.
Imperialist powers were the leading anti-populists of that period. They defended property privileges and condemned nationalism as 'authoritarian' and undemocratic. They demonized the mass support for populism as 'a threat to Western Christian civilization'. Not infrequently, the anti-populists ideologues would label the national-populists as 'fascists' . . . even as they won numerous elections at different times and in a variety of countries.
The historical experience of populism, in theory and practice, has nothing to do with what today's ' anti-populists' in the media are calling ' populism' . In reality, current anti-populism is still a continuation of anti-communism , a political weapon to disarm working class and popular movements. It advances the class interest of the ruling class. Both 'anti's' have been orchestrated by ruling class ideologues seeking to blur the real nature of their 'pro-capitalist' privileged agenda and practice. Presenting your program as 'pro-capitalist', pro-inequalities, pro-tax evasion and pro-state subsidies for the elite is more difficult to defend at the ballot box than to claim to be ' anti-populist' .
' Anti-populism' is the simple ruling class formula for covering-up their real agenda, which is pro-militarist, pro-imperialist (globalization), pro-'rebels' (i.e. mercenary terrorists working for regime change), pro crisis makers and pro-financial swindlers.
The economic origins of ' anti-populism' are rooted in the deep and repeated crises of capitalism and the need to deflect and discredit mass discontent and demoralize the popular classes in struggle. By demonizing ' populism', the elites seek to undermine the rising tide of anger over the elite-imposed wage cuts, the rise of low-paid temporary jobs and the massive increase in the reserve army of cheap immigrant labor to compete with displaced native workers.
Historic 'anti-populism' has its roots in the inability of capitalism to secure popular consent via elections. It reflects their anger and frustration at their failure to grow the economy, to conquer and exploit independent countries and to finance growing fiscal deficits.
The Amalgamation of Historical Populism with the Contemporary Fabricated Populism
What the current anti-populists ideologues label ' populism' has little to do with the historical movements.
Unlike all of the past populist governments, which sought to nationalize strategic industries, none of the current movements and parties, denounced as 'populist' by the media, are anti-imperialists. In fact, the current ' populists' attack the lowest classes and defend the imperialist-allied capitalist elites. The so-called current ' populists' support imperialist wars and bank swindlers, unlike the historical populists who were anti-war and anti-bankers.
Ruling class ideologues simplistically conflate a motley collection of rightwing capitalist parties and organizations with the pro-welfare state, pro-worker and pro-farmer parties of the past in order to discredit and undermine the burgeoning popular multi-class movements and regimes.
Demonization of independent popular movements ignores the fundamental programmatic differences and class politics of genuine populist struggles compared with the contemporary right-wing capitalist political scarecrows and clowns.
One has only to compare the currently demonized ' populist' Donald Trump with the truly populist US President Franklin Roosevelt, who promoted social welfare, unionization, labor rights, increased taxes on the rich, income redistribution, and genuine health and workplace safety legislation within a multi-class coalition to see how absurd the current media campaign has become.
The anti-populist ideologues label President Trump a 'populist' when his policies and proposals are the exact opposite. Trump champions the repeal of all pro-labor and work safety regulation, as well as the slashing of public health insurance programs while reducing corporate taxes for the ultra-elite.
The media's ' anti-populists' ideologues denounce pro-business rightwing racists as ' populists' . In Italy, Finland, Holland, Austria, Germany and France anti-working class parties are called ' populist' for attacking immigrants instead of bankers and militarists.
In other words, the key to understanding contemporary ' anti-populism' is to see its role in preempting and undermining the emergence of authentic populist movements while convincing middle class voters to continue to vote for crisis-prone, austerity-imposing neo-liberal regimes. ' Anti-populism' has become the opium (or OxyContin) of frightened middle class voters.
The anti-populism of the ruling class serves to confuse the 'right' with the 'left'; to sidelight the latter and promote the former; to amalgamate rightwing 'rallies' with working class strikes; and to conflate rightwing demagogues with popular mass leaders.
Unfortunately, too many leftist academics and pundits are loudly chanting in the 'anti-populist' chorus. They have failed to see themselves among the shock troops of the right. The left ideologues join the ruling class in condemning the corporate populists in the name of 'anti-fascism'. Leftwing writers, claiming to 'combat the far-right enemies of the people' , overlook the fact that they are 'fellow-travelling' with an anti-populist ruling class, which has imposed savage cuts in living standards, spread imperial wars of aggression resulting in millions of desperate refugees- not immigrants –and concentrated immense wealth.
The bankruptcy of today's ' anti-populist' left will leave them sitting in their coffee shops, scratching at fleas, as the mass popular movements take to the streets!
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Jul 07, 2017 | www.unz.com
Introduction
Throughout the US and European corporate and state media, right and left, we are told that ' populism' has become the overarching threat to democracy, freedom and . . . free markets. The media's ' anti-populism' campaign has been used and abused by ruling elites and their academic and intellectual camp followers as the principal weapon to distract, discredit and destroy the rising tide of mass discontent with ruling class-imposed austerity programs, the accelerating concentration of wealth and the deepening inequalities.
We will begin by examining the conceptual manipulation of ' populism' and its multiple usages. Then we will turn to the historic economic origins of populism and anti-populism. Finally, we will critically analyze the contemporary movements and parties dubbed ' populist' by the ideologues of ' anti-populism' .
Conceptual Manipulation
In order to understand the current ideological manipulation accompanying ' anti-populism ' it is necessary to examine the historical roots of populism as a popular movement.
Populism emerged during the 19 th and 20 th century as an ideology, movement and government in opposition to autocracy, feudalism, capitalism, imperialism and socialism. In the United States, populist leaders led agrarian struggles backed by millions of small farmers in opposition to bankers, railroad magnates and land speculators. Opposing monopolistic practices of the 'robber barons', the populist movement supported broad-based commercial agriculture, access to low interest farm credit and reduced transport costs.
- In 19 th century Russia, the populists opposed the Tsar, the moneylenders and the burgeoning commercial elites.
- In early 20 th century India and China, populism took the form of nationalist agrarian movements seeking to overthrow the imperial powers and their comprador collaborators.
- In Latin America, from the 1930s onward, especially with the crises of export regimes, Brazil, Argentina, Bolivia and Peru, embraced a variety of populist, anti-imperialist governments. In Brazil, President Getulio Vargas's term (1951-1954) was notable for the establishment of a national industrial program promoting the interests of urban industrial workers despite banning independent working class trade unions and Marxist parties. In Argentina, President Juan Peron's first terms (1946-1954) promoted large-scale working class organization, advanced social welfare programs and embraced nationalist capitalist development.
- In Bolivia, a worker-peasant revolution brought to power a nationalist party, the Revolutionary Nationalist Movement (MNR), which nationalized the tin mines, expropriated the latifundios and promoted national development during its rule from 1952-1964.
- In Peru, under President Velasco Alvarado (1968-1975), the government expropriated the coastal sugar plantations and US oil fields and copper mines while promoting worker and agricultural cooperatives.
In all cases, the populist governments in Latin America were based on a coalition of nationalist capitalists, urban workers and the rural poor. In some notable cases, nationalist military officers brought populist governments to power. What they had in common was their opposition to foreign capital and its local supporters and exporters ('compradores'), bankers and their elite military collaborators. Populists promoted 'third way' politics by opposing imperialism on the right, and socialism and communism on the left. The populists supported the redistribution of wealth but not the expropriation of property. They sought to reconcile national capitalists and urban workers. They opposed class struggle but supported state intervention in the economy and import-substitution as a development strategy.
Imperialist powers were the leading anti-populists of that period. They defended property privileges and condemned nationalism as 'authoritarian' and undemocratic. They demonized the mass support for populism as 'a threat to Western Christian civilization'. Not infrequently, the anti-populists ideologues would label the national-populists as 'fascists' . . . even as they won numerous elections at different times and in a variety of countries.
The historical experience of populism, in theory and practice, has nothing to do with what today's ' anti-populists' in the media are calling ' populism' . In reality, current anti-populism is still a continuation of anti-communism , a political weapon to disarm working class and popular movements. It advances the class interest of the ruling class. Both 'anti's' have been orchestrated by ruling class ideologues seeking to blur the real nature of their 'pro-capitalist' privileged agenda and practice. Presenting your program as 'pro-capitalist', pro-inequalities, pro-tax evasion and pro-state subsidies for the elite is more difficult to defend at the ballot box than to claim to be ' anti-populist' .
' Anti-populism' is the simple ruling class formula for covering-up their real agenda, which is pro-militarist, pro-imperialist (globalization), pro-'rebels' (i.e. mercenary terrorists working for regime change), pro crisis makers and pro-financial swindlers.
The economic origins of ' anti-populism' are rooted in the deep and repeated crises of capitalism and the need to deflect and discredit mass discontent and demoralize the popular classes in struggle. By demonizing ' populism', the elites seek to undermine the rising tide of anger over the elite-imposed wage cuts, the rise of low-paid temporary jobs and the massive increase in the reserve army of cheap immigrant labor to compete with displaced native workers.
Historic 'anti-populism' has its roots in the inability of capitalism to secure popular consent via elections. It reflects their anger and frustration at their failure to grow the economy, to conquer and exploit independent countries and to finance growing fiscal deficits.
The Amalgamation of Historical Populism with the Contemporary Fabricated Populism
What the current anti-populists ideologues label ' populism' has little to do with the historical movements.
Unlike all of the past populist governments, which sought to nationalize strategic industries, none of the current movements and parties, denounced as 'populist' by the media, are anti-imperialists. In fact, the current ' populists' attack the lowest classes and defend the imperialist-allied capitalist elites. The so-called current ' populists' support imperialist wars and bank swindlers, unlike the historical populists who were anti-war and anti-bankers.
Ruling class ideologues simplistically conflate a motley collection of rightwing capitalist parties and organizations with the pro-welfare state, pro-worker and pro-farmer parties of the past in order to discredit and undermine the burgeoning popular multi-class movements and regimes.
Demonization of independent popular movements ignores the fundamental programmatic differences and class politics of genuine populist struggles compared with the contemporary right-wing capitalist political scarecrows and clowns.
One has only to compare the currently demonized ' populist' Donald Trump with the truly populist US President Franklin Roosevelt, who promoted social welfare, unionization, labor rights, increased taxes on the rich, income redistribution, and genuine health and workplace safety legislation within a multi-class coalition to see how absurd the current media campaign has become.
The anti-populist ideologues label President Trump a 'populist' when his policies and proposals are the exact opposite. Trump champions the repeal of all pro-labor and work safety regulation, as well as the slashing of public health insurance programs while reducing corporate taxes for the ultra-elite.
The media's ' anti-populists' ideologues denounce pro-business rightwing racists as ' populists' . In Italy, Finland, Holland, Austria, Germany and France anti-working class parties are called ' populist' for attacking immigrants instead of bankers and militarists.
In other words, the key to understanding contemporary ' anti-populism' is to see its role in preempting and undermining the emergence of authentic populist movements while convincing middle class voters to continue to vote for crisis-prone, austerity-imposing neo-liberal regimes. ' Anti-populism' has become the opium (or OxyContin) of frightened middle class voters.
The anti-populism of the ruling class serves to confuse the 'right' with the 'left'; to sidelight the latter and promote the former; to amalgamate rightwing 'rallies' with working class strikes; and to conflate rightwing demagogues with popular mass leaders.
Unfortunately, too many leftist academics and pundits are loudly chanting in the 'anti-populist' chorus. They have failed to see themselves among the shock troops of the right. The left ideologues join the ruling class in condemning the corporate populists in the name of 'anti-fascism'. Leftwing writers, claiming to 'combat the far-right enemies of the people' , overlook the fact that they are 'fellow-travelling' with an anti-populist ruling class, which has imposed savage cuts in living standards, spread imperial wars of aggression resulting in millions of desperate refugees- not immigrants –and concentrated immense wealth.
The bankruptcy of today's ' anti-populist' left will leave them sitting in their coffee shops, scratching at fleas, as the mass popular movements take to the streets!
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May 05, 2017 | nationalinterest.org
One of the best summary observations in this regard is from Washington Post columnist Steven Pearlstein , who writes on business and financial matters but whose conclusions could apply as well to Trump's handling of a wide range of foreign and domestic matters: " What we know, first and foremost, is that it hardly matters what Trump says because what he says is as likely as not to have no relationship to the truth, no relationship to what he said last year during the campaign or even what he said last week. What he says bears no relationship to any consistent political or policy ideology or world-view. What he says is also likely to bear no relationship to what his top advisers or appointees have said or believe, making them unreliable interlocutors even if they agreed among themselves, which they don't. This lack of clear policy is compounded by the fact that the president, despite his boasts to the contrary, knows very little about the topics at hand and isn't particularly interested in learning. In other words, he's still making it up as he goes along."Many elements of dismay can follow from the fact of having this kind of president. We are apt to get a better idea of which specific things are most worthy of dismay as the rest of this presidency unfolds. I suggest, however, that a prime, overarching reason to worry is Trump's utter disregard for the truth. Not just a disregard, actually, but a determination to crush the truth and to instill falsehood in the minds of as many people as possible. The Post 's fact checker, Glenn Kessler , summarizes the situation by noting that "the pace and volume of the president's misstatements" are so great that he and other fact checkers "cannot possibly keep up."
Kessler also observes how Trump's handling of falsehoods is qualitatively as well as quantitatively different from the garden variety of lying in which many politicians indulge: "Many will drop a false claim after it has been deemed false. But Trump just repeats the claim over and over." It is a technique reminiscent of the Big Lie that totalitarian regimes have used, in which the repetition and brazenness of a lie help lead to its acceptance.
The problem is fundamental, and relates to a broad spectrum of policy issues both foreign and domestic, because truth-factual reality -- is a necessary foundation to consider and evaluate and debate policy on any subject. Crushing the truth means not just our having to endure any one misdirected policy; it means losing the ability even to address policy intelligently. To the extent that falsehood is successfully instilled in the minds of enough people, the political system loses what would otherwise be its ability to provide a check on policy that is bad policy because it is inconsistent with factual reality.
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May 05, 2017 | nationalinterest.org
One of the best summary observations in this regard is from Washington Post columnist Steven Pearlstein , who writes on business and financial matters but whose conclusions could apply as well to Trump's handling of a wide range of foreign and domestic matters: " What we know, first and foremost, is that it hardly matters what Trump says because what he says is as likely as not to have no relationship to the truth, no relationship to what he said last year during the campaign or even what he said last week. What he says bears no relationship to any consistent political or policy ideology or world-view. What he says is also likely to bear no relationship to what his top advisers or appointees have said or believe, making them unreliable interlocutors even if they agreed among themselves, which they don't. This lack of clear policy is compounded by the fact that the president, despite his boasts to the contrary, knows very little about the topics at hand and isn't particularly interested in learning. In other words, he's still making it up as he goes along."Many elements of dismay can follow from the fact of having this kind of president. We are apt to get a better idea of which specific things are most worthy of dismay as the rest of this presidency unfolds. I suggest, however, that a prime, overarching reason to worry is Trump's utter disregard for the truth. Not just a disregard, actually, but a determination to crush the truth and to instill falsehood in the minds of as many people as possible. The Post 's fact checker, Glenn Kessler , summarizes the situation by noting that "the pace and volume of the president's misstatements" are so great that he and other fact checkers "cannot possibly keep up."
Kessler also observes how Trump's handling of falsehoods is qualitatively as well as quantitatively different from the garden variety of lying in which many politicians indulge: "Many will drop a false claim after it has been deemed false. But Trump just repeats the claim over and over." It is a technique reminiscent of the Big Lie that totalitarian regimes have used, in which the repetition and brazenness of a lie help lead to its acceptance.
The problem is fundamental, and relates to a broad spectrum of policy issues both foreign and domestic, because truth-factual reality -- is a necessary foundation to consider and evaluate and debate policy on any subject. Crushing the truth means not just our having to endure any one misdirected policy; it means losing the ability even to address policy intelligently. To the extent that falsehood is successfully instilled in the minds of enough people, the political system loses what would otherwise be its ability to provide a check on policy that is bad policy because it is inconsistent with factual reality.
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Dec 29, 2017 | www.moonofalabama.org
VietnamVet , Dec 26, 2017 3:40:43 PM | 30
Russiagate and corporate media scapegoating Putin's trolls are information operations to keep the little people misinformed. The Ukraine Putsch and the MH-17 shoot down were handled poorly by Russia. They've come back in Syria. Russian intelligence wouldn't be doing their job if they weren't surveilling the West.NemesisCalling , Dec 26, 2017 4:39:00 PM | 36 karlof1 , Dec 26, 2017 4:42:57 PM | 37Victoria Nuland's EU rant was released. Vladimir Putin preferred Donald Trump over Hillary Clinton.
What got western oligarchs upset is the disclosure of the truth; the system is rigged. Obama voters in mid-America voted for Donald Trump. Hillary Clinton's loss triggered a witch hunt rather than addressing the root causes of her defeat. A group of oligarchs want the upstart NY casino boss gone. The only question is what will be the collateral damage from the mob war.
Name of Me | Dec 26, 2017 12:13:28 PM | 2Pft , Dec 26, 2017 7:09:07 PM | 43The US Government was controlling media well before the CIA's creation. Please take a little time to learn about George Seldes whose 1929 book You Can't Print That!: The Truth Behind the News, 1918–1928 is vastly informative with original copies easy to find under $15, or even online through this link . Indeed, numerous works of his are digitized. I.F. Stone followed in Seldes's footsteps, and the website with his collected writings is here . Perhaps one of the least known episodes of US Government media manipulation was related to the atomic bomb crimes, an event nearly 100% airbrushed from history books, and of course the ongoing attempt to cover up one of the biggest crimes of all time.
My mention of media manipulation by the US Government wouldn't be complete without including the 100% blackout that was to apply to the discussions in Philadelphia that led to the 1787 Constitution -- the document that elevated the "natural aristocracy" into the catbird seat ensuring their control of the federal government until it's overthrown via revolution.
Fortunately, Madison and others kept copious notes that were eventually published long after the fate of Commoners was sealed, so we know that Aristocracy viewed its contemporary deplorables no differently than how HRC and today's 1% view them/us.
Americans and much of the rest of the world are the target of an immense psyop . Propaganda techniques going back to Bernay and WWI have been expanded on and perfected. Infiltration and control is lot limited to the print media and TV news stations but also , hollywood movies/TV shows , academia (history, economics, etc) , book publishing, blogs and social media. The last few bastions of truth will be eliminated with the end of net neutrality.Peter AU 1 , Dec 26, 2017 7:58:27 PM | 49As former CIA Director William Casey allegedly once said: "We'll know our disinformation program is complete when everything the American public believes is false." His error here was saying Americans were the target and not the global population as well, but at least as far as America goes I think its pretty much a thumbs up. Mission Accomplished.
"We do not know what the billionaires get for their service. The CIA surely has many ways to let them gain information on their competition or to influence business regulations in foreign countries. One hand will wash the other."Something I have often thought about. Media and social media tycoons - all could be taken down very fast if they did not toe the CIA line, though for most, it seems their work with CIA is voluntary and enthusiastic.
I guess you don't get that rich by having ethics or scruples.
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Dec 26, 2017 | angrybearblog.com
run75441 , December 24, 2017 3:10 pm
Lyle , December 24, 2017 6:28 pmLinda:
I believe this to be mostly correct;
Indeed, having an able, sympathetic messenger who can translate the issues that truly matter into terms that make sense to ordinary people is something the Democratic Party lacked in the last election. The tone deafness of Debbie Wasserman Schultz and, much of the time, Hillary Clinton, meant that ordinary people didn't understand that Trump is merely a blowhard capitalist who doesn't care if he cheats or lies or exploits other people so long as he gets notoriety and money, while the Democrats have been the party working for a decent sustainable economy, environmental protection and preservation, protection from pollution and diseases, and working wages for ordinary folk.
Dems have done us a disservice in not being able to communicate in terms many people could understand, relate to, and embrace.
likbez , December 26, 2017 5:55 amYet the Gilded age was one where the average person was better off in 1900 than in 1870. It was the period of the great deflation https://en.wikipedia.org/wiki/The_Great_Deflation which meant the cost of everything was in general dropping 2% per year in the us.
A large part of this at least for folks in larger cities was the integration of the US into essentially 1 market from several markets as most larger cities had at least 2 railroad groups serving them. I recall reading that in general estate inventories in 1900 show more goods than those in 1870. Just a bit outside this time frame My grandparents bought a farm in 1910 and build a new house.
The house on the property was a 2 room house that was turned into a coal shed and wash house. The new house had 6 rooms plus a root cellar. (Still off grid of course because this was in the country) this period was one of both rapid adoption of technologies developed in the first 1/2 of the 19th century, (railroad, telegraph, steamship) and the development and implementation of new technologies (auto, telephone, electricity, etc) See Creating the 20th century by Smil for details.
Of course some folks lost because they could no longer compete with imported goods, One example I have read is that up to 1869 a lot of furniture was built in Utah because it was so hard to get stuff there, The Union Pacific solved the problem and the local furniture makers found a new line of work.
So in general life was better in the US in 1900 than 1870 and things did at least then trickle down.This was the period of the great deflation where the cost of living was declining about 2% a year: https://en.wikipedia.org/wiki/The_Great_Deflation And this document from the department of labor from 1898 listing wages shows roughly flat wages over that time (depending on the field although some went up (locomotive engineers went up 25% in this period for example) https://fraser.stlouisfed.org/scribd/?toc_id=498267&filepath=/files/docs/publications/bls/bls_v03_0018_1898.pdf&start_page=10
So it appears that if you look at unbiased statistics of the time a rising tide back then did lift all boats, even as a few got extremely rich, and as a result inequality increased.
Neoliberalism actually means restoration of Gilded Age on a new level. So the return to Gilded Age commenced not now, but with the election of Reagan, or slightly earlier. Trump actually professed "bastard neoliberalism" (neoliberalism without neoliberal globalizations).
Election of Trump IMHO signified the deep crisis of neoliberalism and loss of legitimacy of neoliberal elite in the USA. That's why Trump was elected and Hillary was not.
The fact that Trump quickly betrayed all his election promises does not change this. We saw such tricks before. He just proved that he is Republican Obama. Much less slick in that, but still belonging to the same brand of "change we can believe in" snake oil salesmen.
The key problem here is that as the neoliberal elite feels less and less secure at home it tries to suppress dissent with rampant jingoism (look at Trumps National security strategy) and Russophobia:
== quote ==
"China and Russia challenge American power, influence, and interests, attempting to erode American security and prosperity. They are determined to make economies less free and less fair, to grow their militaries, and to control information and data to repress their societies and expand their influence. At the same time, the dictatorships of the Democratic People's Republic of Korea and the Islamic Republic of Iran are determined to destabilize regions, threaten Americans and our allies, and brutalize their own people."
=== end of quote ===That's why we have the current neo-McCarthyism campaign. The goal is to both to rally the nation around the flag rather than turning against the government, and to suppress the growing dissent by conflating it with pro-Russian sentiments. Turing the majority of US public and public opinion against Russian government. Along with the attempt to swipe Hillary Clinton fiasco and the corruption of DNC (and now the corruption of FBI which suppressed "emailgate") which pushed Sanders under the bus by illegal means. .
My impression is that while there is no clear alternative to neoliberalism as a social system, the growth and success of far-right movement both in Europe and the USA means that people badly want an alternative, whatever it can be. Even if this is far right nationalism.
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Dec 26, 2017 | www.unz.com
As we move into 2018, I am swinging away from the Republicans. I don't support the Paul Ryan "Better Way" agenda . I don't support neoliberal economics. I think we have been going in the wrong direction since the 1970s and don't want to continue going down this road.
Opioid Deaths:
As we all know, the opioid epidemic has become a national crisis and the White working class has been hit the hardest by it. It is a "sea of despair" out there .
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Apr 28, 2017 | economistsview.typepad.com
XXX, April 28, 2017 at 06:29 PMSanjait,"Hillary Clinton, following a long tradition of mainstream Democrats, had a grab bag of proposals that, if enacted, would collectively make a huge difference in the lives of working people. "
I think you are wrong here.
Hillary was/is a neoliberal, and as such is hostile to the interests of working people and middle class in general. Like most neoliberals she is a Machiavellian elitist. Her election promises are pure demagogy, much like Trump or Obama election promised (immortalized in the slogan "change we can believe in" which now became the synonym of election fraud)
Also she was/is hell-bent of preserving/expanding the US neoliberal empire and the wars for neoliberal dominance (in ME mainly for the benefit of Israel and Saudis). War are pretty costly ventures and they are financed at the expense of working class and lower middle class, never at the expense of "fat cats" from Wall Street.
All-in-all I think the role of POTUS is greatly "misunderestimated" in your line of thinking. As we can see differences between Trump and Hillary in foreign policy are marginal. Why are you assuming that the differences in domestic economic policies would be greater ?
In reality there are other powerful factors in play that diminish the importance of POTUS:
- The US Presidential Elections are no longer an instrument for change. They are completely corrupted and are mostly of "bread and circuses" type of events, where two gladiators preselected by financial elite fight for the coveted position, using all kind of dirty tricks for US public entertainment.
- While the appearance of democracy remains, in reality the current system represents that rule of "deep state". In the classic form of "National security state". In the National Security State, the US people no longer have the any chances to change the policies.
- Political emasculation of US voters has led to frustration, depression and rage. It feeds radical right movement including neo-fascists, which embrace more extreme remedies to the current problems because they correctly feel that the traditional parties no longer represent the will of the people.
- Insulated and partially degenerated US elite have grown more obtuse and is essentially a hostage for neocons. They chose to ignore the seething anger that lies just below the surface of brainwashed Us electorate.
- The "American Dream" is officially dead. People at a and below lower middle class level see little hope for themselves, their children or the country. The chasm between top 1% (or let's say top 20%) and the rest continues to fuel populist anger.
- While Trump proved to be "yet another turncoat" like Barak Obama (who just got his first silver coin in the form of the $400K one hour speech) Trump's election signify a broad rejection of the country's neoliberal elite, including neoliberal MSM, neocon foreign policy as well as neoliberal economic system (and first of all neoliberal globalization).
- The country foreign policy remains hijacked by neocons (this time in the form of fiends of Paul Wolfowitz among the military brass appointed by Trump to top positions in his administration) and that might spell major conflict or even WWIII.
The level of subservience to neocon agenda in Trump administration might well be higher then in previous administration. And "make America first" was already transformed into "full spectrum dominance" == "America uber alles". http://www.newyorker.com/culture/culture-desk/deutschland-uber-alles-and-america-first-in-song
8. We can now talk about the USA as "neocon occupied country" (NOC), because the neocons policies contradict the USA national interests and put heavy burden of taxpayers, especially in lower income categories. Due to neglect in maintaining infrastructure, in some areas the USA already looks like third word country. Still we finance Israel and several other countries to the tune of $40 billion dollars in military aid alone (that that's in case of Israel just the tip of the iceberg; real figure is probably double of that) https://fas.org/sgp/crs/mideast/RL33222.pdf
Since Bill Clinton POTUS is more or less a marionette of financial oligarchy (which Obama -- as a person without the past (or with a very fuzzy past) - symbolizes all too well).
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Dec 24, 2017 | www.unz.com
As we move into 2018, I am swinging away from the Republicans. I don't support the Paul Ryan "Better Way" agenda. I don't support neoliberal economics. I think we have been going in the wrong direction since the 1970s and don't want to continue going down this road.
- Opioid Deaths: As we all know, the opioid epidemic has become a national crisis and the White working class has been hit the hardest by it. It is a "sea of despair" out there.
- White Mortality: As the family crumbles, religion recedes in his life, and his job prospects dwindle, the middle aged White working class man is turning to drugs, alcohol and suicide: The White suicide rate has soared since 2000:
- Median Household Income: The average household in the United States is poorer in 2017 than it was in 1997:
- Real GDP: Since the late 1990s, real GDP and real median household income have parted ways:
- Productivity and Real Wages: Since the 1970s, the minimum wage has parted ways with productivity gains in the US economy:
- Stock Market: Since 2000, the stock market has soared, but 10% of Americans own 80% of stocks. The top 1% owns 38% of stocks. In 2007, 3/4th of middle class households were invested in the stock market, but now only 50% are investors. Overall, 52% of Americans now own stocks, which is down from 65%. The average American has less than $1,000 in their combined checking and savings accounts.
Do you know what this tells me?
It tells me that the bottom line is that Christmas has become a harder season for White families. We are worse off because of BOTH social and economic liberalism which has only benefited an elite few. The bottom half of the White population is now in total disarray – drug addiction, demoralization, divorce, suicide, abortion, atomization, stagnant wages, declining household income and investments – and this dysfunction is creeping up the social ladder. The worst thing we can do is step on the accelerator.
Paul Ryan and his fellow conservatives look at this and conclude we need MORE freedom. We need lower taxes, more free trade, more deregulation, weaker unions, more immigration and less social safety net spending. He wants to follow up tax reform with entitlement reform in 2018. I can't but see how this is going to make an already bad situation for the White working class even worse.
I'm not rightwing in the sense that these people are. I think their policies are harmful to the nation. I don't think they feel any sense of duty and obligation to the working class like we do. They believe in liberal abstractions and make an Ayn Rand fetish out of freedom whereas we feel a sense of solidarity with them grounded in race, ethnicity and culture which tempers class division. We recoil at the evisceration of the social fabric whereas conservatives celebrate this blind march toward plutocracy.
Do the wealthy need to own a greater share of the stock market? Do they need to own a greater share of our national wealth? Do we need to loosen up morals and the labor market? Do we need more White children growing up in financially stressed, broken homes on Christmas? Is the greatest problem facing the nation spending on anti-poverty programs? Paul Ryan and the True Cons think so.
Yeah, I don't think so. I also think it is a good thing right now that we aren't associated with the mainstream Right. In the long run, I bet this will pay off for us. I predict this platform they have been standing on for decades now, which they call the conservative base, is going to implode on them. Donald Trump was only the first sign that Atlas is about to shrug.
(Republished from Occidental Dissent by permission of author or representative)
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Apr 28, 2017 | economistsview.typepad.com
XXX, April 28, 2017 at 06:29 PMSanjait,"Hillary Clinton, following a long tradition of mainstream Democrats, had a grab bag of proposals that, if enacted, would collectively make a huge difference in the lives of working people. "
I think you are wrong here.
Hillary was/is a neoliberal, and as such is hostile to the interests of working people and middle class in general. Like most neoliberals she is a Machiavellian elitist. Her election promises are pure demagogy, much like Trump or Obama election promised (immortalized in the slogan "change we can believe in" which now became the synonym of election fraud)
Also she was/is hell-bent of preserving/expanding the US neoliberal empire and the wars for neoliberal dominance (in ME mainly for the benefit of Israel and Saudis). War are pretty costly ventures and they are financed at the expense of working class and lower middle class, never at the expense of "fat cats" from Wall Street.
All-in-all I think the role of POTUS is greatly "misunderestimated" in your line of thinking. As we can see differences between Trump and Hillary in foreign policy are marginal. Why are you assuming that the differences in domestic economic policies would be greater ?
In reality there are other powerful factors in play that diminish the importance of POTUS:
- The US Presidential Elections are no longer an instrument for change. They are completely corrupted and are mostly of "bread and circuses" type of events, where two gladiators preselected by financial elite fight for the coveted position, using all kind of dirty tricks for US public entertainment.
- While the appearance of democracy remains, in reality the current system represents that rule of "deep state". In the classic form of "National security state". In the National Security State, the US people no longer have the any chances to change the policies.
- Political emasculation of US voters has led to frustration, depression and rage. It feeds radical right movement including neo-fascists, which embrace more extreme remedies to the current problems because they correctly feel that the traditional parties no longer represent the will of the people.
- Insulated and partially degenerated US elite have grown more obtuse and is essentially a hostage for neocons. They chose to ignore the seething anger that lies just below the surface of brainwashed Us electorate.
- The "American Dream" is officially dead. People at a and below lower middle class level see little hope for themselves, their children or the country. The chasm between top 1% (or let's say top 20%) and the rest continues to fuel populist anger.
- While Trump proved to be "yet another turncoat" like Barak Obama (who just got his first silver coin in the form of the $400K one hour speech) Trump's election signify a broad rejection of the country's neoliberal elite, including neoliberal MSM, neocon foreign policy as well as neoliberal economic system (and first of all neoliberal globalization).
- The country foreign policy remains hijacked by neocons (this time in the form of fiends of Paul Wolfowitz among the military brass appointed by Trump to top positions in his administration) and that might spell major conflict or even WWIII.
The level of subservience to neocon agenda in Trump administration might well be higher then in previous administration. And "make America first" was already transformed into "full spectrum dominance" == "America uber alles". http://www.newyorker.com/culture/culture-desk/deutschland-uber-alles-and-america-first-in-song
8. We can now talk about the USA as "neocon occupied country" (NOC), because the neocons policies contradict the USA national interests and put heavy burden of taxpayers, especially in lower income categories. Due to neglect in maintaining infrastructure, in some areas the USA already looks like third word country. Still we finance Israel and several other countries to the tune of $40 billion dollars in military aid alone (that that's in case of Israel just the tip of the iceberg; real figure is probably double of that) https://fas.org/sgp/crs/mideast/RL33222.pdf
Since Bill Clinton POTUS is more or less a marionette of financial oligarchy (which Obama -- as a person without the past (or with a very fuzzy past) - symbolizes all too well).
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Dec 24, 2017 | www.unz.com
... ... ...
Presidential Leadership and Abuse in the Workplace
Several Presidents have been accused of gross sexual abuse and humiliation of office staff and interns, most ignobly William Jefferson Clinton. However, the Congressional Office of Compliance, in accord with the Congressional Accountability Act of 1995 does not collect statistics on presidential abuses and financial settlements. Nevertheless, we can examine the number of Congressional victims and payments during the tenures of the various Presidents during the past 20 years. This can tell us if the Presidents chose to issue any directives or exercise any leadership with regard to stopping the abuses occurring during their administrations.
Under Presidents William Clinton and Barack Obama we have data for 12 years 1997-2000, and 2009-2016. Under President George W Bush and Donald Trump we have data for 9 years 2001-2008 and 2017.
Under the two Democratic Presidents, 148 legislative employees were abused and the Treasury paid out approximately $5 million dollars and under the Republican Presidents, 116 were abused and Treasury and over $12 million dollars was paid out.
Under the Democratic Presidents, the average number of abuse victims was 12 per year; under the Republicans the average number was 13 per year. As in the case of Congressional leadership, US Presidents of both parties showed remarkable bipartisan consistency in tolerating Congressional abuse.
Congressional Abuse: The Larger Meaning
Workplace abuse by elected leaders in Washington is encouraged by Party cronyism, loyalties and shameless bootlicking. It is reinforced by the structure of power pervasive in the ruling class. Congress people exercise near total power over their employees because they are not accountable to their peers or their voters. They are protected by their financial donors, the special Congressional 'judicial' system and by the mass media with a complicity of silence.
The entire electoral system is based on a hierarchy of power, where those on the top can demand subordination and enforce their demands for sexual submission with threats of retaliation against the victim or the victim's outraged family members. This mirrors a feudal plantation system.
However, like sporadic peasant uprisings in the Middle Ages, some employees rise up, resist and demand justice. It is common to see Congressional abusers turn to their office managers, often female, to act as 'capos' to first threaten and then buy off the accuser – using US taxpayer funds. This added abuse never touches the wallet of the abuser or the office enforcer. Compensation is paid by the US Treasury. The social and financial status of the abusers and the abusers' families remain intact as they look forward to lucrative future employment as lobbyists.
This does not occur in isolation from the broader structure of class and power.
The sexual exploitation of workers in the Halls of the US Congress is part of the larger socio-economic system. Elected officials, who abuse their office employees and interns, share the same values with corporate and cultural bosses, who exploit their workers and subordinates. At an even larger level, they share the same values and culture with the ImperialState as it brutalizes and rapes independent nations and peoples.
The system of abuse and exploitation by the Congress and the corporate, cultural, academic, religious and political elite depends on complicit intermediaries who frequently come from upwardly mobile groups. The most abusive legislators will hire upwardly mobile women as public relations officers and office managers to recruit victims and, when necessary, arrange pay-offs. In the corporate sphere, CEOs frequently rely on former plant workers, trade union leaders, women and minorities to serve as 'labor relations' experts to provide a progressive façade in order to oust dissidents and enforce directives persecuting whistleblowers. On a global scale, the political warlords work hand in glove with the mass media and humanitarian interventionist NGO's to demonize independent voices and to glorify the military as they slaughter resistance fighters, while claiming to champion gender and minority rights. Thus, the US invasion and occupation of Afghanistan was widely propagandized and celebrated as the 'liberation of Afghan women'.
The Congressional perverts have their own private, secret mission: to abuse staff, to nurture the rich, enforce silence and approve legislation to make taxpayers pay the bill.
Let us hope that the current ' Me Too !' movement against workplace sexual abuse will grow to include a broader movement against the neo-feudalism within politics, business, and culture and lead to a political movement uniting workers in all fields.
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Dec 23, 2017 | www.unz.com
Liverpool , December 22, 2017 at 9:16 pm GMT
I was raised by Democrats, and used to vote for them. But these days, I think heck would freeze over before I'd vote Democrat again. From my point of view, Bernie tried to pull them back to sanity. But the hard core Clinton-corporate-corrupt Democrats have declared war on any movement for reform within the Democratic Party. And there is no way that I'm voting for any of these corrupt-corporate Democrats ever again.Of course, the notion of 'reform' within the Democratic Party is an oxymoron. Its been around since Nader, when the corrupt-corporate Democrats tried to tell us that the way forward was to work within the corrupt-corporate Democratic Party and change things that way. We saw the way the corrupt-corporate Democrats colluded and rigged the last Presidential Primaries so that Corrupt-Corporate-Clinton was guaranteed the corrupt-corporate Democrat nomination. That's a loud and clear message to anyone who thinks they can achieve change within the corrupt-corporate-colluding-rigged Democratic Party.
Since I've always been anti-war, I've been forced to follow what anti-war movement there is over to the Republicans. And I see Steve Bannon trying to wage the fight within the Republican party that the fake-reformers in the Democrats never even tried . ie, numerous primary challenges to corrupt-corporate Democrats. That never happened, and by 2012 I was convinced that even the fake-reformers within the corrupt-corporate Democrats were fakes who only wanted fund-raising but didn't really fight for reform.
Neither party represents any but the richest of the rich these days. Both parties lie to voters and try to pretend that they might actually give a damn about the rest of us. But the only sign of life that I see of anyone trying to fight back against this Bannon inside the Republicans. I'm not thrilled with Bannon, although he's not nearly as bad as the loony-lefties in the corrupt-corporate Democratic Party and their many satellites call him. But he's the only one putting up a fight. I just hope that maybe someone will run in primaries against the corrupt-corporate-Republicans who fake-represent the part of the map where I live.
Neither party is on our side. The establishment in both parties is crooked and corrupt. Someone needs to fight them. And I sure as heck won't vote for the corrupt and the crooked. Since the Democrats are doubling down on corrupt and crooked and telling such big lies that even Goebbels would blush, it doesn't look like I'll ever vote Dem0crat again.
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Dec 12, 2017 | www.theamericanconservative.com
On America's 'long emergency' of recession, globalization, and identity politics.
Can a people recover from an excursion into unreality? The USA's sojourn into an alternative universe of the mind accelerated sharply after Wall Street nearly detonated the global financial system in 2008. That debacle was only one manifestation of an array of accumulating threats to the postmodern order, which include the burdens of empire, onerous debt, population overshoot, fracturing globalism, worries about energy, disruptive technologies, ecological havoc, and the specter of climate change.
A sense of gathering crisis, which I call the long emergency , persists. It is systemic and existential. It calls into question our ability to carry on "normal" life much farther into this century, and all the anxiety that attends it is hard for the public to process. It manifested itself first in finance because that was the most abstract and fragile of all the major activities we depend on for daily life, and therefore the one most easily tampered with and shoved into criticality by a cadre of irresponsible opportunists on Wall Street. Indeed, a lot of households were permanently wrecked after the so-called Great Financial Crisis of 2008, despite official trumpet blasts heralding "recovery" and the dishonestly engineered pump-up of capital markets since then.
With the election of 2016, symptoms of the long emergency seeped into the political system. Disinformation rules. There is no coherent consensus about what is happening and no coherent proposals to do anything about it. The two parties are mired in paralysis and dysfunction and the public's trust in them is at epic lows. Donald Trump is viewed as a sort of pirate president, a freebooting freak elected by accident, "a disrupter" of the status quo at best and at worst a dangerous incompetent playing with nuclear fire. A state of war exists between the White House, the permanent D.C. bureaucracy, and the traditional news media. Authentic leadership is otherwise AWOL. Institutions falter. The FBI and the CIA behave like enemies of the people.
Bad ideas flourish in this nutrient medium of unresolved crisis. Lately, they actually dominate the scene on every side. A species of wishful thinking that resembles a primitive cargo cult grips the technocratic class, awaiting magical rescue remedies that promise to extend the regime of Happy Motoring, consumerism, and suburbia that makes up the armature of "normal" life in the USA. They chatter about electric driverless car fleets, home delivery drone services, and as-yet-undeveloped modes of energy production to replace problematic fossil fuels, while ignoring the self-evident resource and capital constraints now upon us and even the laws of physics -- especially entropy , the second law of thermodynamics. Their main mental block is their belief in infinite industrial growth on a finite planet, an idea so powerfully foolish that it obviates their standing as technocrats.
The non-technocratic cohort of the thinking class squanders its waking hours on a quixotic campaign to destroy the remnant of an American common culture and, by extension, a reviled Western civilization they blame for the failure in our time to establish a utopia on earth. By the logic of the day, "inclusion" and "diversity" are achieved by forbidding the transmission of ideas, shutting down debate, and creating new racially segregated college dorms. Sexuality is declared to not be biologically determined, yet so-called cis-gendered persons (whose gender identity corresponds with their sex as detected at birth) are vilified by dint of not being "other-gendered" -- thereby thwarting the pursuit of happiness of persons self-identified as other-gendered. Casuistry anyone?
The universities beget a class of what Nassim Taleb prankishly called "intellectuals-yet-idiots," hierophants trafficking in fads and falsehoods, conveyed in esoteric jargon larded with psychobabble in support of a therapeutic crypto-gnostic crusade bent on transforming human nature to fit the wished-for utopian template of a world where anything goes. In fact, they have only produced a new intellectual despotism worthy of Stalin, Mao Zedong, and Pol Pot.
In case you haven't been paying attention to the hijinks on campus -- the attacks on reason, fairness, and common decency, the kangaroo courts, diversity tribunals, assaults on public speech and speakers themselves -- here is the key take-away: it's not about ideas or ideologies anymore; it's purely about the pleasures of coercion, of pushing other people around. Coercion is fun and exciting! In fact, it's intoxicating, and rewarded with brownie points and career advancement. It's rather perverse that this passion for tyranny is suddenly so popular on the liberal left.
Until fairly recently, the Democratic Party did not roll that way. It was right-wing Republicans who tried to ban books, censor pop music, and stifle free expression. If anything, Democrats strenuously defended the First Amendment, including the principle that unpopular and discomforting ideas had to be tolerated in order to protect all speech. Back in in 1977 the ACLU defended the right of neo-Nazis to march for their cause (National Socialist Party of America v. Village of Skokie, 432 U.S. 43).
The new and false idea that something labeled "hate speech" -- labeled by whom? -- is equivalent to violence floated out of the graduate schools on a toxic cloud of intellectual hysteria concocted in the laboratory of so-called "post-structuralist" philosophy, where sundry body parts of Michel Foucault, Jacques Derrida, Judith Butler, and Gilles Deleuze were sewn onto a brain comprised of one-third each Thomas Hobbes, Saul Alinsky, and Tupac Shakur to create a perfect Frankenstein monster of thought. It all boiled down to the proposition that the will to power negated all other human drives and values, in particular the search for truth. Under this scheme, all human relations were reduced to a dramatis personae of the oppressed and their oppressors, the former generally "people of color" and women, all subjugated by whites, mostly males. Tactical moves in politics among these self-described "oppressed" and "marginalized" are based on the credo that the ends justify the means (the Alinsky model).
This is the recipe for what we call identity politics, the main thrust of which these days, the quest for "social justice," is to present a suit against white male privilege and, shall we say, the horse it rode in on: western civ. A peculiar feature of the social justice agenda is the wish to erect strict boundaries around racial identities while erasing behavioral boundaries, sexual boundaries, and ethical boundaries. Since so much of this thought-monster is actually promulgated by white college professors and administrators, and white political activists, against people like themselves, the motives in this concerted campaign might appear puzzling to the casual observer.
I would account for it as the psychological displacement among this political cohort of their shame, disappointment, and despair over the outcome of the civil rights campaign that started in the 1960s and formed the core of progressive ideology. It did not bring about the hoped-for utopia. The racial divide in America is starker now than ever, even after two terms of a black president. Today, there is more grievance and resentment, and less hope for a better future, than when Martin Luther King made the case for progress on the steps of the Lincoln Memorial in 1963. The recent flash points of racial conflict -- Ferguson, the Dallas police ambush, the Charleston church massacre, et cetera -- don't have to be rehearsed in detail here to make the point that there is a great deal of ill feeling throughout the land, and quite a bit of acting out on both sides.
The black underclass is larger, more dysfunctional, and more alienated than it was in the 1960s. My theory, for what it's worth, is that the civil rights legislation of 1964 and '65, which removed legal barriers to full participation in national life, induced considerable anxiety among black citizens over the new disposition of things, for one reason or another. And that is exactly why a black separatism movement arose as an alternative at the time, led initially by such charismatic figures as Malcolm X and Stokely Carmichael. Some of that was arguably a product of the same youthful energy that drove the rest of the Sixties counterculture: adolescent rebellion. But the residue of the "Black Power" movement is still present in the widespread ambivalence about making covenant with a common culture, and it has only been exacerbated by a now long-running "multiculturalism and diversity" crusade that effectively nullifies the concept of a national common culture.
What follows from these dynamics is the deflection of all ideas that don't feed a narrative of power relations between oppressors and victims, with the self-identified victims ever more eager to exercise their power to coerce, punish, and humiliate their self-identified oppressors, the "privileged," who condescend to be abused to a shockingly masochistic degree. Nobody stands up to this organized ceremonial nonsense. The punishments are too severe, including the loss of livelihood, status, and reputation, especially in the university. Once branded a "racist," you're done. And venturing to join the oft-called-for "honest conversation about race" is certain to invite that fate.
Globalization has acted, meanwhile, as a great leveler. It destroyed what was left of the working class -- the lower-middle class -- which included a great many white Americans who used to be able to support a family with simple labor. Hung out to dry economically, this class of whites fell into many of the same behaviors as the poor blacks before them: absent fathers, out-of-wedlock births, drug abuse. Then the Great Financial Crisis of 2008 wiped up the floor with the middle-middle class above them, foreclosing on their homes and futures, and in their desperation many of these people became Trump voters -- though I doubt that Trump himself truly understood how this all worked exactly. However, he did see that the white middle class had come to identify as yet another victim group, allowing him to pose as their champion.
The evolving matrix of rackets that prompted the 2008 debacle has only grown more elaborate and craven as the old economy of stuff dies and is replaced by a financialized economy of swindles and frauds . Almost nothing in America's financial life is on the level anymore, from the mendacious "guidance" statements of the Federal Reserve, to the official economic statistics of the federal agencies, to the manipulation of all markets, to the shenanigans on the fiscal side, to the pervasive accounting fraud that underlies it all. Ironically, the systematic chiseling of the foundering middle class is most visible in the rackets that medicine and education have become -- two activities that were formerly dedicated to doing no harm and seeking the truth !
Life in this milieu of immersive dishonesty drives citizens beyond cynicism to an even more desperate state of mind. The suffering public ends up having no idea what is really going on, what is actually happening. The toolkit of the Enlightenment -- reason, empiricism -- doesn't work very well in this socioeconomic hall of mirrors, so all that baggage is discarded for the idea that reality is just a social construct, just whatever story you feel like telling about it. On the right, Karl Rove expressed this point of view some years ago when he bragged, of the Bush II White House, that "we make our own reality." The left says nearly the same thing in the post-structuralist malarkey of academia: "you make your own reality." In the end, both sides are left with a lot of bad feelings and the belief that only raw power has meaning.
Erasing psychological boundaries is a dangerous thing. When the rackets finally come to grief -- as they must because their operations don't add up -- and the reckoning with true price discovery commences at the macro scale, the American people will find themselves in even more distress than they've endured so far. This will be the moment when either nobody has any money, or there is plenty of worthless money for everyone. Either way, the functional bankruptcy of the nation will be complete, and nothing will work anymore, including getting enough to eat. That is exactly the moment when Americans on all sides will beg someone to step up and push them around to get their world working again. And even that may not avail.
James Howard Kunstler's many books include The Geography of Nowhere, The Long Emergency, Too Much Magic: Wishful Thinking, Technology, and the Fate of the Nation , and the World Made by Hand novel series. He blogs on Mondays and Fridays at Kunstler.com .
Whine Merchant December 20, 2017 at 10:49 pm
Wow – is there ever negative!Celery , says: December 20, 2017 at 11:33 pmI think I need to go listen to an old-fashioned Christmas song now.Fran Macadam , says: December 20, 2017 at 11:55 pmThe ability to be financially, or at least resource, sustaining is the goal of many I know since we share a lack of confidence in any of our institutions. We can only hope that God might look down with compassion on us, but He's not in the practical plan of how to feed and sustain ourselves when things play out to their inevitable end. Having come from a better time, we joke about our dystopian preparations, self-conscious about our "overreaction," but preparing all the same.
Merry Christmas!
Look at it this way: Germany had to be leveled and its citizens reduced to abject penury, before Volkswagen could become the world's biggest car company, and autobahns built throughout the world. It will be darkest before the dawn, and hopefully, that light that comes after, won't be the miniature sunrise of a nuclear conflagration.KD , says: December 21, 2017 at 6:02 amEat, Drink, and be Merry, you can charge it on your credit card!Rock Stehdy , says: December 21, 2017 at 6:38 amHard words, but true. Kunstler is always worth reading for his common-sense wisdom.Helmut , says: December 21, 2017 at 7:04 amAn excellent summary and bleak reminder of what our so-called civilization has become. How do we extricate ourselves from this strange death spiral?Liam , says: December 21, 2017 at 7:38 am
I have long suspected that we humans are creatures of our own personal/group/tribal/national/global fables and mythologies. We are compelled by our genes, marrow, and blood to tell ourselves stories of our purpose and who we are. It is time for new mythologies and stories of "who we are". This bizarre hyper-techno all-for-profit world needs a new story.Peter , says: December 21, 2017 at 8:34 am"The black underclass is larger, more dysfunctional, and more alienated than it was in the 1960s. My theory, for what it's worth, is that the civil rights legislation of 1964 and '65, which removed legal barriers to full participation in national life, induced considerable anxiety among black citizens over the new disposition of things, for one reason or another."Um, forgotten by Kunstler is the fact that 1965 was also the year when the USA reopened its doors to low-skilled immigrants from the Third World – who very quickly became competitors with black Americans. And then the Boom ended, and corporate American, influenced by thinking such as that displayed in Lewis Powell's (in)famous 1971 memorandum, decided to claw back the gains made by the working and middle classes in the previous 3 decades.
I have some faith that the American people can recover from an excursion into unreality. I base it on my own survival to the end of this silly rant.SteveM , says: December 21, 2017 at 9:08 amRe: Whine Merchant, "Wow – is there ever negative!"Dave Wright , says: December 21, 2017 at 9:22 amCan't argue with the facts
P.S. Merry Christmas.
Hey Jim, I know you love to blame Wall Street and the Republicans for the GFC. I remember back in '08 you were urging Democrats to blame it all on Republicans to help Obama win. But I have news for you. It wasn't Wall Street that caused the GFC. The crisis actually had its roots in the Clinton Administration's use of the Community Reinvestment Act to pressure banks to relax mortgage underwriting standards. This was done at the behest of left wing activists who claimed (without evidence, of course) that the standards discriminated against minorities. The result was an effective repeal of all underwriting standards and an explosion of real estate speculation with borrowed money. Speculation with borrowed money never ends well.NoahK , says: December 21, 2017 at 10:15 amI have to laugh, too, when you say that it's perverse that the passion for tyranny is popular on the left. Have you ever heard of the French Revolution? How about the USSR? Communist China? North Korea? Et cetera.
Leftism is leftism. Call it Marxism, Communism, socialism, liberalism, progressivism, or what have you. The ideology is the same. Only the tactics and methods change. Destroy the evil institutions of marriage, family, and religion, and Man's innate goodness will shine forth, and the glorious Godless utopia will naturally result.
Of course, the father of lies is ultimately behind it all. "He was a liar and a murderer from the beginning."
When man turns his back on God, nothing good happens. That's the most fundamental problem in Western society today. Not to say that there aren't other issues, but until we return to God, there's not much hope for improvement.
It's like somebody just got a bunch of right-wing talking points and mashed them together into one incohesive whole. This is just lazy.Andrew Imlay , says: December 21, 2017 at 10:36 amHmm. I just wandered over here by accident. Being a construction contractor, I don't know enough about globalization, academia, or finance to evaluate your assertions about those realms. But being in a biracial family, and having lived, worked, and worshiped equally in white and black communities, I can evaluate your statements about social justice, race, and civil rights. Long story short, you pick out fringe liberal ideas, misrepresent them as mainstream among liberals, and shoot them down. Casuistry, anyone?peter in boston , says: December 21, 2017 at 10:48 amYou also misrepresent reality to your readers. No, the black underclass is not larger, more dysfunctional, and more alienated now than in the 1960's, when cities across the country burned and machine guns were stationed on the Capitol steps. The "racial divide" is not "starker now than ever"; that's just preposterous to anyone who was alive then. And nobody I've ever known felt "shame" over the "outcome of the civil rights campaign". I know nobody who seeks to "punish and humiliate" the 'privileged'.
I get that this column is a quick toss-off before the holiday, and that your strength is supposed to be in your presentation, not your ideas. For me, it's a helpful way to rehearse debunking common tropes that I'll encounter elsewhere.
But, really, your readers deserve better, and so do the people you misrepresent. We need bad liberal ideas to be critiqued while they're still on the fringe. But by calling fringe ideas mainstream, you discredit yourself, misinform your readers, and contribute to stereotypes both of liberals and of conservatives. I'm looking for serious conservative critiques that help me take a second look at familiar ideas. I won't be back.
Love Kunstler -- and love reading him here -- but he needs a strong editor to get him to turn a formless harangue into clear essay.Someone in the crowd , says: December 21, 2017 at 11:07 amI disagree, NoahK, that the whole is incohesive, and I also disagree that these are right-wing talking points.Jon , says: December 21, 2017 at 11:10 amThe theme of this piece is the long crisis in the US, its nature and causes. At no point does this essay, despite it stream of consciousness style, veer away from that theme. Hence it is cohesive.
As for the right wing charge, though it is true, to be sure, that Kunstler's position is in many respects classically conservative -- he believes for example that there should be a national consensus on certain fundamentals, such as whether or not there are two sexes (for the most part), or, instead, an infinite variety of sexes chosen day by day at whim -- you must have noticed that he condemned both the voluntarism of Karl Rove AND the voluntarism of the post-structuralist crowd.
My impression is that what Kunstler is doing here is diagnosing the long crisis of a decadent liberal post-modernity, and his stance is not that of either of the warring sides within our divorced-from-reality political establishment, neither that of the 'right' or 'left.' Which is why, logically, he published it here. National Review would never have accepted this piece. QED.
This malaise is rooted in human consciousness that when reflecting on itself celebrating its capacity for apperception suffers from the tension that such an inquiry, such an inward glance produces. In a word, the capacity for the human being to be aware of his or herself as an intelligent being capable of reflecting on aspects of reality through the artful manipulation of symbols engenders this tension, this angst.Joe the Plutocrat , says: December 21, 2017 at 11:27 amSome will attempt to extinguish this inner tension through intoxication while others through the thrill of war, and it has been played out since the dawn of man and well documented when the written word emerged.
The malaise which Mr. Kunstler addresses as the problem of our times is rooted in our existence from time immemorial. But the problem is not only existential but ontological. It is rooted in our being as self-aware creatures. Thus no solution avails itself as humanity in and of itself is the problem. Each side (both right and left) seeks its own anodyne whether through profligacy or intolerance, and each side mans the barricades to clash experiencing the adrenaline rush that arises from the perpetual call to arms.
The scientist 880 , says: December 21, 2017 at 11:48 am"Globalization has acted, meanwhile, as a great leveler. It destroyed what was left of the working class -- the lower-middle class -- which included a great many white Americans who used to be able to support a family with simple labor."And to whom do we hand the tab for this? Globalization is a word. It is a concept, a talking point. Globalization is oligarchy by another name. Unfortunately, under-educated, deplorable, Americans; regardless of party affiliation/ideology have embraced. And the most ironic part?
Russia and China (the eventual surviving oligarchies) will eventually have to duke it out to decide which superpower gets to make the USA it's b*tch (excuse prison reference, but that's where we're headed folks).
And one more irony. Only in American, could Christianity, which was grew from concepts like compassion, generosity, humility, and benevolence; be re-branded and 'weaponized' to further greed, bigotry, misogyny, intolerance, and violence/war. Americans fiddled (over same sex marriage, abortion, who has to bake wedding cakes, and who gets to use which public restroom), while the oligarchs burned the last resources (natural, financial, and even legal).
Adam , says: December 21, 2017 at 11:57 am"Today, there is more grievance and resentment, and less hope for a better future, than when Martin Luther King made the case for progress on the steps of the Lincoln Memorial in 1963."Spoken like a white guy who has zero contact with black people. I mean, even a little bit of research and familiarity would give lie to the idea that blacks are more pessimistic about life today than in the 1960's.
Black millenials are the most optimistic group of Americans about the future. Anyone who has spent any significant time around older black people will notice that you don't hear the rose colored memories of the past. Black people don't miss the 1980's, much less the 1950's. Young black people are told by their elders how lucky they are to grow up today because things are much better than when grandpa was our age and we all know this history.\
It's clear that this part of the article was written from absolute ignorance of the actual black experience with no interest in even looking up some facts. Hell, Obama even gave a speech at Howard telling graduates how lucky they were to be young and black Today compared to even when he was their age in the 80's!
Here is the direct quote;
"In my inaugural address, I remarked that just 60 years earlier, my father might not have been served in a D.C. restaurant -- at least not certain of them. There were no black CEOs of Fortune 500 companies. Very few black judges. Shoot, as Larry Wilmore pointed out last week, a lot of folks didn't even think blacks had the tools to be a quarterback. Today, former Bull Michael Jordan isn't just the greatest basketball player of all time -- he owns the team. (Laughter.) When I was graduating, the main black hero on TV was Mr. T. (Laughter.) Rap and hip hop were counterculture, underground. Now, Shonda Rhimes owns Thursday night, and Beyoncé runs the world. (Laughter.) We're no longer only entertainers, we're producers, studio executives. No longer small business owners -- we're CEOs, we're mayors, representatives, Presidents of the United States. (Applause.)
I am not saying gaps do not persist. Obviously, they do. Racism persists. Inequality persists. Don't worry -- I'm going to get to that. But I wanted to start, Class of 2016, by opening your eyes to the moment that you are in. If you had to choose one moment in history in which you could be born, and you didn't know ahead of time who you were going to be -- what nationality, what gender, what race, whether you'd be rich or poor, gay or straight, what faith you'd be born into -- you wouldn't choose 100 years ago. You wouldn't choose the fifties, or the sixties, or the seventies. You'd choose right now. If you had to choose a time to be, in the words of Lorraine Hansberry, "young, gifted, and black" in America, you would choose right now. (Applause.)"
https://www.politico.com/story/2016/05/obamas-howard-commencement-transcript-222931
https://www.google.com/amp/s/m.huffpost.com/us/entry/us_58cf1d9ae4b0ec9d29dcf283/amp
I love reading about how the Community Reinvestment Act was the catalyst of all that is wrong in the world. As someone in the industry the issue was actually twofold. The Commodities Futures Modernization Act turned the mortgage securities market into a casino with the underlying actual debt instruments multiplied through the use of additional debt instruments tied to the performance but with no actual underlying value. These securities were then sold around the world essentially infecting the entire market. In order that feed the beast, these NON GOVERNMENT loans had their underwriting standards lowered to rediculous levels. If you run out of qualified customers, just lower the qualifications. Government loans such as FHA, VA, and USDA were avoided because it was easier to qualify people with the new stuff. And get paid. The short version is all of the incentives that were in place at the time, starting with the Futures Act, directly led to the actions that culminated in the Crash. So yes, it was the government, just a different piece of legislation.SteveM , says: December 21, 2017 at 12:29 pmKunstler itemizing the social and economic pathologies in the United States is not enough. Because there are other models that demonstrate it didn't have to be this way.One Guy , says: December 21, 2017 at 1:10 pmE.g. Germany. Germany is anything but perfect and its recent government has screwed up with its immigration policies. But Germany has a high standard of living, an educated work force (including unions and skilled crafts-people), a more rational distribution of wealth and high quality universal health care that costs 47% less per capita than in the U.S. and with no intrinsic need to maraud around the planet wasting gobs of taxpayer money playing Global Cop.
The larger subtext is that the U.S. house of cards was planned out and constructed as deliberately as the German model was. Only the objective was not to maximize the health and happiness of the citizenry, but to line the pockets of the parasitic Elites. (E.g., note that Mitch McConnell has been a government employee for 50 years but somehow acquired a net worth of over $10 Million.)
P.S. About the notionally high U.S. GDP. Factor out the TRILLIONS inexplicably hoovered up by the pathological health care system, the metastasized and sanctified National Security State (with its Global Cop shenanigans) and the cronied-up Ponzi scheme of electron-churn financialization ginned up by Goldman Sachs and the rest of the Banksters, and then see how much GDP that reflects the actual wealth of the middle class is left over.
Right-Wing Dittoheads and Fox Watchers love to blame the Community Reinvestment Act. It allows them to blame both poor black people AND the government. The truth is that many parties were to blame.LouB , says: December 21, 2017 at 1:14 pmOne of the things I love about this rag is that almost all of the comments are included. You may be sure that similar commenting privilege doesn't exist most anywhere else.tzx4 , says: December 21, 2017 at 1:57 pmAny disfavor regarding the supposed bleakness with the weak hearted souls aside, Mr K's broadside seems pretty spot on to me.
I think the author overlooks the fact that government over the past 30 to 40 years has been tilting the playing field ever more towards the uppermost classes and against the middle class. The evisceration of the middle class is plain to see.Jeeves , says: December 21, 2017 at 2:09 pmIf the the common man had more money and security, lots of our current intrasocial conflicts would be far less intense.
Andrew Imlay: You provide a thoughtful corrective to one of Kunstler's more hyperbolic claims. And you should know that his jeremiad doesn't represent usual fare at TAC. So do come back.Wezz , says: December 21, 2017 at 2:44 pmWhether or not every one of Kunstler's assertions can withstand a rigorous fact-check, he is a formidable rhetorician. A generous serving of Weltschmerz is just what the season calls for.
America is stupefied from propaganda on steroids for, largely from the right wing, 25? years of Limbaugh, Fox, etc etc etc Clinton hate x 10, "weapons of mass destruction", "they hate us because we are free", birtherism, death panels, Jade Helm, pedophile pizza, and more Clinton hate porn.John Blade Wiederspan , says: December 21, 2017 at 4:26 pmAmericans have been taught to worship the wealthy regardless of how they got there. Americans have been taught they are "Exceptional" (better, smarter, more godly than every one else) in spite of outward appearances. Americans are under educated and encouraged to make decisions based on emotion from constant barrage of extra loud advertising from birth selling illusion.
Americans brain chemistry is most likely as messed up as the rest of their bodies from junk or molested food. Are they even capable of normal thought?
Donald Trump has convinced at least a third of Americans that only he, Fox, Breitbart and one or two other sources are telling the Truth, every one else is lying and that he is their friend.
Is it possible we are just plane doomed and there's no way out?
I loathe the cotton candy clown and his Quislings; however, I must admit, his presence as President of the United States has forced everyone (left, right, religious, non-religious) to look behind the curtain. He has done more to dis-spell the idealism of both liberal and conservative, Democrat and Republican, rich and poor, than any other elected official in history. The sheer amount of mind-numbing absurdity resulting from a publicity stunt that got out of control ..I am 70 and I have seen a lot. This is beyond anything I could ever imagine. America is not going to improve or even remain the same. It is in a 4 year march into worse, three years to go.EarlyBird , says: December 21, 2017 at 5:23 pmSheesh. Should I shoot myself now, or wait until I get home?dvxprime , says: December 21, 2017 at 5:46 pmMr. Kuntzler has an honest and fairly accurate assessment of the situation. And as usual, the liberal audience that TAC is trying so hard to reach, is tossing out their usual talking points whilst being in denial of the situation.Slooch , says: December 21, 2017 at 7:03 pmThe Holy Bible teaches us that repentance is the first crucial step on the path towards salvation. Until the progressives, from their alleged "elite" down the rank and file at Kos, HuffPo, whatever, take a good, long, hard look at the current national dumpster fire and start claiming some responsibility, America has no chance of solving problems or fixing anything.
Kunstler must have had a good time writing this, and I had a good time reading it. Skewed perspective, wild overstatement, and obsessive cherry-picking of the rare checkable facts are mixed with a little eye of newt and toe of frog and smothered in a oar and roll of rhetoric that was thrilling to be immersed in. Good work!jp , says: December 21, 2017 at 8:09 pmaah, same old Kunstler, slightly retailored for the Trump years.c.meyer , says: December 21, 2017 at 8:30 pmfor those of you familiar with him, remember his "peak oil" mania from the late 00s and early 2010s? every blog post was about it. every new year was going to be IT: the long emergency would start, people would be Mad Maxing over oil supplies cos prices at the pump would be $10 a gallon or somesuch.
in this new rant, i did a control-F for "peak oil" and hey, not a mention. I guess even cranks like Kunstler know when to give a tired horse a rest.
So what else is new. Too 'clever', overwritten, no new ideas. Can't anyone move beyond clichés?Active investor , says: December 22, 2017 at 12:35 amKunstler once again waxes eloquent on the American body politic. Every word rings true, except when it doesn't. At times poetic, at other times paranoid, Kunstler does us a great service by pointing a finger at the deepest pain points in America, any one of which could be the geyser that brings on catastrophic failure.JonF , says: December 22, 2017 at 9:52 amHowever, as has been pointed out, he definitely does not hang out with black people. For example, the statement:
But the residue of the "Black Power" movement is still present in the widespread ambivalence about making covenant with a common culture, and it has only been exacerbated by a now long-running "multiculturalism and diversity" crusade that effectively nullifies the concept of a national common culture.
The notion of a 'national common culture' is interesting but pretty much a fantasy that never existed, save colonial times.
Yet Kunstler's voice is one that must be heard, even if he is mostly tuning in to the widespread radicalism on both ends of the spectrum, albeit in relatively small numbers. Let's face it, people are in the streets marching, yelling, and hating and mass murders keep happening, with the regularity of Old Faithful. And he makes a good point about academia loosing touch with reality much of the time. He's spot on about the false expectations of what technology can do for the economy, which is inflated with fiat currency and God knows how many charlatans and hucksters. And yes, the white working class is feeling increasingly like a 'victim group.'
While Kunstler may be more a poet than a lawyer, more songwriter than historian, my gut feeling is that America had better take notice of him, as The American ship of state is being swept by a ferocious tide and the helmsman is high on Fentanyl (made in China).
Re: The crisis actually had its roots in the Clinton Administration's use of the Community Reinvestment Actkevin on the left , says: December 22, 2017 at 10:49 amHere we go again with this rotting zombie which rises from its grave no matter how many times it has been debunked by statisticians and reputable economists (and no, not just those on the left– the ranks include Bruce Bartlett for example, a solid Reaganist). To reiterate again : the CRA played no role in the mortgage boom and bust. Among other facts in the way of that hypothesis is the fact that riskiest loans were being made by non-bank lenders (Countrywide) who were not covered by the CRA which only applied to actual banks– and the banks did not really get into the game full tilt, lowering their lending standards, until late in the game, c. 2005, in response to their loss of business to the non-bank lenders. Ditto for the GSEs, which did not lower their standards until 2005 and even then relied on wall Street to vet the subprime loans they were buying.
To be sure, blaming Wall Street for everything is also wrong-headed, though wall Street certainly did some stupid, greedy and shady things (No, I am not letting them off the hook!) But the cast of miscreants is numbered in the millions and it stretches around the planet. Everyone (for example) who got into the get-rich-quick Ponzi scheme of house flipping, especially if they lied about their income to do so. And everyone who took out a HELOC (Home Equity Line of Credit) and foolishly charged it up on a consumption binge. And shall we talk about the mortgage brokers who coached people into lying, the loan officers who steered customers into the riskiest (and highest earning) loans they could, the sellers who asked palace-prices for crackerbox hovels, the appraisers who rubber-stamped such prices, the regulators who turned a blind eye to all the fraud and malfeasance, the ratings agencies who handed out AAA ratings to securities full of junk, the politicians who rejoiced over the apparent "Bush Boom" well, I could continue, but you get the picture.
We have met the enemy and he was us.
"The Holy Bible teaches us that repentance is the first crucial step on the path towards salvation. Until the progressives, from their alleged "elite" down the rank and file at Kos, HuffPo, whatever, take a good, long, hard look at the current national dumpster fire and start claiming some responsibility, America has no chance of solving problems or fixing anything."Pretty sure that calling other people to repent of their sin of disagreeing with you is not quite what the Holy Bible intended.
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Dec 22, 2017 | www.unz.com
Introduction
Clearly the pendulum has swung to the right in the past few years. Numerous questions arise. What kind of right? How far right? How did they gain power? What is their appeal? How sustainable are the right wing regimes? Who are their international allies and adversaries? Having taken power, how have the rightist regimes performed and by what criteria is success or failure measured?
While the left has been in retreat, they still retain power in some states. Numerous questions arise. What is the nature of the left today? Why have some regimes continued while others have declined or been vanquished? Can the left recover its influence and under what conditions and with what programmatic appeal.
We will proceed by discussing the character and policies of the right and left and their direction. We will conclude by analyzing the dynamics of right and left policies, alignments and future perspectives.
Right-Radicalism: The Face of Power
The right wing regimes are driven by intent to implement structural changes: they look to reordering the nature of the state, economic and social relations and international political and economic alignments.
Radical right regimes rule in Brazil, Argentina, Mexico, Colombia, Peru, Paraguay, Guatemala, Honduras and Chile.
In several countries extreme right regimes have made abrupt changes, while in others they build on incremental changes constituted over time.
The changes in Argentina and Brazil represent examples of extreme regressive transformations directed at reversing income distribution, property relations, international alignments and military strategies. The goal is to redistribute income upwardly, to re-concentrate wealth, property-ownership upward and externally and to subscribe to imperial doctrine. These pluto-populist regimes are run by rulers, who openly speak to and for very powerful domestic and overseas investors and are generous in their distribution of subsidies and state resources – a kind of ' populism for the plutocrats' .
The rise and consolidation of extremist right regimes in Argentina and Brazil are based on several decisive interventions, combining elections and violence, purges and co-optation, mass media propaganda and deep corruption.
Mauricio Macri was backed by the major media, led by the Clarin conglomerate, as well as by the international financial press (Financial Times, Wall Street Journal, etc.). Wall Street speculators and Washington's overseas political apparatus subsidized his electoral campaign.
Macri, his family, cronies and financial accomplices, transferred public resources to private accounts. Provincial political bosses and their patronage operations joined forces with the wealthy financial sectors of Buenos Aires to secure votes in the Capital.
Upon his election, the Mauricio Macri regime transferred five billion dollars to the notorious Wall Street speculator, Paul Singer, signed off on multi-billion dollar, high interest loans, increased utility fees six fold, privatized oil, gas and public lands and fired tens of thousands of public sector employees.
Macri organized a political purge and arrest of opposition political leaders, including former President Cristina Fernandez Kirchner. Several provincial activists were jailed or even assassinated.
Macri is a success story from the perspective of Wall Street, Washington and the Porteño business elite. Wages and salaries have declined for Argentine workers. Utility companies secured their highest profits ever. Bankers doubled interest rate returns. Importers became millionaires. Agro-business incomes skyrocketed as their taxes were reduced.
From the perspective of Argentina's small and medium business enterprises President Macri's regime has been a disaster: Many thousands have gone bankrupt because of high utility costs and harsh competition from cheap Chinese imports. In addition to the drop in wages and salaries, unemployment and under employment doubled and the rate of extreme poverty tripled
The economy, as a whole, floundered. Debt financing failed to promote growth, productivity, innovation and exports. Foreign investment experienced easy entry, big profits and fast departure. The promise of prosperity was narrowly based around a quarter of the population. To weaken the expected public discontent – the regime shut down independent media voices, unleashed thugs against critics and co-opted pliable gangster trade union bosses to break strikes.
Public protests and strikes multiplied but were ignored and repressed. Popular leaders and activists are stigmatized by the Macri-financed media hacks.
Barring a major social upheaval or economic collapse, Macri will exploit the fragmentation of the opposition to secure re-election as a model gangster for Wall Street. Macri is prepared to sign off on US military bases, EU free trade agreements, and greater police liaison with Israel's sinister secret police, Mossad.
Brazil has followed Macri's far right policies.
Seizing power through a phony impeachment operation, the mega-swindler Michel Temer immediately proceeded to dismantle the entire public sector, freeze salaries for twenty years, and extend retirement age for pensioners by five to ten years. Temer led over a thousand bribe-taking elected officials in the multi-billion dollar pillage of the state oil company and every major public infrastructure project.
Coup, corruption and contempt were hidden by a system granting Congressional impunity until independent prosecutors investigated, charged and jailed several dozen politicians, but not Temer. Despite 95% public disapproval, President Temer remains in power with the total backing of Wall Street, the Pentagon and Sao Paolo bankers.
Mexico, the long-standing narco-assassin state, continues elect one thieving PRI-PAN political regime after another. Billions in illicit profits flows to the overseas tax havens of money laundering bankers, US and Canadian mine owners. Mexican and international manufacturers extracted double digit profits sent, to overseas accounts and tax havens. Mexico broke its own miserable record in elite tax avoidance, while extending low wage-tax 'free trade zones'. Millions of Mexicans have fled across the border to escape predatory gangster capitalism. The flow of hundreds of millions of dollars of profits by US and Canadian multi-nationals were a result of the 'unequal exchange' between US capital and Mexican labor, held in place by Mexico's fraudulent electoral system.
In at least two well-known presidential elections in 1988 and 2006, left of center candidates, Cuahtemoc Cardenas and Manuel Lopez Obrador, won with healthy margins of victory, only to have their victories stolen by fraudulent vote counts.
Peru's rightist mining regimes, alternated between the overtly bloody Fujimori dictatorship and corrupt electoral regimes. What is consistent in Peruvian politics is the handover of mineral resources to foreign capital, pervasive corruption and the brutal exploitation of natural resources by US and Canadian mining and drilling corporations in regions inhabited by Indian communities.
The extreme right ousted elected left-of-center governments, including President Fernando Lugo in Paraguay (2008-2012) and Manuel Zelaya in Honduras (2006-2009), with the active support and approval of the US State Department. Narco-presidents now wield power by means of repression, including violence against popular movements and the killing of scores of peasant and urban activists. This year, a grossly rigged election in Honduras ensured the continuity of narco-regimes and US military bases.
The spread of the extreme right from Central America and Mexico to the Southern Cone provides the groundwork for the re-assertion of US centered military alliances and regional trade pacts.
The rise of the extreme right ensures the most lucrative privatizations and the highest rates of return on overseas bank loans. The far right is quick to crack down on popular dissent and electoral challenges with violence. At most the far right allows a few rotating elites with nationalist pretensions to provide a façade of electoral democracy.
The Shift from the Center-Left to the Center-Right
The political swings to the far right have had profound ripple effects – as nominal center-left regimes have swung to the center-right.
Two regimes have moved decisively from the center-left to the center-right: Uruguay under Tabare Vazquez of the 'Broad Front' and Ecuador with the recent election of Lenin Moreno of PAIS Alliance. In both cases the groundwork was established via accommodations with oligarchs of the traditional right parties. The previous center-left regimes of Ecuadorean President Rafael Correa and Uruguayan President Jose Mujica succeeded in pushing for public investments and social reforms. They combined their leftist rhetoric while capitalizing on the global high prices and high demand for agro-mineral exports to finance their reforms. With the decline in world prices and the public exposure of corruption, the newly elected center-left parties nominated and elected center –right candidates who turned anti-corruption campaigns into vehicles for embracing neoliberal economic policies. The center-right presidents rejected economic nationalism, encouraged large scale foreign investment and implemented fiscal austerity programs appealing to the upper middle class and ruling class.
The center-right regimes marginalized the leftist sectors of their parties. In the case of Ecuador, they split the party, with the newly elected president realigning international policies away from the left (Bolivia, Venezuela) and toward the US and the far right– while shedding the legacy of their predecessor in terms of popular social programs.
With the decline in export prices the center-right regimes offered generous subsidies to foreign investors in agriculture and forestry in Uruguay, and mine owners and exporters in Ecuador.
The newly converted center-right regimes joined with their established counterparts in Chile and joined the Trans Pacific Partnership with Asian nations, the EU and the US.
The center-right sought to manipulate the social rhetoric of the previous center-left regimes in order to retain popular voters while securing support from the business elite.
The Left Moves to the Center Left
Bolivia, under Evo Morales, has demonstrated an exceptional capacity for sustaining growth, securing re-election and neutralizing the opposition by combining a radical left foreign policy with a moderate, mixed public-private export economy. While Bolivia condemns US imperialism, major oil, gas, metals and lithium multi-nationals have invested heavily in Bolivia. Evo Morales has moderated his ideological posture shifting from revolutionary socialism to a local version of liberal democratic cultural politics.
Evo Morales' embrace of a mixed economy has neutralized any overt hostility from the US and the new far-right regimes in the region
Though remaining politically independent, Bolivia has integrated its exports with the far right neoliberal regimes in the region. President Evo Morales's moderate economic policies, diversity of mineral exports, fiscal responsibility, incremental social reforms, and support from well-organized social movements has led to political stability and social continuity despite the volatility of commodity prices.
Venezuela's left regimes under President Hugo Chavez and Maduro have followed a divergent course with harsh consequences. Totally dependent on extraordinary global oil prices, Venezuela proceeded to finance generous welfare programs at home and abroad. Under President Chavez leadership, Venezuela adopted a consequential anti-imperialist policy successfully opposing a US centered free trade agreement (LAFTA) and launching an anti-imperialist alternative, the Bolivarian Alliance for the Americas (ALBA).
Advancing social welfare and financing overseas allies without diversifying the economy and markets and increasing production was predicated on continuous high returns on a single volatile export – oil.
Unlike Bolivia under President Evo Morales, who built his power with the support of an organized, class conscious and disciplined mass base, Venezuela counted on an amorphous electoral alliance, which included slum dwellers, defectors from the corrupt traditional parties (across the spectrum) and opportunists intent on grabbing office and perks. Political education was reduced to mouthing slogans, cheering the President and distributing consumer goods.
Venezuelan technocrats and political loyalists occupied highly lucrative positions, especially in the petroleum sector and were not held to account by workers' councils or competent state auditors. Corruption was rampant and billions of dollars of oil wealth was stolen. This pillage was tolerated because of the huge influx of petro-dollars due to historic high prices and high demand. This led to a bizarre situation where the regime spoke of socialism and funded massive social programs, while the major banks, food distributers, importers and transportation operators were controlled by hostile private oligarchs who pocketed enormous profits while manufacturing shortages and promoting inflation. Despite the problems, the Venezuelan voters gave the regime a series of electoral victories over the US proxies and oligarch politicians. This tended to create overconfidence in the regime that the Bolivarian socialist model was irrevocable.
The precipitous drop of oil prices, global demand, and export earnings led to the decline of imports and consumption. Unlike Bolivia, foreign reserves declined, the rampant theft of billions was belatedly uncovered and the US-backed rightwing opposition returned to violent 'direct action' and sabotage while hoarding essential food, consumer goods and medicine. Shortages led to widespread black marketeering. Public sector corruption and hostile opposition control of the private banking, retail and industrial sectors, backed by the US, paralyzed the economy. The economy has been in a free-fall and electoral support has eroded. Despite the regime's severe problems, the majority of low income voters correctly understood that their chances of surviving under the US-backed oligarchic opposition would be worse and the embattled left continued to win gubernatorial and municipal elections up through 2017.
Venezuela's economic vulnerability and negative growth rate led to increased indebtedness. The opposition of the extreme right regimes in Latin America and Washington's economic sanctions has intensified food shortages and increased unemployment.
In contrast, Bolivia effectively defeated US-elite coup plots between 2008-10. The Santa Cruz-based oligarchs faced the clear choice of either sharing profits and social stability by signing off on social pacts (workers/peasants, capital and state) with the Morales government or facing an alliance of the government and the militant labor movement prepared to expropriate their holdings. The elites chose economic collaboration while pursuing low intensity electoral opposition.
Conclusion
Left opposition is in retreat from state power. Opposition to the extreme right is likely to grow, given the harsh, uncompromising assault on income, pensions, the rise in the cost of living, severe reductions in social programs and attacks on private and public sector employment. The extreme right has several options, none of which offer any concessions to the left. They have chosen to heighten police state measures (the Macri solution); they attempt to fragment the opposition by negotiating with the opportunist trade union and political party bosses; and they reshuffle degraded rulers with new faces to continue policies (the Brazilian solution).
The formerly revolutionary left parties, movements and leaders have evolved toward electoral politics, protests and job action. So far they do not represent an effective political option at the national level
The center-left, especially in Brazil and Ecuador, is in a strong position with dynamic political leaders (Lula DaSilva and Correa) but face trumped up charges by right-wing prosecutors who intend to exclude them from running for office. Unless the center-left reformers engage in prolonged large-scale mass activity, the far right will effectively undermine their political recovery.
The US imperial state has temporarily regained proxy regimes, military allies and economic resources and markets. China and the European Union profit from optimal economic conditions offered by the far right regimes. The US military program has effectively neutralized the radical opposition in Colombia, and the Trump regime has intensified and imposed new sanctions on Venezuela and Cuba.
The Trump regimes 'triumphalist' celebration is premature – no decisive strategic victory has taken place, despite important short term advances in Mexico, Brazil and Argentina. However large outflows of profits, major transfers of ownership to foreign investors, favorable tax rates, low tariff and trade policies have yet to generate new productive facilities, sustainable growth and to ensure economic fundamentals. Maximizing profits and ignoring investments in productivity and innovation to promote domestic markets and demand has bankrupted tens of thousands of medium and small local commercial and manufacturing firms. This has led to rising chronic unemployment and underemployment. Marginalization and social polarization without political leadership is growing. Such conditions led to 'spontaneous' uprisings in Argentina 2001, Ecuador 2000 and Bolivia 2005.
The far right in power may not evoke a rebellion of the far left but its policies can certainly undermine the stability and continuity of the current regimes. At a minimum, it can lead to some version of the center left and restoration of the welfare and employment regimes now in tatters.
In the meantime the far right will press ahead with their perverse agenda combining deep reversals of social welfare, the degradation of national sovereignty and economic stagnation with a formidable profit maximizing performance.
Jason Liu , December 19, 2017 at 7:04 pm GMT
I think this author is on the wrong site. None of those countries have "radical right" governments. Right wing radicals believe in social hierarchy regardless of wealth distribution.Miro23 , December 20, 2017 at 3:11 am GMTLemurmaniac , December 20, 2017 at 10:03 am GMTIn contrast, Bolivia effectively defeated US-elite coup plots between 2008-10. The Santa Cruz-based oligarchs faced the clear choice of either sharing profits and social stability by signing off on social pacts (workers/peasants, capital and state) with the Morales government or facing an alliance of the government and the militant labor movement prepared to expropriate their holdings. The elites chose economic collaboration while pursuing low intensity electoral opposition.
This is an intelligent form of Bolivia First, looking for good relations with International Capital, but putting the wellbeing of all Bolivians first.
And interestingly it works.According to a report by the Centre for Economic and Policy Research (CEPR) in Washington, "Bolivia has grown much faster over the last eight years than in any period over the past three and a half decades." The benefits of such growth have been felt by the Bolivian people: under Morales, poverty has declined by 25% and extreme poverty has declined by 43%; social spending has increased by more than 45%; the real minimum wage has increased by 87.7%; and, perhaps unsurprisingly, the Economic Commission on Latin America and the Caribbean has praised Bolivia for being "one of the few countries that has reduced inequality". In this respect, the re-election of Morales is really very simple: people like to be economically secure – so if you reduce poverty, they'll probably vote for you.
Turns out the difference between Bolivia and Venezuela has nothing to do with abstract ideological labels, and everything to do with fiscal prudence.
I know, I know, fiscal prudence sounds deadly dull, but it makes an enormous difference in real people's lives. While Venezuela's reckless socialists were impoverishing the country's once thriving middle class, Bolivia's socialists were creating an entirely new indigenous middle class, even spawning a whole new style of architecture along with it. Why? Because newly affluent Bolivians can afford it: Per capita GDP more than tripled from just $1,000 a year to over $3,200 over a decade. At the same time, new government social programs designed to help older people, mothers and other at-risk groups saw to major improvements in social indicators. To take just one, consider this: Thirty-two percent of Bolivians were chronically malnourished in 2003. By 2012, just 18 percent were.The "CONSERVATIVE SOCIALISM" of Bolivia's Evo Morales
https://panampost.com/editor/2017/05/10/conservative-bolivia-evo-morales/
Oligarchic regimes pursuing the factional, plutocratic, trans-national good are merely an older form of the liberal left.They're a cargo cult of the true hierarchical expressions of a right wing order in the realm of gross materialism.
The post-liberal right is interested in securing the COMMON GOOD.
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Dec 20, 2017 | www.nakedcapitalism.com
By Bill Black, the author of The Best Way to Rob a Bank is to Own One, an associate professor of economics and law at the University of Missouri-Kansas City, and co-founder of Bank Whistleblowers United. Originally published at New Economic Perspectives
The truly exceptional thing about 'modern macroeconomics' devotees is not that they are so consistently and horrifically wrong or that they persist in their errors – but their exceptional combination of arrogance and disdain for those who have dramatically better records and broader and more relevant expertise. Kartik Athreya, the Richmond Fed's Research Director, led the modern macro parade on June 17, 2010 with his blog (which he later withdrew in embarrassment) when he announced the Athreya Axiom of Absolute Arrogance.
So far, I've claimed something a bit obnoxious-sounding: that writers who have not taken a year of PhD coursework in a decent economics department (and passed their PhD qualifying exams), cannot meaningfully advance the discussion on economic policy. Taken literally, I am almost certainly wrong. Some of them have great ideas, for sure. But this is irrelevant. The real issue is that there is extremely low likelihood that the speculations of the untrained, on a topic almost pathologically riddled by dynamic considerations and feedback effects, will offer anything new. Moreover, there is a substantial likelihood that it will instead offer something incoherent or misleading.
Modern macro devotees suffered far worse substantive embarrassment than Athreya's personal embarrassment. After Athreya (briefly) published his Axiom, a flurry of the world's top economists issued devastating critiques of modern macro's foundational myths in their dynamic stochastic general equilibrium (DSGE) models. The takedowns enraged and humiliated modern macro devotees, and because they are incapable of staying embarrassed, they doubled-down on Athreya's Axiom by announcing the Dilettante Doctrine .
People who don't like dynamic stochastic general equilibrium (DSGE) models are dilettantes. By this we mean they aren't serious about policy analysis.
Lawrence J. Christiano, Martin S. Eichenbaum, and Mathias Trabandt, authored "On DSGE Models on November 9, 2017. Christiano and Eichenbaum are freshwater modern macro devotees trained largely at the University of Minnesota, and now holding prominent positions at Northwestern. Trabandt is a German modern macro devotee.
A dilettante is a person who cultivates an area of interest, such as the arts, without real commitment or knowledge. The Dilettante Doctrine takes modern macro's arrogance to a new pinnacle. Only their model is legitimate, and it is illegitimate to criticize their DSGE models, even though they repeatedly fail. Instead, we must all "like" their models. We cannot make any statements about macroeconomics unless we "like [DSGE] models." The Dilettante Doctrine is a sure-fire means of winning academic disputes. You demand that your critics endorse your views, or you dismiss them as dilettantes unworthy of respect.
Readers may recall that the scientific method works in the opposite direction of the Dilettante Doctrine. Modern macro proposes a theory (DSGE) and tests its predictive ability. The DSGE models fail recurrently, on the most important macro events, and the failures are massive. The scientific method requires the theorist of the failed model to declare it falsified. Economists who "like" repeatedly falsified DSGE models are, as Paul Romer famously declared, engaged in "pseudoscience."
Athreya then inadvertently compounded modern macro's failures by putting in writing a bit too many of modern macro's darker secrets in his 2013 book about macroeconomics. Athreya confirmed many of the most fundamental criticisms of modern macro devotees, revealed additional failures that were even more devastating, and illustrated perfectly the blindness of modern macro's devotees to their dogmas and logic. Athreya did recognize clearly one dogma that made modern macro devotees unable to spot even the world's largest bubble – but treated that failure as if it were a virtue. Modern macro devotees train macroeconomists to be unable to identify warn against, or take action to end even the most destructive bubbles. This is like training surgeons to believe that shock cannot occur and they should ignore shock in treating patients.
I will return to these errors in subsequent columns, but in this initial column, I introduce Athreya's most embarrassing and devastating admission. Athreya goes on for over 100 pages on how wondrous his fellow modern macro devotees are. They are brilliant specialists who are the world's top practitioners of ultra-rigorous logic and ultra-sophisticated mathematics skills that make it impossible for them to be anything other than transparent and scrupulously honest. In particular, Athreya tells the reader that the paramount problem in macro and microeconomics is recognizing, understanding, and countering deceit, the defining element at law of fraud. (Actually, he does that only in an exceptionally opaque manner.) On p.103, however, Athreya admits that modern macro devotees know that their vaunted DSGE models rest on a fatal premise that is so preposterous and embarrassing that they dare not state it. "A silent assumption of the ADM model" is that "the ADM God" perfectly prevents all crimes, predation, and deceit – at no cost. Note that this means that modern macro devotees (silently) designed their DSGE models to be incapable of recognizing, understanding, measuring, or countering deceit, which they admit is their paramount and fatal failure.
It is never good to be arrogant. It is always dangerous and limiting to be (proudly) ignorant of fields that are likely to have superior understanding of issues such as deceit, fraud, and predation. Athreya's book displays his pride in both of these faults.
The authors of the Dilettante Doctrine inadvertently revealed another embarrassing modern macro failure of great importance. It is the combination of repeated, devastating failure and unfailing arrogance that defines (and dooms) modern macro as pseudoscientists. In fairness to the authors, they announced their Dilettante Doctrine in the context of an article admitting catastrophic errors in modern macro. They also unintentionally admit the non-scientific nature of their enterprise. Consider this passage:
For [IMF's leader] to take DSGE model-based recommendations seriously, the economic intuition underlying those recommendations has to be made in compelling and intuitive ways.
Yes, they actually wrote that for anyone to take DSGE models "seriously" their "economic intuition" must "be made intuitive." Wow, who knew science could be so 'intuitive?' Not satisfied with announcing their new "intuitive method" as a substitute for the scientific method, the authors double-down on the concept that 'intuition' is the secret sauce of economics declaring that the super-secret is to keep that 'intuition' "simple."
To be convincing, it is critical for a DSGE modeler to understand and convey the economic intuition behind the model's implications in simple and intuitive terms.
Notice that the authors are not stating the conditions required to make the DSGE models 'correct.' They are only interested in what practices will make the models' results "convincing" to the bosses.
The bosses decide "actual policymaking." The Dilettante Doctrine authors declare policymaking to be even less scientific than relying on 'simple' 'intuition' to convey DSGE model results. It turns out that DSGE models are the 'canvas' on which modern macro devotees "see the combined effect of the different colors" of their "art."
Inevitably, actual policymaking will always be to some extent an art. But even an artist needs a canvas to see the combined effect of the different colors. A DSGE model is that canvas.
These passages are not simply embarrassing, they are revealing. DSGE is a substantive farce that repeatedly fails because modern macro devotees shaped their models from the beginning to embrace laissez faire dogmas. The 'simple' 'intuitions' underlying DSGE models are the most destructive laissez faire dogmas. Narayana Kocherlakota's sly use of the word "almost" reveals his agreement with this point.
[A]lmost coincidentally -- in these [early DSGE] models, all government interventions (including all forms of stabilization policy) are undesirable.
The authors of the Dilettante Doctrine agree with Kocherlakota's observation about the original DSGE models.
The associated policy implications are clear: there was no need for any form of government intervention. In fact, government policies aimed at stabilizing the business cycle are welfare-reducing.
Modern macro is proud that its 'freshwater' and 'saltwater' factions have achieved a grand fusion. The saltwater types agreed to use DSGE models and the freshwater types agreed that the freshwater types could add 'frictions' to the DSGE models that would allow the models to at least purport to address some of the actual macroeconomic problems. There is a misleading view that because the 'saltwater' types often call themselves "New Keynesians" they must have views sympathetic to Keynesian thought. The Dilettante Doctrine authors make the useful point that "New Keynesian" dogma is actually Milton Friedman's core laissez faire dogmas.
Prototypical pre-crisis DSGE models built upon the chassis of the RBC model to allow for nominal frictions, both in labor and goods markets. These models are often referred to as New Keynesian (NK) DSGE models. But, it would be just as appropriate to refer to them as Friedmanite DSGE models. The reason is that they embody the fundamental world view articulated in Friedman's seminal Presidential Address .
The Dilettante Doctrine authors admit that DSGE models failed at the most fundamental level – they could not even spot that the economy was becoming progressively more dangerous and harmful.
Pre-crisis DSGE models didn't predict the increasing vulnerability of the US economy to a financial crisis.
The authors go badly wrong in multiple ways when they attempt to explain the DSGE models failures and their implications for economic theory and policy.
There is still an ongoing debate about the causes of the financial crisis. Our view, shared by Bernanke (2009) and many others, is that the financial crisis was precipitated by a rollover crisis in a very large and highly levered shadow-banking sector that relied on short-term debt to fund long-term assets.19
The trigger for the rollover crisis was developments in the housing sector. U.S. housing prices had risen rapidly in the 1990's with the S&P/Case-Shiller U.S. National Home Price Index rising by a factor of roughly 2.5 between 1991 and 2006. The precise role played by expectations, the subprime market, declining lending standards in mortgage markets, and overly-loose monetary policy is not critical for our purposes. What is critical is that housing prices began to decline in mid-2006, causing a fall in the value of the assets of shadow banks that had heavily invested in mortgage-backed securities. The Fed's willingness to provide a safety net for the shadow banking system was at best implicit, creating the conditions under which a roll-over crisis was possible. In fact a rollover crisis did occur and shadow banks had to sell their asset-backed securities at fire-sale prices, precipitating the Great Recession.
In sum, the pre-crisis mainstream DSGE models failed to forecast the financial crisis because they did not integrate the shadow banking system into their analysis.
I begin with the most fundamental failure – the failure to ask the right questions. Two prominent examples are why didn't the DSGE models warn us decades ago that the economy was systematically misallocating assets and creating the largest bubble in world history and what should we do to change the perverse incentives harming the economy and economic stability? Kocherlakota, in the same article from which I quoted above, emphasized that modern macro failed to warn about the coming financial crisis and the Great Recession and failed to provide effective policies to respond to them.
The dilettante article only uses the word 'bubble' once – to describe the tech bubble. It never labels the vastly larger housing bubble a 'bubble.' The dilettante article's authors claim it is not relevant for their purposes to know how the bubble arose, why it continued to inflate for over a decade, why it burst, or why it triggered the global financial crisis and the Great Recession. Only a dilettante could make or believe that claim.
Recall that Athreya emphasizes that deceit is the key factor that screws up economies – and that DSGE models "silently" assume "the ADM God" makes deceit impossible. I have explained in scores of columns why deceit, fraud, and predation were the central causes of the housing bubble hyper-inflating, the financial crisis, and the creation of the Great Recession. The dilettante authors refusal to call the housing bubble a bubble does not change the fact that they claim that the dramatic fall in housing values after 2005 was the paramount "trigger" of the financial crisis and the Great Recession.
The dilettante authors create a fiction about what "precipitat[ed] the Great Recession.
In fact a rollover crisis did occur and shadow banks had to sell their asset-backed securities at fire-sale prices, precipitating the Great Recession.
The dilettante authors then make their twin ' mea culpa ' on behalf of modern macro.
Against this background, we turn to the first of the two criticisms of DSGE models mentioned above, namely their failure to signal the increasing vulnerability of the U.S. economy to a financial crisis. This criticism is correct. The failure reflected a broader failure of the economics community.
The failure was to allow a small shadow-banking system to metastasize into a massive, poorly-regulated wild west-like sector that was not protected by deposit insurance or lender-of-last-resort backstops.
We now turn to the second criticism of DSGE models, namely that they did not sufficiently emphasize financial frictions. One reason why modelers did not emphasize financial frictions in DSGE models is that until the recent crisis, post-war recessions in the U.S. and Western Europe did not seem closely tied to disturbances in financial markets. The Savings and Loans crisis in the US was a localized affair that did not grow into anything like the Great Recession. Similarly, the stock market meltdown in the late 1980's and the bursting of the tech-bubble in 2001 only had minor effects on aggregate economic activity.
At the same time, the financial frictions that were included in DSGE models did not seem to have very big effects.
The dilettante authors have no idea how important their concessions are. Their premise is that it was government regulation, deposit insurance, and the central bank's 'lender of last resort' function that prevented prior epidemics of accounting control fraud from causing anything worse than "minor effects on aggregate economic activity." The obvious problem is that since its inception 30 years ago modern macro ideologues have claimed the opposite is true – that governmental action is unnecessary and harmful. They constructed their DSGE models to valorize their Friedmanite dogmas.
The less obvious problem is that freshwater modern macro has claimed that the lesson of the financial crisis is the opposite. Athreya and the Richmond Fed have preached for years that the federal safety net caused the housing problem, the financial crisis, and the Great Recession. The Richmond Fed claims that the key policy response to future financial crises is allowing the shadow sector to collapse in an orgy of "rollover cris[e]s."
The broader problem is why the dilettante authors are so wedded to their failed models, which at their core assume out of existence the institutions and events they say are most critical to explaining the catastrophic failures of their models. Why, for example, start with a general equilibrium model based on absurdly utopian assumptions (stated and unstated) that invariably produces equilibrium when the things we most need to study involve the failure of markets to function? It is nonsensical to make contradictory assumptions in different parts of your model about human behavior. Modern macro models keep failing and their devotees' response is to add (over time) dozens of fudges that posit that humans typically act in a manner that contradicts to the explicit and unstated assumptions of the DSGE model about human behavior. DSGE models increasingly resemble Borg constructs. The Borg also claim that there is no alternative to assimilation into their collective.
Aaron Layman , December 20, 2017 at 10:23 am
diptherio , December 20, 2017 at 11:07 amExcellent points. Helps to explain how you get a supposedly serious site covering real estate falling for ridiculous tripe about the root cause of the housing crisis (aka Great Recession). Take a careful look at the bombshell "working paper" and the new "narrative" cited, and you can see the groupstink of the Fed written all over it
https://betterdwelling.com/forget-subprime-canadian-real-estate-buyers-investors-crashed-the-us-market/Altandmain , December 20, 2017 at 12:01 pmGreat article.
Modern mainstream macro is like a police detective whose model of the world states that people are nice and the body heals itself, and that therefore we will all live happily ever after. When confronted by a murder victim lying in a pool of their own blood, and that fact's apparent incompatibility with their model of the world, they respond, "My model is correct only, you see, it failed to account for sudden massive blood loss. How that loss of blood happened is beyond the scope of my investigation, the important thing is that I've now incorporated that knowledge in my new improved model, which proves that we will all live happily ever after -- except in cases of a sudden, massive loss of blood ."
shinola , December 20, 2017 at 2:10 pmThere has not been a big mea-culpa from neoliberal economists after the 2008 Financial Crisis. I don't think there will be. Many are essentially the equal of religious fundamentalists.
However, we should also remember that the very wealthy have backed the neoliberal economists against the general public. Neolibe3ralism provides a pseudoscientific economic excuse for what amounts to turning society into a plutocracy, which is precisely what the rich want.
flora , December 20, 2017 at 3:26 pm" essentially the equal of religious fundamentalists."
Yes – nailed it!
Skip Intro , December 20, 2017 at 3:12 pmaka: The divine right of markets. /s
Matthew G. Saroff , December 20, 2017 at 12:16 pmThe GFC worked out very well for the neoliberal agenda. What you can't predict, you don't need to prevent or protect against. If the result happens to be a massive transfer of funds from states to speculators that eases the path to austerity and asset stripping, what's to apologize for?
Robert Denne , December 20, 2017 at 12:50 pmWhat is ADM, aside from the agribusiness?
Jean , December 20, 2017 at 12:31 pmADM is the Arrow-Debreu-McKenzie (ADM) model, as revealed in the blurb for the Athreya book on Amazon.
voislav , December 20, 2017 at 1:28 pmLack of higher math skills precludes citizen involvement in economics.
Blame it on the math card in PCs that makes doing it by hand and thus learning and understanding how numbers work.djrichard , December 20, 2017 at 1:31 pmMost economists lack higher math skills too, but that doesn't seem to be obstacle for them. It's spherical chickens in a vacuum, models that are supposedly related to real world but are simplified beyond recognition because most economists are ignorant of even rudimentary statistics.
Amfortas the Hippie , December 20, 2017 at 3:59 pmYou don't need math to follow the money.
Synoia , December 20, 2017 at 12:48 pmand you don't need math to discover that the holy Models rely on downright silly assumptions about Human Beings.
"rational actors with perfect information".
lol.
Most of the economic actors I know do not even remotely resemble that.
and whomever said that modern econ is akin to fundamentalist religion is right on.
I can't read "Money" or watch CNBC without thinking about Pat Robertson or Billy Graham.
It's just a different god they worship.
With this in mind, I think it's hilarious that the current hyperventilation about "cryptocurrency" could possibly be the bubble that, in popping, brings the whole mess down.
"Masters of the Universe", indeed.Know Thy Farmer.
PB , December 20, 2017 at 1:28 pmPersonally I believe economic as practiced is an example of telling the boss (the King) what they want to hear.
Economist appear descended form a long line of Court Magicians, telling the futures from the entrails of an animal, consulting the spirits for guidance, or using a Chrystal ball.
Of more pointedly Bullshit, baffles brains.
Prof Black make the point that he DSGE models assume away fraud. They also assume people are "rational actors, driven only by logic," that is: we are all Vulcans from Star Trek.
A simple view of women's fashions (high heels) with regard to comfort or safety would demolish any theory of people as "rational actors." Or men's behavior over their "sports teams."
To assume away human behavior and emotion, and thus chaos or catastrophe theory, would put economists at odds with their masters, and cut their income, by the nearly always fatal, or career limiting "telling truth to power."
It's interesting to speculate what would be the scope or size of common ground in a dialog between anthropologists and economists. Null set perhaps?
Hi all,
Just a quick note for those who were initially confused by Bill Black's use of "modern macroeconomic theory" and thought "modern monetary theory". (I know I did, and was initially really confused by his take, and had to re-read the first three paragraphs a few times to re-set my mental pointers). As far as I know (and I did a year of Ph.D economics at Stanford, so I pass Arthreya's first test) I haven't heard of "modern" applied to DSGE macro but that probably reflects my choice of reading material more than anything else. In short, "modern macro" is bad, "modern monetary" is good.
BTW, one of the best takes of macroeconomics I've encountered is Steve Keen's work, which I gratefully acknowledge I first read here on NC. Keen's critique of DSGE models is utterly spot-on and mathematically sophisticated. Part of the problem with economics is that it has been afflicted with 'math envy' since its earliest days, and the ADM results were proved with Banach Space methods, so they just *had* to be right. Google the phrase "spherical cow" for more on this mindset, not to mention one of the few really funny math jokes I know.
Cheers,
P
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Apr 04, 2015 | Economist's View
Darryl FKA Ron -> pgl...
At the risk of oversimplifying might it not be as simple as stronger leanings towards IS-LM and kind are indicative of a bias towards full employment and stronger leanings towards DSGE, microfoundations, and kind are indicative of a bias towards low inflation?
IN general I consider over-simplification a fault, if and only if, it is a rigidly adhered to final position. This is to say that over-simplification is always a good starting point and never a good ending point. If in the end your problem was simple to begin with, then the simplified answer would not be OVER-simplified anyway. It is just as bad to over-complicate a simple problem as it is to over-simplify a complex problem. It is easier to build complexity on top of a simple foundation than it is to extract simplicity from a complex foundation.
A lot of the Chicago School initiative into microfoundations and DSGE may have been motivated by a desire to bind Keynes in a NAIRU straight-jacket. Even though economic policy making is largely done just one step at a time then that is still one step too much if it might violate rentier interests.
Darryl FKA Ron -> Barry...
There are two possible (but unlikely) schools of (generously attributed to as) thought for which internal consistency might take precedence over external consistency. One such school wants to consider what would be best in a perfect world full of perfect people and then just assume that is best for the real world just to let the chips fall where they may according to the faults and imperfections of the real world. The second such school is the one whose eyes just glaze over mesmerized by how over their heads they are and remain affraid to ask any question lest they appear stupid.
A more probable school of thought is that this game was created as a con and a cover for the status quo capitalist establishment to indulge themselves in their hard money and liquidity fetishes, consequences be damned.
Richard H. Serlin
Consistency sounds so good, Oh, of course we want consistency, who wouldn't?! But consistent in what way? What exactly do you mean? Consistent with reality, or consistent with people all being superhumans? Which concept is usually more useful, or more useful for the task at hand?Richard H. Serlin -> Richard H. Serlin...Essentially, they want models that are consistent with only certain things, and often because this makes their preferred ideology look far better. They want models, typically, that are consistent with everyone in the world having perfect expertise in every subject there is, from finance to medicine to engineering, perfect public information, and perfect self-discipline, and usually on top, frictionless and perfectly complete markets, often perfectly competitive too.
But a big thing to note is that perfectly consistent people means a level of perfection in expertise, public information, self-discipline, and "rationality", that's extremely at odds with how people actually are. And as a result, this can make the model extremely misleading if it's interpreted very literally (as so often it is, especially by freshwater economists), or taken as The Truth, as Paul Krugman puts it.
You get things like the equity premium "puzzle", which involves why people don't invest more in stocks when the risk-adjusted return appears to usually be so abnormally good, and this "puzzle" can only be answered with "consistency", that people are all perfectly expert in finance, with perfect information, so they must have some mysterious hidden good reason. It can't be at all that it's because 65% of people answered incorrectly when asked how many reindeer would remain if Santa had to lay off 25% of his eight reindeer ( http://richardhserlin.blogspot.com/2013/12/surveys-showing-massive-ignorance-and.html ).
Yes, these perfect optimizer consistency models can give useful insights, and help to see what is best, what we can do better, and they can, in some cases, be good as approximations. But to say they should be used only, and interpreted literally, is, well, inconsistent with optimal, rational behavior -- of the economist using them.
Of course, unless the economist using them is doing so to mislead people into supporting his libertarian/plutocratic ideology.dilbert dogbert
As an old broken down mech engineer, I wonder why all the pissing and moaning about micro foundations vs aggregation. In strength of materials equations that aggregate properties work quite well within the boundaries of the questions to be answered. We all know that at the level of crystals, materials have much complexity. Even within crystals there is deeper complexities down to the molecular levels. However, the addition of quantum mechanics adds no usable information about what materials to build a bridge with.
But, when working at the scale of the most advanced computer chips quantum mechanics is required. WTF! I guess in economics there is no quantum mechanics theories or even reliable aggregation theories.
Poor economists, doomed to argue, forever, over how many micro foundations can dance on the head of a pin.
RGC -> dilbert dogbert...
Endless discussions about how quantum effects aggregate to produce a material suitable for bridge building crowd out discussions about where and when to build bridges. And if plutocrats fund the endless discussions, we get the prominent economists we have today.
Darryl FKA Ron -> dilbert dogbert...
"...I guess in economics there is no quantum mechanics theories or even reliable aggregation theories..."
[I guess it depends upon what your acceptable confidence interval on reliability is. Most important difference that controls all the domain differences between physical science and economics is that underlying physical sciences there is a deterministic methodology for which probable error is merely a function of the inaccuracy in input metrics WHEREAS economics models are incomplete probabilistic estimating models with no ability to provide a complete system model in a full range of circumstances.
YOu can design and build a bridge to your load and span requirements with alternative models for various designs with confidence and highly effective accuracy repeatedly. No ecomomic theory, model, or combination of models and theories was ever intended to be used as the blueprint for building an economy from the foundation up.
With all the formal trappings of economics the only effective usage is to decide what should be done in a given set of predetermined circumstance to reach some modest desired effect. Even that modest goal is exposed to all kinds of risks inherent in assumptions, incomplete information, externalities, and so on that can produce errors of uncertain potential bounds.
Nonetheless, well done economics can greatly reduce the risks encountered in the random walk of economics policy making. So much so is this true, that the bigger questions in macro-economics policy making is what one is willing to risk and for whom.
The arguments over internal and external consistency of models is just a convenient misdirection from what policy makers are willing to risk and whose interests they are willing to risk policy decisions for.]
Darryl FKA Ron -> Peter K....
unless you have a model which maps the real world fairly closely like quantum mechanics.
[You set a bar too high. Macro models at best will tell you what to do to move the economy in the direction that you seek to go. They do not even ocme close to the notion of a theory of everything that you have in physics, even the theory of every little thing that is provided by quantum mechanics. Physics is an empty metaphor for economics. Step one is to forgo physics envy in pursuit of understanding suitable applications and domain constraints for economics models.
THe point is to reach a decision and to understand cause and effect directions. All precision is in the past and present. The future is both imprecise and all that there is that is available to change.
For the most part an ounce of common sense and some simple narrative models are all that are essential for making those policy decisions in and of themselves. HOWEVER, nation states are not ruled by economist philosopher kings and in the process of concensus decision making by (little r)republican governments then human language is a very imprecise vehicle for communicating logic and reason with respect to the management of complex systems. OTOH, mathematics has given us a universal language for communicating logic and reason that is understood the same by everyone that really understands that language at all. Hence mathematical models were born for the economists to write down their own thinking in clear precise terms and check their own work first and then share it with others so equipped to understand the language of mathematics. Krugman has said as much many times and so has any and every economist worth their salt.]
likbez -> Syaloch...
I agree with Pgl and PeterK. Certain commenters like Darryl seem convinced that the Chicago School (if not all of econ) is driven by sinister, class-based motives to come up justifications for favoring the power elite over the masses. But based on what I've read, it seems pretty obvious that the microfoundation guys just got caught up in their fancy math and their desire to produce more elegant, internally consistent models and lost sight of the fact that their models didn't track reality.
That's completely wrong line of thinking, IMHO.
Mathematical masturbations are just a smoke screen used to conceal a simple fact that those "economists" are simply banking oligarchy stooges. Hired for the specific purpose to provide a theoretical foundation for revanschism of financial oligarchy after New Deal run into problems. Revanschism that occurred in a form of installing neoliberal ideology in the USA in exactly the same role which Marxism was installed in the USSR.
With "iron hand in velvet gloves" type of repressive apparatus to enforce it on each and every university student and thus to ensure the continues, recurrent brainwashing much like with Marxism on the USSR universities.To ensure continuation of power of "nomenklatura" in the first case and banking oligarchy in the second. Connections with reality be damned. Money does not smell.
Economic departments fifth column of neoliberal stooges is paid very good money for their service of promoting and sustaining this edifice of neoliberal propaganda. Just look at Greg Mankiw and Rubin's boys.
But the key problem with neoliberalism is that the cure is worse then disease. And here mathematical masturbations are very handy as a smoke screen to hide this simple fact.
likbez -> likbez...
Here is how Rubin's neoliberal boy Larry explained the situation to Elizabeth Warren:
"Larry [Summers] leaned back in his chair and offered me some advice. I had a choice. I could be an insider or I could be an outsider. Outsiders can say whatever they want. But people on the inside don't listen to them. Insiders, however, get lots of access and a chance to push their ideas. People - powerful people - listen to what they have to say. But insiders also understand one unbreakable rule: they don't criticize other insiders."
Elizabeth Warren, A Fighting Chance
Syaloch -> likbez...
Yeah, case in point.
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Dec 19, 2017 | www.nakedcapitalism.com
We accompanied that with a prank in which we posed as Potanin calling the Washington Wizards for courtside seats, Harvard University business school to purchase a degree, and the Augusta National Golf Club -- brandishing Hiatt's article for access:
eXile : I am Russian banker, so-called robber baron capitalist, am interested in purchasing your degree.
Harvard : ( pause ) Uh, sir, you can't buy the degree, but you can enroll in our program. It's an intensive 9 week program, and you receive a certificate, not a degree.
eXile : No, this is no good. Do you realize who I am? Fred Hiatt wrote about me in today Washington Post, that I am not typical robber baron. I am ze baby billionaire.
Harvard : We read a lot about Russia and it sounds very exciting.
eXile : Of course it exciting. Now I vant Harvard degree.
Harvard : You can't buy a degree.
eXile : Maybe instead I build nice cafe for you on campus. Or I can donate small nightclub for Harvard degree.
Harvard : Sir, Harvard is a 350-year-old institution. It's not all just about money. We've turned down princes.
eXile : NOT ABOUT MONEY? Hah!
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Mar 09, 2017 | www.nakedcapitalism.com
Yves here. The first release of the Wikileaks Vault 7 trove has curiously gone from being a MSM lead story yesterday to a handwave today. On the one hand, anyone who was half awake during the Edward Snowden revelations knows that the NSA is in full spectrum surveillance and data storage mode, and members of the Five Eyes back-scratch each other to evade pesky domestic curbs on snooping. So the idea that the CIA (and presumably the NSA) found a way to circumvent encryption tools on smartphones, or are trying to figure out how to control cars remotely, should hardly come as a surprise.
However, at a minimum, reminding the generally complacent public that they are being spied on any time they use the Web, and increasingly the times in between, makes the officialdom Not Happy.
And if this Wikileaks claim is even halfway true, its Vault 7 publication is a big deal:
Recently, the CIA lost control of the majority of its hacking arsenal including malware, viruses, trojans, weaponized "zero day" exploits, malware remote control systems and associated documentation. This extraordinary collection, which amounts to more than several hundred million lines of code, gives its possessor the entire hacking capacity of the CIA The archive appears to have been circulated among former U.S. government hackers and contractors in an unauthorized manner, one of whom has provided WikiLeaks with portions of the archive.
This is an indictment of the model of having the intelligence services rely heavily on outside contractors. It is far more difficult to control information when you have multiple organizations involved. In addition, neolibearlism posits that workers are free agents who have no loyalties save to their own bottom lines (or for oddballs, their own sense of ethics). Let us not forget that Snowden planned his career job moves , which included a stint at NSA contractor Dell, before executing his information haul at a Booz Allen site that he had targeted.
Admittedly, there are no doubt many individuals who are very dedicated to the agencies for which they work and aspire to spend most it not all of their working lives there. But I would assume that they are a minority.
The reason outsiders can attempt to pooh-pooh the Wikileaks release is that the organization redacted sensitive information like the names of targets and attack machines. The CIA staffers who have access to the full versions of these documents as well as other major components in the hacking toolkit will be the ones who can judge how large and serious the breach really is. 1 And their incentives are to minimize it no matter what.
By Gaius Publius , a professional writer living on the West Coast of the United States and frequent contributor to DownWithTyranny, digby, Truthout, and Naked Capitalism. Follow him on Twitter @Gaius_Publius , Tumblr and Facebook . GP article archive here . Originally published at DownWithTyranny
CIA org chart from the WikiLeaks cache (click to enlarge). "The organizational chart corresponds to the material published by WikiLeaks so far. Since the organizational structure of the CIA below the level of Directorates is not public, the placement of the EDG [Engineering Development Group] and its branches is reconstructed from information contained in the documents released so far. It is intended to be used as a rough outline of the internal organization; please be aware that the reconstructed org chart is incomplete and that internal reorganizations occur frequently."
* * * "O brave new world, that has such people in it."Bottom line first. As you read what's below, consider:
That the CIA is capable of doing all of the things described, and has been for years, is not in doubt.
That unnameable many others have stolen ("exfiltrated") these tools and capabilities is, according to the Wikileaks leaker, also certain. Consider this an especially dangerous form of proliferation, with cyber warfare tools in the hands of anyone with money and intent. As WikiLeaks notes, "Once a single cyber 'weapon' is 'loose' it can spread around the world in seconds, to be used by peer states, cyber mafia and teenage hackers alike."
That the CIA is itself using these tools, and if so, to what degree, are the only unknowns. But can anyone doubt, in this aggressively militarized environment, that only the degree of use is in question?
Now the story.
WikiLeaks just dropped a huge cache of documents (the first of several promised releases), leaked from a person or people associated with the CIA in one or more capacities (examples, employee, contractor), which shows an agency out-of-control in its spying and hacking overreach. Read through to the end. If you're like me, you'll be stunned, not just about what they can do, but that they would want to do it, in some cases in direct violation of President Obama's orders. This story is bigger than anything you can imagine.
Consider this piece just an introduction, to make sure the story stays on your radar as it unfolds - and to help you identify those media figures who will try to minimize or bury it. (Unless I missed it, on MSNBC last night, for example, the first mention of this story was not Chris Hayes, not Maddow, but the Lawrence O'Donnell show, and then only to support his guest's "Russia gave us Trump" narrative. If anything, this leak suggests a much muddier picture, which I'll explore in a later piece.)
So I'll start with just a taste, a few of its many revelations, to give you, without too much time spent, the scope of the problem. Then I'll add some longer bullet-point detail, to indicate just how much of American life this revelation touches.
While the cache of documents has been vetted and redacted , it hasn't been fully explored for implications. I'll follow this story as bits and piece are added from the crowd sourced research done on the cache of information. If you wish to play along at home, the WikiLeaks torrent file is here . The torrent's passphrase is here . WikiLeaks press release is here (also reproduced below). Their FAQ is here .
Note that this release covers the years 2013–2016. As WikiLeaks says in its FAQ, "The series is the largest intelligence publication in history."
Preface - Trump and Our "Brave New World"
But first, this preface, consisting of one idea only. Donald Trump is deep in the world of spooks now, the world of spies, agents and operatives. He and his inner circle have a nest of friends, but an even larger, more varied nest of enemies. As John Sevigny writes below, his enemies include not only the intel and counter-intel people, but also "Republican lawmakers, journalists, the Clintons, the Bush family, Barack Obama, the ACLU, every living Democrat and even Rand Paul." Plus Vladimir Putin, whose relationship with Trump is just "business," an alliance of convenience, if you will.
I have zero sympathy for Donald Trump. But his world is now our world, and with both of his feet firmly planted in spook world, ours are too. He's in it to his neck, in fact, and what happens in that world will affect every one of us. He's so impossibly erratic, so impossibly unfit for his office, that everyone on the list above wants to remove him. Many of them are allied, but if they are, it's also only for convenience.
How do spooks remove the inconvenient and unfit? I leave that to your imagination;they have their ways. Whatever method they choose, however, it must be one without fingerprints - or more accurately, without their fingerprints - on it.
Which suggests two more questions. One, who will help them do it, take him down? Clearly, anyone and everyone on the list. Second, how do you bring down the president, using extra-electoral, extra-constitutional means, without bringing down the Republic? I have no answer for that.
Here's a brief look at "spook world" (my phrase, not the author's) from " The Fox Hunt " by John Sevigny:
Several times in my life – as a journalist and rambling, independent photographer - I've ended up rubbing shoulders with spooks. Long before that was a racist term, it was a catch-all to describe intelligence community people, counter intel types, and everyone working for or against them. I don't have any special insight into the current situation with Donald Trump and his battle with the IC as the intelligence community calls itself, but I can offer a few first hand observations about the labyrinth of shadows, light, reflections, paranoia, perceptions and misperceptions through which he finds himself wandering, blindly. More baffling and scary is the thought he may have no idea his ankles are already bound together in a cluster of quadruple gordian knots, the likes of which very few people ever escape.
Criminal underworlds, of which the Trump administration is just one, are terrifying and confusing places. They become far more complicated once they've been penetrated by authorities and faux-authorities who often represent competing interests, but are nearly always in it for themselves.
One big complication - and I've written about this before - is that you never know who's working for whom . Another problem is that the hierarchy of handlers, informants, assets and sources is never defined. People who believe, for example, they are CIA assets are really just being used by people who are perhaps not in the CIA at all but depend on controlling the dupe in question. It is very simple - and I have seen this happen - for the subject of an international investigation to claim that he is part of that operation. [emphasis added]
Which leads Sevigny to this observation about Trump, which I partially quoted above: "Donald Trump may be crazy, stupid, evil or all three but he knows the knives are being sharpened and there are now too many blades for him to count. The intel people are against him, as are the counter intel people. His phone conversations were almost certainly recorded by one organization or another, legal or quasi legal. His enemies include Republican lawmakers, journalists, the Clintons, the Bush family, Barack Obama, the ACLU, every living Democrat and even Rand Paul. Putin is not on his side - that's a business matter and not an alliance."
Again, this is not to defend Trump, or even to generate sympathy for him - I personally have none. It's to characterize where he is, and we are, at in this pivotal moment. Pivotal not for what they're doing, the broad intelligence community. But pivotal for what we're finding out, the extent and blatancy of the violations.
All of this creates an incredibly complex story, with only a tenth or less being covered by anything like the mainstream press. For example, the Trump-Putin tale is much more likely to be part of a much broader "international mobster" story, whose participants include not only Trump and Putin, but Wall Street (think HSBC) and major international banks, sovereign wealth funds, major hedge funds, venture capital (vulture capital) firms, international drug and other trafficking cartels, corrupt dictators and presidents around the world and much of the highest reaches of the "Davos crowd."
Much of the highest reaches of the .01 percent, in other words, all served, supported and "curated" by the various, often competing elements of the first-world military and intelligence communities. What a stew of competing and aligned interests, of marriages and divorces of convenience, all for the common currencies of money and power, all of them dealing in death .
What this new WikiLeaks revelation shows us is what just one arm of that community, the CIA, has been up to. Again, the breadth of the spying and hacking capability is beyond imagination. This is where we've come to as a nation.
What the CIA Is Up To - A Brief Sample
Now about those CIA spooks and their surprising capabilities. A number of other outlets have written up the story, but this from Zero Hedge has managed to capture the essence as well as the breadth in not too many words (emphasis mine throughout):
WikiLeaks has published what it claims is the largest ever release of confidential documents on the CIA It includes more than 8,000 documents as part of 'Vault 7', a series of leaks on the agency, which have allegedly emerged from the CIA's Center For Cyber Intelligence in Langley , and which can be seen on the org chart below, which Wikileaks also released : [org chart reproduced above]
A total of 8,761 documents have been published as part of 'Year Zero', the first in a series of leaks the whistleblower organization has dubbed 'Vault 7.' WikiLeaks said that 'Year Zero' revealed details of the CIA's "global covert hacking program," including "weaponized exploits" used against company products including " Apple's iPhone , Google's Android and Microsoft's Windows and even Samsung TVs , which are turned into covert microphones."
WikiLeaks tweeted the leak, which it claims came from a network inside the CIA's Center for Cyber Intelligence in Langley, Virginia.
Among the more notable disclosures which, if confirmed, " would rock the technology world ", the CIA had managed to bypass encryption on popular phone and messaging services such as Signal, WhatsApp and Telegram. According to the statement from WikiLeaks, government hackers can penetrate Android phones and collect "audio and message traffic before encryption is applied."
With respect to hacked devices like you smart phone, smart TV and computer, consider the concept of putting these devices in "fake-off" mode:
Among the various techniques profiled by WikiLeaks is "Weeping Angel", developed by the CIA's Embedded Devices Branch (EDB), which infests smart TVs , transforming them into covert microphones. After infestation, Weeping Angel places the target TV in a 'Fake-Off' mode , so that the owner falsely believes the TV is off when it is on. In 'Fake-Off' mode the TV operates as a bug, recording conversations in the room and sending them over the Internet to a covert CIA server.
As Kim Dotcom chimed in on Twitter, "CIA turns Smart TVs, iPhones, gaming consoles and many other consumer gadgets into open microphones" and added "CIA turned every Microsoft Windows PC in the world into spyware. Can activate backdoors on demand, including via Windows update "[.]
Do you still trust Windows Update?
About "Russia did it"
Adding to the "Russia did it" story, note this:
Another profound revelation is that the CIA can engage in "false flag" cyberattacks which portray Russia as the assailant . Discussing the CIA's Remote Devices Branch's UMBRAGE group, Wikileaks' source notes that it "collects and maintains a substantial library of attack techniques 'stolen' from malware produced in other states including the Russian Federation.["]
As Kim Dotcom summarizes this finding, " CIA uses techniques to make cyber attacks look like they originated from enemy state ."
This doesn't prove that Russia didn't do it ("it" meaning actually hacking the presidency for Trump, as opposed to providing much influence in that direction), but again, we're in spook world, with all the phrase implies. The CIA can clearly put anyone's fingerprints on any weapon they wish, and I can't imagine they're alone in that capability.
Hacking Presidential Devices?
If I were a president, I'd be concerned about this, from the WikiLeaks " Analysis " portion of the Press Release (emphasis added):
"Year Zero" documents show that the CIA breached the Obama administration's commitments [that the intelligence community would reveal to device manufacturers whatever vulnerabilities it discovered]. Many of the vulnerabilities used in the CIA's cyber arsenal are pervasive [across devices and device types] and some may already have been found by rival intelligence agencies or cyber criminals.
As an example, specific CIA malware revealed in "Year Zero" [that it] is able to penetrate, infest and control both the Android phone and iPhone software that runs or has run presidential Twitter accounts . The CIA attacks this software by using undisclosed security vulnerabilities ("zero days") possessed by the CIA[,] but if the CIA can hack these phones then so can everyone else who has obtained or discovered the vulnerability. As long as the CIA keeps these vulnerabilities concealed from Apple and Google (who make the phones) they will not be fixed, and the phones will remain hackable.
Does or did the CIA do this (hack presidential devices), or is it just capable of it? The second paragraph implies the latter. That's a discussion for another day, but I can say now that both Lawrence Wilkerson, aide to Colin Powell and a non-partisan (though an admitted Republican) expert in these matters, and William Binney, one of the triumvirate of major pre-Snowden leakers, think emphatically yes. (See Wilkerson's comments here . See Binney's comments here .)
Whether or not you believe Wilkerson and Binney, do you doubt that if our intelligence people can do something, they would balk at the deed itself, in this world of "collect it all "? If nothing else, imagine the power this kind of bugging would confer on those who do it.
The Breadth of the CIA Cyber-Hacking Scheme
But there is so much more in this Wikileaks release than suggested by the brief summary above. Here's a bullet-point overview of what we've learned so far, again via Zero Hedge:
Key Highlights from the Vault 7 release so far:
"Year Zero" introduces the scope and direction of the CIA's global covert hacking program, its malware arsenal and dozens of "zero day" weaponized exploits against a wide range of U.S. and European company products , include Apple's iPhone, Google's Android and Microsoft's Windows and even Samsung TVs, which are turned into covert microphones.
Wikileaks claims that the CIA lost control of the majority of its hacking arsenal including malware, viruses, trojans, weaponized "zero day" exploits, malware remote control systems and associated documentation . This extraordinary collection, which amounts to more than several hundred million lines of code, gives its possessor the entire hacking capacity of the CIA The archive appears to have been circulated among former U.S. government hackers and contractors in an unauthorized manner, one of whom has provided WikiLeaks with portions of the archive.
By the end of 2016, the CIA's hacking division, which formally falls under the agency's Center for Cyber Intelligence (CCI), had over 5000 registered users and had produced more than a thousand hacking systems, trojans, viruses, and other "weaponized" malware . Such is the scale of the CIA's undertaking that by 2016, its hackers had utilized more code than that used to run Facebook.
The CIA had created, in effect, its "own NSA" with even less accountability and without publicly answering the question as to whether such a massive budgetary spend on duplicating the capacities of a rival agency could be justified.
Once a single cyber 'weapon' is 'loose' it can spread around the world in seconds , to be used by rival states, cyber mafia and teenage hackers alike.
Also this scary possibility:
As of October 2014 the CIA was also looking at infecting the vehicle control systems used by modern cars and trucks.
The purpose of such control is not specified, but it would permit the CIA to engage in nearly undetectable assassinations .
Journalist Michael Hastings, who in 2010 destroyed the career of General Stanley McChrystal and was hated by the military for it, was killed in 2013 in an inexplicably out-of-control car. This isn't to suggest the CIA, specifically, caused his death. It's to ask that, if these capabilities existed in 2013, what would prevent their use by elements of the military, which is, after all a death-delivery organization?
And lest you consider this last speculation just crazy talk, Richard Clarke (that Richard Clarke ) agrees: "Richard Clarke, the counterterrorism chief under both Bill Clinton and George W. Bush, told the Huffington Post that Hastings's crash looked consistent with a car cyber attack.'" Full and fascinating article here .
WiliLeaks Press Release
Here's what WikiLeaks itself says about this first document cache (again, emphasis mine):
Press Release
Today, Tuesday 7 March 2017, WikiLeaks begins its new series of leaks on the U.S. Central Intelligence Agency. Code-named "Vault 7" by WikiLeaks, it is the largest ever publication of confidential documents on the agency.
The first full part of the series, "Year Zero", comprises 8,761 documents and files from an isolated, high-security network situated inside the CIA's Center for Cyber Intelligence in Langley, Virgina. It follows an introductory disclosure last month of CIA targeting French political parties and candidates in the lead up to the 2012 presidential election .
Recently, the CIA lost control of the majority of its hacking arsenal including malware, viruses, trojans, weaponized "zero day" exploits, malware remote control systems and associated documentation. This extraordinary collection, which amounts to more than several hundred million lines of code, gives its possessor the entire hacking capacity of the CIA The archive appears to have been circulated among former U.S. government hackers and contractors in an unauthorized manner, one of whom has provided WikiLeaks with portions of the archive.
"Year Zero" introduces the scope and direction of the CIA's global covert hacking program, its malware arsenal and dozens of "zero day" weaponized exploits against a wide range of U.S. and European company products, include Apple's iPhone, Google's Android and Microsoft's Windows and even Samsung TVs, which are turned into covert microphones.
Since 2001 the CIA has gained political and budgetary preeminence over the U.S. National Security Agency (NSA). The CIA found itself building not just its now infamous drone fleet, but a very different type of covert, globe-spanning force - its own substantial fleet of hackers. The agency's hacking division freed it from having to disclose its often controversial operations to the NSA (its primary bureaucratic rival) in order to draw on the NSA's hacking capacities.
By the end of 2016, the CIA's hacking division, which formally falls under the agency's Center for Cyber Intelligence (CCI), had over 5000 registered users and had produced more than a thousand hacking systems, trojans, viruses, and other "weaponized" malware. Such is the scale of the CIA's undertaking that by 2016, its hackers had utilized more code than that used to run Facebook. The CIA had created, in effect, its "own NSA" with even less accountability and without publicly answering the question as to whether such a massive budgetary spend on duplicating the capacities of a rival agency could be justified.
In a statement to WikiLeaks the source details policy questions that they say urgently need to be debated in public , including whether the CIA's hacking capabilities exceed its mandated powers and the problem of public oversight of the agency. The source wishes to initiate a public debate about the security, creation, use, proliferation and democratic control of cyberweapons.
Once a single cyber 'weapon' is 'loose' it can spread around the world in seconds, to be used by rival states, cyber mafia and teenage hackers alike.
Julian Assange, WikiLeaks editor stated that "There is an extreme proliferation risk in the development of cyber 'weapons'. Comparisons can be drawn between the uncontrolled proliferation of such 'weapons', which results from the inability to contain them combined with their high market value, and the global arms trade. But the significance of "Year Zero" goes well beyond the choice between cyberwar and cyberpeace. The disclosure is also exceptional from a political, legal and forensic perspective."
Wikileaks has carefully reviewed the "Year Zero" disclosure and published substantive CIA documentation while avoiding the distribution of 'armed' cyberweapons until a consensus emerges on the technical and political nature of the CIA's program and how such 'weapons' should analyzed, disarmed and published.
Wikileaks has also decided to redact and anonymise some identifying information in "Year Zero" for in depth analysis. These redactions include ten of thousands of CIA targets and attack machines throughout Latin America, Europe and the United States. While we are aware of the imperfect results of any approach chosen, we remain committed to our publishing model and note that the quantity of published pages in "Vault 7" part one ("Year Zero") already eclipses the total number of pages published over the first three years of the Edward Snowden NSA leaks.
Be sure to click through for the Analysis, Examples and FAQ sections as well.
"O brave new world," someone once wrote . Indeed. Brave new world, that only the brave can live in.
____
1 Mind you, the leakers may have had a comprehensive enough view to be making an accurate call. But the real point is there are no actors who will be allowed to make an independent assessment.
salvo , March 9, 2017 at 3:13 amThat's all I needed.
https://www.theguardian.com/us-news/2017/jan/10/fbi-chief-given-dossier-by-john-mccain-alleging-secret-trump-russia-contactsSenator John McCain passed documents to the FBI director, James Comey, last month alleging secret contacts between the Trump campaign and Moscow and that Russian intelligence had personally compromising material on the president-elect himself.
The material, which has been seen by the Guardian, is a series of reports on Trump's relationship with Moscow. They were drawn up by a former western counter-intelligence official, now working as a private consultant. BuzzFeed on Tuesday published the documents, which it said were "unverified and potentially unverifiable".
The Guardian has not been able to confirm the veracity of the documents' contents,
Emphases mine. I had been sitting on this link trying to make sense of this part. Clearly, the Trump Whitehouse has some major leaks, which the MSM is exploiting. But the start of this article suggests that para-intelligence (is that a word? Eh, it is now) was the source of the allegedly damaging info.
This is no longer about the deep-state, but a rouge state, possibly guns for higher, each having fealty to specific political interests. The CIA arsenal wasn't leaked. It was delivered.
visitor , March 9, 2017 at 3:40 amhmm.. as far as I can see, noone seems to care here in Germany anymore about being spied on by our US friends, apart from a few alternative sources which are being accused of spreading fake news, of being anti-american, russian trolls, the matter is widely ignored
Yves Smith Post author , March 9, 2017 at 5:53 amI have read a few articles about the Vault 7 leak that typically raise a few alarms I would like to comment on.
1) The fact that the
CIA had managed to bypass encryption on popular phone and messaging services
does not mean that it has broken encryption, just that it has a way to install a program at a lower level, close to the operating system, that will read messages before they are encrypted and sent by the messaging app, or just after they have been decrypted by it.
As a side note: banks have now largely introduced two-factor authentication when accessing online services. One enters username (or account number) and password; the bank site returns a code; the user must then enter this code into a smartphone app or a tiny specialized device, which computes and returns a value out of it; the user enters this last value into the entry form as a throw-away additional password, and gains access to the bank website.
I have always refused to use such methods on a smartphone and insist on getting the specialized "single-use password computer", precisely because the smartphone platform can be subverted.
2) The fact that
"Weeping Angel", developed by the CIA's Embedded Devices Branch (EDB), [ ] infests smart TVs, transforming them into covert microphones.
is possible largely because smart TVs are designed by their manufacturers to serve as spying devices. "Weeping Angel" is not some kind of virus that turns normal devices into zombies, but a tool to take control of existing zombie devices.
The fact that smart TVs from Vizio , Samsung or LG constitute an outrageous intrusion into the privacy of their owners has been a known topic for years already.
3) The
CIA [ ] also looking at infecting the vehicle control systems used by modern cars and trucks
is not a "scary possibility" either; various demonstrations of such feats on Tesla , Nissan , or Chrysler vehicles have been demonstrated in the past few years.
And the consequences have already been suggested (killing people by disabling their car controls on the highway for instance).
My take on this is that we should seriously look askance not just at the shenanigans of the CIA, but at the entire "innovative technology" that is imposed upon (computerized cars) or joyfully adopted by (smartphones) consumers. Of course, most NC readers are aware of the pitfalls already, but alas not the majority of the population.
4) Finally this:
He's so impossibly erratic, so impossibly unfit for his office,
Trump is arguably unfit for office, does not have a clue about many things (such as foreign relations), but by taxing him of being "erratic" Gaius Publius shows that he still does not "get" the Donald.
Trump has a completely different modus operandi than career politicians, formed by his experience as a real-estate mogul and media star. His world has been one where one makes outrageous offers to try anchoring the negotiation before reducing one's claims - even significantly, or abruptly exiting just before an agreement to strike a deal with another party that has been lured to concessions through negotiations with the first one. NC once included a video of Trump doing an interactive A/B testing of his slogans during a campaign meeting; while changing one's slogans on the spot might seem "erratic", it is actually a very systematic market probing technique.
So stop asserting that Trump is "unpredictable" or "irrational"; this is underestimating him (a dangerous fault), as he is very consistent, though in an uncommon fashion amongst political pundits.
visitor , March 9, 2017 at 6:59 amWhile I agree that it's worth pointing out that the CIA has not broken any of the major encryption tools, even Snowden regards being able to circumvent them as worse, since people using encryption are presumably those who feel particularly at risk and will get a false sense of security and say things or keep data on their devices that they never never would if they thought they were insecure.
Re Gaius on Trump, I agree the lady doth protest too much. But I said repeatedly that Trump would not want to be President if he understood the job. It is not like being the CEO of a private company. Trump has vastly more control over his smaller terrain in his past life than he does as President.
And Trump is no longer campaigning. No more a/b testing.
The fact is that he still does not have effective control of the Executive branch. He has lots of open positions in the political appointee slots (largely due to not having even submitted candidates!) plus has rebellion in some organizations (like folks in the EPA storing data outside the agency to prevent its destruction).
You cannot pretend that Trump's former MO is working at all well for him. And he isn't showing an ability to adapt or learn (not surprising at his age). For instance, he should have figured out by now that DC is run by lawyers, yet his team has hardly any on it. This is continuing to be a source of major self inflicted wounds.
His erraticness may be keeping his opponents off base, but it is also keeping him from advancing any of his goals.
RBHoughton , March 9, 2017 at 9:00 pmI believe we are in agreement.
Yes, not breaking encryption is devious, as it gives a false sense of security - this is precisely why I refuse to use those supposedly secure e-banking login apps on smartphones whose system software can be subverted, and prefer those non-connected, non-reprogrammable, special-purpose password generating devices.
As for Trump being incompetent for his job, and his skills in wheeling-dealing do not carrying over usefully to conducting high political offices, that much is clear. But he is not "erratic", rather he is out of place and out of his depth.
Ivy , March 9, 2017 at 10:09 amI am writing this in the shower with a paper bag over my head and my iPhone in the microwave.
I have for years had a password-protected document on computer with all my important numbers and passwords. I have today deleted that document and reverted to a paper record.
visitor , March 9, 2017 at 11:34 amPlease tell readers more about the following for our benefit:
"single-use password computer"
PhilM , March 9, 2017 at 11:35 amThat is an example of the sort of thing I am talking about.
jrs , March 9, 2017 at 2:36 pmI think he means a machine dedicated to high-security operations like anything financial or bill-pay. Something that is not exposed to email or web-browsing operations that happen on a casual-use computer that can easily compromise. That's not a bad way to go; it's cheaper in terms of time than the labor-intensive approaches I use, but those are a hobby more than anything else. It depends on how much you have at stake if they get your bank account or brokerage service password.
I take a few basic security measures, which would not impress the IT crowd I hang out with elsewhere, but at least would not make me a laughingstock. I run Linux and use only open-source software; run ad-blockers and script blockers; confine risky operations, which means any non-corporate or non-mainstream website to a virtual machine that is reset after each use; use separate browsers with different cookie storage policies and different accounts for different purposes. I keep a well-maintained pfSense router with a proxy server and an intrusion detection system, allowing me to segregate my secure network, home servers, guest networks, audiovisual streaming and entertainment devices, and IoT devices each on their own VLANs with appropriate ACLs between them. No device on the more-secured network is allowed out to any port without permission, and similar rules are there for the IoT devices, and the VoIP tools.
The hardware to do all of that costs at least $700, but the real expense is in the time to learn the systems properly. Of course if you use Linux, you could save that on software in a year if you are too cheap to send a contribution to the developers.
It's not perfect, because I still have computers turned on :) , but I feel a bit safer this way.
That said, absolutely nothing that I have here would last 30 milliseconds against anything the "hats" could use, if they wanted in. It would be over before it began. If I had anything to hide, really, I would have something to fear; so guess I'm OK.
visitor , March 9, 2017 at 2:45 pmopen source software often has a lot of bugs to be exploioted. Wouldn't it be easier to just do banking in person?
cfraenkel , March 9, 2017 at 12:07 pmBanks discourage that by
a) charging extortionate fees for "in-person" operations at the counter;
b) closing subsidiaries, thus making it tedious and time-consuming to visit a branch to perform banking operations in person;
c) eliminating the possibility to perform some or even all usual operations in any other form than online (see the advent of "Internet only" banks).
In theoretical terms, all this is called "nudging".
meme , March 9, 2017 at 3:53 amThey're key fobs handed to you by your IT dept. The code displayed changes every couple of minutes. The plus is there's nothing sent over the air. The minus is the fobs are subject to theft, and are only good for connecting to 'home'. And since they have a cost, and need to be physically handed to you, they're not good fit for most two factor login applications (ie logging into your bank account).
Direction , March 9, 2017 at 4:23 amI watched (fast forwarded through, really) Morning Joe yesterday to see what they would have to say about Wikileaks. The show mostly revolved around the health care bill and Trump's lying and tweeting about Obama wiretapping him. They gave Tim Kaine plenty of time to discuss his recent trip to London talking to "some of our allies there" saying that they are concerned that "all the intelligence agencies" say the Rooskies "cyber hacked" our election, and since it looks like we aren't doing anything when we are attacked, they KNOW we won't do anything when they are attacked. (more red baiting)
The only two mentions I saw was about Wikileaks were, first, a question asked of David Cohen, ex Deputy Director of the CIA, who refused to confirm the Wikileaks were authentic, saying whatever tools and techniques the CIA had were used against foreign persons overseas, so there is no reason to worry that your TV is looking at you. And second, Senator Tom Cotton, who didn't want to comment on the contents of Wikileaks, only saying that the CIA is a foreign intelligence service, collecting evidence on foreign targets to keep our country safe, and it does not do intelligence work domestically.
So that appears to be their story, the CIA doesn't spy on us, and they are sticking with it, probably hoping the whole Wikileaks thing just cycles out of the news.
skippy , March 9, 2017 at 5:46 amThanks for mentioning Hastings. His death has always been more than suspicious.
james wordsworth , March 9, 2017 at 5:50 amElite risk management reduction tool goes walkabout inverting its potential ..
disheveled . love it when a plan comes together ..
Yves Smith Post author , March 9, 2017 at 7:52 amThe unwillingness of the main stream media (so far) to really cover the Wikileaks reveal is perhaps the bigger story. This should be ongoing front page stuff .. but it is not.
As for using ZeroHedge as a source for anything, can we give that a rest. That site has become a cesspool of insanity. It used to have some good stuff. Now it is just unreadable. SAD
And yes I know the hypocrisy of slamming ZH and the MSM at the same time we live in interesting times.
3urypteris , March 9, 2017 at 12:14 pmYour remarks on ZH are an ad hominem attack and therefore a violation of site policies. The onus is on you to say what ZH got wrong and not engage in an ungrounded smear. The mainstream media often cites ZH.
NC more than just about any other finance site is loath to link to ZH precisely because it is off base or hyperventilating a not acceptably high percent of the time, and is generally wrong about the Fed (as in governance and how money works). We don't want to encourage readers to see it as reliable. However, it is good on trader gossip and mining Bloomberg data.
And I read through its summary of the Wikileaks material as used by Gaius and there was nothing wrong with it. It was careful about attributing certain claims to Wikileaks as opposed to depicting them as true.
sunny129 , March 9, 2017 at 7:20 pmMy rules for reading ZH:
1- Skip every article with no picture
2- Skip every article where the picture is a graph
3- Skip every article where the picture is of a single person's face
4- Skip every afticle where the picture is a cartoon
5- Skip every article about gold, BitCoin, or high-frequency trading
6- Skip all the "Guest Posts"
7- ALWAYS click through to the source
8- NEVER read the commentsIt is in my opinion a very high noise-to-signal source, but there is some there there.
TheCatSaid , March 9, 2017 at 6:14 amFinding the TRUTH is NOT that easy.
Discerning a 'news from noise' is NEVER that easy b/c it is an art, developed by years of shifting through ever increasing 'DATA information' load. This again has to be filtered and tested against one's own 'critical' thinking or reasoning! You have to give ZH, deserved credit, when they are right!
There is no longer a Black or white there, even at ZH! But it is one of the few, willing to challenge the main stream narrative 'kool aid'
Romancing The Loan , March 9, 2017 at 8:43 amIn addition to the "para-intelligence" community (hat tip Code named D) there are multiple enterprises with unique areas of expertise that interface closely with the CIA The long-exposed operations, which include entrapment and blackmailing of key actors to guarantee complicity, "loyalty" and/or sealed lips, infect businesses, NGOs, law enforcement agencies, judges, politicians, and other government agencies. Equal opportunity employment for those with strong stomachs and a weak moral compass.
nobody , March 9, 2017 at 10:10 amYes I can't remember where I read it but it was a tale passed around supposedly by an FBI guy that had, along with his colleagues, the job of vetting candidates for political office. They'd do their background research and pass on either a thick or thin folder full of all the compromising dirt on each potential appointee. Over time he said he was perturbed to notice a persistent pattern where the thickest folders were always the ones who got in.
craazyboy , March 9, 2017 at 8:20 amI learned this when I was in my 20s. The Catholic Church was funding my early critique of American foreign aid as being imperialist. I asked whether they thought I should go into politics. They said, "No, you'd never make it". And I said, "Why?" and they said, "Well, nobody has a police record or any other dirt on you." I asked what they meant. They said, "Unless they have something over you to blackmail you with, you're not going to be able to get campaign funding. Because they believe that you might do something surprising," in other words, something they haven't asked you to do. So basically throughout politics, on both sides of the spectrum, voters have candidates who are funded by backers who have enough over them that they can always blackmail.
flora , March 9, 2017 at 11:11 amI find the notion that my consumer electronics may be CIA microphones somewhat irritating, but my imagination quickly runs off to far worse scenarios. (although the popular phase, "You're tax dollars at work." keeps running thru my head like a earworm. And whenever I hear "conservatives" speak of their desire for "small government", usually when topics of health care, Medicare and social security come up, I can only manage a snort of incredulousness anymore)
One being malware penetrating our nuke power plants and shutting down the cooling system. Then the reactor slowly overheats over the next 3 days, goes critical, and blows the surrounding area to high heaven. We have plants all around the coast of the country and also around the Great Lakes Region – our largest fresh water store in a drought threatened future.
Then the same happening in our offensive nuke missile systems.
Some other inconvenient truths – the stuxnet virus has been redesigned. Kaspersky – premier anti malware software maker – had a variant on their corporate network for months before finally discovering it. What chance have we?
In China, hacking is becoming a consumer service industry. There are companies building high power data centers with a host of hacking tools. Anyone, including high school script kiddies, can rent time to use the sophisticated hacking tools, web search bots, and whatever, all hosted on powerful servers with high speed internet bandwidth.
Being a bit "spooked" by all this, I began to worry about my humble home computer and decided to research whatever products I could get to at least ward off annoying vandalism. Among other things, I did sign up for a VPN service. I'm looking at the control app for my VPN connection here and I see that with a simple checkbox mouse click I can make my IP address appear to be located in my choice of 40 some countries around the world. Romania is on the list!
craazyboy , March 9, 2017 at 12:40 pm"my consumer electronics may be CIA microphones "
I haven't tested this, so can't confirm it works, but it sounds reasonable.
http://www.komando.com/tips/390304/secure-your-webcam-and-microphone-from-hackerscraazyboy , March 9, 2017 at 12:46 pmActually, I very much doubt that does work. The mic "pickup" would feed its analog output to a DAC (digital to analog converter) which would convert the signal to digital. This then goes to something similar to a virtual com port in the operating system. Here is where a malware program would pick it up and either create a audio file to be sent to an internet address, or stream it directly there.
The article is just plugging in a microphone at the output jack. The malware got the data long before it goes thru another DAC and analog amp to get to the speakers or output jack.
flora , March 9, 2017 at 2:43 pms/b "plugging in a earbud at the output jack". They're confusing me too.
Stephen Gardner , March 9, 2017 at 2:53 pmah. thanks for vetting.
Stephen Gardner , March 9, 2017 at 2:52 pmIt's actually a input/output jack or, if you will, a mic/headphone jack.
Pat , March 9, 2017 at 8:27 amIt depends on how it is hooked up internally. Old fashioned amateur radio headphones would disable the speakers when plugged in because the physical insertion of the plug pushed open the connection to the speakers. The jack that you plug the ear buds into might do the same, disconnecting the path between the built-in microphone and the ADC (actually it is an ADC not a DAC). The only way to know is to take it apart and see how it is connected.
Eureka Springs , March 9, 2017 at 8:31 amThe CIA is not allowed to operate in the US is also the panacea for the public. And some are buying it. Along with everyone knows they can do this is fueling the NOTHING to see here keep walking weak practically non existent coverage.
Anon , March 9, 2017 at 2:40 pmAt what point do people quit negotiating in terrorism and errorism? For this is what the police, the very State itself has long been. Far beyond being illegitimate, illegal, immoral, this is a clear and ever present danger to not just it's own people, but the rule of law itself. Blanket statements like we all know this just makes the dangerously absurd normal I'll never understand that part of human nature. But hey, the TSA literally just keeps probing further each and every year. Bend over!
Trump may not be the one for the task but we the people desperately need people 'unfit', for it is the many fit who brought us to this point. His unfit nature is as refreshing on these matters in its chaotic honest disbelief as Snowden and Wiki revelations. Refreshing because it's all we've got. One doesn't have to like Trump to still see missed opportunity so many should be telling him he could be the greatest pres ever if (for two examples) he fought tirelessly for single payer and to bring down this police state rather than the EPA or public education.
This cannot stand on so many levels. Not only is the fourth amendment rendered utterly void, but even if it weren't it falls far short of the protections we deserve.
No enemy could possibly be as bad as who we are and what we allow/do among ourselves. If an election can be hacked (not saying it was by Russia).. as these and other files prove anything can and will be hacked then our system is to blame, not someone else.
What amazes me is that the spooks haven't manufactured proof needed to take Trump out of office Bonfire of The Vanities style. I'd like to think the people have moved beyond the point they would believe manufactured evidence but the Russia thing proves otherwise.
These people foment world war while probing our every move and we do nothing!
If we wait for someone fit nothing will ever change because we wait for the police/media/oligarch state to tell us who is fit.
Stephen Gardner , March 9, 2017 at 3:05 pmbeing "unfit" does not automatically make someone a savior.
Allegorio , March 9, 2017 at 4:00 pmBut being fit by the standards of our ruling class, the "real owners" as Carlin called them is, in my book, an automatic proof that they are up to no good. Trump is not my cup of tea as a president but no one we have had in a while wasn't clearly compromised by those who fund them. Did you ever wonder why we have never had a president or even a powerful member of congress that was not totally in the tank for that little country on the Eastern Mediterranean? Or the Gulf Monarchies? Do you think that is by accident? Do you think money isn't involved? Talk about hacked elections! We should be so lucky as to have ONLY Russians attempting to affect our elections. Money is what hacks US elections and never forget that. To me it is laughable to discuss hacking the elections without discussing the real way our "democracy" is subverted–money not document leaks or voting machine hacks. It's money.
Why isn't Saudi Arabia on Trump's list? Iran that has never been involved in a terrorist act on US soil is but not Saudi Arabia? How many 911 hijackers came from Iran? If anything saves Trump from destruction by the real owners of our democracy it is his devotion to the aforementioned countries.
HBE , March 9, 2017 at 8:47 amThe point again is not to remove him from office but to control him. With Trump's past you better believe the surveillance state has more than enough to remove him from office. Notice the change in his rhetoric since inauguration? More and more he is towing the establishment Republican line. Of course this depends on whether you believe Trump is a break with the past or just the best liar out there. A very unpopular establishment would be clever in promoting their agent by pretending to be against him.
Anyone who still believes that the US is a democratic republic and not a mafia state needs to stick their heads deeper into the sands. When will the low information voters and police forces on whom a real revolution depends realize this is anyone's guess. The day is getting closer especially for the younger generation. The meme among the masses is that government has always been corrupt and that this is nothing new. I do believe the level of immorality among the credentialed classes is indeed very new and has become the new normal. Generations of every man for himself capitalist philosophy undermining any sense of morality or community has finally done its work.
Arizona Slim , March 9, 2017 at 8:50 amGo take a jaunt over to huffpo, at the time of this post there was not a single mention of vault 7 on the front page. Just a long series of anti trump administration articles.
Glad to know for sure who the true warmongers were all along.
Eureka Springs , March 9, 2017 at 8:59 amWe need another Church Commission.
Arizona Slim , March 9, 2017 at 1:31 pmNo.. The Church commission was a sweep it under the rug operation. It got us FISA courts. More carte blanche secrecy, not less. The commission nor the rest of the system didn't even hold violators of the time accountable.
We have files like Vault 7. Commissions rarely get in secret what we have right here before our eyes.
Foppe , March 9, 2017 at 1:55 pmWell, how about a Truth and Reconciliation Commission?
River , March 9, 2017 at 10:59 amCute but the ANC lost the war by acceding to WTO entry (which "forbade" distributive politics, land/resource redistribution, nationalizations, etc.).
DJG , March 9, 2017 at 12:49 pmNeed Langley surrounded and fired upon by tanks at this point.
Err on the side of caution.
polecat , March 9, 2017 at 12:53 pmRiver: Interesting historic parallel? I believe that the Ottomans got rid of the Janissaries that way, after the Janissaries had become a state within a state, by using cannons on their HQ
From Wiki entry, Janissaries:
The corps was abolished by Sultan Mahmud II in 1826 in the Auspicious Incident in which 6,000 or more were executed.[8]
knowbuddhau , March 9, 2017 at 9:01 am"Nuke it from orbit it's the only way to be sure . "
Stormcrow , March 9, 2017 at 9:35 amTook less than a minute to download the 513.33MB file. The passphrase is what JFK said he'd like to do to CIA: SplinterItIntoAThousandPiecesAndScatterItIntoTheWinds.
"The illegal we do immediately; the unconstitutional takes a little longer." Henry Kissinger, 1975.
SplinterItIntoAThousandPiecesAndScatterItIntoTheWinds. , March 9, 2017 at 10:06 amHere is Raimondo's take:
Spygate
http://original.antiwar.com/justin/2017/03/07/spygate-americas-political-police-vs-donald-j-trump/The campaign to frame up and discredit Trump and his associates is characteristic of how a police state routinely operates. A national security apparatus that vacuums up all our communications and stores them for later retrieval has been utilized by political operatives to go after their enemies – and not even the President of the United States is immune. This is something that one might expect to occur in, say, Turkey, or China: that it is happening here, to the cheers of much of the media and the Democratic party, is beyond frightening.
The irony is that the existence of this dangerous apparatus – which civil libertarians have warned could and probably would be used for political purposes – has been hailed by Trump and his team as a necessary and proper function of government. Indeed, Trump has called for the execution of the person who revealed the existence of this sinister engine of oppression – Edward Snowden. Absent Snowden's revelations, we would still be in the dark as to the existence and vast scope of the NSA's surveillance.
And now the monster Trump embraced in the name of "national security" has come back to bite him.
We hear all the time that what's needed is an open and impartial "investigation" of Trump's alleged "ties" to Russia. This is dangerous nonsense: does every wild-eyed accusation from embittered losers deserve a congressional committee armed with subpoena power bent on conducting an inquisition? Certainly not.
What must be investigated is the incubation of a clandestine political police force inside the national security apparatus, one that has been unleashed against Trump – and could be deployed against anyone.
This isn't about Donald Trump. It's about preserving what's left of our old republic.
Perhapps overstated but well worth pondering.
flora , March 9, 2017 at 11:21 amYeah I downloaded it the day it came out and spent an hour or so looking at it last night. First impressions – "heyyy this is like a Hackers Guide – the sort I used in the 80s, or DerEngel's Cable Modem Hacking" of the 00s.
2nd impressions – wow it really gives foundational stuff – like "Enable Debug on PolarSSL".
3rd impressions – "I could spend hours going thru this happily ".
4th impressions – I went looking for the "juicy bits" of interest to me – SOHO routers, small routers – sadly its just a table documenting routers sold around the world, and whether these guys have put the firmware in their Stash Repository. Original firmware, not hacked one. But the repository isn't in the vault dump, AFAIK.
Its quite fascinating. But trying to find the "juicy stuff" is going to be tedious. One can spend hours and hours going thru it. To speed up going thru it, I'm going to need some tech sites to say "where to go".
Sam F , March 9, 2017 at 10:10 amIt seems clear that Wikileaks has not and will not release actual ongoing method "how-to" info or hacking scripts. They are releasing the "whats", not the tech level detailed "hows". This seems like a sane approach to releasing the data. The release appears to be for political discussion, not for spreading the hacking tools. So I wouldn't look for "juicy bits" about detailed methodology. Just my guess.
That said, love what you're doing digging into this stuff. I look forward to a more detailed report in future. Thanks.
Outis Philalithopoulos , March 9, 2017 at 10:58 amYves, I think that you much underestimate the extremity of these exposed violations of the security of freedom of expression, and of the security of private records. The WikiLeaks docs show that CIA has developed means to use all personal digital device microphones and cameras even when they are "off," and to send all of your files and personal data to themselves, and to send your private messages to themselves before they are encrypted. They have installed these spyware in the released version of Windows 10, and can easily install them on all common systems and devices.
This goes far beyond the kind of snooping that required specialized devices installed near the target, which could be controlled by warrant process. There is no control over this extreme spying. It is totalitarianism now.
This is probably the most extreme violation of the rights of citizens by a government in all of history. It is far worse than the "turnkey tyranny" against which Snowden warned, on the interception of private messages. It is tyranny itself, the death of democracy.
susan the other , March 9, 2017 at 10:59 amYour first sentence is a bit difficult to understand. If you read Yves' remarks introducing the post, she says that the revelations are "a big deal" "if the Wikileaks claim is even halfway true," while coming down hard on the MSM and others for "pooh-pooh[ing]" the story. Did you want her to add more exclamation points?
NotTimothyGeithner , March 9, 2017 at 11:34 amSo we have a zillion ways to spy and hack and deceive and assassinate, but no control. I think this is what the military refers to as "being overtaken by events."
It's easy to gather information; not so easy to analyze it, and somehow impossible to act on it in good faith. With all this ability to know stuff and surveil people the big question is, Why does everything seem so beyond our ability to control it?
We should know well in advance that banks will fail catastrophically; that we will indeed have sea level rise; that resources will run out; that water will be undrinkable; that people will be impossible to manipulate when panic hits – but what do we do? We play dirty tricks, spy on each other like voyeurs, and ignore the inevitable. Like the Stasi, we clearly know what happened, what is happening and what is going to happen. But we have no control.
Arizona Slim , March 9, 2017 at 1:33 pmMy godfather was in the CIA in the late sixties and early seventies, and he said that outside of the President's pet projects there was no way to sift through and bring important information to decision makers before it made the Washington Post (he is aware of the irony) and hit the President's breakfast table.
Old Jake , March 9, 2017 at 6:05 pmDo you mean to say that the CIA leaked like a sieve? That's my understanding of your post.
Andrew , March 9, 2017 at 11:14 amAS, I would interpret it as saying that there was so much coming in it was like trying to classify snowflakes in a snowstorm. They could pick a few subject areas to look at closely but the rest just went into the files.
Leaking like a sieve is also likely, but perhaps not the main point.
Stormcrow , March 9, 2017 at 11:20 amThe archive appears to have been circulated among government hackers and contractors in a authorized manner
There, that looks the more likely framing considering CIA & DNI on behalf of the whole US IC seemingly fostered wide dissimilation of these tools, information. Demonstration of media control an added plus.
Cheers Yves
lyman alpha blob , March 9, 2017 at 11:42 amThe Empire Strikes Back
WikiLeaks Has Joined the Trump Administration
Max Boot
Foreign Policy magazineI guess we can only expect more of this.
Todd Pierce , on the other hand, nails it. (From his Facebook page.)
The East German Stasi could only dream of the sort of surveillance the NSA and CIA do now, with just as nefarious of purposes.JTMcPhee , March 9, 2017 at 3:02 pmPerhaps the scare quotes around "international mobster" aren't really necessary.
In all this talk about the various factions aligned with and against Trump, that's one I haven't heard brought up by anybody. With all the cement poured in Trump's name over the years, it would be naive to think his businesses had not brushed up against organized crime at some point. Question is, whose side are they on?
Skip Intro , March 9, 2017 at 12:55 pmLike all the other players, the "side" they are on is them-effing-selves. And isn't that the whole problem with our misbegotten species, writ large?
Then there's this: https://www.youtube.com/watch?v=s1Hzds9aGdA Maybe these people will be around and still eating after us urban insects and rodents are long gone? Or will our rulers decide no one should survive if they don't?
tegnost , March 9, 2017 at 1:05 pmTo what extent do these hacks represent the CIA operating within the US? To what extent is that illegal? With the democrats worshipping the IC, will anyone in an official position dare to speak out?
Oregoncharles , March 9, 2017 at 2:17 pmWell we know chuckie won't speak out..
FTA "Schumer said that as he understands, intelligence officials are "very upset with how [Trump] has treated them and talked about them.""
Stephen Gardner , March 9, 2017 at 3:51 pmI've long thought that the reason Snowden was pursued so passionately was that he exposed the biggest, most embarrassing secret: that the National "Security" Agency's INTERNAL security was crap.
And here it is: "Wikileaks claims that the CIA lost control of the majority of its hacking arsenal "
The CIA's internal security is crap, too. Really a lot of people should be fired over that, as well as over Snowden's release. We didn't hear of it happening in the NSA, though I'm not sure we would have. Given Gaius's description of Trump's situation, it seems unlikely it will happen this time, either. One of my hopes for a Trump administration, as long as we're stuck with it, was a thorough cleanout of the upper echelons in the IC. It's obviously long overdue, and Obama wasn't up to it. But I used the past tense because I don't think it's going to happen. Trump seems more interested in sucking up to them, presumably so they won't kill him or his family. That being one of their options.
tiebie66 , March 9, 2017 at 2:59 pmAh, that's the beauty of contracting it out. No one gets fired. Did anyone get fired because of Snowden? It was officially a contractor problem and since there are only a small number of contractors capable of doing the work, well you know. We can't get new ones.
JTMcPhee , March 9, 2017 at 3:06 pmWhat I find by far the most distressing is this: "The CIA had created, in effect, its "own NSA" with even less accountability ." [My emphasis]. It seems to characterize an organization that operates outside of any control and oversight – and one that is intentionally structuring itself that way. That worries me.
It is becoming increasingly clear that the Republic is lost because we didn't stand guard for it. Blaming others don't cut it either – we let it happen. And like the Germans about the Nazi atrocities, we will say that we didn't know about it.
Stephen Gardner , March 9, 2017 at 4:08 pmHey, I didn't let it happen. Stuff that spooks and sh!tes do behind the Lycra ™ curtain happens because it is, what is the big word again, "ineluctable." Is my neighbor to blame for having his house half eaten by both kinds of termites, where the construction is such that the infestation and damage are invisible until the vast damage is done?
nonsense factory , March 9, 2017 at 8:57 pmAnd just how were we supposed to stand guard against a secret and unaccountable organization that protected itself with a shield of lies? And every time some poor misfit complained about it they were told that they just didn't know the facts. If they only knew what our IC knows they would not complain.
It's a dangerous world out there and only our brave IC can protect us from it. Come on. Stop blaming the victim and place the blame where it belongs–our IC and MIC. I say stop feeding the beast with your loyalty to a government that has ceased to be yours.
Studiously avoid any military celebrations. Worship of the military is part of the problem. Remember, the people you thank for "their service" are as much victims as you are. Sadly they don't realize that their service is to a rotten empire that is not worthy of their sacrifice but every time we perform the obligatory ritual of thankfulness we participate in the lie that the service is to a democratic country instead of an undemocratic empire.
It's clearly a case of Wilfred Owen's classic "Dulce et Decorum Est". Read the poem, google it and read it. It is instructive: " you would not tell with such high zest To children ardent for some desperate glory, The old Lie: Dulce et decorum est Pro patria mori." Make no mistake. It is a lie and it can only be undone if we all cease to tell it.
Here's a pretty decent review of the various CIA programs revealed by Wikileaks:
http://www.libertyforjoe.com/2017/03/what-is-vault-7.html
"These CIA revelations in conjunction with those of the NSA paints a pretty dark future for privacy and freedom. Edward Snowden made us aware of the NSA's program XKEYSCORE and PRISM which are utilized to monitor and bulk collect information from virtually any electronic device on the planet and put it into a searchable database. Now Wikileaks has published what appears to be additional Big Brother techniques used by a competing agency. Say what you want about the method of discovery, but Pandora's box has been opened."
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Mar 09, 2017 | www.nakedcapitalism.com
Yves here. The first release of the Wikileaks Vault 7 trove has curiously gone from being a MSM lead story yesterday to a handwave today. On the one hand, anyone who was half awake during the Edward Snowden revelations knows that the NSA is in full spectrum surveillance and data storage mode, and members of the Five Eyes back-scratch each other to evade pesky domestic curbs on snooping. So the idea that the CIA (and presumably the NSA) found a way to circumvent encryption tools on smartphones, or are trying to figure out how to control cars remotely, should hardly come as a surprise.
However, at a minimum, reminding the generally complacent public that they are being spied on any time they use the Web, and increasingly the times in between, makes the officialdom Not Happy.
And if this Wikileaks claim is even halfway true, its Vault 7 publication is a big deal:
Recently, the CIA lost control of the majority of its hacking arsenal including malware, viruses, trojans, weaponized "zero day" exploits, malware remote control systems and associated documentation. This extraordinary collection, which amounts to more than several hundred million lines of code, gives its possessor the entire hacking capacity of the CIA The archive appears to have been circulated among former U.S. government hackers and contractors in an unauthorized manner, one of whom has provided WikiLeaks with portions of the archive.
This is an indictment of the model of having the intelligence services rely heavily on outside contractors. It is far more difficult to control information when you have multiple organizations involved. In addition, neolibearlism posits that workers are free agents who have no loyalties save to their own bottom lines (or for oddballs, their own sense of ethics). Let us not forget that Snowden planned his career job moves , which included a stint at NSA contractor Dell, before executing his information haul at a Booz Allen site that he had targeted.
Admittedly, there are no doubt many individuals who are very dedicated to the agencies for which they work and aspire to spend most it not all of their working lives there. But I would assume that they are a minority.
The reason outsiders can attempt to pooh-pooh the Wikileaks release is that the organization redacted sensitive information like the names of targets and attack machines. The CIA staffers who have access to the full versions of these documents as well as other major components in the hacking toolkit will be the ones who can judge how large and serious the breach really is. 1 And their incentives are to minimize it no matter what.
By Gaius Publius , a professional writer living on the West Coast of the United States and frequent contributor to DownWithTyranny, digby, Truthout, and Naked Capitalism. Follow him on Twitter @Gaius_Publius , Tumblr and Facebook . GP article archive here . Originally published at DownWithTyranny
CIA org chart from the WikiLeaks cache (click to enlarge). "The organizational chart corresponds to the material published by WikiLeaks so far. Since the organizational structure of the CIA below the level of Directorates is not public, the placement of the EDG [Engineering Development Group] and its branches is reconstructed from information contained in the documents released so far. It is intended to be used as a rough outline of the internal organization; please be aware that the reconstructed org chart is incomplete and that internal reorganizations occur frequently."
* * * "O brave new world, that has such people in it."Bottom line first. As you read what's below, consider:
That the CIA is capable of doing all of the things described, and has been for years, is not in doubt.
That unnameable many others have stolen ("exfiltrated") these tools and capabilities is, according to the Wikileaks leaker, also certain. Consider this an especially dangerous form of proliferation, with cyber warfare tools in the hands of anyone with money and intent. As WikiLeaks notes, "Once a single cyber 'weapon' is 'loose' it can spread around the world in seconds, to be used by peer states, cyber mafia and teenage hackers alike."
That the CIA is itself using these tools, and if so, to what degree, are the only unknowns. But can anyone doubt, in this aggressively militarized environment, that only the degree of use is in question?
Now the story.
WikiLeaks just dropped a huge cache of documents (the first of several promised releases), leaked from a person or people associated with the CIA in one or more capacities (examples, employee, contractor), which shows an agency out-of-control in its spying and hacking overreach. Read through to the end. If you're like me, you'll be stunned, not just about what they can do, but that they would want to do it, in some cases in direct violation of President Obama's orders. This story is bigger than anything you can imagine.
Consider this piece just an introduction, to make sure the story stays on your radar as it unfolds - and to help you identify those media figures who will try to minimize or bury it. (Unless I missed it, on MSNBC last night, for example, the first mention of this story was not Chris Hayes, not Maddow, but the Lawrence O'Donnell show, and then only to support his guest's "Russia gave us Trump" narrative. If anything, this leak suggests a much muddier picture, which I'll explore in a later piece.)
So I'll start with just a taste, a few of its many revelations, to give you, without too much time spent, the scope of the problem. Then I'll add some longer bullet-point detail, to indicate just how much of American life this revelation touches.
While the cache of documents has been vetted and redacted , it hasn't been fully explored for implications. I'll follow this story as bits and piece are added from the crowd sourced research done on the cache of information. If you wish to play along at home, the WikiLeaks torrent file is here . The torrent's passphrase is here . WikiLeaks press release is here (also reproduced below). Their FAQ is here .
Note that this release covers the years 2013–2016. As WikiLeaks says in its FAQ, "The series is the largest intelligence publication in history."
Preface - Trump and Our "Brave New World"
But first, this preface, consisting of one idea only. Donald Trump is deep in the world of spooks now, the world of spies, agents and operatives. He and his inner circle have a nest of friends, but an even larger, more varied nest of enemies. As John Sevigny writes below, his enemies include not only the intel and counter-intel people, but also "Republican lawmakers, journalists, the Clintons, the Bush family, Barack Obama, the ACLU, every living Democrat and even Rand Paul." Plus Vladimir Putin, whose relationship with Trump is just "business," an alliance of convenience, if you will.
I have zero sympathy for Donald Trump. But his world is now our world, and with both of his feet firmly planted in spook world, ours are too. He's in it to his neck, in fact, and what happens in that world will affect every one of us. He's so impossibly erratic, so impossibly unfit for his office, that everyone on the list above wants to remove him. Many of them are allied, but if they are, it's also only for convenience.
How do spooks remove the inconvenient and unfit? I leave that to your imagination;they have their ways. Whatever method they choose, however, it must be one without fingerprints - or more accurately, without their fingerprints - on it.
Which suggests two more questions. One, who will help them do it, take him down? Clearly, anyone and everyone on the list. Second, how do you bring down the president, using extra-electoral, extra-constitutional means, without bringing down the Republic? I have no answer for that.
Here's a brief look at "spook world" (my phrase, not the author's) from " The Fox Hunt " by John Sevigny:
Several times in my life – as a journalist and rambling, independent photographer - I've ended up rubbing shoulders with spooks. Long before that was a racist term, it was a catch-all to describe intelligence community people, counter intel types, and everyone working for or against them. I don't have any special insight into the current situation with Donald Trump and his battle with the IC as the intelligence community calls itself, but I can offer a few first hand observations about the labyrinth of shadows, light, reflections, paranoia, perceptions and misperceptions through which he finds himself wandering, blindly. More baffling and scary is the thought he may have no idea his ankles are already bound together in a cluster of quadruple gordian knots, the likes of which very few people ever escape.
Criminal underworlds, of which the Trump administration is just one, are terrifying and confusing places. They become far more complicated once they've been penetrated by authorities and faux-authorities who often represent competing interests, but are nearly always in it for themselves.
One big complication - and I've written about this before - is that you never know who's working for whom . Another problem is that the hierarchy of handlers, informants, assets and sources is never defined. People who believe, for example, they are CIA assets are really just being used by people who are perhaps not in the CIA at all but depend on controlling the dupe in question. It is very simple - and I have seen this happen - for the subject of an international investigation to claim that he is part of that operation. [emphasis added]
Which leads Sevigny to this observation about Trump, which I partially quoted above: "Donald Trump may be crazy, stupid, evil or all three but he knows the knives are being sharpened and there are now too many blades for him to count. The intel people are against him, as are the counter intel people. His phone conversations were almost certainly recorded by one organization or another, legal or quasi legal. His enemies include Republican lawmakers, journalists, the Clintons, the Bush family, Barack Obama, the ACLU, every living Democrat and even Rand Paul. Putin is not on his side - that's a business matter and not an alliance."
Again, this is not to defend Trump, or even to generate sympathy for him - I personally have none. It's to characterize where he is, and we are, at in this pivotal moment. Pivotal not for what they're doing, the broad intelligence community. But pivotal for what we're finding out, the extent and blatancy of the violations.
All of this creates an incredibly complex story, with only a tenth or less being covered by anything like the mainstream press. For example, the Trump-Putin tale is much more likely to be part of a much broader "international mobster" story, whose participants include not only Trump and Putin, but Wall Street (think HSBC) and major international banks, sovereign wealth funds, major hedge funds, venture capital (vulture capital) firms, international drug and other trafficking cartels, corrupt dictators and presidents around the world and much of the highest reaches of the "Davos crowd."
Much of the highest reaches of the .01 percent, in other words, all served, supported and "curated" by the various, often competing elements of the first-world military and intelligence communities. What a stew of competing and aligned interests, of marriages and divorces of convenience, all for the common currencies of money and power, all of them dealing in death .
What this new WikiLeaks revelation shows us is what just one arm of that community, the CIA, has been up to. Again, the breadth of the spying and hacking capability is beyond imagination. This is where we've come to as a nation.
What the CIA Is Up To - A Brief Sample
Now about those CIA spooks and their surprising capabilities. A number of other outlets have written up the story, but this from Zero Hedge has managed to capture the essence as well as the breadth in not too many words (emphasis mine throughout):
WikiLeaks has published what it claims is the largest ever release of confidential documents on the CIA It includes more than 8,000 documents as part of 'Vault 7', a series of leaks on the agency, which have allegedly emerged from the CIA's Center For Cyber Intelligence in Langley , and which can be seen on the org chart below, which Wikileaks also released : [org chart reproduced above]
A total of 8,761 documents have been published as part of 'Year Zero', the first in a series of leaks the whistleblower organization has dubbed 'Vault 7.' WikiLeaks said that 'Year Zero' revealed details of the CIA's "global covert hacking program," including "weaponized exploits" used against company products including " Apple's iPhone , Google's Android and Microsoft's Windows and even Samsung TVs , which are turned into covert microphones."
WikiLeaks tweeted the leak, which it claims came from a network inside the CIA's Center for Cyber Intelligence in Langley, Virginia.
Among the more notable disclosures which, if confirmed, " would rock the technology world ", the CIA had managed to bypass encryption on popular phone and messaging services such as Signal, WhatsApp and Telegram. According to the statement from WikiLeaks, government hackers can penetrate Android phones and collect "audio and message traffic before encryption is applied."
With respect to hacked devices like you smart phone, smart TV and computer, consider the concept of putting these devices in "fake-off" mode:
Among the various techniques profiled by WikiLeaks is "Weeping Angel", developed by the CIA's Embedded Devices Branch (EDB), which infests smart TVs , transforming them into covert microphones. After infestation, Weeping Angel places the target TV in a 'Fake-Off' mode , so that the owner falsely believes the TV is off when it is on. In 'Fake-Off' mode the TV operates as a bug, recording conversations in the room and sending them over the Internet to a covert CIA server.
As Kim Dotcom chimed in on Twitter, "CIA turns Smart TVs, iPhones, gaming consoles and many other consumer gadgets into open microphones" and added "CIA turned every Microsoft Windows PC in the world into spyware. Can activate backdoors on demand, including via Windows update "[.]
Do you still trust Windows Update?
About "Russia did it"
Adding to the "Russia did it" story, note this:
Another profound revelation is that the CIA can engage in "false flag" cyberattacks which portray Russia as the assailant . Discussing the CIA's Remote Devices Branch's UMBRAGE group, Wikileaks' source notes that it "collects and maintains a substantial library of attack techniques 'stolen' from malware produced in other states including the Russian Federation.["]
As Kim Dotcom summarizes this finding, " CIA uses techniques to make cyber attacks look like they originated from enemy state ."
This doesn't prove that Russia didn't do it ("it" meaning actually hacking the presidency for Trump, as opposed to providing much influence in that direction), but again, we're in spook world, with all the phrase implies. The CIA can clearly put anyone's fingerprints on any weapon they wish, and I can't imagine they're alone in that capability.
Hacking Presidential Devices?
If I were a president, I'd be concerned about this, from the WikiLeaks " Analysis " portion of the Press Release (emphasis added):
"Year Zero" documents show that the CIA breached the Obama administration's commitments [that the intelligence community would reveal to device manufacturers whatever vulnerabilities it discovered]. Many of the vulnerabilities used in the CIA's cyber arsenal are pervasive [across devices and device types] and some may already have been found by rival intelligence agencies or cyber criminals.
As an example, specific CIA malware revealed in "Year Zero" [that it] is able to penetrate, infest and control both the Android phone and iPhone software that runs or has run presidential Twitter accounts . The CIA attacks this software by using undisclosed security vulnerabilities ("zero days") possessed by the CIA[,] but if the CIA can hack these phones then so can everyone else who has obtained or discovered the vulnerability. As long as the CIA keeps these vulnerabilities concealed from Apple and Google (who make the phones) they will not be fixed, and the phones will remain hackable.
Does or did the CIA do this (hack presidential devices), or is it just capable of it? The second paragraph implies the latter. That's a discussion for another day, but I can say now that both Lawrence Wilkerson, aide to Colin Powell and a non-partisan (though an admitted Republican) expert in these matters, and William Binney, one of the triumvirate of major pre-Snowden leakers, think emphatically yes. (See Wilkerson's comments here . See Binney's comments here .)
Whether or not you believe Wilkerson and Binney, do you doubt that if our intelligence people can do something, they would balk at the deed itself, in this world of "collect it all "? If nothing else, imagine the power this kind of bugging would confer on those who do it.
The Breadth of the CIA Cyber-Hacking Scheme
But there is so much more in this Wikileaks release than suggested by the brief summary above. Here's a bullet-point overview of what we've learned so far, again via Zero Hedge:
Key Highlights from the Vault 7 release so far:
"Year Zero" introduces the scope and direction of the CIA's global covert hacking program, its malware arsenal and dozens of "zero day" weaponized exploits against a wide range of U.S. and European company products , include Apple's iPhone, Google's Android and Microsoft's Windows and even Samsung TVs, which are turned into covert microphones.
Wikileaks claims that the CIA lost control of the majority of its hacking arsenal including malware, viruses, trojans, weaponized "zero day" exploits, malware remote control systems and associated documentation . This extraordinary collection, which amounts to more than several hundred million lines of code, gives its possessor the entire hacking capacity of the CIA The archive appears to have been circulated among former U.S. government hackers and contractors in an unauthorized manner, one of whom has provided WikiLeaks with portions of the archive.
By the end of 2016, the CIA's hacking division, which formally falls under the agency's Center for Cyber Intelligence (CCI), had over 5000 registered users and had produced more than a thousand hacking systems, trojans, viruses, and other "weaponized" malware . Such is the scale of the CIA's undertaking that by 2016, its hackers had utilized more code than that used to run Facebook.
The CIA had created, in effect, its "own NSA" with even less accountability and without publicly answering the question as to whether such a massive budgetary spend on duplicating the capacities of a rival agency could be justified.
Once a single cyber 'weapon' is 'loose' it can spread around the world in seconds , to be used by rival states, cyber mafia and teenage hackers alike.
Also this scary possibility:
As of October 2014 the CIA was also looking at infecting the vehicle control systems used by modern cars and trucks.
The purpose of such control is not specified, but it would permit the CIA to engage in nearly undetectable assassinations .
Journalist Michael Hastings, who in 2010 destroyed the career of General Stanley McChrystal and was hated by the military for it, was killed in 2013 in an inexplicably out-of-control car. This isn't to suggest the CIA, specifically, caused his death. It's to ask that, if these capabilities existed in 2013, what would prevent their use by elements of the military, which is, after all a death-delivery organization?
And lest you consider this last speculation just crazy talk, Richard Clarke (that Richard Clarke ) agrees: "Richard Clarke, the counterterrorism chief under both Bill Clinton and George W. Bush, told the Huffington Post that Hastings's crash looked consistent with a car cyber attack.'" Full and fascinating article here .
WiliLeaks Press Release
Here's what WikiLeaks itself says about this first document cache (again, emphasis mine):
Press Release
Today, Tuesday 7 March 2017, WikiLeaks begins its new series of leaks on the U.S. Central Intelligence Agency. Code-named "Vault 7" by WikiLeaks, it is the largest ever publication of confidential documents on the agency.
The first full part of the series, "Year Zero", comprises 8,761 documents and files from an isolated, high-security network situated inside the CIA's Center for Cyber Intelligence in Langley, Virgina. It follows an introductory disclosure last month of CIA targeting French political parties and candidates in the lead up to the 2012 presidential election .
Recently, the CIA lost control of the majority of its hacking arsenal including malware, viruses, trojans, weaponized "zero day" exploits, malware remote control systems and associated documentation. This extraordinary collection, which amounts to more than several hundred million lines of code, gives its possessor the entire hacking capacity of the CIA The archive appears to have been circulated among former U.S. government hackers and contractors in an unauthorized manner, one of whom has provided WikiLeaks with portions of the archive.
"Year Zero" introduces the scope and direction of the CIA's global covert hacking program, its malware arsenal and dozens of "zero day" weaponized exploits against a wide range of U.S. and European company products, include Apple's iPhone, Google's Android and Microsoft's Windows and even Samsung TVs, which are turned into covert microphones.
Since 2001 the CIA has gained political and budgetary preeminence over the U.S. National Security Agency (NSA). The CIA found itself building not just its now infamous drone fleet, but a very different type of covert, globe-spanning force - its own substantial fleet of hackers. The agency's hacking division freed it from having to disclose its often controversial operations to the NSA (its primary bureaucratic rival) in order to draw on the NSA's hacking capacities.
By the end of 2016, the CIA's hacking division, which formally falls under the agency's Center for Cyber Intelligence (CCI), had over 5000 registered users and had produced more than a thousand hacking systems, trojans, viruses, and other "weaponized" malware. Such is the scale of the CIA's undertaking that by 2016, its hackers had utilized more code than that used to run Facebook. The CIA had created, in effect, its "own NSA" with even less accountability and without publicly answering the question as to whether such a massive budgetary spend on duplicating the capacities of a rival agency could be justified.
In a statement to WikiLeaks the source details policy questions that they say urgently need to be debated in public , including whether the CIA's hacking capabilities exceed its mandated powers and the problem of public oversight of the agency. The source wishes to initiate a public debate about the security, creation, use, proliferation and democratic control of cyberweapons.
Once a single cyber 'weapon' is 'loose' it can spread around the world in seconds, to be used by rival states, cyber mafia and teenage hackers alike.
Julian Assange, WikiLeaks editor stated that "There is an extreme proliferation risk in the development of cyber 'weapons'. Comparisons can be drawn between the uncontrolled proliferation of such 'weapons', which results from the inability to contain them combined with their high market value, and the global arms trade. But the significance of "Year Zero" goes well beyond the choice between cyberwar and cyberpeace. The disclosure is also exceptional from a political, legal and forensic perspective."
Wikileaks has carefully reviewed the "Year Zero" disclosure and published substantive CIA documentation while avoiding the distribution of 'armed' cyberweapons until a consensus emerges on the technical and political nature of the CIA's program and how such 'weapons' should analyzed, disarmed and published.
Wikileaks has also decided to redact and anonymise some identifying information in "Year Zero" for in depth analysis. These redactions include ten of thousands of CIA targets and attack machines throughout Latin America, Europe and the United States. While we are aware of the imperfect results of any approach chosen, we remain committed to our publishing model and note that the quantity of published pages in "Vault 7" part one ("Year Zero") already eclipses the total number of pages published over the first three years of the Edward Snowden NSA leaks.
Be sure to click through for the Analysis, Examples and FAQ sections as well.
"O brave new world," someone once wrote . Indeed. Brave new world, that only the brave can live in.
____
1 Mind you, the leakers may have had a comprehensive enough view to be making an accurate call. But the real point is there are no actors who will be allowed to make an independent assessment.
salvo , March 9, 2017 at 3:13 amThat's all I needed.
https://www.theguardian.com/us-news/2017/jan/10/fbi-chief-given-dossier-by-john-mccain-alleging-secret-trump-russia-contactsSenator John McCain passed documents to the FBI director, James Comey, last month alleging secret contacts between the Trump campaign and Moscow and that Russian intelligence had personally compromising material on the president-elect himself.
The material, which has been seen by the Guardian, is a series of reports on Trump's relationship with Moscow. They were drawn up by a former western counter-intelligence official, now working as a private consultant. BuzzFeed on Tuesday published the documents, which it said were "unverified and potentially unverifiable".
The Guardian has not been able to confirm the veracity of the documents' contents,
Emphases mine. I had been sitting on this link trying to make sense of this part. Clearly, the Trump Whitehouse has some major leaks, which the MSM is exploiting. But the start of this article suggests that para-intelligence (is that a word? Eh, it is now) was the source of the allegedly damaging info.
This is no longer about the deep-state, but a rouge state, possibly guns for higher, each having fealty to specific political interests. The CIA arsenal wasn't leaked. It was delivered.
visitor , March 9, 2017 at 3:40 amhmm.. as far as I can see, noone seems to care here in Germany anymore about being spied on by our US friends, apart from a few alternative sources which are being accused of spreading fake news, of being anti-american, russian trolls, the matter is widely ignored
Yves Smith Post author , March 9, 2017 at 5:53 amI have read a few articles about the Vault 7 leak that typically raise a few alarms I would like to comment on.
1) The fact that the
CIA had managed to bypass encryption on popular phone and messaging services
does not mean that it has broken encryption, just that it has a way to install a program at a lower level, close to the operating system, that will read messages before they are encrypted and sent by the messaging app, or just after they have been decrypted by it.
As a side note: banks have now largely introduced two-factor authentication when accessing online services. One enters username (or account number) and password; the bank site returns a code; the user must then enter this code into a smartphone app or a tiny specialized device, which computes and returns a value out of it; the user enters this last value into the entry form as a throw-away additional password, and gains access to the bank website.
I have always refused to use such methods on a smartphone and insist on getting the specialized "single-use password computer", precisely because the smartphone platform can be subverted.
2) The fact that
"Weeping Angel", developed by the CIA's Embedded Devices Branch (EDB), [ ] infests smart TVs, transforming them into covert microphones.
is possible largely because smart TVs are designed by their manufacturers to serve as spying devices. "Weeping Angel" is not some kind of virus that turns normal devices into zombies, but a tool to take control of existing zombie devices.
The fact that smart TVs from Vizio , Samsung or LG constitute an outrageous intrusion into the privacy of their owners has been a known topic for years already.
3) The
CIA [ ] also looking at infecting the vehicle control systems used by modern cars and trucks
is not a "scary possibility" either; various demonstrations of such feats on Tesla , Nissan , or Chrysler vehicles have been demonstrated in the past few years.
And the consequences have already been suggested (killing people by disabling their car controls on the highway for instance).
My take on this is that we should seriously look askance not just at the shenanigans of the CIA, but at the entire "innovative technology" that is imposed upon (computerized cars) or joyfully adopted by (smartphones) consumers. Of course, most NC readers are aware of the pitfalls already, but alas not the majority of the population.
4) Finally this:
He's so impossibly erratic, so impossibly unfit for his office,
Trump is arguably unfit for office, does not have a clue about many things (such as foreign relations), but by taxing him of being "erratic" Gaius Publius shows that he still does not "get" the Donald.
Trump has a completely different modus operandi than career politicians, formed by his experience as a real-estate mogul and media star. His world has been one where one makes outrageous offers to try anchoring the negotiation before reducing one's claims - even significantly, or abruptly exiting just before an agreement to strike a deal with another party that has been lured to concessions through negotiations with the first one. NC once included a video of Trump doing an interactive A/B testing of his slogans during a campaign meeting; while changing one's slogans on the spot might seem "erratic", it is actually a very systematic market probing technique.
So stop asserting that Trump is "unpredictable" or "irrational"; this is underestimating him (a dangerous fault), as he is very consistent, though in an uncommon fashion amongst political pundits.
visitor , March 9, 2017 at 6:59 amWhile I agree that it's worth pointing out that the CIA has not broken any of the major encryption tools, even Snowden regards being able to circumvent them as worse, since people using encryption are presumably those who feel particularly at risk and will get a false sense of security and say things or keep data on their devices that they never never would if they thought they were insecure.
Re Gaius on Trump, I agree the lady doth protest too much. But I said repeatedly that Trump would not want to be President if he understood the job. It is not like being the CEO of a private company. Trump has vastly more control over his smaller terrain in his past life than he does as President.
And Trump is no longer campaigning. No more a/b testing.
The fact is that he still does not have effective control of the Executive branch. He has lots of open positions in the political appointee slots (largely due to not having even submitted candidates!) plus has rebellion in some organizations (like folks in the EPA storing data outside the agency to prevent its destruction).
You cannot pretend that Trump's former MO is working at all well for him. And he isn't showing an ability to adapt or learn (not surprising at his age). For instance, he should have figured out by now that DC is run by lawyers, yet his team has hardly any on it. This is continuing to be a source of major self inflicted wounds.
His erraticness may be keeping his opponents off base, but it is also keeping him from advancing any of his goals.
RBHoughton , March 9, 2017 at 9:00 pmI believe we are in agreement.
Yes, not breaking encryption is devious, as it gives a false sense of security - this is precisely why I refuse to use those supposedly secure e-banking login apps on smartphones whose system software can be subverted, and prefer those non-connected, non-reprogrammable, special-purpose password generating devices.
As for Trump being incompetent for his job, and his skills in wheeling-dealing do not carrying over usefully to conducting high political offices, that much is clear. But he is not "erratic", rather he is out of place and out of his depth.
Ivy , March 9, 2017 at 10:09 amI am writing this in the shower with a paper bag over my head and my iPhone in the microwave.
I have for years had a password-protected document on computer with all my important numbers and passwords. I have today deleted that document and reverted to a paper record.
visitor , March 9, 2017 at 11:34 amPlease tell readers more about the following for our benefit:
"single-use password computer"
PhilM , March 9, 2017 at 11:35 amThat is an example of the sort of thing I am talking about.
jrs , March 9, 2017 at 2:36 pmI think he means a machine dedicated to high-security operations like anything financial or bill-pay. Something that is not exposed to email or web-browsing operations that happen on a casual-use computer that can easily compromise. That's not a bad way to go; it's cheaper in terms of time than the labor-intensive approaches I use, but those are a hobby more than anything else. It depends on how much you have at stake if they get your bank account or brokerage service password.
I take a few basic security measures, which would not impress the IT crowd I hang out with elsewhere, but at least would not make me a laughingstock. I run Linux and use only open-source software; run ad-blockers and script blockers; confine risky operations, which means any non-corporate or non-mainstream website to a virtual machine that is reset after each use; use separate browsers with different cookie storage policies and different accounts for different purposes. I keep a well-maintained pfSense router with a proxy server and an intrusion detection system, allowing me to segregate my secure network, home servers, guest networks, audiovisual streaming and entertainment devices, and IoT devices each on their own VLANs with appropriate ACLs between them. No device on the more-secured network is allowed out to any port without permission, and similar rules are there for the IoT devices, and the VoIP tools.
The hardware to do all of that costs at least $700, but the real expense is in the time to learn the systems properly. Of course if you use Linux, you could save that on software in a year if you are too cheap to send a contribution to the developers.
It's not perfect, because I still have computers turned on :) , but I feel a bit safer this way.
That said, absolutely nothing that I have here would last 30 milliseconds against anything the "hats" could use, if they wanted in. It would be over before it began. If I had anything to hide, really, I would have something to fear; so guess I'm OK.
visitor , March 9, 2017 at 2:45 pmopen source software often has a lot of bugs to be exploioted. Wouldn't it be easier to just do banking in person?
cfraenkel , March 9, 2017 at 12:07 pmBanks discourage that by
a) charging extortionate fees for "in-person" operations at the counter;
b) closing subsidiaries, thus making it tedious and time-consuming to visit a branch to perform banking operations in person;
c) eliminating the possibility to perform some or even all usual operations in any other form than online (see the advent of "Internet only" banks).
In theoretical terms, all this is called "nudging".
meme , March 9, 2017 at 3:53 amThey're key fobs handed to you by your IT dept. The code displayed changes every couple of minutes. The plus is there's nothing sent over the air. The minus is the fobs are subject to theft, and are only good for connecting to 'home'. And since they have a cost, and need to be physically handed to you, they're not good fit for most two factor login applications (ie logging into your bank account).
Direction , March 9, 2017 at 4:23 amI watched (fast forwarded through, really) Morning Joe yesterday to see what they would have to say about Wikileaks. The show mostly revolved around the health care bill and Trump's lying and tweeting about Obama wiretapping him. They gave Tim Kaine plenty of time to discuss his recent trip to London talking to "some of our allies there" saying that they are concerned that "all the intelligence agencies" say the Rooskies "cyber hacked" our election, and since it looks like we aren't doing anything when we are attacked, they KNOW we won't do anything when they are attacked. (more red baiting)
The only two mentions I saw was about Wikileaks were, first, a question asked of David Cohen, ex Deputy Director of the CIA, who refused to confirm the Wikileaks were authentic, saying whatever tools and techniques the CIA had were used against foreign persons overseas, so there is no reason to worry that your TV is looking at you. And second, Senator Tom Cotton, who didn't want to comment on the contents of Wikileaks, only saying that the CIA is a foreign intelligence service, collecting evidence on foreign targets to keep our country safe, and it does not do intelligence work domestically.
So that appears to be their story, the CIA doesn't spy on us, and they are sticking with it, probably hoping the whole Wikileaks thing just cycles out of the news.
skippy , March 9, 2017 at 5:46 amThanks for mentioning Hastings. His death has always been more than suspicious.
james wordsworth , March 9, 2017 at 5:50 amElite risk management reduction tool goes walkabout inverting its potential ..
disheveled . love it when a plan comes together ..
Yves Smith Post author , March 9, 2017 at 7:52 amThe unwillingness of the main stream media (so far) to really cover the Wikileaks reveal is perhaps the bigger story. This should be ongoing front page stuff .. but it is not.
As for using ZeroHedge as a source for anything, can we give that a rest. That site has become a cesspool of insanity. It used to have some good stuff. Now it is just unreadable. SAD
And yes I know the hypocrisy of slamming ZH and the MSM at the same time we live in interesting times.
3urypteris , March 9, 2017 at 12:14 pmYour remarks on ZH are an ad hominem attack and therefore a violation of site policies. The onus is on you to say what ZH got wrong and not engage in an ungrounded smear. The mainstream media often cites ZH.
NC more than just about any other finance site is loath to link to ZH precisely because it is off base or hyperventilating a not acceptably high percent of the time, and is generally wrong about the Fed (as in governance and how money works). We don't want to encourage readers to see it as reliable. However, it is good on trader gossip and mining Bloomberg data.
And I read through its summary of the Wikileaks material as used by Gaius and there was nothing wrong with it. It was careful about attributing certain claims to Wikileaks as opposed to depicting them as true.
sunny129 , March 9, 2017 at 7:20 pmMy rules for reading ZH:
1- Skip every article with no picture
2- Skip every article where the picture is a graph
3- Skip every article where the picture is of a single person's face
4- Skip every afticle where the picture is a cartoon
5- Skip every article about gold, BitCoin, or high-frequency trading
6- Skip all the "Guest Posts"
7- ALWAYS click through to the source
8- NEVER read the commentsIt is in my opinion a very high noise-to-signal source, but there is some there there.
TheCatSaid , March 9, 2017 at 6:14 amFinding the TRUTH is NOT that easy.
Discerning a 'news from noise' is NEVER that easy b/c it is an art, developed by years of shifting through ever increasing 'DATA information' load. This again has to be filtered and tested against one's own 'critical' thinking or reasoning! You have to give ZH, deserved credit, when they are right!
There is no longer a Black or white there, even at ZH! But it is one of the few, willing to challenge the main stream narrative 'kool aid'
Romancing The Loan , March 9, 2017 at 8:43 amIn addition to the "para-intelligence" community (hat tip Code named D) there are multiple enterprises with unique areas of expertise that interface closely with the CIA The long-exposed operations, which include entrapment and blackmailing of key actors to guarantee complicity, "loyalty" and/or sealed lips, infect businesses, NGOs, law enforcement agencies, judges, politicians, and other government agencies. Equal opportunity employment for those with strong stomachs and a weak moral compass.
nobody , March 9, 2017 at 10:10 amYes I can't remember where I read it but it was a tale passed around supposedly by an FBI guy that had, along with his colleagues, the job of vetting candidates for political office. They'd do their background research and pass on either a thick or thin folder full of all the compromising dirt on each potential appointee. Over time he said he was perturbed to notice a persistent pattern where the thickest folders were always the ones who got in.
craazyboy , March 9, 2017 at 8:20 amI learned this when I was in my 20s. The Catholic Church was funding my early critique of American foreign aid as being imperialist. I asked whether they thought I should go into politics. They said, "No, you'd never make it". And I said, "Why?" and they said, "Well, nobody has a police record or any other dirt on you." I asked what they meant. They said, "Unless they have something over you to blackmail you with, you're not going to be able to get campaign funding. Because they believe that you might do something surprising," in other words, something they haven't asked you to do. So basically throughout politics, on both sides of the spectrum, voters have candidates who are funded by backers who have enough over them that they can always blackmail.
flora , March 9, 2017 at 11:11 amI find the notion that my consumer electronics may be CIA microphones somewhat irritating, but my imagination quickly runs off to far worse scenarios. (although the popular phase, "You're tax dollars at work." keeps running thru my head like a earworm. And whenever I hear "conservatives" speak of their desire for "small government", usually when topics of health care, Medicare and social security come up, I can only manage a snort of incredulousness anymore)
One being malware penetrating our nuke power plants and shutting down the cooling system. Then the reactor slowly overheats over the next 3 days, goes critical, and blows the surrounding area to high heaven. We have plants all around the coast of the country and also around the Great Lakes Region – our largest fresh water store in a drought threatened future.
Then the same happening in our offensive nuke missile systems.
Some other inconvenient truths – the stuxnet virus has been redesigned. Kaspersky – premier anti malware software maker – had a variant on their corporate network for months before finally discovering it. What chance have we?
In China, hacking is becoming a consumer service industry. There are companies building high power data centers with a host of hacking tools. Anyone, including high school script kiddies, can rent time to use the sophisticated hacking tools, web search bots, and whatever, all hosted on powerful servers with high speed internet bandwidth.
Being a bit "spooked" by all this, I began to worry about my humble home computer and decided to research whatever products I could get to at least ward off annoying vandalism. Among other things, I did sign up for a VPN service. I'm looking at the control app for my VPN connection here and I see that with a simple checkbox mouse click I can make my IP address appear to be located in my choice of 40 some countries around the world. Romania is on the list!
craazyboy , March 9, 2017 at 12:40 pm"my consumer electronics may be CIA microphones "
I haven't tested this, so can't confirm it works, but it sounds reasonable.
http://www.komando.com/tips/390304/secure-your-webcam-and-microphone-from-hackerscraazyboy , March 9, 2017 at 12:46 pmActually, I very much doubt that does work. The mic "pickup" would feed its analog output to a DAC (digital to analog converter) which would convert the signal to digital. This then goes to something similar to a virtual com port in the operating system. Here is where a malware program would pick it up and either create a audio file to be sent to an internet address, or stream it directly there.
The article is just plugging in a microphone at the output jack. The malware got the data long before it goes thru another DAC and analog amp to get to the speakers or output jack.
flora , March 9, 2017 at 2:43 pms/b "plugging in a earbud at the output jack". They're confusing me too.
Stephen Gardner , March 9, 2017 at 2:53 pmah. thanks for vetting.
Stephen Gardner , March 9, 2017 at 2:52 pmIt's actually a input/output jack or, if you will, a mic/headphone jack.
Pat , March 9, 2017 at 8:27 amIt depends on how it is hooked up internally. Old fashioned amateur radio headphones would disable the speakers when plugged in because the physical insertion of the plug pushed open the connection to the speakers. The jack that you plug the ear buds into might do the same, disconnecting the path between the built-in microphone and the ADC (actually it is an ADC not a DAC). The only way to know is to take it apart and see how it is connected.
Eureka Springs , March 9, 2017 at 8:31 amThe CIA is not allowed to operate in the US is also the panacea for the public. And some are buying it. Along with everyone knows they can do this is fueling the NOTHING to see here keep walking weak practically non existent coverage.
Anon , March 9, 2017 at 2:40 pmAt what point do people quit negotiating in terrorism and errorism? For this is what the police, the very State itself has long been. Far beyond being illegitimate, illegal, immoral, this is a clear and ever present danger to not just it's own people, but the rule of law itself. Blanket statements like we all know this just makes the dangerously absurd normal I'll never understand that part of human nature. But hey, the TSA literally just keeps probing further each and every year. Bend over!
Trump may not be the one for the task but we the people desperately need people 'unfit', for it is the many fit who brought us to this point. His unfit nature is as refreshing on these matters in its chaotic honest disbelief as Snowden and Wiki revelations. Refreshing because it's all we've got. One doesn't have to like Trump to still see missed opportunity so many should be telling him he could be the greatest pres ever if (for two examples) he fought tirelessly for single payer and to bring down this police state rather than the EPA or public education.
This cannot stand on so many levels. Not only is the fourth amendment rendered utterly void, but even if it weren't it falls far short of the protections we deserve.
No enemy could possibly be as bad as who we are and what we allow/do among ourselves. If an election can be hacked (not saying it was by Russia).. as these and other files prove anything can and will be hacked then our system is to blame, not someone else.
What amazes me is that the spooks haven't manufactured proof needed to take Trump out of office Bonfire of The Vanities style. I'd like to think the people have moved beyond the point they would believe manufactured evidence but the Russia thing proves otherwise.
These people foment world war while probing our every move and we do nothing!
If we wait for someone fit nothing will ever change because we wait for the police/media/oligarch state to tell us who is fit.
Stephen Gardner , March 9, 2017 at 3:05 pmbeing "unfit" does not automatically make someone a savior.
Allegorio , March 9, 2017 at 4:00 pmBut being fit by the standards of our ruling class, the "real owners" as Carlin called them is, in my book, an automatic proof that they are up to no good. Trump is not my cup of tea as a president but no one we have had in a while wasn't clearly compromised by those who fund them. Did you ever wonder why we have never had a president or even a powerful member of congress that was not totally in the tank for that little country on the Eastern Mediterranean? Or the Gulf Monarchies? Do you think that is by accident? Do you think money isn't involved? Talk about hacked elections! We should be so lucky as to have ONLY Russians attempting to affect our elections. Money is what hacks US elections and never forget that. To me it is laughable to discuss hacking the elections without discussing the real way our "democracy" is subverted–money not document leaks or voting machine hacks. It's money.
Why isn't Saudi Arabia on Trump's list? Iran that has never been involved in a terrorist act on US soil is but not Saudi Arabia? How many 911 hijackers came from Iran? If anything saves Trump from destruction by the real owners of our democracy it is his devotion to the aforementioned countries.
HBE , March 9, 2017 at 8:47 amThe point again is not to remove him from office but to control him. With Trump's past you better believe the surveillance state has more than enough to remove him from office. Notice the change in his rhetoric since inauguration? More and more he is towing the establishment Republican line. Of course this depends on whether you believe Trump is a break with the past or just the best liar out there. A very unpopular establishment would be clever in promoting their agent by pretending to be against him.
Anyone who still believes that the US is a democratic republic and not a mafia state needs to stick their heads deeper into the sands. When will the low information voters and police forces on whom a real revolution depends realize this is anyone's guess. The day is getting closer especially for the younger generation. The meme among the masses is that government has always been corrupt and that this is nothing new. I do believe the level of immorality among the credentialed classes is indeed very new and has become the new normal. Generations of every man for himself capitalist philosophy undermining any sense of morality or community has finally done its work.
Arizona Slim , March 9, 2017 at 8:50 amGo take a jaunt over to huffpo, at the time of this post there was not a single mention of vault 7 on the front page. Just a long series of anti trump administration articles.
Glad to know for sure who the true warmongers were all along.
Eureka Springs , March 9, 2017 at 8:59 amWe need another Church Commission.
Arizona Slim , March 9, 2017 at 1:31 pmNo.. The Church commission was a sweep it under the rug operation. It got us FISA courts. More carte blanche secrecy, not less. The commission nor the rest of the system didn't even hold violators of the time accountable.
We have files like Vault 7. Commissions rarely get in secret what we have right here before our eyes.
Foppe , March 9, 2017 at 1:55 pmWell, how about a Truth and Reconciliation Commission?
River , March 9, 2017 at 10:59 amCute but the ANC lost the war by acceding to WTO entry (which "forbade" distributive politics, land/resource redistribution, nationalizations, etc.).
DJG , March 9, 2017 at 12:49 pmNeed Langley surrounded and fired upon by tanks at this point.
Err on the side of caution.
polecat , March 9, 2017 at 12:53 pmRiver: Interesting historic parallel? I believe that the Ottomans got rid of the Janissaries that way, after the Janissaries had become a state within a state, by using cannons on their HQ
From Wiki entry, Janissaries:
The corps was abolished by Sultan Mahmud II in 1826 in the Auspicious Incident in which 6,000 or more were executed.[8]
knowbuddhau , March 9, 2017 at 9:01 am"Nuke it from orbit it's the only way to be sure . "
Stormcrow , March 9, 2017 at 9:35 amTook less than a minute to download the 513.33MB file. The passphrase is what JFK said he'd like to do to CIA: SplinterItIntoAThousandPiecesAndScatterItIntoTheWinds.
"The illegal we do immediately; the unconstitutional takes a little longer." Henry Kissinger, 1975.
SplinterItIntoAThousandPiecesAndScatterItIntoTheWinds. , March 9, 2017 at 10:06 amHere is Raimondo's take:
Spygate
http://original.antiwar.com/justin/2017/03/07/spygate-americas-political-police-vs-donald-j-trump/The campaign to frame up and discredit Trump and his associates is characteristic of how a police state routinely operates. A national security apparatus that vacuums up all our communications and stores them for later retrieval has been utilized by political operatives to go after their enemies – and not even the President of the United States is immune. This is something that one might expect to occur in, say, Turkey, or China: that it is happening here, to the cheers of much of the media and the Democratic party, is beyond frightening.
The irony is that the existence of this dangerous apparatus – which civil libertarians have warned could and probably would be used for political purposes – has been hailed by Trump and his team as a necessary and proper function of government. Indeed, Trump has called for the execution of the person who revealed the existence of this sinister engine of oppression – Edward Snowden. Absent Snowden's revelations, we would still be in the dark as to the existence and vast scope of the NSA's surveillance.
And now the monster Trump embraced in the name of "national security" has come back to bite him.
We hear all the time that what's needed is an open and impartial "investigation" of Trump's alleged "ties" to Russia. This is dangerous nonsense: does every wild-eyed accusation from embittered losers deserve a congressional committee armed with subpoena power bent on conducting an inquisition? Certainly not.
What must be investigated is the incubation of a clandestine political police force inside the national security apparatus, one that has been unleashed against Trump – and could be deployed against anyone.
This isn't about Donald Trump. It's about preserving what's left of our old republic.
Perhapps overstated but well worth pondering.
flora , March 9, 2017 at 11:21 amYeah I downloaded it the day it came out and spent an hour or so looking at it last night. First impressions – "heyyy this is like a Hackers Guide – the sort I used in the 80s, or DerEngel's Cable Modem Hacking" of the 00s.
2nd impressions – wow it really gives foundational stuff – like "Enable Debug on PolarSSL".
3rd impressions – "I could spend hours going thru this happily ".
4th impressions – I went looking for the "juicy bits" of interest to me – SOHO routers, small routers – sadly its just a table documenting routers sold around the world, and whether these guys have put the firmware in their Stash Repository. Original firmware, not hacked one. But the repository isn't in the vault dump, AFAIK.
Its quite fascinating. But trying to find the "juicy stuff" is going to be tedious. One can spend hours and hours going thru it. To speed up going thru it, I'm going to need some tech sites to say "where to go".
Sam F , March 9, 2017 at 10:10 amIt seems clear that Wikileaks has not and will not release actual ongoing method "how-to" info or hacking scripts. They are releasing the "whats", not the tech level detailed "hows". This seems like a sane approach to releasing the data. The release appears to be for political discussion, not for spreading the hacking tools. So I wouldn't look for "juicy bits" about detailed methodology. Just my guess.
That said, love what you're doing digging into this stuff. I look forward to a more detailed report in future. Thanks.
Outis Philalithopoulos , March 9, 2017 at 10:58 amYves, I think that you much underestimate the extremity of these exposed violations of the security of freedom of expression, and of the security of private records. The WikiLeaks docs show that CIA has developed means to use all personal digital device microphones and cameras even when they are "off," and to send all of your files and personal data to themselves, and to send your private messages to themselves before they are encrypted. They have installed these spyware in the released version of Windows 10, and can easily install them on all common systems and devices.
This goes far beyond the kind of snooping that required specialized devices installed near the target, which could be controlled by warrant process. There is no control over this extreme spying. It is totalitarianism now.
This is probably the most extreme violation of the rights of citizens by a government in all of history. It is far worse than the "turnkey tyranny" against which Snowden warned, on the interception of private messages. It is tyranny itself, the death of democracy.
susan the other , March 9, 2017 at 10:59 amYour first sentence is a bit difficult to understand. If you read Yves' remarks introducing the post, she says that the revelations are "a big deal" "if the Wikileaks claim is even halfway true," while coming down hard on the MSM and others for "pooh-pooh[ing]" the story. Did you want her to add more exclamation points?
NotTimothyGeithner , March 9, 2017 at 11:34 amSo we have a zillion ways to spy and hack and deceive and assassinate, but no control. I think this is what the military refers to as "being overtaken by events."
It's easy to gather information; not so easy to analyze it, and somehow impossible to act on it in good faith. With all this ability to know stuff and surveil people the big question is, Why does everything seem so beyond our ability to control it?
We should know well in advance that banks will fail catastrophically; that we will indeed have sea level rise; that resources will run out; that water will be undrinkable; that people will be impossible to manipulate when panic hits – but what do we do? We play dirty tricks, spy on each other like voyeurs, and ignore the inevitable. Like the Stasi, we clearly know what happened, what is happening and what is going to happen. But we have no control.
Arizona Slim , March 9, 2017 at 1:33 pmMy godfather was in the CIA in the late sixties and early seventies, and he said that outside of the President's pet projects there was no way to sift through and bring important information to decision makers before it made the Washington Post (he is aware of the irony) and hit the President's breakfast table.
Old Jake , March 9, 2017 at 6:05 pmDo you mean to say that the CIA leaked like a sieve? That's my understanding of your post.
Andrew , March 9, 2017 at 11:14 amAS, I would interpret it as saying that there was so much coming in it was like trying to classify snowflakes in a snowstorm. They could pick a few subject areas to look at closely but the rest just went into the files.
Leaking like a sieve is also likely, but perhaps not the main point.
Stormcrow , March 9, 2017 at 11:20 amThe archive appears to have been circulated among government hackers and contractors in a authorized manner
There, that looks the more likely framing considering CIA & DNI on behalf of the whole US IC seemingly fostered wide dissimilation of these tools, information. Demonstration of media control an added plus.
Cheers Yves
lyman alpha blob , March 9, 2017 at 11:42 amThe Empire Strikes Back
WikiLeaks Has Joined the Trump Administration
Max Boot
Foreign Policy magazineI guess we can only expect more of this.
Todd Pierce , on the other hand, nails it. (From his Facebook page.)
The East German Stasi could only dream of the sort of surveillance the NSA and CIA do now, with just as nefarious of purposes.JTMcPhee , March 9, 2017 at 3:02 pmPerhaps the scare quotes around "international mobster" aren't really necessary.
In all this talk about the various factions aligned with and against Trump, that's one I haven't heard brought up by anybody. With all the cement poured in Trump's name over the years, it would be naive to think his businesses had not brushed up against organized crime at some point. Question is, whose side are they on?
Skip Intro , March 9, 2017 at 12:55 pmLike all the other players, the "side" they are on is them-effing-selves. And isn't that the whole problem with our misbegotten species, writ large?
Then there's this: https://www.youtube.com/watch?v=s1Hzds9aGdA Maybe these people will be around and still eating after us urban insects and rodents are long gone? Or will our rulers decide no one should survive if they don't?
tegnost , March 9, 2017 at 1:05 pmTo what extent do these hacks represent the CIA operating within the US? To what extent is that illegal? With the democrats worshipping the IC, will anyone in an official position dare to speak out?
Oregoncharles , March 9, 2017 at 2:17 pmWell we know chuckie won't speak out..
FTA "Schumer said that as he understands, intelligence officials are "very upset with how [Trump] has treated them and talked about them.""
Stephen Gardner , March 9, 2017 at 3:51 pmI've long thought that the reason Snowden was pursued so passionately was that he exposed the biggest, most embarrassing secret: that the National "Security" Agency's INTERNAL security was crap.
And here it is: "Wikileaks claims that the CIA lost control of the majority of its hacking arsenal "
The CIA's internal security is crap, too. Really a lot of people should be fired over that, as well as over Snowden's release. We didn't hear of it happening in the NSA, though I'm not sure we would have. Given Gaius's description of Trump's situation, it seems unlikely it will happen this time, either. One of my hopes for a Trump administration, as long as we're stuck with it, was a thorough cleanout of the upper echelons in the IC. It's obviously long overdue, and Obama wasn't up to it. But I used the past tense because I don't think it's going to happen. Trump seems more interested in sucking up to them, presumably so they won't kill him or his family. That being one of their options.
tiebie66 , March 9, 2017 at 2:59 pmAh, that's the beauty of contracting it out. No one gets fired. Did anyone get fired because of Snowden? It was officially a contractor problem and since there are only a small number of contractors capable of doing the work, well you know. We can't get new ones.
JTMcPhee , March 9, 2017 at 3:06 pmWhat I find by far the most distressing is this: "The CIA had created, in effect, its "own NSA" with even less accountability ." [My emphasis]. It seems to characterize an organization that operates outside of any control and oversight – and one that is intentionally structuring itself that way. That worries me.
It is becoming increasingly clear that the Republic is lost because we didn't stand guard for it. Blaming others don't cut it either – we let it happen. And like the Germans about the Nazi atrocities, we will say that we didn't know about it.
Stephen Gardner , March 9, 2017 at 4:08 pmHey, I didn't let it happen. Stuff that spooks and sh!tes do behind the Lycra ™ curtain happens because it is, what is the big word again, "ineluctable." Is my neighbor to blame for having his house half eaten by both kinds of termites, where the construction is such that the infestation and damage are invisible until the vast damage is done?
nonsense factory , March 9, 2017 at 8:57 pmAnd just how were we supposed to stand guard against a secret and unaccountable organization that protected itself with a shield of lies? And every time some poor misfit complained about it they were told that they just didn't know the facts. If they only knew what our IC knows they would not complain.
It's a dangerous world out there and only our brave IC can protect us from it. Come on. Stop blaming the victim and place the blame where it belongs–our IC and MIC. I say stop feeding the beast with your loyalty to a government that has ceased to be yours.
Studiously avoid any military celebrations. Worship of the military is part of the problem. Remember, the people you thank for "their service" are as much victims as you are. Sadly they don't realize that their service is to a rotten empire that is not worthy of their sacrifice but every time we perform the obligatory ritual of thankfulness we participate in the lie that the service is to a democratic country instead of an undemocratic empire.
It's clearly a case of Wilfred Owen's classic "Dulce et Decorum Est". Read the poem, google it and read it. It is instructive: " you would not tell with such high zest To children ardent for some desperate glory, The old Lie: Dulce et decorum est Pro patria mori." Make no mistake. It is a lie and it can only be undone if we all cease to tell it.
Here's a pretty decent review of the various CIA programs revealed by Wikileaks:
http://www.libertyforjoe.com/2017/03/what-is-vault-7.html
"These CIA revelations in conjunction with those of the NSA paints a pretty dark future for privacy and freedom. Edward Snowden made us aware of the NSA's program XKEYSCORE and PRISM which are utilized to monitor and bulk collect information from virtually any electronic device on the planet and put it into a searchable database. Now Wikileaks has published what appears to be additional Big Brother techniques used by a competing agency. Say what you want about the method of discovery, but Pandora's box has been opened."
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Dec 17, 2017 | www.zerohedge.com
With eyebrows suspiciously furrowed, Tucker Carlson sat down tonight with NYU Professor of Russian Studies and contributor to The Nation , Stephen Cohen, to discuss the 35 page #FakeNews dossier which has gripped the nation with nightmares of golden showers and other perverted conduct which was to be used by Russia to keep Trump on a leash.
The left leaning Cohen, who holds a Ph.D. in government and Russian studies from Columbia, taught at Princeton for 30 years before moving to NYU. He has spent a lifetime deeply immersed in US-Russian relations, having been both a long standing friend of Mikhail Gorbachev and an advisor to President George H.W. Bush. His wife is also the editor of uber liberal " The Nation," so it's safe to assume he's not shilling for Trump - and Tucker was right to go in with eyebrows guarded against such a heavyweight.
Cohen, who has been quite vocal against the Russophobic witch hunt gripping the nation , believes that this falsified 35 page report is part of an "endgame" to mortally wound Trump before he even sets foot in the White House, by grasping at straws to paint him as a puppet of the Kremlin. The purpose of these overt attempts to cripple Trump, which have relied on ham-handed intelligence reports that, according to Cohen "even the New York Times referred to as lacking any evidence whatsoever," is to stop any kind of détente or cooperation with Russia.
Cohen believes that these dangerous accusations attempting to brand a US President as a puppet of a foreign government constitute a "grave American national security threat."
At the very end of the interview, Tucker's very un-furrowed eyebrows agreed.
https://www.youtube.com/watch?v=OtwFEA4dM18
Content originally generated at iBankCoin.com
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Dec 17, 2017 | www.nakedcapitalism.com
JBird , December 16, 2017 at 5:14 pm
Plenue , December 16, 2017 at 6:45 pmYes, it can be used for that , but often the goal is to channel, and contain the thinking from or to whatever, not degrade. Using modern neoliberal economics as an example. The older 19th and early 20th century mainstream political economy were deeper, more comprehensive, and often better at explaining economics. It was also called political economy, and not just economics for that reason.
There was a real financed campaign to narrow the focus on what we call economics today. Part of that effort was to label people very narrowly as just economic beings, which is what libertarianism is, and to label economic thought outside of it as socialism/communism, which is Stalinism, which is the gulag, which is bad thought. The economists studying this were just as intelligent, thoughtful, and incisive, but the idea, the worm of people=money=economics created a thought stop, or an an un-acknowledgment of anything else, the inability to even see anything else.
I sometimes think some are against the masses getting any higher education because one is exposed to other ways of thinking, and believing. A student might never change their beliefs, but the mind is expanded for considering the possibilities and at looking at where others are coming from. Those mindworms are also more obvious, and less useful.
So you could be ninety year blockhead, but if you are willing to listen, to think on what you are exposed to in college, your mind is expanded and strengthen. Which is perhaps the main goal of a liberal arts education. Even a very hard college education will still have some of the same effect.
JBird , December 16, 2017 at 7:41 pm"The economists studying this were just as intelligent, thoughtful, and incisive, but the idea, the worm of people=money=economics created a thought stop, or an an un-acknowledgment of anything else, the inability to even see anything else."
So would you say identity politics is the same thing in reverse? Intelligent people looking at issues from every perspective but that of money and economics?
Yes, as it is used now. It can be very important, but what I have against identity politics as it is done today is that it is the first and last answer to everything. Many people can see, they just think one's identity is paramount. MLK said it best when he talked about being judged for the content of their character rather than the color of their skin.
Please keep in mind that the identity being used could anything. Your sex, gender, orientation, age, class, religion, anything.
Today it's skin color, tomorrow?
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Dec 15, 2017 | www.zerohedge.com
Authored by Gabriel Rockhill via Counterpunch.org,One of the most steadfast beliefs regarding the United States is that it is a democracy. Whenever this conviction waivers slightly, it is almost always to point out detrimental exceptions to core American values or foundational principles. For instance, aspiring critics frequently bemoan a "loss of democracy" due to the election of clownish autocrats, draconian measures on the part of the state, the revelation of extraordinary malfeasance or corruption, deadly foreign interventions, or other such activities that are considered undemocratic exceptions . The same is true for those whose critical framework consists in always juxtaposing the actions of the U.S. government to its founding principles, highlighting the contradiction between the two and clearly placing hope in its potential resolution.
The problem, however, is that there is no contradiction or supposed loss of democracy because the United States simply never was one. This is a difficult reality for many people to confront, and they are likely more inclined to immediately dismiss such a claim as preposterous rather than take the time to scrutinize the material historical record in order to see for themselves. Such a dismissive reaction is due in large part to what is perhaps the most successful public relations campaign in modern history.
What will be seen, however, if this record is soberly and methodically inspected, is that a country founded on elite, colonial rule based on the power of wealth -- a plutocratic colonial oligarchy, in short -- has succeeded not only in buying the label of "democracy" to market itself to the masses, but in having its citizenry, and many others, so socially and psychologically invested in its nationalist origin myth that they refuse to hear lucid and well-documented arguments to the contrary.
To begin to peel the scales from our eyes, let us outline in the restricted space of this article, five patent reasons why the United States has never been a democracy (a more sustained and developed argument is available in my book, Counter-History of the Present ).
To begin with, British colonial expansion into the Americas did not occur in the name of the freedom and equality of the general population, or the conferral of power to the people. Those who settled on the shores of the "new world," with few exceptions, did not respect the fact that it was a very old world indeed, and that a vast indigenous population had been living there for centuries. As soon as Columbus set foot, Europeans began robbing, enslaving and killing the native inhabitants. The trans-Atlantic slave trade commenced almost immediately thereafter, adding a countless number of Africans to the ongoing genocidal assault against the indigenous population. Moreover, it is estimated that over half of the colonists who came to North America from Europe during the colonial period were poor indentured servants, and women were generally trapped in roles of domestic servitude. Rather than the land of the free and equal, then, European colonial expansion to the Americas imposed a land of the colonizer and the colonized, the master and the slave, the rich and the poor, the free and the un-free. The former constituted, moreover, an infinitesimally small minority of the population, whereas the overwhelming majority, meaning "the people," was subjected to death, slavery, servitude, and unremitting socio-economic oppression.
Second, when the elite colonial ruling class decided to sever ties from their homeland and establish an independent state for themselves, they did not found it as a democracy. On the contrary, they were fervently and explicitly opposed to democracy, like the vast majority of European Enlightenment thinkers. They understood it to be a dangerous and chaotic form of uneducated mob rule. For the so-called "founding fathers," the masses were not only incapable of ruling, but they were considered a threat to the hierarchical social structures purportedly necessary for good governance. In the words of John Adams, to take but one telling example, if the majority were given real power, they would redistribute wealth and dissolve the "subordination" so necessary for politics.
When the eminent members of the landowning class met in 1787 to draw up a constitution, they regularly insisted in their debates on the need to establish a republic that kept at bay vile democracy, which was judged worse than "the filth of the common sewers" by the pro-Federalist editor William Cobbett. The new constitution provided for popular elections only in the House of Representatives, but in most states the right to vote was based on being a property owner, and women, the indigenous and slaves -- meaning the overwhelming majority of the population -- were simply excluded from the franchise. Senators were elected by state legislators, the President by electors chosen by the state legislators, and the Supreme Court was appointed by the President.
It is in this context that Patrick Henry flatly proclaimed the most lucid of judgments: "it is not a democracy." George Mason further clarified the situation by describing the newly independent country as "a despotic aristocracy."
When the American republic slowly came to be relabeled as a "democracy," there were no significant institutional modifications to justify the change in name. In other words, and this is the third point, the use of the term "democracy" to refer to an oligarchic republic simply meant that a different word was being used to describe the same basic phenomenon. This began around the time of "Indian killer" Andrew Jackson's presidential campaign in the 1830s. Presenting himself as a 'democrat,' he put forth an image of himself as an average man of the people who was going to put a halt to the long reign of patricians from Virginia and Massachusetts. Slowly but surely, the term "democracy" came to be used as a public relations term to re-brand a plutocratic oligarchy as an electoral regime that serves the interest of the people or demos . Meanwhile, the American holocaust continued unabated, along with chattel slavery, colonial expansion and top-down class warfare.
In spite of certain minor changes over time, the U.S. republic has doggedly preserved its oligarchic structure, and this is readily apparent in the two major selling points of its contemporary "democratic" publicity campaign. The Establishment and its propagandists regularly insist that a structural aristocracy is a "democracy" because the latter is defined by the guarantee of certain fundamental rights (legal definition) and the holding of regular elections (procedural definition). This is, of course, a purely formal, abstract and largely negative understanding of democracy, which says nothing whatsoever about people having real, sustained power over the governing of their lives.
However, even this hollow definition dissimulates the extent to which, to begin with, the supposed equality before the law in the United States presupposes an inequality before the law by excluding major sectors of the population: those judged not to have the right to rights, and those considered to have lost their right to rights (Native Americans, African-Americans and women for most of the country's history, and still today in certain aspects, as well as immigrants, "criminals," minors, the "clinically insane," political dissidents, and so forth). Regarding elections, they are run in the United States as long, multi-million dollar advertising campaigns in which the candidates and issues are pre-selected by the corporate and party elite. The general population, the majority of whom do not have the right to vote or decide not to exercise it, are given the "choice" -- overseen by an undemocratic electoral college and embedded in a non-proportional representation scheme -- regarding which member of the aristocratic elite they would like to have rule over and oppress them for the next four years. "Multivariate analysis indicates," according to an important recent study by Martin Gilens and Benjamin I. Page, "that economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while average citizens and mass-based interest groups have little or no independent influence. The results provide substantial support for theories of Economic-Elite Domination [ ], but not for theories of Majoritarian Electoral Democracy."
To take but a final example of the myriad ways in which the U.S. is not, and has never been, a democracy, it is worth highlighting its consistent assault on movements of people power. Since WWII, it has endeavored to overthrow some 50 foreign governments, most of which were democratically elected.
It has also, according the meticulous calculations by William Blum in America's Deadliest Export: Democracy , grossly interfered in the elections of at least 30 countries, attempted to assassinate more than 50 foreign leaders, dropped bombs on more than 30 countries, and attempted to suppress populist movements in 20 countries. The record on the home front is just as brutal. To take but one significant parallel example, there is ample evidence that the FBI has been invested in a covert war against democracy. Beginning at least in the 1960s, and likely continuing up to the present, the Bureau "extended its earlier clandestine operations against the Communist party, committing its resources to undermining the Puerto Rico independence movement, the Socialist Workers party, the civil rights movement, Black nationalist movements, the Ku Klux Klan, segments of the peace movement, the student movement, and the 'New Left' in general" ( Cointelpro: The FBI's Secret War on Political Freedom , p. 22-23).
Consider, for instance, Judi Bari's summary of its assault on the Socialist Workers Party: "From 1943-63, the federal civil rights case Socialist Workers Party v. Attorney General documents decades of illegal FBI break-ins and 10 million pages of surveillance records. The FBI paid an estimated 1,600 informants $1,680,592 and used 20,000 days of wiretaps to undermine legitimate political organizing."
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Jan 01, 2014 | thebaffler.com
By any reasonable measure, the neoliberal dream lies in tatters. In 2008 poorly regulated financial markets yielded a world-historic financial collapse. One generation, weaned on reveries of home ownership as the coveted badge of economic independence and old-fashioned American striving, has been plunged into foreclosure, bankruptcy, and worse. And a successor generation of aspiring college students is now discovering that their equally toxic student-loan dossiers are condemning them to lifetimes of debt. Both before and after 2008, ours has been an economic order that, largely designed to reward paper speculation and penalize work, produces neither significant job growth nor wages that keep pace with productivity. Meanwhile, the only feints at resurrecting our nation's crumbling civic life that have gained any traction are putatively market-based reforms in education, transportation, health care, and environmental policy, which have been, reliably as ever, riddled with corruption, fraud, incompetence, and (at best) inefficiency. The Grand Guignol of deregulation continues apace.
In one dismal week this past spring, for example, a virtually unregulated fertilizer facility immolated several blocks of West, Texas, claiming at least fourteen lives (a number that would have been much higher had the junior high school adjoining the site been in session at the time of the explosion), while a shoddily constructed and militantly unregulated complex of textile factories collapsed in Savar, Bangladesh, with a death toll of more than 1,100 workers.
In the face of all this catastrophism, the placid certainties of neoliberal ideology rattle on as though nothing has happened. Remarkably, our governing elites have decided to greet a moment of existential reckoning for most of their guiding dogmas by incanting with redoubled force the basic catechism of the neoliberal faith: reduced government spending, full privatization of social goods formerly administered by the public sphere, and a socialization of risk for the upper class. When the jobs economy ground to a functional halt, our leadership class first adopted an anemic stimulus plan, and then embarked on a death spiral of austerity-minded bids to decommission government spending at the very moment it was most urgently required -- measures seemingly designed to undo whatever prospective gains the stimulus might have yielded. It's a bit as though the board of directors of the Fukushima nuclear facility in the tsunami-ravaged Japanese interior decided to go on a reactor-building spree on a floodplain, or on the lip of an active volcano.
So now, five years into a crippling economic downturn without even the conceptual framework for a genuine, broad-based, jobs-driven recovery shored up by boosts in federal spending and public services, the public legacy of these times appears to be a long series of metaphoric euphemisms for brain-locked policy inertia: the debt ceiling, the fiscal cliff, the sequestration, the shutdown, the grand bargain. Laid side by side, all these coinages bring to mind the claustrophobic imagery of a kidnapping montage from a noir gangster film -- and it is, indeed, no great exaggeration to say that the imaginative heart of our public life is now hostage to a grinding, miniaturizing agenda of neoliberal market idolatry. As our pundit class has tirelessly flogged the non-dramas surrounding the official government's non-confrontations over the degree and depth of the inevitable brokered deal to bring yet more austerity to the flailing American economy, we civilian observers can be forgiven for suspecting that there is, in fact, no "there" there. For all their sound and fury, these set-tos proceed from the same basic premises on both sides, and produce the same outcome: studied retreat from any sense of official economic accountability for, well, anything.
But the neoliberal flight from public responsibility is actually a tangled, and curiously instructive, tale of strikingly other-than-intended consequences -- something akin to the fables of perverse incentives that neoliberal theorists themselves love to cook up in their never-ending campaign against the prerogatives of the public sphere. The world of neoliberal market consensus that we now inhabit would likely strike many of the movement's founders as a grotesque parody of their own aims and intentions. But because it is a fable of intellectual overreach, as opposed to narrow economic self-interest, the neoliberal saga also bears an oddly hopeful moral. The seemingly impermeable armature of terrible social and economic thought that has bequeathed to us our present state of ruin is really a flimsy and jury-rigged set of market superstitions, and could readily be discarded for sturdier wares.
Open and Shut
To be sure, policy consensus is one of the premier breeding grounds of irony in our time, but the mid-twentieth-century movement that became known to us as the neoliberal rebellion is steeped in the stuff. For starters, the original cohort of neoliberal apostles conceived of themselves as an insulated, elite group of critics who were able to approach the great machinery of government and popular political discourse only at a fastidious remove. They began the project of combining their intellectual labors, oddly enough, out of their shared embrace of The Good Society (1937), a treatise on the limits of state planning by New Republic columnist Walter Lippmann, who, like many of his successors at that "contrarian" journal, advertised his growing disenchantment with New Deal liberalism and the whole endeavor of economic policy-making in the public interest. But Lippmann soon fell afoul of the more doctrinaire members of his new fraternity of mostly European fellow travelers -- notably German economist Wilhelm Röpke and French publisher Louis Rougier, who would later come into bad odor as a fascist collaborator. The group's early association with both Lippmann and Rougier underlined the perils of overexuberant detours into the political arena, and when they made a fresh stab at affiliating as transatlantic defenders of market liberty once the interregnum of the Second World War had passed, their formal alliance, now called the Mont Pelerin Society after a resort in the Swiss Alps, began life as something of a standoffish debating society. The first major irony in the annals of neoliberalism is that a clutch of publicity-averse intellectuals would, within three decades of the group's founding in 1947, end up running a very big chunk of the Anglophone capitalist world.
The neoliberal flight from public responsibility is actually a curiously instructive tale of strikingly other-than-intended consequences.
The Mont Pelerin faithful congregated around the Austrian anti-Keynesian economist F. A. Hayek, an Old World polymath who was eager to integrate his (strictly theoretical) vindication of individual liberty not merely into the heart of the economics discipline, but also into the full sweep of public life, from moral philosophy to scientific research. With the zeal of the ardent émigré, Hayek embraced the skeptical empiricism of conservative British thinkers such as Edmund Burke and David Hume -- and also seconded the broader British reverence for political custom and cultural tradition, which he saw as the outcome of adaptation across the generations. As economic historian Angus Burgin writes, Hayek maintained that "traditions were products of extended processes of competition, and had persisted because in some sense -- which their beneficiaries did not always rationally comprehend -- they worked." The focus here remained, as it did throughout Hayek's career, squarely on the radical limitations on knowledge available to individual human agents. In The Constitution of Liberty , the work he regarded, far more than the bestselling polemic The Road to Serfdom , as the summation of his thought, Hayek wrote that "civilization enables us constantly to profit from knowledge which we individually do not possess" -- and thereby the "freedom and unpredictability of human action" were to be tempered by "rules which experience has shown to serve best on the whole." It speaks volumes about Hayek's own sense of intellectual tradition that he initially proposed the group be called the Acton-Tocqueville Society -- a suggestion overruled on the grounds that these particular avatars of noble European tradition were both too Catholic and too aristocratic for modern tastes.
Like many European intellectuals of the time, Hayek was also haunted by the recent terrors of totalitarianism; both he and his harder-line Austrian colleague, Ludwig von Mises, were exiles from the Nazi regime, and the group of like-minded intellectuals they recruited to form the Mont Pelerin Society shared their sense that market-based liberalism remained the only sure refuge from communism and fascism. It was an obvious corollary of this faith that the philosophic values associated with such liberalism -- skepticism, open inquiry, and historical contingency -- were the most reliable antidotes to totalitarianism. Hayek, for example, argued that the halting and contingent nature of all human knowledge laid bare the conceits of state economic planning and demand management as so much bitter and destructive farce. In a 1936 lecture called "Economics and Knowledge," he sounded an early note of epistemological skepticism in public affairs that was virtually postmodern: "How," he demanded to know, "can the combination of fragments of knowledge existing in different minds bring about results which, if they were to be brought about deliberately, would require a knowledge on the part of the directing mind which no single person can possess?"
Clearly, nothing about such radical skepticism entailed an ironclad commitment to free-market fundamentalism. Any brand of liberalism that forced humans into free market relations would be self-contradictory, as liberal theorists from Adam Smith and John Stuart Mill to John Dewey, all of whom shared Hayek's epistemological stance, understood. Indeed, Karl Popper -- the thinker who inspired Hayek and many other Mont Pelerin founders -- was himself a social democratic defender of the welfare state with decidedly socialist leanings. As Popper explained in a 1994 interview not long before his death, his conception of individual liberty was not antithetical to principles of economic democracy:
In a way one has to have a free market, but I also believe that to make a godhead out of the principle of the free market is nonsense. . . . Traditionally, one of the main tasks of economics was to think of the problem of full employment. Since approximately 1965 economists have given up on that; I find it very wrong.
Clearly, too, the "open society" that Popper famously envisioned permitted ample room for the adoption of egalitarian, even redistributionist, policies. Even as Hayek himself inveighed against the "collectivist" ideology of New Deal economic reforms, he also took pains to distance himself from a devil-take-the-hindmost model of unregulated market competition. The challenge, as Hayek saw it, was not merely to mobilize the resources of the economic policy elite and its intellectual fellow travelers to ratify a complacent, status quo vision of business civilization, but to collaborate on a far more ambitious project. In a 1949 paper called "The Intellectuals and Socialism," Hayek sketched out a visionary, classically liberal mandate that became the animating mission of the Mont Pelerin Society:
We must be able to offer a new liberal program which appeals to the imagination. We must make the building of a free society once more an intellectual adventure, a deed of courage. What we lack is a liberal Utopia, a program which seems neither a mere defense of things as they are nor a diluted kind of socialism, but a truly liberal radicalism which does not spare the susceptibilities of the mighty (including the trade unions), which is not too severely practical, and which does not confine itself to what appears today as politically possible. We need intellectual leaders who are willing to work for an ideal, however small may be the prospects of its early realisation. They must be men who are willing to stick to principles and to fight for their realisation, however remote. The practical compromises they must leave to the politicians.
There is, of course, a contradiction at the heart of Hayek's vision: How is a utopian free society supposed to pursue its own ambitious battery of universalized mandates while remaining ostensibly founded on the radically unknowable nature of all human experience? But the real irony of Hayek's utopian longings is that they were fully realized -- albeit, of course, in nothing like the form he envisioned. As Daniel Stedman Jones argues in his incisive study of the neoliberal rise to power, Masters of the Universe , "it is hard to think of another 'utopia' to have been as fully realized" as Hayek's came to be in the powerful neoliberal regimes taking shape in Reagan's America and Thatcher's Britain: "The free market became the organizing principle for microeconomic reform, especially through the privatization of state assets, nationalized industries, and public services. Trade unions were vanquished and the power of labor was diluted. Exchange controls were abolished. The financial markets were progressively deregulated. Market mechanisms became the models for the operation of health care." While it's true, Stedman Jones notes, that "the purity that Hayek advocated was meant as an optimistic and ideological and intellectual tactic rather than a blueprint," it was to become that and much, much more: neoliberals went on to erect a permanent edifice of postideological assumptions about the natural predominance of markets and the just as rigid limitations of government. "The results," as Stedman Jones sums things up, "have been extraordinary."
Interesting Wishes
In retrospect, Mont Pelerin's guiding spirits probably should have put a lot less stock in Adam Smith's comforting policy-fable of the Invisible Hand and heeded instead the counsel of the old Chinese curse "May all your wishes be granted." That aphorism is also rendered in English as "May you live in interesting times," and both renderings hold with equal force in the neoliberal case. For as the (fairly recondite and academic) proceedings of the Mont Pelerin set were gaining wider traction in the policy world, multiple crackups of the Keynesian model of coordinated economic planning helped to create an opening for the figure who would be the new economic order's zeitgeist on horseback: the diminutive University of Chicago monetarist-for-all-seasons, Milton Friedman.
The robustly entrepreneurial Friedman embraced a masscult platform.
When Paul Volcker -- Jimmy Carter's appointee to chair the Federal Reserve -- adopted a modified version of Friedman's theology of the money supply to tame the two-digit inflation of the late 1970s, Friedman was suddenly the policy visionary who could do no wrong. He soon served as an informal adviser to both the Reagan and Thatcher governments (and, less prestigiously, to the dictatorship of Chilean general Augusto Pinochet). He reached a popular audience via a column in Newsweek , a hit series on PBS, and several bestselling tracts of unalloyed free-market sloganeering. While demure Europeans such as Hayek distrusted the allure of popular renown as a temptation to oversimplify their ideas and pander to the public, the robustly entrepreneurial Friedman embraced a masscult platform -- and for the most part on the very grounds that aroused Hayek's suspicion. When he succeeded Hayek as chairman of the Mont Pelerin group, Friedman brought it, and the broader project of neoliberal thought, into its high propaganda phase. As he cultivated a high media profile, Friedman positioned himself at the nexus of an influential new group of transatlantic conservative think tanks that would go on to supply much of the concrete policy agendas for the Reagan and Thatcher revolutions: the Institute of Economic Affairs in London; the Hoover Institution at Stanford (where he would spend the balance of his career after retiring from the University of Chicago); and the Cato Institute, the Heritage Foundation, and the American Enterprise Institute in Washington.
And as the institutional platforms for Milton Friedman's free-market gospel multiplied, the vaunted intellectual range of neoliberal inquiry vanished into a stagnant pool of confident and absolute assertions of the market's unchallenged sovereignty as the arbiter of all life outcomes. Friedman converted Adam Smith's classical doctrine of the invisible hand -- whereby all self-interested actions mystically possess a benign or munificent social payoff -- into an inverted demonology of the public sphere. There is, he said in an address honoring the two-hundredth anniversary of The Wealth of Nations , "an invisible hand in politics that is the precise reverse of the invisible hand in the market":
In politics, men who intend only to promote the public interest, as they conceive it, are 'led by an invisible hand to promote an end which was no part of their intention.' They become the front-men for special interests they would never knowingly serve. They end up sacrificing the public interest to the special interest, the interest of the consumers to that of producers, of the masses who never go to college to that of those who attend college, of the poor working-class saddled with employment taxes to the middle class who get disproportionate benefits from social security, and so down the line.
It's hard to imagine a purer statement of the founding principles of neoliberalism as we have come wearily to know it in this advanced stage of market collapse. It is pitched, first of all, in a counterintuitive rhetoric of worldly cleverness, a spirit of seminar-room one-upmanship. Not only is Adam Smith right about the hidden virtues of business interests, but the same paradox operates, by a virtually metaphysical law, to transform every action of every individual putatively serving the public interest into a parody of his or her stated intent. Here is a hermeneutics of suspicion that far outstrips the wildest excesses of the death-of-the-author acolytes of high postmodern critical theory. Not only is it the case that public servants will fail to advance the public's interest out of some depressingly common shortcoming of character -- susceptibility to bribery, say, or short-sighted ideological delusion. No, the central idea here is far more radical than that: government, by its very nature, can't serve the public interest, because of the innately condescending and imperious character of the act of governing.
Friedman's claim owed its origins in large part to the work of George Stigler, a colleague at the University of Chicago. Stigler helped pioneer the famous neoliberal doctrine of regulatory capture, which in turn is its own ultra-cynical academic appropriation of what seems, at first glance, like a muckraking Marxist's indictment of the bourgeois state. Stigler and other advocates of the so-called public choice school of economic theory maintained that regulatory agencies inevitably became hostage to the interests of the industries they oversaw. In a 1971 journal article bearing the deceptively wan title "The Theory of Economic Regulation," Stigler airily dismissed reformist complaints about regulatory corruption as "exactly as appropriate as a criticism of the Great Atlantic and Pacific Tea Company for selling groceries, or as a criticism of a politician for currying popular support." Stigler's disdain for pandering political leaders did not, however, prevent him from summarizing his theory in a policy paper for then-president Richard Nixon. And, like most of the leading lights of neoliberal theory, Stigler went on to win a Nobel Prize in Economics.
To be sure, the problem of industry-captive oversight is a common failing of the modern regulatory state, as any cursory glance at the recent track records of, say, the Securities and Exchange Commission or the National Oceanic and Atmospheric Administration will sadly demonstrate. But in promoting regulatory capture as a bedrock law of public-sector enterprise, the neoliberals performed a neat trick; they posited corruption as a permanent condition of the regulatory state. And in so doing, they casually relegated a fistful of traditional Progressive and New Deal reforms -- the cause of good government, upgrades in civil service appointments and public-sector unionizing, the punishment of graft and fraud, and (not least by a long shot) the tighter regulation of corruption in the private sector -- to the dustbin of history. Such measures, they preached, could breed only perverse and self-defeating outcomes, and would indeed grievously multiply double-dealing in the public sector. Only by harnessing the superior explanatory power of "profit-maximizing" in public life, Stigler argued, could the sad pieties of reformism be laid aside in favor of the sterner and more confident guidance of the true masters of realpolitik -- the lords of the economic profession. Because "reformers will be ill-equipped to use the state for their reforms, and victims of the pervasive use of the state's support of special groups will be helpless to protect themselves," Stigler reasoned, "economists should quickly establish the license to practice on the rational theory of political behavior." Thus was born still another pet piety of the neoliberal counter-reformation: the notion that economics is "the imperial science," duly licensed to dispense its market-pleasing wisdom in every sphere of life, from crime prevention and education policy to dating and food preparation.
The notion that the public and private sectors both bear "defects" is elevated to a metaphysical affront to the market's sovereignty.
In the brewing theology of the modern conservative backlash, the moral hazards of the captive regulatory state were entirely the creation of the bad actors in the public sector. The bagmen for the industries seeking to purchase regulatory favors from the agents of the state were, after all, only acting in accord with the sainted Smithian dictates of self-interest. What fault could it be of theirs if the state had provided them with an open market in graft, kickbacks, and influence-peddling? Indeed, Friedman, ever alert to opportunities for rhetorical one-upmanship, floated the proposition that critics of free-market policies were foisting a bad-faith "double standard" on the rightful workings of market self-interest. "A market 'defect,'" Friedman explained in a tribute to Smith's Wealth of Nations , "whether through an absence of competition or external effects (equivalent, as recent literature has made clear, to transaction costs) has been regarded as immediate justification for government intervention. But the political mechanism has its 'defects' too. It is fallacious to compare the actual market with the ideal political structure. One should either compare the real with the real, or the ideal with the ideal."
Got that? The notion that the public and private sectors both bear "defects" -- a completely banal supposition conceded by any Galbraithian on the economic left -- is here elevated to a metaphysical affront to the market's sovereignty. In fact, the double standard that Friedman calls out is nothing of the sort. No progressive-minded supporter of government intervention had staked out the absurd position that the state is morally immaculate, or itself unsusceptible to any constructive outside intervention when its practices are out of line with the public interest. Friedman writes as though Congress had never appointed an inspector general, passed legislation to reform the civil service, and improved regulatory safeguards -- or as though the various federal employees' unions had never pushed for improved hiring practices or better working conditions to upgrade their work product. And that's because, for critics in the neoliberal camp, such external controls on the state's behavior simply cannot exist; the regulatory-capture school of neoliberal theory already ruled out, on principle, the possibility that such interventions could yield anything other than market-distorting outcomes. In other words, Friedman's lament about the mismatched moral standards of state and market is the phony protest of a card cheat seeking mainly to stoke up the theatrical appeal of an already rigged game.
Who'll Stop the Rana?
You'd think that our recent bruising encounters with the devastating fallout from the deregulators' handiwork in the housing market of the early aughts should, by rights, render Friedman's complaints about the public sector's assaults on market virtue the deadest of dead letters. But, if anything, the ritual defense of the market's sovereign prerogative has dug in that much more intractably as its basic coordinates have been discredited. As critics such as Dean Baker routinely point out, the stalled recovery out of the Great Recession is almost exclusively a function of the failure of our neoliberal economic establishment to speak honestly about a collapsed housing bubble that created a yawning shortfall in demand -- a shortfall that, amid the paralysis of credit markets in the same recession, could be jumpstarted only by government stimulus.
All sorts of absurdities have flowed from this magisterial breakdown in comprehension. Since the neoliberal catechism holds that stimulative government spending can never be justified in the long run, much of our debate over the recovery's prospective course has been given over to speculative nonsense. Chief among these talismanic invocations of free-market faith is the great question of how to placate the jittery job creators. At virtually every turn in the course of debate over how steeply to cut government spending in this recession, our sachems of neoliberal orthodoxy have insisted that any revenue-enhancing move the government so much as contemplated would spook business leaders into mothballing plans to expand operations and add jobs. It became the all-purpose worst-case scenario of first resort. If health care reform passed, if federal deficits expanded, or if marginal tax rates were permitted to rise for the vapors-prone investor class, why, then the whole prospect of a broad-based economic recovery was as good as shot. [*]
And since neoliberalism is most notably a global -- or properly speaking, the globalizing -- ideology, such pat distortions of economic reality are no longer confined to the Anglo-American political economy. Nor are they confined to strictly cognitive errors in policymaking. The collapse of the Rana Plaza garment factory in Bangladesh has yielded commentary from neoliberals that might well merit entry into the psychiatric profession's DSM-5 as textbook illustrations of moral aphasia. Here, after all, was a tragedy that would appall even the darkest Victorian imaginings of a Charles Dickens or a Karl Marx: factory workers earning a monthly wage of $38 crowded into a structurally unsound multistory facility built on a foundation of sand above a drained pond. Three stories of the factory had been hastily erected on top of an already unsound existing structure just to house the fresh battalions of underpaid workers demanded by bottom-feeding international textile contractors.
Government inspectors repeatedly demanded that the facility be shuttered on safety grounds, but the plant's proprietors ignored their citations, reckoning that the short-term gains of maintaining peak production outweighed the negligible threat of a fine or safety citation. Nor was there likely to be any pressure from Western bastions of enlightenment and human rights. The ceremonial stream of Astroturf labor-and-safety-inspecting delegations from Western nations made zero note of the cracked and teetering foundations of the Rana Plaza structure. Lorenz Berzau, the managing director of one such industry consortium (the Business Social Compliance Initiative), primly told the Wall Street Journal that the group isn't an engineering concern -- and what's more, "it's very important not to expect too much from the social audit" that his group and other Western overseers conduct on production facilities. And, as Dave Jamieson and Emran Hossain reported in the Huffington Post , labor organizers have long since learned that the auditing groups serve largely as pro forma conduits of impression management for consumer markets in the West. The auditing of manufacturing facilities in the developing world "ends up catering more to the brands involved than the workers toiling on the line," Jamieson and Hossain write.
Yes, factory owners and managers well understand the permissible bounds of discourse in such Potemkin-style inquiries -- and instruct their workforce accordingly. "What to say to the auditors always comes from the owners," a Bangladeshi line worker named Suruj Miah told the two reporters. "The owners in most cases would warn workers not to say negative things about the factories. Workers are left without a choice." Sumi Abedin, one of the survivors of an earlier disaster -- a factory fire in the nearby Tazreen plant that claimed the lives of 112 workers in November 2012 -- told the Huffington Post that on the day of an international audit team's visit, management compelled workers to wear T-shirts designating them as members of a nonexistent fire safety committee, and had them brandishing prop fire-extinguishing equipment that plant managers had procured only for the duration of the audit.
What this disaster ought to have driven through the neoliberal consensus's collective solar plexus is something close to the polar opposite of its cherished, evidence-proof theory of the captive regulator: a largely cosmetic global watchdog effort funded overwhelmingly by private-sector concerns, far from delivering oversight and accountability, has incentivized fraud and negligence. And conveniently enough, it's the race-to-the-bottom competitive forces unleashed by the global workplace that ritually sanctify all of this routine dishonesty. In their malignant neglect of worker safety measures, local factory managers are able to cite the same market pressures to maximize production and profit that have prevented the ornamental Western groups conducting audits of workplace safety practices from releasing their findings to the workers at risk of being killed by the neoliberal regime of global manufacturing.
Barking Dogmas
Still, the dogmas of neoliberal market prerogative are far sturdier than a collapsing factory or a raging fire on the production line. If the dogmatists have thrown overboard Hayek-era intellectual values like experimentation and skepticism, at least they can stave off their inevitable extinction by shoring up Friedman-era platitudes and, from the mantles of the nation's most prestigious universities and op-ed shops, try to pass them off as the nation's highest common sense. So former University of Chicago law professor Richard Epstein, who helped found the influential law and economics movement that essentially transposed the shibboleths of public choice theory into legal doctrine, has patiently explained that the just and measured response to the collapse of Rana Plaza is to seek enforcement of preexisting building codes across the Bangladeshi private sector. Writing on the heels of the disaster, in the Hoover Institution's web journal, Defining Ideas , Epstein takes pains to rule out the passage of any "new laws" to improve worker-safety standards or international monitoring efforts.
In other words: Bangladeshi workers can either be more safe or starve more rapidly.
But lest even this minimal recourse to regulation sound like too heady a plunge into statist remedies, Professor Epstein also cautions that the aggrieved and grieving workers in the Bangladeshi garment trade must not veer recklessly into unionism or other non-market-approved modes of worker self-determination. After all, he reasons, "in order to stave a shutdown off by improving factory safety, the savvy firm will have to raise its asking price from foreign purchasers . . . and may have to lower wages to remain competitive." (This is another classic myth of the neoliberal faith -- the rational "trade-off" between personal safety and wages that the independent broker makes when he or she contracts with an employer to freely exchange time and skills for wages. Only, of course, the notion of such rational choice has been reduced to a bitter farce in workplaces such as Rana Plaza, where the basic human rights of workers are only acknowledged theatrically, for the purposes of Potemkin auditing tours.) A more activist approach to the crisis in global worker safety would create intolerable distress to Epstein's utopian vision of the carefully calibrated relations of global market production. Sure, the EU might ban exports of clothes bearing the taint of labor exploitation -- but such a measure would just perversely create "undeserved economic protection" for EU economies that are net clothing exporters (and by implication, would deprive consumers of the sacred right to the cheapest possible attire that bullied and undercompensated labor can provide).
And do not get Epstein started on the mischief wrought by unions, which are all but certain to multiply calamities like the Rana Plaza disaster:
It is not as though the only thing that a union does once it gains its dominant position is to advocate for the safety of its workers, even if that item is at the top of its agenda. Unions also bargain over wages, work rules, seniority, pensions, benefits, and other conditions of employment. In dealing with these issues, they exert a monopoly clout that can easily raise wages and reduce productivity. In a market with many firms, they can exert that force only if they are prepared to take retaliatory action against the firms that refuse to bow to their conditions. And they can only do so if they induce the government to take measures to restrict the entry of non-union firms that could underbid them.
In other words: Bangladeshi workers can either be more safe or starve more rapidly. But according to Epstein, they assuredly aren't entitled to earn a living wage without the threat of being crushed or burned to death at any given moment. The pertinent market trade-offs simply won't permit it. Indeed, if you want to know the truth, Epstein claims, "labor agitation was . . . one of the contributing causes to the collapse at Rana Plaza." Even the threat of union-related disruptions to established work discipline can be Kryptonite to the beleaguered clothes barons of Bangladesh. We find ourselves confronted yet again by the torments of the heroic job creator. Prospective labor agitation, Epstein contends, "places enormous strains on the firms that have to deliver goods to foreign purchasers in order to remain in business. The threat of a repeat protest has led many firm bosses to step up the pace of work in the factories, which in turn means longer shifts, more workers, more extensive use of heavy equipment in order to make up for lost production, and stockpiling goods. That maneuver turned into a fatal insurance policy against future labor disruptions."
You see? One minute you're protesting for a wage increase or a work regime less likely to injure you, and before you know it, you've frightened your employer into stockpiling inventory at such a frenetic pace that he kills you. Could the tonic discipline of market preferences really be any clearer? One can only hope that future no-goodnik labor agitators will heed this tragic lesson and recognize "foreign purchasers" as the remote, punitive, and awesome deities that the market meant them to be.
Trapped in the Moneybox
It is not all that surprising, in light of the trajectory of neoliberal ascendancy, to see rigidly orthodox market apologists like Professor Epstein driven to such extremities to tease out a neoliberal moral from the bloody, smoldering squalor of the Rana Plaza disaster. But the neoliberal consensus has long since transcended conventional divisions of party and ideology; the axiomatic assertion of market dominance is a conditioned reflex among nearly all established pundits.
In a now-infamous April 24 write-up of the Bangladeshi catastrophe, Slate 's Moneybox columnist Matt Yglesias -- an eager Democratic partisan brandishing pious Washington credentials from The American Prospect and the Center for American Progress -- tried his own hand at an Epstein-style vindication of the market's undeviating wisdom. In a post bearing the reassuring free-to-be-you-and-me headline "Different Places Have Different Safety Rules and That's OK," Yglesias framed his defense of the status quo regime of erratic standards for worker safety in the hoary rhetoric of the public choice "trade-off." "While having a safe job is good," Yglesias chirped, "money is also good."
OK, then! But note again the pinched moral universe in which employees are permitted only to have a safe job or a (barely) sustenance income, and never both at the same time. It seems a modest social goal to demand that the exchange of labor value for a paycheck in non-mortal conditions be accepted as an incontrovertible human right. If a rapidly globalizing market order is unable to secure that baseline personal and financial security, its support for wildly varying models of job safety should be regarded precisely as the problem -- and not as the taken-for-granted standard for phony assertions about what individual workers (let alone "the Bangladeshis," tout court) are purported to be choosing.
"While having a safe job is good," Yglesias chirped, "money is also good."
But Matt Yglesias, like many of Washington's market-besotted, faux-contrarian pundits on the notional left side of the partisan aisle, will not be rushed into stating the morally obvious. Yes, he concedes, there could well be an abstract case here for collective action aimed at upgrading the safety conditions of Bangladeshi workplaces -- but like Epstein, he frets that the collective-action models of richer, Western workplaces create prohibitive costs of doing business and therefore may not fall within the ambit of choices that workers in Bangladesh should reasonably be permitted to make. "Bangladesh is a lot poorer than the United States, and there are very good reasons for Bangladeshi people to make different choices in this regard than Americans," Yglesias writes. "Safety rules that are appropriate for the United States would be unnecessarily immiserating in much poorer Bangladesh."
So, not to worry, Mr. Moneybox confidently asserts. The trade-offs have yielded optimal gains in each diverse market setting, in this, the best of all possible neoliberal worlds: "American jobs have gotten much safer over the past 20 years, and Bangladesh has gotten a lot richer." As an authority for this sweeping claim -- which, by the way, is untrue in what Yglesias sees as the argument-clinching "safer" U.S. end of the spectrum; Bureau of Labor Statistics data on workplace fatalities show steady increases over the past five years, with right-to-work states such as Texas leading the grisly toll -- Yglesias cites the work of Robert Frank, a public-choice enthusiast who, in his recent book The Darwin Economy , seeks to lay the groundwork for a terrifying entity he calls the "libertarian welfare state."
Social media scourges wasted little time in calling out Yglesias's smug, fatuous, and opportunistic effort to advertise his market contrarianism on the ruins of the Rana Plaza collapse. Eventually the scribe was hounded into publishing a passive-aggressive follow-up post averring that he'd been misread and unfairly castigated by his critics. The stalwart wonk remained unbowed, however; Yglesias wrote that he still "absolutely" stood by the conclusion that, in matters of workplace safety, it's "appropriate for rich countries to have more stringent standards than poor ones."
Now, Matt Yglesias is not a doctrinaire neoliberal thinker -- certainly not in the sense that a disciplined propagandist like Milton Friedman was (even though he longs, absurdly, for a revival of "Friedman-style pragmatism" to bring the economic right to its senses). [**] But that's precisely the point. Neoliberal orthodoxy has leached so deeply into the intellectual groundwater of the nation's political class that it's no longer a meaningful descriptor of ideological difference. That's why Yglesias's erstwhile American Prospect colleague Ezra Klein, over at his prestigious post atop the Washington Post 's economic blog shop, can marvel at the tough-minded budget "seriousness" of serial Randian liar Paul Ryan -- or why the Obama White House can confidently slot offshore billionaire Penny Pritzker as its second-term commerce secretary while it continues to mouth empty platitudes about saving the nation's middle class.
All Friedmans Now
It was Milton Friedman himself who famously announced, during his tour as an informal adviser to Richard Nixon, that "we're all Keynesians now" -- but that oft-quoted maxim has been badly truncated from its full context. What Friedman actually said, in a 1968 interview with Time magazine, was "in one sense, we are all Keynesians now; in another, no one is a Keynesian any longer." He went on to spell out the paradox more fully: "We all use the Keynesian language and apparatus; none of us any longer accepts the initial Keynesian conclusions."
Now, more than four decades on, Friedman's savvy rhetorical dodge is the watchword of all mainstream macroeconomic thought. Even putative liberals who pay lip service to the efficacy of government intervention dig in behind their own pet postulates about the market's transcendent wisdom and beneficence -- about the need to temper the alleged excesses of the social-democratic usages of social wealth with sterner, more austere pieties about the real-world trade-offs mandated by the lords of neoliberal market liberation.
It is an undeniable species of gibberish, one that would have likely appalled even as firm a market stoic as Hayek, who, whatever his other intellectual handicaps, well understood the mischief wrought by a glib and self-seeking centrism. During the Mont Pelerin group's tenth anniversary gathering in 1957, Hayek delivered a controversial speech called "Why I Am Not a Conservative." It was designed, among other things, to distance the group from the steady accretion of self-insulated and untested right-wing bromides that would later be the hallmark of Friedman's successor reign. Today, however, Hayek's oration sounds a much more sobering note of prophecy for our political culture at large. "Advocates of the Middle Way with no goal of their own, conservatives have been guided by the belief that the truth must lie somewhere between the extremes -- with the result that they have shifted position every time a more extreme movement appeared on either wing," Hayek announced.
The one true road to intellectual serfdom, in other words, was the one that Hayek correctly saw lurking within the heart of the neoliberal revolution.
[*] Meanwhile, the actual state of the labor economy told a different story -- that corporate profits had spiked to record highs and that, instead of scaling back entirely on job expenditures, employers were in fact adding hours to the average employee workweek, rightly calculating that they could continue getting more value out of the existing workforce in an artificially slack job market with anemic, and declining, union representation. (Once again, Dean Baker was virtually alone among economic commentators in noting this important shift.) Never mind, as well, that when significant provisions of the allegedly business-killing health care law finally began to kick in, health care spending in the private sector started to slow and stabilize on what looked to be a permanent and structural basis, with a projected decline of $770 billion over the next decade. In other words, government intervention in the economy -- even via a mechanism as compromised and graft-riddled as the 2010 Affordable Care Act -- was showing a striking capacity to even out and stabilize one of the most stubborn and devastating inequalities in the American economy, access to affordable health care. And far from producing a steeper drag on broader conditions for recovery, the stabilization of health care spending occurred amid a pronounced spike in health care hiring, and indeed a long overdue (if still altogether too weak) rebound in the labor economy generally.
[**] Yglesias has offered qualified support for the Obama stimulus plan and health care overhaul, and on this past May Day, even ventured a classically coy Slate post where he pretended to flirt with Marxism. (Hipster-trolling headline: "Capitalism is looking pretty shabby.")
Chris Lehmann is editor in chief of The Baffler and author of Rich People Things . His latest book, The Money Cult , is out now from Melville House.
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Dec 11, 2017 | www.huffingtonpost.com
In his ground-breaking 1995 book Jihad vs. McWorld , political scientist Benjamin Barber posits that the global conflicts of the early 21st century would be driven by two opposing but equally undemocratic forces: neoliberal corporate globalization (which he dubbed "McWorld") and reactionary tribal nationalisms (which he dubbed "Jihad"). Although distinct in many ways, both of these forces, Barber persuasively argues, succeed by denying the possibilities for democratic consensus and action, and so both must be opposed by civic engagement and activism on a broad scale.
In the two decades since Barber's book, this conflict has seemed to play out along overtly cultural lines: with Islamic extremism representing jihad, in opposition to Western neoliberalism representing McWorld. Case in pitch-perfect point: the Al Qaeda terrorist attacks on the World Trade Center. Yet despite his use of the Arabic word Jihad, Barber is clear that reactionary tribalism is a worldwide phenomenon -- and in 2016 we're seeing particularly striking examples of that tribalism in Western nations such as Great Britain and the United States.
Britain's vote this week in favor of leaving the European Union was driven entirely by such reactionary tribal nationalism. The far-right United Kingdom Independence Party (UKIP) and its leader Nigel Farage led the charge in favor of Leave , as exemplified by a recent UKIP poster featuring a photo of Syrian refugees with the caption " Breaking point: the EU has failed us ." Farage and his allies like to point to demographic statistics about how much the UK has changed in the last few decades , and more exactly how the nation's white majority has been somewhat shifted over that time by the arrival of sizeable African and Asian immigrant communities.
It's impossible not to link the UKIP's emphases on such issues of immigration and demography to the presidential campaign of the one prominent U.S. politician who is cheering for the Brexit vote : presumptive GOP nominee Donald Trump. From his campaign-launching speech about Mexican immigrant "criminals and rapists" to his proposal to ban Muslim immigration and his "Make American Great Again" slogan, Trump has relied on reactionary tribal nationalism at every stage of his campaign, and has received the enthusiastic endorsement of white supremacist and far-right organizations as a result. For such American tribal nationalists, the 1965 Immigration Act is the chief bogeyman, the origin point of continuing demographic shifts that have placed white America in a precarious position.
The only problem with that narrative is that it's entirely inaccurate. What the 1965 Act did was reverse a recent, exclusionary trend in American immigration law and policy, returning the nation to the more inclusive and welcoming stance it had taken throughout the rest of its history. Moreover, while the numbers of Americans from Latin American, Asian, and Muslim cultures have increased in recent decades, all of those communities have been part of o ur national community from its origin points . Which is to say, this right-wing tribal nationalism isn't just opposed to fundamental realities of 21st century American identity -- it also depends on historical and national narratives that are as mythic as they are exclusionary.
Linking Brexit and Trump to global right-wing tribal nationalisms doesn't mean conflating them all, of course. Although Trump rallies have featured troubling instances of violence, and although the murderer of British politican Jo Cox was an avowed white supremacist and Leave supporter, the right-wing Islamic extremism of groups such as Al Qaeda, ISIS, and Boko Haram rely far more consistently and centrally on violence and terrorism in support of their worldview and goals. Such specific contexts and nuances are important and shouldn't be elided.
Yet at the same time, we can't understand our 21st century world without a recognition of this widespread phenomenon of global, tribal nationalism. From ISIS to UKIP, Trump to France's Jean-Marie Le Pen, such reactionary forces have become and remain dominant players across the world, influencing local and international politics, economics, and culture. Benjamin Barber called this trend two decades ago, and we would do well to read and remember his analyses -- as well as his call for civic engagement and activism to resist these forces and fight for democracy.
Ben Railton Professor & public scholar of American Studies, Follow Ben Railton on Twitter: www.twitter.com/AmericanStudier
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Dec 16, 2017 | www.nakedcapitalism.com
Sabrina Jeworrek , Vanessa Mertins , Heiner Schumacher , and Matthias Sutter .
Originally published at VoxEUYves here. There has been much gnashing of teeth in the US about lackluster productivity growth, with the citied culprits ranging from lack of fundamental breakthroughs to cheap labor costs discouraging investment. Almost entirely absent from consideration is poor management demotivating worker. This article helps fill that gap.
Any organisation that needs to restructure, cut wages, or make layoffs needs to know how the employees who are not affected will respond. This column presents a field experiment which revealed that the perception that employers are unfair – in this case, as a result of layoffs – reduces the performance of employees who have not been not directly affected. As part of the experiment, experienced HR managers were able to successfully anticipate the consequences of unfair employer behaviour on unaffected workers.
Management matters for the success and profitability of companies. We know that simple management practices – including the regular maintenance of machines, optimisation of inventory, or recording types of quality problems – can improve the productivity of companies substantially (Bloom et al. 2013). Many of these management practices relate to the structure of an organisation, in particular its workflow and how it is controlled. But the relationship between managers and workers is also important. This relationship is characterised by both the wage paid to a worker as an incentive to work hard, but also by the worker's perception that he or she is being treated fairly (Akerlof 1982).
If workers believe that their employer is acting unfairly towards them, this can greatly reduce their performance at work. For example, Mas (2008) demonstrated that the conflict between Caterpillar and its workforce in the 1990s led to lower production quality. It is not clear, though, whether workers react to employer behaviour that they think is unfair only if they are directly affected (for example, through wage cuts or reorganisation), or also if they are not directly affected (their colleagues suffer, but they do not). This distinction is important for any organisation that reorganises or lays off some of its workers.
Random Layoffs
In our new study, we set up a field experiment to measure how unaffected workers react to unfair employer behaviour (Heinz et al. 2017). We rented a call centre and hired 195 employees to conduct a telephone survey in two shifts. Overall, our organisation was very employee-friendly – we paid a generous hourly wage, offered flexible work times, a pleasant work atmosphere, and full discretion to workers how to perform their job. We measured individual performance precisely by the number of calls each worker made during a shift.
We used three treatments to identify the effect of unfair employer behaviour on the performance of unaffected workers:
To keep the remaining workers' prospects constant (in the only remaining shift), we made explicit that there would be no future employment possibilities in our organisation. We also paid the wage upon arrival for each shift. This meant that workers in the 'layoff' treatment knew at the beginning of the second shift that the layoffs of their co-workers could not have any consequences for them.
The Effect of Layoffs on Survivors
We found that the layoff announcement decreased the remaining workers' performance by 12% (Figure 1). In the 'layoff' treatment, workers took a longer break at the beginning of the second shift, and they left their workplace earlier than in the other treatments. The layoff announcement also lowered the quality of workers' output.
In contrast, there was no significant difference in performance between our 'no-layoff' and 'quasi-layoff' treatments. The reduction in staff size per se had no effect on performance. Further robustness checks revealed that our treatment differences were not driven by a change in beliefs about the importance of the job, or changes in perceptions of the management's competence. Since our employees worked in single offices, and few of them had social ties to employees from other treatments, we can largely rule out peer effects.
Figure 1 Difference in performance (number of calls made) between the first and second shift in the 'no layoff', 'quasi-layoff' and 'layoff' treatment
Source : Heinz et al. (2017).
After the field experiment, we conducted surveys with our workers. Overall, workers in all treatments were quite satisfied with their salary, the management's behaviour towards them, and the atmosphere in the call centre. The remaining workers in the 'layoff' treatment, however, were significantly less satisfied with management behaviour towards their colleagues than the workers in the other treatments. We also asked workers from the 'layoff' treatment which parts of the layoff announcement they considered anti-social. Their answers indicate that they saw the layoffs per se, and the random selection of workers, as particularly unfair.
To back up our interpretation of the data, we conducted a prediction experiment with 43 professional human resource managers from medium-sized and large companies in Germany (they had, on average, eight years of professional experience). We explained our call centre setting and our treatment variation to them, and then asked them to predict the change in workplace performance between the first and second shifts.
The HR managers' predictions were remarkably accurate, in the aggregate. They predicted that performance in the 'layoff' treatment would drop significantly between the first and second shift, and that would drop only slightly in the other treatments. A large majority of the HR managers mentioned fairness concerns as the main reason for the performance reduction.
Maintaining Productivity During Layoffs
Our results imply that unfair behaviour towards workers can be costly for the employer, even if the only workers who are directly affected have quit the firm. This is important for any organisation that has to accommodate economic shocks by reducing labour costs.
To reduce or mitigate the costs of supposedly unfair acts, organisations could apply a number of HR practices. They could use HR practices that avoid layoffs (for example using natural fluctuation in the workforce). They could provide severance pay or outplacement services. They might shift the blame to interim managers or business consultants. They could also separate profitable and unprofitable business units, and downsize only the unprofitable units. These practices may help employers to maintain a productive relationship with their workforce.
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Dec 13, 2017 | www.unz.com
Introduction
The American welfare state was created in 1935 and continued to develop through 1973. Since then, over a prolonged period, the capitalist class has been steadily dismantling the entire welfare state.
Between the mid 1970's to the present (2017) labor laws, welfare rights and benefits and the construction of and subsidies for affordable housing have been gutted. ' Workfare' (under President 'Bill' Clinton) ended welfare for the poor and displaced workers. Meanwhile the shift to regressive taxation and the steadily declining real wages have increased corporate profits to an astronomical degree.
What started as incremental reversals during the 1990's under Clinton has snowballed over the last two decades decimating welfare legislation and institutions.
The earlier welfare 'reforms' and the current anti-welfare legislation and austerity practices have been accompanied by a series of endless imperial wars, especially in the Middle East.
In the 1940's through the 1960's, world and regional wars (Korea and Indo-China) were combined with significant welfare program – a form of ' social imperialism' , which 'buy off' the working class while expanding the empire. However, recent decades are characterized by multiple regional wars and the reduction or elimination of welfare programs – and a massive growth in poverty, domestic insecurity and poor health.
New Deals and Big Wars
The 1930's witnessed the advent of social legislation and action, which laid the foundations of what is called the ' modern welfare state' .
Labor unions were organized as working class strikes and progressive legislation facilitated trade union organization, elections, collective bargaining rights and a steady increase in union membership. Improved work conditions, rising wages, pension plans and benefits, employer or union-provided health care and protective legislation improved the standard of living for the working class and provided for 2 generations of upward mobility.
Social Security legislation was approved along with workers' compensation and the forty-hour workweek. Jobs were created through federal programs (WPA, CCC, etc.). Protectionist legislation facilitated the growth of domestic markets for US manufacturers. Workplace shop steward councils organized 'on the spot' job action to protect safe working conditions.
World War II led to full employment and increases in union membership, as well as legislation restricting workers' collective bargaining rights and enforcing wage freezes. Hundreds of thousands of Americans found jobs in the war economy but a huge number were also killed or wounded in the war.
The post-war period witnessed a contradictory process: wages and salaries increased while legislation curtailed union rights via the Taft Hartley Act and the McCarthyist purge of leftwing trade union activists. So-called ' right to work' laws effectively outlawed unionization mostly in southern states, which drove industries to relocate to the anti-union states.
Welfare reforms, in the form of the GI bill, provided educational opportunities for working class and rural veterans, while federal-subsidized low interest mortgages encourage home-ownership, especially for veterans.
The New Deal created concrete improvements but did not consolidate labor influence at any level. Capitalists and management still retained control over capital, the workplace and plant location of production.
Trade union officials signed pacts with capital: higher pay for the workers and greater control of the workplace for the bosses. Trade union officials joined management in repressing rank and file movements seeking to control technological changes by reducing hours (" thirty hours work for forty hours pay "). Dissident local unions were seized and gutted by the trade union bosses – sometimes through violence.
Trade union activists, community organizers for rent control and other grassroots movements lost both the capacity and the will to advance toward large-scale structural changes of US capitalism. Living standards improved for a few decades but the capitalist class consolidated strategic control over labor relations. While unionized workers' incomes, increased, inequalities, especially in the non-union sectors began to grow. With the end of the GI bill, veterans' access to high-quality subsidized education declined.
While a new wave of social welfare legislation and programs began in the 1960's and early 1970's it was no longer a result of a mass trade union or workers' "class struggle". Moreover, trade union collaboration with the capitalist regional war policies led to the killing and maiming of hundreds of thousands of workers in two wars – the Korean and Vietnamese wars.
Much of social legislation resulted from the civil and welfare rights movements. While specific programs were helpful, none of them addressed structural racism and poverty.
The Last Wave of Social Welfarism
The 1960'a witnessed the greatest racial war in modern US history: Mass movements in the South and North rocked state and federal governments, while advancing the cause of civil, social and political rights. Millions of black citizens, joined by white activists and, in many cases, led by African American Viet Nam War veterans, confronted the state. At the same time, millions of students and young workers, threatened by military conscription, challenged the military and social order.
Energized by mass movements, a new wave of social welfare legislation was launched by the federal government to pacify mass opposition among blacks, students, community organizers and middle class Americans. Despite this mass popular movement, the union bosses at the AFL-CIO openly supported the war, police repression and the military, or at best, were passive impotent spectators of the drama unfolding in the nation's streets. Dissident union members and activists were the exception, as many had multiple identities to represent: African American, Hispanic, draft resisters, etc.
Under Presidents Lyndon Johnson and Richard Nixon, Medicare, Medicaid, OSHA, the EPA and multiple poverty programs were implemented. A national health program, expanding Medicare for all Americans, was introduced by President Nixon and sabotaged by the Kennedy Democrats and the AFL-CIO. Overall, social and economic inequalities diminished during this period.
The Vietnam War ended in defeat for the American militarist empire. This coincided with the beginning of the end of social welfare as we knew it – as the bill for militarism placed even greater demands on the public treasury.
With the election of President Carter, social welfare in the US began its long decline. The next series of regional wars were accompanied by even greater attacks on welfare via the " Volker Plan " – freezing workers' wages as a means to combat inflation.
Guns without butter' became the legislative policy of the Carter and Reagan Administrations. The welfare programs were based on politically fragile foundations.
The Debacle of Welfarism
Private sector trade union membership declined from a post-world war peak of 30% falling to 12% in the 1990's. Today it has sunk to 7%. Capitalists embarked on a massive program of closing thousands of factories in the unionized North which were then relocated to the non-unionized low wage southern states and then overseas to Mexico and Asia. Millions of stable jobs disappeared.
Following the election of 'Jimmy Carter', neither Democratic nor Republican Presidents felt any need to support labor organizations. On the contrary, they facilitated contracts dictated by management, which reduced wages, job security, benefits and social welfare.
The anti-labor offensive from the ' Oval Office' intensified under President Reagan with his direct intervention firing tens of thousands of striking air controllers and arresting union leaders. Under Presidents Carter, Reagan, George H.W. Bush and William Clinton cost of living adjustments failed to keep up with prices of vital goods and services. Health care inflation was astronomical. Financial deregulation led to the subordination of American industry to finance and the Wall Street banks. De-industrialization, capital flight and massive tax evasion reduced labor's share of national income.
The capitalist class followed a trajectory of decline, recovery and ascendance. Moreover, during the earlier world depression, at the height of labor mobilization and organization, the capitalist class never faced any significant political threat over its control of the commanding heights of the economy.
The ' New Deal' was, at best, a de facto ' historical compromise' between the capitalist class and the labor unions, mediated by the Democratic Party elite. It was a temporary pact in which the unions secured legal recognition while the capitalists retained their executive prerogatives.
The Second World War secured the economic recovery for capital and subordinated labor through a federally mandated no strike production agreement. There were a few notable exceptions: The coal miners' union organized strikes in strategic sectors and some leftist leaders and organizers encouraged slow-downs, work to rule and other in-plant actions when employers ran roughshod with special brutality over the workers. The recovery of capital was the prelude to a post-war offensive against independent labor-based political organizations. The quality of labor organization declined even as the quantity of trade union membership increased.
Labor union officials consolidated internal control in collaboration with the capitalist elite. Capitalist class-labor official collaboration was extended overseas with strategic consequences.
The post-war corporate alliance between the state and capital led to a global offensive – the replacement of European-Japanese colonial control and exploitation by US business and bankers. Imperialism was later 're-branded' as ' globalization' . It pried open markets, secured cheap docile labor and pillaged resources for US manufacturers and importers.
US labor unions played a major role by sabotaging militant unions abroad in cooperation with the US security apparatus: They worked to coopt and bribe nationalist and leftist labor leaders and supported police-state regime repression and assassination of recalcitrant militants.
' Hand in bloody glove' with the US Empire, the American trade unions planted the seeds of their own destruction at home. The local capitalists in newly emerging independent nations established industries and supply chains in cooperation with US manufacturers. Attracted to these sources of low-wage, violently repressed workers, US capitalists subsequently relocated their factories overseas and turned their backs on labor at home.
Labor union officials had laid the groundwork for the demise of stable jobs and social benefits for American workers. Their collaboration increased the rate of capitalist profit and overall power in the political system. Their complicity in the brutal purges of militants, activists and leftist union members and leaders at home and abroad put an end to labor's capacity to sustain and expand the welfare state.
Trade unions in the US did not use their collaboration with empire in its bloody regional wars to win social benefits for the rank and file workers. The time of social-imperialism, where workers within the empire benefited from imperialism's pillage, was over. Gains in social welfare henceforth could result only from mass struggles led by the urban poor, especially Afro-Americans, community-based working poor and militant youth organizers.
The last significant social welfare reforms were implemented in the early 1970's – coinciding with the end of the Vietnam War (and victory for the Vietnamese people) and ended with the absorption of the urban and anti-war movements into the Democratic Party.
Henceforward the US corporate state advanced through the overseas expansion of the multi-national corporations and via large-scale, non-unionized production at home.
The technological changes of this period did not benefit labor. The belief, common in the 1950's, that science and technology would increase leisure, decrease work and improve living standards for the working class, was shattered. Instead technological changes displaced well-paid industrial labor while increasing the number of mind-numbing, poorly paid, and politically impotent jobs in the so-called 'service sector' – a rapidly growing section of unorganized and vulnerable workers – especially including women and minorities.
Labor union membership declined precipitously. The demise of the USSR and China's turn to capitalism had a dual effect: It eliminated collectivist (socialist) pressure for social welfare and opened their labor markets with cheap, disciplined workers for foreign manufacturers. Labor as a political force disappeared on every count. The US Federal Reserve and President 'Bill' Clinton deregulated financial capital leading to a frenzy of speculation. Congress wrote laws, which permitted overseas tax evasion – especially in Caribbean tax havens. Regional free-trade agreements, like NAFTA, spurred the relocation of jobs abroad. De-industrialization accompanied the decline of wages, living standards and social benefits for millions of American workers.
The New Abolitionists: Trillionaires
The New Deal, the Great Society, trade unions, and the anti-war and urban movements were in retreat and primed for abolition.
Wars without welfare (or guns without butter) replaced earlier 'social imperialism' with a huge growth of poverty and homelessness. Domestic labor was now exploited to finance overseas wars not vice versa. The fruits of imperial plunder were not shared.
As the working and middle classes drifted downward, they were used up, abandoned and deceived on all sides – especially by the Democratic Party. They elected militarists and demagogues as their new presidents.
President 'Bill' Clinton ravaged Russia, Yugoslavia, Iraq and Somalia and liberated Wall Street. His regime gave birth to the prototype billionaire swindlers: Michael Milken and Bernard 'Bernie' Madoff.
Clinton converted welfare into cheap labor 'workfare', exploiting the poorest and most vulnerable and condemning the next generations to grinding poverty. Under Clinton the prison population of mostly African Americans expanded and the breakup of families ravaged the urban communities.
Provoked by an act of terrorism (9/11) President G.W. Bush Jr. launched the 'endless' wars in Afghanistan and Iraq and deepened the police state (Patriot Act). Wages for American workers and profits for American capitalist moved in opposite directions.
The Great Financial Crash of 2008-2011 shook the paper economy to its roots and led to the greatest shakedown of any national treasury in history directed by the First Black American President. Trillions of public wealth were funneled into the criminal banks on Wall Street – which were ' just too big to fail .' Millions of American workers and homeowners, however, were ' just too small to matter' .
The Age of Demagogues
President Obama transferred 2 trillion dollars to the ten biggest bankers and swindlers on Wall Street, and another trillion to the Pentagon to pursue the Democrats version of foreign policy: from Bush's two overseas wars to Obama's seven.
Obama's electoral 'donor-owners' stashed away two trillion dollars in overseas tax havens and looked forward to global free trade pacts – pushed by the eloquent African American President.
Obama was elected to two terms. His liberal Democratic Party supporters swooned over his peace and justice rhetoric while swallowing his militarist escalation into seven overseas wars as well as the foreclosure of two million American householders. Obama completely failed to honor his campaign promise to reduce wage inequality between black and white wage earners while he continued to moralize to black families about ' values' .
Obama's war against Libya led to the killing and displacement of millions of black Libyans and workers from Sub-Saharan Africa. The smiling Nobel Peace Prize President created more desperate refugees than any previous US head of state – including millions of Africans flooding Europe.
'Obamacare' , his imitation of an earlier Republican governor's health plan, was formulated by the private corporate health industry (private insurance, Big Pharma and the for-profit hospitals), to mandate enrollment and ensure triple digit profits with double digit increases in premiums. By the 2016 Presidential elections, ' Obama-care' was opposed by a 45%-43% margin of the American people. Obama's propagandists could not show any improvement of life expectancy or decrease in infant and maternal mortality as a result of his 'health care reform'. Indeed the opposite occurred among the marginalized working class in the old 'rust belt' and in the rural areas. This failure to show any significant health improvement for the masses of Americans is in stark contrast to LBJ's Medicare program of the 1960's, which continues to receive massive popular support.
Forty-years of anti welfare legislation and pro-business regimes paved the golden road for the election of Donald Trump
Trump and the Republicans are focusing on the tattered remnants of the social welfare system: Medicare, Medicaid, Social Security. The remains of FDR's New Deal and LBJ's Great Society -- are on the chopping block.
The moribund (but well-paid) labor leadership has been notable by its absence in the ensuing collapse of the social welfare state. The liberal left Democrats embraced the platitudinous Obama/Clinton team as the 'Great Society's' gravediggers, while wailing at Trump's allies for shoving the corpse of welfare state into its grave.
Conclusion
Over the past forty years the working class and the rump of what was once referred to as the ' labor movement' has contributed to the dismantling of the social welfare state, voting for ' strike-breaker' Reagan, ' workfare' Clinton, ' Wall Street crash' Bush, ' Wall Street savior' Obama and ' Trickle-down' Trump.
Gone are the days when social welfare and profitable wars raised US living standards and transformed American trade unions into an appendage of the Democratic Party and a handmaiden of Empire. The Democratic Party rescued capitalism from its collapse in the Great Depression, incorporated labor into the war economy and the post- colonial global empire, and resurrected Wall Street from the 'Great Financial Meltdown' of the 21 st century.
The war economy no longer fuels social welfare. The military-industrial complex has found new partners on Wall Street and among the globalized multi-national corporations. Profits rise while wages fall. Low paying compulsive labor (workfare) lopped off state transfers to the poor. Technology – IT, robotics, artificial intelligence and electronic gadgets – has created the most class polarized social system in history. The first trillionaire and multi-billionaire tax evaders rose on the backs of a miserable standing army of tens of millions of low-wage workers, stripped of rights and representation. State subsidies eliminate virtually all risk to capital. The end of social welfare coerced labor (including young mother with children) to seek insecure low-income employment while slashing education and health – cementing the feet of generations into poverty. Regional wars abroad have depleted the Treasury and robbed the country of productive investment. Economic imperialism exports profits, reversing the historic relation of the past.
Labor is left without compass or direction; it flails in all directions and falls deeper in the web of deception and demagogy. To escape from Reagan and the strike breakers, labor embraced the cheap-labor predator Clinton; black and white workers united to elect Obama who expelled millions of immigrant workers, pursued 7 wars, abandoned black workers and enriched the already filthy rich. Deception and demagogy of the labor-
Issac , December 11, 2017 at 11:01 pm GMT
"The military-industrial complex has found new partners on Wall Street and among the globalized multi-national corporations."whyamihere , December 12, 2017 at 4:24 am GMT"The collaboration of liberals and unions in promoting endless wars opened the door to Trump's mirage of a stateless, tax-less, ruling class."
A mirage so real, it even has you convinced.
If the welfare state in America was abolished, major American cities would burn to the ground. Anarchy would ensue, it would be magnitudes bigger than anything that happened in Ferguson or Baltimore. It would likely be simultaneous.Disordered , December 13, 2017 at 8:41 am GMTI think that's one of the only situations where preppers would actually live out what they've been prepping for (except for a natural disaster).
I've been thinking about this a little over the past few years after seeing the race riots. What exactly is the line between our society being civilized and breaking out into chaos. It's probably a lot thinner than most people think.
I don't know who said it but someone long ago said something along the lines of, "Democracy can only work until the people figure out they can vote for themselves generous benefits from the public treasury." We are definitely in this situation today. I wonder how long it can last.
While I agree with Petras's intent (notwithstanding several exaggerations and unnecessary conflations with, for example, racism), I don't agree so much with the method he proposes. I don't mind welfare and unions to a certain extent, but they are not going to save us unless there is full employment and large corporations that can afford to pay an all-union workforce. That happened during WW2, as only wartime demand and those pesky wage freezes solved the Depression, regardless of all the public works programs; while the postwar era benefited from the US becoming the world's creditor, meaning that capital could expand while labor participation did as well.Wally , Website December 13, 2017 at 8:57 am GMTFrom then on, it is quite hard to achieve the same success after outsourcing and mechanization have happened all over the world. Both of these phenomena not only create displaced workers, but also displaced industries, meaning that it makes more sense to develop individual workfare (and even then, do it well, not the shoddy way it is done now) rather than giving away checks that probably will not be cashed for entrepreneurial purposes, and rather than giving away money to corrupt unions who depend on trusts to be able to pay for their benefits, while raising the cost of hiring that only encourages more outsourcing.
The amount of welfare given is not necessarily the main problem, the problem is doing it right for the people who truly need it, and efficiently – that is, with the least amount of waste lost between the chain of distribution, which should reach intended targets and not moochers.
Which inevitably means a sound tax system that targets unearned wealth and (to a lesser degree) foreign competition instead of national production, coupled with strict, yet devolved and simple government processes that benefit both business and individuals tired of bureaucracy, while keeping budgets balanced. Best of both worlds, and no military-industrial complex needed to drive up demand.
"President Obama transferred 2 trillion dollars to the ten biggest bankers and swindlers on Wall Street " That's twice the amount that Bush gave them.jacques sheete , December 13, 2017 at 10:52 am GMTDen Lille Abe , December 13, 2017 at 11:09 am GMTThe American welfare state was created in 1935 and continued to develop through 1973. Since then, over a prolonged period, the capitalist class has been steadily dismantling the entire welfare state.
Wrong wrong wrong.
Corporations [now] are welfare recipients and the bigger they are, the more handouts they suck up, and welfare for them started before 1935. In fact, it started in America before there was a USA. I do not have time to elaborate, but what were the various companies such as the British East India Company and the Dutch West India Companies but state pampered, welfare based entities? ~200 years ago, Herbert Spencer, if memory serves, pointed out that the British East India Company couldn't make a profit even with all the special, government granted favors showered upon it.
Corporations not only continuously seek monopolies (with the aid and sanction of the state) but they steadily fine tune the welfare state for their benefit. In fact, in reality, welfare for prols and peasants wouldn't exist if it didn't act as a money conduit and ultimate profit center for the big money grubbers.
Well, the author kind of nails it. I remember from my childhood in the 50-60 ties in Scandinavia that the US was the ultimate goal in welfare. The country where you could make a good living with your two hands, get you kids to UNI, have a house, a telly ECT. It was not consumerism, it was the American dream, a chicken in every pot; we chewed imported American gum and dreamed.wayfarer , December 13, 2017 at 1:01 pm GMTIn the 70-80 ties Scandinavia had a tremendous social and economic growth, EQUALLY distributed, an immense leap forward. In the middle of the 80 ties we were equal to the US in standards of living.
Since we have not looked at the US, unless in pity, as we have seen the decline of the general income, social wealth fall way behind our own.
The average US workers income has not increased since 90 figures adjusted for inflation. The Scandinavian workers income in the same period has almost quadrupled. And so has our societies.The article is dismal reading, and evidence of the failings of the "unregulated" society, where the anything goes as long as you are wealthy.
Anonymous , Disclaimer December 13, 2017 at 1:40 pm GMTBetween the mid 1970's to the present (2017) labor laws, welfare rights and benefits and the construction of and subsidies for affordable housing have been gutted. 'Workfare' (under President 'Bill' Clinton) ended welfare for the poor and displaced workers. Meanwhile the shift to regressive taxation and the steadily declining real wages have increased corporate profits to an astronomical degree.
source: http://www.unz.com/jpetras/rise-and-decline-of-the-welfare-state/
What does Hollywood "elite" JAP and wannabe hack-stand-up-comic Sarah Silverman think about the class struggle and problems facing destitute Americans? "Qu'ils mangent de la bagels!", source: https://en.wikipedia.org/wiki/Let_them_eat_cake
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@Greg FraserAnonymous , Disclaimer December 13, 2017 at 2:43 pm GMTLike the Pentagon. Americans still don't readily call this welfare, but they will eventually. Defense profiteers are unions in a sense, you're either in their club Or you're in the service industry that surrounds it.
As other commenters have pointed out, it's Petras curious choice of words that sometimes don't make too much sense. We can probably blame the maleable English language for that, but here it's too obvious. If you don't define a union, people might assume you're only talking about a bunch of meat cutters at Safeway.animalogic , December 13, 2017 at 2:57 pm GMTThe welfare state is alive and well for corporate America. Unions are still here – but they are defined by access and secrecy, you're either in the club or not.
The war on unions was successful first by co-option but mostly by the media. But what kind of analysis leaves out the role of the media in the American transformation? The success is mind blowing.
America has barely literate (white) middle aged males trained to spout incoherent Calvinistic weirdness: unabased hatred for the poor (or whoever they're told to hate) and a glorification of hedge fund managers as they get laid off, fired and foreclosed on, with a side of opiates.
There is hardly anything more tragic then seeing a web filled with progressives (management consultants) dedicated to disempowering, disabling and deligitimizing victims by claiming they are victims of biology, disease or a lack of an education rather than a system that issues violence while portending (with the best media money can buy) that they claim the higher ground.
@WallyReg Cæsar , December 13, 2017 at 3:08 pm GMT""Democracy can only work until the people figure out they can vote for themselves generous benefits from the public treasury." We are definitely in this situation today."
Quite right: the 0.01% have worked it out & US democracy is a Theatre for the masses.
Reg Cæsar , December 13, 2017 at 3:20 pm GMTThey elected militarists and demagogues as their new presidents.
Wilson and FDR were much more militarist and demagogic than those that followed.
@whyamiherephil , December 13, 2017 at 4:48 pm GMTI don't know who said it but someone long ago said something along the lines of, "Democracy can only work until the people figure out they can vote for themselves generous benefits from the public treasury."
Some French aristocrat put it as, once the gates to the treasury have been breached, they can only be closed again with gunpowder. Anyone recognize the author?
The author doesn't get it. What we have now IS the welfare state in an intensely diverse society. We have more transfer spending than ever before and Obamacare represents another huge entitlement.HallParvey , December 13, 2017 at 4:57 pm GMTIntellectuals continue to fantasize about the US becoming a Big Sweden, but Sweden has only been successful insofar as it has been a modest nation-state populated by ethnic Swedes. Intense diversity in a huge country with only the remnants of federalism results in massive non-consensual decision-making, fragmentation, increased inequality, and corruption.
@AnonymousAnonymous , Disclaimer December 13, 2017 at 4:57 pm GMTThe welfare state is alive and well for corporate America. Unions are still here – but they are defined by access and secrecy, you're either in the club or not.
They are largely defined as Doctors, Lawyers, and University Professors who teach the first two. Of course they are not called unions. Access is via credentialing and licensing. Good Day
@Linda GreenAnonymous , Disclaimer December 13, 2017 at 5:54 pm GMTBernie Sanders, speaking on behalf of the MIC's welfare bird: "It is the airplane of the United States Air Force, Navy, and of NATO."
Elizabeth Warren, referring to Mossad's Estes Rockets: "The Israeli military has the right to attack Palestinian hospitals and schools in self defense"
Barack Obama, yukking it up with pop stars: "Two words for you: predator drones. You will never see it coming."
It's not the agitprop that confuses the sheep, it's whose blowhole it's coming out of (labled D or R for convenience) that gets them to bare their teeth and speak of poo.
@HallParveyLogan , December 13, 2017 at 9:10 pm GMTWhat came first, the credentialing or the idea that it is a necessary part of education? It certainly isn't an accurate indication of what people know or their general intelligence – although that myth has flourished. Good afternoon.
@RealistLogan , December 13, 2017 at 9:19 pm GMTFor an interesting projection of what might happen in total civilizational collapse, I recommend the Dies the Fire series of novels by SM Stirling.
It has a science-fictiony setup in that all high-energy system (gunpowder, electricity, explosives, internal combustion, even high-energy steam engines) suddenly stop working. But I think it does a good job of extrapolating what would happen if suddenly the cities did not have food, water, power, etc.
Spoiler alert: It ain't pretty. Those who dream of a world without guns have not really thought it through.
@philIt has been pointed out repeatedly that Sweden does very well relative to the USA. It has also been noted that people of Swedish ancestry in the USA do pretty well also. In fact considerably better than Swedes in Sweden
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Dec 14, 2017 | www.nakedcapitalism.com
Yves here. I imagine many readers are acutely aware of the problems outlined in this article, if not beset by them already. By any rational standard, I should move now to a much cheaper country that will have me. I know individuals who live most of the year in third-world and near-third world countries, but they have very cheap ways of still having a toehold in the US and not (yet or maybe ever) getting a long-term residence visa. Ecuador is very accommodating regarding retirement visas, and a Social Security level income goes far there, but yours truly isn't retiring any time soon. And another barrier to an international move (which recall I did once, so I have some appreciation for what it takes), is that one ought to check out possible destinations but if you are already time and money and energy stressed, how do you muster the resources to do that at all, let alone properly?
Aside from the potential to greatly reduce fixed costs, a second impetus for me is Medicare. I know for most people, getting on Medicare is a big plus. I have a very rare good, very old insurance policy. When you include the cost of drug plans, Medicare is no cheaper than what I have now, and considerably narrows my network. Moreover, I expect it to be thoroughly crapified by ten years from now (when I am 70), which argues for getting out of Dodge sooner rather than later.
And that's before you get to another wee problem Lambert points out that I would probably not be happy in a third world or high end second world country. But the only bargain "world city" I know of is Montreal. I'm not sure it would represent enough of an all-in cost saving to justify the hassle of an international move and the attendant tax compliance burdens .and that charitably assumes I could even find a way to get permanent residence. Ugh.
By Alex Henderson, who has written for the L.A. Weekly, Billboard, Spin, Creem, the Pasadena Weekly and many other publications. Follow him on Twitter @alexvhenderson. Originally published at Alternet
Millions can no longer afford to retire, and may never be able when the GOP passes its tax bill.
The news is not good for millions of aging Baby Boomers and Gen Xers in the United States who are moving closer to retirement age. According to the Employee Benefit Research Institute's annual report on retirement preparedness for 2017, only 18 percent of U.S.-based workers feel "very confident" about their ability to retire comfortably ; Craig Copeland, senior research associate for EBRI and the report's co-author, cited "debt, lack of a retirement plan at work, and low savings" as "key factors" in workers' retirement-related anxiety. The Insured Retirement Institute finds a mere 23 percent of Baby Boomers and 24 percent of Gen Xers are confident that their savings will last in retirement. To make matters worse, more than 40 percent of Boomers and over 30 percent of Gen Xers report having no retirement savings whatsoever .
The U.S. has a retirement crisis on its hands, and with the far right controlling the executive branch and both houses of Congress, as well as dozens of state governments, things promise to grow immeasurably worse.
It wasn't supposed to be this way. Past progressive presidents, notably Franklin D. Roosevelt and Lyndon B. Johnson, took important steps to make life more comfortable for aging Americans. FDR signed the Social Security Act of 1935 into law as part of his New Deal, and when LBJ passed Medicare in 1965, he established a universal health care program for those 65 and older. But the country has embraced a neoliberal economic model since the election of Ronald Reagan, and all too often, older Americans have been quick to vote for far-right Republicans antagonistic to the social safety net.
In the 2016 presidential election, 55 percent of voters 50 and older cast their ballots for Donald Trump against just 44 percent for Hillary Clinton. (This was especially true of older white voters; 90 percent of black voters 45 and older, as well as 67 percent of Latino voters in the same age range voted Democratic.)
Sen. Bernie Sanders' (I-VT) economic proposals may have been wildly popular with millennials, but no demographic has a greater incentive to vote progressive than Americans facing retirement. According to research conducted by the American Association of Retired Persons, the three greatest concerns of Americans 50 and older are Social Security, health care costs and caregiving for loved ones -- all areas that have been targeted by Republicans.
House of Representatives Speaker Paul Ryan, a devotee of social Darwinist Ayn Rand , has made no secret of his desire to privatize Social Security and replace traditional Medicare with a voucher program. Had George W. Bush had his way and turned Social Security over to Wall Street, the economic crash of September 2008 might have left millions of senior citizens homeless.
Since then, Ryan has doubled down on his delusion that the banking sector can manage Social Security and Medicare more effectively than the federal government. Republican attacks on Medicare have become a growing concern: according to EBRI, only 38 percent of workers are confident the program will continue to provide the level of benefits it currently does.
The GOP's obsession with abolishing the Affordable Care Act is the most glaring example of its disdain for aging Americans. Yet Obamacare has been a blessing for Boomers and Gen Xers who have preexisting conditions. The ACA's guaranteed issue plans make no distinction between a 52-year-old American with diabetes, heart disease or asthma and a 52-year-old who has never had any of those illnesses. And AARP notes that under the ACA, the uninsured rate for Americans 50 and older decreased from 15 percent in 2013 to 9 percent in 2016.
According to the Congressional Budget Office, the replacement bills Donald Trump hoped to ram through Congress this year would have resulted in staggering premium hikes for Americans over 50. The CBO's analysis of the American Health Care Act, one of the earlier versions of Trumpcare, showed that a 64-year-old American making $26,500 per year could have gone from paying $1,700 annually in premiums to just over $16,000. The CBO also estimated that the GOP's American Health Care Act would have deprived 23 million Americans of health insurance by 2026.
As 2017 winds down, Americans with health problems are still in the GOP's crosshairs -- this time because of so-called tax reform. The Tax Cuts and Jobs Act (both the House and Senate versions) includes provisions that would undermine Obamacare and cause higher health insurance premiums for older Americans. According to AARP, "Older adults ages 50-64 would be at particularly high risk under the proposal, facing average premium increases of up to $1,500 in 2019 as a result of the bill."
The CBO estimates that the bill will cause premiums to spike an average of 10 percent overall, with average premiums increasing $890 per year for a 50-year-old, $1,100 per year for a 55-year-old, $1,350 per year for a 60-year-old and $1,490 per year for a 64-year-old. Premium increases, according to the CBO, would vary from state to state; in Maine, average premiums for a 64-year-old would rise as much as $1,750 per year.
Countless Americans who are unable to afford those steep premiums would lose their insurance. The CBO estimates that the Tax Cuts and Jobs Act would cause the number of uninsured under 65 to increase 4 million by 2019 and 13 million by 2027. The bill would also imperil Americans 65 and over by cutting $25 billion from Medicare .
As morally reprehensible as the GOP's tax legislation may be, it is merely an acceleration of the redistribution of wealth from the bottom to the top that America has undergone since the mid-1970s. (President Richard Nixon may have been a paranoid right-winger with authoritarian tendencies, but he expanded Medicare and supported universal health care.) Between the decline of labor unions, age discrimination, stagnant wages, an ever-rising cost of living, low interest rates, and a shortage of retirement accounts, millions of Gen Xers and Baby Boomers may never be able to retire.
Traditional defined-benefit pensions were once a mainstay of American labor, especially among unionized workers. But according to Pew Charitable Trusts, only 13 percent of Baby Boomers still have them (among millennials, the number falls to 6 percent). In recent decades, 401(k) plans have become much more prominent, yet a majority of American workers don't have them either.
Analyzing W2 tax records in 2012, U.S. Census Bureau researchers Michael Gideon and Joshua Mitchell found that only 14 percent of private-sector employers in the U.S. were offering a 401(k) or similar retirement packages to their workers. That figure was thought to be closer to 40 percent, but Gideon and Mitchell discovered the actual number was considerably lower when smaller businesses were carefully analyzed, and that larger companies were more likely to offer 401(k) plans than smaller ones.
Today, millions of Americans work in the gig economy who don't have full-time jobs or receive W2s, but instead receive 1099s for freelance work. Tax-deferred SEP-IRAs were once a great, low-risk way for freelancers to save for retirement without relying exclusively on Social Security, but times have changed since the 1980s and '90s when interest rates were considerably higher for certificates of deposit and savings accounts. According to Bankrate.com, average rates for one-year CDs dropped from 11.27 percent in 1984 to 8.1 percent in 1990 to 5.22 percent in 1995 to under 1 percent in 2010, where it currently remains.
The combination of stagnant wages and an increasingly high cost of living have been especially hellish for Americans who are trying to save for retirement. The United States' national minimum wage, a mere $7.25 per hour, doesn't begin to cover the cost of housing at a time when rents have soared nationwide. Never mind the astronomical prices in New York City, San Francisco or Washington, D.C. Median rents for one-bedroom apartments are as high as $1,010 per month in Atlanta, $960 per month in Baltimore, $860 per month in Jacksonville and $750 per month in Omaha, according to ApartmentList.com.
That so many older Americans are renting at all is ominous in its own right. FDR made home ownership a primary goal of the New Deal, considering it a key component of a thriving middle class. But last year, the Urban Institute found that 19 million Americans who previously owned a home are now renting, 31 percent between the ages of 36 and 45. Laurie Goodman, one of the study's authors, contends the Great Recession has "permanently raised the number of renters," and that the explosion of foreclosures has hit Gen Xers especially hard.
The severity of the U.S. retirement crisis is further addressed in journalist Jessica Bruder's new book "Nomadland: Surviving America in the 21st Century," which follows Americans in their 50s, 60s and even 70s living in RVs or vans , barely eking out a living doing physically demanding, seasonal temp work from harvesting sugar beets to cleaning toilets at campgrounds. Several had high-paying jobs before their lives were blown apart by the layoffs, foreclosures and corporate downsizing of the Great Recession. Bruder speaks with former college professors and software professionals who now find themselves destitute, teetering on the brink of homelessness and forced to do backbreaking work for next to nothing. Unlike the big banks, they never received a bailout.
These neo-nomads recall the transients of the 1930s, themselves victims of Wall Street's recklessness. But whereas FDR won in a landslide in 1932 and aggressively pursued a program of progressive economic reforms, Republicans in Congress have set out to shred what little remains of the social safety net, giving huge tax breaks to millionaires and billionaires . The older voters who swept Trump into office may have signed their own death warrants.
If aging Americans are going to be saved from this dystopian future, the U.S. will have to forge a new Great Society. Programs like Social Security, Medicare and Medicaid will need to be strengthened, universal health care must become a reality and age discrimination in the workplace will have to be punished as a civil rights violation like racial and gender-based discrimination. If not, millions of Gen Xers and Boomers will spend their golden years scraping for pennies.
Expat , , December 14, 2017 at 6:29 am
vidimi , , December 14, 2017 at 6:40 amI certainly will never go back to the States for these and other reasons. I have a friend, also an American citizen, who travels frequently back to California to visit his son. He is truly worried about getting sick or having an accident when he is there since he knows it might bankrupt him. As he jokes, he would be happy to have another heart attack here in France since it's free!
For those of you who have traveled the world and talked to people, you probably know that most foreigners are perplexed by America's attitude to health care and social services. The richest nation in the world thinks that health and social security (in the larger sense of not being forced into the street) are not rights at all. Europeans scratch their heads at this.
The only solution is education and information, but they are appalling in America. America remains the most ignorant and worst educated of the developed nations and is probably beaten by many developing nations. It is this ignorance and stupidity that gets Americans to vote for the likes of Trump or any of the other rapacious millionaires they send to office every year.
A first step would be for Americans to insist that Congress eliminate its incredibly generous and life-long healthcare plans for elected officials. They should have to do what the rest of Americans do. Of course, since about 95% of Congress are millionaires, it might not be effective. But it's a start.
Marco , , December 14, 2017 at 6:46 amFrance has its share of problems, but boy do they pale next to the problems in America or even Canada. Life here is overall quite pleasant and I have no desire to go back to N.A.
WobblyTelomeres , , December 14, 2017 at 7:47 amCanada has problems?
vidimi , , December 14, 2017 at 8:03 amWas in Yellowknife a couple of years ago. The First Nations people have a rough life. From what I've read, such extends across the country.
JEHR , , December 14, 2017 at 1:46 pmyeah, Canada has a neoliberal infestation that is somewhere between the US and the UK. France has got one too, but it is less advanced. I'll enjoy my great healthcare, public transportation, and generous paid time off while I can.
JEHR , , December 14, 2017 at 1:55 pmThe newest neoliberal effort in Canada was put forward by our Minister of Finance (a millionaire) who is touting a bill that will get rid of defined benefit pension plans given to public employees for so-called target benefit pension plans. The risk for target plans is taken by the recipient. Morneau's former firm promotes target benefit pension plans and the change could benefit Morneau himself as he did not put his assets from his firm in a blind trust. At the very least, he has a conflict of interest and should probably resign.
There is always an insidious group of wealthy people here who would like to re-make the world in their own image. I fear for the future.
Dita , , December 14, 2017 at 8:25 amYes, I agree. There is an effort to "simplify" the financial system of the EU to take into account the business cycle and the financial cycle .
jefemt , , December 14, 2017 at 10:02 amEuropeans may scratch their heads, but they should recall their own histories and the long struggle to the universal benefits now enjoyed. Americans are far too complacent. This mildness is viewed by predators as weakness and the attacks will continue.
Scramjett , , December 14, 2017 at 1:43 pmWe really should be able to turn this around, and have an obligation to ourselves and our 'nation state' , IF there were a group of folks running on a fairness, one-for-all, all-for-one platform. That sure isn't the present two-sides-of-the-same-coin Democraps and Republicrunts.
Not sure if many of the readers here watch non-cable national broadcast news, but Pete Peterson and his foundation are as everpresent an advertiser as the pharma industry. Peterson is the strongest, best organized advocate for gutting social services, social security, and sending every last penny out of the tax-mule consumer's pocket toward wall street. The guy needs an equivalent counterpoint enemy.
Check it out, and be vigilant in dispelling his message and mission. Thanks for running this article.
Running away: the almost-haves run to another nation state, the uber-wealthy want to leave the earth, or live in their private Idaho in the Rockies or on the Ocean. What's left for the least among us? Whatever we create?
https://www.pgpf.org/sierra7 , , December 14, 2017 at 8:45 pmI think pathologically optimistic is a better term than complacent. Every time someone dumps on them, their response is usually along the lines of "Don't worry, it'll get better," "Everything works itself out in the end," "maybe we'll win the lottery," my personal favorite "things will get better, just give it time" (honestly it's been 40 years of this neoliberal bullcrap, how much more time are we supposed to give it?), "this is just a phase" or "we can always bring it back later and better than ever." The last one is most troubling because after 20 years of witnessing things in the public sphere disappearing, I've yet to see a single thing return in any form at all.
I'm not sure where this annoying optimism came from but I sure wish it would go away.
Jeremy Grimm , , December 14, 2017 at 4:44 pmThe "optimism" comes from having a lack of historical memory. So many social protections that we have/had is seen as somehow coming out of the ether benevolently given without any social struggles. The lack of historical education on this subject in particular is appalling. Now, most would probably look for an "APP" on their "dumbphones" to solve the problem.
The social advantages that we still enjoy were fought in the streets, and on the "bricks" flowing with the participants blood. 8 hr. day; women's right to vote; ability and right for groups of laborers to organize; worker safety laws ..and so many others. There is no historical memory on how those rights were achieved. We are slowly slipping into an oligarchy greased by the idea that the physical possession of material things is all that matters. Sheeple, yes.
Expat , , December 14, 2017 at 6:10 pmWOW! You must have been outside the U.S. for a long time. Your comment seems to suggest we still have some kind of democracy here. We don't get to pick which rapacious millionaires we get to vote for and it doesn't matter any way since whichever one we pick from the sad offerings ends up with policies dictated from elsewhere.
Disturbed Voter , , December 14, 2017 at 6:29 amMmm, I think American voters get what they want in the end. They want their politicians because they believe the lies. 19% of Americans believe they are in the top 1% of wealth. A huge percentage of poor people believe they or their kids will (not can, but will) become wealthy. Most Americans can't find France on a map.
So, yes, you DO get to pick your rapacious millionaire. You send the same scumbags back to Washington every year because it's not him, it the other guys who are the problem. One third of Americans support Trump! Really, really support him. They think he is Jesus, MacArthur and Adam Smith all rolled up into one.
I may have been gone for about thirty years, but that has only sharpened my insights into America. It's very hard to see just how flawed America is from the inside but when you step outside and have some perspective, it's frightening.
Carolinian , , December 14, 2017 at 8:05 amThe Democrat party isn't a reform party. Thinking it is so, is because of the "No Other Choice" meme. Not saying that the Republican party works in my favor. They don't. Political reform goes deeper than reforming either main party. It means going to a European plurality system (with its own downside). That way growing Third parties will be viable, if they have popular, as opposed to millionaire, support. I don't see this happening, because of Citizens United, but if all you have is hope, then you have to go with that.
KYrocky , , December 14, 2017 at 12:05 pmHad George W. Bush had his way and turned Social Security over to Wall Street, the economic crash of September 2008 might have left millions of senior citizens homeless.
Substitute Bill Clinton for George Bush in that sentence and it works just as well. Neoliberalism is a bipartisan project.
And many of the potential and actual horrors described above arise from the price distortions of the US medical system with Democratic acquiescence in said system making things worse. The above article reads like a DNC press release.
And finally while Washington politicians of both parties have been threatening Social Security for years that doesn't mean its third rail status has been repealed. The populist tremors of the last election -- which have caused our elites to lose their collective mind -- could be a mere prelude to what will happen in the event of a full scale assault on the safety net.
rps , , December 14, 2017 at 5:01 pmSubstitute Obama's quest for a Grand Bargain as well.
Our government, beginning with Reagan, turned its back on promoting the general welfare. The wealthy soon learned that their best return on investment was the "purchase" of politicians willing to pass the legislation they put in their hands. Much of their investment included creating the right wing media apparatus.
The Class War is real. It has been going on for 40 years, with the Conservative army facing virtually no resistance. Conservatives welcome Russia's help. Conservatives welcome barriers to people voting. Conservatives welcome a populace that believes lies that benefit them. Conservatives welcome the social and financial decline of the entire middle class and poor as long as it profits the rich financially, and by extension enhances their power politically.
If retirees flee our country that will certainly please the Conservatives as that will be fewer critics (enemies). Also less need or demand for social programs.
tegnost , , December 14, 2017 at 8:59 am"Single acts of tyranny may be ascribed to the accidental opinion of the day, but a series of oppressions, begun at a distinguished period and pursued unalterably through every change of ministers, too plainly prove a deliberate, systematic plan of reducing [a people] to slavery" Thomas Jefferson. Rights of British America, 1774 ME 1:193, Papers 1:125
Marco , , December 14, 2017 at 6:55 amyes, my problem with the post as well, completely ignores democrat complicity the part where someone with a 26k salary will pay 16k in insurance? No they won't, the system would collapse in that case which will be fine with me.
OpenThePodBayDoorsHAL , December 14, 2017 at 3:57 pm"President Richard Nixon may have been a paranoid right-winger with authoritarian tendencies, but he expanded Medicare and supported universal health care."
"Gimme that old time Republican!"
One of the reasons I love NC is that most political economic analysis is often more harsh on the Democrats than the Repubs so I am a bit dismayed how this article is way too easy on Team D. How many little (and not so little) knives in the back from Clinton and Obama? Is a knife in the chest that much worse?
tagio , December 14, 2017 at 4:39 pmThis entire thread is simply heartbreaking, Americans have had their money, their freedom, their privacy, their health, and sometimes their very lives taken away from them by the State. But the heartbreaking part is that they feel they are powerless to do anything at all about it so are just trying to leave.
But "People should not fear the government; the government should fear the people"
It's more than a feeling, HAL. https://www.newyorker.com/news/john-cassidy/is-america-an-oligarchy Link to the academic paper embedded in article.
As your quote appears to imply, it's not a problem that can be solved by voting which, let's not forget, is nothing more than expressing an opinion. I am not sticking around just to find out if economically-crushed, opiod-, entertainment-, social media-addled Americans are actually capable of rolling out tumbrils for trips to the guillotines in the city squares. I strongly suspect not.
This is the country where, after the banks crushed the economy in 2008, caused tens of thousands to lose their jobs, and then got huge bailouts, the people couldn't even be bothered to take their money out of the big banks and put it elsewhere. Because, you know, convenience! Expressing an opinion, or mobilizing others to express an opinion, or educating or proselytizing others about what opinion to have, is about the limit of what they are willing, or know how to do.
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Dec 15, 2017 | economistsview.typepad.com
"Their disdain for ordinary working Americans as opposed to investors, heirs, and business owners runs so deep that they can't contain it": Republicans Despise the Working Class, by Paul Krugman, NY Times : You can always count on Republicans to do two things: try to cut taxes for the rich and try to weaken the safety net for the poor and the middle class. ...But ... something has been added to the mix. ...Republicans ... don't treat all Americans with a given income the same. Instead, their bill ... hugely privileges owners, whether of businesses or of financial assets, over those who simply work for a living. ...
The nonpartisan Tax Policy Center has evaluated the Senate bill, which the final bill is expected to resemble. It finds that the bill would reduce taxes on business owners , on average, about three times as much as it would reduce taxes on those whose primary source of income is wages or salaries. For highly paid workers, the gap would be even wider, as much as 10 to one. ...
If this sounds like bad policy, that's because it is. More than that, it opens the doors to an orgy of tax avoidance. ... We're pitting hastily devised legislation, drafted without hearings over the course of just a few days, against the cleverest lawyers and accountants money can buy. Which side do you think will win?
As a result, it's a good guess that the bill will increase the budget deficit far more than currently projected. ...
So why are they doing this? After all, the tax bill appears to be terrible politics as well as terrible policy. ... The ... public overwhelmingly disapproves of the current Republican plan.
But Republicans don't seem able to help themselves: Their disdain for ordinary working Americans as opposed to investors, heirs, and business owners runs so deep that they can't contain it.
When I realized the extent to which G.O.P. tax plans were going to favor business owners over ordinary workers, I found myself remembering what happened in 2012, when Eric Cantor -- then the House majority leader -- tried to celebrate Labor Day. He put out a tweet for the occasion that somehow failed to mention workers at all, instead praising those who have "built a business and earned their own success." ...
Cantor, a creature of the G.O.P. establishment if ever there was one, had so little respect for working Americans that he forgot to include them in a Labor Day message.
And now that disdain has been translated into legislation, in the form of a bill that treats anyone who works for someone else -- that is, the vast majority of Americans -- as a second-class citizen.
Paine , December 15, 2017 at 12:07 PM
Fair play for the ever so many petty wage heads. Out there ! High achieving high dollar earning high altruism embodying.Our PK. What a guy ! "haut Liberal oblige " at its most glowing
Exploited citizens are indeed like oppressed citizens. Inferior class typesHillary prefers earning her daily bread. By making humanist speeches to bankers and writing best selling alibi seasoned memoirs for the bibliophilic public. Why oh why does Paul love her so ?JohnH -> Paine ... , December 15, 2017 at 01:33 PMPaine -> JF... , December 15, 2017 at 12:40 PMPK would probably even tell you that some of his best friends are working class. As a show of his undying love, he even penned opinion pieces on their behalf, promoting the gift of China's ascension the WTO in 2000, saying how great it would be for labor...that was before the great sucking sound of jobs going to China...
Republicans have no monopoly on selling out the working class...but workers have yet to figure out that there are more than two candidates running for President.
Labor parties exist in the OECD. But they had a third way fantasy. Where we all dance together. Most have still not shaken off this collaborationist pipe dream despite the fall of 2008. And the ten year doldrums sinceChristopher H. said in reply to Paine ... , December 15, 2017 at 03:08 PMhttps://www.reuters.com/article/us-britain-politics-banking/british-labour-leader-corbyn-tells-morgan-stanley-were-a-threat-idUSKBN1DV44LLongtooth , December 15, 2017 at 12:16 PMDECEMBER 1, 2017 / 3:23 AM / 14 DAYS AGO
British Labour leader Corbyn tells Morgan Stanley: 'We're a threat'
Guy Faulconbridge
LONDON (Reuters) - Britain's opposition Labour leader Jeremy Corbyn warned Morgan Stanley that bankers are right to regard him as a threat because he wants to transform what he cast as a rigged economy that profits speculators at the expense of ordinary people.
...
I have news for you Paul.... the wealthy have always treated labor as second class citizens... what else is new and why are you just now figuring this out?DrDick -> Longtooth... , December 15, 2017 at 01:01 PMIt's interesting that regardless of which party has been in power since the 1960's (e.g. since Johnson) neither have provided any gains in real income to labor's share of income.
And regardless of which party has been in power since the 1970's median incomes have grown at a barely perceptible rate while GDP has continued to grow unabated at a very much greater rate... the gap (wedge) has continued to increase without a hitch.
So Paul, are you just no noticing this or are you under the impression that it's just the GOP wealthy that have disdain for labor... since it would appear to me that it's the wealthy regardless of party identification -- though there are admittedly a few notable exemptions.... but those are only after they have become among the globes richest persons.
That seems a grotesque misreading of the piece, which never claims this is new, just that it is even worse than before. Krugman has also written extensively about these issues in the past (he lambasted the Bush administration for exactly the same issues).Longtooth -> DrDick... , December 15, 2017 at 02:30 PMDr. Dick,DeDude , December 15, 2017 at 12:20 PMI've been reading PK probably since before you could even read or perhaps since you graduated from Dick, Jane, Sally, & Spot. I'm even a huge fan except:
- I lambast him for not calling a spade a spade (which until just very recently he never did before), and
- For intentionally misleading, even though the direction he misleads favors my own positions.
In this case he made a clear statement that in the context of his post is intended to mean the current GOP (as you also were led to believe by your statement "worse then before", or perhaps "recent GOP" as you also believed by your statement "Bush administration...").
You are in fact the direct intent of my comment.. people who believe this GOP is any different than any other GOP. The only difference in this one and any other is that the party has a bullet proof majority in both houses AND a complicit Executive to do their bidding. That just makes it possible for the GOP to carry out its objectives... the objectives have never changed... since Coolidge and Hoover at least.
Krugman's explicit statement inferring and implying this GOP is different is:
"But Republicans don't seem able to help themselves: Their disdain for ordinary working Americans as opposed to investors, heirs, and business owners runs so deep that they can't contain it."
In fact this has been the case all along so why if its not new news does he even mention it? Moreover he neglects entirely to say that it's not just the GOP that has disdain for labor but the entire wealth class, regardless of party. The Dems were persuaded by organized labor to pay attention to labor's issues and preferences .. or else!
Even at that all actual evidence shows quite clearly that labor takes it in the shorts since the 1960's at least, and if you go back to Coolidge and Hoover it was also in clear and obvious evidence at that time as well.
And yet, in all the time since, through all administrations and congress's labor keeps getting the shaft so it's not just the GOP that caters to the wealth, but the Dems as well... and this shouldn't be a surprise (but I'm sure is) because the U.S. gov't is actually run by and to the primarily benefit of the wealthy -- and it always has been in case you haven't much history under your belt yet.
You took Krugman's statement as he intended people like you to take it in his post hook line and sinker.
(my uncle was high up in organized labor in western US in the 1950's through 1970's. I lived with he and my aunt for a summer between college years. He said often and astutely based in his intimate political dealings with Democratic national and State leaders, "The Democrats have nor more back-bone than what Organized Labor provides." The parties aren't really that much different when it comes to the working class."
I was taken aback, and didn't believe him --- after all he was a labor leader --- but I watched over the ensuing decades and sure 'nuff, he was dead on right then and nothing's changed.
To make a difference gov't control has to be taken from the wealthy and has to be shared equally with labor... it doesn't do that nor has it ever done that. Ignore the rhetoric and look at the evidence over time... it's quite obvious and not even remotely vague.
But even among the predatory capitalists GOP types some are quite angry at the current tax "reform"Paine -> DeDude... , December 15, 2017 at 12:41 PMThere is likely to be a lot more of that. When some guys get $10 million then others are going to be angry that they only got $1 million. The donor class as a whole will be happy, but some of them will be very unhappy. They may even be willing to support the "Repal the Trump tax cuts" movement and actively support democratic candidates.
A giant Shark frenzy ? To good to be likelyPatricia Shannon , December 15, 2017 at 12:57 PMTrue, but the Democrats do too. When I was active in the local Democratic party, the only concerns were for minorities and the middle-class. The only time the Caucasian working class was mentioned was to put them down.Patricia Shannon -> Patricia Shannon ... , December 15, 2017 at 12:58 PMI was referring to attitudes to the low income working class.mulp -> Fred C. Dobbs... , December 15, 2017 at 02:29 PMIf only Democrats were explaining how corporations can cut their taxes: Hire more workers to increase labor cost tax dodging! Pay workers higher wages to increase labor cost tax dodging. Provide more tax exempt benefits to increase labor cost tax dodges. Pay workers to do more R&D which is expensed. Borrow at low interest rates to pay workers to build a huge costly factory that will generate huge depreciation tax dodges plus interest cost tax dodges.mulp , December 15, 2017 at 02:20 PMLower prices of goods and services offered to just a small amount above costs of labor in operations and capital. If every business paid 100% of revenue to workers, the taxes owed in profit taxes will be zero.
Krugman constantly fails to understand that the GOP, intentionally or not, works to kill jobs.Tom aka Rusty , December 15, 2017 at 02:20 PMAll businesses can dodge that "highest in the world" 35% corporate PROFITS tax by PAYING MORE TO WORKERS!
The biggest corporate business tax dodge in the US is labor costs.
Granted, the tax dodge of paying labor costs building a factory is spread out over decades, but if you build a billion dollar factory, the revenue after paying workers to operate the plant will almost never come close to a billion dollars. Immediate expensing of the billion dollar factory is likely to result in taxable losses of a billion dollars, that can be carried over to shelter $50-100 million in "profit" as the capital cost of production is zero - the capital costs is fully depreciated if capital is expensed, meaning the factory has a book value of zero.
The bizzare result in a corporation pays no taxes for 10 to 15 years when the factory is new and it's productivity means the highest return on investment, until the factory is old and less competitive, and now the loss carry forward is zero so any profit is now taxed, at the time when the factory is old.
Standard double declining balance depreciation spreads taxes out over the life of the factory, so taxes are flatter. Note that selling the factory after taxes are owed merely triggers capital gains equal to the price because the capital book price is zero.
The point of cutting the profit tax rate is to kill jobs. A profit tax of zero would promote a business trying to create a slave labor force so 100% of revenue is tax free to the owners. A zero profit tax rate means every single dollar paid to workers cuts shareholder income by 100% of those dollars.
To create jobs by lowering profit tax rates, investors must suddenly say "No no don't give me so much in dividends and do not increase the price of my shares by stock buyback! I HAVE TOO MUCH MONEY AND I WANT WORKERS TO GET MY MONEY"
To go a step further, the GOP will next call for killing jobs by ending or cutting SS and Medicare and Medicaid payments which pay workers to feed, cloth, house, care for those getting those benefits.
Maybe only half will end up homeless and hungry, but those will be the ones moving into their kids, or grandkids living rooms, eating their food. In exchange for a $500 tax cut for working class families, these families get to feed and house their grandparent or parent, assuming they were earning enough to move out of their parent's basement.
Economies are zero sum.
One person's costs are another person's 100% income.
Cut costs, you cut income.
As I liberal, I say that, like Newt ordered "death" replace "estate", every mention of "costs" get replaced with "jobs".
On tax and spend, the GOP is focused on killing jobs. Cut taxes to kill jobs. Cut spending to kill jobs.
After all, I never knew any employee going into a corporate meeting on cost cutting expecting to hear of a big hiring program or of company wide wage and benefit hikes, other than mandatory long vacations, at zero pay.
The globalist Democrats despise the working class, but play nice each election cycle while they suck money out of union treasuries.
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Dec 12, 2017 | www.nakedcapitalism.com
...Neoliberal epidemics are particular pathways of embodiment. From Ted Schrecker and Clare Bambra in The Conversation :
In our new book , we draw on an extensive body of scientific literature to assess the health effects of three decades of neoliberal policies. Focusing on the social determinants of health -- the conditions of life and work that make it relatively easy for some people to lead long and healthy lives, while it is all but impossible for others -- we show that there are four interconnected neoliberal epidemics: austerity, obesity, stress, and inequality. They are neoliberal because they are associated with or worsened by neoliberal policies. They are epidemics because they are observable on such an international scale and have been transmitted so quickly across time and space that if they were biological contagions they would be seen as of epidemic proportions.
(The Case-Deaton study provides an obvious fifth: Deaths of despair. There are doubtless others.) Case in point for one of the unluckier members of the 90%:
On the morning of 25 August 2014 a young New Jersey woman, Maria Fernandes, died from inhaling gasoline fumes as she slept in her 13-year-old car. She often slept in the car while shuttling between her three, low-wage jobs in food service; she kept a can of gasoline in the car because she often slept with the engine running, and was worried about running out of gasoline. Apparently, the can accidentally tipped over and the vapours from spilled gasoline cost her life. Ms Fernandes was one of the more obvious casualties of the zero-hours culture of stress and insecurity that pervades the contemporary labour market under neoliberalism.
And Schrecker and Bambra conclude:
Neoliberalism operates through labor markets to undermine health not only by way of the financial consequences of unemployment, inadequate employment, or low wages, as important as these are, but also through chronic exposure to stress that 'gets under your skin' by way of multiple mechanisms. Quite simply, the effects of chronic insecurity wear people out over the life course in biologically measurable ways .
... ... ...
Oh, and "beyond class" because for social beings embodiment involves "social production; social consumption; and social reproduction." In the most reductive definition of class -- the one I used in my crude 1% + 10% + 90% formulation -- class is determined by wage work (or not), hence is a part of production (of capital), not social consumption (eating, etc.) or social reproduction (children, families, household work ). So, even if class in our political economy is the driver, it's not everything.
nonclassical , December 11, 2017 at 8:30 pm
Amfortas the Hippie , December 11, 2017 at 4:20 pmL.S. reminiscent of Ernst Becker's, "The Structure of Evil" – "Escape from Evil"? (..not to indicate good vs. evil dichotomy) A great amount of perspective must be agreed upon to achieve "change" intoned. Divide and conquer are complicit, as noted .otherwise (and as indicated by U.S. economic history) change arrives only when all have lost all and can therefore agree begin again.
There is however, Naomi Klein perspective, "Shock Doctrine", whereby influence contributes to destabilization, plan in hand leading to agenda driven ("neoliberal"=market fundamentalism) outcome, not at all spontaneous in nature:
"Neoliberalism sees competition as the defining characteristic of human relations. It redefines citizens as consumers, whose democratic choices are best exercised by buying and selling, a process that rewards merit and punishes inefficiency. It maintains that "the market" delivers benefits that could never be achieved by planning.
Attempts to limit competition are treated as inimical to liberty. Tax and regulation should be minimised, public services should be privatised. The organisation of labour and collective bargaining by trade unions are portrayed as market distortions that impede the formation of a natural hierarchy of winners and losers. Inequality is recast as virtuous: a reward for utility and a generator of wealth, which trickles down to enrich everyone. Efforts to create a more equal society are both counterproductive and morally corrosive. The market ensures that everyone gets what they deserve."
Rosario , December 11, 2017 at 10:55 pmWell done, as usual.
On Case-Deason: Sounds like home. I keep the scanner on(local news) ems and fire only since 2006(sheriff got a homeland security grant). The incidence of suicide, overdose and "intoxication psychosis" are markedly increased in the last 10+ years out here in the wilderness(5K folks in whole county, last I looked). Our local economy went into near depression after the late 90's farm bill killed the peanut program then 911 meant no hunting season that year(and it's been noticeably less busy ever since) then drought and the real estate crash(we had 30 some realtors at peak..old family land being sold off, mostly). So the local Bourgeoisie have had less money to spend, which "trickles down" onto the rest of us.:less construction, less eating out even at the cheap places, less buying of gas, and on and on means fewer employees are needed, thus fewer jobs. To boot, there is a habit among many employers out here of not paying attention to labor laws(it is Texas ) the last minwage rise took 2 years to filter out here, and one must scrutinize one's pay stub to ensure that the boss isn't getting squirrelly with overtime and witholding.
Geography plays into all this, too 100 miles to any largish city.... ... ...
Lambert Strether Post author , December 11, 2017 at 11:20 pmI'm not well versed in Foucault or Lacan but I've read some of both and in reading between the lines of their writing (the phantom philosophy?) I saw a very different message than that often delivered by post-modern theorists.
As opposed to being champions of "self-actualization/identity" and "absolute relativism", I always got the impression that they were both offering stark warnings about diving too deeply into the self, vis-a-vis, identity. As if, they both understood the terrifying world that it could/would create, devoid of common cause, community, and ultimately empathy. A world where "we" are not possible because we have all become "I".
Considering what both their philosophies claimed, if identity is a lie, and the subject is always generated relative to the other, then how the hell can there be any security or well being in self-actualization? It is like trying to hit a target that does not exist.
All potentially oppressive cultural categorizations are examples of this (black, latino, gay, trans, etc.). If the identity is a moving target, both to the oppressor and the oppressed, then how can it ever be a singular source of political action? You can't hit what isn't there. This is not to say that these groups (in whatever determined category) are not oppressed, just that formulating political action based strictly on the identity (often as an essential category) is impossible because it does not actually exist materially. It is an amalgamation of subjects who's subjectivity is always relative to some other whether ally or oppressor. Only the manifestations of oppression on bodies (as brought up in Lambert's post) can be utilized as metrics for political action.
... ... ...
oaf , December 12, 2017 at 7:11 amI thought of a couple of other advantages of the "embodiment" paradigm:
Better Framing . Wonks like Yglesias love to mock working class concerns as "economic anxiety," which is at once belittling (it's all about f-e-e-e-lings *) and disempowering (solutions are individual, like therapy or drugs). Embodiment by contrast insists that neoliberalism (the neoliberal labor market (class warfare)) has real, material, physiological effects that can be measured and tracked, as with any epidemic.
... ... ...
"we have measurable health outcomes from political choices" So True!!!
Thank you for posting this.
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Dec 09, 2017 | www.zerohedge.com
Internet-is-Beast -> Ms No , Dec 9, 2017 3:25 AM
Davidduke2000 -> Internet-is-Beast , Dec 9, 2017 3:05 AMI acknowledge what you are saying. However, I have learned that when one is in the midst of a pessimistic scenario, one tends to develop tunnel vision and assume that the future will be like the present, only worse. Though I despise psychology as a science, this is a very psychological phenomenon. Granting what you say about Trump and the false optimism he generated, I voted for him not because I hated Trump less, but that I hated Hillary more.
Nevertheless, notwithstanding, in spite of all this, I do have a certain optimism about the American people, as a rayon de lumière in a gloomy prospect.
Clock Crasher -> Ms No , Dec 9, 2017 12:57 AMkeep the blinders on, even better yet wear the virtual reality goggles of MAGA while the country is living off a never ending fraud.
Every part of the us government is a fraud, the money is a fraud, wall street is a fraud, 99% of the food you eat is kosher fraud and you pension is fraud as the money is not there to allow you to collect your pension yet most people are paying dearly for their pension and the money goes to either israel or the profiteers of the war machine.
Davidduke2000 -> Clock Crasher , Dec 9, 2017 2:58 AMThey are toast. The leaks are not going to stop. Once the baby boom generation dies off completely the next generations will clean up their mess. The baby boom can't see past their own prosperity. But everyone else is ready for reform.
(trying to throw a little optimism into the mix)
Think about it.. when you look at the electoral map by county HRC was thoroughly crushed. Is DJT a SomaSalesMan aka Mega Psyop.. who the fuck knows. The awakening is happen Chinese water torture style.
This is a lot like being a Gold perma Bull. We want to come into the forums every day and write about how hopeless the situation is (a lot like what I do here everyday).
Just remember this.. Even Mao's wife had to stand trial for crimes against the populace. In 20 years the babyboomers will be out of the way and we can get onto bigger and better things.
FredFlintstone -> Ms No , Dec 9, 2017 5:55 AMthe biggest problems come from the millennial who grew up with bullshit, baby boomers lived threw a lot of american bullshit and they are the ones like PCR are warning the youngs that america's days are numbered . even Deagel.com predict that the us population in 2025 will dwindle from 325 million to only 55 millions, where do you think the 275 million will go? nuclear war will take care of them.
http://www.deagel.com/country/forecast.aspx
the corruption is so great that every single new weapon does not work and all these weapons are built at a great cost. The bulk of the left activists are millennials , the same with the super left, yet on the right the millennials are busy filing their nails, surfing and buying bitcoin for a quick profit.
I am Canadian, I am an outsider and see clearly as I am not part of the system, I see a country where the leaders convinced the population that they are exceptional but the people took it as a compliment, it was meant to fool them into a sense of being above the rest of the world, yet most americans do not know the capital of florida, california, mississippi, alabama yet they are in their own country.
This exceptionalism is preventing them from understanding the danger they are in.
For the first time I see a consensus on zerohedge that PCR is 100% right and the posters are worried what will become of america if israel is left with a huge hold on all us presidents and on the political infrastructure of the us and they agree with PCR on the list of propaganda the us have been telling the citizens to keep them distracted from knowing that their days are numbered when the Russians might attack thinking america wants to annihilate them.
veritas semper ... , Dec 9, 2017 12:27 AMDamnit! I just wanted to retire quietly to a golf course.
Internet-is-Beast -> veritas semper vinces , Dec 9, 2017 2:46 AMPax Britannica<< Pax Americana<< Pax Judaica.
We are in the late stages of Pax Judaica. They, through their money magic,usury,fiat printing,and the bought/paid for/bribed/blackmailed sycophants,rule almost the whole world.The West entirely.
They have push so much,on all aspects of the society,that the recoil is going to be devastating.We started seeing this with the Jerusalem f*ck up.
US can not be saved at this point. It is at the Event Horizon already. I don't know what will be left of it: a few 4th world small countries ,where warlords kill each other? Americans love violence.
I absolutely sure IS...RA...EL is NOT going to survive. Neither Saudi Barbaria. Especially after this last blunder.
Will they go into the dustbin of history gracefully,without destroying the whole world in the process?
I don't think so,they are psychopaths.They do not like to lose or to be exposed for what they really are.
PCR makes a valid point. The Russians are patient ,balanced, intelligent people,but if they sense they are dealing with irrational ones ,they will not take a chance. The Russians have already said that US is not agreement capable, a great insult in their view.
HRClinton -> veritas semper vinces , Dec 9, 2017 3:44 AMReferencing your first line, there's also "army intelligence" "Long Island expressway" to cite a couple of other examples of the same wordplay.
roddy6667 -> JibjeResearch , Dec 9, 2017 1:06 AMPax Iudaea. Delenda est.
Hostis humani generis. Delenda est.
IDESofMARCH , Dec 9, 2017 1:07 AMIn America everybody has their labels (businessman, Libertarian, Democrat, Republican) so they can all fight with each other better. The country is so Balkanized that cannot function as a whole any more. I guess that was the plan all along.
Walt , Dec 9, 2017 1:28 AMPeace and truth are not welcome at the Whitehouse which should be painted BLOOD RED. Politicians are a greedy bloodthirsty criminals, That includes Trump. If you want to save the world from WW3 which we are watching incubate. ALL current crop of politicians have to be thrown out of government. YOU NEED A BLOODY REVOLUTION and throw these criminals into maximum security with the killers and molestors to do as they wish with them.
Without public revolt we'll just keep seeing, hearing and swallowing fake news after fake news brain wash and send our children to kill the innocent in WAR after WAR.
Seasmoke , Dec 9, 2017 1:34 AMPrivate interests and agendas have control over the US government. As in (((Private interests and agendas))) have control over the US government.
Moe Howard , Dec 9, 2017 1:46 AMDon't forget the biggest lie. Even bigger than 9/11. That in the mid 2000s millions of deadbeats all decided to buy houses that they could not afford. What a joke of a country. Land of the fee. Home of the Slave.
Ivan de beers , Dec 9, 2017 2:05 AM"What Mueller is doing is so corrupt that he really should be arrested and renditioned to Egypt." Best line of the whole piece. Love it. We are not, however, "Walking Into Armageddon" Rather, we are "Slouching into the Apocolypse"
I am ENTERTAINED.
GardenWeasel , Dec 9, 2017 2:57 AMTrump handing Jerusalem to israel is just the first step in setting up the rise of Israel and the fall of America. It is a symbolic transfer of power. All is left is world war 3 and the financial system collapse.
ProsperD9 -> GardenWeasel , Dec 9, 2017 3:56 AMPCR is way off this time. Flynn is acting as bait, and the swamp critters went for it. Trump and Bannon are playing the ol' rope-a-dope rather well. After the Dems and Deep Staters wear themselves out throwing all of these ineffective punches they will take them out.
jafo2me , Dec 9, 2017 3:01 AMYou might be on to something...as the Dems and Deep State reveal themselves for what they really are, it makes it easier for Trump to go in for the kill....! They are getting more and more careless and their corruption and stupidity revealed more and more each day. I hope Trump be able to pave the way to cleaning up America and getting it back on its feet....we will see...!
slicktroutman -> jafo2me , Dec 9, 2017 8:40 AMAs many of you either know or have heard...
"THE" controllers of the puppet politicans, bankers and world leaders "WANT YOU TO LIVE IN FEAR." All the reasons stated by PCR are valid but not one of them is a reason to go out and get drunk tomorrow. Either you believe in your own fate and the actions which control the fate which you harvest "OR YOU DON'T."
Why would I worry about things I have zero control over, especially when I "KNOW" "THEY" live off of that fear? I will live every moment of my life in the joy and happiness which is this blessing to be alive "AND" will live in fear of no one. If you live your life this way they lose and you get to appreciate a gift which is greater then any material object on the planet.
The worse which they can do when you decide to refuse to live in fear of "THEM" is to take your life which they have no power to do either.. Put up your middle finger to all of them, smile and move on and enjoy what time you have here to make it the best you can do.
Choose not to live in fear of them..
We all fear death and question our place in the universe. The artist's job is not to succumb to despair, but to find an antidote for the emptiness of existence. ... Ernest Hemingway
Conscious Reviver , Dec 9, 2017 3:08 AMAnd then he killed himself.....l...
jafo2me , Dec 9, 2017 3:23 AMTwo interesting pieces of news out of moonofalabama.org
First b says the real buyer of the fake $450M fake DaVinci is MbS, the KSA crown prince. Second, MbS just fired his Zino-friendly, Jared-friendly foreign minister.
JailBanksters , Dec 9, 2017 3:29 AMAs for Flynn...
The rumors early on were that Flynn knew who all the pedophiles were in Washington, wanted to go after them "AND" would not back down. Trump's VP was included on that list and played a part in the decision to move him out of the public eye and into the position he currently occupies behind the scenes.
Interestingly enough it was supposedly this stupid explanation of him not telling Pence about his meeting with the Russian Ambassador which was the excuse as to why he had to be removed. On face value, think about how ridiculous this is. A decorated General who answers to the President withheld information on a meeting which is fairly typical military procedure.
"IT'S CALLED THE NEED TO KNOW." HELLO....
Trump could have simply stated that Flynn was not under orders from Pence and was acting under a protocol common to members within the Military but not common to politicians. If Pence wanted to know anything about what people within my Administration are doing he is always welcome to discuss it with me. PERIOD...
THE ENTIRE EXCUSE IS TOTAL BS AND THE WEAKNESS OF THAT EXCUSE GIVES ME SUSPICION TO BELIEVE THAT THE ORIGIONAL RUMORS WERE ACCURATE.
Conscious Reviver -> JailBanksters , Dec 9, 2017 4:46 AMAmerica Isn't "Walking Into Armageddon", America Is "Pushing for Armageddon"
JailBanksters -> Conscious Reviver , Dec 9, 2017 5:11 AMThe Fascist Tom Cotton with his hair on fire leading the charge. Metaphorically leading the charge to our own destruction. He would never get himself involved in any genuine battle charge. Russia is not my enemy or adversary.
slipreedip , Dec 9, 2017 4:57 AMHas Iraq, Libya, Syria, Iran, Russia, China, North Korea ever done any physical harm to the USA ? No ... How about the reverse ? Mmm, it appears the only ones that have attacked the USA are Saudi Arabia and Israel. But America does not attack them, instead it only attacks the countries that have never attacked the USA.
Is that wierd or what ?, it's almost as if there is another agenda at play.
Stan Derdissue -> Tellthetruth , Dec 9, 2017 6:25 AMUS foreign Policy in a nutshell. Its war...one way or another.
free corn , Dec 9, 2017 5:59 AMYou mean the Islam that allows grandads to marry and abuse 10 year olds. Husbands to beat up their wives, hang gay teenage boys off cranes in public squares. Whip 12 year old girls in public for wearing western tight jeans ( underneath their hijab may I add). Satan would approve of this sadistic protocol.
Conscious Reviver -> free corn , Dec 9, 2017 7:00 AMit's amazing to see so much naivety here. People seems to believe that America/Russia are bad/good. But people it's not just imperialism anymore it's globalism. Therefore it's not about interests of countries but rather the ones of oligarchs. And oligarchs interests are international, so why would they be interested in Armageddon? Earth belong to them, why would they want to damage their wealth so much? i think we'll see busyness as usual - small wars, removing obstacles for transnationals, concentration of wealth and power and social engineering on global scale.
slicktroutman -> Conscious Reviver , Dec 9, 2017 8:30 AMThe NWO globalism program failed already. Now we are on to something else.
WTFUD -> free corn , Dec 9, 2017 7:23 AMCan you explain how it failed already? Be specific.
Dark star , Dec 9, 2017 6:46 AMNaive, ha ha! Take a look at Libya, the War Crimes & Genocide, overseen by the US & Vassals and talk about Good/Bad, NO SON, we're talking Class A EVIL here, and in the other Regime Change Neocon Playbook. How many Foreign Bases/Entanglements are Russia involved in, outside of Russia? In their Only ME base/port in Syria the US tried to fuck them over. Now Russia has half a dozen strategic Bases ( including a meeting of minds with Egypt, Qatar, Libya, Turkey, Sudan ) to eliminate DAESH/al-CIAd'uh (US Constructs).
Lastly, Only through Threat and Intimidation can the US keep these Vassals on board. Have you not noticed how the Geopolitical Landmark is changing with Sovereigns flocking far and wide to Moscow, for an ALTERNATIVE to the Vassal Prisoner Status offered up by Vichy DC.
Naive Son? Z/Hedgers will call out Russia if they deviate from the Path of Righteousness.
No Russia didn't displace, maim, murder, tens of millions of citizens in the ME, VICHY DC did.
WTFUD -> Dark star , Dec 9, 2017 6:59 AMI read somewhere that the Ukrainian Army has changed its rule book to allow soldiers to wear beards. The inference from this is that those ISIS members rescued by the Americans are being shipped to Ukraine to fight with the Nazis against those in the East who object to Kiev's desire to genocide ethnic Russians. It would appear that, not content with arming Nazis and putting them in Ukraine's Government, the US is now putting an armed ISIS into Eastern Europe. Does anybody have more detail?
WTFUD , Dec 9, 2017 6:47 AMAirlifting them from Der el Zor ( and inevitable destruction at the hands of Syrian/Hezbollah Bravehearts ) onto the demarcation line in the Donbass? Good luck with that Chestnut! What are the Jihadi's wearing, 3 SETS OF THERMALS? Let's put it this way, no matter how many Jihadi proxy scum/Advisers they airlift into Donbass there will be 10 times more FOREIGN FREEDOM-FIGHTERS (ok mainly Russian, but from Everywhere ) ready to join that gig, me included.
Death to ZATO!
Conscious Reviver -> WTFUD , Dec 9, 2017 7:05 AMHow convenient that Trump gets to play the Good Guy, supposedly fingers tied at every turn by Deep State, preventing him from reaching out.
There's not a shred of evidence that he's intervened to mend relations with Russia and if there is can someone shed light on this?
First up he has a filthy Neocon POS in Nikki Haley in the UN, the Only one on the Security Council who's a War Hawk (including the Palestinian fiasco ).
Did he intervene in the ILLEGAL eviction of Russian Diplomatic Quarters? Has he worked diligently with China & Russia to resolve DPRK or contributed to the Neocon war-drum beat with more bluster? Has he increased or defused tension in the ME by withdrawing US Troops or has he added to Obama's clandestine proxy jihadi recruitment programme by sending moar ADVISERS?
They say Tillerson's on his way out, to be replaced by a Neocon war-hawk in Mike Pompeo who's current charge of al-CIAd'uh covert operations is a continuation of the Obama failings.
Unlike Obama ( one of his few credits in 8 years ) Trump's Encouraging Netanyahu's Deviancy?
I've read over at the Saker/Other that behind the scenes Vichy DC could step up the supply of WMD's/Advisers to Kiev.
The US Coalition Forces in Syria (minus the US, lol), like their Iraqi counterparts (the Kurds in the main ) are at least talking with Russia/Government to thwart, long-term US Military Bases on Syrian soil. Obviously the US is unhappy about this with their Partition ambitions.
FUCK VICHY DC & EVERYONE IN IT!
Able Ape , Dec 9, 2017 8:15 AMWhen Vicky Nuland's relatives ran Russia. https://youtube.com/watch?v=pRfY8CwjXvY
"Rebellion to t... , Dec 9, 2017 8:33 AMThe US suffers from MIC Induced Psychosis - the only cure is stop funding the military!...
Sudden Debt , Dec 9, 2017 9:01 AMPope John Paul II, Gorbachev, and Reagan, together, ended the Cold War. HW Bush is the architect on how the USA kept its military industrial complex intact. The USA no longer had an existential threat, and no longer a reason to maintain a multiple tens of billions annual defense budget. So HW Bush picked an enemy and started a global war, that continues to this day. The British military map makers, redrew much of the middle east, after WWI.
The state of Israel was already in the works, long before the story of the holocaust, some 20 years later. Anyway, Sadaam Hussein, leader of Iraq, and US ally, spoke to the Bush administration about Kuwait; and taking back for Iraq, what Sadaam believed the British map makers took away in 1917. Saddam was fooled, and the Bush administration had a reason to keep the military industrial complex intact. The globalism/new world order, that US and EU government officials speak of, is simply another way of saying that no one has any civil liberties and everyone is being monitored.
This dangerous game was effective and working for quite a while. A great deal of wealth and power transferred to a select few. The strategy went sideways when Mr Putin said enough is enough, in roughly 2011.
Now, freedom fighters have joined Mr Putin, such as Edward Snowden, Julian Assange, Barrett Brown, Manning, Glenn Greenwald, Sarah Carter,and many other, to restore freedom and honor back to the people of the world by shining light on all of the corruption.
It will take Trump and Sessions some time to restore trust and to root out the corruption.
The bottom line is that there are good people out there, who will never let this criminal behavior and corruption to be hidden from the unwashed masses.
America is just looking for an excuse to send their young kids to war to get shot to pieces and get mentally fucked up so the drug industry can profit, the war industry can profit, the banks can profit...
in all...
It's clear that it's the patriotic thing to do.
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Dec 14, 2017 | www.nakedcapitalism.com
Yves here. I imagine many readers are acutely aware of the problems outlined in this article, if not beset by them already. By any rational standard, I should move now to a much cheaper country that will have me. I know individuals who live most of the year in third-world and near-third world countries, but they have very cheap ways of still having a toehold in the US and not (yet or maybe ever) getting a long-term residence visa. Ecuador is very accommodating regarding retirement visas, and a Social Security level income goes far there, but yours truly isn't retiring any time soon. And another barrier to an international move (which recall I did once, so I have some appreciation for what it takes), is that one ought to check out possible destinations but if you are already time and money and energy stressed, how do you muster the resources to do that at all, let alone properly?
Aside from the potential to greatly reduce fixed costs, a second impetus for me is Medicare. I know for most people, getting on Medicare is a big plus. I have a very rare good, very old insurance policy. When you include the cost of drug plans, Medicare is no cheaper than what I have now, and considerably narrows my network. Moreover, I expect it to be thoroughly crapified by ten years from now (when I am 70), which argues for getting out of Dodge sooner rather than later.
And that's before you get to another wee problem Lambert points out that I would probably not be happy in a third world or high end second world country. But the only bargain "world city" I know of is Montreal. I'm not sure it would represent enough of an all-in cost saving to justify the hassle of an international move and the attendant tax compliance burdens .and that charitably assumes I could even find a way to get permanent residence. Ugh.
By Alex Henderson, who has written for the L.A. Weekly, Billboard, Spin, Creem, the Pasadena Weekly and many other publications. Follow him on Twitter @alexvhenderson. Originally published at Alternet
Millions can no longer afford to retire, and may never be able when the GOP passes its tax bill.
The news is not good for millions of aging Baby Boomers and Gen Xers in the United States who are moving closer to retirement age. According to the Employee Benefit Research Institute's annual report on retirement preparedness for 2017, only 18 percent of U.S.-based workers feel "very confident" about their ability to retire comfortably ; Craig Copeland, senior research associate for EBRI and the report's co-author, cited "debt, lack of a retirement plan at work, and low savings" as "key factors" in workers' retirement-related anxiety. The Insured Retirement Institute finds a mere 23 percent of Baby Boomers and 24 percent of Gen Xers are confident that their savings will last in retirement. To make matters worse, more than 40 percent of Boomers and over 30 percent of Gen Xers report having no retirement savings whatsoever .
The U.S. has a retirement crisis on its hands, and with the far right controlling the executive branch and both houses of Congress, as well as dozens of state governments, things promise to grow immeasurably worse.
It wasn't supposed to be this way. Past progressive presidents, notably Franklin D. Roosevelt and Lyndon B. Johnson, took important steps to make life more comfortable for aging Americans. FDR signed the Social Security Act of 1935 into law as part of his New Deal, and when LBJ passed Medicare in 1965, he established a universal health care program for those 65 and older. But the country has embraced a neoliberal economic model since the election of Ronald Reagan, and all too often, older Americans have been quick to vote for far-right Republicans antagonistic to the social safety net.
In the 2016 presidential election, 55 percent of voters 50 and older cast their ballots for Donald Trump against just 44 percent for Hillary Clinton. (This was especially true of older white voters; 90 percent of black voters 45 and older, as well as 67 percent of Latino voters in the same age range voted Democratic.)
Sen. Bernie Sanders' (I-VT) economic proposals may have been wildly popular with millennials, but no demographic has a greater incentive to vote progressive than Americans facing retirement. According to research conducted by the American Association of Retired Persons, the three greatest concerns of Americans 50 and older are Social Security, health care costs and caregiving for loved ones -- all areas that have been targeted by Republicans.
House of Representatives Speaker Paul Ryan, a devotee of social Darwinist Ayn Rand , has made no secret of his desire to privatize Social Security and replace traditional Medicare with a voucher program. Had George W. Bush had his way and turned Social Security over to Wall Street, the economic crash of September 2008 might have left millions of senior citizens homeless.
Since then, Ryan has doubled down on his delusion that the banking sector can manage Social Security and Medicare more effectively than the federal government. Republican attacks on Medicare have become a growing concern: according to EBRI, only 38 percent of workers are confident the program will continue to provide the level of benefits it currently does.
The GOP's obsession with abolishing the Affordable Care Act is the most glaring example of its disdain for aging Americans. Yet Obamacare has been a blessing for Boomers and Gen Xers who have preexisting conditions. The ACA's guaranteed issue plans make no distinction between a 52-year-old American with diabetes, heart disease or asthma and a 52-year-old who has never had any of those illnesses. And AARP notes that under the ACA, the uninsured rate for Americans 50 and older decreased from 15 percent in 2013 to 9 percent in 2016.
According to the Congressional Budget Office, the replacement bills Donald Trump hoped to ram through Congress this year would have resulted in staggering premium hikes for Americans over 50. The CBO's analysis of the American Health Care Act, one of the earlier versions of Trumpcare, showed that a 64-year-old American making $26,500 per year could have gone from paying $1,700 annually in premiums to just over $16,000. The CBO also estimated that the GOP's American Health Care Act would have deprived 23 million Americans of health insurance by 2026.
As 2017 winds down, Americans with health problems are still in the GOP's crosshairs -- this time because of so-called tax reform. The Tax Cuts and Jobs Act (both the House and Senate versions) includes provisions that would undermine Obamacare and cause higher health insurance premiums for older Americans. According to AARP, "Older adults ages 50-64 would be at particularly high risk under the proposal, facing average premium increases of up to $1,500 in 2019 as a result of the bill."
The CBO estimates that the bill will cause premiums to spike an average of 10 percent overall, with average premiums increasing $890 per year for a 50-year-old, $1,100 per year for a 55-year-old, $1,350 per year for a 60-year-old and $1,490 per year for a 64-year-old. Premium increases, according to the CBO, would vary from state to state; in Maine, average premiums for a 64-year-old would rise as much as $1,750 per year.
Countless Americans who are unable to afford those steep premiums would lose their insurance. The CBO estimates that the Tax Cuts and Jobs Act would cause the number of uninsured under 65 to increase 4 million by 2019 and 13 million by 2027. The bill would also imperil Americans 65 and over by cutting $25 billion from Medicare .
As morally reprehensible as the GOP's tax legislation may be, it is merely an acceleration of the redistribution of wealth from the bottom to the top that America has undergone since the mid-1970s. (President Richard Nixon may have been a paranoid right-winger with authoritarian tendencies, but he expanded Medicare and supported universal health care.) Between the decline of labor unions, age discrimination, stagnant wages, an ever-rising cost of living, low interest rates, and a shortage of retirement accounts, millions of Gen Xers and Baby Boomers may never be able to retire.
Traditional defined-benefit pensions were once a mainstay of American labor, especially among unionized workers. But according to Pew Charitable Trusts, only 13 percent of Baby Boomers still have them (among millennials, the number falls to 6 percent). In recent decades, 401(k) plans have become much more prominent, yet a majority of American workers don't have them either.
Analyzing W2 tax records in 2012, U.S. Census Bureau researchers Michael Gideon and Joshua Mitchell found that only 14 percent of private-sector employers in the U.S. were offering a 401(k) or similar retirement packages to their workers. That figure was thought to be closer to 40 percent, but Gideon and Mitchell discovered the actual number was considerably lower when smaller businesses were carefully analyzed, and that larger companies were more likely to offer 401(k) plans than smaller ones.
Today, millions of Americans work in the gig economy who don't have full-time jobs or receive W2s, but instead receive 1099s for freelance work. Tax-deferred SEP-IRAs were once a great, low-risk way for freelancers to save for retirement without relying exclusively on Social Security, but times have changed since the 1980s and '90s when interest rates were considerably higher for certificates of deposit and savings accounts. According to Bankrate.com, average rates for one-year CDs dropped from 11.27 percent in 1984 to 8.1 percent in 1990 to 5.22 percent in 1995 to under 1 percent in 2010, where it currently remains.
The combination of stagnant wages and an increasingly high cost of living have been especially hellish for Americans who are trying to save for retirement. The United States' national minimum wage, a mere $7.25 per hour, doesn't begin to cover the cost of housing at a time when rents have soared nationwide. Never mind the astronomical prices in New York City, San Francisco or Washington, D.C. Median rents for one-bedroom apartments are as high as $1,010 per month in Atlanta, $960 per month in Baltimore, $860 per month in Jacksonville and $750 per month in Omaha, according to ApartmentList.com.
That so many older Americans are renting at all is ominous in its own right. FDR made home ownership a primary goal of the New Deal, considering it a key component of a thriving middle class. But last year, the Urban Institute found that 19 million Americans who previously owned a home are now renting, 31 percent between the ages of 36 and 45. Laurie Goodman, one of the study's authors, contends the Great Recession has "permanently raised the number of renters," and that the explosion of foreclosures has hit Gen Xers especially hard.
The severity of the U.S. retirement crisis is further addressed in journalist Jessica Bruder's new book "Nomadland: Surviving America in the 21st Century," which follows Americans in their 50s, 60s and even 70s living in RVs or vans , barely eking out a living doing physically demanding, seasonal temp work from harvesting sugar beets to cleaning toilets at campgrounds. Several had high-paying jobs before their lives were blown apart by the layoffs, foreclosures and corporate downsizing of the Great Recession. Bruder speaks with former college professors and software professionals who now find themselves destitute, teetering on the brink of homelessness and forced to do backbreaking work for next to nothing. Unlike the big banks, they never received a bailout.
These neo-nomads recall the transients of the 1930s, themselves victims of Wall Street's recklessness. But whereas FDR won in a landslide in 1932 and aggressively pursued a program of progressive economic reforms, Republicans in Congress have set out to shred what little remains of the social safety net, giving huge tax breaks to millionaires and billionaires . The older voters who swept Trump into office may have signed their own death warrants.
If aging Americans are going to be saved from this dystopian future, the U.S. will have to forge a new Great Society. Programs like Social Security, Medicare and Medicaid will need to be strengthened, universal health care must become a reality and age discrimination in the workplace will have to be punished as a civil rights violation like racial and gender-based discrimination. If not, millions of Gen Xers and Boomers will spend their golden years scraping for pennies.
Expat , , December 14, 2017 at 6:29 am
vidimi , , December 14, 2017 at 6:40 amI certainly will never go back to the States for these and other reasons. I have a friend, also an American citizen, who travels frequently back to California to visit his son. He is truly worried about getting sick or having an accident when he is there since he knows it might bankrupt him. As he jokes, he would be happy to have another heart attack here in France since it's free!
For those of you who have traveled the world and talked to people, you probably know that most foreigners are perplexed by America's attitude to health care and social services. The richest nation in the world thinks that health and social security (in the larger sense of not being forced into the street) are not rights at all. Europeans scratch their heads at this.
The only solution is education and information, but they are appalling in America. America remains the most ignorant and worst educated of the developed nations and is probably beaten by many developing nations. It is this ignorance and stupidity that gets Americans to vote for the likes of Trump or any of the other rapacious millionaires they send to office every year.
A first step would be for Americans to insist that Congress eliminate its incredibly generous and life-long healthcare plans for elected officials. They should have to do what the rest of Americans do. Of course, since about 95% of Congress are millionaires, it might not be effective. But it's a start.
Marco , , December 14, 2017 at 6:46 amFrance has its share of problems, but boy do they pale next to the problems in America or even Canada. Life here is overall quite pleasant and I have no desire to go back to N.A.
WobblyTelomeres , , December 14, 2017 at 7:47 amCanada has problems?
vidimi , , December 14, 2017 at 8:03 amWas in Yellowknife a couple of years ago. The First Nations people have a rough life. From what I've read, such extends across the country.
JEHR , , December 14, 2017 at 1:46 pmyeah, Canada has a neoliberal infestation that is somewhere between the US and the UK. France has got one too, but it is less advanced. I'll enjoy my great healthcare, public transportation, and generous paid time off while I can.
JEHR , , December 14, 2017 at 1:55 pmThe newest neoliberal effort in Canada was put forward by our Minister of Finance (a millionaire) who is touting a bill that will get rid of defined benefit pension plans given to public employees for so-called target benefit pension plans. The risk for target plans is taken by the recipient. Morneau's former firm promotes target benefit pension plans and the change could benefit Morneau himself as he did not put his assets from his firm in a blind trust. At the very least, he has a conflict of interest and should probably resign.
There is always an insidious group of wealthy people here who would like to re-make the world in their own image. I fear for the future.
Dita , , December 14, 2017 at 8:25 amYes, I agree. There is an effort to "simplify" the financial system of the EU to take into account the business cycle and the financial cycle .
jefemt , , December 14, 2017 at 10:02 amEuropeans may scratch their heads, but they should recall their own histories and the long struggle to the universal benefits now enjoyed. Americans are far too complacent. This mildness is viewed by predators as weakness and the attacks will continue.
Scramjett , , December 14, 2017 at 1:43 pmWe really should be able to turn this around, and have an obligation to ourselves and our 'nation state' , IF there were a group of folks running on a fairness, one-for-all, all-for-one platform. That sure isn't the present two-sides-of-the-same-coin Democraps and Republicrunts.
Not sure if many of the readers here watch non-cable national broadcast news, but Pete Peterson and his foundation are as everpresent an advertiser as the pharma industry. Peterson is the strongest, best organized advocate for gutting social services, social security, and sending every last penny out of the tax-mule consumer's pocket toward wall street. The guy needs an equivalent counterpoint enemy.
Check it out, and be vigilant in dispelling his message and mission. Thanks for running this article.
Running away: the almost-haves run to another nation state, the uber-wealthy want to leave the earth, or live in their private Idaho in the Rockies or on the Ocean. What's left for the least among us? Whatever we create?
https://www.pgpf.org/sierra7 , , December 14, 2017 at 8:45 pmI think pathologically optimistic is a better term than complacent. Every time someone dumps on them, their response is usually along the lines of "Don't worry, it'll get better," "Everything works itself out in the end," "maybe we'll win the lottery," my personal favorite "things will get better, just give it time" (honestly it's been 40 years of this neoliberal bullcrap, how much more time are we supposed to give it?), "this is just a phase" or "we can always bring it back later and better than ever." The last one is most troubling because after 20 years of witnessing things in the public sphere disappearing, I've yet to see a single thing return in any form at all.
I'm not sure where this annoying optimism came from but I sure wish it would go away.
Jeremy Grimm , , December 14, 2017 at 4:44 pmThe "optimism" comes from having a lack of historical memory. So many social protections that we have/had is seen as somehow coming out of the ether benevolently given without any social struggles. The lack of historical education on this subject in particular is appalling. Now, most would probably look for an "APP" on their "dumbphones" to solve the problem.
The social advantages that we still enjoy were fought in the streets, and on the "bricks" flowing with the participants blood. 8 hr. day; women's right to vote; ability and right for groups of laborers to organize; worker safety laws ..and so many others. There is no historical memory on how those rights were achieved. We are slowly slipping into an oligarchy greased by the idea that the physical possession of material things is all that matters. Sheeple, yes.
Expat , , December 14, 2017 at 6:10 pmWOW! You must have been outside the U.S. for a long time. Your comment seems to suggest we still have some kind of democracy here. We don't get to pick which rapacious millionaires we get to vote for and it doesn't matter any way since whichever one we pick from the sad offerings ends up with policies dictated from elsewhere.
Disturbed Voter , , December 14, 2017 at 6:29 amMmm, I think American voters get what they want in the end. They want their politicians because they believe the lies. 19% of Americans believe they are in the top 1% of wealth. A huge percentage of poor people believe they or their kids will (not can, but will) become wealthy. Most Americans can't find France on a map.
So, yes, you DO get to pick your rapacious millionaire. You send the same scumbags back to Washington every year because it's not him, it the other guys who are the problem. One third of Americans support Trump! Really, really support him. They think he is Jesus, MacArthur and Adam Smith all rolled up into one.
I may have been gone for about thirty years, but that has only sharpened my insights into America. It's very hard to see just how flawed America is from the inside but when you step outside and have some perspective, it's frightening.
Carolinian , , December 14, 2017 at 8:05 amThe Democrat party isn't a reform party. Thinking it is so, is because of the "No Other Choice" meme. Not saying that the Republican party works in my favor. They don't. Political reform goes deeper than reforming either main party. It means going to a European plurality system (with its own downside). That way growing Third parties will be viable, if they have popular, as opposed to millionaire, support. I don't see this happening, because of Citizens United, but if all you have is hope, then you have to go with that.
KYrocky , , December 14, 2017 at 12:05 pmHad George W. Bush had his way and turned Social Security over to Wall Street, the economic crash of September 2008 might have left millions of senior citizens homeless.
Substitute Bill Clinton for George Bush in that sentence and it works just as well. Neoliberalism is a bipartisan project.
And many of the potential and actual horrors described above arise from the price distortions of the US medical system with Democratic acquiescence in said system making things worse. The above article reads like a DNC press release.
And finally while Washington politicians of both parties have been threatening Social Security for years that doesn't mean its third rail status has been repealed. The populist tremors of the last election -- which have caused our elites to lose their collective mind -- could be a mere prelude to what will happen in the event of a full scale assault on the safety net.
rps , , December 14, 2017 at 5:01 pmSubstitute Obama's quest for a Grand Bargain as well.
Our government, beginning with Reagan, turned its back on promoting the general welfare. The wealthy soon learned that their best return on investment was the "purchase" of politicians willing to pass the legislation they put in their hands. Much of their investment included creating the right wing media apparatus.
The Class War is real. It has been going on for 40 years, with the Conservative army facing virtually no resistance. Conservatives welcome Russia's help. Conservatives welcome barriers to people voting. Conservatives welcome a populace that believes lies that benefit them. Conservatives welcome the social and financial decline of the entire middle class and poor as long as it profits the rich financially, and by extension enhances their power politically.
If retirees flee our country that will certainly please the Conservatives as that will be fewer critics (enemies). Also less need or demand for social programs.
tegnost , , December 14, 2017 at 8:59 am"Single acts of tyranny may be ascribed to the accidental opinion of the day, but a series of oppressions, begun at a distinguished period and pursued unalterably through every change of ministers, too plainly prove a deliberate, systematic plan of reducing [a people] to slavery" Thomas Jefferson. Rights of British America, 1774 ME 1:193, Papers 1:125
Marco , , December 14, 2017 at 6:55 amyes, my problem with the post as well, completely ignores democrat complicity the part where someone with a 26k salary will pay 16k in insurance? No they won't, the system would collapse in that case which will be fine with me.
OpenThePodBayDoorsHAL , December 14, 2017 at 3:57 pm"President Richard Nixon may have been a paranoid right-winger with authoritarian tendencies, but he expanded Medicare and supported universal health care."
"Gimme that old time Republican!"
One of the reasons I love NC is that most political economic analysis is often more harsh on the Democrats than the Repubs so I am a bit dismayed how this article is way too easy on Team D. How many little (and not so little) knives in the back from Clinton and Obama? Is a knife in the chest that much worse?
tagio , December 14, 2017 at 4:39 pmThis entire thread is simply heartbreaking, Americans have had their money, their freedom, their privacy, their health, and sometimes their very lives taken away from them by the State. But the heartbreaking part is that they feel they are powerless to do anything at all about it so are just trying to leave.
But "People should not fear the government; the government should fear the people"
It's more than a feeling, HAL. https://www.newyorker.com/news/john-cassidy/is-america-an-oligarchy Link to the academic paper embedded in article.
As your quote appears to imply, it's not a problem that can be solved by voting which, let's not forget, is nothing more than expressing an opinion. I am not sticking around just to find out if economically-crushed, opiod-, entertainment-, social media-addled Americans are actually capable of rolling out tumbrils for trips to the guillotines in the city squares. I strongly suspect not.
This is the country where, after the banks crushed the economy in 2008, caused tens of thousands to lose their jobs, and then got huge bailouts, the people couldn't even be bothered to take their money out of the big banks and put it elsewhere. Because, you know, convenience! Expressing an opinion, or mobilizing others to express an opinion, or educating or proselytizing others about what opinion to have, is about the limit of what they are willing, or know how to do.
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Dec 14, 2017 | www.unz.com
BigAl , December 13, 2017 at 1:17 pm GMT
The 1970's was in many ways the watershed decade for the radical transformation of the American economy and society, even more than the 1960's (I lived through both as a young man). I have yet to read the definitive social-critical analysis of these years to explain the changes that, looking back, seem to have taken the country of my childhood right out from under me, gone forever, increasingly difficult to remember through the fog of nostalgia that tends to distort as much as to reveal.Some of the things I do remember about this time include the PATCO (air traffic controllers) strike, very well. What is often not mentioned is that PATCO was attempting to do something that had not been permitted under federal civil service law, that is, bargain for wages as well as working conditions. Wage bargaining, PATCO correctly assessed, was the issue that made or broke unions and had enabled state and local public employees to finally begin to earn a decent, living wage beginning in the 1960's (think the iconic Mike Quill and the NYC TWU).
Reagan correctly (from his point of view) saw that to fail to break PATCO on this issue was to open the floodgates and turn the U.S. civil services into something akin to its European counterpart, with the possibility of general strikes and the rest. And of course to encourage private sector unions in their drive to organize and to change federal and state labor laws to strengthen the right to picket strike and organize.
What I also remember well however, is how little support PATCO was able to garnish from other unionized workers (and in many cases from union leadership as well). It seemed to me at the time that some of the strongest hostility came from rank and file of trade and utilities unions. Of course Reagan, following the Nixon playbook, shrewdly played the patriot-nationalist card, painting PATCO as a threat to national security as well as composed of a bunch of ingrates who should have been happy to have jobs. But by then the segmentation of the American workforce, a tactic that played right into the hands of the corporate-capitalist class was in full swing. The American worker lucky enough to possess a decent paying skilled or semi-skilled union job was being taught to see their situation as morally "deserved" and to see newer aspirants to similar positions, whether recently arrived immigrants or members of racial-ethnic groups previously suppressed by law, custom and prejudice as threats/dangers/enemies of their own recently won status.
I recall too that it was in the 1970's that the threat of "relocation", at that time mainly from the more heavily unionized north and northeastern states to the union-hostile south began to play a major role in the destruction of the power of labor. This was the beginning of the "globalization" factor and of the off-shoring of manufacturing jobs that has been commented on extensively and that took off a decade or so later. What is often not recalled is that unions and other pro-labor groups attempted to lobby Congress to amend the NLRA (National Labor Relations Act) and to appoint labor-friendly members to the NLRB to ensure that plant relocation would be a mandatory subject of bargaining and thus prevent unilateral (by capital ownership) relocation or the threat of relocation as a means to destroy the power of labor. They were, of course, not successful, and factories and business continued to move away from traditional centers of labor power and worker-protections, first to so-called "right-to-work" states and eventually to Asia.
And I remember the beginning of the financialization of the American corporation that I experienced on a "micro" scale, a kid lucky enough to have a summer job while in university at a large resource-extraction corporation's HQ in NYC. I recall white-collar conversations about compensation and about how salaries had steadily risen over the past decade (the company was said to be doing "really well"). And I remember how towards the end of my summer stints more and more conversation was about stock prices and Wall Street favor and about the new executive managerial style brought in by "those young MBA"s", and about (for the first time) worries of a "take-over" by "outsiders" (the company, although public, had had family leadership for many years).
And most of all I remember how gradually the material-economic components to the identity of the blue-collar and middle class worker were written out of existence. The great narrative, the myth that explains to us what it means to be "an American," no longer included any hint of class solidarity, of the kind of work we did, the pay we earned, the common living conditions in the small towns and urban neighborhoods and "cookie-cutter" suburbs of America.
Formerly the struggle of economic and material improvement was seen by most ordinary Americas as a struggle for certain necessary conditions to maintain, strengthen, and perpetuate a way-of-life in which the common core assumptions about the "good life" remained basically stable and unchallenged: family, stable job, residential security, public schools, public places -- neighborhood bars, coffee shops, civic clubs, parks and playgrounds -- where people could meet and interact as social equals.
The financialization of the economy, indeed of social life itself to a great extent, meant the drive for the maximization of private profit and the pursuit of interests and 'efficiencies" conceived entirely apart from any impact of the common good of society as a whole, and should have been seen as a grave threat to the very conditions of material and economic security, only recently achieved, that were the foundation of these other civic and social institutions.
Instead, through a grand and diabolical deceit cynically promulgated by a mostly Republican capitalist class of privilege, but also aided and abetted by a "new Left" that increasingly postured itself as the enemy of this older and more traditional way of life, the enemy was reconceived as the new "elites", the young, urban, hipster "Leftist" who despised the old ways and represented a singular assault on everything good about America.
Meanwhile, steadily, relentlessly, the material conditions and hard-won economic improvements that had gradually made small town, urban-neighborhood, and inner-suburban life decent and livable were being destroyed by a class that paid lip-service to Capra's Bedford Falls while at the same time endlessly working to transform it into Pottersville.
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Dec 14, 2017 | www.nakedcapitalism.com
December 14, 2017 by Yves Smith Yves here. Notice that Costa Rica is served up as an example in this article. Way back in 1997, American Express had designated Costa Rica as one of the countries it identified as sufficiently high income so as to be a target for a local currency card offered via a franchise agreement with a domestic institution (often but not always a bank). 20 years later, the Switzerland of Central America still has limited Internet connectivity, yet is precisely the sort of place that tech titans like Google would like to dominate.
The initiative described in this article reminds me of how the World Bank pushed hard for emerging economies to develop capital markets, for the greater good of America's investment bankers.
By Burcu Kilic, an expert on legal, economic and political issues. Originally published at openDemocracy
Today, the big tech race is for data extractivism from those yet to be 'connected' in the world – tech companies will use all their power to achieve a global regime in which small nations cannot regulate either data extraction or localisation.
n a few weeks' time, trade ministers from 164 countries will gather in Buenos Aires for the 11th World Trade Organization (WTO) Ministerial Conference (MC11). US President Donald Trump in November issued fresh accusations of unfair treatment towards the US by WTO members , making it virtually impossible for trade ministers to leave the table with any agreement in substantial areas.
To avoid a 'failure ministerial," some countries see the solution as pushing governments to open a mandate to start conversations that might lead to a negotiation on binding rules for e-commerce and a declaration of the gathering as the "digital ministerial". Argentina's MC11 chair, Susana Malcorra, is actively pushing for member states to embrace e-commerce at the WTO, claiming that it is necessary to " bridge the gap between the haves and have-nots ".
It is not very clear what kind of gaps Malcorra is trying to bridge. It surely isn't the "connectivity gap" or "digital divide" that is growing between developed and developing countries, seriously impeding digital learning and knowledge in developing countries. In fact, half of humanity is not even connected to the internet, let alone positioned to develop competitive markets or bargain at a multilateral level. Negotiating binding e-commerce rules at the WTO would only widen that gap.
Dangerously, the "South Vision" of digital trade in the global trade arena is being shaped by a recent alliance of governments and well-known tech-sector lobbyists, in a group called 'Friends of E-Commerce for Development' (FED), including Argentina, Chile, Colombia, Costa Rica, Kenya, Mexico, Nigeria, Pakistan, Sri Lanka, Uruguay, and, most recently, China. FED claims that e-commerce is a tool to drive growth, narrow the digital divide, and generate digital solutions for developing and least developed countries.
However, none of the countries in the group (apart from China) is leading or even remotely ready to be in a position to negotiate and push for binding rules on digital trade that will be favorable to them, as their economies are still far away from the technology revolution. For instance, it is perplexing that one of the most fervent defenders of FED's position is Costa Rica. The country's economy is based on the export of bananas, coffee, tropical fruits, and low-tech medical instruments, and almost half of its population is offline . Most of the countries in FED are far from being powerful enough to shift negotiations in favor of small players.
U.S.-based tech giants and Chinese Alibaba – so-called GAFA-A – dominate, by far, the future of the digital playing field, including issues such as identification and digital payments, connectivity, and the next generation of logistics solutions. In fact, there is a no-holds-barred ongoing race among these tech giants to consolidate their market share in developing economies, from the race to grow the advertising market to the race to increase online payments.
An e-commerce agenda that claims unprecedented development for the Global South is a Trojan horse move. Beginning negotiations on such topics at this stage – before governments are prepared to understand what is at stake – could lead to devastating results, accelerating liberalization and the consolidation of the power of tech giants to the detriment of local industries, consumers, and citizens. Aware of the increased disparities between North and South, and the data dominance of a tiny group of GAFA-A companies, a group of African nations issued a statement opposing the digital ambitions of the host for MC11. But the political landscape is more complex, with China, the EU, and Russia now supporting the idea of a "digital" mandate .
Repeating the Same Mistakes?
The relationships of most countries with tech companies are as imbalanced as their relationships with Big Pharma, and there are many parallels to note. Not so long ago, the countries of the Global South faced Big Pharma power in pharmaceutical markets in a similar way. Some developing countries had the same enthusiasm when they negotiated intellectual property rules for the protection of innovation and research and development costs. In reality, those countries were nothing more than users and consumers of that innovation, not the owners or creators. The lessons of negotiating trade issues that lie at the core of public interest issues – in that case, access to medicines – were costly. Human lives and fundamental rights of those who use online services should not be forgotten when addressing the increasingly worrying and unequal relationships with tech power.
The threat before our eyes is similarly complex and equally harmful to the way our societies will be shaped in the coming years. In the past, the Big Pharma race was for patent exclusivity, to eliminate local generic production and keep drug prices high. Today, the Big Tech race is for data extractivism from those who have yet to be connected in the world, and tech companies will use all the power they hold to achieve a global regime in which small nations cannot regulate either data extraction or data localization.
Big Tech is one of the most concentrated and resourceful industries of all time. The bargaining power of developing countries is minimal. Developing countries will basically be granting the right to cultivate small parcels of a land controlled by data lords -- under their rules, their mandate, and their will -- with practically no public oversight. The stakes are high. At the core of it is the race to conquer the markets of digital payments and the battle to become the platform where data flows, splitting the territory as old empires did in the past. As the Economist claimed on May 6, 2017: "Conflicts over control of oil have scarred the world for decades. No one yet worries that wars will be fought over data. But the data economy has the same potential for confrontation."
If countries from the Global South want to prepare for data wars, they should start thinking about how to reduce the control of Big Tech over -- how we communicate, shop, and learn the news -- , again, over our societies. The solution lies not in making rules for data liberalization, but in devising ways to use the law to reduce Big Tech's power and protect consumers and citizens. Finding the balance would take some time and we are going to take that time to find the right balance, we are not ready to lock the future yet.
Jef , December 14, 2017 at 11:32 am
Thuto , December 14, 2017 at 2:14 pmI thought thats what the WTO is for?
Mark P. , December 14, 2017 at 3:30 pmOne suspects big money will be thrown at this by the leading tech giants. To paraphrase from a comment I made recently regarding a similar topic : "with markets in the developed world pretty much sewn up by the tripartite tech overlords (google, fb and amazon), the next 3 billion users for their products/services are going to come from developing world". With this dynamic in mind, and the "constant growth" mantra humming incessantly in the background, it's easy to see how high stakes a game this is for the tech giants and how no resources will be spared to stymie any efforts at establishing a regulatory oversight framework that will protect the digital rights of citizens in the global south.
Multilateral fora like the WTO are de facto enablers for the marauding frontal attacks of transnational corporations, and it's disheartening to see that some developing nations have already nailed the digital futures of their citizens to the mast of the tech giants by joining this alliance. What's more, this signing away of their liberty will be sold to the citizenry as the best way to usher them into the brightest of all digital futures.
Thuto , December 14, 2017 at 4:58 pmOne suspects big money will be thrown at this by the leading tech giants.
Vast sums of money are already being thrown at bringing Africa online, for better or worse. Thus, the R&D aimed at providing wireless Internet via giant drones/balloons/satellites by Google, Facebook, etc.
You're African. Possibly South African by your user name, which may explain why you're a little behind the curve, because the action is already happening, but more to the north -- and particularly in East Africa.
The big corporations -- and the tech giants are competing with the banking/credit card giants -- have noted how mobile technology leapt over the dearth of last century's telephony tech, land lines, and in turn enabled the highest adoption rates of cellphone banking in the world. (Particularly in East Africa, as I say.) The payoffs for big corporations are massive -- de facto cashless societies where the corporations control the payment systems –and the politicians are mostly cheap.
In Nigeria, the government has launched a Mastercard-branded national ID card that's also a payment card, in one swoop handing Mastercard more than 170 million potential customers, and their personal and biometric data.
In Kenya, the sums transferred by mobile money operator M-Pesa are more than 25 percent of that country's GDP.
You can see that bringing Africa online is technically a big, decade-long project. But also that the potential payoffs are vast. Though I also suspect China may come out ahead -- they're investing far more in Africa and in some areas their technology -- drones, for instance -- is already superior to what the Europeans and the American companies have.
Mark P. , December 14, 2017 at 6:59 pmThank you Mark P.
Hoisted from a comment I made here recently: "Here in South Africa and through its Free Basics programme, facebook is jumping into bed with unsuspecting ISPs (I say unsuspecting because fb will soon be muscling in on their territory and becoming an ISP itself by provisioning bandwidth directly from its floating satellites) and circumventing net neutrality "
I'm also keenly aware of the developments in Kenya re: safaricom and Mpesa and how that has led to traditional banking via bank accounts being largely leapfrogged for those moving from being unbanked to active economic citizens requiring money transfer facilities. Given the huge succes of Mpesa, I wouldn't be surprised if a multinational tech behemoth (chinese or american) were to make a play for acquiring safaricom and positioning it as a triple-play ISP, money transfer/banking services and digital content provider (harvesting data about users habits on an unprecedented scale across multiple areas of their lives), first in Kenya then expanded throughout east, central and west africa. I must add that your statement about Nigeria puts Mark Zuckerberg's visit there a few months back into context somewhat, perhaps a reconnaissance mission of sorts.
Out of idle curiosity, how could you accurately deduce my country of origin from my name?
Mark P. , December 14, 2017 at 3:34 pmOut of idle curiosity, how could you accurately deduce my country of origin from my name?
Though I've lived in California for decades, my mother was South African and I maintain a UK passport, having grown up in London.
Mattski , December 14, 2017 at 3:41 pmAs you also write: "with markets in the developed world pretty much sewn up by the tripartite tech overlords (google, fb and amazon), the next 3 billion users for their products/services are going to come from developing world."
Absolutely true. This cannot be stressed enough. The tech giants know this and the race is on.
Been happening with food for 50 years.
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Dec 11, 2017 | stumblingandmumbling.typepad.com
Lucius has been poorly recently, which has required some trips to the vet and therefore a bill of a size that only David Davis could negotiate*. This has made me wonder: is there more to be said for the labour theory of value than we like to think?
For a long time, I've not really cared about this theory one way or the other. This is partly because I've not bothered much with questions of value; partly because, as John Roemer has shown, we don't need (pdf) a labour theory of value to suggest workers are exploited; and partly because the main Marxian charges against capitalism – for example that it entails relationships of domination – hold true (or not!) independently of the theory.
As I approach retirement, however, I've begun to change my mind. I think of major expenses in terms of labour-time because they mean I have to work longer. A trip to the vet is an extra fortnight of work; a good guitar an extra month, a car an extra year, and so on.
When I consider my spending, I ask: what must I give up in order to get that? And the answer is my time and freedom. My labour-time is the measure of value.
This is a reasonable basis for the claim that workers are exploited. To buy a bundle of goods and services, we must work a number of hours a week. But taking all workers together, the hours we work are greater than the hours needed to produce those bundles because we must also work to provide a profit for the capitalist. As Marx put it:
We have seen that the labourer, during one portion of the labour-process, produces only the value of his labour-power, that is, the value of his means of subsistence During the second period of the labour-process, that in which his labour is no longer necessary labour, the workman, it is true, labours, expends labour-power; but his labour, being no longer necessary labour, he creates no value for himself. He creates surplus-value which, for the capitalist, has all the charms of a creation out of nothing. This portion of the working-day, I name surplus labour-time.
For Marx, value was socially-necessary labour time: David Harvey is good on this. From this perspective, exploitation and alienation are linked. Workers are exploited because they must work longer than necessary to get their consumption bundle. And they are alienated because this work is unsatisfying and a source of unfreedom. Now, I'll concede that many people hate the labour theory of value. One reason for this is that many discussions of it quickly become obscurantist – as if "value" is some mystical entity embodied in commodities.
This, though, certainly was not Marx's intention. Quite the opposite. He intended his theory to be a demystification. He wanted to show how what looked like relations between things – the exchange of money for goods or labour-time – were in fact relations between people. And unequal ones at that.
What's more, the charge of obscurantism against Marx is an especially weak one when it comes from orthodox economics. Much of this invokes unobservable concepts such as the natural rate of unemployment, marginal productivity, utility, the marginal product of capital and natural rate of interest – ideas which, in the last two cases, might not even be theoretically coherent.
In fact, the LTV is reasonably successful by the standards of conventional economics: we have empirical evidence to suggest that it does (pdf) a decent (pdf) job of explaining (pdf) relative prices – not that this was how Marx intended it to be used.
You can of course, think of counter-examples to the theory. But so what? in the social sciences, no substantial theory is 100% true.
I suspect that some of the animosity to Marx's use of LTV arises because of a resistance to the inference that Marx drew from it – that workers are exploited. This issue, however, is independent of the validity of not of the LTV. For example, Roemer thinks workers are exploited without believing in the LTV, and Smith believed the LTV without arguing that workers were exploited.
By the (low) standards of economic theories, perhaps the LTV isn't so bad.
* He seems to be recovering now. The vet is also expected to make a full recovery eventually.
December 11, 2017 Permalink
CommentsLuis Enrique , December 11, 2017 at 02:09 PM
David Friedman , December 11, 2017 at 06:14 PMBut the LTV says more than the output of the economy is divided between the workers and the (suppliers and) owners of capital goods, doesn't it? I mean, mainstream econ says that too. And unless ownership of capital inputs to production is distributed equally across society, then some people consume things that other's labour has produced, which means workers must produce more than they consume. But again, that's basic mainstream stuff, not LVT. You end by saying you can believe in exploitation but not LVT, and vice versa, but the main body of this blog seems to be connecting the two. I am confused.
Of course if you have the ability to vary your labour supply, and labour is how you earn your money, then you ask yourself how much you need to work to purchase whatever. But again that's mainstream not LVT.
ConfusedNeoLiberal , December 11, 2017 at 08:51 PMYour version of the labor theory of value is one of Adam Smith's versions. I don't think it is Marx's, but I know Smith better than Marx.
And definitely not Ricardo's.
Blissex , December 12, 2017 at 12:23 AMWhat about value, in terms of risk among others, that the employers put in starting a new business?
Blissex , December 12, 2017 at 12:29 AM"Smith believed the LTV without arguing that workers were exploited."
The Marxian approach was interested in, as other commenters have said, in the specific capitalist case, where "capitalism" for him means strictly "labour for hire" by workers alienated from the means of production by their ownership by capitalists.
But the labour theory of value, as understood by what Marx called "classicals", applies also to all labour, and he used it in that sense.
My understanding of the classicals and the LTV is reduced to a minimum this:
- By "value" we mean "surplus".
- The "physiocrats" correctly identified "land" (mines, farms, the sea) as a producer of physical surplus: once corn seed produces a whole corn cob. The quantity of physical output appears to be greater than the quantity of physical input, a phenomenon that used to be called "fertility".
- However the "classicals" recognized that there is surplus also when the quantity of output is physically smaller than the quantity of input: a larger quantity of iron ore and coal gets turned into a much smaller quantity of metal called "spoon", and that generates surplus too.
- Since the surplus is not quantitative they called it a surplus of "ofelimity", of usefulness. A spoon is more useful than the physically larger quantity of iron ore and coal used to make it, in most contexts.
- So the question is what creates a surplus of ofelimity even if quantity shrinks drastically.
- The classicals observed that while quantitative surplus may be spontaneous, as in apple trees just produce apples by themselves, all cases involving a surplus of ofelimity involved the application of labour.
- The LTV is simply that observation: that the whole chain of surpluses of ofelimity always goes back to the application of labour, from the first people who chipped obsidian blocks into blades onwards.
- As such the LTV is not really a "theory": it is a generic principle. It would be more properly a theory if there was some kind of "law" that related the quantity of labour embedded in a commodity to the surplus of usefulness it seems to have. But any such law cannot be universal, because usefulness is strictly context dependent. Sraffa wrote some preliminary booklet about that :-).
Further understanding, which evolved after Marx, is that the LTV is just special case of the principle that what produces a surplus of usefulness is not labour per se, but the energy used in the transformation of a larger quantity of something into a smaller quantity of something else, and muscle power is just one way, even if it was the main one for a very long time, to obtain energy to transform a large quantity of less useful commodities into a smaller quantity of more useful commodities.
And this follows into the impression that I have derived from various authors that our high standards of living depend not on the high "productivity" of labour, but on the high "productivity" of fossil fuels, which are the product of the fertility of land.
Blissex , December 12, 2017 at 01:14 AM"value, in terms of risk among others, that the employers put in starting a new business?"
If the business produces a surplus, that is value added, than the surplus is the product of the energy/labour expended by all participants
How it is accounted for is one issue, especially over multiple time periods, and how it is shared out is a social relationship.
As to risk, everybody in the business runs the risk of not getting paid at the end of the month, and the opportunity cost of not doing something else, whichever labour they put in.
How risk and opportunity cost are accounted for, especially over multiple time periods, is another issue, and how they are shared is another social relationship.
Luis Enrique , December 12, 2017 at 08:40 AM"the surplus is the product of the energy/labour expended by all participants"
I'll perhaps further diminish the reputation of my "contributions" this way: perhaps all social relationships of production (at least among males) map closely onto (cursorial) group hunts.
https://78.media.tumblr.com/d4db6631d383cbfc9bd135c799a06e7f/tumblr_n3u8r0eJu01sohvpko1_500.jpg
:-)
Blissex , December 12, 2017 at 01:50 PMThat's a very long winded way of saying that making stuff requires labour.
Rich Clayton , December 12, 2017 at 03:35 PM"a very long winded way of saying that making stuff requires labour"
Well, that's obvious, but what the classicals thought of as the LTV was not entirely obvious: that "surplus" (rather than "stuff") comes from the fertility of land and the transformation achieved with labour, and that nothing else is needed to achieve "surplus". Because for example capital goods are themselves surplus from fertility or labour, again back to the first blades made from chipping lumps of obsidian.
That's quite a bit more insightful, never mind also controversial, than "making stuff requires labour".
Lukas , December 12, 2017 at 03:41 PMLove this post. But, being a fellow marxist, I can't help but to disagree with this bit: "And they are alienated because this work is unsatisfying and a source of unfreedom." This is a colloquial use of alienation, and its not wrong.
But Marx is getting at something else: the complex process of differentiation in the economy (aka the division of labor) obscures the relationship between the creation of the surplus (work time above that necessary to reproduce consumption bundle) and its utilization by capitalists via investment. Investment is not possible without exploitation of workers, but that relationship is occluded by the mechanics of employment, markets, and property.
That's the sense in which workers are alienated under capitalism. Socialism could still have boring work, but, in so far as the investment function is brought under collective democratic control, workers would not be alienated in the special sense Marx is using.
Blissex , December 12, 2017 at 05:36 PM@Luis Enrique
"Where else could stuff come from?" Well, assuming by "stuff" we mean objects of value, nowhere. But the reasons for which we value them are not dependent upon their natural origins or the labor required for their production. I don't value a computer because it's made of plastic and silicon and so forth, nor because of the labor required to produce it. It's useful because of what it does, not what it is; it's sort of Kant's definition of art versus the general conception of tools.
As for the relationship between production functions and the LTV, that seems (at least prima facie) pretty straightforward. If there is a high olefimity ascribed to the surplus provided by the product created by X, Y, then those production functions will, themselves, be assigned greater value, i.e., be worthy of more labor-time to attain. E.g., even if I'm not very good at fishing, if I really like the flavor of fish over other protein sources, I'll spend more time increasing my labor efficiency (be a better fisherman).
Blissex , December 12, 2017 at 05:41 PM"Everything ultimately derives from nature and the labour of humans. Where else could stuff come from? That's all there is."
Then in theory the cost (not the price) of everything can be measured in terms of physical quantities of primary inputs and of hours of work.
"What's controversial about it?"
What is controversial is that written like that you sound like a Marxist: the alternative approach is to say that *property* creates surplus.
In the standard neoclassical approach "property" is the often forgotten "initial endowments" of the single representative agent.Anyhow the "narrative" is: as Mr. Moneybags owns the iron mine and the coal mine and the smelter and the ingot roller and spoon press, then he is entitled to the surplus because without his property it is impossible to make spoons. Labour on its own is worthless, wastes away, while property is "valuable" capital.
"And how one gets from a production function (stuff is made from X, Y and Z) to LTV"
Production functions are just not very elaborate scams to pretend that property is the factor of production, rather then the fertility of land and the energy of labour, and land does not exist (after JB Clark "disappeared" it) and labour is just an accessory. Part of the scam is that "X, Y and Z" are denominated in money, not physical quantities.
As I wrote in another answer accounting for the output of land fertility and labour energy and how it is shared are the difficult bits. Welcome to the institutional approach to the political economy. :-)
Luis Enrique , December 12, 2017 at 05:43 PM"the reasons for which we value them are not dependent upon their natural origins or the labor required for their production"
And here be dragons. Your old bearded acquaintance Karl has something to say about this :-).
"It's useful because of what it does, not what it is"
So cleaning floors which is very useful should have a high value, while Leonardo paintings, that are merely scarce, should have a low value :-).
I though that most people reckoned that "value" depends on scarcity: so there is a scarcity of even not very good promoters of torysm, so G Osborne is entitled to £600,000 a year to edit the "Evening Standard", but there is no scarcity of excellent cleaners, so cleaners gets minimum wage if they are lucky.
:-)
mulp , December 12, 2017 at 05:46 PMcounting hours of worked is not a measure of cost, it is a tally of hours worked. In mainstream econ, production functions describe a physical production process (to make 1 unit of Y, you combine inputs like so) and are not not denominated in money. e.g. You multiply L by w to get cost.
Blissex , December 12, 2017 at 06:01 PMEconomies are zero sum. GDP must be paid for, otherwise it won't be produced. The only source of money comes from labor costs, the money paid to workers to work producing GDP. As conservatives note, all taxes fall on workers by directly taking their pay, or by hiking the prices of what workers buy.
Taxes pay workers, e.g. teachers, and doctors with Medicare and Medicaid, weapons makers and warriors, or pay people to pay workers, Social Security benefits and SNAP.
Capital has value because it is built by paying workers. It gets a cut to repay the payers of workers.
Monopoly rent seeking is unsustainable. If a monoplists takes more from workers than they pay workers, he eventually takes so much money workers can no longer pay for GDP and it falls to zero as workers produce what they consume without buying from the monopolist capital.
Tanstaafl
As Keynes put it:
"I feel sure that the demand for capital is strictly limited in the sense that it would not be difficult to increase the stock of capital up to a point where its marginal efficiency had fallen to a very low figure. This would not mean that the use of capital instruments would cost almost nothing, but only that the return from them would have to cover little more than their exhaustion by wastage and obsolescence together with some margin to cover risk and the exercise of skill and judgment. In short, the aggregate return from durable goods in the course of their life would, as in the case of short-lived goods, just cover their labour costs of production plus an allowance for risk and the costs of skill and supervision.
"Now, though this state of affairs would be quite compatible with some measure of individualism, yet it would mean the euthanasia of the rentier, and, consequently, the euthanasia of the cumulative oppressive power of the capitalist to exploit the scarcity-value of capital. Interest today rewards no genuine sacrifice, any more than does the rent of land. The owner of capital can obtain interest because capital is scarce, just as the owner of land can obtain rent because land is scarce. But whilst there may be intrinsic reasons for the scarcity of land, there are no intrinsic reasons for the scarcity of capital. An intrinsic reason for such scarcity, in the sense of a genuine sacrifice which could only be called forth by the offer of a reward in the shape of interest, would not exist, in the long run, except in the event of the individual propensity to consume proving to be of such a character that net saving in conditions of full employment comes to an end before capital has become sufficiently abundant. But even so, it will still be possible for communal saving through the agency of the State to be maintained at a level which will allow the growth of capital up to the point where it ceases to be scarce."
Economies are zero sum. The value of goods and services must equal the labor costs in the long run. TanstaaaflLuis Enrique , December 12, 2017 at 06:26 PM"Socialism could still have boring work, but, in so far as the investment function is brought under collective democratic control, workers would not be alienated in the special sense Marx is using."
My impression is that your bearded friend Karl does not use "alienation" in that sense at all, in an economic sense, but in a humanist sense: that by being separated from the means of production proletarians are alienated from the meaning of their work, from work as a human activity, as distinct from an economic activity.
Collective ownership does not change at all that kind of alienation: being a cog in the capitalist machinery is no less alienating than being a cog in the collectivist machinery.
I think that our blogger when he talks about distributing control of the production process to workers is far closer to the marxian ideal than a collectivist approach.
Practically every "Dilbert" strip is about "alienation". This is my favourite:
http://dilbert.com/strip/2002-03-09
But these are also good:
http://dilbert.com/strip/1991-12-26
http://dilbert.com/strip/1993-01-05
http://dilbert.com/strip/1993-04-26
http://dilbert.com/strip/1994-11-07
http://dilbert.com/strip/1996-03-03
http://dilbert.com/strip/1996-07-24
http://dilbert.com/strip/1996-10-10
http://dilbert.com/strip/2002-08-10Blissex , December 12, 2017 at 06:53 PMThat is not what zero sum means
Luis Enrique , December 12, 2017 at 08:55 PM"counting hours of worked is not a measure of cost"
For a definition of "cost" that is made-up disregarding P Sraffa's work and in general the classics.
"multiply L by w to get cost."
As J Robinson and others pointed out that "w" depends on the distribution of income, on the interest rate, etc., so is an institutional matter.
As I was saying, accounting for the surplus and how to share it is not so easily handwavable.Luis Enrique , December 12, 2017 at 08:57 PMsorry, I meant for a money definition of cost that is not just counting inputs, but which is inputs multiplied by their prices.
nobody is hand waving. I think the mainstream view is that 'value' and 'surplus' are not meaningful terms, only prices and profits and subjective value. A production function says nothing about prices, you have to explain them with other stuff, and as you say, institutions and all manner of things could come in the play there.
You can say that that workers produce more in money terms than than they are paid, which is trivial (the wages paid by an employer are less than its gross profits so long as there are non-zero returns to capital, interest on a loan or dividends or whatever) and to my mind it's silly to define that as exploitation because it would apply in situations where the 'capitalist' is getting a small return and workers rewarded handsomely by any standard. Better imo to define exploitation as when capitalists are earning excess returns (and I'd fudge that by differentiating between workers' wages and salaries of top execs). Otherwise you lay yourself open to "the only thing worse than being exploited by capitlists is not beingn exploited by capitalists" which is J Robinson too I believe.
B.L. Zebub , December 13, 2017 at 04:02 AMand i think you only have to look at the income distribution to infer workers are being expoloited
Lukas , December 13, 2017 at 04:28 AM@Blissex,
This is a genuine question: what you exposed above is related to or influenced by Steve Keen's ideas, yes? If so, I'd be interested in reading about that in more detail.
Luis Enrique , December 13, 2017 at 08:34 AM@Blissex
I've always thought that defining value by scarcity was an absurd misdirection, in part because there is no reason that the two should correlate at all. At any point in socioeconomic development beyond subsistence, value is to some extent socially defined, not economically defined. Status ends up being the most "useful" resource, as we see among all those who've never had to worry about their material conditions.
Placing a high value on the frivolous and "useless" has always been the hallmark of those most able to decide the value of anything, because they have no use for economic use (so to speak), but rather social signaling. Broad social respect is an extremely expensive thing to buy with money alone.
@Luis Enrique
Ah, but name for me a production process that doesn't take place over time. There's an infinite amount of time for all of us, but for each of us only so much, and those who fail to value it die full of regret. Surely someone somewhere must have something to say about this.
Blissex , December 13, 2017 at 11:43 AMI don't know why I wrote the above. Surplus is also a mainstream term. See wages set by bargaing over a surplus. Presume it's based on prices of outputs compared to inputs or if in model with real quantities not prices, then in subjective values.
Lukas production functions are defined over a period of time.
Blissex , December 13, 2017 at 11:51 AMAhem, I am trying to explain my understanding of Marx, who wrote both as economist and a philosopher, and a politial theorist.
Alienation, exploitation and inequality are technically distinct concepts, even if in the marxist (view (and that of every business school, that are faithful to marxist political economy) capitalist control of the means of production leads to alienation which leads to exploitation which leads to inequality. In the marxian political economy inequality can exist even with exploitation, for example, and that makes it less objectionable.
"Surplus is also a mainstream term. See wages set by bargaing over a surplus."
Some Economists have not forgotten at least some terminology of political economy and some Departments of Business still have surviving "history of economic thought" courses that some postgrads may still accidentally occasionally wander into and pick up some terms from...
"are not meaningful terms, only prices and profits and subjective value."
But the mainstream focus on prices and profits etc. is the purest handwaving, because it begs the question...
"A production function says nothing about prices"
Ha! This is one of the best examples where mainstream theory handwaves furiously: mainstream production functions switch effortlessly from "capital" as phusical quantities to aggregating "capital" by reckoning it in "numeraire". That is all about prices, and even about future expected prices and future expected rates of discount. Therefore rational expectations, a grand feat of handwaving.
Blissex , December 13, 2017 at 12:03 PM"defining value by scarcity was an absurd misdirection, in part because there is no reason that the two should correlate at all."
Ahhhhhhh but this is a very political point and not quite agreeable because:
One of the conceits of "microfoundations" is to show that there are "laws" of Economics that are precise, so everybody get exactly their just compensation, so for example demand-supply schedules are always presented, cleverly, as lines and static.
The view of political economists is that instead "everything" lies within boundaries of feasibility, which are dynamic, so for example demand-supply schedules are ribbons that change over time and circumstances, and transactions happens not at uniquely determined points of intersections, but in regions of feasibility, the precise point dependent on institutional arrangements.
So the LTV determines one boundary for "price" and desirability another boundary.
Luis Enrique , December 13, 2017 at 04:33 PM"exposed above is related to or influenced by Steve Keen's ideas"
Related and independently derived, but also a bit influenced. I had always suspected that the "classicals" used "labour" as a synonym for "muscle power", but various later readings persuaded me that was indeed the case. Later post will have some hopefully interesting detail. Then I looked into the literature and found that obviously this had been figured out before (centuries ago in some cases, like B de Mandeville).
Anyhow for similar approaches some references:
Blissex if you can come up with a better way of trying to describe total quantities of highly heterogeneous things (i.e. capital) you have a Nobel awaiting. Everybody know that attempts to put a number on the real quantity of capital is always going to be a rough and ready endeavour.
I don't see how working with prices and profits is 'handwaving'. What question does it beg? Much of economics is about trying to explain these things. I would not say economics focuses on prices and profits because many economics models work with real quantities that are high abstract and in theory are made commensurate using subjective value (utility) as the unit of account.
And I don't think this lot
https://www.theguardian.com/business/2010/oct/11/nobel-prize-for-economics-three-winners
picked up the term surplus by accidentally wandering in to the wrong seminar
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Dec 13, 2017 | www.nakedcapitalism.com
Livius Drusus , December 13, 2017 at 2:44 pm
I thought this was an interesting article. Apologies if this has been posted on NC already.
A stunning 33% of job seekers ages 55 and older are long-term unemployed, according to the AARP Public Policy Institute. The average length of unemployment for the roughly 1.2 million people 55+ who are out of work: seven to nine months. "It's emotionally devastating for them," said Carl Van Horn, director of Rutgers University's John J. Heldrich Center for Workforce Development, at a Town Hall his center and the nonprofit WorkingNation held earlier this year in New Brunswick, N.J.
... ... ...
The fight faced by the long-term unemployed
And, recent studies have shown, the longer you're out of work - especially if you're older and out of work - the harder it becomes to get a job offer.
The job-finding rate declines by roughly 50% within eight months of unemployment, according to a 2016 paper by economists Gregor Jarosch of Stanford University and Laura Pilossoph of the Federal Reserve Bank of New York. "Unemployment duration has a strongly negative effect on the likelihood of subsequent employment," wrote researchers from the University of Maryland and the U.S. Census Bureau in another 2016 paper.
"Once upon a time, you could take that first job and it would lead to the next job and the job after that," said Town Hall panelist John Colborn, chief operating officer at the nonprofit JEVS Human Services, of Philadelphia. "The notion of a career ladder offered some hope of getting back into the labor market. The rungs of the ladder are getting harder and harder to find and some of them are broken."
In inner cities, said Kimberly McClain, CEO of The Newark Alliance, "there's an extra layer beyond being older and out of work. There are issues of race and poverty and being defined by your ZIP Code. There's an incredible sense of urgency."
... ... ...
Filling a work gap
If you are over 50, unemployed and have a work gap right now, the Town Hall speakers said, fill it by volunteering, getting an internship, doing project work, job-shadowing someone in a field you want to be in or taking a class to re-skill. These kind of things "make a candidate a lot more attractive," said Colborn. Be sure to note them in your cover letter and résumé.
Town Hall panelist Amanda Mullan, senior vice president and chief human resources officer of the New Jersey Resources Corp. (a utility company based in Wall, N.J.), said that when her company is interviewing someone who has been out of work lately, "we will ask: 'What have you done during that time frame?' If we get 'Nuthin,' that shows something about the individual, from a motivational perspective."
... ... ...
The relief of working again
Finally finding work when you're over 50 and unemployed for a stretch can be a relief for far more than financial reasons.
"Once I landed my job, the thing I most looked forward to was the weekend," said Konopka. "Not to relax, but because I didn't have to think about finding a job anymore. That's 24/7 in your head. You're always thinking on a Saturday: 'If I'm not doing something to find a job, will there be a posting out there?'"
Full article: https://www.marketwatch.com/story/jobs-are-everywhere-just-not-for-people-over-55-2017-12-08
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Dec 07, 2017 | angrybearblog.com
John Harwood of that well known lefty outlet, . ummm, CNBC . writes this morning that "Trump has Forgotten his 'Forgotten People':"
He forgot them on health care. Jettisoning his campaign pledge to "take care of everybody" regardless of income, he proposed cutting federal health subsidies for the hard-pressed blue-collar voters who put him into office.
He forgot them on financial regulation. Abandoning talk of cracking down on Wall Street executives who "rigged" the economy to hobble the working class, he seeks to undercut the Consumer Financial Protection Bureau.
And he forgot them on taxes. Discarding his vow to reshape taxation for average families at the expense of rich people like himself, he's working with Republican leaders to hand the biggest benefits to corporations and the wealthy.
To the contrary, his budget includes big cuts to Social Security disability program. Meanwhile his much-vaunted infrastructure plan has 'failed to materialize."
But, Harwood points out:
The president hasn't forgotten everything. In lieu of big financial benefits, Trump has steadily given "the forgotten people" at least one visceral commodity [: ] affirmation of shared racial grievances.
I think this is a good summary of Trump's domestic policies as revealed by the past year. On social issues, he has governed exactly as he promised during his campaign, issuing a de facto ban on Muslim immigration, unleashing ICE against Latinos, and fulminating against protesting black NFL players.
But on economic issues he has behaved exactly like a standard issue country club republican. The requirement that the GOP enact a "replacement" for Obamacare? Gone. Preventing the offshoring of manufacturing jobs? Gone. Enacting at least something like a tariff at the borders? Gone. Actually *doing* something about the opioid crisis, which is strongly correlated with areas of economic distress (as opposed to lip service)? Nothing.Joel , December 7, 2017 9:03 am
little john , December 7, 2017 4:01 pmForgotten? LOL! No, Trump didn't forget. He was lying.
run75441 , December 8, 2017 9:35 amI hate doing this because I am not a fan of the President but a "de facto ban on Muslim immigration"? I cannot remember but I don't think Indonesia, Pakistan, India or Turkey was on the list. Those a pretty big Muslim nations. Maybe you should look it up. "Unleashing ICE against Latinos"? I have three Latino neighbors on my street, my next door neighbor doesn't even speak English, but I haven't seen any ICE agents around. Maybe I should just wait they're on their way? "Fulminating against NFL players"? You're right about that.
As an aside I have recently had to laugh when I see your pseudonym. Here in Dallas we've taken down the statue of Robert E. Lee from Robert E. Lee Park. (Now named Oak Lawn Park.) At the opening of the park in 1936 there is a great picture of the statue with FDR, Robert E Lee IV and D.W. Griffith. I am wondering if NewDealDemocrat is a microaggression?
spencer , December 8, 2017 1:45 pmNDD:
Before you bemoan the loss of the CSR (covered by Section 1402 of the ACA) for those making between 138 and 250% FPL, you do understand premium subsidies will pick up the difference. If the states apply the premium increase properly to the Silver plans, the impact is felt across all other levels between 138% and 400% FPL. Indeed, in many cases Bronze plans are free, Gold plans become less costly, and premiums decrease. A person can go to a lower deductible/copay for the same or less cost than the original silver plan.
I think as some will tell you here, this does nothing for those greater than 400% FPL who now find themselves being hit with the full impact of a premium increase due to Trump's action. While a much smaller percentage of the insured, it still numbers around 9 million.
Isn't that 8 million being hit out of the under 20 million that had signed up for Obamacare.
So on a percent basis doesn't you quote imply about half of the relevant population is being hit?
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Dec 13, 2017 | www.nakedcapitalism.com
diptherio , December 13, 2017 at 2:40 pm
Apologies if I posted this already:
Credit Union Sues Donald Trump to Save the Consumer Financial Protection Bureau
https://madmimi.com/p/a2194bDecember 5, 2017 – This afternoon, the law firm of Emery Celli Brinckerhoff & Abady LLP (ECBA) filed a lawsuit on behalf of the Lower East Side People's Federal Credit Union against Donald Trump and Michael Mulvaney. The lawsuit was filed in federal court in Manhattan.
The lawsuit challenges President Trump's recent, illegal takeover of the federal Consumer Financial Protection Bureau (CFPB), in which he installed his at-will White House employee, Michael Mulvaney, to be Acting Director of the CFPB. The CFPB protects millions of Americans from unfair, deceptive, and abusive practices in the financial marketplace. Mr. Mulvaney has called the CFPB a "sad, sick joke."
"We support the CFPB as a protector of our low income members' financial rights, and fear that the appointment of an Acting Director beholden to the White House could result in upheaval and ultimate dissolution of this critical agency," said Linda Levy, CEO of the Credit Union. "Having experienced the devastation that the 2008 mortgage crisis wreaked on our low income members, we need the CFPB to protect communities targeted by financial predators."
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Dec 13, 2017 | www.nakedcapitalism.com
Livius Drusus , December 13, 2017 at 2:44 pm
I thought this was an interesting article. Apologies if this has been posted on NC already.
A stunning 33% of job seekers ages 55 and older are long-term unemployed, according to the AARP Public Policy Institute. The average length of unemployment for the roughly 1.2 million people 55+ who are out of work: seven to nine months. "It's emotionally devastating for them," said Carl Van Horn, director of Rutgers University's John J. Heldrich Center for Workforce Development, at a Town Hall his center and the nonprofit WorkingNation held earlier this year in New Brunswick, N.J.
... ... ...
The fight faced by the long-term unemployed
And, recent studies have shown, the longer you're out of work - especially if you're older and out of work - the harder it becomes to get a job offer.
The job-finding rate declines by roughly 50% within eight months of unemployment, according to a 2016 paper by economists Gregor Jarosch of Stanford University and Laura Pilossoph of the Federal Reserve Bank of New York. "Unemployment duration has a strongly negative effect on the likelihood of subsequent employment," wrote researchers from the University of Maryland and the U.S. Census Bureau in another 2016 paper.
"Once upon a time, you could take that first job and it would lead to the next job and the job after that," said Town Hall panelist John Colborn, chief operating officer at the nonprofit JEVS Human Services, of Philadelphia. "The notion of a career ladder offered some hope of getting back into the labor market. The rungs of the ladder are getting harder and harder to find and some of them are broken."
In inner cities, said Kimberly McClain, CEO of The Newark Alliance, "there's an extra layer beyond being older and out of work. There are issues of race and poverty and being defined by your ZIP Code. There's an incredible sense of urgency."
... ... ...
Filling a work gap
If you are over 50, unemployed and have a work gap right now, the Town Hall speakers said, fill it by volunteering, getting an internship, doing project work, job-shadowing someone in a field you want to be in or taking a class to re-skill. These kind of things "make a candidate a lot more attractive," said Colborn. Be sure to note them in your cover letter and résumé.
Town Hall panelist Amanda Mullan, senior vice president and chief human resources officer of the New Jersey Resources Corp. (a utility company based in Wall, N.J.), said that when her company is interviewing someone who has been out of work lately, "we will ask: 'What have you done during that time frame?' If we get 'Nuthin,' that shows something about the individual, from a motivational perspective."
... ... ...
The relief of working again
Finally finding work when you're over 50 and unemployed for a stretch can be a relief for far more than financial reasons.
"Once I landed my job, the thing I most looked forward to was the weekend," said Konopka. "Not to relax, but because I didn't have to think about finding a job anymore. That's 24/7 in your head. You're always thinking on a Saturday: 'If I'm not doing something to find a job, will there be a posting out there?'"
Full article: https://www.marketwatch.com/story/jobs-are-everywhere-just-not-for-people-over-55-2017-12-08
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Jun 13, 2010 | www.nj.com
At 5:30 every morning, Tony Gwiazdowski rolls out of bed, brews a pot of coffee and carefully arranges his laptop, cell phone and notepad like silverware across the kitchen table.
And then he waits.
Gwiazdowski, 57, has been waiting for 16 months. Since losing his job as a transportation sales manager in February 2009, he wakes each morning to the sobering reminder that, yes, he is still unemployed. So he pushes aside the fatigue, throws on some clothes and sends out another flurry of resumes and cheery cover letters.
But most days go by without a single phone call. And around sundown, when he hears his neighbors returning home from work, Gwiazdowski -- the former mayor of Hillsborough -- can't help but allow himself one tiny sigh of resignation.
"You sit there and you wonder, 'What am I doing wrong?'" said Gwiazdowski, who finds companionship in his 2-year-old golden retriever, Charlie, until his wife returns from work.
"The worst moment is at the end of the day when it's 4:30 and you did everything you could, and the phone hasn't rung, the e-mails haven't come through."
Gwiazdowski is one of a growing number of chronically unemployed workers in New Jersey and across the country who are struggling to get through what is becoming one long, jobless nightmare -- even as the rest of the economy has begun to show signs of recovery.
Nationwide, 46 percent of the unemployed -- 6.7 million Americans -- have been without work for at least half a year, by far the highest percentage recorded since the U.S. Labor Department began tracking the data in 1948.
In New Jersey, nearly 40 percent of the 416,000 unemployed workers last year fit that profile, up from about 20 percent in previous years, according to the department, which provides only annual breakdowns for individual states. Most of them were unemployed for more than a year.
But the repercussions of chronic unemployment go beyond the loss of a paycheck or the realization that one might never find the same kind of job again. For many, the sinking feeling of joblessness -- with no end in sight -- can take a psychological toll, experts say.
Across the state, mental health crisis units saw a 20 percent increase in demand last year as more residents reported suffering from unemployment-related stress, according to the New Jersey Association of Mental Health Agencies.
"The longer the unemployment continues, the more impact it will have on their personal lives and mental health," said Shauna Moses, the association's associate executive director. "There's stress in the marriage, with the kids, other family members, with friends."
And while a few continue to cling to optimism, even the toughest admit there are moments of despair: Fear of never finding work, envy of employed friends and embarassment at having to tell acquaintances that, nope, still no luck.
"When they say, 'Hi Mayor,' I don't tell a lot of people I'm out of work -- I say I'm semi-retired," said Gwiazdowski, who maxed out on unemployment benefits several months ago.
"They might think, 'Gee, what's wrong with him? Why can't he get a job?' It's a long story and maybe people really don't care and now they want to get away from you."
SECOND TIME AROUNDLynn Kafalas has been there before, too. After losing her computer training job in 2000, the East Hanover resident took four agonizing years to find new work -- by then, she had refashioned herself into a web designer.
That not-too-distant experience is why Kafalas, 52, who was laid off again eight months ago, grows uneasier with each passing day. Already, some of her old demons have returned, like loneliness, self-doubt and, worst of all, insomnia. At night, her mind races to dissect the latest interview: What went wrong? What else should she be doing? And why won't even Barnes & Noble hire her?
"It's like putting a stopper on my life -- I can't move on," said Kafalas, who has given up karate lessons, vacations and regular outings with friends. "Everything is about the interviews."
And while most of her friends have been supportive, a few have hinted to her that she is doing something wrong, or not doing enough. The remarks always hit Kafalas with a pang.
In a recent study, researchers at Rutgers University found that the chronically unemployed are prone to high levels of stress, anxiety, depression, loneliness and even substance abuse, which take a toll on their self-esteem and personal relationships.
"They're the forgotten group," said Carl Van Horn, director of the John J. Heldrich Center for Workforce Development at Rutgers, and a co-author of the report. "And the longer you are unemployed, the less likely you are to get a job."
Of the 900 unemployed workers first interviewed last August for the study, only one in 10 landed full-time work by March of this year, and only half of those lucky few expressed satisfaction with their new jobs. Another one in 10 simply gave up searching.
Among those who were still unemployed, many struggled to make ends meet by borrowing from friends or family, turning to government food stamps and forgoing health care, according to the study.
More than half said they avoided all social contact, while slightly less than half said they had lost touch with close friends. Six in 10 said they had problems sleeping.
Kafalas says she deals with her chronic insomnia by hitting the gym for two hours almost every evening, lifting weights and pounding the treadmill until she feels tired enough to fall asleep.
"Sometimes I forget what day it is. Is it Tuesday? And then I'll think of what TV show ran the night before," she said. "Waiting is the toughest part."
AGE A FACTORGenerally, the likelihood of long-term unemployment increases with age, experts say. A report by the National Employment Law Project this month found that nearly half of those who were unemployed for six months or longer were at least 45 years old. Those between 16 and 24 made up just 14 percent.
Tell that to Adam Blank, 24, who has been living with his girlfriend and her parents at their Martinsville home since losing his sales job at Best Buy a year and half ago.
Blank, who graduated from Rutgers with a major in communications, says he feels like a burden sometimes, especially since his girlfriend, Tracy Rosen, 24, works full-time at a local nonprofit. He shows her family gratitude with small chores, like taking out the garbage, washing dishes, sweeping floors and doing laundry.
Still, he often feels inadequate.
"All I'm doing on an almost daily basis is sitting around the house trying to keep myself from going stir-crazy," said Blank, who dreams of starting a social media company.
When he is feeling particularly low, Blank said he turns to a tactic employed by prisoners of war in Vietnam: "They used to build dream houses in their head to help keep their sanity. It's really just imagining a place I can call my own."
LESSONS LEARNEDMeanwhile, Gwiazdowski, ever the optimist, says unemployment has taught him a few things.
He has learned, for example, how to quickly assess an interviewer's age and play up or down his work experience accordingly -- he doesn't want to appear "threatening" to a potential employer who is younger. He has learned that by occasionally deleting and reuploading his resume to job sites, his entry appears fresh.
"It's almost like a game," he said, laughing. "You are desperate, but you can't show it."
But there are days when he just can't find any humor in his predicament -- like when he finishes a great interview but receives no offer, or when he hears a fellow job seeker finally found work and feels a slight twinge of jealousy.
"That's what I'm missing -- putting on that shirt and tie in the morning and going to work," he said.
The memory of getting dressed for work is still so vivid, Gwiazdowski says, that he has to believe another job is just around the corner.
"You always have to hope that that morning when you get up, it's going to be the day," he said.
"Today is going to be the day that something is going to happen."
Leslie Kwoh may be reached at [email protected] or (973) 392-4147.
DrBuzzard Jun 13, 2010I collect from the state of iowa, was on tier I and when the gov't recessed without passing extension, iowa stopped paying tier I claims that were already open, i was scheduled to be on tier I until july 15th, and its gone now, as a surprise, when i tried to claim my week this week i was notified. SURPRISE, talk about stress.
berganliz Jun 13, 2010
This is terrible....just wait until RIF'd teachers hit the unemployment offices....but then, this is what NJ wanted...fired teachers who are to blame for the worst recession our country has seen in 150 years...thanks GWB.....thanks Donald Rumsfeld......thanks Dick Cheney....thanks Karl "Miss Piggy" Rove...and thank you Mr. Big Boy himself...Gov Krispy Kreame!
rp121 Jun 13, 2010
For readers who care about this nation's unemployed- Call your Senators to pass HR 4213, the "Extenders" bill. Unfortunately, it does not add UI benefits weeks, however it DOES continue the emergency federal tiers of UI. If it does not pass this week many of us are cut off at 26 wks. No tier 1, 2 -nothing.
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Dec 13, 2017 | www.cvtips.com
It's almost impossible to describe the various psychological impacts, because there are so many. There are sometimes serious consequences, including suicide, and, some would say worse, chronic depression.
There's not really a single cause and effect. It's a compound effect, and unemployment, by adding stress, affects people, often badly.
The world doesn't need any more untrained psychologists, and we're not pretending to give medical advice. That's for professionals. Everybody is different, and their problems are different. What we can do is give you an outline of the common problems, and what you can do about them.
The good news is that only a relatively small number of people are seriously affected by the stress of unemployment to the extent they need medical assistance. Most people don't get to the serious levels of stress, and much as they loathe being unemployed, they suffer few, and minor, ill effects.
For others, there are a series of issues, and the big three are:
- Stress
- Anger, and other negative emotions
- Depression
Stress
Stress is Stage One. It's a natural result of the situation. Worries about income, domestic problems, whatever, the list is as long as humanity. The result of stress is a strain on the nervous system, and these create the physical effects of the situation over time. The chemistry of stress is complex, but it can be rough on the hormonal system.
Over an extended period, the body's natural hormonal balances are affected, and this can lead to problems. These are actually physical issues, but the effects are mental, and the first obvious effects are, naturally, emotional.
Anger, and other negative emotions
Not at all surprisingly, people under stress experience strong emotions. It's a perfectly natural response to what can be quite intolerable emotional strains. It's fair to say that even normal situations are felt much more severely by people already under stress. Things that wouldn't normally even be issues become problems, and problems become serious problems. Relationships can suffer badly in these circumstances, and that, inevitably, produces further crises. Unfortunately for those affected, these are by now, at this stage, real crises.
If the actual situation was already bad, this mental state makes it a lot worse. Constant aggravation doesn't help people to keep a sense of perspective. Clear thinking isn't easy when under constant stress.
Some people are stubborn enough and tough enough mentally to control their emotions ruthlessly, and they do better under these conditions. Even that comes at a cost, and although under control, the stress remains a problem.
One of the reasons anger management is now a growth industry is because of the growing need for assistance with severe stress over the last decade. This is a common situation, and help is available.
If you have reservations about seeking help, bear in mind it can't possibly be any worse than the problem.
Depression
Depression is universally hated by anyone who's ever had it. This is the next stage, and it's caused by hormonal imbalances which affect serotonin. It's actually a physical problem, but it has mental effects which are sometimes devastating, and potentially life threatening.
The common symptoms are:
- Difficulty in focusing mentally, thoughts all over the place in no logical order
- Fits of crying for no known reason
- Illogical, or irrational patterns of thought and behavior
- Sadness
- Suicidal thinking
It's a disgusting experience. No level of obscenity could possibly describe it. Depression is misery on a level people wouldn't conceive in a nightmare. At this stage the patient needs help, and getting it is actually relatively easy. It's convincing the person they need to do something about it that's difficult. Again, the mental state is working against the person. Even admitting there's a problem is hard for many people in this condition.
Generally speaking, a person who is trusted is the best person to tell anyone experiencing the onset of depression to seek help. Important: If you're experiencing any of those symptoms:
- Get on the phone and make an appointment to see your doctor. It takes half an hour for a diagnosis, and you can be on your way home with a cure in an hour. You don't have to suffer. The sooner you start to get yourself out of depression, the better.
- Avoid any antidepressants with the so-called withdrawal side effects. They're not too popular with patients, and are under some scrutiny. The normal antidepressants work well enough for most people.
Very important: Do not, under any circumstances, try to use drugs or alcohol as a quick fix. They make it worse, over time, because they actually add stress. Some drugs can make things a lot worse, instantly, too, particularly the modern made-in-a-bathtub variety. They'll also destroy your liver, which doesn't help much, either.
Alcohol, in particular, makes depression much worse. Alcohol is a depressant, itself, and it's also a nasty chemical mix with all those stress hormones.
If you've ever had alcohol problems, or seen someone with alcohol wrecking their lives, depression makes things about a million times worse.
Just don't do it. Steer clear of any so-called stimulants, because they don't mix with antidepressants, either.
Unemployment and staying healthy
The above is what you need to know about the risks of unemployment to your health and mental well being.
These situations are avoidable.
Your best defense against the mental stresses and strains of unemployment, and their related problems is staying healthy.
We can promise you that is nothing less than the truth. The healthier you are, the better your defenses against stress, and the more strength you have to cope with situations.
Basic health is actually pretty easy to achieve:
Diet
Eat real food, not junk, and make sure you're getting enough food. Your body can't work with resources it doesn't have. Good food is a real asset, and you'll find you don't get tired as easily. You need the energy reserves.
Give yourself a good selection of food that you like, that's also worth eating.
The good news is that plain food is also reasonably cheap, and you can eat as much as you need. Basic meals are easy enough to prepare, and as long as you're getting all the protein veg and minerals you need, you're pretty much covered.
You can also use a multivitamin cap, or broad spectrum supplements, to make sure you're getting all your trace elements. Also make sure you're getting the benefits of your food by taking acidophilus or eating yogurt regularly.
Exercise
You don't have to live in a gym to get enough exercise for basic fitness. A few laps of the pool, a good walk, some basic aerobic exercises, you're talking about 30-45 minutes a day. It's not hard.
Don't just sit and suffer
If anything's wrong, check it out when it starts, not six months later. Most medical conditions become serious when they're allowed to get worse.
For unemployed people the added risk is also that they may prevent you getting that job, or going for interviews. If something's causing you problems, get rid of it.
Nobody who's been through the blender of unemployment thinks it's fun.
Anyone who's really done it tough will tell you one thing:
Don't be a victim. Beat the problem, and you'll really appreciate the feeling.
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Nov 28, 2014 | theguardian.com
Nichole Gracely has a master's degree and was one of Amazon's best order pickers. Now, after protesting the company, she's homeless.I am homeless. My worst days now are better than my best days working at Amazon.
According to Amazon's metrics, I was one of their most productive order pickers -- I was a machine, and my pace would accelerate throughout the course of a shift. What they didn't know was that I stayed fast because if I slowed down for even a minute, I'd collapse from boredom and exhaustion.
During peak season, I trained incoming temps regularly. When that was over, I'd be an ordinary order picker once again, toiling in some remote corner of the warehouse, alone for 10 hours, with my every move being monitored by management on a computer screen.
Superb performance did not guarantee job security. ISS is the temp agency that provides warehouse labor for Amazon and they are at the center of the SCOTUS case Integrity Staffing Solutions vs. Busk. ISS could simply deactivate a worker's badge and they would suddenly be out of work. They treated us like beggars because we needed their jobs. Even worse, more than two years later, all I see is: Jeff Bezos is hiring.
I have never felt more alone than when I was working there. I worked in isolation and lived under constant surveillance. Amazon could mandate overtime and I would have to comply with any schedule change they deemed necessary, and if there was not any work, they would send us home early without pay. I started to fall behind on my bills.
At some point, I lost all fear. I had already been through hell. I protested Amazon. The gag order was lifted and I was free to speak. I spent my last days in a lovely apartment constructing arguments on discussion boards, writing articles and talking to reporters. That was 2012 and Amazon's labor and business practices were only beginning to fall under scrutiny. I walked away from Amazon's warehouse and didn't have any other source of income lined up.
I cashed in on my excellent credit, took out cards, and used them to pay rent and buy food because it would be six months before I could receive my first unemployment compensation check.
I received $200 a week for the following six months and I haven't had any source of regular income since those benefits lapsed. I sold everything in my apartment and left Pennsylvania as fast as I could. I didn't know how to ask for help. I didn't even know that I qualified for food stamps.
I furthered my Amazon protest while homeless in Seattle. When the Hachette dispute flared up I "flew a sign," street parlance for panhandling with a piece of cardboard: "I was an order picker at amazon.com. Earned degrees. Been published. Now, I'm homeless, writing and doing this. Anything helps."
I have made more money per word with my signs than I will probably ever earn writing, and I make more money per hour than I will probably ever be paid for my work. People give me money and offer well wishes and I walk away with a restored faith in humanity.
I flew my protest sign outside Whole Foods while Amazon corporate employees were on lunch break, and they gawked. I went to my usual flying spots around Seattle and made more money per hour protesting Amazon with my sign than I did while I worked with them. And that was in Seattle. One woman asked, "What are you writing?" I told her about the descent from working poor to homeless, income inequality, my personal experience. She mentioned Thomas Piketty's book, we chatted a little, she handed me $10 and wished me luck. Another guy said, "Damn, that's a great story! I'd read it," and handed me a few bucks.
[snip]
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Jul 30, 2014 | marknesop.wordpress.com
colliemum, July 30, 2014 at 10:05 am
Found at zerohedge, a US reaction on Russia's reaction to the sanctions:yalensis, July 30, 2014 at 3:31 pm"Assuming that they take this action, it would be blatant protectionism," Clayton Yeutter, a U.S. Trade Representative under President Ronald Reagan, said in a phone interview. "There is little or no legitimacy to their complaints."
Yep, how dare the Russkies retaliate, when they ought to come begging on their knees to be allowed to do what the grand master in DC wants them to do
Russians are using "trade as a geopolitical tool," warns a Washington think tank. Russia engaging in trade war – How despicable!ThatJ, July 30, 2014 at 3:39 pmFirst Russkies pretend to find antibiotics in McDonalds "cheese" products. But everybody knows the cheese cannot possibly contain antibiotics, because it's not even real cheese! (it's a kind of edible plastic substance )
And next Russans claim that "Fruit shipments from the EU have recently contained Oriental fruit moths "
That's a lie too.
Everybody knows that if you eat your Polish quinces with a runcible spoon, then they will not contain any measurable amounts of moth larvae.
"Fedorov said consulting firms and audit firms will be the first to be targeted by the new bill. Next will be U.S. media, he said."colliemum, July 31, 2014 at 12:44 amThe US media helps in spreading liberasty. It should have been barred years ago.
Above all else, Putin should throw out all Western NGOs – especially those with links to Soros.marknesop, July 30, 2014 at 9:41 pmcartman, July 30, 2014 at 10:21 am"It's not unusual for Russia to find something wrong when they have a political reason to do so".No word on whether his tongue immediately turned black and started to smoke, then fell out of his mouth. It's not unusual for the United States to apply sanctions when they have a political reason to do so, and fuck-all else.
I was wrong about Rosoboronexport. It is EXEMPT from the list of sanctions. No doubt some of the deals (titanium) are critical for the US's own MIC. Put Kadyrov or someone on the board and force Congress to slit Boeing's throat.cartman, July 30, 2014 at 10:26 amOr hire him to the company that produces rolled titanium alloys for Boeing and Airbus. A shot across the bow to say that Western leaders will have to be standing in front of their populations as they crash their economies. Russia won't do it for them.marknesop, July 30, 2014 at 9:51 pmExcellent reasoning. The baying audience of FOX-friends might be stoked at the idea of economic war with Russia, but the cold-eyed businessmen are likely to be unenthused at best. This is a great plan for achieving leverage cheaply and easily, and the U.S. government would be left 'splaining to Boeing that they had to lay off a couple of thousand workers because a bad man was appointed to the board of their major supplier.The west is locked into its lame sanctions groove, and too proud to back down. This might be the big shootout from which only one currency will walk away.
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Aug 19, 2012 | Corrente
I got to thinking today about how neocon and neoliberal are becoming interchangeable terms. They did not start out that way. My understanding is they are ways of rationalizing breaks with traditional conservatism and liberalism. Standard conservatism was fairly isolationist. Conservatism's embrace of the Cold War put it at odds with this tendency. This was partially resolved by accepting the Cold War as a military necessity despite its international commitments but limiting civilian programs like foreign aid outside this context and rejecting the concept of nation building altogether.
With the end of the Cold War conservative internationalism needed a new rationale, and this was supplied by the neoconservatives. They advocated the adoption of conservatism's Cold War military centered internationalism as the model for America's post-Cold War international relations. After all, why drop a winning strategy? America had won the Cold War against a much more formidable opponent than any left on the planet. What could go wrong?
America's ability not simply to project but its willingness to use military power was equated with its power more generally. If America did not do this, it was weak and in decline. However, the frequent use of military power showed that America was great and remained the world's hegemon. In particular, the neocons focused on the Middle East. This sales pitch gained them the backing of both supporters of Israel (because neoconservatism was unabashedly pro-Israel) and the oil companies. The military industrial complex was also on board because the neocon agenda effectively countered calls to reduce military spending. But neoconservatism was not just confined to these groups. It appealed to both believers in American exceptionalism and backers of humanitarian interventions (of which I once was one).
As neoconservatism developed, that is with Iraq and Afghanistan, the neocons even came to embrace nation building which had always been anathema to traditional conservatism. Neocons sold this primarily by casting nation building in military terms, the creation and training of police and security forces in the target country.
9/11 too was critical. It vastly increased the scope of the neocon project in spawning the Global War on Terror. It increased the stage of neocon operations to the entire planet. It effectively erased the distinction between the use of military force against countries and individuals. Individuals more than countries became targets for military, not police, action. And unlike traditional wars or the Cold War itself, this one would never be over. Neoconservatism now had a permanent raison d'être.
Politically, neoconservatism has become the bipartisan foreign policy consensus. Democrats are every bit as neocon in their views as Republicans. Only a few libertarians on the right and progressives on the left reject it.
Neoliberalism, for its part, came about to address the concern of liberals, especially Democrats, that they were too anti-business and too pro-union, and that this was hurting them at the polls. It was sold to the rubiat as pragmatism.
The roots of neoliberalism are the roots of kleptocracy. Both begin under Carter. Neoliberalism also known at various times and places as the Washington Consensus (under Clinton) and the Chicago School is the political expression for public consumption of the kleptocratic economic philosophy, just as libertarian and neoclassical economics (both fresh and salt water varieties) are its academic and governmental face. The central tenets of neoliberalism are deregulation, free markets, and free trade. If neoliberalism had a prophet or a patron saint, it was Milton Friedman.
Again just as neoconservatism and kleptocracy or bipartisan so too is neoliberalism. There really is no daylight between Reaganism/supply side economics/trickledown on the Republican side and Clinton's Washington Consensus or Team Obama on the other.
And just as we saw with neoconservatism, neoliberalism expanded from its core premises and effortlessly transitioned into globalization, which can also be understood as global kleptocracy.
The distinctions between neoconservatism and neoliberalism are being increasingly lost, perhaps because most of our political classes are practitioners of both. But initially at least neoconservatism was focused on foreign policy and neoliberalism on domestic economic policy. As the War on Terror expanded, however, neoconservatism came back home with the creation and expansion of the surveillance state.
At the same time, neoliberalism went from domestic to global, and here I am not just thinking about neoliberal experiments, like Pinochet's Chile or post-Soviet Russia, but the financialization of the world economy and the adoption of kleptocracy as the world economic model.
jest on Mon, 08/20/2012 - 5:55amlambert on Mon, 08/20/2012 - 9:18amI'm now under the opinion that you can't talk about any of the "neo-isms" without talking about the corporate state.
That's really the tie that binds the two things you are speaking of.
With neocons, it manifests itself through the military-industrial complex (Boeing, Raytheon, etc.), and with neolibs it manifests itself through finance and industrial policy.
For example, you need the US gov't to bomb Iraq (Raytheon) in order to secure oil (Halliburton), which is priced & financed in US dollars (Goldman Sachs). It's like a 3-legged stool; if you remove one of these legs, the whole thing comes down. But each leg has two components, a statist component and a corporate component.
The entity that enables all of this is the corporate state.
It also explains why economic/financial interests (neolib) are now considered national security interests (neocon). The viability of the state is now tied to the viability of the corporation.
jest on Mon, 08/20/2012 - 1:37pmCorporate/statist (not sure "corporate" captures the looting/rentier aspect though). We see it everywhere, for example in the revolving door.
I think the stool has more legs and is also more dynamic; more like Ikea furniture. For example, the press is surely critical in organizing the war.
But the yin/yang of neo-lib/neo-con is nice: It's as if the neo-cons handle the kinetic aspects (guns, torture) and the neo-libs handle the mental aspects (money, mindfuckery) but both merge (like Negronponte being on the board of Americans Select) over time as margins fall and decorative aspects like democratic institutions and academic freedom get stripped away. The state and the corporation have always been tied to each other but now the ties are open and visible (for example, fines are just a cost of doing business, a rent on open corruption.)
And then there's the concept of "human resource," that abstracts all aspects of humanity away except those that are exploitable.
First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi
Lex on Mon, 08/20/2012 - 8:28amI like the term much better than Fascist, as it is 1) more accurate, 2) avoids the Godwin's law issue, and 3) makes them sound totalitarianist.
Yes, I would agree that additional legs make sense. The media aspect is essential, as it neutralizes the freedom of the press, without changing the constitution. It dovetails pretty well with the notion of Inverted Totalitarianism.
I think you could also make the argument that Obama is perhaps the most ideal combination of neolib & neocon. The two sides of him flow together so seamlessly, no one seems to notice. But that's in part because he is so corporate.
Hugh on Mon, 08/20/2012 - 3:57pmActually, neoliberalism is an economic term. An economic liberal in the UK and EU is for open markets, capitalism, etc. You're right that neoliberalism comes heavily from the University of Chicago, but it has little to do with American political liberalism.
A reading of the classical liberal economists puts some breaks on the markets, corporations, etc. Neoliberalism goes to the illogical extremes of market theory and iirc, has some influence from the Austrian school ... which gives up on any pretense of scientific exposition of economics or rationality at the micro level, assuming that irrationality will magically become rational behavior in aggregate.
Therefore, US conservatives post Eisenhower but especially post Reagan are almost certainly economic neoliberals. Since Clinton, liberals/Democrats have been too (at least the elected ones). You nailed neoconservative and both parties are in foreign policy since at least Clinton ... though here lets not forget to go back as far as JFK and his extreme anti-Communism that led to all sorts of covert operations, The Bay of Pigs, Vietnam, and the Cuban Missile Crisis. Remember, the Soviets put the missiles in Cuba because we put missiles in Turkey and they backed down from Cuba because we agreed to remove the missiles from Turkey; Nikita was nice enough not to talk about that so that Kennedy didn't lose face.
"Don't believe them, don't fear them, don't ask anything of them" - Aleksandr Solzhenitsyn
Hugh on Mon, 08/20/2012 - 10:44pmI agree that neoconservatism and neoliberalism are two facets of corporatism/kleptocracy. I like the kinetic vs. white collar distinction.
The roots of neoliberalism go back to the 1940s and the Austrians, but in the US it really only comes into currency with Clinton as a deliberate shift of the Democratic/liberal platform away from labor and ordinary Americans to make it more accommodating to big business and big money. I had never heard of neoliberalism before Bill Clinton but it is easy to see how those tendencies were at work under Carter, but not under Johnson.
This was a rough and ready sketch. I guess I should also have mentioned PNAC or the Project to Find a New Mission for the MIC.
Lex on Mon, 08/20/2012 - 11:49pmI have never understood this love of Clinton that some Democrats have just as I have never understood the attraction of Reagan for Republicans. There is no Clinton faction. There is no Obama faction. Hillary Clinton is Obama's frigging Secretary of State. Robert Rubin and Larry Summers, both of whom served as Bill Clinton's Treasury Secretary, were Obama's top financial and economic advisors. Timothy Geithner was their protégé. Leon Panetta Obama's Director of the CIA and current Secretary of Defense was Clinton's Director of OMB and then Chief of Staff.
The Democrats as a party are neoconservative and neoliberal as are Obama and the Clintons. As are Republicans.
What does corporations need regulation mean? It is rather like saying that the best way to deal with cancer is to find a cure for it. Sounds nice but there is no content to it. Worse in the real world, the rich own the corporations, the politicians, and the regulators. So even if you come up with good ideas for regulation they aren't going to happen.
What you are suggesting looks a whole lot another iteration of lesser evilism meets Einstein's definition of insanity. How is it any different from any other instance of Democratic tribalism?
Perhaps it should be pointed out that the Clintons became fabulously wealthy just after Bill left office, mostly on the strength of his speaking engagements for the financial sector that he'd just deregulated. Both he and Hillary hew to a pretty damned neoconservative foreign policy ... with that dash of "humanitarian interventionism" that makes war palatable to liberals.
But your deeper point is that there isn't enough of a difference between Obama and Bill Clinton to really draw a distinction, not in terms of ideology. What a theoretical Hillary Clinton presidency would have looked like is irrelevant, because both Bill and Obama talked a lot different than they walked. Any projection of a Hillary Clinton administration is just that and requires arguing that it would have been different than Bill's administration and policies.
The unfortunate fact of the matter is that at that level of politics, the levers of money and power work equally well on both party's nomenklatura. They flock to it like moths to porch light.
That the money chose Obama over Clinton doesn't say all that much, because there's no evidence suggesting that the money didn't like Clinton or that it would have chosen McCain over Clinton. It's not as if Clinton's campaign was driven into the ground by lack of funds.
Regardless, that to be a Democrat i would kind of have to chose between two factions that are utterly distasteful to me just proves that i have no business being a Democrat. And since i wouldn't vote for either of those names, i guess i'll just stick to third parties and exit the political tribalism loop for good.
"Don't believe them, don't fear them, don't ask anything of them" - Aleksandr Solzhenitsyn
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Dec 12, 2017 | billmoyers.com
The notion of the "Deep State" as outlined by Mike Lofgren may be useful in pointing to a new configuration of power in the US in which corporate sovereignty replaces political sovereignty, but it is not enough to simply expose the hidden institutions and structures of power.
... ... ...
Moreover, Lofgren needs to say more about a growing culture of cruelty brought about by the death of concessions in politics -- a politics now governed by the ultra-rich and mega corporations that has no allegiance to local politics and produces a culture infused with a self-righteous coldness that takes delight in the suffering of others. Power is now separated from politics and floats, unchecked and uncaring.
This is a revolution in which the welfare state is being liquidated, along with the collective provisions that supported it. It is a revolution in which economics drives politics. Neoliberalism is a new form of hybrid global financial authoritarianism. It is connected to the Deep State and marked by its savage willingness in the name of accumulation, privatization, deregulation, dispossession and power to make disposable a wide range of groups extending from low income youth and poor minorities to elements of the middle class that have lost jobs, social protections and hope.Then, there is the central question, how does the Deep State function to encourage particular types of individualistic, competitive, acquisitive and entrepreneurial behavior in its citizens?
The biggest problem facing the US may not be its repressive institutions, modes of governance and the militarization of everyday life, but the interiority of neoliberal nihilism, the hatred of democratic relations and the embrace of a culture of cruelty. The role of culture as an educative force, a new and powerful force in politics is central here and is vastly underplayed in the essay (which of course cannot include everything). For instance, in what ways does the Deep State use the major cultural apparatuses to convince people that there is no alternative to existing relations of power, that consumerism is the ultimate mark of citizenship and that making money is the essence of individual and social responsibility?
In other words, there is no theory of cultural domination here, no understanding of how identities, subjectivities and values are shaped in the narrow and selfish image of commerce, how exchange values are the only values. In my estimation, the Deep State is symptomatic of something more ominous, the rise of a new form of authoritarianism, a counter-revolution in which society is being restructured and advanced under what might be called the neoliberal revolution. This is a revolution in which the welfare state is being liquidated, along with the collective provisions that supported it. It is a revolution in which economics drives politics.
... ... ...
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Dec 12, 2017 | seanmichaelbutler.wordpress.com
For 25 years following the end of the Second World War, the global economy experienced an unprecedented period of sustained growth. In the industrialized world, millions of people joined the ranks of the middle class, and wealth inequality sunk to historic lows. After decades of strife, labour and capital reached a relative ceasefire, and a mixed economy of governmental macroeconomic guidance combined with private microeconomic initiative emerged. Capital was able to make healthy profits, while much of the rising productivity of labour was passed on in the form of higher wages. Governments made full employment a priority, and increasingly accepted the responsibility of providing for the poor and disadvantaged. By the late 1960s, governments were seriously considering implementing a basic income (also known as a guaranteed annual income) and many policymakers thought that our biggest problem in another 20 years would be what to do with all our free time once the work week had been significantly reduced.
This exuberant economic attitude was arguably reflected in the radical social experimentation and revolution that emanated from universities now accessible to the majority, and in the various movements for liberty and social justice erupting worldwide. For many, all this social and economic optimism had one man to thank: the British political economist John Maynard Keynes, who had emerged from the academic wilderness in the 1930s to play a leading role in the design of the post-war economy at Bretton Woods, and whose focus on the counter-cyclical stimulus of aggregate demand became the lynchpin of governmental economic policy in subsequent decades. "There was a broad body of optimism that the 1950s and 1960s were the product of Keynesian economic engineering. Indeed, there was no reason why the prosperity of the international economy should not continue as long as appropriate Keynesian policies were pursued " In 1971, even the conservative US president Richard Nixon would famously proclaim, "We are all Keynesians now." The triumph of Keynesianism seemed complete.
Yet shortly after Nixon uttered these words, it all fell apart. That same year, Nixon ended the era of dollar to gold convertibility, a move that many see as the beginning of the end for the great post-war compromise between capital and labour.
Three years later, in the face of the first oil embargo and other pressures, the economy nose-dived into the worst recession since the Great Depression, never to rebound to earlier levels. Worse still, the theoretical underpinnings of Keynesianism were called into question by the simultaneous appearance of high inflation and high unemployment – a new phenomenon dubbed "stagflation". While Keynesianism floundered for an explanation, new theories stepped into the breach; monetarism and supply-side economics were the two most popular. While these new theories had distinctive approaches, both shared the belief that big government – namely Keynesianism – was the problem, and that the solution to stagflation was to restrict government intervention in the economy to a strict inflation-fighting monetary policy (in the case of monetarism) or to cut taxes to stimulate private investment (in the case of the supply-siders). This move away from government intervention and the welfare state, and towards more emphasis on an unfettered market, can been summed up by the term "neoliberalism". As the 1970s ran their course, neoliberalism gradually took over from Keynesianism as the reigning economic orthodoxy, to be consummated in the Anglo-Saxon world by the elections of Margaret Thatcher in the UK in 1979, Ronald Reagan in the US in 1980, and Brian Mulroney in Canada in 1984.
The story told by the victors of this ideological battle – the neoliberals – is that Keynesianism, despite its apparent success for 25 years, was in the end responsible for the constellation of economic crises that descended on the industrialized countries during the 1970s, and that neoliberalism was the remedy. The shift from Keynesianism to neoliberalism was, according to this story, the only rational option in the face of stagflation; as Thatcher crisply remarked at the time, "There is no alternative."
I will call into question this story, by first examining the causes of the 1970s economic malaise, and then looking at what interests were behind the promotion of neoliberalism as a solution, how it gained political power, and how it was disseminated around the world. I will fashion an alternate narrative, one in which Keynesianism was not to blame for stagflation, in which the economic crises of the 1970s put the compromise between capital and labour under severe strain and ultimately broke it, in which the capitalist class went on the offensive partly because it feared for its very survival, and in which this class achieved its ends by forming an alliance with social conservatives equally fearful in the face of the 1960s counter-cultural revolution. The protagonist of this story will be the United States; as the capitalist world's superpower, it was largely responsible for the crisis of the 1970s, it suffered the worst from it, and it led the way down the new path of neoliberalism.
THE FALL OF KEYNESIANISM
As one of the principle fathers of neoliberalism, the economist Milton Friedman's indictment of Keynesianism is of special relevance, for it is emblematic of the neoliberal attempt to – quite successfully – pin the blame for chronic recession squarely on Keynesian shoulders. Briefly, Friedman theorized that there was a so-called "natural" rate of unemployment, which persisted in the long-term despite governmental attempts to stimulate demand through spending. Running a budget deficit to pump money into the economy might bring down the unemployment rate in the short term, he thought, but in the long run it would only create inflation, while unemployment would inevitably return to its natural rate – now higher because of the inflation. He essentially argued that fiscal policy was useless – even damaging – and that if governments wanted to bring down the natural rate of unemployment, they should focus on keeping inflation low through monetary policy, while loosening restrictions on markets so that, for instance, wage levels could find their equilibrium point. This explanation for the stagflation encountered in the 1970s proved quite convincing to many searching for answers to the predicament, as well as enormously appealing to those who had always wished for a return to unfettered markets, and played a key role in justifying the switch from Keynesianism to neoliberalism, in its guise of monetarism.
How realistic is this account? Certainly, deficit financing played an important role in the soaring inflation of the 1970s, but was this solely the result of spending on social programs, such as under president Lyndon Johnson's Great Society initiative, or were there other causes for deficit spending? The Vietnam War, combined with Johnson's unwillingness to raise taxes in the face of rising war expenditures, caused the US Federal Reserve to print large amounts of new dollars. Military spending is often seen as the most inflationary form of government spending, because it puts new money into the economy without a corresponding increase in output. The US had some leeway to get away with this rapid increase in the money supply, since the dollar was the international reserve currency, but there was a limit to this, and the explosive inflation of the 1970s was the result.
It must be noted that the US proved a dismal failure in its short-lived role as manager of the world's monetary system. At Bretton Woods, it had been entrusted with the task of maintaining a sound monetary system, through the gold exchange standard, just as Britain had previously. Britain, being a trading nation, had had a strong interest in maintaining a sound international monetary system, and had been effective (some would say too effective) at maintaining it. The United States, on the other hand, traded much less, and consequentially took its responsibilities much less seriously. It is easy to speculate about the justification made by US officials as they printed irresponsible amounts money to pay for their war in Vietnam: they surely saw themselves as defending the free world against the tyranny of communism, a cause for which a little monetary instability, shouldered by the "free world" in general, was a small price to pay.
The first cracks in the system started to show during the series of currency crises that struck in the late 1960s. By the end of the decade, the dollars held outside the US were worth eight times as much as the US had in gold reserves. In 1971, rather than saving the system by devaluing the dollar, and fearing a run on US gold, Nixon ended the gold exchange standard. The US had abused its power of seigniorage (as monarchs before had), but wouldn't escape without paying a price.
The result was more inflation, as the dollar, now cut loose from the Bretton Woods standard of $35 per ounce of gold, shed its inflated value. The lower dollar also raised the cost of imports to the US consumer, further fueling domestic inflation. (The end of dollar convertibility also brought with it more far-reaching consequences. The fixed exchange rates of the 1950s and 60s were incompatible with free flows of capital. Yet taking the dollar off gold led directly to floating exchange rates, which in turn paved the way for freer flows of capital between countries. This development would later aid greatly in the furtherance of the neoliberal agenda.)
As if these developments were not inflationary enough, the Yom Kippur War of October 1973 led OPEC to restrict oil exports to Israel's allies, quadrupling oil prices virtually overnight. Yet this was inflation of a different nature than the kind that had been building up in the 1960s; rather than being linked to excess demand and an overheated economy, it was driven by increases in costs on the supply side and brought with it recessionary pressures. An increase in the price of oil, being fundamental to so much of the economy, is "similar to the imposition of a substantial sales tax. The price of the product goes up and consumers have less income available to spend on other goods and services. The result is a bout of inflation, at least temporarily, and sluggish economic expansion if not recession." This goes a long way towards explaining the supposedly impossible coincidence of high inflation with high unemployment.
Yet there were other factors that also contributed to the so-called "misery index" (inflation rate plus unemployment rate). The most basic of these was that governments tried repeatedly to beat inflation by attacking perceived excess demand through restrictive monetary and fiscal policies; when Nixon tried this strategy in 1970, it resulted in recession. His successor, Gerald Ford, tried the same approach in 1974 – despite the fact that inflation at that point was not being driven by excess demand, but by high costs on the supple side (namely oil). Thus, poor governmental reaction to inflation caused recession and rising unemployment, while failing to master inflation.
Another factor contributing to the slow-down of growth in the US economy was the end of the privileged position it enjoyed as the only power to emerge from the Second World War relatively unscathed. As Germany and Japan laboured to reconstruct their war-ravaged economies, the US faced little competition. Yet by the end of the 1960s, the old Axis powers, now recast as capitalist democracies but still economic powerhouses, were flexing their economic muscles again. This, combined with increasing competition from newly industrialized countries in East Asia and from other developing countries, cut into the robust economic growth the US had enjoyed for two decades previously.
To sum up, inflation caused by first the Vietnam War and later the oil embargo (itself the result of war in the Mideast), coupled with increasing competition to US business internationally, along with the shock of the collapse of the Bretton Woods framework, were the major factors that combined to create the "perfect storm" known as stagflation:
the stage was set for the deepest recession since the 1930s. The long period of post-war expansion had at last come to an end; America and world capitalism entered a new phase of turbulence which, amongst other things, threw economic policy and economics as a theory into a state of flux.
AND THE RISE OF NEOLIBERALISM
In the previous section, I outlined the confluence of factors that led to the crisis of stagflation in the 1970s. In the following section, I will describe the reaction to this crisis – the how and why of neoliberalism's triumph as the new economic orthodoxy.
Different authors ascribe to different points in time when the balance decisively shifted from Keynesianism to neoliberalism – some place the tipping point as early as the latter half of the 1960s, others as late as the ascendancy of Thatcher and Reagan – but the midway year 1974 seems as good as any. It was in this year that Gerald Ford came to the White House with the slogan, "Whip Inflation Now" (WIN), declaring that inflation was public enemy number one and that reduction in government spending was the chief means to that end. It was also in this year that inflation peaked (at 11% – although it would later be surpassed by a second peak of 13.5% in 1980), and that the "perfect storm" that had been building for years, catalyzed by the energy crisis, finally unleashed its full fury on the economy. In declaring war on inflation, Ford broke with the Keynesian bias of giving precedence to full employment; whereas before inflation had been a tool to control unemployment, now unemployment was to be used as a tool to control inflation:
The choice seemed to be stark: accept some inflation as the price of expansion and adapt business and accounting practices accordingly, or pursue a firm deflationary policy even if that meant accepting a higher level of unemployment than had been customary since the Second World War.
In choosing the latter, Ford shattered the fragile compromise between labour and capital and, favouring capital, took America on its first real steps towards neoliberalism.
Yet, as the crisis had gathered steam in the early 1970s, it was by no means clear which way the winds would blow. It was well remembered that the last major economic crisis, in the 1930s, had resulted in the socialist policies of the New Deal, and indeed in the 1970s labour again called for more governmental intervention as the solution to the crisis. Capital, meanwhile, as it suffered from reduced profits due to increased competition abroad and recession at home, also saw the crisis as both an opportunity to advance its interests and as a threat to its interests from an increasingly militant labour. "The upper classes had to move decisively if they were to protect themselves from political and economic annihilation." The ceasefire between labour and capital had held when times were good, but as soon as conditions started to sour, both sides went on the offensive. It was to be one or the other.
Sensing both the opportunity and the threat presented by the crisis, the capitalist class put aside its differences and united against the common enemy of labour. The 1970s marked the beginning of the right-wing think tank, with corporate dollars founding such now well-known beacons of neoliberal thought as the Heritage Foundation, the Hoover Institute, and the American Enterprise Institute. Lobbying efforts, though such umbrella organizations as the American Chamber of Commerce, the National Association of Manufacturers, and the Business Roundtable (a group of CEOs founded in 1972), were massively ramped up; business schools at Stanford and Harvard, established through corporation benefaction, " became centres of neoliberal orthodoxy from the very moment they opened" ; and "the supposedly 'progressive' campaign finance laws of 1971 [that] in effect legalized the financial corruption of politics," were followed by a series of Supreme Court decisions that established the right of corporations to make unlimited donations to political parties. "During the 1970s, the political wing of the nation's corporate sector staged one of the most remarkable campaigns in the pursuit of power in recent history."
The ideology adopted by capital during this remarkable drive to win the minds of the political leadership " had long been lurking in the wings of public policy." It emanated largely from the writings of the Austrian economist Friedrich von Hayek, around whom a collection of admirers (including Milton Friedman) called the Mont Pelerin Society had formed in 1947. This group's ideas became known as neoliberalism because of its adherence to such neoclassical economists of the latter half of the 19th Century as Alfred Marshall, William Stanley Jevons, and Leon Walras. Hayek had argued presciently that it might take a generation before they could win the battle of ideas; by the time he won the Nobel Prize for economics in 1974, followed by Friedman two years later, victory was indeed close at hand.
Why did capital " [pluck] from the shadows of relative obscurity [this] particular doctrine that went under the name of 'neoliberalism' "? Was it to save the world from the ravages of Keynesian stagnation and to free people from the heavy hand of bloated government? This was certainly part of the rhetoric used to sell neoliberalism to the public, but one need only look at who benefited from neoliberalism to get a strong sense of whose interests it really served. It was eventually quite successful in lowering inflation rates, and moderately successful in lowering unemployment, but failed to revive economic growth to pre-1970s levels; meanwhile, it resulted in levels of wealth inequality not seen since the 1920s in the US, stagnating real wages, and a decreased quality of life for those reliant on government services. Alan Budd, Thatcher's economic advisor, was candid about the real motives behind the neoliberal rhetoric when he said, "The 1980s policies of attacking inflation by squeezing the economy and public spending were a cover to bash the workers." Neoliberalism was capital's way of disciplining labour through unemployment, creating what Marx called an "industrial reserve army" that would break unions and drag wages down. Reagan facing down the air traffic controller's union, PATCO, during a bitter strike in 1981, paralleled across the Atlantic by Thatcher's similarly tough stance with the National Union of Mineworkers' year-long strike in 1984-85, was emblematic of the new hostile approach to labour reintroduced to state policy by neoliberalism. In short, neoliberalism was driven by class interests; it was the vehicle best suited " to restor[ing] the power of economic elites." The true point of neoliberalism is revealed by the fact that whenever the dictates of neoliberal theory conflicted with the interests of the capitalist class, such as when it came to running massive budgetary deficits to pay for military spending during peacetime, neoliberalism was discarded in favour of the interests of capital.
Before neoliberalism came to roost in the White House, however, there were several experiments conducted in the periphery. It is revealing to note that the first nationwide imposition of neoliberalism occurred under conditions of tyranny: Augusto Pinochet's Chile; it is likewise fitting that neoliberalism drove from Chile its antithesis, the communism of Salvador Allende, and that it was imposed through a US-backed coup. After the coup in 1973, Chile became a field school for graduates from the economics department of the University of Chicago, where disciples of Milton Friedman, who taught there, had formed their own monetarist/neoliberal school of thought. These economists attempted to remake the Chilean economy into the ideal neoliberal state (in the same way that US neoliberals are currently attempting in Iraq), a transformation that likely would not have been possible without the Chilean military ensuring a compliant labour. Despite lackluster economic results (particularly after the 1982 debt crisis in Latin America), Chile served as a model to neoliberals who wanted the rich countries to follow the same path.
There was another coup, of sorts – less known and less violent – that occurred in New York City in 1975. In that year, the city went bankrupt, and the subsequent bailout came with strict conditions attached, including budgetary rules and other institutional restructuring. "This amounted to a coup by the financial institutions against the democratically elected government of New York City, and it was every bit as effective as the military coup that had occurred in Chile." It was "an early, perhaps decisive battle in a new war," the purpose of which was "to show others that what is happening to New York could and in some cases would happen to them." "The management of the New York fiscal crisis pioneered the way for neoliberal practices both domestically under Reagan and internationally through the IMF in the 1980s."
While coups, either military or financial, were possible against developing countries and municipalities, neoliberalism would have to gain dominance in the US federal government through slightly more democratic means. As noted earlier, the intense drive to power through lobbying, think tanks, and academia convinced many in the elite of the virtues of neoliberalism, but ultimately this ideology would have to sway masses of people to actually vote in favour of it. In order to secure the broad base of support necessary to win elections, neoliberals formed an alliance in the 1970s with the religious right (a move that has forever since confused the terms "liberal" and "conservative"). While this significant segment of the American population had previously been largely apolitical, the counter-cultural revolution of the late 1960s and early 1970s provoked many of these "neoconservatives" to enter the political arena to oppose the perceived moral corruption of American society – a movement that came to fruition with preacher Jerry Fallwell's so-called "moral majority" in 1978. While neoliberals and neoconservatives may seem like strange bedfellows, the coalition was likely facilitated by religious fundamentalists' relative indifference towards the material, economic world; according to their extremist Christian worldview, their material interests in this world would be well worth sacrificing to secure the spiritual interests of their nation in the next world. Furthermore, both religious and economic fundamentalists must have found a comforting familiarity in each other's simplistic extremism (the "invisible hand" of the neoliberals' free market is eerily similar to the Christians' God in its omnipotence, omnipresence, and inscrutability).
The Republican Party gathered under its banner these religious reactionaries, as well as those non-religious (largely white, heterosexual, male, and working-class) who simply feared the growing liberation of blacks, gays, and women, and who felt threatened by affirmative action, the emerging welfare state, and the Soviet Union. "Not for the first time, nor, it is to be feared, for the last time in history had a social group been persuaded to vote against its material, economic, and class interests for cultural, nationalist, and religious reasons." It was this alliance of social fear and economic opportunism that swept arch-neoliberal Ronald Reagan to the White House in 1980 – " a turning point in post-war American economic and social history." After a decade-long campaign, the neoliberals had come to Washington.
Of course, the crusade to reshape society along neoliberal ideals was far from won; Reagan faced a Democratic Congress, and was often forced to govern more pragmatically than ideologically when his supply-side policies failed. As Margaret Thatcher said, "Economics are the method, but the object is to change the soul," and it takes time to change people's souls.
There was also still a whole world to convert to the gospel of market liberalization. The crisis of stagflation that had opened the door to neoliberal ideas in the US had also created financial incentives for the dissemination of neoliberalism to other countries. With the impact of the first oil crisis flooding New York investment banks with petrodollars, and a depressed economy at home offering fewer places to spend them, the banks poured the money into developing countries. This created pressure on the US government to pry open new markets for investment, as well as to protect the growing investments overseas – helping to bring US-bred neoliberalism to foreign shores.
Yet these pressures were only a taste of what was to come; after the Iranian revolution in 1979 caused oil prices to suddenly double, inflation in the US returned with a vengeance. This in turn led the US Federal Reserve, under its new neoliberal-minded chairman Paul Volcker, to drastically raise interest rates. This "Volcker shock", resulting in nominal interest rates close to 20% by 1981, coming on the heels of the profligate lending of petrodollars during the 1970s, played a major part in the debt crisis that descended on the developing world during the 1980s. As countries defaulted on their debts, they were driven into the arms of the International Monetary Fund (IMF), which, after what economist Joseph Stiglitz described as a "purge" of Keynesians in 1982, became a center " for the propagation and enforcement of 'free market fundamentalism' and neoliberal orthodoxy." Mexico, after its debt default of 1982-84, became one of the first countries to submit to neoliberal reforms in exchange for debt rescheduling, thus " beginning the long era of structural adjustment."
Many of the IMF economists who designed these Structural Adjustment Programs (SAPs), as well as those who staffed the World Bank and the finance departments of many developing countries, were trained at the top US research universities, which by 1990 were dominated by neoliberal ideas – providing yet another avenue by which neoliberalism spread from the US to other parts of the world. By the mid-1990s, the process of neoliberal market liberalization (under the supervision of the World Trade Organization (WTO)) came to be known as the "Washington Consensus", in recognition of the origins of this ideological revolution.
THE REVOLUTION CONTINUES
Some authors have called neoliberalism the antithesis to Keynesianism , yet its real opposite is communism; Keynesianism represented a compromise between the two – a middle way. Yet this fragile balance did not survive the economic crucible of the 1970s. Neoliberalism's strategic political alliance with neoconservatism can be seen as a natural reaction to the rapid changes that had unfolded during the 1950s and 60s in both the US economy (with the growth of the welfare state) and society (with the rise of the counter-cultural revolution); at the same time, it can also be seen as an opportunist power grab by the capitalist class during a period of uncertainty about the foundations of the old order. The fear of communism – captured succinctly in the title of Hayek's famous work, The Road to Serfdom – drove neoliberals to the opposite extreme: the belief in the superiority of the unfettered marketplace as the guiding principle to human civilization. Neoliberalism, therefore, represents an extremist ideology that, if carried through to its end, will likely end up being as destructive to the societies it touches as extremist socialism was to the former Soviet bloc.
Although the neoliberal revolution is still winning many political battles, such as the growing attack on Medicare in Canada or on Social Security in the United States, evidence of an emerging counter-movement (such as the poorly named "anti-globalization movement" – anti-neoliberalization would be more apt) is growing. As Karl Polanyi described in his classic, The Great Transformation, the industrialization and economic liberalization of the 19th Century resulted in a reaction from society for more governmental intervention to protect people and communities from the destructive effects of unfettered markets. It is highly likely that we are now witnessing the first stages of a similar reaction to the latest round of rapid technological change and market liberalization. Hopefully, this reaction will lead to a society that better balances capitalism's creative destruction with the needs of humans and their communities for continuity and security.
Copyright Sean Butler 2006
Written for an Intro to Political Economy class at Carleton University in 2006
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Feb 01, 2013 | reason.com
The review of: Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics, by Daniel Stedman Jones, Princeton University Press, 424 pages, $35
Socialist ideas were already floating around the democratic West in the early 1900s, but they gained much greater popularity after the Great Depression, which was widely seen as a failure of capitalism. One part of this shift entailed a greater role for the government in regulating or owning business enterprises. The second part involved a major expansion of social insurance programs.
Beginning in the late 1970s, there was a backlash against excessive government intervention in the economy. This neoliberal revolution involved privatization, deregulation, and cuts in marginal tax rates, but it left most social insurance programs in place.
Daniel Stedman Jones, an independent historian (and barrister) in London, has written a balanced and informative study of neoliberal thinkers such as F.A. Hayek and Milton Friedman, exploring their impact on policy making, particularly during Margaret Thatcher's administration in the United Kingdom and Ronald Reagan's in the United States. Jones suggests a policy revolution that began in the 1970s drew on 30 years of neoliberal research and advocacy, partly financed by businessmen hostile to Franklin Roosevelt's New Deal policies. Although Jones is skeptical of the more radical elements of neoliberalism, he is mostly respectful of the major neoliberal figures, despite the fact that his own politics are clearly left of center.
Jones traces the origins of neoliberalism to the mid-1940s, specifically to the nearly simultaneous publication of Hayek's The Road to Serfdom (1944), Ludwig von Mises' Bureaucracy (1944), and Karl Popper's The Open Society and Its Enemies (1945). The appearance of these highly influential books was followed by the formation of the Mont Pelerin Society, a group of American and European neoliberals who met annually starting in 1947. Even within this group there were important ideological differences, with Popper being much more sympathetic to the democratic left than Mises. Early neoliberals rejected complete laissez faire, which was widely seen as discredited by the depression; they supported economic interventions such as antitrust laws, the regulation of natural monopolies, health and safety regulation, and government provision of education and other social services.
Over time the center of the neoliberal movement shifted from Europe to America, especially the economics departments at the University of Chicago, where Milton Friedman taught, and the University of Virginia, where James Buchanan and Gordon Tullock developed "public choice" theory, which aims to explain why government policies often end up serving special interest groups. At the same time, the ideology drew closer to laissez faire. Neoliberal economists were less likely to endorse interventions such as antitrust and more likely to support a radical program of deregulation.
Beginning in the late 1970s, neoliberal ideas began to have a significant impact on policy in the U.S. and Britain. Under President Jimmy Carter there was significant deregulation of transportation, utilities, and banking, and capital gains taxes were reduced. Deregulation continued in the 1980s under President Reagan, who also slashed the top income tax rate from 70 percent to 28 percent. In Britain the Labour Party began to move away from traditional Keynesian stimulus programs, as these policies were widely blamed for the high rates of inflation during the 1970s. Thatcher sped up that trend after taking office in 1979. Her Tory government privatized state-owned firms and public housing, deregulated the financial industry, weakened labor unions, and sharply reduced the top income tax rate.
... ... ..
Consider Jones' description of neoliberalism's evolution from the late 1940s to the '70s: "The early neoliberals were marked by their desire to move beyond both laissez-faire economics and the New Deal. Later neoliberals, defined by the Chicago emphasis on unregulated markets, were less ambiguous in their opposition to the welfare state and to the need for government intervention in the economy."
In political practice, neoliberalism was not about abandoning the welfare state. It was about deregulation, privatization, freer trade, lower marginal tax rates, and keeping inflation under control. Thatcher's policies were viewed as a big neoliberal success, despite the fact that government spending remained close to 40 percent of GDP. There is far less regulation of investment, trade, market access, and prices in developed countries today than in the 1970s. Many state-owned enterprises have been sold to the private sector, and inflation has been brought down to relatively low levels. Virtually every developed country has sharply cut its top income tax rate from the levels of the 1970s. Yet the welfare state in those countries is roughly as large as it was four decades ago.
Nor was opposition to the welfare state ever a big part of the academic side of neoliberalism. I studied economics at the University of Chicago between 1977 and 1980, when the Chicago school had reached its peak of influence. There was a heavy focus on the failures of Keynesian demand-side macroeconomics as well as the often counterproductive effects of regulation. But if the welfare state ever came up, it was generally brushed aside with the comment that the optimal policy would probably be to just give money to the poor.
Milton Friedman proposed a "negative income tax" that would have replaced many welfare programs with direct cash payments. He also advocated vouchers for education and health care, plus a progressive consumption tax. Jones suggests that Friedman was opposed to both the welfare state and progressive taxes, but that's a bit misleading. What Friedman opposed was paternalism and inefficiency. At times Friedman indicated that his ideal society was a minimal state, but his policy recommendations would have given the government a substantial role in addressing issues such as health care, education, and income inequality. Hayek too supported a basic safety net.
A study by the libertarian political scientist Charles Murray in the mid-1980s did point to the pernicious effect of welfare on incentives, but the issue was not significantly addressed until the mid-1990s, when the welfare system was modified -- under a Democratic president -- to provide smaller benefits to the nonworking poor and more subsidies to the working poor. This wasn't a conservative plot to cut spending. It was an example of modern liberalism being transformed by academic research.
All the other major neoliberal initiatives in America were essentially bipartisan, including free trade agreements, cuts in capital gains taxes, the reduction of the top income tax rate, and the deregulation of transportation, utilities, and banking. Because big social programs such as Medicare and Social Security in America and the National Health Service in the U.K. are highly popular, criticism of the welfare state is often directed at relatively modest efforts aimed at groups not likely to vote for the more conservative party. Even as Mitt Romney complained about people "who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them," he campaigned vigorously against President Barack Obama's Medicare cuts.
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Dec 10, 2017 | www.defenddemocracy.press
"It's barbarism. I see it coming masqueraded under lawless alliances and predetermined enslavements. It may not be about Hitler's furnaces, but about the methodical and quasi-scientific subjugation of Man. His absolute humiliation. His disgrace"
Odysseas Elytis, Greek poet, in a press conference on the occasion of receiving the Nobel Prize (1979)
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Dec 08, 2017 | www.moonofalabama.org
psychohistorian , Dec 8, 2017 6:22:05 PM | 18
@ Daniel ending with "This "Clash of Civilizations" type narrative is not encouraging." That is exactly what they want you to focus on as a narrative rather than the simple truth about the demise of private banking. On the previous thread about the Republican: Ryan deficit BS there was a commenter ex-SA with a John H. Hotson link that I want to see go viral because it simply explains the history of the Gordian Knot we face as a speciesThe link to a 1996 article: Understanding Money by John H. Hotson . The take away quote
"Banking came into existence as a fraud. The fraud was legalized and we've been living with the consequences, both good and bad, ever since. Even so it is also a great invention-right up there with fire, the wheel, and the steam engine."
Clash of Civilizations is as vapid a meme as the common understanding of the Capitalism myth as that article so clearly states. Spread his word far and wide to wake up the zombies. It is time!
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Sep 14, 2015 | The Guardian
The waning clout stems from the lobby siding with the revanchist Israeli Prime Minister Binyamin Netanyahu, whose Iran strategy since the 2012 US presidential campaign has been to unabashedly side with Republican hawks. AIPAC's alignment with the position effectively caused the group to marginalize itself; the GOP is now the only place where AIPAC can today find lockstep support. The tens of millions AIPAC spent lobbying against the deal were unable to obscure this dynamic.
We may not look back at this as a sea change – some Senate Democrats who held firm against opposition to the deal are working with AIPAC to pass subsequent legislation that contains poison pills designed to kill it – but rather as a rising tide eroding the once sturdy bipartisan pro-Israeli government consensus on Capitol Hill. Some relationships have been frayed; previously stalwart allies of the Israel's interests, such as Vice President Joe Biden, have reportedly said the Iran deal fight soured them on AIPAC.
Even with the boundaries of its abilities on display, however, AIPAC will continue its efforts. "We urge those who have blocked a vote today to reconsider," the group said in a spin-heavy statement casting a pretty objective defeat as victory with the headline, "Bipartisan Senate Majority Rejects Iran Nuclear Deal." The group's allies in the Senate Republican Party have already promised to rehash the procedural vote next week, and its lobbyists are still rallying for support in the House. But the Senate's refusal to halt US support for the deal means that Senate Democrats are unlikely to reconsider, especially after witnessing Thursday's Republican hijinx in the House. These ploys look like little more than efforts to embarrass Obama into needing to cast a veto.
If Republicans' rhetoric leading up to to their flop in the Senate – Senator Lindsey Graham of South Carolina took to the floor during the debate and pulled out an old trick from the run-up to the Iraq war: blaming Iran for 9/11 and saying a failure to act would result in a worse attack – is any indication, even Democrats like the pro-Israel hawk Chuck Schumer will find it untenable to sidle up to AIPAC and the Republicans.
Opponents of the deal want to say the Democrats played politics instead of evaluating the deal honestly. That charge is ironic, to say the least, since most experts agree the nuclear deal is sound and the best agreement diplomacy could achieve. But there were politics at play: rather than siding with Obama, Congressional Democrats lined up against the Republican/Netanyahu alliance. The adamance of AIPAC ended up working against its stated interests.
Groups like AIPAC will go on touting their bipartisan bona fides without considering that their adoption of Netanyahu's own partisanship doomed them to a partisan result. Meanwhile, the ensuing fight, which will no doubt bring more of the legislative chaos we saw this week, won't be a cakewalk, so to speak, but will put the lie to AIPAC's claims it has a bipartisan consensus behind it. Despite their best efforts, Obama won't be the one embarrassed by the scrambling on the horizon.
TiredOldDog 13 Sep 2015 21:47a foreign country whose still hell bent on committing war crimes
I guess this may mean Israel. If it does, how about we compare Assad's Syria, Iran and Israel. How many war crimes per day in the last 4 years and, maybe, some forecasts. Otherwise it's the usual gratuitous use of bad words at Israel. It has a purpose. To denigrate and dehumanize Israel or, at least, Zionism.
ID7612455 13 Sep 2015 18:04
The problem with the right in the USA is that they offer no alternatives, nothing, nada and zilch they have become the opposition party of opposition. They rely on talking point memes and fear, and it has become the party of extremism and simplicity offering low hanging fruit and red meat this was on perfect display at their anti Iran deal rally, palin, trump, beck and phil robinson who commands ducks apparently.
winemaster2 13 Sep 2015 17:01
Put a Brush Mustache on the control freak, greed creed, Nentanhayu the SOB not only looks like but has the same mentality as Hitler and his Nazism crap.
Martin Hutton -> mantishrimp 12 Sep 2015 23:50
I wondered when someone was going to bring up that "forgotten" fact. Is it any wonder the Iranians don't trust the US. After the US's spying exploits during the Iraqi WMD inspections, why are you surprised that Iran asks for 24 days notice of inspection (enough time to clear out conventional weapons development but not enough to remove evidence of nuclear weapons development).
mantishrimp 12 Sep 2015 20:51
Most Americans don't know the CIA overthrew the Iranian government in 1953 and installed the Shaw. Most Republicans know that most Americans will believe what Fox news tells them. Republicans live in an alternate universe where there is no climate change, mammon is worshiped and wisdom is rejected hatred is accepted negotiation is replaced by perpetual warfare. Now most Americans are tired of stupid leadership and the Republicans are in big trouble.
ByThePeople -> Sieggy 12 Sep 2015 20:27
Is pitiful how for months and months, certain individuals blathered on and on and on when it was fairly clear from the get go that this was a done deal and no one was about cater to the war criminal. I suppose it was good for them, sucking every last dime they could out of the AICPA & Co. while they acted like there was 'a chance'. Nope, only chance is that at the end of the day, a politician is a politician and he'll suck you dry as long as you let 'em.
What a pleasure it is to see the United States Congress finally not pimp themselves out completely to a foreign country whose still hell bent on committing war crimes. A once off I suppose, but it's one small step for Americans.
ByThePeople 12 Sep 2015 20:15
AIPAC - Eventually everything is seen for what is truly is.
ambushinthenight -> Greg Zeglen 12 Sep 2015 18:18
Seems that it makes a lot of sense to most everyone else in the world, it is now at the point where it really makes no difference whether the U.S. ratifies the deal or not. Israel is opposed because they wish to maintain their nuclear weapons monopoly in the region. Politicians here object for one of two reasons. They are Israeli first and foremost not American or for political expediency and a chance to try undo another of this President's achievements. Been a futile effort so far I'd say.
hello1678 -> BrianGriffin 12 Sep 2015 16:42
With the threat you describe from Israel it seems only sensible for Iran to develop nuclear weapons - if my was country (Scotland) was in Iran's place and what you said is true i would only support politicians who promised fast and large scale production of atomic weapons to counter the clear threat to my nation.
nardone -> Bruce Bahmani 12 Sep 2015 14:12
Netanyahu loves to play the victim, but he is the primary cause that Jews worldwide, but especially in the United States, are rethinking the idea of "Israel." I know very few people who willingly identify with a strident right wing government comprised of rabid nationalists, religious fundamentalists, and a violent, almost apocalyptic settler community.
The Israeli electorate has indicated which path it wishes to travel, but that does not obligate Jews throughout the world to support a government whose policies they find odious.
Greg Zeglen -> Glenn Gang 12 Sep 2015 13:51
good point which is found almost nowhere else...it is still necessary to understand that the whole line of diplomacy regarding the west on the part of Iran has been for generations one of deceit...and people are intensely jealous of what they hold dear - especially safety and liberty with in their country....
EarthyByNature -> Bruce Bahmani 12 Sep 2015 13:45
I do trust your on salary with a decent benefits package with the Israeli government or one of it's slavish US lobbyists. Let's face it, got to be hard work pouring out such hateful drivel.
BrianGriffin -> imipak 12 Sep 2015 12:53
The USA took about six years to build a bomb from scratch. The UK took almost six years to build a bomb. Russia was able to build a bomb in only four years (1945-1949). France took four years to build a bomb. https://en.wikipedia.org/wiki/France_and_weapons_of_mass_destruction
The Chinese only took four years. http://www.china.org.cn/english/congress/228244.htm
steelhead 12 Sep 2015 12:48
As part of this deal the US and allies should guarantee Iran protection against Israeli aggression. Otherwise, considering Israel's threats, Iran is well justified in seeking a nuclear deterrent.
BrianGriffin -> HauptmannGurski 12 Sep 2015 12:35
"Europe needs business desperately."
Sieggy 12 Sep 2015 12:32
In other words, once again, Obama out-played and out-thought both the GOP and AIPAC. He was playing multidimensional chess while they were playing checkers. The democrats kept their party discipline while the republicans ran around like a schoolyard full of sugared-up children. This is what happens when you have grownups competing with adolescents. The republican party, to put it very bluntly, can't get it together long enough to whistle 'Yankee Doodle Dandy' in unison.
They lost. Again. And worse than being losers, they're sore, whining, sniveling, blubbering losers. Even when they've been spanked - hard - they swear it's not over and they're gonna get even, just you wait and see! Get over it. They lost - badly - and the simple fact that their party is coming apart at the seams before our very eyes means they're going to be losing a lot more, too.
AIPAC's defeat shows that their grip on the testicles of congress has been broken. All the way around, a glorious victory for Obama, and an ignominious defeat for the republicans. And most especially, Israel. Their primary goal was to keep Iran isolated and economically weak. They knew full well that the Iranians hadn't had a nuclear program since 2003, but Netanhayu needed an existential threat to Israel in order to justify his grip on power. All of this charade has bee at the instigation of and directed by Israel. And they lost They were beaten by that hated schwartze and the liberals that Israel normally counts on for unthinking support.
Their worst loss, however, was losing the support of the American jews. Older, orthodox jews are Israel-firsters. The younger, less observant jews are Americans first. Netanhayu's behavior has driven a wedge between the US and Israel that is only going to deepen over time. And on top of that, Iran is re-entering the community of nations, and soon their economy will dominate the region. Bibi overplayed his hand very, very stupidly, and the real price that Israel will pay for his bungling will unfold over the next few decades.
BrianGriffin -> TiredOldDog 12 Sep 2015 12:18
"The Constitution provides that the president 'shall have Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two-thirds of the Senators present concur'"
http://www.senate.gov/artandhistory/history/common/briefing/Treaties.htm
Hardly a done deal. If Obama releases funds to Iran he probably would be committing an impeachable crime under US law. Even many Democrats would vote to impeach Obama for providing billions to a sworn enemy of Israel.
Glenn Gang -> Bruce Bahmani 12 Sep 2015 12:07
"...institutionally Iranclad(sic) HATRED towards the west..." Since you like all-caps so much, try this: "B.S."
The American propel(sic) actually figured out something else---that hardline haters like yourself are desperate to keep the cycle of Islamophobic mistrust and suspicion alive, and blind themselves to the fact that the rest of us have left you behind.
FACT: More than half of the population of Iran today was NOT EVEN BORN when radical students captured the U.S. Embassy in Teheran in 1979.
People like you, Bruce, conveniently ignore the fact that Ahmedinejad and his hardline followers were voted out of power in 2013, and that Supreme Leader Ali Khamenei further marginalized them by allowing the election of new President Hassan Rouhani to stand, though he was and is an outspoken reformer advocating rapprochement with the west. While his outward rhetoric still has stern warnings about anticipated treachery by the 'Great Satan', Khamenei has allowed the Vienna agreement to go forward, and shows no sign of interfering with its implementation.
He is an old man, but he is neither stupid nor senile, and has clearly seen the crippling effects the international sanctions have had on his country and his people. Haters like you, Bruce, will insist that he ALWAYS has evil motives, just as Iranian hardliners (like Ahmedinejad) will ALWAYS believe that the U.S. has sinister motives and cannot EVER be trusted to uphold our end of any agreement. You ascribe HATRED in all caps to Iran, the whole country, while not acknowledging your own simmering hatred.
People like you will always find a 'boogeyman,' someone else to blame for your problems, real or imagined. You should get some help.
beenheretoolong 12 Sep 2015 10:57
No doubt Netanyahu will raise the level of his anger; he just can't accept that a United States president would do anything on which Israel hadn't stamped its imprimatur. It gets tiresome listening to him.
geneob 12 Sep 2015 10:12
It is this deal that feeds the military industrial complex. We've already heard Kerry give Israel and Saudi Arabia assurances of more weapons. And that $150 billion released to Iran? A healthy portion will be spent for arms..American, Russian, Chinese. Most of the commenters have this completely backwards. This deal means a bonanza for the arms industry.
Jack Hughes 12 Sep 2015 08:38
The Iran nuclear agreement accomplishes the US policy goal of preventing the creation of the fissionable material required for an Iranian nuclear weapons program.
What the agreement does not do is eliminate Iran as a regional military and economic power, as the Israelis and Saudis -- who have invested hundreds of millions of dollars to lobby American politicians and brainwash American TV viewers -- would prefer.
To reject the agreement is to accept the status quo, which is unacceptable, leaving an immediate and unprovoked American-led bombing campaign as the only other option.
Rejection equals war. It's not surprising that the same crowd most stridently demanding rejection of the agreement advocated the disastrous invasion and occupation of Iraq. These homicidal fools never learn, or don't care as long as it's not their lives at risk.
American politicians opposed to the agreement are serving their short-term partisan political interests and, under America's system of legalized bribery, their Israeli and Saudi paymasters -- not America's long-term policy interests.
ID293404 -> Jeremiah2000 12 Sep 2015 05:01
And how did the Republicans' foreign policy work out? Reagan created and financed Al Qaeda. Then Bush II invades Iraq with promises the Iraqis will welcome us with flowers (!), the war will be over in a few weeks and pay for itself, and the middle east will have a nascent democracy (Iraq) that will be a grateful US ally.
He then has pictures taken of himself in a jet pilot's uniform on a US aircraft carrier with a huge sign saying Mission Accomplished. He attacks Afghanistan to capture Osama, lets him get away, and then attacks Iraq instead, which had nothing to do with 9/11 and no ties with Al Qaeda.
So then we have two interminable wars going on, thanks to brilliant Republican foreign policy, and spend gazillions of dollars while creating a mess that may never be straightened out. Never mind all the friends we won in the middle east and the enhanced reputation of our country through torture, the use of mercenaries, and the deaths and displacement of hundreds of thousands of civilians. Yeah, we really need those bright Republicans running the show over in the Middle East!
HauptmannGurski -> lazman 12 Sep 2015 02:31
That is a very difficult point to understand, just look at this sentence "not understanding the fact in international affairs that to disrespect an American president is to disrespect Americans" ... too much emperor thinking for me. We have this conversation with regard to Putin everywhere now, so we disrespect all 143 million Russians? There's not a lot of disrespect around for Japanese PM Abe and Chinese Xi - does this now mean we respect them and all Japanese and Chinese? Election campaigns create such enormous personality cults that people seem to lose perspective.
On the Iran deal, if the US had dropped out of it it would have caused quite a rift because many countries would have just done what they wanted anyway. The international Atomic Energy Organisation or what it is would have done their inspections. Siemens would have sold medical machines. Countries would grow up as it were. But as cooperation is always better than confrontation it is nice the US have stayed in the agreement that was apparently 10 years in the making. It couldn't have gone on like that. With Europe needing gazillions to finance Greece, Ukraine, and millions of refugees (the next waves will roll on with the next spring and summer from April), Europe needs business desparately. Israel was happy to buy oil through Marc Rich under sanctions, now it's Europe's turn to snatch some business.
imipak -> BrianGriffin 11 Sep 2015 21:56
Iran lacks weapons-grade uranium and the means to produce it. Iran has made no efforts towards nuclear weapons technology for over a decade. Iran is a signatory of the NPT and is entitled to the rights enshrined therein. If Israel launches a nuclear war against Iran over Iran having a medical reactor (needed to produce isotopes for medicine, isotopes America can barely produce enough of for itself) that poses no security threat to anyone, then Israel will have transgressed so many international laws that if it survives the radioactive fallout (unlikely), it won't survive the political fallout.
It is a crime of the highest order to use weapons of mass destruction (although that didn't stop the Israelis using them against Palestinian civilians) and pre-emtive self-defence is why most believe Bush and Blair should be on trial at the ICJ, or (given the severity of their crimes) Nuremberg.
Israel's right to self-defense is questionable, I'm not sure any such right exists for anyone, but even allowing for it, Israel has no right to wage unprovoked war on another nation on the grounds of a potential threat discovered through divination using tea leaves.
imipak -> Jeremiah2000 11 Sep 2015 21:43
Iran's sponsorship of terrorism is of no concern. Such acts do not determine its competency to handle nuclear material at the 5% level (which you can find naturally). There are only three questions that matter - can Iran produce the 90-95% purity needed to build a bomb (no), can Iran produce such purity clandestinely (no), and can Iran use its nuclear technology to threaten Israel (no).
Israel also supports international terrorism, has used chemical weapons against civilians, has directly indulged in terrorism, actually has nuclear weapons and is paranoid enough that it may use them against other nations without cause.
I respect Israel's right to exist and the intelligence of most Israelis. But I neither respect nor tolerate unreasoned fear nor delusions of Godhood.
imipak -> commish 11 Sep 2015 21:33
I've seen Iranian statements playing internal politics, but I have never seen any actual Iranian threats. I've seen plenty about Israel assassinating people in other countries, using incendiaries and chemical weapons against civilians in other countries, conducting illegal kidnappings overseas, using terrorism as a weapon of war, developing nuclear weapons illegally, ethnically cleansing illegally occupied territories, that sort of thing.
Until such time as Israel implements the Oslo Accords, withdraws to its internationally recognized boundary and provides the International Court of Justice a full accounting of state-enacted and state-sponsored terrorism, it gets no claims on sainthood and gets no free rides.
Iran has its own crimes to answer, but directly threatening Israel in words or deeds has not been one of them within this past decade. Its actual crimes are substantial and cannot be ignored, but it is guilty only of those and not fictional works claimed by psychotic paranoid ultra-nationalists.
imipak -> moishe 11 Sep 2015 21:18
Domestic politics. Of no real consequence, it's just a way of controlling a populace through fear and a never-ending pseudo-war. It's how Iran actually feels that is important.
For the last decade, they've backed off any nuclear weapons research and you can't make a bomb with centrifuges that can only manage 20% enriched uranium. You need something like 90% enrichment, which requires centrifuges many, many times more advanced. It'd be hard to smuggle something like that in and the Iranians lack the skills, technology and science to make them.
Iran's conventional forces are busy fighting ISIS. What they do afterwards is a concern, but Israel has a sizable military presence on the Golan Heights. The most likely outcome is for Iran to install puppet regimes (or directly control) Syria and ISIS' caliphate.
I could see those two regions plus Iraq being fully absorbed into Iran, that would make some sense given the new geopolitical situation. But that would tie up Iran for decades. Which would not be a bad thing and America would be better off encouraging it rather than sabre-rattling.
(These are areas that contribute a lot to global warming and political instability elsewhere. Merging the lot and encouraging nuclear energy will do a lot for the planet. The inherent instability of large empires will reduce mischief-making elsewhere to more acceptable levels - they'll be too busy. It's idle hands that you need to be scared of.)
Israelis worry too much. If they spent less time fretting and more time developing, they'd be impervious to any natural or unnatural threat by now. Their teaching of Roman history needs work, but basically Israel has a combined intellect vastly superior to that of any nearby nation.
That matters. If you throw away fear and focus only on problems, you can stop and even defeat armies and empires vastly greater than your own. History is replete with examples, so is the mythologicized history of the Israeli people. Israel's fear is Israel's only threat.
mostfree 11 Sep 2015 21:10
Warmongers on all sides would had loved another round of fear and hysteria. Those dark military industrial complexes on all sides are dissipating in the face of the high rising light of peace for now . Please let it shine.
bishoppeter4 11 Sep 2015 20:09
The rabid Republicans working for a foreign power against the interest of the United States -- US citizens will know just what to do.
Jeremiah2000 -> Carolyn Walas Libbey 11 Sep 2015 19:21
"Netanyahu has no right to dictate what the US does."
But he has every right to point out how Obama is a weak fool. How's Obama's red line working in Syria? How is his toppling of Qadaffi in Libya working? How about his completely inept dealings with Egypt, throwing support behind the Muslim Brotherhood leaders? The leftists cheer Obama's weakening of American influence abroad. But they don't talk much about its replacement with Russian and Chinese influence. Russian build-up in Syria part of secret deal with Iran's Quds Force leader. Obama and Kerry are sending a strongly worded message.
Susan Dechancey -> whateverworks4u 11 Sep 2015 19:05
Incredible to see someone prefer war to diplomacy - guess you are an armchair General not a real one.
Susan Dechancey -> commish 11 Sep 2015 19:04
Except all its neighbours ... not only threatened but entered military conflict and stole land ... murdered Iranian Scientists but apart from that just a kitten
Susan Dechancey -> moishe 11 Sep 2015 19:00
Israel has nukes so why are they afraid ?? Iran will never use nukes against Israel and even Mossad told nuttyyahoo sabre rattling
Susan Dechancey 11 Sep 2015 18:57
Iran is not a made-up country like Iraq it is as old as Greece. If the Iraq war was sold as pushover and failed miserably then an Iran war would be unthinkable. War can be started in an instant diplomacy take time. UK, France, Germany & EU all agree its an acceptable alternative to war. So as these countries hardly ever agree it is clear the deal is a good one.
To be honest the USA can do what it likes now .. UK has set up an embassy - trade missions are landing Tehran from Europe. So if Israel and US congress want war - they will be alone and maybe if US keeps up the Nuttyahoo rhetoric European firms can win contracts to help us pay for the last US regime change Iraq / Isis / Refugees...
lswingly -> commish 11 Sep 2015 16:58
Rank and file Americans don't even know what the Iran deal is. And can't be bothered to actually find out. They just listen to sound bites from politicians the loudest of whom have been the wildly partisan republicans claiming that it gives Iran a green light to a nuclear weapon. Not to mention those "less safe" polls are completely loaded. Certain buzz words will always produce negative results. If you associate something positive "feeling safe" or "in favor of" anything that Iran signs off on it comes across as indirectly supporting Iran and skews the results of the poll. "Iran" has been so strongly associated with evil and negative all you have to do is insert it into a sentence to make people feel negatively about the entire sentence. In order to get true data on the deal you would have to poll people on the individual clauses the deal.
It's no different from how when you run a poll on who's in favor "Obamacare" the results will be majority negative. But if you poll on whether you are in favor of "The Affordable Care Act" most people are in favor of it and if you break it down and poll on the individual planks of "Obamacare" people overwhelming approve of the things that "Obamacare does". The disapproval is based on the fact that Republican's have successfully turned "Obamacare" into a pejorative and has almost no reflection of people feelings on actual policy.
To illustrate how meaningless those poll numbers are a Jewish poll (supposedly the people who have the most to lose if this deal is bad) found that a narrow majority of Jews approve of the deal. You're numbers are essentially meaningless.
The alternative to this plan is essentially war if not now, in the very near future, according to almost all non-partisan policy wonks. Go run a poll on whether we should go to war with Iran and see how that turns out. Last time we destabilized the region we removed a secular dictator who was enemies with Al Queda and created a power vacuum that led to increased religious extremism and the rise of Isis. You want to double down on that strategy?
MadManMark -> whateverworks4u 11 Sep 2015 16:34
You need to reread this article. It's exactly this attitude of yours (and AIPAC and Netanyahu) that this deal is not 100% perfect, but then subsequently failed to suggest ANY way to get something better -- other than war, which I'm sorry most people don't want another Republican "preemptive" war -- caused a lot people originally uncertain about this deal (like me) to conclude there may not be a better alternative. Again, read the article: What you think about me, I now think about deal critics like you ("It seems people will endorse anything to justify their political views.)
USfan 11 Sep 2015 15:34
American Jews are facing one of the most interesting choices of recent US history. The Republican Party, which is pissing into a stiff wind of unfavorable demographics, seems to have decided it can even the playing field by peeling Jews away from the Democrats with promises to do whatever Israel wants. So we have the very strange (but quite real) prospect of Jews increasingly throwing in their lot with the party of Christian extremists whose ranks also include violent antiSemites.
Interesting times. We'll see how this plays out. My family is Jewish and I have not been shy in telling them that alliances with the GOP for short-term gains for Israel is not a wise policy. The GOP establishment are not antiSemtic but the base often is, and if Trump's candidacy shows anything it's that the base is in control of the Republicans.
But we'll see.
niyiakinlabu 11 Sep 2015 15:29
Central question: how come nobody talks about Israel's nukes?
hello1678 -> BrianGriffin 11 Sep 2015 14:02
Iran will not accept being forced into dependence on outside powers. We may dislike their government but they have as much right as anyone else to enrich their own fuel.
JackHep 11 Sep 2015 13:30
Netanyahu is an example of all that is bad about the Israeli political, hence military industrial, establishment. Why Cameron's government allowed him on British soil is beyond belief. Surely the PM's treatment of other "hate preachers" would not have been lost on Netanyahu? Sadly our PM seems to miss the point with Israel.
talenttruth 11 Sep 2015 13:12
The American Warmonger Establishment (that now fully entrenched "Military Industrial Complex" against which no more keen observer than President Dwight Eisenhower warned us), is rip-shit over the Iran Agreement. WHAT? We can't Do More War? That will be terrible for further increasing our obscene 1-percent wealth. Let's side with Israeli wingnut Netanyahu, who cynically leverages "an eye for an eye for an eye for an eye" to hold his "Power."
And let's be treasonous against the United States by trying to undermine U.S. Foreign Policy FOR OUR OWN PROFIT. We are LONG overdue for serious jail time for these sociopaths, who already have our country "brainwashed" into 53% of our budget going to the War Profiteers and to pretending to be a 19th century Neo-Colonial Power -- in an Endless State of Eternal War. These people are INSANE. Time to simply say so.
Boredwiththeusa 11 Sep 2015 12:58
At the rally to end the Iran deal in the Capitol on Wednesday, one of the AIPAC worshipping attendees had this to say to Jim Newell of Slate:
""Obama is a black, Jew-hating, jihadist putting America and Israel and the rest of the planet in grave danger," said Bob Kunst of Miami. Kunst-pairing a Hillary Clinton rubber mask with a blue T-shirt reading "INFIDEL"-was holding one sign that accused Obama, Hillary Clinton, and John Kerry of "Fulfilling Hitler's Dreams" and another that queried, "DIDN'T WE LEARN ANYTHING FROM 1938?"
His only reassurance was that, when Iran launches its attack on the mainland, it'll be stopped quickly by America's heavily armed citizenry."
That is indicative of the mindset of those opposed to the agreement.
Boredwiththeusa 11 Sep 2015 12:47
AIPAC is a dangerous anti-american organization, and a real and extant threat to the sovereignty of the U.S. Any elected official acting in concert with AIPAC is colluding with a foreign government to harm the U.S. and should be considered treasonous and an enemy of the American people.
tunejunky 11 Sep 2015 12:47
AIPAC, its constituent republicans, and the government of Israel all made the same mistake in a common episode of hubris. by not understanding the American public, war, and without the deference shown from a proxy to its hegemon, Israel's right wing has flown the Israeli cause into a wall. not understanding the fact in international affairs that to disrespect an American president is to disrespect Americans, the Israeli government acted as a spoiled first-born - while to American eyes it was a greedy, ungrateful ward foisted upon barely willing hands. it presumed far too much and is receiving the much deserved rebuke.
impartial12 11 Sep 2015 12:37
This deal is the best thing that happened in the region in a while. We tried war and death. It didn't work out. Why not try this?
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Feb 10, 2015 | The Guardian
vr13vr -> jezzam 10 Feb 2015 18:35
The distrust between the West and the rest of Ukraine is not 14 months old. It has always existed. Since the War at the very list. Even in Kiev they view Western Ukrainians as strangers. Western Ukrainians would call everyone a moscovite, and in the East and the South, the Russians were neutral because their lives were much closer to Russia than to all this Ukrainian bullshit. So they didn't have any hate back towards the West Ukrainians. Besides, West Ukraine was sufficiently far from Donbass for Russians there not to feel threatened.
So the Western [Ukrainians] hate towards Russians vs. Russian neutral attitude towards Ukrainians has existed for decades.
Systematic
A new law to likely be approved by the Rada "criminalizes the denial or justification of Russia's aggression against Ukraine" with a fine equivalent to 22 to 44,000 USD for the first offense and up to three years in prison for repeat offenders.Meanwhile, while the law is not approved,
In February 8 in Mariupol a rally was planned against mobilization. On the eve the adviser of Interior Minister Anton Gerashchenko said that everyone who comes there will be arrested, "Everyone who comes to the rally tomorrow against mobilization, will be delayed for several hours for identification and after fingerprinting and photographing until released. Let me remind you that I and my fellow lawmaker Boris Filatov has filed a bill to impose criminal liability for public calls for the failure of mobilization "- he wrote on his page on Facebook. As a result, the action did not take place.
vr13vr -> SallyWa 10 Feb 2015 18:25
With all the hot headed claims of how the Soviet Union just grabbed the piece of land from Poland, Ukraine has a good chance to correct those misdeeds. Give West Ukraine to Poland, Transkarpathia - to Hungary, and the South West - to Romania. That would be restoring historical injustice.
vr13vr -> SallyWa 10 Feb 2015 18:18
But isn't it wrong that the faith of those people will depend on what EU or US will allow them to do rather than on their natural desire? How does it co-exist with all those democratic ideas.
Besides, federalization may or may not protect them. Kiev may or may not adhere to rules in the future, there will be a tax issue, there will be cultural issues as Kiev will try to Ukrainize those areas subtly - you know those programs that are not anti-Russian per se but that increase Ukrainian presence, thus diluting the original population. Remaining under the same roof with Kiev and L'vov isn't really the best solution for Donbass if they want to preserve their independence and identity.
SallyWa -> VladimirM 10 Feb 2015 18:16
They key thing in all of this is to stop being naive. Learn it, remember it. Our media will only care for the "right" journalists and will throw campaigns only for them and there will be rallies only over the death of "right" people, while we won't pay attention to thousands of deaths of the "wrong" people.
theeskimo -> ridibundus 10 Feb 2015 18:02
The US actively encouraged the overthrow of the democratically elected president of Ukraine, a void filled by right wing nationalists and an act that led directly to the current conflict. Now they want to arm a leadership with no national mandate who have ceded responsibility for prosecuting their war in the east to an ultra nationalist bunch of thugs.
I think it's you who should keep up with what's happening. By the time this is over, Ukraine will be no more.
newsflashUK 10 Feb 2015 18:01
Scraping the barrel for cannon fodder by pro-NATO puppet Poroshenko regime: "The draft officers have been tapping men from 20 to 60 years old and women of 20 to 50 years old with relevant military service experience and training. The age limit for senior officers that could be mobilized is 65 years. Vladyslav Seleznev, spokesman of General Staff, said" (Kyiv news).
theeskimo -> ridibundus 10 Feb 2015 18:02
The US actively encouraged the overthrow of the democratically elected president of Ukraine, a void filled by right wing nationalists and an act that led directly to the current conflict. Now they want to arm a leadership with no national mandate who have ceded responsibility for prosecuting their war in the east to an ultra nationalist bunch of thugs.
I think it's you who should keep up with what's happening. By the time this is over, Ukraine will be no more.
newsflashUK 10 Feb 2015 18:01
Scraping the barrel for cannon fodder by pro-NATO puppet Poroshenko regime: "The draft officers have been tapping men from 20 to 60 years old and women of 20 to 50 years old with relevant military service experience and training. The age limit for senior officers that could be mobilized is 65 years. Vladyslav Seleznev, spokesman of General Staff, said" (Kyiv news).
erpiu 10 Feb 2015 17:59
The focus on Putin and geopolitics forces the actual ukr people out of the picture and blurrs understanding.
The maidan was a genuinely popular NW-ukr rebellion after NW-ukr had lost all recent pre-2014 elections to the culturally Russian majority of voters mainly in SE-ukr.
In turn, the maidan coup d'etat de facto disenfranchised the culturally russian majority in SE-ukr.
the NW-ukr neonazi bands fighting in SE-ukr are de facto foreign in SE-ukr, both culturally and geo-politically, and are there to give this majority a lesson.
USA+EU weapons would only help the punitive "pacification" of SE ukr, the place that was deciding UKR elections until the coup.
The real festering conflict is the incompatibility of the anti-Russian feelings in NW ukr (little else is shared by the various maidan factions) with the cccp/russian heritage of most people in SE ukr... that incompatibility is the main problem that needs to be "solved".
Neither the maidan coup nor yanukovich&the pre-coup electoral dominance of SE ukr voters were ever stable solutions.
newsflashUK 10 Feb 2015 17:57
In Zakarpattia Oblast, only 410 out of 1,110 people who received draft notices came to mobilization centers, Oleg Lysenko, a representative of General Staff said recently.(kyiv news)
SallyWa 10 Feb 2015 17:51
Ukraine's Economy Is Collapsing And The West Doesn't Seem To CareFor some reason that isn't quite clear to me, discussion among Western experts has overwhelmingly centered not on the imminent economic apocalypse facing Kiev, but on whether or not the United States should supply it with advanced weapons systems to beat back the Russians.
It might be inconvenient to note, but Russia is positively crucial to Ukraine's economy not merely as a source of raw materials and energy but as a destination for industrial production that would otherwise be unable to find willing customers. According to Ukrainian government data, Russia accounted for roughly a quarter of the country's total foreign trade. The equivalent figure from the Russian side? Somewhere between 6 and 7%. Given that reality, Russia's leverage over Ukraine is obviously much greater that Ukraine's leverage over Russia.
TET68HUE 10 Feb 2015 17:35
During WW 2 Draft dodging was almost unheard of. The war was perceived as "just", a righteous cause. Thus, men correctly saw it as their duty to take up arms against fascism.
During the Vietnam War, the draft was a huge issue with many thousands of young men going to Canada, thousand who were in the military receiving less than honorable discharges and still others doing jail time. The war was view as an unjust war by the better educated and those who didn't have to enlist for food and shelter ("three hots and a cot").
The rebellion against the draft in Ukraine tells us that the war against the people in the Eastern area is an unjust war. People don't need a degree in history to understand when they are being use in ways that is not in their interest. We find only the fascist battalion who are hungry for this war. The US and EU should keep out of this internal civil struggle in Ukraine.
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moonofalabama.org
This, by AFP, is one of the most misleading propaganda efforts I have ever seen.
The headline:
Ukraine run by 'miserable' Jews: rebel chief80% of the readers will not read more than that headline.
The first paragraph:
Donetsk (Ukraine) (AFP) - Ukraine's pro-Russian rebel chief on Monday branded the country's leaders "miserable" Jews in an apparent anti-Semitic jibe.Of those 20% of the readers who will read the first paragraph only one forth will also read the second one. The "anti-semitic" accusation has thereby been planted in 95% of the readership. Now here is the second paragraph:
Alexander Zakharchenko, leader of the self-proclaimed Donetsk People's Republic, claimed that Kiev's pro-Western leaders were "miserable representatives of the great Jewish people".Saying that George W. Bush and Dick Cheney were "miserable representatives of the great American people" would be "anti-American"? What is anti-semitic in calling "the Jewish people" "great"?
The AFP reporter and editor who put that up deserve an Orwellian reward. It is one of the most misleading quotations I have ever seen. Accusing Zakharchenko of anti-semitism when he is actually lauding Jews.
Now I do not agree with Zakharchenko. There is no such thing as "the Jewish people" in the sense of a racial or national determination. There are people of various nationalities and racial heritages who assert that they follow, or their ancestors followed, religious Jewish believes. Some of them may have been or are "great".
But that does not make them "the Jewish people" just like followers of Scientology do not make "the Scientologish people".
Posted by b at 06:51 AM | Comments (76)jfl | Feb 3, 2015 8:27:41 AM | 4
Lysander | Feb 3, 2015 12:02:09 PM | 13@1
Saker has a link to the youtube, the audio in Russian with English subtitles. It begins at about 12:30.
@3
When Sarkozy came in AFP really hit the skids. Like the NYTimes and Bush XLIII.
What Zacharchenko did that was unforgivable is to draw attention to the fact that Kiev's current leadership is largely Jewish. From Yats to Petro (Waltzman) Poroshenko To Igor Kolomoiski. No matter how gracefully Zach would put it, it is the content that they hate.Not saying there is anything wrong with that, but I guess there are some who would rather you not notice.
Lone Wolf | Feb 3, 2015 2:01:47 PM | 20
Right-wing nazi-rag KyivPost has a miserable coverage of same piece. "Agence France-Presse: Russia's guy says Ukraine run by 'miserable Jews'" Zhakharchenko is "Russia's guy," his picture under the headline with a totally unrelated caption, subtitled by the first paragraph of the AFP fake "news" (sic!)"Ukraine's pro-Russian rebel chief on Monday branded the country's leaders "miserable" Jews in an apparent anti-Semitic jibe.", and a link to Yahoo news reproducing the AFP piece in full.Zionazi thieves stole the word "semitic" to mean "Jews," when in fact it comprehends many other languages and peoples. Zhakharchenko's AFP phony "anti-Semitic jibe" would be insulting to all these many peoples.
https://en.wikipedia.org/wiki/Semitic_people
"...Semitic peoples and their languages, in ancient historic times (between the 30th and 20th centuries BC), covered a broad area which encompassed what are today the modern states and regions of Iraq, Syria, Israel, Jordan, Lebanon, Palestinian territories, Saudi Arabia, Kuwait, Oman, Yemen, Bahrain, Qatar, United Arab Emirates and the Sinai Peninsula and Malta..."
...The word "Semite" and most uses of the word "Semitic" relate to any people whose native tongue is, or was historically, a member of the associated language family.[35][36] The term "anti-Semite", however, came by a circuitous route to refer most commonly to one hostile or discriminatory towards Jews in particular...[37]
Yet another historical theft by the so-called "chosen" crooks.
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Nov 09, 2002 | www.prospect-magazine.co.uk
Financial markets 101
Early history
The Bretton Woods system
The power of financial actors
Consequences of global financial flows
Policy options
Theological and ethical considerations
A new financial architecture
What Christians can do
Want to know more?
Questions For Discussion
"During my whole career at Goldman Sachs - 1967 to 1991 - I never owned a foreign stock or emerging market bonds. Now I have hundreds of millions of dollars in Russia, Brazil, Argentina and Chile, and I worry constantly about the dollar-yen rate. Every night before I go to bed I call in for the dollar-yen quote, and to find out what the Nikkei is doing and what the Hang Seng Index is doing. We have bets in all these markets. Right now Paul [one of my traders] is long [on] the Canadian dollar. We have bets all over the place. I would not have worried about any of these twenty years ago. Now I have to worry about all of them."
Leon Coopermann, hedge fund manager1
Economic globalization is probably the most fundamental transformation of the world's political and economic arrangements since the Industrial Revolution. Decisions made in one part of the world more and more affect people and communities elsewhere in the world. Sometimes the consequences of globalization are positive, liberating inventive and entrepreneurial talents and accelerating the pace of sustainable development. But at other times they are negative, as when many people, especially in less-developed countries, are left behind without a social safety net. Globalization undermines the ability of the nation to tax and to regulate its own economy. This weakens the power of sovereign nations relative to that of large transnational corporations and distorts how social and economic priorities are chosen.
Economic globalization is most often associated with rapid growth in the flow of goods and services across international borders. Indeed, the economic "openness" of a nation is often measured by the value of its exports, imports, or their sum when compared to the size of its economy. Economic globalization also involves large investments from outside each nation, often by transnational corporations. These corporations often combine technology and know-how with their investments that enhance the productive capacity of a nation. Previous position papers of the Mobilization, contained in Speaking of Religion & Politics: The Progressive Church Tackles Hot Topics2, have dealt with globalization primarily in these terms.
But international trade and investment are only part of the openness that has come to be called globalization. Another part, and arguably the most important, is the quickening flow of financial assets internationally. While a small portion of this flow is directly associated with the "real" economy of production and exchange, its vast majority is composed of trades in the "paper" economy of short-term financial markets. This paper economy is enormous: The value of global financial securities greatly exceeds the value of annual world output of goods and services. Moreover, the paper economy often contributes to crises in the real economy. Thus it is important to the well being of humanity and the planet as a whole, yet it is little understood by most people. This essay undertakes to provide a basic understanding of this paper economy, especially as its more speculative features have multiplied during the last two or three decades, so that Christians and others concerned about what is happening in our world can join in an intelligent discussion of how the harmful consequences of financial markets can be controlled.
Financial markets 101
To better understand this paper economy, one first needs to know something about foreign exchange markets, international money markets, and "external" financial markets.
In an open economy, domestic residents often engage in international transactions. American car dealers, for example, buy Japanese Toyotas and Datsuns, while German computer companies sell electronic notebooks to Mexican businessmen. Similarly, Australian mutual funds invest in the shares of companies all over the world, while the treasurer of a Canadian transnational corporation parks idle cash in 90-day Bank of England notes. Most of these transactions require one or more participants to acquire a foreign currency. If an American buys a Toyota and pays the Japanese Toyota dealer in dollars, for example, the latter will have to exchange the dollars for yens in order to have the local currency with which to pay his workers and local suppliers.
The foreign exchange market is the market in which national currencies are traded. As in any market, a price must exist at which trade can occur. An exchange rate is the price of a unit of domestic currency in terms of a foreign currency. Thus, if the exchange rate of the dollar in terms of the Japanese yen increases, we say the dollar has depreciated and the yen has appreciated. Similarly, a decrease in the dollar/yen exchange rate would imply an appreciation of the dollar and a depreciation of the yen.
Foreign exchange markets can be classified as spot markets and forward markets. In spot markets currencies are bought and sold for immediate delivery and payment. In forward markets, currencies are bought or sold for future delivery and payment. A U.S. music company, say, enters into a contract to buy British records for delivery in 30 days. To guard against the possibility of the dollar/pound exchange rate increasing in the meantime, the company buys pounds forward, for delivery in 30 days, at the corresponding forward exchange rate quoted today. This is called hedging.
Of course, there has to be a counterpart to the music company's forward purchase of pounds. Who is the seller of those pounds? The immediate seller would be a commercial bank, as in the spot market. But the bank only acts as an intermediary. The ultimate seller of forward pounds may be another hedger, like the music company, but with a position just its opposite. Suppose, for example, that an American firm or individual has invested in 30-day British securities that it wants to convert back into dollars after the end of 30 days. The investor may decide to sell the pound proceeds forward in order to assure itself of the rate at which the pounds are to be converted back into dollars after 30 days.
Another type of investor may be providing the forward contract bought by the music company. This is the speculator, who attempts to profit from changes in exchange rates. Depending on their expectations, speculators may enter the forward market either as sellers or as buyers of forward exchange. In this particular case, the speculator may have reason to believe that the dollar/pound exchange rate will decrease in the next 30 days, permitting him to obtain the promised pounds at a lower price in the spot market 30 days hence.
The main instruments of foreign exchange transactions include electronic bank deposit transfers and bank drafts, bills of exchange, and a whole array of other short-term instruments expressed in terms of foreign currency. Thus, foreign exchange transactions do not generally involve a physical exchange of currencies across borders. They generally involve only changes in debits and credits at different banks in different countries. Very large banks in the main financial centers such as New York, London, Brussels and Zurich, account for most foreign exchange transactions. Local banks can provide foreign exchange by purchasing it in turn from major banks.
Although the foreign exchange market is dispersed in many cities and countries, it is unified by keen competition among the highly sophisticated market participants. A powerful force keeping exchange rate quotations in different places in line with each other is the search on the part of market participants for foreign exchange arbitrage opportunities. Arbitrage is the simultaneous purchase and sale of a commodity or financial asset in different markets with the purpose of obtaining a profit from the differential between the buying and selling price.
When foreign exchange is acquired in order to engage in international transactions involving the purchase or sale of goods and services, it is said that international trade has taken place in the real economy. When international transactions involve the purchase or sale of financial assets, they are referred to as international financial transactions. They constitute the paper economy.
Financial markets are commonly classified as capital markets or money markets. Capital markets deal in financial claims that reach more than one year into the future. Such claims include shares of stock, bonds, and long-term loans, among others. Money markets, on the other hand, deal in short-term claims, with maturities of less than one year. These include marketable government securities (like Treasury bills), large-denomination certificates of deposit issued by banks, commercial paper (representing short-term corporate debt), money market funds, and many other kinds of short-term, highly liquid (easily transferable) financial instruments. It is these short-term money market securities that account for most of the instability in the global paper economy.
Buying or selling a money market security internationally involves the same kind of foreign exchange risk that plagues buyers or sellers of merchandise internationally. If one wishes to guard against the possibility of an increase or decrease in the foreign exchange rate, one can insure against such fluctuations by "covering" in the forward market. By the same token, the decision about whether to own domestic or foreign money market securities is not simply a comparison of the rates of interest paid on otherwise comparable securities, because one must also take into account the gain (or loss) from purchasing foreign currency spot and selling it forward. Thus, choosing the security with the highest return does not necessarily imply the one with the highest interest rate.
People who trade in international money markets, moreover, need to take into account many other variables, including the costs of gathering and processing information, transaction costs, the possibility of government intervention and regulation, other forms of political risk, and the inability to make direct comparisons of alternative assets. Speculating in international money markets is a risky proposition.
International money markets involve assets denominated in different currencies. External financial markets involve assets denominated in the same currency but issued in different political jurisdictions. Eurodollars, for example, are dollar deposits held outside the United States (offshore), such as dollar deposits in London, Zurich, or even Singapore banks. The deposits may be in banks owned locally or in the offshore banking subsidiaries of U.S. banks. Deutsche mark deposits in London banks or pound sterling deposits in Amsterdam banks also are examples of external deposits. They are referred to as eurocurrency deposits. (The advent of a new common currency in the European Community - the Euro - will require the development of new nomenclature for external financial markets)
External banking activities are a segment of the wholesale international money market. The vast majority of eurocurrency transactions fall in the above $1 million value range, frequently reaching the hundreds of millions (or even billion) dollar value. Accordingly, the customers of eurobanks are almost exclusively large organizations, including multinational corporations, government entities, hedge funds, and international organizations, as well as eurobanks themselves. Like domestic banks, eurobanks that have excess reserves may make loans denominated in eurocurrencies, expanding the supply of eurocurrency deposits. The eurocurrency market funnels funds from lending countries to borrowing countries. Thus, it performs an important function as global financial intermediator.
Early history
The origins of what Karl Polanyi3 called haute finance can be traced to Renaissance Italy, where as early as 1422 there were seventy-two bankers or bill-brokers in or near the Mecato Vecchio of Florence.4 Many combined trade with purely financial business. By the middle of the fifteenth century, the Medici of Florence had opened branches in Bruges, London and Avignon, both as a means of financing international trade and as a way of marketing new kinds of financial assets. Many banking terms and practices still in use today originated in the burgeoning financial centers of Renaissance Europe.
By the early seventeenth century, the Dutch and East India Companies began issuing shares to the public in order to fund imperial enterprises closely linked to Holland and Britain. Their shares were made freely transferable, permitting development of a secondary financial market for claims to future income. Amsterdam opened a stock exchange in 1611, and shortly thereafter, the British government began issuing lottery tickets, an early form of government bonds, to finance colonial expansion, wars and other major areas of state expenditure. A lively secondary market in these financial instruments also emerged.5
Throughout these early years, financial markets were anything but riskless and stable. Consider the famous Dutch tulip mania of 1630, for example. This speculative bubble saw prices of tulip bulbs reach what seemed like absurd levels, yet "the rage among the Dutch to possess them [tulips] was so great that the ordinary industry of the country was neglected." Some investors in Britain and France shared this "irrational exuberance," though it was centered mostly in Holland. Then, not unlike speculative bubbles of more recent vintage, prices crashed6, pushing the economy into a depression and leaving many investors angry and confused.
Paris developed into an early financial center in the eighteenth century, but the Revolution of 1789 dissipated its power. The New York Stock Exchange was formally organized in 1792 and the official London Stock Exchange opened in 1802. The expansion westward of the railroads in the U.S. offered the financial community opportunity to sell railway shares and bonds that quickly became dominant in the financial markets. Indeed, the bond markets of London, Paris, Berlin, and Amsterdam were vehicles for collecting massive amounts of European savings and transferring it at higher returns to the emerging markets of the U.S., Canada, Australia, Latin America and Russia in the century preceding World War I.
Forward markets soon developed, especially in the U.S., in order to counter the impact of long distances and unpredictable weather. As capital and money markets expanded, other new financial instruments came into use. Joint stock companies were formed, enabled by legislation that clarified the distinction between the owners and managers of corporations. This, in turn, helped stimulate the growth of the American stock market in the late nineteenth century. To be sure, financial markets did not grow continuously in the nineteenth century. Lending to the emerging markets was interrupted by defaults in the 1820s, 1850s, 1870s and 1890s, but each wave of default was confined to a relatively small number of countries, permitting growth of financial flows to resume.7
In the four decades leading up to World War I, a truly worldwide economy was forged for the first time, extending from the core of Western Europe and the U.S. to latecomers in Eastern Europe and Latin America and even to the countries supplying raw materials on the periphery. Central to this expansion of trade and investment was an expanding system of finance that girded the globe. The amount was enormous: between 1870 and 1914 something like $30 billion,8 the equivalent in 2002 dollars of $550 billion, was transferred to recipient countries, in a world economy perhaps one-twelfth as large as today's.
During this "Gilded Age" of haute finance, the risks of participating in international trade and investment were generously shared with governments and the banking system. The reason is that foreign exchange rates were kept reasonably stable by the commitment of most governments to the "high" gold standard. In this way, businesses and individuals engaging in international transactions were reasonably certain that the value of their contracts was not going to change before they matured. Their exchange risk was shared with government by its willingness to buy or sell gold in order to keep the exchange rate constant. Because of this assurance, financial flows were reasonably free of regulation.
They were not immune from crises, however. When the sources of financial capital temporarily dried up, capital-importing countries occasionally found they could not expand export earnings sufficiently to avoid suspending interest payments on their debts or abandoning gold parity. On two occasions, the United States faced this possibility. The first was in 1893, when it switched in a sharp economic downturn to bimetallism (which caused William Jennings Bryan to denounce the "cross of gold"), and the second was in 1907, which led to the creation of the Federal Reserve System, handing to the government the function of lender of last resort previously carried out by Wall Street banks under the tutelage of J. Pierpont Morgan.
In his magisterial book The Great Transformation, Karl Polanyi reflected on the pervasive influence of haute finance on the policies of nations even in this "Gilded Age." The globalising financial markets and the gold standard, according to Polanyi, left very little room for states, especially smaller ones, to adopt monetary and fiscal policies independent of the new international order. "Loans, and the renewal of loans, hinged upon credit, and credit upon good behavior. Since, under constitutional government ..., behavior is reflected in the budget and the external value of the currency cannot be detached from the appreciation of the budget, debtor governments were well advised to watch their exchanges carefully and to avoid policies which might reflect upon the soundness of budget positions." Thus, even one hundred years ago the then-dominant world power, Great Britain, speaking as it did so often through the voice of the City of London, "prevailed by the timely pull of a thread in the international monetary network.9
Following World War I, the United States emerged not merely as a creditor country but as the primary source of new international financial flows. At first, the principal borrowers were the national governments of the stronger countries, but as the boom in security underwriting developed in the U.S, numerous obscure provinces, departments and municipalities found it possible to sell their bonds to American investors.10 Just as domestic construction, land, and equity markets went through speculative rises in the 1920s, so too did the U.S. experience a speculative surge in foreign investment. In the aftermath of successive defaults by foreign debtors in 1932, the Senate Committee on Banking and Currency concluded:
The record of the activities of investment bankers in the flotation of foreign securities is one of the most scandalous chapters in the history of American investment banking. The sale of these foreign issues was characterized by practices and abuses that violated the most elementary principles of business ethics.11
Speculation in the stock markets leading up to 1929 offers still another window on the instability of short-term financial flows. A speculative market can be defined as one in which prices move in response to the balance of opinion regarding the future movement of prices rather than responding normally to changes in the demand for and supply of whatever is priced. Helped by the willingness of Wall Street to allow people to buy stocks on margin, people were only too ready to bet prices would rise as long as others thought so too. Day after day and month after month the price of stocks went up in 1927. The gains by later standards were not large, but they had an aspect of great reliability. Then in 1928, the nature of the boom changed. "The mass escape into make-believe, so much a part of the true speculative orgy, started in earnest.12
Following World War I, the gold standard itself took on new form. Nations were allowed to hold their international reserves in either gold or foreign exchange. This worked for a while in the 1920s, but as speculation mounted and balances of payments disequilibria grew, fears of devaluation led central banks to try to replace their foreign-exchange holdings with specie in a "scramble for gold." The worldwide result of these shifts in central bank portfolios was an overall contraction of the supply of money and credit that sapped aggregate demand and forced prices to fall and output levels to shrink. Thus, it can be argued - persuasively in our view - that the Great Depression of the 1930s was as much, if not more, the result of mismanagement of money and credit as it was the result of protectionist policies. Protectionist policies were more likely the result of slowed growth and stalled trade. Countries that broke with the gold-exchange standard early, such as Britain in 1931, and pursued more expansionary monetary policies fared somewhat better.
The Bretton Woods system
During the darkest days of World War II, a radically new economic architecture was designed for the postwar world at a New Hampshire ski resort called Bretton Woods. With the competitive devaluation and protectionist policies of the 1930s still fresh in their minds, the mostly British and American delegates to the conference wanted most of all to design a system with fixed exchange rates that did not rely on national gold hoards to keep exchange rates stable. They decided to depend instead on strict controls of international financial movements. In this way, they hoped to allow countries to pursue full-employment policies through appropriate monetary (money and credit) and fiscal (tax and spending) policies without some of the anxieties associated with open financial markets. The role of monetary and financial stabilizer was given to the International Monetary Fund (IMF), which was provided with modest funds to assist nations to adjust imbalances in their external payments obligations. The International Bank for Reconstruction and Development (IBRD, later the World Bank) assumed the task of helping to finance post-war reconstruction.13
The IMF as it emerged from Bretton Woods had inadequate reserves to advance money for the long periods that many countries require for "soft-landings" from big current-account deficits. It would make only short-term loans. To make sure that borrowing nations were constrained, "conditionality" attached to IMF loans became standard practice, even in the early years of the Fund's operation. Policy limitations and "performance targets" tied to credit lines advanced under "standby agreements" began in the middle 1950s and were universal by the 1960s, long before the notions of "stabilization" and "structural adjustment" came into common parlance.
The Bretton Woods agreement also imposed a foreign exchange standard by which exchange rates between major currencies were fixed in terms of the dollar, and the value of the dollar was tied to gold at a U.S. guaranteed price of thirty-five dollars per ounce. By devising a system that controlled financial movements and assisted with the adjustment of countries' balances of payments, the new system succeeded in keeping exchange rates remarkably stable. They were changed only very occasionally, e.g., as when the value of sterling relative to the dollar was reduced in 1949 and again in 1966. This meant that companies doing business abroad did not need to worry constantly about the risk of exchanging one currency for another.
Among the reasons for this remarkable stability was the willingness of the central banks of other countries to hold an increasing proportion of their official reserves in the form of U.S. dollars. It was an essential part of the system that the dollars held by other countries would be seen as IOUs backed by the U.S. offer to exchange them for gold at a fixed pre-war price. But as the balance-of-payments of the U.S. moved more deeply into deficits in the 1960s, there were more and more U.S. dollars held by other countries, and this so-called "dollar overhang" became disturbingly large.15 General de Gaulle called it "the exorbitant privilege," meaning that the Americans were paying their bills - for defense spending to fight the Vietnam War among other things - with IOUs instead of real resources in the form of exports of goods and services.
Strict control over financial movements began to weaken as early as the 1950s, when the first eurodollar (later eurocurrency) deposits were made in London. At first a trickle, limited originally to Europe, these offshore banking operations soon expanded worldwide. The American "Interest Equalization Tax" (IET) instituted in 1963 raised the costs to banks of lending offshore from their domestic branches.16 The higher external rates led dollar depositors such as foreign corporations to switch their funds from onshore U.S. institutions to eurobanks. Thus, the real effect of the IET was to encourage the dollar to follow the foreigners abroad, rather than the other way around. Eurobanks paid higher interest rates on deposits and loaned eurocurrencies at lower rates than U.S. banks could at home. Still another large inflow of eurodeposits occurred in 1973-74 as the Organization of Petroleum Exporting Countries (OPEC) began "recycling" their surplus dollar earnings through eurobanks. Because of their existence, a country such as Brazil could arrange within a reasonably regulation-free environment to obtain multimillion-dollar loans from a consortium of offshore American, German and Japanese banks and thereby finance its oil imports. Net eurocurrency deposit liabilities that amounted to around $10 billion in the mid-1960s, grew to $500 billion by 1980.
These eurocurrency transactions taught the players in financial markets how to shift their deposits, loans, and investments from one currency to another whenever exchange rates or interest rates were thought to be ready to change. Even the ability of central banks to regulate the supply of money and credit was undermined by the readiness of commercial banks to borrow and lend offshore. Hence, the effectiveness of regulatory mechanisms that had been put in place to implement the Bretton Woods agreement - interest rate ceilings, lending limits, portfolio restrictions, reserve and liquidity requirements - gradually eroded as offshore transactions started to balloon.
The world economy developed at unprecedented rates during the roughly twenty-five years immediately following World War II. Growth and employment rates during these years were at historic highs in most countries. Productivity also advanced rapidly in most developing countries as well as in the technological leaders. These facts suggest that the system devised at Bretton Woods worked reasonably well, despite occasional adjustments. To be sure, it helped to sow the seeds of its own destruction by failing to retain operational control of international financial flows. But the twenty-five years of its survival leading up to August 15, 1971, when President Nixon closed the gold window, have nonetheless come to be called by some economic historians the "Golden Years."
Controlling private risk
Fixed exchange rates did not last long after the U.S. stopped exchanging gold for claims on the dollar held by foreign central banks. The pound sterling was allowed to float against the dollar in July, 1972. Japan set the yen free to float in February, 1973, and most European currencies followed suit shortly thereafter. The Bretton Woods gold-dollar system was doomed.
The fact that exchange rates no longer were fixed meant that companies doing business in different countries had to cope with the day-to-day shifts in the dollar's rate of exchange with other currencies. The risks of unexpected changes in the value of international contracts suddenly had shifted from the public to the private sector. Corporate finance officers now had to hedge against possible exchange losses by buying a currency forward and investing the equivalent in the short-term money market, or by investing in the eurocurrency market. The corporations' banks, in turn, tried to match each foreign currency transaction with another contrary transaction in order not to leave each of the banks exposed to foreign exchange risk overnight. Since no single bank was likely to balance its foreign exchange positions exactly, the need arose to swap deposits in different currencies in order to match corporate hedging transactions and to square the bank's books.
The price of this forward cover on inter-bank transactions - that is to say, the premium or discount on a currency's spot value - has tended to accord with the differences between interest-rates offered for eurocurrency deposits in different currencies. This is the connection between the foreign exchange market and the short-term credit markets, between exchange rates and interest rates. Whenever exchange rates move up or down, therefore, their influence is immediately transmitted through the eurocurrency markets to the credit markets.
It is this scramble to avoid private risk that accounted for the dramatic rise in international financial movements following the demise of the Bretton Woods system. By 1973, daily foreign exchange trading around the world varied between $10 and $20 billion per day. This amount was approximately twice the value of world trade at the time. Bank of International Settlements data suggests that the daily average of foreign exchange trading had climbed by 1980 to about $80 billion, and that the ratio between foreign exchange trading and international trade was more nearly ten to one. The data for 1992 was $880 billion and fifty to one, respectively; for 1995, $l,260 billion and seventy to one; and for 2000, almost $1,800 and ninety to one.
There is very little doubt, therefore, that the lion's share of international financial flows is relatively short-run. Indeed, about eighty percent of foreign exchange transactions are reversed in less than seven business days. Only a very small proportion is used to finance international trade and direct foreign investment. The vast majority must be used with the expectation of gain or to avoid losses that may result from changes in the value of financial assets. In general terms, they are speculative, made in hope of capital gain or to hedge against potential capital loss, or to seek the gains of arbitrage based on slight differences in rates of return in different financial centers.
The power of financial actors17
Foreign exchange markets and markets for money and credit seem remote and abstract to most people. This section introduces the real institutions that operate these markets and assesses the nature of their power.
- Commercial banks They take deposits, lend money, and create credit to the extent their capitalization allows. In Europe, they tend to combine commercial and investment banking services, but in the U.S. and Japan they are still kept at least partially separate by regulation. The foreign exchange trading facilities of the largest commercial banks, e.g. Citibank and J.P.Morgan/Chase in the U.S., tend to dominate the market. The banking industry as a whole represents the largest pool of world financial capital.
- Investment banks They facilitate international payments, manage new issues of stocks and bonds, advise on mergers and acquisitions in all industries, and engage in securities and foreign exchange trading as allowed by law. Investment banks (previously called merchant banks in the U.K.) have specialized in particular kinds of derivative products. Derivatives are financial contracts whose value is based upon the value of other underlying financial assets such as stocks, bonds, mortgages or foreign exchange.
- Brokerage houses They handle the bulk of stock exchange transactions and a major part of foreign exchange transactions. Investment banks recently have acquired several of the main brokerage houses in the U.S. The development of investor-friendly methods of buying and selling securities, e.g., over-the-counter markets and electronic brokerage, also have diminished the role of independent brokerage houses.
- Mutual funds They are pools of funds provided by clients that are run by professional investment managers. These collective investments are held in portfolios with various mixes of money-market instruments, bonds and equities. Mutual funds account for the second largest pool of global financial capital.
- Hedge funds They resemble mutual funds, but they are much less restricted in investment activities and techniques. Their customers are high net-worth individuals and large institutional investors. They specialize in complex financial instruments and tend to take significant speculative positions, especially on expected future changes in macroeconomic conditions. They exploit arbitrage opportunities embedded in the relative prices of related securities. They frequent offshore centers and tax havens.
- Tax havens Offshore centers and tax havens shelter perhaps $10 trillion of wealth from capital and income taxation. The British Virgin Islands, the Bahamas, Bermuda, the Cayman Islands, Dublin and Luxembourg are among the most important. Many hedge funds are registered there.
- Wealthy individuals They are an important source of funds, as many of them invest their liquid funds in financial markets. They account for about eighty percent of hedge fund investors.
- Private pension funds They function like annuities, receiving funds today in return for a promise to pay future benefits. With large pools of funds to invest, they tend to depend on investment banks, mutual funds or hedge funds to supervise placement of their assets in global financial markets.
- Insurance companies They pool risks by selling protection against the loss of property, income, or life. Since the risks they insure have various durations, they call for varied investment strategies. A portion of their funds is invested in short-term financial instruments, often through mutual and hedge funds.
- Transnational corporations They produce and sell goods and services in a number of countries. Their finance departments seek the best ways to raise and transfer funds across borders, and administer the transfer prices18 of international trade conducted within the corporation. Some even have in-house corporate banks.
According to recent work by political scientists, the power of these financial actors is based in part on a complicated "process of multiplication" of loans, assets and transactions. Many investors in financial markets buy financial instruments on very thin margins, based on loans obtained by pledging the assets as collateral. This is called "leverage" in the jargon of financial markets. In turn, the borrowed funds are invested in other financial assets, multiplying the demand for credit and financial assets. As demand rises, more sophisticated financial assets are invented, including many forms of financial derivatives. A major portion of the accumulated debt remains serviceable only as long as the prices of most assets will rise or at least remain relatively stable. If prices turn down, they easily can lead to a chain-reaction. If investors respond instinctively like a herd, they will bring a far-reaching collapse that constitutes a crisis.
As the flow of financial assets climbs, some bankers, brokers, and managers of financial institutions become prominent players in the competition for investor dollars. Some become known for picking profitable places to invest and for promoting their selections successfully. This can influence markets if people have confidence in their advice. A notorious example of the influence of prominent players was the attack on British sterling in 1992 by George Soros' Quantum Fund. Believing that sterling was overvalued, the Fund quietly established credit lines that allowed it to borrow $15 billion worth of sterling and sell it for dollars at the then "overvalued" price. Its purpose, of course, was to pay back the loan with cheaper pounds after they had depreciated. Having gone long on dollars and short on sterling, Soros decided to speak up noisily. He publicized his short-selling and made statements in newspapers that the pound would soon be devalued. It wasn't long before sterling was devalued; he made $1 billion in profit.
The point can be made more generally: financial markets are subject to manipulation because they have become socially structured. Market leaders and financial gurus are admired and followed (at least until very recently). The heavyweights thus dominate the business. An obvious consequence of this is that there is a strong tendency in financial markets for further concentration of resources.
Another source of the power of financial actors is their obvious affinity for the rampant free-market philosophy of neo-liberalism. The freedom with which they move financial capital around depends, of course, on the market-friendly policies of the so-called Washington Consensus.19 As long as they are seen as part of the governing coalition, they derive special powers to regulate themselves rather than be controlled by an independent government agency or civil society. Their power also is reinforced by the activities of several collective associations of financial actors,20 which lobby on their behalf.
One more source of power for the financial actors is their knowledge that if they are big enough and sufficiently interlaced with other financial actors, then the "system" will keep them from failing. Consider the case of Long-term Capital Management, a hedge fund partnership started in 1994. It was able to borrow from various banks the equivalent of forty times its capitalization in order to make bets on changes in the relative prices of bonds in the U.S. and abroad. When the Russian government announced a devaluation and debt moratorium in August, 1998, it produced losses that the fund could not sustain. Nor could some of the banks that had loaned large amounts to the fund. Accordingly, the Federal Reserve Bank of New York, fearful that the risk to the entire system was too high, orchestrated a private rescue operation by fourteen banks and other financial institutions, which re-capitalized the company for $3.5 billion.
Financial actors also have the power indirectly to influence non-financial actors such as firms or states. By providing economic incentives to gamble and speculate on financial instruments, global financial markets divert funds from long-term productive investments. In all probability, they also encourage banks and financial institutions to maintain a regime of higher real interest rates that reduce the ability of productive enterprises to obtain credit. The volatility of global financial markets, moreover, brings uncertainty and volatility in interest rates and exchange rates that are harmful to various sectors of the real economy, particularly international trade.
The above stories about George Soros and Long-term Capital Management are good illustrations of the consequences for non-financial actors of actions by financial actors. Both episodes are examples of games that are basically zero-sum, at least in the short-run. Nothing new was produced; no new values were created. In the 1992 case about speculating against sterling, the Quantum Fund's profits were at the expense of the British government, especially the Bank of England, and British taxpayers. In 1998, the losses suffered by Long-term Capital Management came out of the pockets of the stockholders of the banks that bailed it out, as the stock-market value of their shares depreciated. Hence, the financial system tends to feed itself by drawing more resources from other sectors of the economy, undermining the vitality of the real economy.
Consequences of global financial flows
The dominant economic ideology of the last twenty-five years has been embodied in the so-called Washington Consensus. It is a "market-friendly" ideology that traces its roots to longstanding policies of the IMF that encourage macroeconomic "stabilization;" to adoption by the World Bank of ideas in vogue in Washington early in the Reagan period concerning deregulation and supply-side economics; to the zeal of the Thatcher government in England for privatizing public enterprises; and perhaps most of all to the neo-liberal tendencies of the business community and the economics profession in the U.S. The implementation of these policies of economic "reform," by first "stabilizing" the macro-economy and then "adjusting" the market so that it can perform more efficiently, are supposed to pay off in the form of faster output growth and rising real incomes
Among these policy prescriptions is financial liberalization in both the developed and the developing countries. Domestically it is achieved by weakening or removing controls on interest and credit and by diluting the differences between banks, insurance and finance companies. International financial liberation, on the other hand, demands removal of controls and regulations on both the inflows and outflows of financial instruments that move through foreign exchange markets. It is the implementation of these reforms that is perhaps the single most important cause of the surge in global financial flows. To be sure, the influence of technological advances has broken the natural barriers of space and time for financial markets as twenty-four hour electronic trading has grown. The fact that throughout most of the 1980s and 1990s the developed countries suffered from over-capacity and overproduction in manufacturing may also have led the owners of financial capital to look for alternative profit opportunities.
It now is time to ask whether the implementation of all these reforms, on balance, has produced good or bad results. The focus of this section will be mostly on the consequences of large and expanding international financial flows. After all, they are the main concern of this essay. But first, we should ask whether or not the policies of growth and rising real incomes promoted by the Washington Consensus have borne fruit.
Growth and income
There is little doubt that the introduction of the Washington Consensus' policy mix expanded the volume of international trade. As a result, trade in goods and services has grown at more than twice the rate of global gross domestic product (GDP), and developing countries' share of trade has risen from 23 to 29 percent. Increasing numbers of firms from developing countries, like their industrial-country counterparts, engage in transnational production and adopt a global perspective in structuring their operations. The flow of foreign direct investments and foreign portfolio investments has multiplied even more rapidly than trade, despite the financial instability experienced in Asia, Brazil, Russia, and elsewhere in recent years.
The effects of liberalization have not been uniformly favorable, however. After at least ten full years of experience with the Washington Consensus, several recent studies have begun to assess the consequences for developing countries of this experiment in more open markets.21 Except for the years of crisis in a number of the countries studied, most developing countries achieved moderate growth rates of gross domestic product in the 1990s - considerably higher than in the l980s in Africa and Latin America during the debt crisis, but remarkably unchanged in most other regions. Moreover, average annual growth in the 1990s was slightly lower than in the twenty-five years preceding the debt crisis when a strategy of substituting domestic production for imports was in fullest use. When population growth rates are taken into consideration, the growth rate of per capita income in the developing countries studied during the 1990s also was somewhat lower than in the 1960s and 1970s. Toward the end of the 1990s, growth tapered off in many countries due to emerging domestic financial crises or external events. There is little evidence in these figures, therefore, to suggest the strategy of liberalization boosted growth rates appreciably.
Nor did the distribution of income improve in most developing countries in the 1990s. On the contrary, virtually without exception the wage differentials between skilled and unskilled workers rose with liberalization. The reasons for this varied widely among countries, but one of the most important reasons was the fact that the number of relatively well-paid jobs in sectors of the economy involved with international trade, though growing, was insufficient to absorb available workers, forcing many workers into more precarious and poorly paid employment in the non-traded, informal trade, and service sectors or where traditional agriculture served as a sponge for the labor market. Between the mid-1960s and the late-1990s, the poorest 20 percent of the world population saw its share of income fall from 2.3 to 1.4 percent. Meanwhile, the share of the wealthiest quintile increased from 70 to 85 percent.22
Risk and reward
While all markets are imperfect and subject to failure, financial markets are more prone than others to fail because they are plagued with three particular shortcomings: asymmetric information, herd behavior and self-fulfilling panics. Asymmetric information is a problem whenever one party to an economic transaction has insufficient information to make rational and consistent decisions. In most financial markets where borrowing and lending take place, borrowers usually have better information about the potential returns and risks associated with the investments to be financed by the loans than do the lenders. This becomes especially true as financial transactions disperse across the globe, often between borrowers and lenders of widely different cultures.
Asymmetric information leads to adverse selection and moral hazard. Adverse selection occurs when, say, lenders have too little information to choose from among potential borrowers those who are most likely to use the loans wisely. The lenders' gullibility, therefore, attracts more unworthy borrowers. Moral hazard occurs when borrowers engage in excessively risky activities that were unanticipated by lenders and lead to significant losses for the lender. Yet another form of moral hazard occurs when lenders indulge in lending indiscriminately because they assume that the government or an international institution will bail them out if the loans go awry.
A good illustration of asymmetric information is the story of bank lending following OPEC's large increase in oil prices following 1973. Awash in cash, the oil exporters deposited large amounts in commercial banks that then perfected the Euro-currency loan for developing countries. Eager to put excess reserves to use, the banks spent little time discriminating among potential borrowers, in part because they believed host governments or international agencies would guarantee the loans. At the same time, developing countries found they could readily borrow not only to import oil, but also to increase other kinds of expenditures. This meant they could use borrowed funds to maintain domestic spending rather than be forced to adjust to the new realities of higher prices for necessary imports. There is considerable evidence that moral hazard also was present in the Mexican crises in 1982 and 1994, and in the Southeast Asian crises in 1997-8.
Yet another illustration of asymmetric information is the tendency of financial firms, especially on Wall Street and in the City of London, to invent ever more complex derivatives to shift risk around the financial system. The market for these products is growing rapidly, both on futures and options exchanges (two of the several places where derivatives are traded). A financial engineer, for example, can take the risk in, say, a bond and break it down into a series of smaller risks, such as that inflation will reduce its real value or that the borrower will default. These smaller risks can then be priced and sold, using derivatives, so that the bondholder keeps only those risks he wishes to bear. But this is not a simple task, particularly when it involves assets with risk exposures far into the future and which are traded so rarely that there is no good market benchmark for setting the price. Enron, for instance, sold a lot of these sorts of derivatives, booking profits on them immediately even though there was a serious doubt about their long-term profitability. Stories of huge losses incurred in derivative trading are legion. The real challenge before central banks and regulatory bodies is to curb speculative behavior and bring discipline in derivative markets.
A second source of risk in financial markets is the tendency of borrowers and lenders alike to engage in herd behavior. John Maynard Keynes, writing in the 1930s, suggested that financial markets are like "beauty contests." His analogy was to a game in the British Sunday newspapers that asked readers to rank pictures of women according to their guess about the average choice by other respondents. The winner, therefore, does not express his own preferences, but rather anticipates "what average opinion expects average opinion to be." Accordingly, Keynes thought that anyone who obtained information or signals that pointed to swings in average opinion and to how it would react to changing events had the basis for substantial gain. Objective information about economic data was not enough. Rather, simple slogans "like public expenditure is bad," "lower unemployment leads to inflation," "larger deficits lead to higher interest rates," were then the more likely sources of changes in public opinion. What mattered was that average opinion believed them to be true, and that advance knowledge of, say, more public spending, lower unemployment, or larger deficits, respectively, offered the speculator a special advantage.
A financial market that operates as a beauty contest is likely to be highly unstable and prone to severe changes. One reason for this is that people trading in financial assets, even today, know very little about them. People who hold stock know little about the companies that issued them. Investors in mutual funds know little about the stocks their funds are invested in. Bondholders know little about the companies or governments that issued the bonds. Even knowledgeable professionals are often more concerned with judging how swings in conventional opinion might change market values rather than with the long-term returns on investments. Indeed, since careful analysis of risks and rewards is costly and time consuming, it often makes sense for fund managers and traders to follow the herd. If they decide rationally not to follow the herd, their competence may be seriously questioned. On the other hand, if fund managers follow the herd and the herd suffers losses, few will question their competence because others too suffered losses. When financial markets are operated like a beauty contest, everyone wants to sell at the same time and nobody wants to buy.
The financial markets behaved as predicted shortly after several industrial countries, including the U.S. and Germany, abolished all restrictions on international capital movements in 1973. The new system proved to be highly volatile, with exchange rates, interest rates, and financial asset-prices subject to large short-term fluctuations. The markets also were susceptible to contagion when financial tremors spread from their epicenter to other countries and markets that seemingly had little connection with the initial problem. In less than five years, it already was clear that both the surpluses and the deficits on the major countries' balance of payments were getting larger, not smaller, despite significant changes in the exchange rates.
In some cases, a financial crisis can be self-fulfilling. A rumor can trigger a self-fulfilling speculative attack, e.g. on a currency, that may be baseless and far removed from the economic fundamentals (unlike the Soros story above). This can cause a sudden shift in the herd's intentions and lead to unanticipated market movements that create severe financial crises. Consider, for example, the succession of major financial crises that have pock-marked the recent history of international financial markets, including Latin America's Southern Cone crisis of 1979-81, the developing-country debt crisis of 1982, the Mexican crisis of 1994-95, the Asian crisis of 1997-98, the Russian crisis of 1998, the Brazilian crisis of 1999, and the Argentine crisis of 2001-02.
Perhaps the Asian crisis of 1997-98 is the most interesting in this regard, for there were relatively few signals beforehand of impending crisis. All the main East Asian economies displayed in 1994-96 low inflation, fiscal surpluses or balanced budgets, limited public debt, high savings and investment rates, substantial foreign exchange reserves and no signs of deterioration before the crisis. This background has led many analysts to suppose that the crisis was a mere product of the global financial system. But what could have triggered the herd to stampede out of Asian currencies? No doubt several factors were at work. Before the crisis that started in the summer of 1997, there was a rise in short-term lending to Asians by Western and Japanese banks with little or no premiums, a fact that the Bank for International Settlement raised questions about. Alert investors, especially hedge funds, also noticed that substantial portions of East and Southeast Asian borrowings were going into non-productive assets and real estate that often were linked to political connections. In fact, some of the funds pouring into non-productive assets were coming out of the productive sector, mortgaging the longer-term viability of some real economies. Information about the structure and policies of financial sectors was opaque. Thus, opinions began to change among key lenders about the regulation of financial sectors in several Asian countries and their destabilizing lack of transparency. Suddenly, several important hedge funds reduced their exposure by shorting currency futures, followed quickly by Western mutual funds. The calling of loans led quickly to deep depression in several Asian countries. It has been estimated that the Asian crisis and its global repercussions cut global output by $2 trillion in 1998-2000.
Loss of government autonomy
Both economic theory and the experience of managing the external financial affairs of nations tell us that it is virtually impossible to maintain (1) full financial mobility, (2) a fixed exchange rate, and (3) freedom to seek macro-economic balance (full employment with little inflation) with appropriate monetary and fiscal policies. Only two of these policy objectives can be consistently maintained. If the authorities try to pursue all three, they will sooner or later be punished by destabilizing financial flows, as in the run up to the Great Depression around 1930 and in the months before sterling's collapse 1992. If a government tries to stimulate its economy with lax monetary policy, for example, and players with significant market power like George Soros sense that at a fixed exchange rate, foreigners will be unwilling to lend enough to finance the country's current account deficit, they will begin to flee the home currency in order to avoid the capital losses they will suffer if and when there is a devaluation. If reserve losses accelerate and more players follow suit, crisis ensues. The authorities are forced to devalue, interest rates soar, and the successful attackers sit back to count their profits.
For nations wishing to retain reasonably independent monetary and fiscal authority in order to cater to domestic needs, the solution is to allow the exchange rate to move up or down as conditions in the foreign exchange markets dictate, or to establish some sort of control over the movement of financial instruments in and out of the country, or to devise some combination of these two adjustment mechanisms. The debate over whether fixed or flexible exchange rates is the wiser policy continues to rage in academic quarters and in finance ministries all over the world. For the most part, the international business community prefers reasonably fixed exchange rates in order to minimize their costs of hedging foreign currency positions. Thus instituting some form of control over speculative financial movements may be an appropriate solution to the "trilemma."
The capacity of a nation to levy enough taxes to finance needed public expenditures is another important reason to retain independent authority. A central function of government has been to insulate domestic groups from excessive market risks, particularly those originating in international transactions. This is the way governments have maintained domestic political support for liberalizing trade and finance throughout the postwar period. Yet many governments are less able today to help citizens that are injured by freer markets with unemployment compensation, severance payments, and adjustment assistance because the slightest hint of raising taxes to pay for these vital public services leads to capital flight in a world of heightened financial mobility.
This is a dilemma. Increased integration into the world economy has raised the need of governments to redistribute tax revenues or implement generous social programs in order to protect the vast majority of the population that remains internationally immobile. At the same time, governments find themselves less able to maintain the safety nets needed to preserve social stability. It seems reasonable to suppose, therefore, that doing things that will bolster the ability of governments to levy sufficient taxes - curbing tax avoidance by transnational corporations, controlling offshore tax havens, regulating capital flight - would help make globalization slightly more democratic.
Winners and losers
The people who benefit from speculative financial movements are, for the most part, better educated and wealthier than the vast majority of fellow citizens. They are the elites, whatever the country. As noted above, they have fewer connections to the real economy of production and exchange than most people. And their purpose in trading financial assets, again for the most part, is to make a profit quickly rather than wait for an investment project to mature.
People who do not participate directly in the buying and selling of short-term financial instruments are nonetheless influenced indirectly by the macroeconomic instability and contagion that often accompany interruptions in financial market flows. This is true for people both in developed and developing countries. In developed countries, the voracious appetite of financial markets for more and more resources saps the vitality of the real economy - the economy that most people depend upon for their livelihood. It has been shown that real interest rates rise as a result of the expansion of speculative financial markets. This rise in real interest rates, in turn, dampens real investment and economic growth while serving to concentrate wealth and political power within a growing worldwide rentier class (people who depend for their income on interest, dividends, and rents).23 Rather, the long-term health of the economy depends upon directing investable funds into productive investments rather than into speculation.
In developing countries, attracting global investors' attention is a mixed blessing. Capital market inflows provide important support for building infrastructure and harnessing natural and human resources. At the same time, surges in money market inflows may distort relative prices, exacerbate weakness in a nation's financial sector, and feed bubbles. As the 1997 Asian crisis attests, financial capital may just as easily flow out of as into a country. Unstable financial flows often lead to one of three kinds of crises:
- Fiscal crises. The government abruptly loses the ability to roll over foreign debts and attract new foreign loans, possibly forcing the government into rescheduling or default of its obligations.
- Exchange crises. Market participants abruptly shift their demands from domestic currency assets to foreign currency assets, depleting the foreign exchange reserves of the central bank in the context of a pegged exchange rate system.
- Banking crises. Commercial banks abruptly lose the ability to roll over market instruments (i.e., certificates-of-deposit) or meet a sudden withdrawal of funds from sight deposits, thereby making the banks illiquid and possibly insolvent.
Although these three types of crises sometimes appear singly, they more often arrive in combination because external shocks or changed market expectations are likely to occur simultaneously in the market for government bonds, the foreign exchange market, and the markets for bank assets. Approximately sixty developing countries have experienced extreme financial crises in the past decade.24
The vast majority of people in the developing world suffer from these convulsive changes. They are tired of adjusting to changes over which they exercise absolutely no control. Most people in these countries view Western capitalism as a private club, a discriminatory system that benefits only the West and the elites who live inside "the bell jars" of poor countries. Even as they consume the consumer goods of the West, they are quite aware that they still linger at the periphery of the capitalist game. They have no stake in it, and they believe that they suffer its consequences. As Hernando deSoto puts it, "Globalization should not be just about interconnecting the bell jars of the privileged few."25
Social solidarity
Karl Polanyi in The Great Transformation sought to explain how the "liberal creed" contributed to the catastrophes of war and depression associated with the first half of the twentieth century. Polanyi's central argument, which in fact can be traced back to Adam Smith, is that markets do indeed promote efficiency and change, but that they achieve this through undermining social coherence and solidarity. Markets must therefore be embedded within social institutions that mitigate their negative consequences.
The evidence of more recent times suggests that the global spread of free-market policies has been accompanied by the decline of countervailing institutions of social solidarity. Indeed, a main feature of the introduction of market-friendly policies has been to weaken local institutions of social solidarity. Consider, for example, the top-down policy prescriptions of the IMF and World Bank during the developing world's debt crisis in the 1980s. These policies evolved into an intricate web of expected behaviors by developing countries. In order for developing countries to expect private businesses and financial interests to invest funds within their borders and to boost the growth potential of domestic economies, they needed to drop the "outdated and inefficient" policies that dominated development strategies for most of the postwar period and adopt in their place policies that are designed to encourage foreign trade and freer financial markets. Without significant adjustments in the ways economies were managed, it was suggested, nations soon would be left behind.
The list of Washington Consensus requirements was long and daunting:
- Make the private sector the primary engine of economic growth
- Maintain a low rate of inflation and price stability
- Shrink the size of the state bureaucracy
- Maintain as close to a balanced budget as possible, if not a surplus
- Eliminate or lower tariffs on imported goods
- Remove restrictions on foreign investment
- Get rid of quotas and domestic monopolies
- Increase exports
- Privatize state-owned industries and utilities
- Deregulate capital markets
- Make currency convertible
- Open industries, stock, and bond markets to direct foreign ownership
- Deregulate the economy to promote domestic competition
- Eliminate government corruption, subsidies and kickbacks
- Open the banking and telecommunications systems to private ownership and competition
- Allow citizens to choose from an array of competing pension options and foreign-run pension and mutual funds.
In a provocative article, Ute Pieper and Lance Taylor point out that market outcomes often conflict with other valuable social institutions. In addition, they emphasize that markets function effectively only when they are "embedded" in society. The authors then look carefully at the experience of a number of developing countries as they struggled to comply with the policy prescriptions of the IMF and the Fund. In almost every case, they demonstrate conclusively that the impact of these efforts was to make society an "adjunct to the market."26
An appropriate balance is not being struck between the economic and non-economic aspirations of human beings and their communities. Indeed, the evidence is mounting that globalization's trajectory can easily lead to social disintegration - to the splitting apart of nations along lines of economic status, mobility, region, or social norms. Globalization not only highlights and exacerbates tensions among groups; it also reduces the willingness of internationally mobile groups to cooperate with others in resolving disagreements and conflicts.
Policy options
History confirms that free-markets are inherently volatile institutions, prone to speculative booms and busts. Overshooting, especially in financial markets, is their normal condition. To work well, free markets need not only regulation, but active management. During the first half of the post-war era, world markets were kept reasonably stable by national governments and by a regime of international cooperation. Only lately has a much earlier idea been revived and made an orthodoxy - the idea adopted by the Washington Consensus that, provided there are clear and well-enforced rules-of-the-game, free markets can be self-regulating because they embody the rational expectations that participants form about the future.
On the contrary, since markets are themselves shaped by human expectations, their behavior cannot be rationally predicted. The forces that drive markets are not mechanical processes of cause and effect, as assumed in most of economic theory. They are what George Soros has termed "reflexive interactions."27 Because markets are governed by highly combustible interactions among beliefs, they cannot be self-regulating.
The question before us then, is what could be done to better regulate financial markets and to bring active management back into the task of "embedding" markets in society, rather than the other way around? Monetary authorities such as the Federal Reserve System in the U.S. and the central banks of other countries were formed long ago in order to dampen the inherent instabilities of financial market in their home countries. But the evolution of an international regulatory framework has not kept pace with the globalization of financial markets. The International Monetary Fund was not designed to cope with the volume and instability of recent financial trends.
Capital controls
Given the problems outlined above about short-term speculative financial transactions, one might wonder why national policy-makers have not insulated their financial markets by imposing some sort of control over financial capital. The answer, of course, is that some have continued trying to do so despite discouragement from the IMF. For example, some have put limitations on the quantity, conditions, or destinations of financial flows. Others have tried to impose a tax on short-term borrowing by national firms from foreign banks. This is said to be "market-based" because it operates by altering the cost of foreign funds. If such transactions were absolutely prohibited, they would be called "non-market" interventions.
A more extreme form of financial capital controls, one that controls movement of foreign exchange across international borders, also has been tried in a number of countries. This form of control requires that some if not all foreign currency inflows be surrendered to the central bank or a government agency, often at a fixed price that differs from that which would be set in free market. The receiving agency then determines the uses of foreign exchange. The absence of exchange controls means that currencies are "convertible."
The neo-liberal argument opposing financial capital controls asserts that their removal will enhance economic efficiency and reduce corruption. It is based on two basic propositions in economic theory that depend for their proof on perfectly competitive markets in the real economy and perfectly efficient gatherers and transmitters of information in financial markets. Neither assumption is realistic in today's world. Indeed, a number of empirical studies have reported the effectiveness of capital controls in controlling capital flight, curbing volatile capital flows and protecting the domestic economy from negative external developments.
Developing countries have only recently abandoned, or still maintain, a variety of control regimes. Latin American countries traditionally have used market-based controls, putting taxes and surcharges on selected financial capital movements or tying them up in escrow accounts. Non-market based restrictions were more common in Asia until the early 1990s. Many commentators believe that their sudden removal in the early 1990s was a contributing cause to the Asian financial crises in 1997-8. The experience of two countries, Malaysia and Chile, with capital controls is especially instructive.
Malaysia, unlike its Asian neighbors, was reluctant to remove its restrictions on external borrowing by national firms unless they could show how they could earn enough foreign exchange to service their debts. Then when the Asian crises hit, its government imposed exchange controls, in effect making its local currency that was held outside the country inconvertible into foreign exchange. After the ringget was devalued, exporters were required to surrender foreign currency earnings to the central bank in exchange for local currency at the new pegged rate. The government also limited the amount of cash nationals could take abroad, and it prohibited the repatriation of earnings on foreign investments that had been held for less than one year. Thus, Malaysia's capital controls were focused mostly on controlling the outflow of short-term financial transactions. Happily, the authorities were able to stabilize the currency and reduce interest rates, leading to a degree of domestic recovery.28
Chile, on the other hand, tried to limit the inflow of short-term financial transactions. It did so by imposing a costly reserve requirement on foreign-owned capital held in the country for less than one year. Despite attempts to stimulate foreign direct investment of the funds, most of the reserve deposits were absorbed in the form of increased reserves at the central bank. In turn, this created a potential for expanding the money supply, which the government feared would lead to inflation. Rather than allow this to happen, the government "sterilized" the inflows by selling government bonds from its portfolio. But this pushed down the prices of bonds and pushed up the interest rates on them, discouraging business investment. Finally, when prices of copper (Chile's primary export) fell sharply in 1998, the control regime was scrapped.29
The tobin tax
A global tax on international currency movements was first proposed by James Tobin, a Yale University economist, in 1972.30 He suggested that a tax of one-quarter to one percent be levied on the value of all currency transactions that cross national borders. He reasoned that such a tax on all spot transactions would fall most heavily on transactions that involve very short round-trips across borders. In other words, it would be speculators with very short time-horizons that the tax would deter, rather than longer-term investors who can amortize the costs of the tax over many years. For example, the yearly cost of a 0.2 percent round trip tax would amount to 48 percent of the value of the traded amount if the round trip were daily, 10 percent if weekly and 2.4 percent if monthly. Since at least eighty percent of spot transactions in the foreign exchange markets are reversed in seven business days or less, the tax could have a profound effect on the costs of short-term speculators.
Of course, for those who believe in the efficiency of markets and the rationality of expectations, a transactions tax would only hinder market efficiency. They argue that speculative sales and purchases of foreign exchange are mostly the result of "wrong" national monetary and fiscal policies. While we readily admit that national policies sometimes do not accord with desired objectives, they nonetheless have little relevance for speculators focused on the next few seconds, minutes or hours.
Tobin did not intend for his proposal to involve a supranational taxation authority. Rather, governments would levy the tax nationally. In order to make the tax rate uniform across countries, however, an international agreement would have to be entered into by at least the principal financial centers. The revenue obtained from the tax could be designated for each country's foreign exchange reserve for use during periods of instability, or it could be directed into a common global fund for uses like aid to the poorest nations. In the latter case, the feasibility of the tax also would depend on an international political agreement. The revenue potential is sizeable, and could run as high as $500 billion annually.
There are two other advantages often cited by proponents of the Tobin tax. Tobin's original rationale for a foreign exchange transactions tax was to enhance policy autonomy in a world of high financial capital mobility. He argued that currency fluctuations often have very significant economic and political costs, especially for producers and consumers of traded goods. A Tobin tax, by breaking the condition that domestic interest rates may differ from foreign interest rates only to the extent that the exchange rate is expected to change (see p. 10), would allow authorities to pursue different policies than those prevailing abroad without exposing them to large exchange rate movements. More recent research suggests that this is only a very modest advantage.31
An additional advantage of the tax is that it could facilitate the monitoring of international financial flows. The world needs a centralized data-base on all kinds of financial flows. Neither the Bank for International Settlements nor the IMF has succeeded in providing enough information to monitor them all. This information should be regularly shared among countries and international institutions in order to collectively respond to emerging issues.
The feasibility issues raised by the Tobin tax are more political than technical. One of the issues is about the likelihood of evasion. All taxes suffer some evasion, but that has rarely been a reason for avoiding them. Ideally all jurisdictions should be a party to any agreement about a common transactions tax, since the temptation to trade through non-participating jurisdictions would be high. Failing that, one could levy a penalty on transactions with "Tobin tax havens" of, say, double the normal tax rate. Moreover, one could limit the problem of substituting untaxed assets for taxed assets by applying the tax to forwards, swaps and possibly other contracts.
Tobin and many others have assumed that the task of managing the tax should be assigned to the IMF. Others argue that the design of the tax is incompatible with the structure of the IMF and that the tax should be managed by a new supranational body. Which view will prevail depends upon the resolution of other outstanding issues. The Tobin tax is an idea that deserves careful consideration. It should not be dismissed as too idealistic or too impractical. It addresses with precision the problems of excessive instability in the foreign exchange markets, and it yields the additional advantage of providing a means to assist those in greater need.
Reforming the IMF
The IMF was established in 1944 to provide temporary financing for member governments to help them maintain pegged exchange rates during a period of internal adjustment. With the collapse of the pegged exchange rate regime in 1971, that responsibility has been eclipsed by its role as central arbiter of financial crises in developing countries. As noted above (p. 20), these crises may be of three different kinds: fiscal crises, foreign exchange crises, and banking crises.
Under current institutional arrangements, a nation suffering a serious fiscal crisis that could easily lead to default must seek temporary relief from its debts from three different (but interrelated) institutions: the IMF, which is sometimes willing to renegotiate loans in return for promises to adopt more stringent policies (see above); the so-called Paris Club that sometimes grants relief on bilateral (country to country) credits; and the London Club that sometimes gives relief on bank credits. This is an extremely cumbersome process that fails to provide debtor countries with standstill protection from creditors, with adequate working capital while debts are being renegotiated, or with ways to ensure an expeditious overall settlement. The existing process often takes several years to complete.
There is a growing consensus that this problem is best resolved with creation of a new international legal framework that provides for de facto sovereign bankruptcy. This could take the form of an International Bankruptcy Code with an international bankruptcy court, or it could involve a less formal functional equivalent to its mechanisms: automatic standstills, priority lending, and comprehensive reorganization plans supported by rules that do not require unanimous consent. Jeffrey Sachs recommends, for example, that the IMF issue a clear statement of operating principles covering all stages of a debtor's progression through "bankruptcy" to solvency. A new system of emergency priority lending from private capital markets could be developed, he suggests, under IMF supervision. He also feels that the IMF and member governments should develop model covenants for inclusion in future sovereign lending instruments that allow for priority lending and speedy renegotiation of debt claims.32
At the Joint Meeting of the IMF and the World Bank in September, 2002, the policy committee directed the IMF staff to develop by April, 2003, a "concrete proposal" for establishing an internationally recognized legal process for restructuring the debts of governments in default. It also endorsed efforts to include "collective action" clauses in future government bond issues to prevent one or two holdout creditors from blocking a debt-restructuring plan approved by a majority of creditors. The objective of both proposals is to resolve future debt crises quickly and before they threaten to destabilize large regions, as happened in Southeast Asia in 1997-98.
Member countries rarely receive support from the IMF any longer to maintain a particular nominal exchange rate. Because financial capital is so mobile now, pegged exchange rates probably are unsupportable. But there are special times when the IMF still might give such support during a foreign exchange crisis. International lending to support a given exchange rate is legitimate if the government is trying to establish confidence in a new national currency, or if its currency is recovering from a severe bout of hyperinflation. Ordinarily the foreign exchange should be provided from an international stabilization fund supervised by the IMF.
National central banks usually supervise and regulate the domestic banking sector. Thus, banking crises normally are handled by domestic institutions. This may not be possible, however, if the nation's banks hold large short-term liabilities denominated in foreign currencies. If the nation's central bank has insufficient reserves of foreign currencies to fund a large outflow of foreign currencies, there may be circumstances when the IMF or other lenders may wish to act as lenders-of-last-resort to a central bank under siege. Nations like Argentina that have engaged in "dollarization" are learning about the downside risks of holding large liabilities denominated in foreign currencies. The best way to avoid this problem is for governments and central banks to restrict the use of foreign currency deposits or other kinds of short-term foreign liabilities at domestic banks.
Overall, what is most needed is the availability of more capital in developing countries and much quicker responses, amply funded, to emerging financial crises.. George Soros has argued powerfully that the IMF needs to establish a better balance between crisis prevention and intervention.33 The IMF has made some progress in prevention by introducing Contingency Credit Lines (CCLs). The CCL rewards countries that follow sound policies by giving them access to IMF credit lines before rather than after a crisis erupts. But CCL terms were set too high and there have been no takers. Soros also has recommended the issuance of Special Drawing Rights (SDRs) that developed-countries would donate for the purpose of providing international assistance. Its proceeds would be used to finance "the provision of public goods on a global scale as well as to foster economic, social, and political progress in individual countries."34
A growing number of civil society institutions, however, oppose giving more money to the IMF unless it is basically reformed. They point out that it is a committed part of the Washington Consensus, the application of whose policies have made societies adjuncts of the market. They see the IMF as an instrument of the U.S. government and its corporate allies. The conditions it attaches to loans for troubled countries often do more to protect the interests of first world investors than to promote the long-term health of the developing countries. The needed chastening of speculative investors does not occur under these circumstances. There is evidence that in several major crises, IMF requirements for assisting nations have in fact worsened the situation and protracted the crises. The IMF opposed the policies that enabled Malaysia to weather the crisis in Southeast Asia, for example, while it urged the failed policies of other Southeast Asian nations. The vast literature cited by Pieper and Taylor (p. 22) is a convincing chronicle of earlier missteps. For such reasons as these, some civil society institutions argue that, unless IMF policies are changed, giving the institution more money will do more harm than good.
Fortunately, the IMF's policies are beginning to change, partly as a result of criticisms by civil society institutions, but more through recognition of the seriousness of the problems with the present system. In the wake of recent financial crises, leaders in the IMF as well as the World Bank are looking for ways to reform the international financial architecture. Arguably, their emphasis is shifting away from slavish devotion to the prescriptions of the Washington Consensus and toward more state intervention in financial markets. Joseph Stiglitz, the Nobel Laureate who has been particularly critical of the IMF, nonetheless acknowledges that its policy stances are improving.35
The IMF has begun to recognize the importance of at least functional public interventions in markets and the need to provide more supporting revenues. It has realized that controls on external financial movements and prudent regulation can help contain financial crises. It has abandoned the doctrine, long the backbone of structural adjustment policies, that raising the local interest rate will stimulate saving and thereby growth. Both the IMF and the World Bank have rolled over or forgiven the bulk of official debt owed by the poorest economies.
Whether these and other promising changes in IMF thinking and policy formation are sufficient to assure that its future responses to crises will be benign still is not clear. While celebrating what they view as belated improvements, many critics of the IMF among civil society institutions are not convinced that they are sufficiently basic. Even if the IMF avoids repeating some of its more egregious mistakes, some believe that it is likely to continue to function chiefly for the benefit of the international financial community rather than the masses of people. Rather, they believe that, at least in the long term, it would be much better for control over international finance to reside in new institutions under a restructured United Nations. They favor the U.N. because it has a broader mandate, is more open and democratic, and, in its practice, has given much greater weight to human, social, and environmental priorities.
Many civil society institutions want the primary focus of reform to be on taming speculation, restoring the control of their economies to nations, and embedding economies in the wider society. They believe that if these policies are adopted there will be less need for large funding to deal with financial crises. There remains, however, the fact that such crises are occurring and will continue to occur for some time. The IMF is the only institution positioned to respond to these crises. Hence, even for those who sympathize with the goals of the civil society institutions, there is a strong argument for more financing for the IMF.
A world financial authority
A variety of public and private citizens and institutions have recently proposed the establishment of a World Financial Authority (WFA) to perform in the domain of world financial markets what national regulators do in domestic markets. Some believe it should be built upon the foundation of global financial surveillance and regulation that have already been laid by the Bank for International Settlements in Basel, Switzerland. Others regard it as a natural extension of the activities of the IMF. Still others are less interested in the precise institutional form it would take than in the clear delineation of the tasks that need to be done by someone.
Its first task probably should be to provide sufficient and timely financial assistance during crises to avert contagion and defaults. This requires a lender-of-last-resort with sufficient resources and authority to disperse rescue money quickly. Perhaps the best example to date is the bailout loan to Mexico by the U.S. Treasury and the IMF at the end of 1994. It supplied sufficient liquidity for Mexico to make the transition back to stability and to pay back the loans ahead of time. The management of the Asian crises in 1997-8, on the other hand, was badly handled. The bailout packages offered by the IMF were not only significantly smaller than in the Mexico case; they also were constrained with so many conditions that a year later only twenty percent of the funds had been disbursed. This slow response to the crisis probably worsened the contagion. Surprisingly, the error was repeated in the Russian crisis in 1998 and the Brazilian crisis in 1999.
A World Financial Authority also should provide the necessary regulatory framework within which the IMF or a successor institution can develop as a lender-of-last-resort. As long as domestic regulatory procedures function properly, there will be no need for a world authority to be involved, any more than to certify that domestic regulatory procedures are effective. In countries where domestic financial regulation is unsatisfactory, the WFA would assist with regulatory reform. In this way, the WFA could aid financial reconstruction, reduce the likelihood of moral hazard, and give confidence to backers of the operation.
There is little appetite today, especially in Washington, to create a new international bureaucracy. This fact gives support to the idea of building the WFA from the existing infrastructure of the Bank for International Settlements (BIS). The BIS is a meeting place for national central bankers who have constructed an increasingly complicated set of norms, rules and decision-making procedures for handling and preventing future crises. Its committees and cooperative cross-border regulatory framework enjoy the confidence of governments and of the financial community. It may well be the best place to govern an international regulatory authority at the present time.
Theological and ethical considerations
While Christian theology cannot provide us with detailed recommendations on how to correct the adverse consequences of speculative financial movements, it can provide us with an empowering perspective or worldview. Our theological expressions of the faith describe the source of our spiritual energy and hope. They betray our ultimate values and the source of our ethical norms. They shape how we perceive and judge the "signs of the times."
God's world and human responsibilities
Nothing in creation is independent of God. "The earth is the Lord's and all that is in it, the world, and all those who live in it." (Ps. 24:1 NRSV) Thus, no part of the creation - whether human beings, other species, the elements of soil and water, even human-made things - is our property to use as we wish. All is to be treated in accord with the values and ground rules of a loving God, their ultimate owner, who is concerned for the good of the whole creation. All of God's creation therefore deserves to be treated with appropriate care and concern, no matter how remote from one's daily consciousness or existence.
The doctrine of creation reminds us that our ultimate allegiance is not to the nationalistic and human-centered values of our culture, but rather to the values of the loving Maker of heaven and earth. When we seek plenty obsessively, consume goods excessively, compete against others compulsively, or commit ourselves to Economic Fate, we are worshiping false gods. Modern idolatries are often encountered in economic forms, just as in the New Testament's warnings about the spiritual perils of prosperity in the parables of the rich, hoarding fool (Luke 12:15-21) and the rich youth (Matt. 19:16-24 and Luke 18:18-25).
The fact that so much of financial speculation is divorced from the real economy of production and exchange suggests that its paper transactions are more like bets in a casino than an essential component of God's real economy, which seeks the good of all creation. It is wrong to subject people to the effects of wholesale gambling. The fact that the practice of financial speculation is secretive, compulsively competitive, and frequented by lone rangers, moreover, hints at a cult of false idols. Its practitioners, including especially day-traders, seem interested only in exceedingly short-term personal financial advantage, unconcerned about the long-term consequences of their actions or their impact on others. This also indicates a degree of idolatry that contradicts the doctrine of creation.
Image of God
The conviction that human beings have a God-given dignity and worth (Gen. 1:26-28) unites humanity in a universal covenant of rights and responsibilities - the family of God. All humans are entitled to the essential conditions for expressing their human dignity and for participation in defining and shaping the common good. These rights include satisfaction of basic biophysical needs, environmental safety, full participation in political and economic life, and the assurance of fair treatment and equal protection of the laws. These rights define our responsibilities in justice to one another, locally, nationally and - because they are human rights - internationally.
Financial speculation often leads to unmanageable floods of funds into and out of host societies, creating unwanted bubbles and panics. Financial speculators normally ignore the human consequences of their activities on the rights of people in host societies, where economic adjustments are shared widely and painfully. Their primary interest is short-term personal financial gain. The absence of a sense of covenantal unity with their brothers and sisters of the developing world is a sad commentary on the governing ethic of speculators in the capital markets. Their arrogance calls for some form of control over foreign exchange and financial capital markets.
Justice in covenant
The rights and responsibilities associated with the image of God are inextricably tied to the stress on justice in Scripture and tradition. We render to others their due because of our loving respect for their God-given dignity and value. The God portrayed in Scripture is the "lover of justice" (Ps. 99:4, 33:5, 37:28, 11:7; Isa. 30:18, 61:8; Jer. 9:24). Justice is at the ethical core of the biblical message. Faithfulness to covenant relationships, moreover, demands a justice that recognizes special obligations, "a preferential option" to widows, orphans, the poor, and aliens, which is to say the economically vulnerable and politically oppressed. Hence, the idea of the Jubilee Year (Lev. 25) was meant to prevent unjust concentrations of power and poverty. Jesus' ministry embodies concern for the rights and needs of the poor; He befriended and defended the dispossessed and the outcasts.
The fact that the liberalization of trade and finance has failed to improve the distribution of incomes, indeed, that it has widened the gap between rich and poor in virtually every country, is not a sign of distributive justice but of its opposite. The standard of living for the least skilled, least mobile, and poorest citizens of many developing countries has declined absolutely. This, too, is an unjust result of a broken system. The fact that governments that wish to assist the vulnerable and weak of their societies are less able to do so, in part because they no longer can levy sufficient taxes on foreign interests, is a violation of justice in community.
Sin and judgment
Sin is a declaration of autonomy from God, a rebellion against the sovereign source of our being. It makes the self and its values the center of one's existence, in defiance of God's care for all. Sin tempts us to value things over people, measuring our worth by the size of our wealth and the quantity of goods we consume, rather than by the quality of our relationships with God and with others. Sin involves injustice because its self-centeredness defies God's covenant of justice, grasping more than one's due and depriving others of their due.
Sin is manifested not only in individuals, but also in social institutions and cultural patterns. These structural injustices are culturally acceptable ways of giving some individuals and groups of people advantage over others. Because they are pervasive and generally invisible, they compel our participation. They benefit some and harm many others. Whether or not we deserve blame as individuals and churches for these social sins depends in part on whether we defend or resist them, tolerate or reject them.
The fact that the freeing of financial markets has permitted financial speculators to engage in high-risk gambles without regard to the consequences for others is abundant evidence of both individual and institutional sin. The policies of the Washington Consensus frequently lead to adverse consequences for the poor and the environment, even as its proponents gain advantages from the implementation of such policies. They are another serious expression of social sin in our time. These policies inevitably increase the concentration of economic power in fewer hands. The fact that the global spread of free-market policies has led to the decline of countervailing institutions of
social solidarity means that it is easier for the centers of economic power to corrupt governments, control markets, alienate neighbors, manipulate public opinion, and contribute to a sense of political impotency in the public.
The Church's mission and hope
The church is called to be an effective expression of the Reign of God, which Jesus embodied and proclaimed. This ultimate hope is a judgment on our deficiencies
and a challenge to faithful service. God's goal of a just and reconciled world is not simply our final destiny but an agenda for our earthly responsibilities. We are called to be a sign of the Reign of God, on earth as it is in heaven, to reflect the coming consummation of God's new covenant of shalom to the fullest extent possible.
A new financial architecture
In her path-breaking book, Casino Capitalism,36 Susan Strange likens the Western financial system to a vast casino. As in a casino,
"the world of high finance today offers the players a choice of games. Instead of roulette, blackjack, or poker, there is dealing to be done - the foreign-exchange market and all its variations; or in bonds, government securities or shares. In all these markets you may place bets on the future by dealing forward and by buying or selling options and all sorts of other recondite financial inventions. Some of the players - banks especially - play with very large stakes. There are also many quite small operators. There are tipsters, too, selling advice, and peddlers of systems to the gullible. And the croupiers in this global finance casino are the big bankers and brokers. They play, as it were, "for the house.' It is they, in the long run, who make the best living."
She goes on to observe that the big difference between ordinary kinds of gambling and speculation in financial markets is that one can choose not to gamble at roulette or poker, whereas everyone is affected by "casino capitalism." What goes on in the back offices of banks and hedge funds "is apt to have sudden, unpredictable and unavoidable consequences for individual lives."
It is this volatility, this instability in financial markets that has given rise to recurring financial crises. They must be tamed. In the wake of recent financial crises, people are beginning to look for ways to reform the international financial architecture. Although it is difficult to move from general theological convictions to specific proposals, we offer the following suggestions for consideration by Christians and other persons of good will.
- Capital controls should be an integral part of national strategies to tame the financial system. They can be made an effective and meaningful tool to protect and insulate the domestic economy from volatile capital flows and other negative external developments.
- Regulatory and supervisory measures should supplement capital controls when appropriate. They should include regulation of financial derivatives and hedge funds. Regulation is a necessary complement to domestic capital controls. Nations influenced by hedge funds and their complex financial instruments should seek international cooperation, including the governments of host countries, to regulate their practices.
- A new international legal framework should be created, which provides for de facto sovereign bankruptcy. The existing international system for dealing with insolvent governments is woefully inadequate. Provision must be made for automatic standstills, priority lending, and planned reorganizations.
- An international transactions tax (like the Tobin tax) should be designed and implemented to discourage short-term speculative capital movements. It is neither "too idealistic" nor "too impractical." It would reduce short-term trading and strengthen the defensibility of the exchange rate regime.
- International cooperation should be sought to curb dubious activities of offshore financial centers. Strict international regulation and supervision of offshore centers is essential to curb tax and regulatory evasions. They also are a primary conduit for money laundering and various criminal activities.
- The IMF's responsibilities as a lender-of-last-resort should be enhanced, expanding its authority and resources to make possible quick action to avert financial crises. The IMF must have effective and swift mechanisms to increase the Fund's access to official monies in times of crisis, including authority to borrow directly from financial markets under those circumstances.
- A World Financial Authority based on the cross-border regulatory framework of the Bank for International Settlements should be developed. It should provide the necessary regulatory framework within which the IMF or a successor organization can develop as a lender-of-last-resort.
Of these recommendations, perhaps the most controversial is that more funds be given to the IMF. We noted above that much of the criticism of the IMF is justified. We also acknowledged that the IMF is improving its policies. We hope that these improvements will continue. Meanwhile, there is no other viable candidate to serve as lender-of-last-resort - an absolutely essential feature of any new financial architecture.
The major reason some civil society institutions resist funding the IMF further is its history of misguided structural adjustment policies, policies that are now widely recognized to have caused widespread suffering. We hope that recent changes will improve this situation as well and enable the IMF to perform the important role we recommend for it.
Along with the World Bank, it is beginning to contextualize its performance criteria and conditionalities, taking much more seriously the unique circumstances of particular economies. It is listening more and nitpicking less. To be sure, the IMF is not likely to abandon its policy of making its loans conditional on the adoption by borrowing countries of mutually agreed economic policies. Even so, there is considerable evidence that when it has had more resources on hand, conditionality has been correspondingly wiser and less draconian.
The IMF now recognizes that it can leave more decisions to developing countries partly because these have better informed and more sophisticated employees than was once the case. Certainly in Latin America and Asia and increasingly in Africa, country economic teams are better qualified technically than the lower rung Ph.D.s from American and European universities to whom the IMF and World Bank entrust their missions. Local economists can do financial programming and standard macroeconomic modeling as well as or better than the people from Washington can; they also know how to do investment project analysis. To be sure, decisions about financial and project plans must include input from many other elements of a society.
We can encourage the IMF (and World Bank) to reverse the typical procedure in setting conditions for multilateral loans. Instead of waiting for it to specify the policies that must be followed to justify additional financing, country economic teams, in consultation with other agencies of their government, should be allowed to propose economic programs to the IMF. Disagreements between Washington staff assessments and the local teams could be resolved directly or by third-party arbitration. The scope of economic conditionality could also be restricted, for example, just to a balance-of-payments target, while the country could pursue its own agenda regarding inflation, income distribution, and growth.
What Christians can do
A primary part of the "principalities and powers" referred to in the Bible is composed of the political-economic institutions and processes that govern how people relate economically to each other and to God's whole creation. The church has a stake in their design. Yet many church members feel powerless to change basic political-economic reality. They think either that the economic conditions of society result "naturally" from the forces of markets that are only marginally within the power of human control, or that economic conditions result from powerful interests that are beyond the reach of ordinary citizens. Thus, there's nothing that can be done about it, or there's nothing we can do about it.
On the contrary, Mobilization for the Human Family believes that the political economy is shaped by deliberate social policy decisions; that conditions at any given time are the result of those decisions; that conditions can be changed by human decisions; and that the will of a nation's and the world's citizens about what the commitments and purposes of the nation and the world should be can be expressed in the political economy through the framework of democratic process provided in our national and transnational polity. Accordingly, we offer below some suggestions for action that may be taken by individual Christians and by our churches and their denominations to correct some correctable flaws of financial globalization.
Actions by individual Christian
- Pray for persons working in governments, international organizations, institutions, and non-governmental organizations who are trying to work toward a better world, including especially a world financial architecture that better assures fairness in capital markets.
- In the management of personal and family investments, seek fuller understanding of the uses to which the banks, companies, mutual funds, and investment counselors are putting your money. Avoid speculative investments that are likely to be made without regard to their consequences for others.
- Reflect upon decisions about work and career choices that are consistent with a Christ-like commitment to economic justice for all.
- Organize Bible study in your local congregation, where possible together with people of other backgrounds and life-styles, to learn and identify with God's continuing struggle to seek economic justice in the world.
- Commit oneself to some voluntary organization that is trying to promote greater economic justice in the local and/or global economy.
- Become involved politically in your area or nation, seeking political and economic change in the direction of economic justice.
Actions by churches and denominations
- Concern for economic justice must be fully reflected in the prayer life, worship, and educational programs and mission outreach of all congregations.
- Seek assistance from members who work for banks, brokerage houses, and mutual funds to help mould an educational program that will assist members of the congregation to become more socially responsible investors.
- Seek collaborative programs among clusters of congregations, perhaps with the aid of local Councils of Churches, to provide educational opportunities where Christians and other faith groups can come to understand some of the complex economic issues amidst which they live and work. Since virtually nothing is now available to explain the problems of financial speculation, this paper could be used to assist study of this phenomenon.
- Over and beyond educational programs, local churches - again perhaps best working together in the same neighborhood or town - can enter into a deliberate dialogue or partnership with one or more voluntary bodies in the civic society, so as to put their energies into the health of the wider society. Engagement with the International Forum on Globalization (l009 General Kennedy Avenue #2, San Francisco, CA 94129) is a good way to explore the means of influencing the debate on the globalization of trade and finance.
- At the denominational level, churches should review their investment criteria to reassure themselves that social responsibility is a primary goal of their financial management.
- Also at the denominational level, agencies responsible for the formation of social witness policies need to monitor global economic indicators on a continuing basis in order to assist its programmatic agencies to form effective and timely social witness regarding the local and national consequences of the globalization of trade and finance.
Want to know more?
Globalization is a vast topic. For a general introduction, see Sarah Anderson and John Cavanagh, Field Guide to the Global Economy (New York: New Press, 2000) and Thomas Friedman, The Lexus and the Olive Tree: Understanding Globalization (New York: Farrar Straus Giroux, 1999). A classic introduction to the financial side of globalization is Susan Strange, Casino Capitalism, (New York: Mnchester University Press, 1986). See also Kavaljit Singh, The Globalisation of Finance: A Citizen's Guide (London: Zed Books, 1999) and John Eatwell and Lance Taylor, Global Finance at Risk: The Case for International Regulation (New York: The New Press, 2000). The best introduction to the Tobin Tax is Mahbub ul Haq et al (eds), The Tobin Tax: Coping with Financial Volatility (New York: Oxford University Press, 1996). For how church people might react, see Pamela Brubaker, Globalization at What Price? (Cleveland: Pilgrim Press, 2001).
Questions For Discussion
- How have the linkages and interconnections of international finance impacted your life? On balance, do you regard them as advantages or disadvantages for a healthy Christian life?
- The frequency and severity of recent financial crises have fueled calls for a radical redesign of the rules of global finance. If you were the advisor to an international commission asked to design "A New International Financial Architecture," what would you recommend?
- Do you favor allowing sovereign nations to declare bankruptcy? What Christian traditions might be invoked to support or deny such an action?
- A growing number of civil society institutions oppose giving more money to the IMF. They point out that it is part of the Washington Consensus, the application of whose policies have made societies adjuncts of the market. Yet this paper suggests that the IMF needs more money. As a committed Christian, which view do you favor?
- Is it too late to expect justice in a globalizing world? Since much of the direction the global economy has taken is irreversible, how can a balance between market and society be negotiated? How might Christians play a role in those negotiations?
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Ron Patterson says: 11/29/2017 at 11:10 amDec 05, 2017 | peakoilbarrel.com
Paulo says: 11/29/2017 at 10:36 am
Up early today and lit the shop woodstove; just waiting for light to get on with my day which always starts (after chores) with my dog and I going for a walk.Ron, I do not disagree with your post or comments, with the exception of when population will peak and the aspect/timing of social disruption?
On this morning wait for daylight I have been reading various blog sites with CNN ticking over in the background. Maybe it is the speed of the news cycle and my being used to the insanity of what is being reported, but today, after seeing the Trump tweets on Muslim Violence (film clips), the so-called tax plan, sexual misconducts, the recent reports on KSA, Yemen, Syria, and what is ramping up concerning North Korea, I think we are at a crux right now. I think there will be a Market collapse and war; perhaps global in scale. Further to that I don't see any desire or mechanism for defusing tensions or a way to recall the situation.
I am 62 and was a kid during a recent/last big social reset. I had older sibs and parents who moved us north to Canada in '68 because they had had enough. My WW2 veteran parents proclaimed they had seen enough to be afraid, and sold out to start over and build new lives. While I was thinking about it, and your post, I realized that in today's situation there are no simple answers and not really any places to run to. It seems different because of the population numbers and armaments, plus the willingness of people to pretend it's just 'tribal/crooked politics as usual'. Then, I thought about photographs and how a few catapulted us into rapid change last century. Certainly, the haunted faces of the Dust Bowl sparked a move towards reform. Images from the south and the stories of the KKK perhaps Rosa Parks herself helped galvanize the Civil Rights Movement. For me, the image of the young lady holding the dead student at Kent State, (her anguish), the burning Monk and young girl coated with napalm coupled with the lie about the Gulf of Tonkin incident pushed me into cynicism; so much that I was not surprised about the non-existent WMD of Iraq.
Perhaps it won't be an image, or story that we look back to as a turning point. Maybe it will be a tweet. Maybe it will be the Market collapse or a premptive attack on North Korea that sets everything in motion. I just think we are loaded and tamped down like a pipe bomb ready to blow.
I do not think we will continue to grow in population until 2050. I think it could start to unravel pretty fast and any day. I don't see any step back from war(s) in either the ME, or Korea.
From Wiki: (just one event that pales alongside today's triggers)
Kent State
"Just five days after the shootings, 100,000 people demonstrated in Washington, D.C., against the war and the killing of unarmed student protesters. Ray Price, Nixon's chief speechwriter from 1969 to 1974, recalled the Washington demonstrations saying, "The city was an armed camp. The mobs were smashing windows, slashing tires, dragging parked cars into intersections, even throwing bedsprings off overpasses into the traffic down below. This was the quote, student protest. That's not student protest, that's civil war."[10] Not only was Nixon taken to Camp David for two days for his own protection, but Charles Colson (Counsel to President Nixon from 1969 to 1973) stated that the military was called up to protect the administration from the angry students; he recalled that "The 82nd Airborne was in the basement of the executive office building, so I went down just to talk to some of the guys and walk among them, and they're lying on the floor leaning on their packs and their helmets and their cartridge belts and their rifles cocked and you're thinking, 'This can't be the United States of America. This is not the greatest free democracy in the world. This is a nation at war with itself.'"
I apologize if this seems North American centric; and in blinders. I wish to reiterate that our population numbers, plus increasing divide and disparity, proliferation of weapons and intolerance, coupled with environmental degradation and Climate Change, makes this much much worse. It's a gun waiting for a trigger, imho.
Yes, things are pretty bad. But things were bad during the Kent State/Nixon era. Yet we survived.Ghung says: 11/29/2017 at 11:34 amIt has been my experience, following this biosphere destruction for many years now, that people who see and understand the destruction, almost always expect things to fall apart real soon. They never do.
I once spent several months as a stockbroker. One thing I learned during that period was a truth about insider traders. That is traders who trade the stock of the company they work for. They see things happening inside their company and expect it to cause great trouble or great profit. They are almost always right and almost always way too early with their predictions. Things just never seem to happen as fast as they expected.
We, you and I and a few others, are insiders to this problem that I have described in my above post. We know something terrible is going to happen. But most of us expect it to happen way before it actually will happen.
An example is "The Population Bomb" by Paul Ehrlich. I think he was spot on, but things just did not happen as fast as he expected. I hope to avoid his mistake.
Yep, Ron, and we need to be careful about saying "this time is different". Perhaps we need a list of things that really are different this time.Dennis Coyne says: 11/29/2017 at 1:16 pmOne that should be obvious to anyone paying attention is that, in the late 60s, US debt to GDP was in the mid 30% range. It is now over 100% according to a number of sources. As Gail T. is wont to say, unserviceable debt will likely be the trigger that results in a cascading failure of financial systems, and everything else is likely to follow. In short, our financial house of cards has grown three-fold in 50 years, as the global reserve currency is tagged to nothing.
Hi Ghung,Ghung says: 11/29/2017 at 1:28 pmI think the debt problem is a little overblown. Now people use debt differently sometimes implying "total debt" and sometimes "public debt" and sometimes "central government debt". Which one are you talking about? I don't read Tverberg's stuff. Looking at your numbers and the link below
https://fred.stlouisfed.org/series/GFDEGDQ188S
it seems you are talking about total US federal government debt.
Consider Japan
https://fred.stlouisfed.org/series/QJPGAN770A
They have been over 100% debt to GDP since 1999 and have been around 200% since 2014.
If Japan has collapsed, I missed it. Note that I agree with the idea that when the US economy is doing well (which at present is the case), that paying down debt is a better idea than reducing taxes. I would raise taxes if anything ( a carbon tax would be ideal) and reduce the deficit to less than zero and pay down the debt.
Or just balance the budget and let economic growth reduce the debt to GDP ratio.
The figures I posted only include US government (National) debt. Total US debt (public+private) is, of course, much higher.Dennis Coyne says: 11/29/2017 at 4:49 pmUS National debt currently around $20.5 trillion.
http://www.usdebtclock.org/US GDP for 2016 per the World Bank was $18,569,100.00
https://data.worldbank.org/indicator/NY.GDP.MKTP.CDAs for Japan, most of what they owe is to themselves while they own a lot of that US debt, above. Japan also uses the carry trade to stay afloat.
I only posted this as being one of the things that is different about our situation ~50 years ago. People can make of it what they will. I personally think it is significant since the world runs on credit. No credit, no growth.
Hi Ghung,OFM says: 11/30/2017 at 8:17 amHard to imagine no credit. Also in the 1960s there was less borrowing by the government (so less credit) and higher growth rates (at least in the US) than today. In the old days there was concern the government would "crowd out" private debt, as if there was some fixed amount of debt the system could sustain and the system always remained at this maximum debt level.
Instead it seems the system had room for higher levels of debt as government debt as increased, but there is little evidence of "crowding out". There may be some maximum debt level that an economy can sustain and Japan may be there. Also note that 50 years ago debt was at fairly low levels, but in 1946 Debt to GDP was 118% of GDP, rapid economic growth from 1946 to 1974 reduced this debt to GDP to 31%, by 1992 it was at 61%, and in 2016 it was 105%.
Strange that the Republicans want to raise the debt higher by cutting taxes, this made sense when the economy was doing poorly during the Obama years and the aftermath of the GFC.
I agree debt could become a problem and would be worried if central government debt to GDP was 200% (as in Japan).
I also don't buy into the unfunded liabilities argument, laws change and governments don't always fulfill their promises, that is just a fact of life.
Personally I believe Tverberg is a person who has discovered a niche she can exploit and is making a living out of it. I had the pleasure of seeing her make her canned presentation at a conference once, where all the presentations were repeated several times over for three days so the entire attending crowd could see them all.Hightrekker says: 11/30/2017 at 10:25 amIf you ask her a real question, she seizes up like a deer in headlights. She knows some elementary level stuff that is worth some thought, in the case of people who know little or nothing about the overall economy and environment.
Her answer in the case of a real question is the same answer you get from a politician who doesn't WANT to answer. She just pretends you asked a DIFFERENT question, and provides a stock answer to THAT question.
She doesn't have anything to say worth listening to , in terms of the level of understanding of the contributing members of this forum.
Being a Cabbage for Christ and a AGW Denier doesn't exactly lend credibility to her work.Caelan MacIntyre says: 11/30/2017 at 9:06 pm
She denies AGW?Nathanael says: 11/29/2017 at 4:22 pm
UK government debt to GDP was well over 400% for decades running; it was never a problem. Don't worry about it. Government debt is not really debt, it's actually money.Dennis Coyne says: 11/29/2017 at 4:54 pm
Hi Nathanael,Paulo says: 11/29/2017 at 1:39 pmWhen was that?
https://fred.stlouisfed.org/series/DEBTTLGBA188A
Oh I see high debt but not 400%
https://fred.stlouisfed.org/series/PSDOTUKA
It was over 160% from 1925 to 1952, maybe that's what you mean.
Good point on the rate. I remember my grade 11 Social Studies teacher talking to me after class in 1972. One of our class texts was The Population Bomb. He expected to see, in his lifetime, a collapse of sorts. When I asked him to expand further he described small scale gardens/farms of no more the 2 acres. The primary machinery used would be walk-behind tractors.George Kaplan says: 11/29/2017 at 1:49 pmI smiled at the memory when I bought my BCS walk-behind ten years ago. I smile every spring when I till the gardens. I still think he was right, just off on the timing (just like I was when I got out of stocks several years ago and put my money in term deposits.)
The older I get, the less I understand. I take comfort in knowing my Dad wouldn't get it, either.
I thought Ehrlich's book "The Dominant Animal" was fairly well measured, and generally in line with the post above (I haven't read the population bomb).
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Feb 09, 2015 | theguardian.com
RussBrown -> stregs101 9 Feb 2015 21:14
21st Century Wire founder was on cross talk recently with others that are trying to call the media out on these things.
>It seems to me that the Intelligence Services have colonised the media. The Mighty Wurlitzer: How the CIA Played America, is a good book to read, it documents boasts from the CIA that they controlled western media and at the press of a button could hear the same tune played all over the western world.
Really, it is up to Guardian and BBC journalists and broadcasters to take a long hard look at themselves and ask why am I being made to sell war propaganda? the BBC news 24 channel had someone on trying to talk up a war with Russia last night, as I was watching it I was wondering if the BBC News presenter, an intelligent man, would have enough moral fibre to realize he is being used to sell a warmongering narrative? But he didnt, which is why I can no longer pay that organisation anymore money.
stregs101 -> RussBrown 9 Feb 2015 21:00
I agree.
The people in the 'western' world think their media is 'free', 'unbiased', 'investigated' but in sad reality it is far from any of those things. It is a mega phone for the narrative the govts of the west (primarily US, UK, EU and sadly Australia) want amplified.
Last week there was an article promoting 'full scale war' in relation to arming Kiev. This type of reporting is actually deemed a 'crime against the peace' under Nuremberg.
By upholding the lies and fabrications of US foreign policy, the mainstream media is complicit in war crimes. Without media propaganda, this military agenda under the guise of counter-terrorism would fall flat, collapse like a deck of cards.
21st Century Wire founder was on cross talk recently with others that are trying to call the media out on these things.
RussBrown -> seaspan 9 Feb 2015 19:54
I am not sure how it works with the MSM. What I have noticed over the years, is that in certain times of war or geopolitical maneuvorings, the BBC and Guardian (and others), but especially those two, seem to have some sort of agreement with the Intelligence Services/Foreign Office to write subtle propaganda or lead with a certain narrative.
Take for example the BBC headlines yesterday, top story was 15 people killed in Ukraine and calls to arm Kiev against Russian aggression. Now the this was TOP news story, the BBC have totally ignored reporting Ukrainian civilian massacres (over 5000 have died), until they are selling a narrative they want to persuade everyone with, such as that we need to arm Kiev against Russian aggression.
This means, the producers or editors at the BBC have agreed with the Security services to allow them to control the media at certain times. Likewise, we see the same in the Guardian, especially at certain times.
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Dec 05, 2017 | www.nakedcapitalism.com
Posted on December 4, 2017 by Jerri-Lynn Scofield By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She now spends much of her time in Asia and is currently working on a book about textile artisans.
Three Democrats and three Republicans have co-sponsored a resolution, under the Congressional Review Act (CRA), to scuttle the Consumer Financial Protection Bureau's payday lending rule.
CRA's procedures to overturn regulations had been invoked, successfully, only once before Trump became president. Congressional Republicans and Trump have used CRA procedures multiple times to kill regulations (as I've previously discussed (see here , here , here and here ). Not only does CRA provide expedited procedures to overturn regulations, but once it's used to kill a regulation, the agency that promulgated the rule is prevented from revisiting the issue unless and until Congress provides new statutory authority to do so.
Payday Lending
As I wrote in an extended October post, CFPB Issues Payday Lending Rule: Will it Hold, as the Empire Will Strike Back, payday lending is an especially sleazy part of the finance sewer, in which private equity swamp creatures, among others, operate. The industry is huge, according to this New York Times report I quoted in my October post, and it preys on the poorest, most financially-stressed Americans:
The payday-lending industry is vast. There are now more payday loan stores in the United States than there are McDonald's restaurants. The operators of those stores make around $46 billion a year in loans, collecting $7 billion in fees. Some 12 million people, many of whom lack other access to credit, take out the short-term loans each year, researchers estimate.
The CFPB's payday lending rule attempted to shut down this area of lucrative lending– where effective interest rates can spike to hundreds of points per annum, including fees (I refer interested readers to my October post, cited above, which discusses at greater length how sleazy this industry is, and also links to the rule; see also this CFPB fact sheet and press release .)
Tactically, as with the ban on mandatory arbitration clauses in consumer financial contracts– an issue I discussed further in RIP, Mandatory Arbitration Ban , (and in previous posts referenced therein), the CFPB under director Richard Cordray made a major tactical mistake in not completing rule-making sufficiently before the change of power to a new administration- 60 "session days" of Congress, thus making these two rules subject to the CRA.
The House Financial Services Committee press release lauding introduction of CRA resolution to overturn the payday lending rule is a classic of its type, so permit me to quote from it at length:
These short-term, small-dollar loans are already regulated by all 50 states, the District of Columbia and Native American tribes. The CFPB's rule would mark the first time the federal government has gotten involved in the regulation of these loans.
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House Financial Services Committee Chairman Jeb Hensarling (R-TX), a supporter of the bipartisan effort, said the CFPB's rule is an example of how "unelected, unaccountable government bureaucracy hurts working people."
"Once again we see powerful Washington elites using the guise of 'consumer protection' to actually harm consumers and make life harder for lower and moderate income Americans who may need a short-term loan to keep their utilities from being cut off or to keep their car on the road so they can get to work," he said. "Americans should be able to choose the checking account they want, the mortgage they want and the short-term loan they want and no unelected Washington bureaucrat should be able to take that away from them."
[Rep Dennis Ross, a Florida Republican House co-sponsor]. said, "More than 1.2 million Floridians per year rely on Florida's carefully regulated small-dollar lending industry to make ends meet. The CFPB's small dollar lending rule isn't reasonable regulation -- it's a de facto ban on what these Floridians need. I and my colleagues in Congress cannot stand by while an unaccountable federal agency deprives our constituents of a lifeline in times of need, all while usurping state authority. Today, we are taking bipartisan action to stop this harmful bureaucratic overreach dead in its tracks."
As CNBC reports in New House bill would kill consumer watchdog payday loan rule , industry representatives continue to denounce the rule, with a straight face:
"The rule would leave millions of Americans in a real bind at exactly the time need a fast loan to cover an urgent expense," said Daniel Press, a policy analyst with the Competitive Enterprise Institute, in a statement after the bill's introduction.
Consumer advocates think otherwise (also from CNBC):
"Payday lenders put cash-strapped Americans in a crippling cycle of 300 percent-interest loan debt," Yana Miles, senior legislative counsel at the Center for Responsible Lending, said in a statement.
Prospects Under CRA
When I wrote about this topic in October, much commentary assumed that prospects for CRA overturn were weak. I emphasized instead the tactical error of failing to insulate the rule from CRA, which could have been done if the CFPB had pushed the rule through well before Trump took office:
If the payday rule had been promulgated in a timely manner during the previous administration it would not have been as vulnerable to a CRA challenge as it is now. Even if Republicans had then passed a CRA resolution of disapproval, a presidential veto would have stymied that. Trump is an enthusiastic proponent of deregulation, who has happily embraced the CRA– a procedure only used once before he became president to roll back a rule.
Now, the Equifax hack may have changed the political dynamics here and made it more difficult for Congressional Republicans– and finance-friendly Democratic fellow travellers– to use CRA procedures to overturn the payday lending rule.
The New York Times certainly seems to think prospects for a CRA challenge remote:
The odds of reversal are "very low," said Isaac Boltansky, the director of policy research at Compass Point Research & Trading.
"There is already C.R.A. fatigue on the Hill," Mr. Boltansky said, using an acronymn for the act, "and moderate Republicans are hesitant to be painted as anti-consumer.
I'm not so sure I would take either side of that bet. [Jerri-Lynn here: my subsequent emphasis.]
A more telling element than CRA-fatigue in my assessment of the rule's survival prospects was my judgment that Democrats wouldn't muster to defend the payday lending industry– although that assumption has not fully held, as this recent American Banker account makes clear:
After the payday rule was finalized in October , it was widely expected that Republicans would attempt to overturn it. It's notable, though, that the effort has attracted bipartisan support in the House.
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Passage in the Senate, however, may be a much heavier lift. The chamber's vote to overturn the arbitration rule in late October came down to the wire, forcing Republicans to call in Vice President Mike Pence to cast the tie-breaking vote.
Bottom Line
I continue to think that this rule will survive– as the payday lending industry cannot count on a full court press lobbying effort by financial services interests. Yet as I wrote in October, I still hesitate to take either side of the bet on this issue.
Dpfaef , December 4, 2017 at 10:53 am
GF , December 4, 2017 at 11:02 amI think this whole article is totally disingenuous. There is a serious need for many Americans to have access to small amount, short term loans. While, these lenders may appear predatory, they do serve a large sector of society.
Maybe you need to read: The Unbanking of America: How the New Middle Class Survives by Lisa Servon . It might be worth the read.
Jerri-Lynn Scofield Post author , December 4, 2017 at 11:11 amWhere's the Post Office Bank when you need it. This overturning of the rule is just an effort to stop the Post Office Bank from gaining traction as the alternative non-predatory source of small loans to the people. Most pay day lender companies are owned by large financial players.
Wisdom Seeker , December 4, 2017 at 3:23 pmI agree that's a far better approach and indeed, I discussed the Post Office bank in my October post– which is linked to in today's post. Permit me to quote from my earlier post:
The payday lending industry preys on the poorest financial consumers. One factor that has allowed it to flourish is current banking system's inability to provide access to basic financial services to a shocking number of Americans. Approximately 38 million households are un or underbanked– roughly 28% of the population.
Now, a sane and humane political system would long ago have responded with direct measures to address that core problem, such as a Post Office Bank (which Yves previously discussed in this post, Mirabile Dictu! Post Office Bank Concept Gets Big Boost and which have long existed in other countries.)
Regular readers are well aware of who benefits from the current US system, and why the lack of institutions that cater to the basic needs of financial consumers rather than focusing on extracting their pound(s) of flesh is not a bug, but a feature.
So, instead, the United States has a wide-ranging payday lending system. Which charges borrowers up to 400% interest rates for short-term loans, many of which are rolled over so that the borrower becomes a prisoner of the debt incurred.
lyman alpha blob , December 4, 2017 at 3:30 pmWith phrasing like "unbanked" or "underbanked", I worry that you've bought into the banking-industry framing of this issue, which I'm sure is not your intent.
Ordinary people should not need any bank (not even a government or post office bank) for everyday life, with the possible exception of mortgages. De-financialization of the medium of exchange, and basic payments, is something the public should be fighting for.
Wisdom Seeker , December 4, 2017 at 3:44 pmI would consider myself an ordinary person and I pay in cash when purchasing day to day items the vast majority of the time and yet I'd still prefer to deposit my money in a bank rather than hiding it in my mattress for any number of good reasons.
Banks aren't the problem – their predatory executives are.
Cary D Berkelhamer , December 4, 2017 at 4:32 pmBut there are, or at least ought to be, safe and secure ways to store money other than by lending it to banks or stuffing it into mattresses. Or carrying wads of cash.
For instance, a debit card (or possibly cell phone) with a secure identity / password can already act as a cashless wallet. The digital cash could be stored directly on the device, and accounted for through something similar to TreasuryDirect, without any intermediaries. But this would require the Federal Government to get serious about having a modern Digital Dollar of some kind (not bitcoin, shudder)
diptherio , December 4, 2017 at 11:08 amEven better would be State Banks. Every state should have one. I believe the State Bank of North Dakota made money in 2008. While the TBTF Banks came hat in hand to our Reps. Of course OUR Reps handed them a blank check and told them to "Make it go Away". However Post Office Banks would be GREAT!!
Vatch , December 4, 2017 at 11:19 amThis is the boilerplate argument that always gets brought up by payday loan defenders, and there is a good bit of truth to it. However, what you are not mentioning is that there are already far superior options available to pretty much any person who needs a small, short term loan. That solution is your friendly neighborhood Credit Union, most of which offer very low interest lines of overdraft coverage. I don't mind saying that it has saved my heiny on more than one occasion. Pay check a little late in arriving? No problem, transfer $200 from your overdraft account into your checking account on-line and you're good to go. Pay it back at your convenience, also on-line, at 7% APR.
Payday lenders are legal loansharks. The problems with their predatory lending model and the damage it does to low-income people are well documented. Simply pointing out that there is a reason that people end up at payday lenders is not a valid justification for the business practices of those lenders, especially when there are much better alternatives readily available.
Off The Street , December 4, 2017 at 12:10 pmPayday lenders are legal loansharks.
Very true! There are several web sites that point out how the fees associated with payday loans raise the effective annual percentage rate into the stratosphere, ranging from 300% to over 600%. Here's one:
http://paydayloansonlineresource.org/average-interest-rates-for-payday-loans/
a different chris , December 4, 2017 at 12:57 pmOne frustration that I have with legislation in general, and finance legislation in particular, is that it does not tell the truth, the whole truth and nothing but the truth.
In my Panglossian world, I envision a financial services bill that lays out the following:
Define the problem
Unserviced people: X percent( for discussion, say 10% to make the math easy) of people are un-serviced (or under-, or rapaciously-serviced) by conventional financial companies, whether banks, credit unions or other, whatever other is conventionally.
Unserviced and don't want: Y percent of that X percent (say, 50% of 10%, so 5%) doesn't want services.
Unserviced and want: 1-Y percent of that X percent (say, 50% of 10%, so 5%) wants services but can not get them. That could be due to various factors, ranging from bad credit (how defined?, say FICO < 600?) to geographic remoteness (no branches within miles, no internet, precious little slow mail service, whatever).Within that deemed unserved 5% of the population, what are the costs to serve and what are the alternatives?
What would an honest service provider need to provide service, accounting for credit risks and the like, and still make a profit sufficient to induce investment?
If I knew how to make and add a nice graphic, I'd include a waterfall chart here to show the costs and components of the interest and fees paid in regular and default mode. Sorry, please bear with me as I make up numbers.
Regular costs
Interest at 30%
Less: cost of funds at, say, 10%
Less: personnel, overhead, everything else at, say, 5%
Pre-tax profit: 15%Default mode costs:
Interest at 275%
Plus: Fees at 25%
Less: cost of funds 20%
Less: personnel, overhead, etc 5%
Less: added default cost not in personnel etc line, say 25%
Pre-tax profit: 250%In that little example, who couldn't make money at those rates?
Extending the notion of APR and Truth-In-Lending to include payday lenders and anyone else without a brick-and-mortar branch who wants to do business in the US, how about mandating some type of honest waterfall chart as dreamt of above?
Then cross-reference and publicize the voting on finance legislation with the campaign contributions from payday people and their ilk, and layer in the borrower costs and credit scores and other metrics in those Congressional districts and zip+4 codes and census tracts and whatever other level of granularity will help provide any amount of disinfecting sunlight to help see the scattering cockroaches.
lyle , December 4, 2017 at 7:33 pmThe problem I suspect is that your "friendly neighborhood credit union" is actually rarely anywhere near the neighborhoods where people who need these kind of loans live.
They don't have cars and mass transit is non-existent or so slow they couldn't get to the Credit Union during business hours, and back again, anyway. That's the problem with expecting Private Enterprise to be a solution for people at the bottom. They don't set up shop where those people live, or the ones that do are not exactly do-gooders.
JTMcPhee , December 4, 2017 at 1:04 pmI just checked and a lot of credit unions let you apply for a loan online, (earlier you can set up membership online). So the issue of transport and time is lessened assuming folks have some form of net access.
Wukchumni , December 4, 2017 at 1:08 pmOne might ask why there are millions of people reduced to having to get ripped off by payday and auto-title lenders, to somehow survive from week to week. Maybe because people can't make a living wage? Can't save any money, however prudent and abstemious they may be? Because inter-citizen cruelty and Calvinism are so very strong a force in this rump of an Empire?
Some of the comments here seem to build on the baseline assumption that's part of the liberal-neoliberal mantra, "You get what's coming to you (or the pittance we can't quite squeeze out of you yet)".
diptherio, I am guessing you may mean that there are models of better alternatives readily available, like paying a living wage, a social safety net for the worst off, a postal bank, national health care, stuff like that. I don't see that there are any alternatives actually available to most real people "on the ground."
diptherio , December 4, 2017 at 1:27 pmThere is an alternative to excessive payday loans, but only if you're in the military, where it's capped @ 36%.
Why not 36% for everybody?
mpalomar , December 4, 2017 at 1:36 pmYou are, of course, correct in that the underlying problem is that so many people are forced to live on so little that they need payday loans in the first place. Thanks for pointing that out.
My point is simply that in the short-term, as a matter of practicality for those of us who don't always make it until payday before running out of money, a CU overdraft account is a very good option.
lyman alpha blob , December 4, 2017 at 1:32 pmAgree. The AB article from October deadpans a description of the ins and outs governing the hellishness of the company town we're living in.
sd , December 4, 2017 at 11:14 amThis is a far superior option and thank you for bringing it up. The only problem is most banks and credit unions will not tell you it exists because they make a lot more money if you just keep bouncing checks.
I only learned about it when I worked for WAMU. We were tasked by management with promoting various new products to customers as a condition of being paid a monthly bonus which was the only thing that made the job pay enough to live on. Funny, they never asked us to promote the overdraft line of credit (aka an ODLOC), ever. I do remember one of my managers tell me that circa 2000 or so, WAMUs operating costs for the entire company for the entire year were offset just by the fees they collected off of bounced checks etc.
The fees or interest you pay for using an ODLOC are a small fraction of what you'd pay for bouncing just one check. IIRC, if I overdrew by $200 or so and paid it back on my next payday, the interest was generally less than $1. My local credit union has since added a $5 fee for accessing the ODLOC on top of the interest, but it's still much less than a bounced check fee or interest on a payday loan. I believe that depending on your credit history, you can get an ODLOC of up to $2500 or so which pretty much negates the need for any payday loans.
RepubAnon , December 4, 2017 at 11:55 amA friend of mine was evicted from her apartment because of a payday loan. She failed to pay it off in full quick enough and it spiraled out of control tripling in a very short time. I really fail to see how usury is beneficial to society.
FluffytheObeseCat , December 4, 2017 at 12:25 pmYes, there's a need for high-interest loans that bankrupt borrowers:
Mom-and-Pop Loan Sharks Being Driven Out by Big Credit Card Companies
Frank Pistone is part of the dying breed known as the American Loan Shark. Not so long ago, the loan shark flourished, offering short-term, high-interest loans to desperate people with nowhere else to turn. Today, however, Pistone and countless others like him are being squeezed out by the major credit-card companies, which can offer money to the down-and-out at lower rates of interest and without the threat of bodily harm
JTMcPhee , December 4, 2017 at 12:35 pmI read Servon's book. It is not a brief on behalf of the payday loan industry. She worked at a couple of payday lenders and explains how they serve the communities they're in, but a few things need to be noted:
The business she was most sympathetic with was a small, local one with only a couple of storefronts, in an east coast inner city. The owner and his help knew the customer base, often by name. Much of her sympathy came from her respect for the women who were dishing out the loans at the windows, not the owners and not the business model. This local joint operated like the most benign of old time pawnbroker/loansharking operation from the early part of the last century.
Most "Cash America" storefront shops (on shabby, midcentury shopping strips in inner ring scuburbs across the US) aren't this decent. They aren't "part of a community" in any sense. And the rates are usurious any way, for all of them.
Thank you to Ms. Scofield for continuing to cover this and related businesses. The upper, cleaner part of our finance industry derives more filthy lucre from these kinds of loan shops than they ever want you to know (sub-prime lending shops, title loans shops . there are a lot of modalities for fleecing the poor and the near-poor nowadays).
ger , December 4, 2017 at 12:42 pmThe NC staff must be pleased that it seems like so many subtle apologists for the looters, predators, "intelligence community," and so forth, appear to be turning up here early in the opening of new site posts. I'm guessing the Elite are not exactly quaking in fear that NC's reporting will catalyze some change that might sweep the political economy in the direction of what the mopery would categorize as "fairness," but still
Matthew Cunningham-Cook , December 4, 2017 at 3:15 pmRaised the dollar definition of middle class and declared a 'new middle class' or could it be 'new middle class' is actually referring to the 'new middle poor'. The former middle class is desperately trying to avoid a plunge into the pits of the 'poor poor'. Payday Loan predators are greasing the handrails.
John , December 4, 2017 at 9:32 pm"Where will the money-changers change money if not in the Holy Temple? Aren't we starving the priests of much-needed revenue? This Jesus guy is totally disingenuous."
sd , December 4, 2017 at 11:11 amIn good neo liberal fashion that Jesus dude got exactly what he deserved. The effrontry of that guy to chase those hard working money lenders out of the temple square. Got exactly what was coming to him.
perpetualWAR , December 4, 2017 at 12:21 pmH.J.Res.122 – Providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Bureau of Consumer Financial Protection relating to "Payday, Vehicle Title, and Certain High-Cost Installment Loans".
December 1, 2017
Sponsor Rep. Ross, Dennis A. [R-FL-15] (Introduced 12/01/2017)
Rep. Hastings, Alcee L. [D-FL-20]
Rep. Graves, Tom [R-GA-14]
Rep. Cuellar, Henry [D-TX-28]
Rep. Stivers, Steve [R-OH-15]
Rep. Peterson, Collin C. [D-MN-7]jawbone , December 4, 2017 at 1:44 pmAhhh ..look at this list. TWO Florida lawbreakers introducing this banker bill. And one from Minnesota. Y'all know that Jacksonville, FL and St. Paul, MN are the two places where the forgeries continue to be provided to the financial crooks? So, it goes to figure that the lawbreakers are attempting to protect the financial crooks committing forgery in their prospective states! How appro.
Mike R. , December 4, 2017 at 1:19 pmIf any of these House critters are "representing" you, time for lots of calls to them.
And thanks, SD, for listing them. I always wonder why our vaunted free press so seldom lists the sponsors of legislation when it's reported on . Hhmm .
m .nonclassical , December 4, 2017 at 1:46 pmI have mixed feelings about this specific issue.
The larger issue of a grossly skewed economic system is what needs to be fixed.
There will always be people that lack common sense and brains regarding money. There will always be people that will take advantage of that.
I don't know how or why you would try and legislate that away.
We need to move in the direction of solving the biggest problems and not get wrapped up in the little problems.
The numbers above sound horrendous, but 7 billion in profit on 46 billion loaned is 14% return. Credit card companies are worse. 7 billion in profit off of 12 million people is $600 per person. Alot for poor folks I recognize, but not necessarily life shattering for all.The "system" loves to wrangle around with issues like this (trivial in my mind) so the handful of big ones go unattended.
Wisdom Seeker , December 4, 2017 at 3:37 pmsome have apparently not felt it necessary to bail out family members for aggressive, egregious and immediate interest rates and escalations charged by these scammers
but there certainly appears concerted effort by (likely) shills to perpetuate scams (and to discredit Consumer Financial Protection Agency and Liz Warren )
Warren-Sanders 2020
Jerri-Lynn Scofield Post author , December 4, 2017 at 8:07 pmI think there's an error in the original article, where it says:
CRA's procedures to overturn legislation had been invoked, successfully, only once before Trump became president. Congressional Republicans and Trump have used CRA procedures multiple times to kill regulations (emphasis added)
My understanding is that CRA gives Congress the power to overturn executive branch regulations , not legislation (which Congress already can overturn anyway). Is that incorrect?
P.S. It's sad that it might not even matter. Nowadays the public can't tell the difference between regulations (written by unaccountable, unelected officials who take the revolving door back to working at the firms they regulated) and legislation (written by unaccountable, only notionally elected politicians who get paid off in various ways by lobbyists for the same firms)
John k , December 4, 2017 at 8:26 pmYou're correct– fixed it! Slip of the fingers there that I didn't catch when I proofread the post. As the rest of the paragraph makes clear, CRA procedures are used to overturn regulations.
Thanks for reading my work so carefully and drawing the error to my attention.
Taras 77 , December 4, 2017 at 10:40 pmFinally bipartisan!
Trump loves it
Obomber woulda loved it
She who cannot be named woulda loved it, too.
Time for them all to get over that little spat she did it before trump should appoint her to something useful I bet she'd love secdefWhere is the lovely Debbie Wasserman schultz in all of this? She has not surprisingly been a leading cheerleader for these pay day lender sharks. but hey, what the hey, the lobby money is good!
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www.warc.ch
"The prototype of the successful man in modern society is not the scientist, the inventor, the scholar. It is the financier, the gambler and those with social pull. The others share [in the winnings] sometimes, it is true, but their share is modest compared with the oligarchs and tycoons; and they don't usually keep their share for long. They are no match for the commercial prowlers."
A snap-shot of London's Mayfair district, home to the burgeoning hedge-fund phenomenon, in November 2006? Actually, no. The above words were written in 1952 by the Labour politician Aneurin Bevan in his book In Place of Fear. Bevan had a gift - his most passionate supporters would say a genius - for exposing the truth of a situation in language that could be both scintillating and pungent.
Fifty years ago, he criticised the prime minister of the day, Sir Anthony Eden, for his reckless actions during the Suez crisis. "[He] has been pretending that he is now invading Egypt in order to strengthen the United Nations," Bevan said in a famous speech in Trafalgar Square. "Every burglar of course could say the same thing: he could argue that he was entering the house in order to train the police. So, if Sir Anthony Eden is sincere in what he is saying, and he may be . . . then he is too stupid to be a prime minister!" Here was political rhetoric with a touch of prophesy about it.
It was the enduring appeal of speeches such as these that helped draw a good crowd to the fifth annual Bevan memorial lecture in London last week. The lecture was to be given by John Monks, formerly general secretary of the British Trades Union Congress, now the Brussels-based leader of the European trade union confederation.
No one in the audience would have been expecting Bevanite rhetorical fireworks from Mr Monks. That has never been his style. Between 1993 and 2003, he led the British trade union movement with modesty and distinction. He was the moderate's moderate: avoiding confrontation wherever possible and advocating partnership at work between management and employees. Business leaders were happy to do business with him.
They would not have found this lecture so easy to deal with. Confronted by today's turbo-charged capitalism, Mr Monks cast off his former moderation. He even seemed to be on the verge of recanting his commitment to the partnership model. "Partnership with who?" he asked. There has been, he said, a "disintegration of the social nexus between worker and employer - a culture containing broad social rights and obligations. The new capitalism wants none of it."
Mr Monks contrasted businesses' healthy profitability with the ruthless way some have treated their staff recently, whether through large-scale redundancies or the constant threat that jobs may be sent off-shore or outsourced. While median wages have stagnated, record executive salaries are legion.
He admitted that he had possibly been a bit naive in the past. "I did not fully appreciate what was happening on the other side of the table," Mr Monks said. While he sympathised with business leaders for the relentless pressure they find themselves under - "It cannot be easy running a firm . . . when you are up for sale every day and every night of every year" - he was appalled by the increasingly "shameless", short-termist behaviour of overpaid corporate executives. "More and more they resemble the Bourbons - and they should be aware of what eventually happened to the Bourbons."
For someone like me, who has sat through 10 years of reasonableness from John Monks, this speech was remarkable, devastating stuff. Maybe there is something in the Brussels water. Perhaps the ghost of Nye Bevan was speaking through him. Or was it just anxiety over the career choice of his daughter's boyfriend? He is now working for - you guessed it - a hedge fund. Whatever its cause, a challenge was being thrown down.
"All this is too important to be left to the practitioners who have a vested interest in obscuring what they do from the rest of us," he said. And, with bonus season fast approaching, he took one final, sweeping aim at the high rollers of "casino capitalism". Their actions are "dangerous to economic stability, traditional industry and jobs", he said. "I would like to see the City pages of the press more challenging and less respectful on these matters . . . Our future - the world's future - is too important to place in the hands of the new capitalists."
Will corporate leaders - those that have read this far anyway - simply shrug their shoulders and get back to their slashing and burning ways? Is Mr Monks merely offering a wholly predictable, knee-jerk, lefty rant? I do not think so. This general secretary just does not do lefty rants. So business people should take note. When the John Monkses of this world say enough is enough, that the capitalist system itself is sick, you can be sure that elsewhere in the world there is deep-seated, lingering resentment and unhappiness.
Half a century ago, Nye Bevan expressed a similar concern. In In Place of Fear he wrote: "There is a sense of injustice in modern society, and this induces a feeling of instability even in normal circumstances. The rewards are not in keeping with social worth, and the consciousness of this, both among the successful and the unsuccessful, will simmer and bubble, blowing up into geysers of political and social disturbance in times of economic stress."
Reading these words, you can see why so many people were prepared to come out on a dark Tuesday night...
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Dec 01, 1998 | Prospect Magazine
The dominant image of the financial markets is that of a giant casino. Brash young men in red braces, driven by insatiable greed, gamble with huge sums every day. When the bets go wrong the innocent suffer. Reckless financial markets pose an immediate threat to the future prosperity of humanity.
Susan Strange, who died just after the publication of her latest book, was one of the most compelling academic advocates of the view that the global casino is out of control. Although she is not a household name, she played an important role in developing the intellectual framework to support the casino thesis. Her Casino Capitalism (1986) is a Keynesian account of the damage inflicted on the world as a result of financial deregulation which was taken up by many better known writers such as William Greider in the US and Will Hutton in Britain.
With the onset of the Asian financial crisis Strange's account of financial markets has become almost mainstream. Her ideas inform many of the discussions about a "new international financial architecture." Economists who would once have scorned her views now agree with her that deregulation has gone too far and that new forms of regulation are needed. The British government has floated the idea of a world financial authority to regulate global finance.
The IMF, once a bastion of free market economics, has conceded that capital controls may be necessary under some circumstances.
Mad Money, the sequel to Casino Capitalism, takes into account the impact of information technology and the rise of financial crime. It also places new emphasis on the role of international institutions. For example, she backs George Soros's plan for an international credit insurance corporation as a complement to the IMF.
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Washington DeCoded
Inside Casino Capitalism Barbarians at the Gate: The Fall of RJR Nabisco
By Bryan Burrough and John Helyar
Harper & Row. 528 pp. $22.95In 1898, Adolphus Green, chairman of the National Biscuit Company, found himself faced with the task of choosing a trademark for his newly formed baking concern. Green was a progressive businessman. He refused to employ child labor, even though it was then a common practice, and he offered his bakery employees the option to buy stock at a discount. Green therefore thought that his trademark should symbolize Nabisco's fundamental business values, "not merely to make dividends for the stockholders of his company, but to enhance the general prosperity and the moral sentiment of the United States." Eventually he decided that a cross with two bars and an oval – a medieval symbol representing the triumph of the moral and spiritual over the base and material – should grace the package of every Nabisco product.
If they had wracked their brains for months, Bryan Burrough and John Helyar could not have come up with a more ironic metaphor for their book. The fall of Nabisco, and its corporate partner R.J. Reynolds, is nothing less than the exact opposite of Green's business credo, a compelling tale of corporate and Wall Street greed featuring RJR Nabisco officers who first steal shareholders blind and then justify their epic displays of avarice by claiming to maximize shareholder value.
The event which made the RJR Nabisco story worth telling was the 1988 leveraged buyout (LBO) of the mammoth tobacco and food conglomerate, then the 19th-largest industrial corporation in America. Battles for corporate control were common during the loosely regulated 1980s, and the LBO was just one method for capturing the equity of a corporation. (In a typical LBO, a small group of top management and investment bankers put 10 percent down and finance the rest of their purchase through high-interest loans or bonds. If the leveraged, privately-owned corporation survives, the investors, which they can re-sell public shares, reach the so-called "pot of gold"; but if the corporation cannot service its debt, everything is at risk, because the collateral is the corporation itself.
The sheer size of RJR Nabisco and the furious bidding war that erupted guaranteed unusual public scrutiny of this particular piece of financial engineering. F. Ross Johnson, the conglomerate's flamboyant, free-spending CEO (RJR had its own corporate airline), put his own company into play with a $75-a-share bid in October. Experienced buyout artists on Wall Street, however, immediately realized that Johnson was trying to play two incompatible games. LBOs typically put corporations such as RJR Nabisco through a ringer in order to pay the mammoth debt incurred after a buyout. But Johnson, desiring to keep corporate perquisites intact, "low-balled" his offer. Other buyout investors stepped forward with competing bids, and after a six-week-long auction the buyout boutique of Kohlberg, Kravis, Roberts & Company (KKR) emerged on top with a $109-a-share bid. The $25-billion buyout took its place as one of the defining business events of the 1980s
Burrough and Helyar, who covered the story for The Wall Street Journal, supply a breezy, colorful, blow-by-blow account of the "deal from hell" (as one businessman characterized a leveraged buyout). The language of Wall Street, full of incongruous "Rambo" jargon from the Vietnam War, is itself arresting. Buyout artists, who presumably never came within 10,000 miles of wartime Saigon, talk about "napalming" corporate perquisites or liken their strategy to "charging through the rice paddies, not stopping for anything and taking no prisoners."
At the time, F. Ross Johnson was widely pilloried in the press as the embodiment of excess; his conflict of interest was obvious. Yet Burrough and Helyar show that Johnson, for all his free-spending ways, was way over his head in the major leagues of greed, otherwise known as Wall Street in the 1980s. What, after all, is more rapacious: the roughly $100 million Johnson stood to gain if his deal worked out over five years, or the $45 million in expenses KKR demanded for waiting 60 minutes while Ross Johnson prepared a final competing bid?
Barbarians is, in the parlance of the publishing world, a good read. At the same time, unfortunately, a disclaimer issued by the authors proves only too true. Anyone looking for a definitive judgment of LBOs will be disappointed. Burrough and Helyar do at least ask the pertinent question: What does all this activity have to do with building and sustaining a business? But authors should not only pose questions; they should answer them, or at least try.
Admittedly, the single most important answer to the RJR puzzle could not be provided by Burrough and Helyar because it is not yet known. The major test of any financial engineering is its effect on the long-term vitality of the leveraged corporation, as measured by such key indicators as market share (and not just whether the corporation survives its debt, as the authors imply). However, a highly-leveraged RJR Nabisco is already selling off numerous profitable parts of its business because they are no longer a "strategic fit": Wall Street code signifying a need for cash in order to service debts and avoid bankruptcy.
If the authors were unable to predict the ultimate outcome, they still had a rare opportunity to explain how and why an LBO is engineered. Unfortunately, their fixation on re-creating events and dialogue – which admittedly produces a fast-moving book – forced them to accept the issues as defined by the participants themselves. There is no other way to explain the book's uncritical stance. When, for example, the RJR Nabisco board of directors tried to decide which bid to accept, Burrough and Helyar report that several directors sided with KKR's offer because the LBO boutique "knew the value of keeping [employees] happy." It is impossible to tell from the book whether the directors knew this to be true or took KKR's word. Even a cursory investigation would have revealed that KKR is notorious for showing no concern for employees below senior management after a leveraged buyout.
The triumph of gossip over substance is manifest in many other ways. Wall Street's deft manipulation of the business press is barely touched upon, and the laissez-faire environment procured by buyout artists via their political contributions is scarcely mentioned, crucial though it is. Nowhere are the authors' priorities more obvious than in the number of words devoted to Henry Kravis's conspicuous consumption compared to those devoted to the details of the RJR deal. In testimony before Congress last year, no less an authority than Treasury Secretary Nicholas Brady – himself an old Wall Street hand – noted that the substitution of tax-deductible debt for taxable income is "the mill in which the grist of takeover premiums is ground."
In the case of RJR Nabisco, 81 percent of the $9.9 billion premium paid to shareholders was derived from tax breaks achievable after the buyout. This singularly important fact cannot be found in the book, however; nor will a reader learn that after the buyout the U.S. Treasury was obligated to refund RJR as much as $1 billion because of its post-buyout debt burden. In Barbarians, more time is spent describing Kravis's ostentatious gifts to his fashion-designer wife than to the tax considerations that make or break these deals.
Fulminations about the socially corrosive effects of greed aside, the buyout phenomenon may represent one of the biggest changes in the way American business is conducted since the rise of the public corporation, nothing less than a transformation of managerial into financial capitalism. The ferocious market for corporate control that emerged during the 1980s has few parallels in business history, but there are two: the trusts that formed early in this century and the conglomerate mania that swept corporate America during the 1960s. Both waves resulted in large social and economic costs, and there is little assurance that the corporate infatuation with debt will not exact a similarly heavy toll.
As the economist Henry Kaufman has written, the high levels of debt associated with buyouts and other forms of corporate restructuring create fragility in business structures and vulnerability to economic cycles. Inexorably, the shift away from equity invites the close, even intrusive involvement of institutional investors (banks, pension funds, and insurance companies) that provide the financing. Superficially, this moves America closer to the system that prevails in Germany and Japan, where historically the relationship between the suppliers and users of capital is close. But Germany and Japan incur higher levels of debt for expansion and investment, whereas equivalent American indebtedness is linked to the recent market for corporate control. That creates a brittle structure, one that threatens to turn the U.S. government into something of an ultimate guarantor if and when things do fall about. It is too easy to construct a scenario in which corporate indebtedness forces the federal government into the business of business. The savings-and-loan bailout is a painfully obvious harbinger of such a development.
The many ramifications of the buyout mania deserve thoughtful treatment. Basic issues of corporate governance and accountability ought to be openly debated and resolved if the American economy is to deliver the maximum benefit to society and not just unconscionable rewards to a handful of bankers, all out of proportion to their social productivity. It is disappointing, but a sign of the times, that the best book about the deal of deals fails to educate as well as it entertains.
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Mar 23, 2017 | www.nakedcapitalism.com
djrichard, March 22, 2017 at 5:35 pmhuman , March 22, 2017 at 7:46 pmJust a bit of a thought experiment, building on some thinking from a comment yesterday by jefemt
Paradoxically, we appear to be seeing a coalescence and consolidation of insurers, we will end up being delightfully exceptional, again -- effectively being single-payer, private sector, paying a monopoly an add-on cost of 35-40% to a parasitic industry whose executives and employees do not contribute to the CARE equation.
Taking jefemt's thinking further, imagine the health insurance provider was not only monopolistic (owned the entire market), but was also a GSE (government sponsored enterprise). Now take it one more step and imagine it was an actual part of the government and not merely a GSE.
Conceivably, it wouldn't even have to live off appropriations from congress, assuming it was equally as extractive from the private sector as it is now (i.e. revenue model is the same). Talk about good living. Who knows, maybe they pocket their proceeds into some kind of surplus in Treasury dept.
But let's assume they had to give up on revenue models. [Afterall, it's easier to find partners in congress when you have an appropriations process that binds you to them.] Then they would be exposed. Somebody would get the bright idea that this agency doesn't need as much staffing since they are no longer revenue oriented. That indeed, they could have the same staffing profile as the agency responsible for medicare. Indeed they could be folded into medicare.
I was thinking of this too as a reponse to Why Steve Bannon Wants You to Believe in the Deep State" [Politico]. "Like the Death Star, the American Deep State does not, of course, exist. "
Indeed, I think of the insurance industry as being part of the deep state already. It seems that congress's preference is that this part of the deep state is outsourced. So that's it not a GSE, and not even a monopoly, but maintained as an oligopoly. And then, well hey whatever surplus it can hoover up is fair game. After all free-hand of the market and all that. [And heaven knows, we don't want to crowd that out.]
In contrast to other parts of the deep state that don't really have a revenue model. In which case, those parts need to be insourced by the Fed Gov.
Ernesto Lyon , March 23, 2017 at 12:09 amThe CIA has a long history of drug trafficking. The FBI traffics in blackmail. The NSA in network surveillance. DIA, special ops. NRO, satelite throughput. 11 more in the US of A and countless more globally. They all have opaque resources outside of regular channels.
Great documentary about the 80's cocaine business in Miami called "Cocaine Cowboys." It's real life Scarface. Guess who the Feds sent to get a handle on the cocaine smuggling? See-eye-aye man George H.W. Bush. Coincidence?
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Dec 04, 2017 | everydayecon.wordpress.com
The Phillips Curve is back. In saying so, I do not mean to imply that being "back" refers to a sudden reappearance of a stable empirical relationship between unemployment (or the output gap) and inflation. The Phillips Curve is back in the same way that conspiracy theories about the assassination of JFK are back after the recent release of government documents. In other words, the Phillips Curve is something that people desperately want to believe in, despite the lack of evidence.
The Phillips Curve is all the rage among central bankers. Since the Federal Reserve embarked on quantitative easing, they have been ensuring the public that QE would not be inflationary because of the slack in the economy. Until labor market conditions tighten, there would be little threat of inflation. Then, as the labor market tightened, the Federal Reserve warned that they might have to start raising interest rates to prevent these tightening conditions from creating inflation.
What is remarkable about this period is that the Federal Reserve has undershot its target rate of inflation throughout this entire period -- and continues to do so today. So what does this tell us about the Phillips Curve and what can we learn about monetary policy?
If one looks at the data on unemployment and inflation (or even the output gap and inflation), you could more easily draw Orion the Hunter as you could a stable Phillips Curve. Fear not, sophisticated advocates of the Phillips Curve will say. This is simply the Lucas Critique at play here. If a Phillips Curve exists, and if the central bank tries to exploit it, then it will not be evident in the data. In fact, if you take a really basic 3-equation-version of the New Keynesian model, there is a New Keynesian Phillips Curve in the model. However, when you solve for the equilibrium conditions, you find that inflation is a function of demand shocks, technology shocks, and unexpected changes in interest rates. The output gap doesn't appear in the solution. But fear not, this simply means that monetary policy is working properly. The Phillips Curve is apparently like the observer effect in quantum mechanics in that when we try to observe the Phillips Curve, we change the actual result (this is a joke, please do not leave comments about why I've misunderstood the observer effect).
... ... ...
What all of this means is that even given the fact that the New Keynesian model features an equation that resembles the Phillips curve, this does not imply that there is some predictive power that comes from thinking about this equation in isolation. In addition, it certainly does not imply that changes in the output gap cause changes in the rate of inflation. There is no direction of causation implied by this one equilibrium condition.
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Feb 12, 2017 | economistsview.typepad.com
anne : February 11, 2017 at 11:43 AM , 2017 at 11:43 AMhttp://www.yalelawjournal.org/article/amazons-antitrust-paradoxJanuary, 2017
Amazon's Antitrust Paradox
By Lina M. KhanAbstract
Amazon is the titan of twenty-first century commerce. In addition to being a retailer, it is now a marketing platform, a delivery and logistics network, a payment service, a credit lender, an auction house, a major book publisher, a producer of television and films, a fashion designer, a hardware manufacturer, and a leading host of cloud server space. Although Amazon has clocked staggering growth, it generates meager profits, choosing to price below-cost and expand widely instead. Through this strategy, the company has positioned itself at the center of e-commerce and now serves as essential infrastructure for a host of other businesses that depend upon it. Elements of the firm's structure and conduct pose anticompetitive concerns -- yet it has escaped antitrust scrutiny.
This Note argues that the current framework in antitrust-specifically its pegging competition to "consumer welfare," defined as short-term price effects-is unequipped to capture the architecture of market power in the modern economy. We cannot cognize the potential harms to competition posed by Amazon's dominance if we measure competition primarily through price and output.
Specifically, current doctrine underappreciates the risk of predatory pricing and how integration across distinct business lines may prove anticompetitive. These concerns are heightened in the context of online platforms for two reasons. First, the economics of platform markets create incentives for a company to pursue growth over profits, a strategy that investors have rewarded. Under these conditions, predatory pricing becomes highly rational-even as existing doctrine treats it as irrational and therefore implausible. Second, because online platforms serve as critical intermediaries, integrating across business lines positions these platforms to control the essential infrastructure on which their rivals depend. This dual role also enables a platform to exploit information collected on companies using its services to undermine them as competitors.
This Note maps out facets of Amazon's dominance. Doing so enables us to make sense of its business strategy, illuminates anticompetitive aspects of Amazon's structure and conduct, and underscores deficiencies in current doctrine. The Note closes by considering two potential regimes for addressing Amazon's power: restoring traditional antitrust and competition policy principles or applying common carrier obligations and duties.
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Apr 07, 2010 | Enterprise Networking Planet
What happened to the old "sysadmin" of just a few years ago? We've split what used to be the sysadmin into application teams, server teams, storage teams, and network teams. There were often at least a few people, the holders of knowledge, who knew how everything worked, and I mean everything. Every application, every piece of network gear, and how every server was configured -- these people could save a business in times of disaster.
Now look at what we've done. Knowledge is so decentralized we must invent new roles to act as liaisons between all the IT groups. Architects now hold much of the high-level "how it works" knowledge, but without knowing how any one piece actually does work. In organizations with more than a few hundred IT staff and developers, it becomes nearly impossible for one person to do and know everything. This movement toward specializing in individual areas seems almost natural. That, however, does not provide a free ticket for people to turn a blind eye.
Specialization
You know the story: Company installs new application, nobody understands it yet, so an expert is hired. Often, the person with a certification in using the new application only really knows how to run that application. Perhaps they aren't interested in learning anything else, because their skill is in high demand right now. And besides, everything else in the infrastructure is run by people who specialize in those elements. Everything is taken care of.
Except, how do these teams communicate when changes need to take place? Are the storage administrators teaching the Windows administrators about storage multipathing; or worse logging in and setting it up because it's faster for the storage gurus to do it themselves? A fundamental level of knowledge is often lacking, which makes it very difficult for teams to brainstorm about new ways evolve IT services. The business environment has made it OK for IT staffers to specialize and only learn one thing.
If you hire someone certified in the application, operating system, or network vendor you use, that is precisely what you get. Certifications may be a nice filter to quickly identify who has direct knowledge in the area you're hiring for, but often they indicate specialization or compensation for lack of experience.
Resource Competition
Does your IT department function as a unit? Even 20-person IT shops have turf wars, so the answer is very likely, "no." As teams are split into more and more distinct operating units, grouping occurs. One IT budget gets split between all these groups. Often each group will have a manager who pitches his needs to upper management in hopes they will realize how important the team is.
The "us vs. them" mentality manifests itself at all levels, and it's reinforced by management having to define each team's worth in the form of a budget. One strategy is to illustrate a doomsday scenario. If you paint a bleak enough picture, you may get more funding. Only if you are careful enough to illustrate the failings are due to lack of capital resources, not management or people. A manager of another group may explain that they are not receiving the correct level of service, so they need to duplicate the efforts of another group and just implement something themselves. On and on, the arguments continue.
Most often, I've seen competition between server groups result in horribly inefficient uses of hardware. For example, what happens in your organization when one team needs more server hardware? Assume that another team has five unused servers sitting in a blade chassis. Does the answer change? No, it does not. Even in test environments, sharing doesn't often happen between IT groups.
With virtualization, some aspects of resource competition get better and some remain the same. When first implemented, most groups will be running their own type of virtualization for their platform. The next step, I've most often seen, is for test servers to get virtualized. If a new group is formed to manage the virtualization infrastructure, virtual machines can be allocated to various application and server teams from a central pool and everyone is now sharing. Or, they begin sharing and then demand their own physical hardware to be isolated from others' resource hungry utilization. This is nonetheless a step in the right direction. Auto migration and guaranteed resource policies can go a long way toward making shared infrastructure, even between competing groups, a viable option.
Blamestorming
The most damaging side effect of splitting into too many distinct IT groups is the reinforcement of an "us versus them" mentality. Aside from the notion that specialization creates a lack of knowledge, blamestorming is what this article is really about. When a project is delayed, it is all too easy to blame another group. The SAN people didn't allocate storage on time, so another team was delayed. That is the timeline of the project, so all work halted until that hiccup was restored. Having someone else to blame when things get delayed makes it all too easy to simply stop working for a while.
More related to the initial points at the beginning of this article, perhaps, is the blamestorm that happens after a system outage.
Say an ERP system becomes unresponsive a few times throughout the day. The application team says it's just slowing down, and they don't know why. The network team says everything is fine. The server team says the application is "blocking on IO," which means it's a SAN issue. The SAN team say there is nothing wrong, and other applications on the same devices are fine. You've ran through nearly every team, but without an answer still. The SAN people don't have access to the application servers to help diagnose the problem. The server team doesn't even know how the application runs.
See the problem? Specialized teams are distinct and by nature adversarial. Specialized staffers often relegate themselves into a niche knowing that as long as they continue working at large enough companies, "someone else" will take care of all the other pieces.
I unfortunately don't have an answer to this problem. Maybe rotating employees between departments will help. They gain knowledge and also get to know other people, which should lessen the propensity to view them as outsiders
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Dec 03, 2017 | www.nakedcapitalism.com
SpringTexan , December 2, 2017 at 12:08 pm
Big River Bandido , December 2, 2017 at 3:10 pmAnd I feel like the Democrats get so distracted. They have been talking about sexual harassment and stuff instead of the TAX BILL. It is so damn easy to get them to take their eyes off the ball! and get played again and again. . . and TRAGIC given the consequences . . .
jrs , December 2, 2017 at 3:18 pmIt's the perfect "distraction". Allows them to engage in virtue-signaling and "fighting for average Americans". It's all phony, they always "lose" in the end getting exactly what they wanted in the first place, while not actually having to cast a vote for it.
Kabuki theater in every respect.
Allegorio , December 2, 2017 at 11:07 pmIt's all related, less safety net and more inequality means more desperation to take a job, *ANY* job, means more women putting up with sexual harassment (and workplace bullying and horrible and illegal workplace conditions etc.) as the price of a paycheck.
Expat , December 2, 2017 at 8:01 amHorrible Toomey's re-election was a parallel to the Clinton/Trump fiasco. The Democrats put up a corporate shill, Katie McGinty that no-one trusted.
"Former lobbyist Katie McGinty has spent three decades in politics getting rich off the companies she regulated and subsidized. Now this master of the revolving-door wants Pennsylvania voters to give her another perch in government: U.S. Senator." Washington Examiner.
She was a Clintonite through and through, that everyone, much like $Hillary, could see through.
tony , December 2, 2017 at 9:30 amTo paraphrase the Beatles, you say you want a revolution but you don't really mean it. You want more of the same because it makes you feel good to keep voting for your Senator or your Congressman. The others are corrupt and evil, but your guys are good. If only the others were like your guys. News flash: they are all your guys.
America is doomed. And so much the better. Despite all America has done for the world, it has also been a brutal despot. America created consumerism, super-sizing and the Kardashians. These are all unforgivable sins. America is probably the most persistently violent country in the world both domestically and internationally. No other country has invaded or occupied so much of the world, unless you count the known world in which case Macedonia wins.
This tax plan is what Americans want because they are pretty ignorant and stupid. They are incapable of understanding basic math so they can't work out the details. They believe that any tax cut is inherently good and all government is bad so that is also all that matters. They honestly think they or their kids will one day be rich so they don't want to hurt rich people. They also believe that millionaires got their money honestly and through hard work because that is what they learned from their parents.
Just send a blank check to Goldman Sachs. Keep a bit to buy a gun which you can use to either shoot up a McDonalds or blow your own brains out.
And some people still ask me why I left and don't want to come back. LOL
False Solace , December 2, 2017 at 5:18 pmMacedonia of today is not the same are that conquered the world. They stole the name from Greeks.
That being said, the US is ripe for a change. Every policy the current rulers enact seems to make things better. However, I suspect a revolution would kill majority of the population since it would disrupt the all important supply chains, so it does not seem viable.
However, a military takeover could be viable. If they are willing to wipe out the most predatory portions of the ruling class, they could fix the healthcare system, install a high-employment policy and take out the banks and even the military contractors. Which could make them very popular.
Allegorio , December 2, 2017 at 11:20 pm> a military takeover could be viable
Yeah, right. Have you seen our generals? They're just more of the same leeches we have everywhere else in the 0.01%. Have you seen any of the other military dictatorships around the world, like actually existing ones? They're all brilliantly corrupt and total failures when it comes to running any sort of economy. Not to mention the total loss of civil rights. Americans have this idiotic love of their military thanks to decades of effective propaganda and think the rule of pampered generals would somehow be better than the right to vote. Bleh.
John Wright , December 2, 2017 at 10:45 amThis is a military dictatorship. The fourth and sixth amendments have been de facto repealed. Trump cared about one thing and one thing only, namely to repeal the estate tax. He is the ultimate con man and this was his biggest con. It is truly amazing how he accomplished this. He has saved his family a billion $$$. He will now turn over governing to the generals and Goldman Sachs. He may even retire. Truly amazing. One has to admire the sheer perversity of it all. When will the American electorate get tired of being conned? The fact is they have nothing but admiration for Trump. We live in a criminal culture, winner take all. America loves its winners.
Steve , December 2, 2017 at 2:45 pmThere is an old 2003 David Brooks column in which he mentions that
"The Democrats couldn't even persuade people to oppose the repeal of the estate tax, which is explicitly for the mega-upper class. Al Gore, who ran a populist campaign, couldn't even win the votes of white males who didn't go to college, whose incomes have stagnated over the past decades and who were the explicit targets of his campaign. Why don't more Americans want to distribute more wealth down to people like themselves?"
Then Brooks goes on to explain
"The most telling polling result from the 2000 election was from a Time magazine survey that asked people if they are in the top 1 percent of earners. Nineteen percent of Americans say they are in the richest 1 percent and a further 20 percent expect to be someday. So right away you have 39 percent of Americans who thought that when Mr. Gore savaged a plan that favored the top 1 percent, he was taking a direct shot at them."
http://www.nytimes.com/2003/01/12/opinion/the-triumph-of-hope-over-self-interest.html
The Republicans have conditioned people to believe government services (except for defense/military) are run poorly and need to be "run like a business" for a profit.
The problem is that not all government services CAN be profitable (homeless care, mental health care for the poor, EPA enforcement, OSHA enforcement). And when attempts are made to privatize some government operations such as incarceration, the result is that the private company tries to maximize profits by pushing for laws to incarcerate ever more people.
The history of the USA as viewed by outsiders, maybe 50 years hence, will be that of a resource consuming nation that spent a vast fortune on military hardware and military adventures when it had little to fear due to geography, a nation that touted an independent press that was anything but, a nation that created a large media/entertainment industry which helped to keep citizens in line, a nation that fostered an overly large (by 2 or 3 times per Paul Whooley) parasitical financial industry that did not perform its prime capital allocation task competently as it veered from bubble to bubble and a nation that managed to spend great sums on medical care without covering all citizens.
But the USA does have a lot of guns and a lot of frustrated people.
Maybe Kevlar vests will be the fashion of the future?
MyLessThanPrimeBeef , December 2, 2017 at 4:08 pmThanks for the great link on how sadly uninformed average Americans are! I've been looking for it for a while and great comment!
Vatch , December 2, 2017 at 7:24 pmThe provision to do away with the estate tax, if not immediately, in the current versions (House and Senate) is great news for the 1%, and bad for the rest of us.
And if more people are not against that (thanks for quoting the NYTImes article), it's the failure of the rest of the media for not focusing more on it, but wasting time and energy on fashion, sports, entertainment, etc.
Sydney Conner , December 2, 2017 at 5:06 pmhe provision to do away with the estate tax . . . is great news for the 1%
I think it's even a little more extreme than that. The data is a few years old, but it is only the top 0.6% who are affected by estate taxes in the United States. See the data at these web sites:
https://www.irs.gov/statistics/soi-tax-stats-historical-table-17
https://www.irs.gov/statistics/soi-tax-stats-estate-tax-statistics-year-of-death-table-1
DHG , December 2, 2017 at 8:13 pmThanks for the succinct, accurate eloquent description of our nightmare reality.
JTMcPhee , December 2, 2017 at 10:34 pmJonathan Holland Becnel , December 2, 2017 at 11:51 amThe military adventures were largely in support of what Smedley Butler so accurately called the Great "Racket" of Monroe Doctrine colonialism and rapacious extractive "capitalism" aka "looting."
For those who haven't encountered Maj. Gen. Butler's take on his 33 years of serving the Oligokleptocracy, here's a link: https://www.ratical.org/ratville/CAH/warisaracket.html
A smart and honest fellow, who even declined as a "war hero" to serve as the oligarchs' figurehead in an earlier and clumsier plot to get rid of the trappings and regulation of "democracy:" The Business Plot, https://jtoddring.wordpress.com/2008/01/19/smedley-butler-and-the-business-plot/
It took longer and costed the rich a bit more to buy up all the bits of government, but the way they've done will likely be more compendious and lasting. Barring some "intervening event(s)".
Doomed?
Project Much?
While Republicans show their true colors, im out there seeing a resurgence of civil society. And im starting to reach Hard core Tea Party types. Jobs, Manufacturing, Actual Policy.
IOW The Revolution Is Nigh.
2018 will be a Fn watershed.
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Feb 01, 2016 | chroniclesmagazine.org
View all posts from this blogOn January 23 Freedom and Prosperity Radio , Virginia's only syndicated political talk radio show, broadcast an interview with Srdja Trifkovic on the subject of Islam and the ongoing Muslim invasion of Europe. Here is the full transcript of the interview. ( Audio )
FPR: Your book The Sword of the Prophet was published back in 2002, yet here we are-15 years later-still scratching our heads over this problem. Defeating Jihad you wrote ten years ago, and yet we are still fumbling around in the dark. It seems like we don't have the ability to say what is right and what is wrong. We've lost the ability we had had during the Cold War to say out way is better than their way . . .
ST: I'm afraid the problem is deeper than that. It is in the unwillingness of the ruling elite in the Western world to come to grips with the nature of Islam-as-such. There is this constant tendency by the politicians, the media and the academia to treat jihadism as some sort of aberration which is alien to "true" Islam. We had an example of that in 2014, when President Obama went so far as to say that ISIS was "un-Islamic"! It is rather curious that the President of the United States assumes the authority of a theologian who can pass definite judgments on whether a certain phenomenon is "Islamic" or not. Likewise we have this constant repetition of the mantra of the "religion of peace and tolerance," which is simply not supported by 14 centuries of historical experience. What I've tried to emphasize in both those books you've mentioned, and in my various other writings and public appearances, is that the problem of Islam resides in the core texts, in the Kuran and the Hadith , the "Traditions" of the prophet of Islam, Muhammed. This is the source from which the historical practice has been derived ever since. The problem is not in the jihadists misinterpreting Islam, but rather in interpreting it all too well. This mythical "moderate Islam," for which everybody seems to be looking these days, is an exception and not the rule.
In answer to your question, I'd say that "scratching one's head" is-by now-only the phenomenon of those who refuse to face reality. Reasonable people who are capable of judging phenomena on their merits and on the basis of ample empirical evidence, are no longer in doubt. They see that the problem is not in the alleged misinterpretation of the Islamic teaching, but rather in its rigorous application and literal understanding. I'm afraid things will not get better, because with each and every new jihadist attack, such as the Charlie Hebdo slaughter in Paris a year ago, or again in Paris last November, or the New Year's Eve violence in Germany, we are witnessing-time and over again-the same problem. The Islamic mindset, the Islamic understanding of the world, the Muslim Weltanschauung , world outlook, is fundamentally incompatible with the Western value system and the Western way of life.
FPR: . . . It seems obvious, regarding Islam, that its "freedom of religion" is impacting other people, and it's dictated to do so-it must go out and fight the infidels. And that's where we have the disconnect. Maybe there is some traction to the statement, as you put it, that fundamentalism reflects a far more thorough following of Islam, and that it is simply incompatible with the Constitution?
ST: It is inevitable, because if you are an orthodox, practicing, mainstream Muslim, then you necessarily believe in the need to impose Sharia as the law of the land. Sharia is much more than a legal code. It is also a political program, it is a code of social behavior, it is the blueprint for the totality of human experience. That's why it is impossible to make Sharia compatible with the liberal principle of "live and let live": it is inherently aggressive to non-Islam. In the Islamic paradigm, the world is divided in the Manichean manner, black-and-white, into "the World of Faith," Dar al-Islam , literally "the world of submission," and "the World of War, Dar al-Harb .
It is the divine duty of each and every Muslim to seek the expansion of Dar al-Islam at the expense of Dar al-Harb until the one true faith is triumphant throughout the world. In this sense the Islamic mindset is very similar to Bolshevism. The Bolsheviks also believed that "the first country of Socialism" should expand its reach and control until the whole world has undergone the proletarian revolution and has become one in the march to the Utopia of communism. There is constant inner tension in the Islamic world, in the sense that for as long as non-Islam exists, it is inherently perceived as "the other," as an abomination. In that sense, Muslims perceive any concession made by the West-for instance in allowing mass immigration into Western Europe-not as a gesture of good will and multicultural tolerance, but as a sign of weakness that needs to be exploited and used as a means to an end.
FPR: The Roman Catholic Church has its Catechism which decides the issues of doctrine. Until there's an Islamic "catechism" which can say "no, this is no longer the right interpretation, this is not what it means any more"-and I don't think this would be a short-term thing, because you'd still have the splinter groups dissenting against the "traitors"-but is this the only way to go to the center of theological jurisprudence in the Islamic world?
ST: The problem is twofold. First of all, there is no "interpretation" of the Kuran . Classical Islamic sources are adamant that the Kuran needs to be taken at face value, literally. If it says in Sura 9, verse 5, "fight the infidels wherever you find them, and let them go if they convert," or if it says time and over again that the choice for a non-Muslim is to accept Islam, or to live as a second-class citizen-the dhimmi -under Islamic supremacy, or else to be killed it is very hard to imagine what sort of authority in the Islamic world would be capable of saying "now we are going to relativize and soften the message."
The second part of the problem is that there is no single authority in Islam. It is not organized in a hierarchical way like the Roman Catholic Church, where if the Pope speaks ex cathedra his pronouncements are obligatory for all Catholics everywhere. Islam is a diffused religion, with various centers of learning and various ullema who may or may not agree on certain peripheral details. Yet any any one of them who'd dare say "look, now we rally need to reinterpret the fundamental sources, the Kuran and the Hadith, so as to make it compatible with the pluralist society"-they'd immediately be condemned as heretics. We've seen attempts at reform in the past. In the end the orthodox interpretation always prevails, because it is-sadly-the right interpretation of the core texts. With neither the hierarchy capable of imposing a new form of teaching on the faithful, nor the existence of alternative core texts which would provide grounds for such reinterpretation, it is very hard to see how it could be done.
FPR: How do we go forward? . . . How does the end-game play out?
ST: I'd say that in modern times the main culprit was Zbigniew Brzezynski, who freely admitted in an interview with the French weekly magazine Le Nouvel Observateur in 1998 that he had this, as he called it, "brilliant idea" to let the Islamist genie out of the bottle to fight the Soviets in Afghanistan following the Soviet occupation in 1979. At that time he was President Carter's National Security Advisor. The transmission belt, from the CIA and various other U.S. agencies to the jihadists in Afghanistan, went via Pakistan. The ISI, the all-powerful military Inter-Service Intelligence-an institution which is pro-jihadist to boot-was used by the U.S. to arm elements which later morphed into al-Qaeda. The breeding ground for the modern, one might say postmodern form of jihadism, was Afghanistan-and it was made possible by U.S. policy inputs which helped its development.
But if we look at the past 14 centuries, time and over again we see the same phenomenon. The first time they tried to conquer Europe was across the Straits of Gibraltar and across the Iberian Peninsula, today's Spain. Then they crossed the Pyrinees and were only stopped at Poitiers by Charles Martel in 732AD. Then they were gradually being pushed back, and the Reconquista -- the reconquest of Spain-lasted 800 years, until 1492, when Cordoba finally fell to the Christian forces. Then came the second, Ottoman onslaught, in the XIVth century, which went across the Dardanelles into the Balkan Peninsula. The Turks were only finally stopped at the gates of Vienna in 1683. Pushing Turkey out of Europe went all the way to 1912, to the First Balkan War.
So we may say that we are now witnessing the third Islamic conquest of Europe. This time it is not using armed janissaries, it is using so-called refugees. In fact most of them are healthy young men, and the whole process is obviously a strategic exercise -- a joint venture between Ankara and Riyadh, who are logistically and financially helping this mass transfer of people from the Turkish and Middle Eastern refugee camps to the heart of Europe. The effect may be the same, but this time it is far more dangerous because, on the European side-unlike in 732, or 1683-there is no political will and there is no moral strength to resist. This is happening because the migrants, the invaders, see Europe as the candy store with a busted lock and they are taking advantage of that fact.
FPR: When you see the horrors of rapes and sexual assaults that took place across Germany, and now we see the Germans' response . . . vigilantes on their streets . . . this is something that we either control politically and with leadership, or else it falls apart into anarchy, Prof. Trifkovic?
ST: Instead of anarchy I think we will have a form of postmodern totalitarianism. The elite class, the government of Germany etc, and the media, will demonize those who try to resist. In fact we already have the spectacle of the minister of the interior of one of the German states saying that "hate speech" on the social networks and websites was far worse than the "incidents" in Cologne. And the Mayor of Cologne-an ultra-feminist who is also a pro-immigration enthusiast-said that in order to prevent such events in the future women should observe a "code of conduct" and keep distance "at an arm's length" from men. It's a classic example of blaming the victim. The victims of Islamic violence should change their behavior in order to adapt themselves to the code of conduct and values of the invaders. This is truly unprecedented.
Instead of utter anarchy, I think we are more likely to see the ever more stringent control of the social media. The German government has already imposed on Google and Twitter which is based on the German draconian "hate speech" legislation, rather than on the universally accepted standards. On the whole we see everywhere in Europe that when you have a political party or a person trying to call a spade by its name, to call for a moratorium on immigration or for a fundamental change in the way of thinking, they will be demonized. The same applies to Marine Le Pen in France and to her party, the Front National , or to Geert Wilders in Holland, or to Strache in Austria. Whoever tries to articulate a coherent plan of action that includes a ban or limits on Islamic immigration is immediately demonized as a right-wing fanatic or a fascist. Instead of facing the reality of the situation, that you have a multi-million Islamic diaspora in Europe which is not assimilating, which refuses even to accept a code of conduct of the host population, the reaction is always the same: blame the victim, and demonize those who try to articulate some form of resistance.
FPR: Dr. Trifkovic, how does a country such as ours, the United States, fix this problem . . .
ST: The answer is fairly simple, but it would require a fundamental transformation of the mindset of the political decision-makers. It is to start treating Islamic activism not as "religious" but as an eminently political activity -- subversive political activity, in the same way as communist subversion was treated during the Cold War. In both cases we have a committed, highly motivated group of people who want to effect a fundamental transformation of the United States in a way that is contrary to the U.S. Constitution, to the American way of life, and to the American values. It is time to stop the Islamists from hiding behind the "freedom of religion" mantra. What they are seeking is not some "freedom of religion" but the freedom to organize in order to pursue political subversion. They do not accept the U.S. Constitution.
To start with, every single potential U.S. citizen from the Islamic world needs to be interviewed in great detail about his or her beliefs and commitments. It is simply impossible for a believing Muslim to swear the oath of allegiance to the United States. None of them, if they are true believers, can regard the U.S. Constitution as superior to the Sharia-which is the law of God, while the U.S. Constitution is a man-made document. I happen to know the oath because I am myself a naturalized U.S. citizen. They can do it "in good faith" from their point of view by practicing taqqiya . This is the Arab word for the art of dissimulation, when the Muslim lies to the infidel in order to protect the faith. For them to lie to investigators or to immigration officials about their beliefs and their objectives does not create any conflict of conscience. The prophet of Islam himself has mandated the use of taqqiya if it serves the objective of spreading the faith.
FPR: Can a civil war come out of this? Is it conceivable?
ST: If there is to be a civil war in Europe, it would be pursued between the elite class which wants to continue pursuing multiculturalism and unlimited immigration --for example Germany, where over a million migrants from the Middle East, North Africa etc. were admitted in 2015 alone-and the majority of the population who have not been consulted, and who feel that their home country is being irretrievably lost. I do not believe that there will be many people fighting on the side of the multiculturalists' suicide, but nevertheless we still have very effective forces of coercion and control on the government side which can be deployed to prevent the articulation of any long-term, coherent plan of resistance.
FPR: Where can people continue to read you writings, Dr. Trifkovic?
ST: On Chroniclesmagazine.org where I publish weekly online commentaries, and also in the print edition of Chronicles where I have my regular column.
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Slashdot
On the topic of outsourcing, IMO it can be cheaper if done right. On paper it always seems like a great idea, but in practice it's not always the best idea financially and/or getting the same or better result in comparison to keeping it in-house. I've worked for companies where they have outsourced a particular department/function to companies where I am the one the job is outsourced to. My observation has been the success of getting projects done (e.g.: programing) or facilitating a role (e.g.: sys admin) rely on a few factors regardless of outsourcing or not.
The first is a golden rule of sorts on doing anything:
- Cheap
- Quality
- Fast
You can only pick two; NO exceptions. I've encountered so many upper management types that foolishly think they can get away with having all three. In my experience 9/10 of the time it turns out a lack of quality bites them in the butt sometime down the road when they assumed they somehow managed to achieve all three.
The second is communication. Mostly everyone in at least the US has experienced the pain of being subjected to some company's outsourced customer service and/or tech support that can't effectively communicate with both parties on the same page of understanding one another. I really shouldn't need to explain why communication, understanding one another is so important. Sadly this is something I have to constantly explain to my current boss with events like today where my non-outsourced colleague rebooted a number of production critical servers when he was asked to reboot just one secondary server.
Third is the employee's skill in doing the job. Again, another obvious one, but I've observed that it isn't always on the hiring menu. Additionally I've seen some people that interview well, but couldn't create a "Hello World" HTML page for a web developer position as an example. There's no point in hiring or keeping a hired individual to do a job that they lack the skill to do; even if it's an entry-level position with training, that person should be willing to put for the effort to learn and take notes. I accept that everyone has their own unique skills that can aide or hinder their ability to learn and be proficient with a particular task. However, I firmly believe anyone can learn to do anything as long as they put their mind to it. I barely have any artistic ability and my drawing skills are stick figures at best (XKCD is miles ahead of me); if I were to put forth the effort to learn how to draw and paint, I could become a good artist. I taught an A+ technician certification class at a tech school a while back and I had a retired Marine that served in the Vietnam War as one of my students. One could argue his best skill was killing and blowing stuff up. He worked hard and learned to be a technician and passed CompTIA's certification test without a problem. That leads me to the next point.
Lastly is attitude of the end employee doing the actual work. It boggles my mind how so many managers loose the plot when it comes to employee morale and motivation. Productivity generally is improved when those two are improved and it usually doesn't have to involve spending a bunch of money. The employee's attitude should be getting the work done correctly in a reasonable amount of time. Demanding it is a poor approach. Poisoning an employee will result in poisoning the company in a small manner all the way up to the failure of the company. Employees should be encouraged through actual morale improvements, positive motivation, and incentives for doing more work at the same and/or better quality level.
Outsourcing or keeping things in house can be successful and possibly economical if approached correctly with the appropriate support of upper management.
How dramatic? Isn't outsourcing done (like it or not) to reduce costs?
Outsourcing is done to reduce the projected costs that PHBs see. In reality, outsourcing can lead to increased costs and delays due to time zone differences and language/cultural barriers.
I have seen it work reasonably well, but only when the extra effort and delays caused by the increased need for rework that comes from complex software projects. If you are working with others on software, it is so much quicker to produce quality software if the person who knows the business requirements is sitting right next to the person doing design and the person cutting code and the person doing the testing, etc, etc.
If these people or groups are scattered around the world with different cultures and native languages, communication can suffer, increasing misunderstanding and reducing the quality. I have personally seen this lead to massive increase in code defects in a project that went from in house development to outsourced.
Also, time zone differences cause problems. I have noticed that the further west people live, the less likely they are to take into account how far behind they are. Working with people who fail to realise that their Monday morning is the next day for someone else, or that by the time they are halfway through Friday, others are already on their weekend is not only frustrating, it leads to slow turn around of bug fixes, etc.
Yeah, I'm told outsourcing keeps costs down, but I am yet to see conclusive evidence of that in the real world. At least in complex development. YMMV for support/call centre stuff.
-- I don't therefore I'm not.
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Apr 05, 2015 | Bloomberg View
Whenever buyers and sellers get together, opportunities to fleece the other guy arise. The history of markets is, in part, the history of lying, cheating and stealing -- and of the effort down the years to fight commercial crime.
In fact, the evolution of the modern economy owes more than you might think to these outlaws. That's the theme of "Forging Capitalism: Rogues, Swindlers, Frauds, and the Rise of Modern Finance" by Ian Klaus. It's a history of financial crimes in the 19th and early 20th centuries that traces a recurring sequence: new markets, new ways to cheat, new ways to transact and secure trust. As Klaus says, criminals helped build modern capitalism.
And what a cast of characters. Thomas Cochrane is my own favorite. (This is partly because he was the model for Jack Aubrey in Patrick O'Brian's "Master and Commander" novels, which I've been reading and rereading for decades. Presumably Klaus isn't a fan: He doesn't note the connection.)
Cochrane was an aristocrat and naval hero. At the height of his fame in 1814 he was put on trial for fraud. An associate had spread false rumors of Napoleon's death, driving up the price of British government debt, and allowing Cochrane to avoid heavy losses on his investments. Cochrane complained (with good reason, in fact) that the trial was rigged, but he was found guilty and sent to prison.
The story is fascinating in its own right, and the book points to its larger meaning. Cochrane, in a way, was convicted of conduct unbecoming a man of his position. Playing the markets, let alone cheating, was something a man of his status wasn't supposed to do. Trust resided in social standing.
As the turbulent century went on, capitalism moved its frontier outward in every sense: It found new opportunities overseas; financial innovation accelerated; and buyers and sellers were ever more likely to be strangers, operating at a distance through intermediaries. These new kinds of transaction required new ways of securing trust. Social status diminished as a guarantee of good faith. In its place came, first, reputation (based on an established record of honest dealing) then verification (based on public and private records that vouched for the parties' honesty).
Successive scams and scandals pushed this evolution of trust along. Gregor MacGregor and the mythical South American colony of Poyais ("the quintessential fraud of Britain's first modern investment bubble," Klaus calls it); Beaumont Smith and an exchequer bill forging operation of remarkable scope and duration; Walter Watts, insurance clerk, theatrical entrepreneur and fraudster; Harry Marks, journalist, newspaper proprietor and puffer of worthless stocks. On and on, these notorious figures altered the way the public thought about commercial trust, and spurred the changes that enabled the public to keep on trusting nonetheless.
The stories are absorbing and the larger theme is important: "Forging Capitalism" is a fine book and I recommend it. But I have a couple of criticisms. The project presumably began as an academic dissertation, and especially at the start, before Klaus starts telling the stories, the academic gravity is crushing.
Trust, to be simple with our definition, is an expectation of behavior built upon norms and cultural habits. It is often dependent upon a shared set of ethics or values. It is also a process orchestrated through communities and institutions. In this sense, it is a cultural event and thus a historical phenomenon.
No doubt, but after a first paragraph like that you aren't expecting a page-turner. Trust me, it gets better. When he applies himself, Klaus can write. Describing the messenger who brought the false news of Napoleon's death, he says:
Removed from the dark of the street, the man could be seen by the light of two candles. He looked, a witness would later testify, "like a stranger of some importance." A German sealskin cap, festooned with gold fringes, covered his head. A gray coat covered his red uniform, upon which hung a star Neighbors and residents of the inn stirred and peered in as the visitor penned a note.
Tell me more.
My other objection is to the book's repeated suggestion that Adam Smith and other classical proponents of market economics naively underestimated the human propensity to deceive and over-credited the market's ability to promote good behavior. Klaus doesn't examine their claims at length or directly, but often says things such as:
The sociability in which Adam Smith had placed his hopes for harnessing self-interest was not a sufficient safeguard in the sometimes criminal capitalism of the ruthless free market.
Of course it wasn't. Smith didn't believe that the market's civilizing tendencies, together with humans' instinct for cooperation, were a sufficient safeguard against fraud or breach of contract or other commercial wrongs. He was nothing if not realistic about human nature. And by the way, many of the subtle adaptations to the shifting risk of fraud that Klaus describes were private undertakings, not government measures. Far from being surprised by them, Smith would have expected their development.
Nonetheless, Klaus is right: Give the markets' ubiquitous and ingenious criminals their due. They helped build modern capitalism, and they aren't going away. Just ask Bernie Madoff.
To contact the author on this story: Clive Crook at [email protected]
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Dec 03, 2017 | www.unz.com
Beckow , December 2, 2017 at 4:19 am GMT
@peterAUSErebus , December 2, 2017 at 8:48 am GMT"The same "hegemon with allies/vassals" as it is now, only in that case divided in three"
Why? There is absolutely nothing about 'multipolar' that dictates three, or four 'hegemons', or even lists who would the 'multis' be. The idea is simply that most people, most of the time are better off left alone.
Is that so hard to understand? Why should people in Washington (or Moscow, Beijing, Brussels, ) be intimately involved with how others live their lives, with their fights and alliances? Knowledge always dissipates with distance, and most of the 'masters of the universe' are not that smart to start with.
Multipolar is just that – leave exercise of power and responsibility as close to the local situation as possible. Brussels telling Poland who should be a TV presenter, or Washington deciding what people in rural Hungary should read is idiotic. What's the point of all this busy-body behaviour? It is always justified by some slogans about preventing 'human rights violations'. Right. We have seen the results – a lot more people have died and suffered because of 'humanitarian' interventions than from anything else in the last 20+ years.
I do find the current rapprochement between Russia and the major Moslem states amusing. It goes beyond Turkey and Iran, Moscow is working all of them, Egypt, Sudan, I suspect it is a clever attempt to beat US at its own game – US has spent about four decades arming and unleashing any Islamic force it could find against Russians (and Slavs in general), using methods that were beyond brutal and hypocrisy that eventually backfired. Maybe turning it around is a good strategy. It is inconsistent, but when you fight extreme stupidity, often the only thing that works is to use more stupidity
@BeckowBeckow , December 2, 2017 at 9:48 pm GMT"The same "hegemon with allies/vassals" as it is now, only in that case divided in three"
Why? There is absolutely nothing about 'multipolar' that dictates three, or four 'hegemons', or even lists who would the 'multis' be. The idea is simply that most people, most of the time are better off left alone.
Peter's is the apocalyptic view made famous by Orwell. He may be right, it may all unravel and Oceania, Eurasia & Eastasia run a classic 3-power calculus of shifting alliances in a struggle for control of the "hinterlands". Not at all impossible, but certainly not what the proponents of the multipolar world want.
The idea is much more than the notion that most people want to "be left alone". The Multipolar world as it is actually being constructed by its proponents, from its monetary structures to its security, commercial and trade regimes, is precisely the attempt to prevent that Orwellian development in the face of Western decline. Their foundational tenet is that Globalization as a world-historical trend is here to stay (for at least the next few generations), and the "compartmentalization" of the world into alliances and hegemonies as historically occurred is no longer a viable option. The 3 Orwellian powers are all nuclear now, and the #1 priority is to mitigate the risk of war between them. Best to do that by dissolving them into a matrix of commercial and developmental programs that they'd be loathe to destroy.
EG: Though Russia considers both China and Iran "strategic partners", there is no formal alliance with either of them, and there won't be. Alliances cannot be "forbidden", but the countries that have signed onto the multipolar world program view alliances with suspicion.
As a introduction to the coming multipolar world, Kupchan's Western-centric analysis is a good place to start: https://www.amazon.com/No-Ones-World-Council-Relations/dp/0199325227
"Kupchan provides a detailed strategy for striking a bargain between the West and the rising rest by fashioning a new consensus on issues of legitimacy, sovereignty, and governance."Assuming he even knows the least thing about what the multipolar world is trying to do, Peter's view is that their attempt will fail. Maybe so.
To "fashion a new consensus on issues of legitimacy, sovereignty, and governance" requires that the professional criminal class that grabbed the remains of Western power a decade and a half ago has been forced to let go. If not, the world indeed faces an abyss.Orwell's vision is but one of the possibilities. Another is Armageddon. Yet another is a "(Failed) West and a multipolar Rest". The latter is what I think will actually happen in the near and medium term. Things being what they are, it may even be the best we can hope for.
@ErebusErebus , Next New Comment December 3, 2017 at 7:18 am GMT"(Failed) West and a multipolar Rest". The latter is what I think will actually happen in the near and medium term.
I think we already have it, except I don't think West has failed yet. Or it has in a way, the process of failing goes on, but the consequences have not been felt much in the West yet.
I don't see any other power than the West (=US) aspiring to 'manage the world'. Maybe some ISIS fanatics have the same dream, but they are not in a position to achieve it. West has 'managed' it very poorly: mindless interventions, wars, migrants, hypocrisy, threats and blackmail.
The other 'powers' have very modest, regional aspirations. Russia or China really don't care that much who wins the elections in Portugal, or what regional papers write in Hungary – US seems to be obsessed with it. And the only justification that Western defenders offer when pressed is that 'there would be a vacuum' and 'Russians would move in'. This is obvious nonsense and only elderly paranoid Cold Warrior types believe it (peterAUS?). What is really going on is that West has over-reached and can barely handle its own problems. So they scream 'Russians are coming' to distract, or to prolong the agony. Russians are not coming, they don't care in 2017, they can barely control their huge territory today. More you see squealing and lying in the Western media, more it shows that they have not much else to work with.
@BeckowBeckow , Next New Comment December 3, 2017 at 10:13 pm GMT"(Failed) West and a multipolar Rest". The latter is what I think will actually happen in the near and medium term.
I think we already have it, except I don't think West has failed yet. Or it has in a way, the process of failing goes on, but the consequences have not been felt much in the West yet.
Well, exogenous events aside, "decline and fall" is necessarily a process. A series of steps and plateaus is typical. A major step occurred in 2007/8, when the money failed. The bankers, in a frankly heroic display of coordination, propped up the $$$ and the West got a decade long plateau. Things are going wobbly again, financially speaking and I suspect the next step function to occur rather soon. Stays of execution have been exhausted, so it'll be interesting how the West handles it, and how the RoW reacts.
Europeans have been invited to join the Eurasian Project, to create a continental market from "Lisbon to Vladivostok". Latent dreams of Hegemony hold at least some of their elites back. The USA has also been invited, but its dreams remain much more virile. That is, until Trump who's backers seem to read the writing on the wall better than the Straussians.
I don't see any other power than the West (=US) aspiring to 'manage the world' .
The other 'powers' have very modest, regional aspirations US seems to be obsessed with it.The fact is that the rise of the West to global dominance is due to a historical anomaly. It was fuelled (literally) by the discovery and harnessing of the chemical energy embedded in coal (late 18thC) and then oil (late 19thC). The first doubled the population, and as first movers gave the West a running start. The second turned on the afterburners, and population grew >3.5 fold. Again the West led the way. To fuel that ahistorical step-function growth curve, control of resources on a global scale became its civilizational imperative.
That growth curve has plateaued, and the rest of the world has caught/is catching up developmentally. The resources the West needs aren't going to be available to it in the way they were 100 years ago. Them days is over, for everybody really, but especially for the West because it has depleted its own hi-ROI resources, and both of its means of control (IMF$ System & U$M) of what's left of everybody else's are failing simultaneously. So its plateau will not be flat, or not flat for long between increasingly violent steps.
The West rode an ahistorical rogue wave of development to a point just short of Global Hegemony. That wave broke, and is now rolling back out into the world leaving the West just short of its civilizational resource requirements. No way to get back on a broken wave. In any case, China now holds the $$$ hammer, and Russia holds the military hammer, and they've now got the surfboard. Both of them, led by historically aware elites, know that Hegemony doesn't work, so will focus on keeping their neck of the woods as stable & prosperous as possible while hell blazes elsewhere.
What is really going on is that West has over-reached and can barely handle its own problems.
IMHO, what's really going on is that the West's problems are simply symptomatic of what "decline and fall", if not "collapse" looks like from within a failing system. A long time ago I read the diary of a Roman nobleman who in the most matter-of-fact style wrote of exactly the same things Westerners complain about today. How this, that or the other thing no longer works the way it did. For all of his 60+ years, every day was infinitesimally worse than the day before, until finally he decides to pack up his Roman households and move to his estates in Spain. It took 170(iirc) more years of continuous decline until Alaric finally arrived at the Gates of Rome. If wholly due to internal causes, collapse is almost always a slow motion train wreck.
'there would be a vacuum' and 'Russians would move in'. This is obvious nonsense and only elderly paranoid Cold Warrior types believe it (peterAUS?).
Actually, it's just stupid. Cold Warrior or not, the view betrays a deep and abiding ignorance of both history and a large part of what drove the West's hegemonic successes. That both militate against anyone else ever even trying such a thing on a global scale can't be seen if you look at historical developments and the rest of the world through 10′ of 1″ pipe.
The idea that Russia wants/needs the Baltics is even more laughable than that it wants/needs the Ukraine or Poland. None of these tarbabies have anything to offer but trouble. Noisome flies on an elephant, it is only if they make themselves more troublesome as outsiders than they would be as vassals would Russia move.
@Erebus"Things are going wobbly again"
Why do you think so? I think we are about to enter an occasional plateau and things will be stable or even improve for a while. The Rome analogies are instructive, but they only take you so far. E.g. Rome was collapsing for about two centuries, on and off. Rome was also infinitely more brutal than today's West and the 'barbarians' were real barbarians, not aspiring migrants led by well-paid NGO comprador class. Why do you think it is getting wobbly?
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May 07, 2015 | jessescrossroadscafe.blogspot.com
"The power and influence of the financial sector threatens a continuation of the regulatory capture that contributed to the financial crisis. Financial firms, too often, have significant say in the appointment of high regulatory officials.The tendency of some former government officials to obtain highly lucrative positions in the financial sector after leaving government may well act as an inducement to those remaining in government to serve the interest of the financial sector rather than those of the public."
Brooksley Born, Finance & Society Conference, May 5, 2015
The Western Banks are all over these markets, from commodities to equities. They are creating huge amounts of money debt, and providing it to the financial industry as top down stimulus. What results is little aggregate or 'organic' growth and a series of paper asset bubbles. They should be ashamed but they are too busy plundering to feel any twinge of conscience. They are like a herd of swine, racing for the abyss.I had to chuckle when the pampered princesses and giggling jackals were talking about the jobs report tomorrow, and said that the ideal situation would be 'a strong jobs number with no wage growth,' a true 'goldilocks' scenario.
I have given up any expectation of reform from within. There will have to be some eye-opening incidents to shake the complacency of the fortunate few.
Non-Farm Payrolls tomorrow.
Have a pleasant evening.
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Aug 21, 2015 | naked capitalism
Lambert found a short article by Richard Cook that I've embedded at the end of the post. I strongly urge you to read it in full. It discusses how complex systems are prone to catastrophic failure, how that possibility is held at bay through a combination of redundancies and ongoing vigilance, but how, due to the impractical cost of keeping all possible points of failure fully (and even identifying them all) protected, complex systems "always run in degraded mode". Think of the human body. No one is in perfect health. At a minimum, people are growing cancers all the time, virtually all of which recede for reasons not well understood.
The article contends that failures therefore are not the result of single causes. As Clive points out:
This is really a profound observation – things rarely fail in an out-the-blue, unimaginable, catastrophic way. Very often just such as in the MIT article the fault or faults in the system are tolerated. But if they get incrementally worse, then the ad-hoc fixes become the risk (i.e. the real risk isn't the original fault condition, but the application of the fixes). https://en.wikipedia.org/wiki/Windscale_fire#Wigner_energy documents how a problem of core instability was a snag, but the disaster was caused by what was done to try to fix it. The plant operators kept applying the fix in ever more extreme does until the bloody thing blew up.
But I wonder about the validity of one of the hidden assumptions of this article. There is a lack of agency in terms of who is responsible for the care and feeding of complex systems (the article eventually identifies "practitioners" but even then, that's comfortably vague). The assumption is that the parties who have influence and responsibility want to preserve the system, and have incentives to do at least an adequate job of that.
There are reasons to doubt that now. Economics has promoted ways of looking at commercial entities that encourage "practitioners" to compromise on safety measures. Mainstream economics has as a core belief that economies have a propensity to equilibrium, and that equilibrium is at full employment. That assumption has served as a wide-spread justification for encouraging businesses and governments to curtail or end pro-stability measures like regulation as unnecessary costs.
To put it more simply, the drift of both economic and business thinking has been to optimize activity for efficiency. But highly efficient systems are fragile. Formula One cars are optimized for speed and can only run one race.
Highly efficient systems also are more likely to suffer from what Richard Bookstaber called "tight coupling." A tightly coupled system in one in which events occur in a sequence that cannot be interrupted. A way to re-characterize a tightly coupled system is a complex system that has been in part re-optimized for efficiency, maybe by accident, maybe at a local level. That strips out some of the redundancies that serve as safeties to prevent positive feedback loops from having things spin out of control.
To use Bookstaber's nomenclature, as opposed to this paper's, in a tightly coupled system, measures to reduce risk directly make things worse. You need to reduce the tight coupling first.
A second way that the economic thinking has arguably increased the propensity of complex systems of all sorts to fail is by encouraging people to see themselves as atomized agents operating in markets. And that's not just an ideology; it's reflected in low attachment to institutions of all sorts, ranging from local communities to employers (yes, employers may insist on all sorts of extreme shows of fealty, but they are ready to throw anyone in the dust bin at a moment's notice). The reality of weak institutional attachments and the societal inculcation of selfish viewpoints means that more and more people regard complex systems as vehicles for personal advancement. And if they see those relationships as short-term or unstable, they don't have much reason to invest in helping to preserving the soundness of that entity. Hence the attitude called "IBY/YBG" ("I'll Be Gone, You'll Be Gone") appears to be becoming more widespread.
I've left comments open because I'd very much enjoy getting reader reactions to this article. Thanks!
James Levy August 21, 2015 at 6:35 am
So many ideas . Mike Davis argues that in the case of Los Angeles, the key to understanding the city's dysfunction is in the idea of sunk capital – every major investment leads to further investments (no matter how dumb or large) to protect the value of past investments.
Tainter argues that the energy cost (defined broadly) of maintaining the dysfunction eventually overwhelms the ability of the system to generate surpluses to meet the rising needs of maintenance.
Goldsworthy has argued powerfully and persuasively that the Roman Empire in the West was done in by a combination of shrinking revenue base and the subordination of all systemic needs to the needs of individual emperors to stay in power and therefore stay alive. Their answer was endlessly subdividing power and authority below them and using massive bribes to the bureaucrats and the military to try to keep them loyal.
In each case, some elite individual or grouping sees throwing good money after bad as necessary to keeping their power and their positions. Our current sclerotic system seems to fit this description nicely.
Jim August 21, 2015 at 8:15 am
xxx August 22, 2015 at 4:39 amI immediately thought of Tainter's "The Complex of Complex Cultures" when I starting reading this. One point that Tainter made is that collapse is not all bad. He presents evidence that the average well being of people in Italy was probably higher in the sixth century than in the fifth century as the Western Roman Empire died. Somewhat like death being necessary for biological evolution collapse may be the only solution to the problem of excessive complexity.
Praedor August 21, 2015 at 9:19 amTainter insists culture has nothing to do with collapse, and therefore refuses to consider it, but he then acknowledges that the elites in some societies were able to pull them out of a collapse trajectory. And from the inside, it sure as hell looks like culture, as in a big decay in what is considered to be acceptable conduct by our leaders, and what interests they should be serving (historically, at least the appearance of the greater good, now unabashedly their own ends) sure looks to be playing a big, and arguably the defining role, in the rapid rise of open corruption and related social and political dysfunction.
jgordon August 21, 2015 at 7:44 amThat also sounds like the EU and even Greece's extreme actions to stay in the EU.
nowhere August 21, 2015 at 12:10 pmThen I'll add my two cents: you've left out that when systems scale linearly, the amount of complexity, and points for failure, and therefore instability, that they contain scale exponentially–that is according to the analysis of James Rickards, and supported by the work of people like Joseph Tainter and Jared Diamond.
Ever complex problem that arises in a complex system is fixed with an even more complex "solution" which requires ever more energy to maintain, and eventually the inevitably growing complexity of the system causes the complex system to collapse in on itself. This process requires no malignant agency by humans, only time.
jgordon August 21, 2015 at 2:04 pmSounds a lot like JMG and catabolic collapse.
Synoia August 21, 2015 at 1:26 pmWell, he got his stuff from somewhere too.
Jim August 21, 2015 at 2:26 pmThere are no linear systems. They are all non-linear because the include a random, non-linear element – people.
Ormond Otvos August 21, 2015 at 4:37 pmLong before there were people the Earth's eco-system was highly complex and highly unstable.
JTMcPhee August 21, 2015 at 4:44 pmThe presumption that fixes increase complexity may be incorrect.
Fixes should include awareness of complexity.
That was the beauty of Freedom Club by Kaczinsky, T.
Maybe call the larger entity "meta-stable?" Astro and geo inputs seem to have been big perturbers. Lots of genera were around a very long time before naked apes set off on their romp. But then folks, even these hot, increasingly dry days, brag on their ability to anticipate, and profit from, and even cause, with enough leverage, de- stability. Good thing the macrocosms of our frail, violent, kindly, destructive bodies are blessed with the mechanisms of homeostasis.
Too bad our "higher" functions are not similarly gifted But that's what we get to chat about, here and in similar meta-spaces
MikeW August 21, 2015 at 7:52 am
Agree, positive density of ideas, thoughts and implications.
I wonder if the reason that humans don't appreciate the failure of complex systems is that (a) complex systems are constantly trying to correct, or cure as in your cancer example, themselves all the time until they can't at which point they collapse, (b) that things, like cancer leading to death, are not commonly viewed as a complex system failure when in fact that is what it is. Thus, while on a certain scale we do experience complex system failure on one level on a daily basis because we don't interpret it as such, and given that we are hardwired for pattern recognition, we don't address complex systems in the right ways.
This, to my mind, has to be extended to the environment and the likely disaster we are currently trying to instigate. While the system is collapsing at one level, massive species extinctions, while we have experienced record temperatures, while the experts keep warning us, etc., most people to date have experienced climate change as an inconvenience - not the early stages of systemwide failure.
Civilization collapses have been regular, albeit spaced out, occurrences. We seem to think we are immune to them happening again. Yet, it isn't hard to list the near catastrophic system failures that have occurred or are currently occurring (famines, financial markets, genocides, etc.).
And, in most systems that relate to humans with an emphasis on short term gain how does one address system failures?
Brooklin Bridge August 21, 2015 at 9:21 am
Good-For-Me-Who-Effing-Cares-If-It's-Bad-For-You-And-Everyone-Else
would be a GREAT category heading though it's perhaps a little close to "Imperial Collapse"
Whine Country August 21, 2015 at 9:52 am
To paraphrase President Bill Clinton, who I would argue was one of the major inputs that caused the catastrophic failure of our banking system (through the repeal of Glass-Steagall), it all depends on what the definition of WE is.
jrs August 21, 2015 at 10:12 pm
And all that just a 21st century version of "apres moi le deluge", which sounds very likely to be the case.
Oregoncharles August 21, 2015 at 3:55 pm
JT – just go to the Archdruid site. They link it regularly, I suppose for this purpose.
Jim August 21, 2015 at 8:42 am
Civilizational collapse is extremely common in history when one takes a long term view. I'm not sure though that I would describe it as having that much "regularity" and while internal factors are no doubt often important external factors like the Mongol Onslaught are also important. It's usually very hard to know exactly what happened since historical documentation tends to disappear in periods of collapse. In the case of Mycenae the archaeological evidence indicates a near total population decline of 99% in less than a hundred years together with an enormous cultural decline but we don't know what caused it.
As for long term considerations the further one tries to project into the future the more uncertain such projections become so that long term planning far into the future is not likely to be evolutionarily stable. Because much more information is available about present conditions than future conditions organisms are probably selected much more to optimize for the short term rather than for the largely unpredicatble long term.
Gio Bruno August 21, 2015 at 1:51 pm
it's not in question. Evolution is about responding to the immediate environment. Producing survivable offspring (which requires finding a niche). If the environment changes (Climate?) faster than the production of survivable offspring then extinction (for that specie) ensues.
Now, Homo sapien is supposedly "different" in some respects, but I don't think so.
Jim August 21, 2015 at 2:14 pm
I agree. There's nothing uniquely special about our species. Of course species can often respond to gradual change by migration. The really dangerous things are global catastrophes such as the asteroid impact at the end of the Cretaceous or whatever happened at the Permian-Triassic boundary (gamma ray burst maybe?).
Ormond Otvos August 21, 2015 at 4:46 pm
Interesting that you sit there and type on a world-spanning network batting around ideas from five thousand years ago, or yesterday, and then use your fingers to type that the human species isn't special.
Do you really think humans are unable to think about the future, like a bear hibernating, or perhaps the human mind, and its offspring, human culture and history, can't see ahead?
Why is "Learn the past, or repeat it!" such a popular saying, then?
diptherio August 21, 2015 at 9:24 am
The Iron Law of Institutions (agents act in ways that benefit themselves in the context of the institution [system], regardless of the effect those actions have on the larger system) would seem to mitigate against any attempts to correct our many, quickly failing complex social and technological systems.
jgordon August 21, 2015 at 10:40 am
This would tend to imply that attempts to organize large scale social structures is temporary at best, and largely futile. I agree. The real key is to embrace and ride the wave as it crests and callapses so its possible to manage the fall–not to try to stand against so you get knocked down and drowned. Focus your efforts on something useful instead of wasting them on a hopeless, and worthless, cause.
Jim August 21, 2015 at 2:21 pm
Civilization is obviously highly unstabe. However it should remembered that even Neolithic cultures are almost all less than 10,000 years old. So there has been little time for evolutionary adaptations to living in complex cultures (although there is evidence that the last 10,000 years has seen very rapid genetic changes in human populations). If civilization can continue indefinitely which of course is not very clear then it would be expected that evolutionary selection would produce humans much better adapted to living in complex cultures so they might become more stable in the distant future. At present mean time to collapse is probably a few hundred years.
Ormond Otvos August 21, 2015 at 4:50 pm
But perhaps you're not contemplating that too much individual freedom can destabilize society. Is that a part of your vast psychohistorical equation?
washunate August 21, 2015 at 10:34 am
Well said, but something I find intriguing is that the author isn't talking so much about civilizational collapse. The focus is more on various subsystems of civilization (transportation, energy, healthcare, etc.).
These individual components are not inherently particularly dangerous (at a systemic/civilizational level). They have been made that way by purposeful public policy choices, from allowing enormous compensation packages in healthcare to dismantling our passenger rail system to subsidizing fossil fuel energy over wind and solar to creating tax incentives that distort community development. These things are not done for efficiency. They are done to promote inequality, to allow connected insiders and technocratic gatekeepers to expropriate the productive wealth of society. Complexity isn't a byproduct; it is the mechanism of the looting. If MDs in hospital management made similar wages as home health aides, then how would they get rich off the labor of others? And if they couldn't get rich, what would be the point of managing the hospital in the first place? They're not actually trying to provide quality, affordable healthcare to all Americans.
It is that cumulative concentration of wealth and power over time which is ultimately destabilizing, producing accepted social norms and customs that lead to fragility in the face of both expected and unexpected shocks. This fragility comes from all sorts of specific consequences of that inequality, from secrecy to group think to brain drain to two-tiered justice to ignoring incompetence and negligence to protecting incumbents necessary to maintain such an unnatural order.
Linus Huber August 21, 2015 at 7:05 pm
I tend to agree with your point of view.
The problem arises with any societal order over time in that corrosive elements in the form of corruptive behavior (not principle based) by decision makers are institutionalized. I may not like Trump as a person but the fact that he seems to unravel and shake the present arrangement and serves as an indicator that the people begin to realize what game is being played, makes me like him in that specific function. There may be some truth in Thomas Jefferson's quote: "The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants. It is its natural manure." Those presently benefiting greatly from the present arrangement are fighting with all means to retain their position, whether successfully or not, we will see.
animalogic August 22, 2015 at 2:18 am
Well said, washunate. I think an argument could be run that outside economic areas, the has been a drive to de-complexity.
Non economic institutions, bodies which exist for non market/profit reasons are or have been either hollowed out, or co-opted to market purposes. Charities as vast engines of self enrichment for a chain of insiders. Community groups, defunded, or shriveled to an appendix by "market forces". The list goes on and on.
Reducing the "not-market" to the status of sliced-white-bread makes us all the more dependant on the machinated complexities of "the market" .god help us .Jay Jay August 21, 2015 at 8:00 am
Joseph Tainter's thesis, set out in "The Collapse of Complex Societies" is simple: as a civilization ages its use of energy becomes less efficient and more costly, until the Law of Diminishing Returns kicks in, generates its own momentum and the system grinds to a halt. Perhaps this article describes a late stage of that process. However, it is worth noting that, for the societies Tainter studied, the process was ineluctable. Not so for our society: we have the ability -- and the opportunity -- to switch energy sources.
Moneta August 21, 2015 at 5:48 pm
In my grandmother's youth, they did not burn wood for nothing. Splitting wood was hard work that required calories.
Today, we heat up our patios at night with gas heaters The amount of economic activity based on burning energy not related to survival is astounding.
A huge percentage of our GDP is based on economies of scale and economic efficiencies but are completely disconnected from environmental efficiencies.
This total loss is control between nature and our lifestyles will be our waterloo .
An interesting article as usual, but here is another take.
Indeed, sometimes complex systems can collapse under the weight of their own complexity (Think: credit default swaps). But sometimes there is a single simple thing that is crushing the system, and the complexity is a desperate attempt to patch things up that is eventually destroyed by brute force.
Consider a forced population explosion: the people are multiplied exponentially. This reduces per capita physical resources, tends to reduce per-capita capital, and limits the amount of time available to adapt: a rapidly growing population puts an economy on a treadmill that gets faster and faster and steeper and steeper until it takes superhuman effort just to maintain the status quo. There is a reason why, for societies without an open frontier, essentially no nation has ever become prosperous with out first moderating the fertility rate.
However, you can adapt. New technologies can be developed. New regulations written to coordinate an ever more complex system. Instead of just pumping water from a reservoir, you need networks of desalinization plants – with their own vast networks of power plants and maintenance supply chains – and recycling plans, and monitors and laws governing water use, and more efficient appliances, etc.etc.
As an extreme, consider how much effort and complexity it takes to keep a single person alive in the space station.
That's why in California cars need to be emissions tested, but in Alabama they don't – and the air is cleaner in Alabama. More people needs more controls and more exotic technology and more rules.
Eventually the whole thing starts to fall apart. But to blame complexity itself, is possibly missing the point.
Steve H. August 21, 2015 at 8:30 am
No system is ever 'the'.
Jim Haygood August 21, 2015 at 11:28 am
Two words, Steve: Soviet Union.
It's gone now. But we're rebuilding it, bigger and better.
Ormond Otvos August 21, 2015 at 4:54 pm
If, of course, bigger is better.
Facts not in evidence.
Ulysses August 21, 2015 at 8:40 am
"But because system operations are never trouble free, human practitioner adaptations to changing conditions actually create safety from moment to moment. These adaptations often amount to just the selection of a well-rehearsed routine from a store of available responses; sometimes, however, the adaptations are novel combinations or de novo creations of new approaches."
This may just be a rationalization, on my part, for having devoted so much time to historical studies– but it seems to me that historians help civilizations prevent collapse, by preserving for them the largest possible "store of available responses."
aronj August 21, 2015 at 8:41 am
Yves,
Thanks for posting this very interesting piece! As you know, I am a fan Bookstaber's concept of tight coupling. Interestingly, Bookstaber (2007) does not reference Cook's significant work on complex systems.
Before reading this article, I considered the most preventable accidents involve a sequence of events uninterrupted by human intelligence. This needs to be modified by Cook's points 8, 9. 10 and 12.
In using the aircraft landing in the New York river as an example of interrupting a sequence of events, the inevitable accident occurred but no lives were lost. Thus the human intervention was made possible by the unknowable probability of coupling the cause with a possible alternative landing site. A number of aircraft accidents involve failed attempts to find a possible landing site, even though Cook's point #12 was in play.
Thanks for the post!!!!!
Brooklin Bridge August 21, 2015 at 8:47 am
A possible issue with or a misunderstanding of #7. Catastrophic failure can be made up of small failures that tend to follow a critical path or multiple critical paths. While a single point of origin for catastrophic failure may rarely if ever occur in a complex system, it is possible and likely in such a system to have collections of small failures that occur or tend to occur in specific sequences of order. Population explosion (as TG points out) would be a good example of a failure in a complex social system that is part of a critical path to catastrophic failure.
Such sequences, characterized by orders of precedence, are more likely in tightly coupled systems (which as Yves points out can be any system pushed to the max). The point is, they can be identified and isolated at least in situations where a complex system is not being misused or pushed to it's limits or created due to human corruption where such sequences of likelihood may be viewed or baked into the system (such as by propaganda->ideology) as features and not bugs.
Spring Texan August 21, 2015 at 8:53 am
I agree completely that maximum efficiency comes with horrible costs. When hospitals are staffed so that people are normally busy every minute, patients routinely suffer more as often no one has time to treat them like a human being, and when things deviate from the routine, people have injuries and deaths. Same is true in other contexts.
washunate August 21, 2015 at 10:40 am
Agreed, but that's not caused by efficiency. That's caused by inequality. Healthcare has huge dispariaties in wages and working conditions. The point of keeping things tightly staffed is to allow big bucks for the top doctors and administrators.
susan the other August 21, 2015 at 2:55 pm
Yes. When one efficiency conflicts with and destroys another efficiency. Eq. Your mother juggled a job and a family and ran around in turbo mode but she dropped everything when her kids were in trouble. That is an example of an efficiency that can juggle contradictions and still not fail.
JTMcPhee August 21, 2015 at 11:38 am
Might this nurse observe that in hospitals, there isn't and can't be a "routine" to deviate from, no matter how fondly "managers" wish to try to make it and how happy they may be to take advantage of the decent, empathic impulses of many nurses and/or the need to work to eat of those that are just doing a job. Hence the kindly (sic) practice of "calling nurses off" or sending them home if "the census is down," which always runs aground against a sudden influx of billable bodies or medical crises that the residual staff is expected to just somehow cope with caring for or at least processing, until the idiot frictions in the staffing machinery add a few more person-hours of labor to the mix. The larger the institution, the greater the magnitude and impact (pain, and dead or sicker patients and staff too) of the "excursions from the norm."
It's all about the ruling decisions on what are deemed (as valued by where the money goes) appropriate outcomes of the micro-political economy In the absence of an organizing principle that values decency and stability and sustainability rather than upward wealth transfer.
Will August 21, 2015 at 8:54 am
I'll join the choir recommending Tainter as a critical source for anybody interested in this stuff.
IBG/YBG is a new concept for me, with at least one famous antecedent. "Après moi, le déluge."
diptherio August 21, 2015 at 9:17 am
The author presents the best-case scenario for complex systems: one in which the practitioners involved are actually concerned with maintaining system integrity. However, as Yves points out, that is far from being case in many of our most complex systems.
For instance, the Silvertip pipeline spill near Billings, MT a few years ago may indeed have been a case of multiple causes leading to unforeseen/unforeseeable failure of an oil pipeline as it crossed the Yellowstone river. However, the failure was made immeasurably worse due to the fact that Exxon had failed to supply that pump-station with a safety manual, so when the alarms started going off the guy in the station had to call around to a bunch of people to figure out what was going on. So while it's possible that the failure would have occurred no matter what, the failure of the management to implement even the most basic of safety procedures made the failure much worse than it otherwise would have been.
And this is a point that the oil company apologists are all too keen to obscure. The argument gets trotted out with some regularity that because these oil/gas transmission systems are so complex, some accidents and mishaps are bound to occur. This is true–but it is also true that the incentives of the capitalist system ensure that there will be more and worse accidents than necessary, as the agents involved in maintaining the system pursue their own personal interests which often conflict with the interests of system stability and safety.
Complex systems have their own built-in instabilities, as the author points out; but we've added a system of un-accountability and irresponsibility on top of our complex systems which ensures that failures will occur more often and with greater fall-out than the best-case scenario imagined by the author.
Brooklin Bridge August 21, 2015 at 9:42 am
As Yves pointed out, there is a lack of agency in the article. A corrupt society will tend to generate corrupt systems just as it tends to generate corrupt technology and corrupt ideology. For instance, we get lots of little cars driving themselves about, profitably to the ideology of consumption, but also with an invisible thumb of control, rather than a useful system of public transportation. We get "abstenence only" population explosion because "groath" rather than any rational assessment of obvious future catastrophe.
washunate August 21, 2015 at 10:06 am
Right on. The primary issue of our time is a failure of management. Complexity is an excuse more often than an explanatory variable.
abynormal August 21, 2015 at 3:28 pm
abynormal
August 21, 2015 at 2:46 pmAm I the only hearing 9″Nails, March of the Pigs
Aug. 21, 2015 1:54 a.m. ET
A Carlyle Group LP hedge fund that anticipated a sudden currency-policy shift in China gained roughly $100 million in two days last week, a sign of how some bearish bets on the world's second-largest economy are starting to pay off.
http://www.wsj.com/articles/hedge-fund-gains-100-million-in-two-days-on-bearish-china-bet-1440136499?mod=e2twoink oink is the sound of system fail
Oregoncharles August 21, 2015 at 3:40 pm
A very important principle:
All systems have a failure rate, including people. We don't get to live in a world where we don't need to lock our doors and banks don't need vaults. (If you find it, be sure to radio back.)
The article is about how we deal with that failure rate. Pointing out that there are failures misses the point.
cnchal August 21, 2015 at 5:05 pm
. . .but it is also true that the incentives of the capitalist system ensure that there will be more and worse accidents than necessary, as the agents involved in maintaining the system pursue their own personal interests which often conflict with the interests of system stability and safety.
How true. A Chinese city exploded. Talk about a black swan. I wonder what the next disaster will be?
hemeantwell August 21, 2015 at 9:32 am
After a skimmy read of the post and reading James' lead-off comment re emperors (Brooklin Bridge comment re misuse is somewhat resonant) it seems to me that a distinguishing feature of systems is not being addressed and therefore being treated as though it's irrelevant.
What about the mandate for a system to have an overarching, empowered regulatory agent, one that could presumably learn from the reflections contained in this post? In much of what is posted here at NC writers give due emphasis to the absence/failure of a range of regulatory functions relevant to this stage of capitalism. These run from SEC corruption to the uncontrolled movement of massive amount of questionably valuable value in off the books transactions between banks, hedge funds etc. This system intentionally has a deliberately weakened control/monitoring function, ideologically rationalized as freedom but practically justified as maximizing accumulation possibilities for the powerful. It is self-lobotomizing, a condition exacerbated by national economic territories (to some degree). I'm not going to now jump up with 3 cheers for socialism as capable of resolving problems posed by capitalism. But, to stay closer to the level of abstraction of the article, doesn't the distinction between distributed opacity + unregulated concentrations of power vs. transparency + some kind of central governing authority matter? Maybe my Enlightenment hubris is riding high after the morning coffee, but this is a kind of self-awareness that assumes its range is limited, even as it posits that limit. Hegel was all over this, which isn't to say he resolved the conundrum, but it's not even identified here.
Ormond Otvos August 21, 2015 at 5:06 pm
Think of Trump as the pimple finally coming to a head: he's making the greed so obvious, and pissing off so many people that some useful regulation might occur.
Another thought about world social collapse: if such a thing is likely, (and I'm sure the PTB know if it is, judging from the reports from the Pentagon about how Global Warming being a national security concern) wouldn't it be a good idea to have a huge ability to overpower the rest of the world?
We might be the only nation that survives as a nation, and we might actually have an Empire of the World, previously unattainable. Maybe SkyNet is really USANet. It wouldn't require any real change in the national majority of creepy grabby people.
Jim August 21, 2015 at 9:43 am
Government bureaucrats and politicians pursue their own interests just as businessmen do. Pollution was much worst in the non-capitalist Soviet Union, East Germany and Eastern Europe than it was in the Capitalist West. Chernobyl happened under socialism not capitalism. The present system in China, although not exactly "socialism", certainly involves a massively powerful govenment but a glance at the current news shows that massive governmental power does not necessarily prevent accidents. The agency problem is not unique to or worse in capitalism than in other systems.
Holly August 21, 2015 at 9:51 am
I'd throw in the theory of cognitive dissonance as an integral part of the failure of complex systems. (Example Tarvis and Aronon's recent book: Mistakes Were Made (But Not by me))
We are more apt to justify bad decisions, with bizarre stories, than to accept our own errors (or mistakes of people important to us). It explains (but doesn't make it easier to accept) the complete disconnect between accepted facts and fanciful justifications people use to support their ideas/organization/behavior.
craazymann August 21, 2015 at 10:03 am
I think this one suffers "Metaphysical Foo Foo Syndrome" MFFS. That means use of words to reference realities that are inherently ill-defined and often unobservable leading to untestable theories and deeply personal approaches to epistemological reasoning.
just what is a 'complex system"? A system implies a boundary - there are things part of the system and things outside the system. That's a hard concept to identify - just where the system ends and something else begins. So when 'the system' breaks down, it's hard to tell with any degree of testable objectivity whether the breakdown resulted from "the system" or from something outside the system and the rest was just "an accident that could have happened to anybody'"
maybe the idea is; '"if something breaks down at the worst possible time and in a way that fkks everything up, then it must have been a complex system". But it could also have been a simple system that ran into bad luck. Consider your toilet. Maybe you put too much toilet paper in it, and it clogged. Then it overflowed and ran out into your hallway with your shit everywhere. Then you realized you had an expensive Chinese rug on the floor. oh no! That was bad. you were gonna put tthat rug away as soon as you had a chance to admire it unrolled. Why did you do that? Big fckk up. But it wasn't a complex system. It was just one of those things.
susan the other August 21, 2015 at 12:14 pm
thanks for that, I think
Gio Bruno August 21, 2015 at 2:27 pm
Actually, it was a system too complex for this individual. S(He) became convinced the plumbing would work as it had previously. But doo to poor maintenance, too much paper, or a stiff BM the "system" didn't work properly. There must have been opportunity to notice something anomalous, but appropriate oversight wasn't applied.
Oregoncharles August 21, 2015 at 3:29 pm
You mean the BM was too tightly coupled?
craazyman August 21, 2015 at 4:22 pm
It coould happen to anybody after enough pizza and red wine
people weren't meant to be efficient. paper towels and duct tape can somettmes help
This ocurred to me: The entire 1960s music revolution would't have happened if anybody had to be efficient about hanging out and jamming. You really have to lay around and do nothing if you want to achieve great things. You need many opportunities to fail and learn before the genius flies. That's why tightly coupled systems are self-defeating. Because they wipe too many people out before they've had a chance to figure out the universe.
JustAnObserver August 21, 2015 at 3:01 pm
Excellent example of tight coupling: Toilet -> Floor -> Hallway -> $$$ Rug
Fix: Apply Break coupling procedure #1: Shut toilet door.
Then: Procedure #2 Jam inexpensive old towels in gap at the bottom.As with all such measures this buys the most important thing of all – time. In this case to get the $$$Rug out of the way.
IIRC one of Bookstaber's points was that that, in the extreme, tight coupling allows problems to propagate through the system so fast and so widely that we have no chance to mitigate before they escalate to disaster.
washunate August 21, 2015 at 10:03 am
To put it more simply, the drift of both economic and business thinking has been to optimize activity for efficiency.
I think that's an interesting framework. I would say effeciency is achieving the goal in the most effective manner possible. Perhaps that's measured in energy, perhaps labor, perhaps currency units, but whatever the unit of measure, you are minimizing that input cost.
What our economics and business thinking (and most importantly, political thinking) has primarily been doing, I would say, is not optimizing for efficiency. Rather, they are changing the goal being optimized. The will to power has replaced efficiency as the actual outcome.
Unchecked theft, looting, predation, is not efficient. Complexity and its associated secrecy is used to hide the inefficiency, to justify and promote that which would not otherwise stand scrutiny in the light of day.
BigEd August 21, 2015 at 10:11 am
What nonsense. All around us 'complex systems' (airliners, pipelines, coal mines, space stations, etc.) have become steadily LESS prone to failure/disaster over the decades. We are near the stage where the only remaining danger in air travel is human error. We will soon see driverless cars & trucks, and you can be sure accident rates will decline as the human element is taken out of their operation.
tegnost August 21, 2015 at 12:23 pm
see fukushima, lithium batteries spontaneously catching fire, financial engineering leading to collapse unless vast energy is invested in them to re stabilize Driverless cars and trucks are not that soon, tech buddies say ten years I say malarkey based on several points made in the article, while as brooklyn bridge points out public transit languishes, and washunate points out that trains and other more efficient means of locomotion are starved while more complex methods have more energy thrown at them which could be better applied elsewhere. I think you're missing the point by saying look at all our complex systems, they work fine and then you ramble off a list of things with high failure potential and say look they haven't broken yet, while things that have broken and don't support your view are left out. By this mechanism safety protocols are eroded (that accident you keep avoiding hasn't happened, which means you're being too cautious so your efficiency can be enhanced by not worrying about it until it happens then you can fix it but as pointed out above tightly coupled systems can't react fast enough at which point we all have to hear the whocoodanode justification )
susan the other August 21, 2015 at 12:34 pm
And the new points of failure will be what?
susan the other August 21, 2015 at 3:00 pm
So here's a question. What is the failure heirarchy. And why don't those crucial nodes of failsafe protect the system. Could it be that we don't know what they are?
Moneta August 22, 2015 at 8:09 am
While 90% of people were producing food a few decades ago, I think a large percentage will be producing energy in a few decades right now we are still propping up our golf courses and avoiding investing in pipelines and refineries. We are still exploiting the assets of the 50s and 60s to live our hyper material lives. Those investments are what gave us a few decades of consumerism.
Now everyone wants government to spend on infra without even knowing what needs to go and what needs to stay. Maybe half of Californians need to get out of there and forget about building more infra there just a thought.
America still has a frontier ethos how in the world can the right investments in infra be made with a collection of such values?
We're going to get city after city imploding. More workers producing energy and less leisure over the next few decades. That's what breakdown is going to look like.
Moneta August 22, 2015 at 8:22 am
Flying might get safer and safer while we get more and more cities imploding.
Just like statues on Easter Island were getting increasingly elaborate as trees were disappearing.
ian August 21, 2015 at 4:02 pm
What you say is true, but only if you have a sufficient number of failures to learn from. A lot of planes had to crash for air travel to be as safe as it is today.
wm.annis August 21, 2015 at 10:19 am
I am surprised to see no reference to John Gall's General Systematics in this discussion, an entire study of systems and how they misbehave. I tend to read it from the standpoint of managing a complex IT infrastructure, but his work starts from human systems (organizations).
The work is organized around aphorisms - Systems tend to oppose their own proper function - The real world is what it is reported to the system - but one or two from this paper should be added to that repertoire. Point 7 seems especially important. From Gall, I have come to especially appreciate the Fail-Safe Theorem: "when a Fail-Safe system fails, it fails by failing to fail safe."
flora August 21, 2015 at 10:32 am
Instead of writing something long and rambling about complex systems being aggregates of smaller, discrete systems, each depending on a functioning and accurate information processing/feedback (not IT) system to maintain its coherence; and upon equally well functioning feedback systems between the parts and the whole - instead of that I'll quote a poem.
" Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold; "-Yates, "The Second Coming"
flora August 21, 2015 at 10:46 am
erm make that "Yeats", as in W.B.
Steve H. August 21, 2015 at 11:03 am
So, naturalists observe, a flea
Has smaller fleas that on him prey;
And these have smaller still to bite 'em,
And so proceed ad infinitum.– Swift
LifelongLib August 21, 2015 at 7:38 pm
IIRC in Robert A. Heinlein's "The Puppet Masters" there's a different version:
Big fleas have little fleas
Upon their backs to bite 'em,
And little fleas have lesser fleas
And so, ad infinitum.Since the story is about humans being parasitized and controlled by alien "slugs" that sit on their backs, and the slugs in turn being destroyed by an epidemic disease started by the surviving humans, the verse has a macabre appropriateness.
LifelongLib August 21, 2015 at 10:14 pm
Original reply got eaten, so I hope not double post. Robert A. Heinlein's (and others?) version:
Big fleas have little fleas
Upon their backs to bite 'em
And little fleas have lesser fleas
And so ad infinitum!Lambert Strether August 21, 2015 at 10:26 pm
The order Siphonoptera .
Oregoncharles August 21, 2015 at 10:59 pm
"And what rough beast, its hour come round at last,
slouches toward Bethlehem to be born?"I can't leave that poem without its ending – especially as it becomes ever more relevant.
Oldeguy August 21, 2015 at 11:02 am
Terrific post- just the sort of thing that has made me a NC fan for years.
I'm a bit surprised that the commentators ( thus far ) have not referred to the Financial Crisis of 2008 and the ensuing Great Recession as being an excellent example of Cook's failure analysis.Bethany McLean and Joe Nocera's
All The Devils Are Here www.amazon.com/All-Devils-Are-Here-Financial/dp/159184438X/
describes beautifully how the erosion of the protective mechanisms in the U.S. financial system, no single one of which would have of itself been deadly in its absence ( Cook's Point 3 ) combined to produce the Perfect Storm.
It brought to mind Garett Hardin's The Tragedy Of The Commons https://en.wikipedia.org/wiki/Tragedy_of_the_commons . While the explosive growth of debt ( and therefore risk ) obviously jeopardized the entire system, it was very much within the narrow self interest of individual players to keep the growth ( and therefore the danger ) increasing.
Ormond Otvos August 21, 2015 at 5:14 pm
Bingo. Failure of the culture to properly train its members. Not so much a lack of morality as a failure to point out that when the temple falls, it falls on Samson.
The next big fix is to use the US military to wall off our entire country, maybe include Canada (language is important in alliances) during the Interregnum.
Why is no one mentioning the Foundation Trilogy and Hari Seldon here?
Deloss August 21, 2015 at 11:29 am
My only personal experience with the crash of a complex, tightly-coupled system was the crash of the trading floor of a very big stock exchange in the early part of this century. The developers were in the computer room, telling the operators NOT to roll back to the previous release, and the operators ignored them and did so anyway. Crash!
In Claus Jensen's fascinating account of the Challenger disaster, NO DOWNLINK, he describes how the managers overrode the engineers' warnings not to fly under existing weather conditions. We all know the result.
Human error was the final cause in both cases.
Now we are undergoing the terrible phenomenon of global warming, which everybody but Republicans, candidates and elected, seems to understand is real and catastrophic. The Republicans have a majority in Congress, and refuse–for ideological and monetary reasons–to admit that the problem exists. I think this is another unfolding disaster that we can ascribe to human error.
Ormond Otvos August 21, 2015 at 5:17 pm
"Human error" needs unpacking here. In this discussion, it's become a Deus ex Humanitas. Humans do what they do because their cultural experiences impel them to do so. Human plus culture is not the same as human. That's why capitalism doesn't work in a selfish society.
Oldeguy August 21, 2015 at 5:52 pm
" capitalism doesn't work in a selfish society "
Very true, not nearly so widely realized as it should be, and the Irony of Ironies .BayesianGame August 21, 2015 at 11:48 am
But highly efficient systems are fragile. Formula One cars are optimized for speed and can only run one race.
Another problem with obsessing about (productive or technical) efficiency is that it usually means a narrow focus on the most measured or measurable inputs and outputs, to the detriment of less measurable but no less important aspects. Wages are easier to measure than the costs of turnover, including changes in morale, loss of knowledge and skill, and regard for the organization vs. regard for the individual. You want low cost fish? Well, it might be caught by slaves. Squeeze the measurable margins, and the hidden margins will move.
Donw August 21, 2015 at 3:18 pm
You hint at a couple fallacies.
1) Measuring what is easy instead of what is important.
2) Measuring many things and then optimizing all of them optimizes the whole.Then, have some linear thinker try to optimize those in a complex system (like any organization involving humans) with multiple hidden and delayed feedback loops, and the result will certainly be unexpected. Whether for good or ill is going to be fairly unpredictable unless someone has actually looked for the feedback loops.
IsabelPS August 21, 2015 at 1:02 pm
Very good.
It's nice to see well spelled out a couple of intuitions I've had for a long time. For example, that we are going in the wrong direction when we try to streamline instead of following the path of biology: redundancies, "dirtiness" and, of course, the king of mechanisms, negative feedback (am I wrong in thinking that the main failure of finance, as opposed to economy, is that it has inbuilt positive feedback instead of negative?). And yes, my professional experience has taught me that when things go really wrong it was never just one mistake, it is a cluster of those.
downunderer August 22, 2015 at 3:52 am
Yes, as you hint here, and I would make forcefully explicit: COMPLEX vs NOT-COMPLEX is a false dichotomy that is misleading from the start.
We ourselves, and all the organisms we must interact with in order to stay alive, are individually among the most complex systems that we know of. And the interactions of all of us that add up to Gaia are yet more complex. And still it moves.
Natural selection built the necessary stability features into our bodily complexity. We even have a word for it: homeostasis. Based on negative feedback loops that can keep the balancing act going. And our bodies are vastly more complex than our societies.
Society's problem right now is not complexity per se, but the exploitation of complexity by system components that want to hog the resources and to hell with the whole, quite exactly parallel to the behavior of cancer cells in our bodies when regulatory systems fail.
In our society's case, it is the intelligent teamwork of the stupidly selfish that has destroyed the regulatory systems. Instead of negative feedback keeping deviations from optimum within tolerable limits, we now have positive feedback so obvious it is trite: the rich get richer.
We not only don't need to de-complexify, we don't dare to. We really need to foster the intelligent teamwork that our society is capable of, or we will fail to survive challenges like climate change and the need to sensibly control the population. The alternative is to let natural selection do the job for us, using the old reliable four horsemen.
We are unlikely to change our own evolved selfishness, and probably shouldn't. But we need to control the monsters that we have created within our society. These monsters have all the selfishness of a human at his worst, plus several natural large advantages, including size, longevity, and the ability to metamorphose and regenerate. And as powerful as they already were, they have recently been granted all the legal rights of human citizens, without appropriate negative feedback controls. Everyone here will already know what I'm talking about, so I'll stop.
Peter Pan August 21, 2015 at 1:18 pm
Formula One cars are optimized for speed and can only run one race.
Actually I believe F1 has rules regarding the number of changes that can be made to a car during the season. This is typically four or five changes (replacements or rebuilds), so a F1 car has to be able to run more than one race or otherwise face penalties.
jo6pac August 21, 2015 at 1:41 pm
Yes, F-1 allows four power planets per-season it has been up dated lately to 5. There isn't anything in the air or ground as complex as a F-1 car power planet. The cars are feeding 30 or more engineers at the track and back home normal in England millions of bit of info per second and no micro-soft is not used but very complex programs watching every system in the car. A pit stop in F-1 is 2.7 seconds anything above 3.5 and your not trying hard enough.
Honda who pride themselves in Engineering has struggled in power planet design this year and admit they have but have put more engineers on the case. The beginning of this Tech engine design the big teams hired over 100 more engineers to solve the problems. Ferrari throw out the first design and did a total rebuild and it working.
This is how the world of F-1 has moved into other designs, long but a fun read.
http://www.wired.com/2015/08/mclaren-applied-technologies-f1/I'm sure those in F-1 system designs would look at stories like this and would come to the conclusion that these nice people are the gate keepers and not the future. Yes, I'm a long time fan of F-1. Then again what do I know.
The sad thing in F-1 the gate keepers are the owners CVC.
Brooklin Bridge August 21, 2015 at 3:25 pm
Interesting comment! One has to wonder why every complex system can't be treated as the be-all. Damn the torpedos. Spare no expense! Maybe if we just admitted we are all doing absolutely nothing but going around in a big circle at an ever increasing speed, we could get a near perfect complex system to help us along.
Ormond Otvos August 21, 2015 at 5:21 pm
If the human race were as important as auto racing, maybe. But we know that's not true ;->
jo6pac August 21, 2015 at 5:51 pm
In the link it's the humans of McLaren that make all the decisions on the car and the race on hand. The link is about humans working together either in real race time or designing out problems created by others.
Marsha August 21, 2015 at 1:19 pm
Globalization factors in maximizing the impact of Murphy's Law:
- Meltdown potential of a globalized 'too big to fail' financial system associated with trade imbalances and international capital flows, and boom and bust impact of volatile "hot money".
- Environmental damage associated with inefficiency of excessive long long supply chains seeking cheap commodities and dirty polluting manufacturing zones.
- Military vulnerability of same long tightly coupled 'just in time" supply chains across vast oceans, war zones, choke points that are very easy to attack and nearly impossible to defend.
- Consumer product safety threat of manufacturing somewhere offshore out of sight out of mind outside the jurisdiction of the domestic regulatory system.
- Geographic concentration and contagion of risk of all kinds – fragile pattern of horizontal integration – manufacturing in China, finance in New York and London, industrialized mono culture agriculture lacking biodiversity (Iowa feeds the world). If all the bulbs on the Christmas tree are wired in series, it takes only one to fail and they all go out.
Globalization is not a weather event, not a thermodynamic process of atoms and molecules, not a principle of Newtonian physics, not water running downhill, but a hyper aggressive top down policy agenda by power hungry politicians and reckless bean counter economists. An agenda hell bent on creating a tightly coupled globally integrated unstable house of cards with a proven capacity for catastrophic (trade) imbalance, global financial meltdown, contagion of bad debt, susceptibility to physical threats of all kinds.
Synoia August 21, 2015 at 1:23 pm
Any complex system contains non-linear feedback. Management presumes it is their skill that keeps the system working over some limited range, where the behavior approximates linear. Outside those limits, the system can fail catastrophically. What is perceived as operating or management skill is either because the system is kept in "safe" limits, or just happenstance. See chaos theory.
Operators or engineers controlling or modifying the system are providing feedback. Feedback can push the system past "safe" limits. Once past safe limits, the system can fail catastrophically Such failure happen very quickly, and are always "a surprise".
Synoia August 21, 2015 at 1:43 pm
All complex system contain non-linear feedback, and all appear manageable over a small rage of operation, under specific conditions.
These are the systems' safe working limits, and sometimes the limits are known, but in many case the safe working limits are unknown (See Stock Markets).
All systems with non-linear feedback can and will fail, catastrophically.
All predicted by Chaos Theory. Best mathematical filed applicable to the real world of systems.
So I'll repeat. All complex system will fail when operating outside safe limits, change in the system, management induced and stimulus induced, can and will redefine those limits, with spectacular results.
We hope and pray system will remain within safe limits, but greed and complacency lead us humans to test those limits (loosen the controls), or enable greater levels of feedback (increase volumes of transactions). See Crash of 2007, following repeal of Glass-Stegal, etc.
Brooklin Bridge August 21, 2015 at 4:05 pm
It's Ronnie Ray Gun. He redefined it as, "Safe for me but not for thee." Who says you can't isolate the root?
Synoia August 21, 2015 at 5:25 pm
Ronnie Ray Gun was the classic example of a Manager.
Where one can only say: "Forgive them Father, for they know not what they do"
Oregoncharles August 21, 2015 at 2:54 pm
Three quite different thoughts:
First, I don't think the use of "practitioner" is an evasion of agency. Instead, it reflects the very high level of generality inherent in systems theory. The pitfall is that generality is very close to vagueness. However, the piece does contain an argument against the importance of agency; it argues that the system is more important than the individual practitioners, that since catastrophic failures have multiple causes, individual agency is unimportant. That might not apply to practitioners with overall responsibility or who intentionally wrecked the system; there's a naive assumption that everyone's doing their best. I think the author would argue that control fraud is also a system failure, that there are supposed to be safeguards against malicious operators. Bill Black would probably agree. (Note that I dropped off the high level of generality to a particular example.)
Second, this appears to defy the truism from ecology that more complex systems are more stable. I think that's because ecologies generally are not tightly coupled. There are not only many parts but many pathways (and no "practitioners"). So "coupling" is a key concept not much dealt with in the article. It's about HUMAN systems, even though the concept should apply more widely than that.
Third, Yves mentioned the economists' use of "equilibrium." This keeps coming up; the way the word is used seems to me to badly need definition. It comes from chemistry, where it's used to calculate the production from a reaction. The ideal case is a closed system: for instance, the production of ammonia from nitrogen and hydrogen in a closed pressure chamber. You can calculate the proportion of ammonia produced from the temperature and pressure of the vessel. It's a fairly fast reaction, so time isn't a big factor.
The Earth is not a closed system, nor are economies. Life is driven by the flow of energy from the Sun (and various other factors, like the steady rain of material from space). In open systems, "equilibrium" is a constantly moving target. In principle, you could calculate the results at any given condition , given long enough for the many reactions to finish. It's as if the potential equilibrium drives the process (actually, the inputs do).
Not only is the target moving, but the whole system is chaotic in the sense that it's highly dependent on variables we can't really measure, like people, so the outcomes aren't actually predictable. That doesn't really mean you can't use the concept of equilibrium, but it has to be used very carefully. Unfortunately, most economists are pretty ignorant of physical science, so ignorant they insistently defy the laws of thermodynamics ("groaf"), so there's a lot of magical thinking going on. It's really ideology, so the misuse of "equilibrium" is just one aspect of the system failure.
Synoia August 21, 2015 at 5:34 pm
Really?
"equilibrium from chemistry, where it's used to calculate the production from a reaction"
That is certainly a definition in one scientific field.
There is another definition from physics.
When all the forces that act upon an object are balanced, then the object is said to be in a state of equilibrium.
However objects on a table are considered in equilibrium, until one considers an earthquake.
The condition for an equilibrium need to be carefully defined, and there are few cases, if any, of equilibrium "under all conditions."
nat scientist August 21, 2015 at 7:42 pm
Equilibrium ceases when Chemistry breaks out, dear Physicist.
Synoia August 21, 2015 at 10:19 pm
Equilibrium ceases when Chemistry breaks out
This is only a subset.
Oregoncharles August 21, 2015 at 10:56 pm
I avoided physics, being not so very mathematical, so learned the chemistry version – but I do think it's the one the economists are thinking of.
What I neglected to say: it's an analogy, hence potentially useful but never literally true – especially since there's no actual stopping point, like your table.
John Merryman August 21, 2015 at 3:09 pm
There is much simpler way to look at it, in terms of natural cycles, because the alternative is that at the other extreme, a happy medium is also a flatline on the big heart monitor. So the bigger it builds, the more tension and pressure accumulates. The issue then becomes as to how to leverage the consequences. As they say, a crisis should never be wasted. At its heart, there are two issues, economic overuse of resources and a financial medium in which the rent extraction has overwhelmed its benefits. These actually serve as some sort of balance, in that we are in the process of an economic heart attack, due to the clogging of this monetary circulation system, that will seriously slow economic momentum.
The need then is to reformulate how these relationships function, in order to direct and locate our economic activities within the planetary resources. One idea to take into consideration being that money functions as a social contract, though we treat it as a commodity. So recognizing it is not property to be collected, rather contracts exchanged, then there wouldn't be the logic of basing the entire economy around the creation and accumulation of notational value, to the detriment of actual value. Treating money as a public utility seems like socialism, but it is just an understanding of how it functions. Like a voucher system, simply creating excess notes to keep everyone happy is really, really stupid, big picture wise.
Obviously some parts of the system need more than others, but not simply for ego gratification. Like a truck needs more road than a car, but an expensive car only needs as much road as an economy car. The brain needs more blood than the feet, but it doesn't want the feet rotting off due to poor circulation either.
So basically, yes, complex systems are finite, but we need to recognize and address the particular issues of the system in question.Bob Stapp August 21, 2015 at 5:30 pm
Perhaps in a too-quick scan of the comments, I overlooked any mention of Nassim Nicholas Taleb's book, Antifragile. If so, my apologies. If not, it's a serious omission from this discussion.
Local to Oakland August 21, 2015 at 6:34 pm
Thank you for this.
I first wondered about something related to this theme when I first heard about just in time sourcing of inventory. (Now also staff.) I wondered then whether this was possible because we (middle and upper class US citizens) had been shielded from war and other catastrophic events. We can plan based on everything going right because most of us don't know in our gut that things can always go wrong.
I'm genX, but 3 out of 4 of my grandparents were born during or just after WWI. Their generation built for redundancy, safety, stability. Our generation, well. We take risks and I'm not sure the decision makers have a clue that any of it can bite them.
Jeremy Grimm August 22, 2015 at 4:23 pm
The just-in-time supply of components for manufacturing was described in Barry Lynn's book "Cornered" and identified as creating extreme fragility in the American production system. There have already been natural disasters that shutdown American automobile production in our recent past.
Everything going right wasn't part of the thinking that went into just-in-time parts. Everything going right - long enough - to steal away market share on price-point was the thinking. Decision makers don't worry about any of this biting them. Passing the blame down and golden parachutes assure that.
flora August 21, 2015 at 7:44 pm
This is really a very good paper. My direct comments are:
point 2: yes. provided the safety shields are not discarded for bad reasons like expedience or ignorance or avarice. See Glass-Steagall Act, for example.
point 4: yes. true of all dynamic systems.
point 7: 'root cause' is not the same as 'key factors'. ( And here the doctor's sensitivity to malpractice suits may be guiding his language.) It is important to determine key factors in order to devise better safety shields for the system. Think airplane black boxes and the 1932 Pecora Commission after the 1929 stock market crash.
Jay M August 21, 2015 at 9:01 pm
It's easy, complexity became too complex. And I can't read the small print. We are devolving into a world of happy people with gardens full of flowers that they live in on their cell phones.
Ancaeus August 22, 2015 at 5:22 am
There are a number of counter-examples; engineered and natural systems with a high degree of complexity that are inherently stable and fault-tolerant, nonetheless.
1. Subsumption architecture is a method of controlling robots, invented by Rodney Brooks in the 1980s. This scheme is modeled on the way the nervous systems of animals work. In particular, the parts of the robot exist in a hierarchy of subsystems, e.g., foot, leg, torso, etc. Each of these subsystems is autonomously controlled. Each of the subsystems can override the autonomous control of its constituent subsystems. So, the leg controller can directly control the leg muscle, and can override the foot subsystem. This method of control was remarkably successful at producing walking robots which were not sensitive to unevenness of the surface. In other words, the were not brittle in the sense of Dr. Cook. Of course, subsumption architecture is not a panacea. But it is a demonstrated way to produce very complex engineered systems consisting of many interacting parts that are very stable.
2. The inverted pendulum Suppose you wanted to build a device to balance a pencil on its point. You could imagine a sensor to detect the angle of the pencil, an actuator to move the balance point, and a controller to link the two in a feedback loop. Indeed, this is, very roughly, how a Segway remains upright. However, there is a simpler way to do it, without a sensor or a feedback controller. It turns out that if your device just moves the balance point sinusoidaly (e.g., in a small circle) and if the size of the circle and the rate are within certain ranges, then the pencil will be stable. This is a well-known consequence of the Mathieu equation. The lesson here is that stability (i.e., safety) can be inherent in systems for subtle reasons that defy a straightforward fault/response feedback.
3. Emergent behavior of swarms Large numbers of very simple agents interacting with one another can sometimes exhibit complex, even "intelligent" behavior. Ants are a good example. Each ant has only simple behavior. However, the entire ant colony can act in complex and effective ways that would be hard to predict from the individual ant behaviors. A typical ant colony is highly resistant to disturbances in spite of the primitiveness of its constituent ants.
4. Another example is the mammalian immune system that uses negative selection as one mechanism to avoid attacking the organism itself. Immature B cells are generated in large numbers at random, each one with receptors for specifically configured antigens. During maturation, if they encounter a matching antigen (likely a protein of the organism) then the B cell either dies, or is inactivated. At maturity, what is left is a highly redundant cohort of B cells that only recognize (and neutralize) foreign antigens.
Well, these are just a few examples of systems that exhibit stability (or fault-tolerance) that defies the kind of Cartesian analysis in Dr. Cook's article.
Marsha August 22, 2015 at 11:42 am
Glass-Steagall Act: interactions between unrelated functionality is something to be avoided. Auto recall: honking the horn could stall the engine by shorting out the ignition system. Simple fix is is a bit of insulation.
ADA software language: Former DOD standard for large scale safety critical software development: encapsulation, data hiding, strong typing of data, minimization of dependencies between parts to minimize impact of fixes and changes. Has safety critical software gone the way of the Glass-Steagall Act? Now it is buffer overflows, security holes, and internet protocol in hardware control "critical infrastructure" that can blow things up.
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marknesop.wordpress.com
Patient Observer, July 23, 2016 at 7:07 pmAn interesting article on John McCain. I disagree with the contention that McCain hid knowledge that many American POWs were left behind (undoubtedly some voluntarily choose to remain behind but not hundreds ). However, the article touched on some ideas that rang true:Today when we consider the major countries of the world we see that in many cases the official leaders are also the leaders in actuality: Vladimir Putin calls the shots in Russia, Xi Jinping and his top Politburo colleagues do the same in China, and so forth. However, in America and in some other Western countries, this seems to be less and less the case, with top national figures merely being attractive front-men selected for their popular appeal and their political malleability, a development that may eventually have dire consequences for the nations they lead. As an extreme example, a drunken Boris Yeltsin freely allowed the looting of Russia's entire national wealth by the handful of oligarchs who pulled his strings, and the result was the total impoverishment of the Russian people and a demographic collapse almost unprecedented in modern peacetime history.
An obvious problem with installing puppet rulers is the risk that they will attempt to cut their strings, much like Putin soon outmaneuvered and exiled his oligarch patron Boris Berezovsky.
One means of minimizing such risk is to select puppets who are so deeply compromised that they can never break free, knowing that the political self-destruct charges buried deep within their pasts could easily be triggered if they sought independence. I have sometimes joked with my friends that perhaps the best career move for an ambitious young politician would be to secretly commit some monstrous crime and then make sure that the hard evidence of his guilt ended up in the hands of certain powerful people, thereby assuring his rapid political rise.
The gist is that elite need a kill switch on their front men (and women).
http://www.unz.com/runz/american-pravda-when-tokyo-rose-ran-for-president/
Cortes , July 24, 2016 at 11:16 am
Seems to be a series of pieces dealing with Vietnam POWs: the following linked item was interesting and provided a plausible explanation: that the US failed to pay up agreed on reparationsmarknesop , July 24, 2016 at 12:29 pmhttp://www.unz.com/runz/american-pravda-relying-upon-maoist-professors-of-cultural-studies/
Remarkable and shocking. Wheels within wheels – this is the first time I have ever seen McCain's father connected with the infamous Board of Inquiry which cleared Israel in that state's attack on USS LIBERTY during Israel's seizure of the Golan Heights.Cortes , July 25, 2016 at 9:08 amAnother stunning article in which the author makes reference to his recent acquisition of what he considers to be a reliably authentic audio file of POW McCain's broadcasts from captivity. Dynamite stuff. The conclusion regarding aspiring untenured historians is quite downbeat:marknesop , July 25, 2016 at 10:40 amhttp://www.unz.com/runz/american-pravda-will-there-be-a-spotlight-sequel-to-the-killing-fields/
Also remarkable; fantastic. It's hard to believe, and a testament to the boldness of Washington dog-and-pony shows, because this must have been well-known in insider circles in Washington – anything so damning which was not ruthlessly and professionally suppressed and simply never allowed to become part of a national discussion would surely have been stumbled upon before now. Land of the Cover-Up.yalensis , July 25, 2016 at 3:40 pm
So, McCain was Hanoi Jack broadcasting from the Hanoi Hilton?
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Nov 30, 2017 | www.theamericanconservative.com
According to recent reports the Heritage Foundation, clearly the most established and many would say politically influential conservative think tank in Washington, is considering David Trulio, Lockheed Martin vice president and longtime lobbyist for the defense industry, to be its next president. While Heritage's connection to Washington's sprawling national security industry is already well-established, naming Trulio as its president might be seen as gilding the lily.If anything, reading this report made me more aware of the degree to which the "conservative policy community" in Washington depends on the whims and interests of particular donors.
And this relationship is apparently no longer something to be concealed or embarrassed by. One can now be open about being in the pocket of the defense industry. Trulio's potential elevation to Heritage president at what we can assume will be an astronomical salary, will no doubt grease the already well-oiled pipeline of funds from major contractors to this "conservative" foundation, which already operates with an annual disclosed budget of almost $100 million.
A 2009 Heritage Foundation report, " Maintaining the Superiority of America's Defense Industrial Base ," called for further government investment in aircraft weaponry for "ensuring a superior fighting force" and "sustaining international stability." In 2011, senior national security fellow James Carafano wrote " Five Steps to Defend America's Industrial Defense Base ," which complained about a "fifty billion dollar under-procurement by the Pentagon" for buying new weaponry. In 2016, Heritage made the case for several years of reinvestment to get the military back on "sound footing," with an increase in fiscal year 2016 described as "an encouraging start."
These special pleas pose a question: which came first, Heritage's heavy dependence on funds from defense giants, or the foundation's belief that unless we steadily increase our military arsenal we'll be endangering "international stability"? Perhaps the answer lies somewhere in the middle: someone who is predisposed to go in a certain direction may be more inclined to do so if he is being rewarded in return. Incidentally, the 2009 position paper seems to be directing the government to throw more taxpayer dollars to Boeing than to its competitor Lockheed. But it seems both defense giants have landed a joint contract this year to produce a new submersible for the Navy, so it may no longer be necessary to pick sides on that one at least. No doubt both corporations will continue to look after Heritage, which will predictably call for further increases, whether they be in aerospace or shipbuilding.
Although one needn't reduce everything to dollars and cents, if we're looking at the issues Heritage and other likeminded foundations are likely to push today, it's far more probable they'll be emphasizing the national security state rather than, say, opposition to gay marriage or the defense of traditional gender roles. There's lots more money to be made advocating for the former rather than the latter. In May 2013, Heritage sponsored a formal debate between "two conservatives" and "two liberals" on the issue of defense spending, with Heritage and National Review presenting the "conservative" side. I wondered as I listened to part of this verbal battle why is was considered "conservative" to call for burdening American taxpayers with massive increases in the purchase of Pentagon weaponry and planes that take 17 years to get off the ground.
Like American higher education, Conservatism Inc. is very big business. Whatever else it's about rates a very far second to keeping the money flowing. "Conservative" positions are often simply causes for which foundations and media enterprises that have the word "conservative" attached to them are paid to represent. It is the label carried by an institution or publication, not necessarily the position it takes, that makes what NR or Heritage advocates "conservative."
In any event, Mr. Trulio won't have to travel far if he takes the Heritage helm. He and his corporation are already ensconced only a few miles away from Heritage's Massachusetts Avenue headquarters, if the information provided by Lockheed Martin is correct. It says: "Headquartered in Bethesda, Maryland, Lockheed Martin is a global security and aerospace company that employs approximately 98,000 people worldwide and is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services." A company like that can certainly afford to underwrite a think tank -- if the price is right.
Paul Gottfried is Raffensperger Professor of Humanities Emeritus at Elizabethtown College, where he taught for twenty-five years. He is a Guggenheim recipient and a Yale PhD. He writes for many websites and scholarly journals and is the author of thirteen books, most recently Fascism: Career of a Concept and Revisions and Dissents . His books have been translated into multiple languages and seem to enjoy special success in Eastern Europe.
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Nov 30, 2017 | www.unz.com
Hundreds of other princes and gentlemen were tortured, too, until they agreed to surrender their ill-gotten assets, 70% of all they have. As I write, and as you read these lines, the torture goes on, and so far MBS has already milked his victims of hundreds of billions $$ worth of cash and assets.
"An Extortion racket", you'll exclaim. Perhaps MBS watched The Godfather in his impressionable youth and was impressed by efficiency of their methods. However, he has solved, or rather is in the process of solving, the problem of solvency.
Perhaps this is the method to be advised to Trump and Putin, as well as to other leaders? If the neoliberal dogma forbids taxing, if the offshore are sacred, what remains for a diligent leader but a plush five-star hotel and a band of experienced torturers?
But surely, the torturer will be condemned and ostracised by human rights' defenders! Not at all. Not a single voice, neither from liberal left nor from authoritarian right objected to this amazing deed of mass torture and extortion. While the co-owner of Twitter has been subjected to daily beatings, the prime voice of liberal conscience, Tom Friedman of the New York Times, eulogised MBS as the bearer of progress. In an article as panegyric as they come, titled Saudi Arabia's Arab Spring, at Last and subtitled "The crown prince has big plans for his society".
Tom Friedman does not use the word "extortion", saying that [MBS's] "government arrested scores of Saudi princes and businessmen on charges of corruption and threw them into a makeshift gilded jail -- the Riyadh Ritz-Carlton -- until they agreed to surrender their ill-gotten gains." No condemnation at all! Can you imagine what he would say if Putin were to arrest his oligarchs "until they agreed to surrender their ill-gotten gains"?
I believe one line in Friedman's eulogy, saying that the Saudis are content with the extortion act: "the mood among Saudis I spoke with was: "Just turn them all upside down, shake the money out of their pockets and don't stop shaking them until it's all out!" Moreover, I am sure the Americans would applaud if their billionaires were to get the MBS treatment. The Russians were mighty pleased when Putin locked up the oligarch Khodorkovsky, and complained that he was the only one to be jailed. They would love to see the whole lot of oligarchs who plundered Russia through manifestly fraudulent, staged auctions under American advisers in Yeltsin's days, to be shaken "until it's all out".
Not only the media is supportive of the extortion scheme. US Treasury Secretary Steven Mnuchin told CNBC: "I think that the Crown Prince [Mohammed bin Salman] is doing a great job at transforming the country." President Trump blessed MBS along similar lines. Not a word of condemnation came out of President Putin, either. Even Al Jazeera, though reporting the extortion in a matter-of-fact way, didn't make too much out of it.
There is a veritable conspiracy around the MBS actions, a conspiracy embracing the media and governments. He kidnapped the Lebanese Prime Minister, placed him under arrest, took away his telephone and watch, forced him to read on TV a resignation letter composed by MBS people, – and the response of the world has been subdued. He bombed Yemen, causing hundreds of thousands to die of cholera and famine, and the world does not give a damn. Do you remember the response when the Russians bombed Aleppo? None of this indignation accompanies MBS's war on Yemen.
But the blanket of silence covering the Extortion Racket beats all. Usually, the global media mainstream system propagates and amplifies the news in a game of rebounding agencies that indirectly end up also to maximize headline sales, wrote the Italian journalist Claudio Resta. But in this case, the important and spectacular news made no headlines. In our Society of the Spectacle , failing to exploit the "spectacular" is a waste of the most valuable resource for the media.
The potential for a great spectacle is all here. The arrest of dignitaries and princes of blood, including the famous Al-Walid bin al-Talal, well-known investor and Bakr bin Laden, brother of the most notorious Osama would normally feed the media for days. Add to it the marvelous setting of the glorious hotel on the verge of the desert. Make it even more dramatic by open rocket fire on the escaping helicopter of Prince Mansour bin Muqrin , killing him and the other dignitaries who tried to flee.
Such a story, so brilliant and spectacular, with the colour and costume of a Middle Eastern monarchy, could sell newspapers for a week at least. But it was followed by deafening silence.
The same media that overwhelms us with the flood of details and opinions in a case of human rights violations in Russia or China in this case shows off an Olympic indifference to the fate of the princes and billionaires, unjustly and arbitrarily arrested and tortured in a country of no constitution or Habeas Corpus. The United Nations joins in the conspiracy of silence.
This is probably the most unusual aspect of the story, reminiscent of The Dog that Didn't Bark by Sir Arthur Conan Doyle. In that Sherlock Holmes story, a dog did not bark during the night when a race horse was removed from a stable, and that indicated that the thief was the dog's master.
In the case of MBS, the media dog keeps silent. It means that its mighty mega-owner, whom I called The Masters of Discourse, allowed and authorised the racket. We witness a unique media event, bordering with revelation. How could it be that a prince of a third-league state would be allowed the licence to kidnap prime-ministers, kill princes by ground-to-air missiles, keep and torture great businessmen and dignitaries with impunity and the media would keep mum?
Is it fear of the robber barons that the example of MBS extorting billions from his super-rich will be picked up and acted upon in their own lands? Perhaps.
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Nov 30, 2017 | www.zerohedge.com
Former Goldmanite and current Minneapolis Fed president, Neel Kashkari, conducted another #AskNeel session on Twitter where the dovish FOMC voter (he was the only one to dissent to the Fed's rate hike decision earlier this year) received numerous questions. Among them was the following one from Zero Hedge:
#AskNeel You have admitted the Fed has a "third mandate" and are worried about financial instability. What do you look at to gauge "instability" and what is the biggest S&P drop the Fed will accept before intervening
-- zerohedge (@zerohedge) November 29, 2017
His response:
Our job is not to protect investors. Tech bubble bursting didn't cause crisis - only mild recession. We don't see leverage building across the economy the way it did in housing run-up. If stocks correct - fine. Need to worry about what would trigger a real crisis. #AskNeel https://t.co/Wl7Pv1BX18
-- Neel Kashkari (@neelkashkari) November 29, 2017
The answer echoed a similar response from back in March , when he claimed that he doesn't "care about stock market fall itself. Care abt potential financial instability. Stock market drop unlikely to trigger crisis."
Needless to say, Kashkari's answer was token, superficial and condescending: while he is right that the tech bubble bursting didn't cause a crisis, the Fed's dramatic easing in response to the bursting of the tech bubble bursting lay the foundations for the housing and credit bubble; in other words, the Fed responded to one bubble by creating an even bigger bubble, and the bursting of that bubble in 2007/2008 did cause a crisis: the biggest financial crisis since the Great Depression to be precise. And, in turn, the bursting of the current global financial bubble - in which the Fed has been joined by all other central banks to inject $20 trillion in global liquidity, or a third of global GDP - and is the biggest in history, will have a far more disastrous outcome than the last one.
Kashkari also said that "we don't see leverage building across the economy the way it did in housing run-up", which of course is a surprisingly naive way of looking at leverage, especially following last night's explanation from Fasakanara that when one takes into account ehe world's vol-sellers, it's all just one giant, $22 trillion position shorting volatility with record gama and all-time high leverage, both explicit and synthetic. Which also makes his next statement that the Fed needs "to worry about what would trigger a real crisis" especially bizarre: we now live in a world in which the market itself, thanks to QE and NIRP, has become systemic risk (see ""It's All One Single, Giant $22 Trillion Position": How Market Risk Became Systemic Risk ").
The fact that, as Kashkari confirms, the Fed is completely oblivious to its footprint and impact in the market should be terrifying to anyone. Well, anyone but not traders because despite what Kashkari also claimed, namely that " If stocks correct - fine ", one thing we can be certain of is that the moment stocks have a 5-10% swoon, the Fed will be right back assuring traders that it will ease back on its tightening, if not launch QE4 (right, James Bullard?)
Neel..I have respect for u but I know what I saw in August 2015..market dropped 7-8% and fed speak became "the case for tightening is less compelling"...
-- jim iuorio (@jimiuorio) November 29, 2017
But wait, it gets better, because in the very next question, immediately after stating that the Fed's job is not to protect investors, in response to a question whether the Fed creates moral hazard by keeping rates extra low, Kashkari answers that " If we raised interest rates to drive down the stock market, how does that help workers/wages/employment? " Or investors, for that matter. But the point is that the Fed quite clearly is intent on keeping stocks high.
The punchline: his very next statement: "If Greenspan had acted on his irrational exuberance call the economic costs may have been high."
We pay close attention to leverage across asset classes and economy. If we raised interest rates to drive down the stock market, how does that help workers/wages/employment? If Greenspan had acted on his irrational exuberance call the economic costs may have been high. #AskNeel https://t.co/hfDycYCXkg
-- Neel Kashkari (@neelkashkari) November 29, 2017
Here's a thought: if Greenspan had acted on his "irrational exuberance" call, there would have been pain, yes, but there would never be a tech bubble, and there would never be a global financial crisis, Lehman, AIG or trillions and trillions in central bank liquidity keeping the global financial system propped up now. In fact, Kashkari's statement once again demonstrates just how utterly clueless the "macroprudential regulators" at the Fed truly are.
* * *
There were some other tangential, but notable insights from the Minneapolis Fed president. One was his accurate observation that the Fed's constantly wrong dot plots have destroyed the Fed's credibility:
I'm not a fan of the dot plot. Forward guidance is a wonderful tool. Forward misguidance may do harm and undermine our credibility . I would rather only give guidance when we are pretty sure about the path forward
In response to whether the Fed's ZIRP was responsible for "zombie companies" in the shale patch and the record glut of oil inventory, the former Goldmanite was non-commital :
I think low interest rates brought down costs for people and businesses to invest - across sectors. That is what they were designed to do. But commodity markets always have cycles of under and overinvestment.
When asked how US investors are supposed to compete with foreign buyers of US stocks, including such buyers as the Swiss National Bank which is price-indescriminate as it creates money out of thin air, Kashkari's response :
It is a global market for investors. I don't think US economic growth would be stronger if we forbade foreign investment. If we can get job and wage growth up, that will help regular Americans make ends meet and save for their futures.
That Kashkari explicitly ignored the stated implication, namely that foreign central banks buying US stocks has led to a giant asset bubble, was one more warning either how clueless or how devious and premeditated this entire asset reflation experiment truly is.
Kashkari was also asked if the Fed would "ever consider forgiving the Treasury debt on its books?" to which the answer - sadly for the Magic Money Treers who have no grasp of elementary finance - was "No. That would violate our independence and likely cause high inflation as people lost confidence in the Fed's independence. "
Among the other interesting exchanges was a question if the Fed plans on using blockchain in the future, where the response was that "researches around the Fed System are looking at it (and other fintech developments). Too soon to know how and if it will be used by the Fed."
Kashkari also touched on inflation price targeting: when asked "What level of inflation would be a reason to 'tap the brakes'?" He responded that, as price targeting would suggest, "2% core PCE on a 12-month basis would be a good place to start. We've been 1.3% for 5+ years so we should be comfortable at 2.7% for 5+ years. That's what we are saying when we call it a target and not a ceiling." In other words, Kashkari supports doubling the rate of core inflation for the next 5 years.
Finally when asked "at what point does the flattening of the Treasury curve become a concern for the Fed?" Kashkari responded that "it's a concern now. We r raising rates, driving the front end up, meanwhile inflation expectations r low keeping the long end anchored. The more we commit to driving rates higher (regardless of data), the more we risk pressuring inflation expectations to the downside." He has good reason to be concerned: the flatter - and eventually inverted - the curve gets, the more the market is telling the Fed what should be obvious to everyone, if not Kashkari: that the Fed has lost control, as Citi warned last week .
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Mar 19, 2017 | finance.yahoo.com
CNBC
Yellen's exit may prompt the Fed to pare its balance sheet sooner rather than later, Goldman says
Yuri Gripas | Reuters
It's often said that good things come to those who wait - but a bloated $4.5 trillion balance sheet might be a notable exception to that rule.
With the Federal Reserve facing a Herculean conundrum in unwinding its crisis-era monetary policy - and a likely leadership transition on the horizon - Goldman Sachs (GS) suggested on Saturday the central bank could move early to reduce the vast sums of government and mortgage-backed securities (MBS) it holds on its books.
In a research note to clients, the bank pointed to the likelihood that President Donald Trump may "reshape the leadership" of the Federal Open Market Committee (FOMC), the Fed's powerful policy-making body, as the terms of Fed Chair Janet Yellen and Vice Chair Stanley Fischer expire in early 2018.
"This could be important for balance sheet policy because many Republican-leaning economists have criticized quantitative easing (QE) and have expressed a preference for rapid balance sheet rundown, perhaps even through asset sales," wrote Daan Struyven, a Goldman economist.
If the new appointments-especially the new chair-are thought to favor aggressive balance sheet normalization, perhaps even including asset sales, and if all decisions are left up to the incoming team, financial markets might experience heightened uncertainty during the transition."
Goldman suggested there was a "strong 'risk management' case for an announcement of very gradual balance sheet runoff later this year," because of the political risk associated with new leadership at the Fed.
"Our forecast is that the discussion around reinvestment continues for most of this year and the plan is formally announced in December 2017," Struyven said. "At that meeting, we expect the committee to hold the funds rate steady after hiking in both June and September. We expect the quarterly hikes to resume in March 2018."
The economist harked back to 2013's "taper tantrum," in which markets reacted the Fed's suggestions of tighter monetary policy by sending bond yields surging and stocks reeling - albeit temporarily.
A potential fire sale of Treasurys and mortgage-backed securities by the Fed "could have significantly more adverse effects on financial conditions than gradual runoff, and the mere risk of such an outcome might set up another 'taper tantrum,' " Struyven added.
'The uncertainty is substantial'
As the central bank begins a campaign to tighten benchmark interest rates - making a quarter-point hike just last week - it's renewed a debate over how to unwind the Fed's massive bond buying program.
Some market observers have long argued that the Fed has distorted financial conditions with QE, and the central bank faces a huge task trying to pare down its bloated balance sheet.
"The bigger the Fed's credit footprint, the more it interferes with the efficient employment and pricing of credit," wrote George Selgin, a senior fellow and director of the Center for Monetary and Financial Alternatives at the libertarian-leaning Cato Institute, in a blog post last month.
"By directing a large share of savings to purchases of longer-term MBS and Treasury securities, for example, the Fed has artificially raised both the prices of those securities, and the importance of the housing market and the federal government relative to the rest of the U.S. economy," Selgin wrote. "It has also dramatically increased its portfolio's duration gap and, by so doing, the risk that it will suffer losses should it sell assets before they mature."
On Friday, Minneapolis Federal Reserve Bank President Neel Kashkari, the lone dissenter against the U.S. central bank's decision last week to raise interest rates, the U.S. economy is still falling short on employment and inflation.
Kashkari, an alumnus of both Goldman Sachs and the U.S. Treasury who oversaw the government's Temporary Asset Relief Program (TARP) during the financial crisis, believes the Fed should wait on raising interest rates until it publishes a detailed plan for how and when it will reduce its $4.5 trillion balance sheet.
Goldman set forth two scenarios under which the Fed could begin trimming its balance sheet. Under an "early start, passive runoff" scenario, the bank said the Fed "gradually tapers reinvestment in December 2017 over 10 months but does not sell assets."
Conversely, under a "late start, active sales" scenario, Goldman said the Fed could cease reinvesting in bonds in July 2018 "without tapering and actively sells $40bn of assets per month."
Under the latter, the Fed could shrink its balance sheet by about $250 billion per quarter starting in the second half of next year, "with similar contributions from maturing assets and active sales," the bank added.
However, neither scenario is without its risks, Goldman's economist wrote: "While our baseline estimate suggests relatively little tightening from balance sheet rundown, the uncertainty is substantial. The 2013 'taper tantrum' also provides a reminder that the impact of balance sheet policy on financial conditions is uncertain and could be larger than our baseline estimate."
JF -> Anachronism ... Reply Monday, March 20, 2017 at 07:39 AM
Every time the Fed deals with the financial asset trading marketplaces the private parties wish to make a profit, no wonder Goldman is shilling to get the more valuable Fed holdings 'sold' to these parties.
No article on reserves or Fed asset holdings is legitimate unless it also discusses the use of administrative offset with Treasury (whether the bonds are mature and as a result, redeemable at that time, or not, they could all be offset with Treasury now).
The Fed has a lot it can do with the assets they bought with newly created money, but subsidizing the money center banks once again ought to be low on the list (moral hazard rewarded again?). The asset-handling plans should be pursued only after Treasury coordination talks are settled and according to well discussed, publicly known plans.
It is not clear to me who the public should trust here, so open public programming should be expected and press involvement sought after by the Fed. Look at the magnitudes here, no one should be looking the other way on this.
RGC -> JF... March 20, 2017 at 07:55 AM
1. The Fed does QE, buying bonds and MBS and thus raising asset prices.
2. Bond traders sell.
3. The Fed raises interest rates, thus lowering bond prices.
4. The Fed reduces QE, selling bonds and MBS and thus lowering prices.
5. Bond traders buy.
6. The Fed reverses course and lowers interest rates, thus raising bond prices.
7. Bond traders sell.
The Fed trades with public money, the bond traders trade with private money.
JF -> RGC... March 20, 2017 at 09:30 AM
RGC what is your point except to note that private interests sweep monies out of private positions in order to create the cash to buy the bond being offered by the Fed should they sell some. It is a way to sweep excess monies out of the economic system, though that is not a completed end-game unless the Fed destroys the money or it is remitted to Treasury where it covers other claims for payment (reducing the need to borrow anew) turnstiling the monies back into the economy.
It is simpler with regard to Treasury to have both sides agree to osset their position.
But offsets means that Treasury offers none or fewer bonds for sale to outsude interests, including China and other govts or within the banks or elsewhere.
Is the Fed ready to do all of these approaches, and is it coordinated with the oublic's govt via Treasury agreement?
The Fed has instruments with 8 percent coupons, I just don't like the idea of them selling these to the banking segment, at a price that allows them to profit, with little risk, especially when you consider that they were the ones who caused the financial crisis in the first place.
It will be interesting to see what the Feds do, what they do with the cash they get, and what Treasury and the Trump Administration does as more cash remittances come in (and why was this not done to help the Obama Admin look good fiscally before?).
RGC -> to JF... March 20, 2017 at 10:06 AM
I was trying to demonstrate the synergy between Wall Street and the Fed.
You can look at the Fed as an economy-regulating institution, but you can also look at it as a pipeline from public wealth to private wealth.
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The National Interest
The rise of technologies such as 3-D printing and advanced robotics means that the next few decades for Asia's economies will not be as easy or promising as the previous five.
OWEN HARRIES, the first editor, together with Robert Tucker, of The National Interest, once reminded me that experts-economists, strategists, business leaders and academics alike-tend to be relentless followers of intellectual fashion, and the learned, as Harold Rosenberg famously put it, a "herd of independent minds." Nowhere is this observation more apparent than in the prediction that we are already into the second decade of what will inevitably be an "Asian Century"-a widely held but rarely examined view that Asia's continued economic rise will decisively shift global power from the Atlantic to the western Pacific Ocean.
No doubt the numbers appear quite compelling. In 1960, East Asia accounted for a mere 14 percent of global GDP; today that figure is about 27 percent. If linear trends continue, the region could account for about 36 percent of global GDP by 2030 and over half of all output by the middle of the century. As if symbolic of a handover of economic preeminence, China, which only accounted for about 5 percent of global GDP in 1960, will likely surpass the United States as the largest economy in the world over the next decade. If past record is an indicator of future performance, then the "Asian Century" prediction is close to a sure thing.
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foreignpolicy.com
Moscow may no longer be a superpower, but its revanchist politics are unsettling the international order. How should Donald Trump deal with Vladimir Putin?
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It did not have to be this way. Twenty-five years ago, the dissolution of the Soviet Union marked not only the end of the Cold War but also the beginning of what should have been a golden era of friendly relations between Russia and the West. With enthusiasm, it seemed, Russians embraced both capitalism and democracy. To an extent that was startling, Russian cities became Westernized. Empty shelves and po-faced propaganda gave way to abundance and dazzling advertisements.
Contrary to the fears of some, there was a new world order after 1991. The world became a markedly more peaceful place as the flows of money and arms that had turned so many regional disputes into proxy wars dried up. American economists rushed to advise Russian politicians. American multinationals hurried to invest.
Go back a quarter century to 1991 and imagine three more or less equally plausible futures. First, imagine that the coup by hard-liners in August of that year had been more competently executed and that the Soviet Union had been preserved. Second, imagine a much more violent dissolution of the Soviet system in which ethnic and regional tensions escalated much further, producing the kind of "super-Yugoslavia" Kissinger has occasionally warned about. Finally, imagine a happily-ever-after history, in which Russia's economy thrived on the basis of capitalism and globalization, growing at Asian rates.
Russia could have been deep-frozen. It could have disintegrated. It could have boomed. No one in 1991 knew which of these futures we would get. In fact, we got none of them. Russia has retained the democratic institutions that were established after 1991, but the rule of law has not taken root, and, under Vladimir Putin, an authoritarian nationalist form of government has established itself that is notably ruthless in its suppression of opposition and criticism. Despite centrifugal forces, most obviously in the Caucasus, the Russian Federation has held together. However, the economy has performed much less well than might have been hoped. Between 1992 and 2016, the real compound annual growth rate of Russian per capita GDP has been 1.5 percent. Compare that with equivalent figures for India (5.1 percent) and China (8.9 percent).
Today, the Russian economy accounts for just over 3 percent of global output, according to the International Monetary Fund's estimates based on purchasing power parity. The U.S. share is 16 percent. The Chinese share is 18 percent. Calculated on a current dollar basis, Russia's GDP is less than 7 percent of America's. The British economy is twice the size of Russia's.
Moreover, the reliance of the Russian economy on exported fossil fuels - as well as other primary products - is shocking. Nearly two-thirds of Russian exports are petroleum (63 percent), according the Observatory of Economic Complexity.
... ... ...
Nevertheless, it is important to remember what exactly Putin said on that occasion. In remarks that seemed mainly directed at the Europeans in the room, he warned that a "unipolar world" - meaning one dominated by the United States - would prove "pernicious not only for all those within this system but also for the sovereign itself." America's "hyper use of force," Putin said, was "plunging the world into an abyss of permanent conflicts." Speaking at a time when neither Iraq nor Afghanistan seemed especially good advertisements for U.S. military intervention, those words had a certain force, especially in German ears.
Nearly 10 years later, even Putin's most splenetic critics would be well-advised to reflect for a moment on our own part in the deterioration of relations between Washington and Moscow. The Russian view that the fault lies partly with Western overreach deserves to be taken more seriously than it generally is.
Is the West to blame?
If I look back on what I thought and wrote during the administration of George W. Bush, I would say that I underestimated the extent to which the expansion of both NATO and the European Union was antagonizing the Russians.
Certain decisions still seem to me defensible. Given their experiences in the middle of the 20th century, the Poles and the Czechs deserved both the security afforded by NATO membership (from 1999, when they joined along with Hungary) and the economic opportunities offered by EU membership (from 2004). Yet the U.S. decision in March 2007 to build an anti-ballistic missile defense site in Poland along with a radar station in the Czech Republic seems, with hindsight, more questionable, as does the subsequent decision to deploy 10 two-stage missile interceptors and a battery of MIM-104 Patriot missiles in Poland. Though notionally intended to detect and counter Iranian missiles, these installations were bound to be regarded by the Russians as directed at them. The subsequent deployment of Iskander short-range missiles to Kaliningrad was a predictable retaliation.
A similar act of retaliation followed in 2008 when, with encouragement from some EU states, Kosovo unilaterally declared independence from Serbia. In response, Russia recognized rebels in South Ossetia and Abkhazia and invaded those parts of Georgia. From a Russian perspective, this was no different from what the West had done in Kosovo.
The biggest miscalculation, however, was the willingness of the Bush administration to consider Ukraine for NATO membership and the later backing by the Obama administration of EU efforts to offer Ukraine an association agreement. I well remember the giddy mood at a pro-European conference in Yalta in September 2013, when Western representatives almost unanimously exhorted Ukraine to follow the Polish path. Not nearly enough consideration was given to the very different way Russia regards Ukraine nor to the obvious West-East divisions within Ukraine itself. This was despite an explicit warning from Putin's aide Sergei Glazyev, who attended the conference, that signing the EU association agreement would lead to "political and social unrest," a dramatic decline in living standards, and "chaos."
This is not in any way to legitimize the Russian actions of 2014, which were in clear violation of international law and agreements. It is to criticize successive administrations for paying too little heed to Russia's sensitivities and likely reactions.
"I don't really even need George Kennan right now," President Obama told the New Yorker's David Remnick in early 2014. The very opposite was true. He and his predecessor badly needed advisors who understood Russia as well as Kennan did. As Kissinger has often remarked, history is to nations what character is to people. In recent years, American policymakers have tended to forget that and then to wax indignant when other states act in ways that a knowledge of history might have enabled them to anticipate. No country, it might be said, has had its character more conditioned by its history than Russia. It was foolish to expect Russians to view with equanimity the departure into the Western sphere of influence of the heartland of medieval Russia, the breadbasket of the tsarist empire, the setting for Mikhail Bulgakov's The White Guard, the crime scene of Joseph Stalin's man-made famine, and the main target of Adolf Hitler's Operation Barbarossa.
One might have thought the events of 2014 would have taught U.S. policymakers a lesson. Yet the Obama administration has persisted in misreading Russia. It was arguably a mistake to leave Germany and France to handle the Ukraine crisis, when more direct U.S. involvement might have made the Minsk agreements effective. It was certainly a disastrous blunder to give Putin an admission ticket into the Syrian conflict by leaving to him the (partial) removal of Bashar al-Assad's chemical weapons. One of Kissinger's lasting achievements in the early 1970s was to squeeze the Soviets out of the Middle East. The Obama administration has undone that, with dire consequences. We see in Aleppo the Russian military for what it is: a master of the mid-20th-century tactic of winning victories through the indiscriminate bombing of cities.
Left: Free Syrian Army fighters fire an anti-aircraft weapon in Aleppo on Dec. 12. (Photo by AFP/Getty Images); Right: Far-right Ukrainian activists attack the office of the pro-Russian movement "Ukrainian Choice" in Kiev on Nov. 21. (Photo by SERGEI SUPINSKY/AFP/Getty Images)
What price peace?
Yet I remain to be convinced that the correct response to these errors of American policy is to swing from underestimating Russia to overestimating it. Such an approach has the potential to be just another variation on the theme of misunderstanding.
It is not difficult to infer what Putin would like to get in any "great deal" between himself and Trump. Item No. 1 would be a lifting of sanctions. Item No. 2 would be an end to the war in Syria on Russia's terms - which would include the preservation of Assad in power for at least some "decent interval." Item No. 3 would be a de facto recognition of Russia's annexation of Crimea and some constitutional change designed to render the government in Kiev impotent by giving the country's eastern Donbass region a permanent pro-Russian veto power.
What is hard to understand is why the United States would want give Russia even a fraction of all this. What exactly would Russia be giving the United States in return for such concessions? That is the question that Trump's national security team needs to ask itself before he so much as takes a courtesy call from the Kremlin.
There is no question that the war in Syria needs to end, just as the frozen conflict in eastern Ukraine needs resolution. But the terms of peace can and must be very different from those that Putin has in mind. Any deal that pacified Syria by sacrificing Ukraine would be a grave mistake.
President Obama has been right in saying that Russia is a much weaker power than the United States. His failure has been to exploit that American advantage.
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The Russian Question itself can be settled another day. But by reframing the international order on the basis of cooperation rather than deadlock in the Security Council, the United States at least poses the question in a new way. Will Russia learn to cooperate with the other great powers? Or will it continue to be the opponent of international order? Perhaps the latter is the option it will choose. After all, an economic system that prefers an oil price closer to $100 a barrel than $50 benefits more than most from escalating conflict in the Middle East and North Africa - preferably conflict that spills over into the oil fields of the Persian Gulf.
However, if that is the goal of Russia's strategy, then it is hard to see for how much longer Beijing and Moscow will be able to cooperate in the Security Council. Beijing needs stability in oil production and low oil prices as much as Russia needs the opposite. Because of recent tensions with the United States, Russia has been acquiescent as the "One Belt, One Road" program extends China's economic influence into Central Asia, once a Russian domain. There is potential conflict of interest there, too.
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Jun 05, 2015 | economistsview.typepad.com
Willem Buiter, Ebrahim Rahbari, Joe Seydl at Vox EU:Secular stagnation: The time for one-armed policy is over: Stagnation is gripping several of the world's largest economies and many view this as secular, not transient.
This column argues that many economies need both demand-side stimulus and supply-side reform to close the output gap and restore potential-output growth. A combined monetary-fiscal stimulus – i.e. helicopter money – is needed to close the output gap, and this should be accompanied with extensive debt restructuring, policies to halt rising inequality, and additional public infrastructure investment.
Selected Skeptical Comments
Sandwichman -> anne:
Workers, collectively, have a single, incontrovertible lever for effecting change -- withholding their labor power. Nothing -- not even imprisonment or death -- can prevent workers from withholding their labor power! Kill me and see how much work you can get out of me.
This is the elementary fact that the elites don't want workers to know. "It is futile!" "It is a fallacy!" "You will only hurt yourselves!"
Once one comprehends the strategic importance of making the withholding of labor power taboo, everything else falls into place. Economics actually makes sense as a persuasive discourse to dissuade from the withholding of labor power.
Above all, ideology must conceal, denigrate, diminish, slander and distract from the ONE effective strategy that workers collectively have. This is the spectre that haunts all economics.
Dan Kervick:
Good stuff by Buiter et al, but here are some suggested additions to the litany of supply side woes:
1. Ineffective economic organization, both inside corporate firms and outside of them.
a. Many corporations are now quite dysfunctional as engines of long-term value creation – but not dysfunctional as vehicles of short-term value extraction for their absurdly over-incentivized key stakeholders.
b. The developed world societies are facing an extreme failure of strategic economic leadership, at both the national and global level, and at both the formal level of government and the informal level of visionary public intellectuals and industrial "captains". There is no coherent consensus on which way lies the direction of progress. Since nobody is setting the agenda for what the future looks like, risk trumps confidence everywhere and nobody knows what to invest in.
2. Dyspeptic dystopianism. The intellectual culture of our times is polluted by obsessive, nail-biting negativity and demoralizing storylines preaching hopelessness: the robots are going to destroy all the jobs; the Big One is going to bury everything, the real "neutral" interest rate is preposterously negative, etc. etc. etc. With so much doom and gloom in the air, there is no reason to invest wealth, rather than consume it. Robert Schiller touched on this at a recent talk at LSE.
3. The popular culture of 2015 America is – as in so many other areas - a tale of two cultural cities. For many of those who consume the bottom layers of it, what they are ingesting is a barbarous Pink Slime cultural sludge that makes them stupid, frivolous, dependent, impulsive and emotionally erratic – something like perpetual 15 year olds. People like this can be duped by the most shallow demagoguery and consumerist manipulation, and can't organize themselves to pursue their enlightened self-interest. Enlightened artists and cultural custodians need to step up, organize and find a way to seize the American mind back from the clutches of consumer capitalist garbage-mongers and philistine society-wreckers.
4. Laissez faire backwardness. We are struggling under left-right-center conspiracy of Pollyanna freedom fools, who despite their constant kvetching at one another all share in common the view that progress is self-organizing.
On the left we have the Chomsky and Graeber-style "libertarian socialists" who are convinced we could have a functioning and prosperous society in which seemingly every action is voluntary and spontaneous, nobody is ever compelled to do anything that their delicate little hearts don't throb to do, and who seemingly have no idea of what it takes even to run a carrot farm.
On the right, we have the clueless paranoid libertarians who think the whole world should revolve around their adolescent desire not to be "tread on", and seem to have no idea of what it takes – and what it took historically - to build a livable civilization.
In the center, we have the neoliberals, who are convinced that our world will spontaneously and beneficially organize itself if only we turn the macroeconomic tumblers and stumble on the right interest rate, or inflation rate, or some other version of the One Parameter to Rule Them All mindset. They are also too devoted to the religion of demand-goosing: the idea that everything will be all right as long as we generate enough "demand" – as though it makes no difference whether people are demanding high fructose cotton candy or the collected works of Shakespeare.
5. I'm an optimist! This is all going to change. We have nearly reached Peak Idiocracy. We're on the verge of a new age of social organization and planning and a return to mixed economy common sense and public-spirited mobilization and adulthood. This will happen because ultimately all of those teenagers will stop denying reality, and stop struggling to escape the realization that a more organized and thoughtfully planned way of life is the only thing that will work in our small, resource strapped, crowded 21st century planet.
George H. Blackford:
likbez:Since the 80s, US companies have been buying abroad to sell at home as foreign countries used our trade deficits to depress their exchange rates. Profits and income share at the top soared; wages and income share at the bottom fell, and employment was maintained by speculative bubbles and increasing debt until the last bubble burst, and the system collapsed.
There seem to be no more bubbles in the offing. The dollar is overvalued. Debt relative to income is unprecedented, and the concentration of income has created stagnation for lack of investment opportunities.
How is an increasing deficit and QE supposed to solve our problems in this situation other than by propping up a failed system that makes the rich richer and the poor poorer by increasing government debt? Does anyone really believe this sort of thing can go on forever in the absence of a fall in the value of the dollar and in the concentration of income? Who's going to be left holding the bag when this system collapses again?
It seems quite clear to me that it is going to take a very long time for the system to adjust to this situation in the absence of a fall in the value of the dollar and the concentration of income. That kind of adjustment means reallocating resources in a very dramatic way so as to accommodate an economy in which resources are allocated to serve the demands of the wealthy few in the absence of the ability of those at the bottom to expand their debt relative to income.
We didn't smoothly transition from an agricultural economy to one based on manufacturing. That transition was plagued with a great deal of civil unrest, speculative bubbles, booms and busts that eventually led to a collapse of the system and the Great Depression.
And we didn't smoothly transition out of the Great Depression. That was ended by WW II and dramatic changes in our economic system, the most dramatic changes being the role and size of government and the fall in the concentration of income for thirty-five years after 1940.
It was the fall in the concentration of income that led to mass markets (large numbers of people with purchasing power out of income) that made investment profitable after WW II in the absence of speculative bubbles, and it was the increase in the concentration of income that led to the bubble economy we have today that has led us into the Great Recession.
What this means to me is that we are not going to get out of the mess we are in today in the absence of some kind of catastrophe comparable to WW II if we, and the rest of the world, do not come to grips with the fundamental problem we face in this modern age, namely, the trade deficit and the concentration of income.
See:
I think neoliberalism naturally leads to secular stagnation. This is the way any economic system that is based on increasing of inequality should behave: after inequality reached certain critical threshold, the economy faces extended period of low growth reflecting persistently weak private demand.
An economic cycle enters recession when total spending falls below expected by producers and they realize that production level is too high relative to demand. What we have under neoliberalism is kind of Marx constant crisis of overproduction.
The focus on monetary policy and the failure to enact fiscal policy options is structural defect of neoliberalism ideology and can't be changed unless neoliberal ideology is abandoned. Which probably will not happen unless another huge crisis hit the USA. 2008 crisis, while discrediting neoliberalism, was clearly not enough for the abandonment of this ideology. Like in most cults adherents became more fanatical believers after the prophecy did not materialized.
The USA elite tried partially alleviate this problem by resorting to military Keynesianism as a supplementary strategy. But while military budget was raised to unprecedented levels, it can't reverse the tendency. Persistent high output gap is now a feature of the US economy, not a transitory state.
"Top everything" does not help iether (top cheap oil is especially nasty factor). Recent pretty clever chess gambit to artificially drop oil price playing Russian card, and sacrificing US shall industry like a pawn (remember that Saudi Arabia is the USA client state) was a very interesting move, but still expectation are now so low that cheap gas stimulus did not work as expected in the USA. It would be interesting to see how quickly oil will return to early 2014 price level because of that. That will be the sign that gambit is abandoned.
In a way behaviour of the USA elite in this respect is as irrational as behavior of the USSR elite. My impression is that they will stick to neoliberal ideology to the bitter end. But at the same time they are much more reckless. Recent attempt to solve economic problems by unleashing a new wars and relying of war time mobilization so far did not work. Including the last move is this game: Russia did not bite the offer for military confrontation that the USA clearly made by instilling coup d'état in Ukraine.
Now it look like there is a second attempt to play "madman" card after Nixon's administration Vietnam attempt to obtain concession from the USSR by threatening to unleash the nuclear war.
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Nov 09, 2015 | resilience.org
by Paul Mobbs, originally published by The Ecologist |
Brian Davey's new book, Credo: Economic Beliefs in a World in Crisis, is an analysis of economic theory as if it were a system of religious belief.
It's a timely book. The simplistic, perhaps 'supernatural' assumptions which underpin key parts of economic theory demand far more attention. It's a debate we've failed to have as a society.
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During the two decades following the neoliberal economists' take-over of Western governments in the 1980s, many felt that the almost mystical terms of economics - such as derivatives, hedging, leverage, contangos, etc - were beyond the understanding of most ordinary people.
And without understanding those terms, irrespective of our gut feeling that there was something wrong, how could we challenge the political lobby those theories had put into power? In the end it took the financial crash of 2007/8 to demonstrate that those in charge of this system didn't understand the complexity and risk of those practices either.
They pursued them as a matter of faith in the market and its processes, despite the apparent warning signs of their imminent failure. Those outside 'orthodox' economics could already see where the economy was heading in the longer-term.
Question is, did economists learn anything from that failure? Or, through austerity, have they once again committed us to their dogmatic belief system, unchanged by that experience?
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However, through simple hubris or optimism bias, the political class has been convinced that 'fracking' is a solution to our economic woes - even though there is a paucity of verifiable evidence to demonstrate those claims, and it has already lost billions of investors money.Economics is a reflection of power
Ultimately though, as within many custom or belief systems, what economics enshrines is a social order. One where a dominant minority are able to take a small quantity of wealth from each member of the majority in order to maintain their higher status.
This idea of economics as an exploitative mechanism is echoed in the cover picture of the book, Bosch's The Conjurer - where a magician distracts the public with a sleight of hand trick so that they can be more easily robbed by his associate.
Again, in a world where we're hitting the limits to human material growth, political models of well-being based upon wealth and consumption are damaging to human society in the long-term. The evidence that we're heading for a longer-term failure is there, as was the case with the warning signs before the 2007 crash. The problem is that those in positions of power do not wish to see it.
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Within its exposition of economics as a quasi-religious theory, Brian Davey's book helps us to understand why economic theory is driving us toward a global system failure - and why politics and economics are incapable of responding to the pressing ecological crisis which the pursuit of economic growth has spawned.
Contrary to the economic hubris of many world leaders, set alongside the reality of ecological limits humanity is not 'too big to fail'.
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www.nakedcapitalism.com
April 29, 2016 by Yves Smith An interview by Gordon T. Long of the Financial Repression Authority. Originally published at his website
GORDON LONG: Thank you for joining us. I'm Gordon Long with the Financial Repression Authority. It's my pleasure to have with me today Dr. Michael Hudson Professor Hudson's very well known in terms of the FIRE economy to-I think, to a lot of our listeners, or at least he's recognized by many as fostering that concept. A well known author, he has published many, many books. Welcome, Professor Hudson.
MICHAEL HUDSON: Yes.
LONG: Let's just jump into the subject. I mentioned the FIRE economy cause I know that I have always heard it coming from yourself-or, indirectly, not directly, from yourself. Could you explain to our listeners what's meant by that terminology?
HUDSON: Well it's more than just people getting fired. FIRE is an acronym for Finance, Insurance and Real Estate. Basically that sector is about assets, not production and consumption. And most people think of the economy as being producers making goods and services and paying labor to produce them – and then, labour is going to buy these goods and services. But this production and consumption economy is surrounded by the asset economy: the web of Finance, Insurance, and Real Estate of who owns assets, and who owes the debts, and to whom.
LONG: How would you differentiate it (or would you) with what's often referred to as financialization, or the financialization of our economy? Are they one and the same?
HUDSON: Pretty much. The Finance, Insurance, and Real Estate sector is dominated by finance. 70 to 80% of bank loans in North America and Europe are mortgage loans against real estate. So instead of a landowner class owning property clean and clear, as they did in the 19 th century, now you have a democratization of real estate. 2/3 or more of the population owns their own home. But the only way to buy a home, or commercial real estate, is on credit. So the loan-to-value ratio goes up steadily. Banks lend more and more money to the real estate sector. A home or piece of real estate, or a stock or bond, is worth whatever banks are willing to lend against it
As banks loosen their credit terms, as they lower their interest rates, take lower down payments, and lower amortization rates – by making interest-only loans – they are going to lend more and more against property. So real estate is bid up on credit. All this rise in price is debt leverage. So a financialized economy is a debt-leveraged economy, whether it's real estate or insurance, or buying an education, or just living. And debt leveraging means that a larger proportion of assets are represented by debt. So debt equity ratios rise. But financialization also means that more and more of people's income and corporate and government tax revenue is paid to creditors. There's a flow of revenue from the production-and-consumption economy to the financial sector.
LONG: I don't know if you know Richard Duncan. He was with the IMF, etc, and lives in Thailand. He argues right now that capitalism is no longer functioning, and really what he refers to what we have now is "creditism." Because in capitalism we have savings that are reinvested into productive assets that create productivity, which leads to a higher level of living. We're not doing that. We have no savings and investments. Credit is high in the financial sector, but it's not being applied to productive assets. Is he valid in that thinking?
HUDSON: Not as in your statement. It's confused.
LONG: Okay.
HUDSON: There's an enormous amount of savings. Gross savings. The savings we have that are mounting up are just about as large as they've ever been – about, 18-19% of the US economy. They're counterpart is debt. Most savings are lent out to borrowers se debt. Basically, you have savers at the top of the pyramid, the 1% lending out their savings to the 99%. The overall net savings may be zero, and that's what your stupid person from the IMF meant. But gross savings are much higher. Now, the person, Mr. Duncan, obviously-I don't know what to say when I hear this nonsense. Every economy is a credit economy.
Let's start in Ancient Mesopotamia. The group that I organized out of Harvard has done a 20-study of the origins of economic structuring in the Bronze Age, even the Neolithic, and the Bronze Age economy – 3200 BC going back to about 1200 BC. Suppose you're a Babylonian in the time of Hammurabi, about 1750 BC, and you're a cultivator. How do you buy things during the year? Well, if you go to the bar, to an ale woman, what she'd do is write down the debt that you owe. It was to be paid on the threshing floor. The debts were basically paid basically once a year when the income was there, on the threshing floor when the harvest was in. If the palace or the temples would advance animals or inputs or other public services, this would be as a debt. It was all paid in grain, which was monetized for paying debts to the palace, temples and other creditors.
The IMF has this Austrian theory that pretends that money began as barter and that capitalism basically operates on barter. This always is a disinformation campaign. Nobody believed this in times past, and it is a very modern theory that basically is used to say, "Oh, debt is bad." What they really mean is that public debt is bad. The government shouldn't create money, the government shouldn't run budget deficits but should leave the economy to rely on the banks. So the banks should run and indebt the economy.
You're dealing with a public relations mythology that's used as a means of deception for most people. You can usually ignore just about everything the IMF says. If you understand money you're not going to be hired by the IMF. The precondition for being hired by the IMF is not to understand finance. If you do understand finance, you're fired and blacklisted. That's why they impose austerity programs that they call "stabilization programs" that actually are destabilization programs almost wherever they're imposed.
LONG: Is this a lack of understanding and adherence to the wrong philosophy, or how did we get into this trap?
HUDSON: We have an actively erroneous view, not just a lack of understanding. This is not by accident. When you have an error repeated year after year after year, decade after decade after decade, it's not really insanity doing the same thing thinking it'll be different. It's sanity. It's doing the same thing thinking the result will be the same again and again and again. The result will indeed be austerity programs, making budget deficits even worse, driving governments further into debt, further into reliance on the IMF. So then the IMF turns them to the knuckle breakers of the World Bank and says, "Oh, now you have to pay your debts by privatization". It's the success. The successful error of monetarism is to force countries to have such self-defeating policies that they end up having to privatize their natural resources, their public domain, their public enterprises, their communications and transportation, like you're seeing in Greece's selloffs. So when you find an error that is repeated, it's deliberate. It's not insane. It's part of the program, not a bug.
LONG: Where does this lead us? What's the roadmap ahead of us here?
HUDSON: A thousand years ago, if you were a marauding gang and you wanted to take over a country's land and its natural resources and public sector, you'd have to invade it with military troops. Now you use finance to take over countries. So it leads us into a realm where everything that the classical economists saw and argued for – public investment, bringing costs in line with the actual cost of production – that's all rejected in favor of a rentier class evolving into an oligarchy. Basically, financiers – the 1% – are going to pry away the public domain from the government. Pry away and privatize the public enterprises, land, natural resources, so that bondholders and privatizers get all of the revenue for themselves. It's all sucked up to the top of the pyramid, impoverishing the 99%.
LONG: Well I think most people, without understanding economics, would instinctively tell you they think that's what's happening right now, in some way.
HUDSON: Right. As long as you can avoid studying economics you know what's happened. Once you take an economics course you step into brainwashing. It's an Orwellian world.
LONG: I think you said it perfectly well there. Exactly. It gets you locked into the wrong way of thinking as opposed to just basic common sense. Your book is Killing the Host . What was the essence of its message? Was it describing exactly what we're talking about here?
HUDSON: Finance has taken over the industrial economy, so that instead of finance becoming what it was expected to be in the 19 th century, instead of the banks evolving from usurious organizations that leant to governments, mainly to wage war, finance was going to be industrialized. They were going to mobilize savings and recycle it to finance the means of production, starting with heavy industry. This was actually happening in Germany in the late 19 th century. You had the big banks working with government and industry in a triangular process. But that's not what's happening now. After WW1 and especially after WW2, finance reverted to its pre-industrial form. Instead of allying themselves with industry, as banks were expected to do, banks allied themselves with real estate and monopolies, realizing that they can make more money off real estate.
The bank spokesman David Ricardo argued against the landed interest in 1817, against land rent. Now the banks are all in favor of supporting land rent, knowing that today, when people buy and sell property, they need credit and pay interest for it. The banks are going to get all the rent. So you have the banks merge with real estate against industry, against the economy as a whole. The result is that they're part of the overhead process, not part of the production process.
LONG: There's a sense that there's a crisis lying ahead in the next year, two years, or three years. The mainstream economy's so disconnected from Wall Street economy. What's your view on that?
HUDSON: It's not disconnected at all. The Wall Street economy has taken over the economy and is draining it. Under what economics students are taught as Say's Law, the economy's workers are supposed to use their income to buy what they produce. That's why Henry Ford paid them $5 a day, so that they could afford to buy the automobiles they were producing.
LONG: Exactly.
HUDSON: But Wall Street is interjecting itself into the economy, so that instead of the circular flow between producers and consumers, you have more and more of the flow diverted to pay interest, insurance and rent. In other words, to pay the FIRE sector. It all ends up with the financial sector, most of which is owned by the 1%. So, their way of formulating it is to distract attention from today's debt quandary by saying it's just a cycle, or it's "secular stagnation." That removes the element of agency – active politicking by the financial interests and Wall Street lobbyists to obtain all the growth of income and wealth for themselves. That's what happened in America and Canada since the late 1970s.
LONG: What does an investor do today, or somebody who's looking for retirement, trying to save for the future, and they see some of these things occurring. What should they be thinking about? Or how should they be protecting themselves?
HUDSON: What all the billionaires and the heavy investors do is simply try to preserve their wealth. They're not trying to make money, they're not trying to speculate. If you're an investor, you're not going to outsmart Wall Street billionaires, because the markets are basically fixed. It's the George Soros principle. If you have so much money, billions of dollars, you can break the Bank of England. You don't follow the market, you don't anticipate it, you actually make the market and push it up, like the Plunge Protection Team is doing with the stock market these days. You have to be able to control the prices. Insiders make money, but small investors are not going to make money.
Since you're in Canada, I remember the beginning of the 1960s. I used to look at the Treasury Bulletin and Federal Reserve Bulletin figures on foreign investment in the US stock market. We all used to laugh at Canada especially. The Canadians don't buy stocks until they're up to the very top, and then they lose all the money by holding these stocks on the downturn. Finally, when the market's all the way at the bottom, Canadians decide to begin selling because they finally can see a trend. So they miss the upswing until they decide to buy at the top once again. It's hilarious to look at how Canada has performed in the US bond market, and they did the same in the silver market. I remember when silver was going up to $50. The Canadians said, "Yes, we can see the trend now!" and they began to buy it. They lost their shirts. So, basically, if you're a Canadian investor, move.
LONG: So the Canadian investors are a better contrarian indicator than the front page cover, you're saying.
HUDSON: I'd think so. Once they get in, you know the bubble's over.
LONG: Absolutely on that one. What are you currently writing? What is your current focus now?
HUDSON: Well, I just finished a book. You mentioned Killing the Host . My next book will be out in about three months: J is for Junk Economics . It began as a dictionary of terms, so I can provide people with a vocabulary. As we got in the argument at the beginning of your program today, our argument is about the vocabulary we're using and the words you're using. The vocabulary taught to students today in economics – and used by the mass media and by government spokesmen – is basically a set of euphemisms. If you look at the television reports on the market, they say that any loss in the stock market isn't a loss, it's "profit taking". And when they talk about money. the stock market rises – "Oh that's good news." But it's awful news for the short sellers it wipes out. Almost all the words we get are kind of euphemisms to conceal the actual dynamics that are happening. For instance, "secular stagnation" means it's all a cycle. Even the idea of "business cycles": Nobody in the 19 th century used the word "business cycle". They spoke about "crashes". They knew that things go up slowly and then they plunge very quickly. It was a crash. It's not the sine curve that you have in Josef Schumpeter's book on Business Cycles . It's a ratchet effect: slow up, quick down. A cycle is something that is automatic, and if it's a cycle and you have leading and lagging indicators as the National Bureau of Economic Research has. Then you'd think "Oh, okay, everything that goes up will come down, and everything that goes down will come up, just wait your turn." And that means governments should be passive.
Well, that is the opposite of everything that's said in classical economics and the Progressive Era, when they realized that economies don't recover by themselves. You need a-the government to step in, you need something "exogenous," as economist say. You need something from outside the system to revive it. The covert idea of this business cycle analysis is to leave out the role of government. If you look at neoliberal and Austrian theory, there's no role for government spending, and no role of public investment. The whole argument for privatization, for instance, is the opposite of what was taught in American business schools in the 19 th century. The first professor of economics at the Wharton School of Business, which was the first business school, was Simon Patten. He said that public infrastructure is a fourth factor of production. But its role isn't to make a profit. It's to lower the cost of public services and basic inputs to lower the cost of living and lower the cost of doing business to make the economy more competitive. But privatization adds interest payments, dividends, managerial payments, stock buybacks, and merges and acquisitions. Obviously these financialized charges are factored into the price system and raise the cost of living and doing business.
LONG: Well, Michael, we're-I thank you for the time, and we're up against our hard line. I know we didn't have as much time as we always like, so we have to break. Any overall comments you'd like to leave with our listeners who might be interested this school of economics?
HUDSON: Regarding the downturn we're in, we're going into a debt deflation. The key of understanding the economy is to look at debt. The economy has to spend more and more money on debt service. The reason the economy is not recovering isn't simply because this is a normal cycle. And It's not because labour is paid too much. It's because people are diverting more and more of their income to paying their debts, so they can't afford to buy goods. Markets are shrinking – and if markets are shrinking, then real estate rents are shrinking, profits are shrinking. Instead of using their earnings to reinvest and hire more labour to increase production, companies are using their earnings for stock buybacks and dividend payouts to raise the share price so that the managers can take their revenue in the form of bonuses and stocks and live in the short run. They're leaving their companies as bankrupt shells, which is pretty much what hedge funds do when they take over companies.
So the financialization of companies is the reverse of everything Adam Smith, John Stuart Mill, and everyone you think of as a classical economist was saying. Banks wrap themselves in a cloak of classical economics by dropping history of economic thought from the curriculum, which is pretty much what's happened. And Canada-I know since you're from Canada, my experience there was that the banks have a huge lobbying power over government. In 1979, I wrote for the IRPP Institute there on Canada In the New Monetary Order . At that time the provinces of Canada were borrowing money from Switzerland and Germany because they could borrow it at much lower interest rates. I said that this was going to be a disaster, and one that was completely unnecessary. If Canadian provinces borrow in Francs or any other foreign currency, this money goes into the central bank, which then creates Canadian dollars to spend. Why not have the central bank simply create these dollars without having Swiss francs, without having German marks? It's unnecessary to have an intermediary. But the more thuggish banks, like the Bank of Nova Scotia, said, "Oh, that way's the road to serfdom." It's not. Following the banks and the Austrian School of the banks' philosophy, that's the road to serfdom. That's the road to debt serfdom. It should not be taken now. It lets universities and the government be run by neoliberals. They're a travesty of what real economics is all about.
LONG: Michael, thank you very much. I learned a lot, appreciate it; certainly appreciate how important it is for us to use the right words on the right subject when we're talking about economics. Absolutely agree with you. Talk to you again?
HUDSON: Going to be here.
LONG: Thank you for the time.
Donald , April 29, 2016 at 7:33 amAlejandro , April 29, 2016 at 9:06 amInteresting, but after insulting Duncan, Hudson says the banks stopped partnering with industry and went into real estate, which sounded like what Duncan said.
I mention this because for a non- expert like myself it is sometimes difficult to tell when an expert is disagreeing with someone for good reasons or just going off half- cocked. I followed what Hudson said about the evils of the IMF, but didn't see where Duncan had defended any of that, unless it was implicit in saying that capitalism used to function better.
Michael Hudson , April 29, 2016 at 9:54 amMichael Hudson from the interview;
"As we got in the argument at the beginning of your program today, our argument is about the vocabulary we're using and the words you're using. The vocabulary taught to students today in economics – and used by the mass media and by government spokesmen – is basically a set of euphemisms ."Almost all the words we get are kind of euphemisms to conceal the actual dynamics that are happening."
May consider it's about recognizing and deciphering the "doublespeak", "newspeak", "fedspeak", "greenspeak" etc, whether willing or unwitting using words for understanding and clarifying as opposed to misleading and confusing dialectic as opposed to sophistry.
Leonard C.Tekaat , April 29, 2016 at 12:19 pmWhat I objected to was the characterization of today's situation as "financialization." I explained that financialization is the FIRST stage - when finance WORKS. We are now in the BREAKDOWN of financialization - toward the "barter" stage.
Treating "finance" as an end stage rather than as a beginning stage overlooks the dynamics of breakdown. It is debt deflation. First profits fall, and as that occurs, rents on commercial property decline. This is already widespread here in New York, from Manhattan (8th St. near NYU is half empty) to Queens (Austin St. in Forest Hills.).SomeCallMeTim , April 29, 2016 at 5:23 pmI wrote an article you might be interested in reading. It outlines a tax policy which would help prevent what you are discussing in your article. The abuse of credit to receive rents and long term capital gains.
The title is "Congress Financialized Our Economy And Created Financial Crisis & More Poverty" Go to http://www.taxpolicyusa.wordpress.com
Skippy , April 29, 2016 at 8:33 pmThank you for another eye-opening exposition. My political economy education was negative (counting a year of Monetarism and Austrian Economics around 1980), so I appreciate your interviews as correctives.
From your interview answer to the question about what we, the 99+% should do,I gathered only that we should not try to beat the market. Anything more than that?
Eduardo Quince , April 29, 2016 at 7:41 amFrom my understanding, post Plaza banking lost most of its traditional market to the shadow sector, as a result, expanded off into C/RE and increasingly to Financialization of everything sundry.
Disheveled Marsupial interesting to note Mr. Hudson's statement about barter, risk factors – ?????
cnchal , April 29, 2016 at 8:30 am"secular stagnation" means it's all a cycle
Actually not.
One of the most important distinctions that investors have to understand is the difference between secular and cyclical trends Let us begin with definitions from the Encarta® World English Dictionary:
Secular – occurring only once in the course of an age or century; taking place over an extremely or indefinitely long period of time
Cycle – a sequence of events that is repeated again and again, especially a causal sequence; a period of time between repetitions of an event or phenomenon that occurs regularly
Excerpted from: http://contrarianinvestorsjournal.com/?p=405#
MikeNY , April 29, 2016 at 9:57 amSecular stagnation from http://lexicon.ft.com/Term?term=secular-stagnation
Secular stagnation is a condition of negligible or no economic growth in a market-based economy . When per capita income stays at relatively high levels, the percentage of savings is likely to start exceeding the percentage of longer-term investments in, for example, infrastructure and education, that are necessary to sustain future economic growth. The absence of such investments (and consequently of the economic growth) leads to declining levels of per capita income (and consequently of per capita savings). With the reduced percentage savings rate converging with the reduced investment rate, economic growth comes to a standstill – ie, it stagnates. In a free economy, consumers anticipating secular stagnation, might transfer their savings to more attractive-looking foreign countries. This would lead to a devaluation of their domestic currency, which would potentially boost their exports, assuming that the country did have goods or services that could be exported.
Persistent low growth, especially in Europe, has been attributed by some to secular stagnation initiated by stronger European economies, such as Germany, in the past few years.
Words. What they mean depends on who's talking.
Secular stagnation is when the predators of finance have eaten too many sheeple.
digi_owl , April 29, 2016 at 7:44 amSecular stagnation is when the predators of finance have eaten too many sheeple.
This.
Alejandro , April 29, 2016 at 9:18 amSad to see Hudson parroting the line about banks lending out savings
Enquiring Mind , April 29, 2016 at 9:02 amThat's not what he said. Re-read or re-listen, please.
tegnost , April 29, 2016 at 9:52 amHudson says
Markets are shrinking – and if markets are shrinking, then real estate rents are shrinking, profits are shrinking.Real estate rents in this latest asset bubble, whether commercial or residential, appear to have been going up in many markets even if the increases are slowing. That rent inflation will likely turn into rent deflation, but that doesn't appear to have happened yet consistently.
Perhaps he meant to say that markets are going to shrink as the debt deflation becomes more evident?
Synoia , April 29, 2016 at 10:06 amI think what it means is it's getting harder to squeeze the blood out of the turnip
rfdawn , April 29, 2016 at 10:52 amWhat Turnip? Its become a stone, fossilized..
ke , April 29, 2016 at 10:22 amYes, I think we are into turnip country now. Figure 1 in this prior article looks clear enough – even if you don't like the analysis that went with it. Wealth inequality still climbs but income inequality has plateaued since Clinton I. Whatever the reasons for that, the 1% should be concerned – where is the ROI?
ke , April 29, 2016 at 12:49 pmBarter has always existed and always will. Debt money expands and contracts the middle class, acting as a feedback signal, which never works over the long term, because the so encapsulated system can only implode, when natural resource liquidation cannot be accelerated. The whole point is to eliminate the initial requirement for capital, work. Debt fails because both sides of the same coin assume that labor can be replaced. The machines driven by dc technology are not replacing labor; neither the elites nor the middle class can fix the machines, which is why they keep accelerating debt, to replace one failed technology only to be followed by the next, netting extortion by whoever currently controls the debt machine, which the majority is always fighting over, expending more energy to avoid work, like the objective is to avoid sweating, unless you are dumb enough to run on asphalt with Nike gear.
meeps , April 29, 2016 at 5:36 pmLabor has no problem with multiwhatever presidents, geneticists, psychologists, or economists, trying to hunt down and replace labor, in or out of turn, but none are going to be any more successful than the others. Trump is being employed to bypass the middle class and cut a deal. There is no deal. Labor is always going to pay males to work and their wives to raise children. Obviously, the majority will vote for a competing economy, and it is welcome to do so, but if debt works so well, why is the majority voting to kidnap our kids with public healthcare and education policies.
Robert Coutinho , April 29, 2016 at 9:29 pmI'm not sure I heard an answer to the question of what people, who might be trying to save for the future or plan for retirement, can do? Is the point that there isn't anything? Because I'm definitely between rocks and hard places
ke , April 29, 2016 at 7:22 pmYeah, he basically said there is no good savings plan. Big-money interests have rigged the rules and are now manipulating the market (this used to be the definition of what was NOT allowed). Thus, they use computer algorithms to squeeze small amounts out of the market millions of times. This means that the "investments" are nothing of the sort. You don't "invest" in something for milliseconds. He said that the 1% are mostly just trying to hold on to what they have. Very few trust the rigged markets.
Russell , April 29, 2016 at 10:00 pmIf Big G can print to infinity, print, but then why book it as debt to future generations?
The future is already becoming the present, because the millenials aren't paying.
cnchal , April 30, 2016 at 4:36 amLow rent & cheap energy are key to the arts & innovations. My model has to work for airports, starts at the fuel farm as the CIA & MI6 Front Page Avjet did. Well before that was Air America. I wonder if now American Airlines itself is a Front.
All of America is a Front far as I can about tell. Hadn't heard that Manhattan rents were coming down. Come in from out of town, how you going to know? Not supposed to I guess.
I got that textbook and I liked that guy John Commons. He says capitalism is great, but it always leads to Socialism because of unbridled greed.
The frenzy to find another stable cash currency showing in Bit Coin and the discussion of Future Tax Credits while the Euro is controlled by the rent takers demands change on both sides of the Atlantic.
We got shot dead protesting the war, and civil rights backlash is the gift that keeps giving to the Southerners looking up every day in every courthouse town, County seat is all about spreading fear and desperation.
How to change it all without violence is going to be really tricky.
Procopius , April 30, 2016 at 8:10 amMany thanks for the shout out to Canada.
. . . So, basically, if you're a Canadian investor, move.
LONG: So the Canadian investors are a better contrarian indicator than the front page cover, you're saying.
HUDSON: I'd think so. Once they get in, you know the bubble's over.
When one reads the financial press in Canada, every dollar extracted by the lords of finance is a glorious taking by brilliant people at the top of the financial food chain from the stupid little people at the bottom, but when it counts, there was silence, in cooperation with Canada's one percent.
The story starts about five years ago, with smart meters. Everyone knows what they are, a method by which electrical power use can be priced depending on the time of day, and day of the week.
To make this tasty, Ontario's local utilities at first kept the price the same for all the time, and then after all the meters were installed, came the changes, phased in over time. Prices were increased substantially, but there was an out. If you changed your living arrangements to live like a nocturnal rodent and washed your clothes in the middle of the night, had supper later in the evening or waited for weekend power rates you could still get low power rates, from the three tier price structure.
The local utilities bought the power from the government of Ontario power generation utility, renamed to Hydro One, and this is where Michael Hudson's talk becomes relevant.
The successful error of monetarism is to force countries to have such self-defeating policies that they end up having to privatize their natural resources, their public domain, their public enterprises, their communications and transportation, like you're seeing in Greece's selloffs. So when you find an error that is repeated, it's deliberate. It's not insane. It's part of the program, not a bug .
LONG: Where does this lead us? What's the roadmap ahead of us here?
HUDSON: A thousand years ago, if you were a marauding gang and you wanted to take over a country's land and its natural resources and public sector, you'd have to invade it with military troops. Now you use finance to take over countries. So it leads us into a realm where everything that the classical economists saw and argued for – public investment, bringing costs in line with the actual cost of production – that's all rejected in favor of a rentier class evolving into an oligarchy. Basically, financiers – the 1% – are going to pry away the public domain from the government. Pry away and privatize the public enterprises, land, natural resources, so that bondholders and privatizers get all of the revenue for themselves. It's all sucked up to the top of the pyramid, impoverishing the 99% .
Eighteen months ago, there was an election in Ontario, and the press was on radio silence during the whole time leading up to the election about the plans to "privatize" Hydro One. I cannot recall one instance of any mention that the new Premier, Kathleen Wynne was planning on selling Hydro One to "investors".
Where did this come from? Did the little people rise up and say to the politicians "you should privatize Hydro One" for whatever reason? No. This push came from the 1% and Hydro One was sold so fast it made my head spin, and is now trading on the Toronto Stock exchange.
At first I though the premier was an economic ignoramus, because Hydro One was generating income for the province and there was no other power supplier, so one couldn't even fire them if they raised their prices too high.
One of the arguments put forward by the 1% to privatize Hydro One was a classic divide and conquer strategy. They argued that too many people at Hydro One were making too much money, and by privatizing, the employees wages would be beat down, and the resultant savings would be passed on to customers.
Back to Michael Hudson
. . . The whole argument for privatization, for instance, is the opposite of what was taught in American business schools in the 19th century. The first professor of economics at the Wharton School of Business, which was the first business school, was Simon Patten. He said that public infrastructure is a fourth factor of production. But its role isn't to make a profit . It's to lower the cost of public services and basic inputs to lower the cost of living and lower the cost of doing business to make the economy more competitive. But privatization adds interest payments, dividends, managerial payments, stock buybacks, and merges and acquisitions . Obviously these financialized charges are factored into the price system and raise the cost of living and doing business .
Power prices have increased yet again in Ontario since privatization, and Canada's 1% are "making a killing" on it. There has been another change as well. Instead of a three tier price structure, there are now two, really expensive and super expensive. There is no longer a price break to living like a nocturnal rodent. The 1% took that for themselves.
I am so tired of seeing that old lie about Old Henry and the $5 a day. I realize it was just a tossed off reference to something most people believe for the purpose of describing a discarded policy, but the fact is very, very few of Old Henry's employees ever got that pay. See, there were strings attached.
Old Henry hired a lot of spies, too. He sent them around to the neighborhoods where his workers lived (it was convenient having them all in Detroit). If the neighbors saw your kid bringing a bucket of beer home from the corner tavern for the family, you didn't get the $5.
If your lawn wasn't mowed to their satisfaction, you didn't get the $5. If you were thought not to bathe as often as they liked, you didn't get the $5. If you didn't go to a church on Sundays, you didn't get the $5. If you were an immigrant and not taking English classes at night school, you didn't get the $5. There were quite a lot of strings attached. The whole story was a public relations stunt, and Old Henry never intended to live up to it; he hated his workers.
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Nov 22, 2017 | www.zerohedge.com
Macro-prudential regulations follow financial crises, rarely do they precede one. Even when evidence is abundant of systemic risks building up, as is today, regulators and policymakers have a marked tendency to turn an institutional blind eye, hoping for imbalances to fizzle out on their own – at least beyond the duration of their mandates. It does not work differently in economics than it does for politics, where short-termism drives the agenda, oftentimes at the expenses of either the next government, the broader population or the next generation.
It does not work differently in the business world either, where corporate actions are selected based on the immediate gratification of shareholders, which means pleasing them at the next round of earnings, often at the expenses of long-term planning and at times exposing the company itself to disruption threats from up-and-comers.
Long-term vision does not pay; it barely shows up in the incentive schemes laid out for most professions . Economics is no exception. Orthodoxy and stillness preserve the status quo, and the advantages hard earned by the few who rose from the ranks of the establishment beforehand.
Yet, when it comes to Central Banking, and more in general policymaking, financial stability should top the priority list. It honorably shows up in the utility function, together with price stability and employment, but is not pursued nearly as actively as them. Central planning and interventionism is no anathema when it comes to target the decimals of unemployment or consumer prices, yet is residual when it comes to master systemic risks, relegated to the camp of ex-post macro-prudential regulation. This is all the more surprising as we know all too well how badly a deep unsettlement of financial markets can reverberate across the real economy, possibly leading into recessions, unemployment, un-anchoring of inflation expectations and durable disruption to consumer patterns. There is no shortage of reminders for that in the history books, looking at the fallout of dee dives in markets in 1929, 2000 and 2007, amongst others.
Intriguingly, the other way round is accepted and even theorized. Manipulating bond and stock prices, directly or indirectly, is mainstream policy theory today. From Ben Bernanke's 'portfolio balance channel theory', to the relentless pursuit of the 'wealth effect' via financial repression under Janet Yellen and Haruhiko Kuroda, to Mario Draghi tackling the fragmentation of credit markets across the EU via direct asset purchases, the practice has become commonplace. To some, like us, the 'wealth effect' may be proving to be more of an 'inequality effect' than much, leading to populism and constantly threatening regime change, but that is beyond the scope of this note today.
What we want to focus on instead is the direct impact that monetary interventionism like Quantitative Easing ('QE') and Negative or Zero Interest Rate Policies ('NIRP' or 'ZIRP') have on the structure of the market itself, how they help create a one-sided investment community, oftentimes long-only, fully invested when not levered up, relying on record-highs for bonds and stocks to perpetuate themselves endlessly - despite a striking disconnect from fundamentals, life-dependent on the lowest levels of volatility ever seen in history . The market structure morphed under the eyes of policymakers over the last few years, to become a pressure cooker at risk of blowing-up, with a small but steadily growing probability as times goes by and the bubble inflates. The positive feedback loops between monetary flooding and the private investment community are culpable for transforming an ever present market risk into a systemic risk, and for masking as peaceful what is instead an unstable equilibrium and market fragility.
Positive Feedback Loops create divergence from general equilibrium, and Systemic RisksPositive feedback loops , in finance like in biology, chemistry, cybernetics, breed system instability, as they orchestrate a further divergence from equilibrium . An unstable equilibrium is defined as one where a small disturbance is sufficient to trigger a large adjustment.
QE and NIRP have two predominant effects on markets: (i) relentless up-trend in stocks and bonds (the 'Trend Factor') , dominated by the buy-the-dip mentality, which encapsulates the 'moral hazard' of investors knowing Central Banks are prompt to come to their rescue (otherwise known as 'Bernanke/Yellen/Kuroda/Draghi put'), and (ii) the relentless down-trend in volatility the 'Volatility Factor').
Two Factors Explain All: Trend and VolatilityThe most fashionable investment strategies these days are directly impacted by either one or both of these drivers. Such strategies make the bulk of the overall market, after leverage or turnover is taken into account : we will refer to them in the following as 'passive' or 'quasi-passive' . The trend impacts the long-only community, crowning it as a sure winner, making the case for low- cost passive investing. The low volatility permeates everything else, making the case for full- investment and leverage.
The vast majority of investors these days are not independent from the QE environment they operate within : ETFs and index funds, Risk Parity funds and Target Volatility vehicles, Low Volatility / Short Volatility vehicles, trend-chasing algos, Machine Learning-inspired funds, behavioral Alternative Risk Premia funds. They are the poster children of the QE world. We estimate combined assets under management of in excess of $8trn across the spectrum. They form a broad category of 'passive' or 'quasi-passive' investors, as are being mechanically driven by two main factors: trend and volatility.
Source: Fasanara Presentations | Market Fragility - How to Position for Twin Bubbles Bust, 16 th October 2017. The slide is described in details in this video recording.
Extraordinary monetary policies have feedback loops with the asset management industry as a whole, reinforcing the effects on markets of such policies in a vicious – or virtuous - cycle . QE and NIRP help a large number of investment strategies to flourish, validating their success and supporting their asset gathering in the process, and are in return helped in boosting bond and stock markets by their flows joining the already monumental public flows.
Private flows so reach singularity with public flows, and the whole market economy morphs into a one big common bet on ever-rising prices, in shallow volatility. Here is the story of how $15trn of money printing by major Central Banks in the last ten years, of which $3.7trn in 2017 alone, is joined by total assets of $8trn managed into buying the same safe and risk assets across, with leverage, indiscriminately.
How Market Risk became Systemic RiskLet's give a cursory look at the main players involved (a recent presentation we did is recorded here) . As markets trend higher, no matter what happens (ever against the shocked disbeliefs of Brexit, Trump, an Italian failed referendum and nuclear threats in North Korea), investors understand the outperformance that comes from pricing risks out of their portfolios entirely and going long-only and fully-invested. Whoever under-weighs positions in an attempt to be prudent ends up underperforming its benchmarks and is then penalized with redemptions. Passive investors who are long-only and fully invested are the winners, as they are designed to be bold and insensitive to risks. As Central Banks policies reduce the level of interest rates to zero or whereabouts, fees become ever more relevant, making the case for passive investing most compelling. The rise of ETF and passive index funds is then inevitable.
According to JP Morgan, in the last 10 years, $2trn left active managers in equities and $2trn entered passive managers (pag.39 here) . We may be excused for thinking they are the same $ 2trn of underlying investors progressively pricing risk provisions out of books, de facto , while chasing outperformance and lower fees.
To be sure, ETFs are a great financial innovation, helping reducing costs in an expensive industry and giving entry to markets previously un-accessible to most investors. Yet, what matters here is their impact on systemic risks, via positive feedback loops. In circular reference, beyond Central Banks flows, markets are helped rise by such classes of valuations-insensitive passive investors, which are then rewarded with further inflows, with which they can then buy more. The more expensive valuations get, the more they disconnect from fundamentals, the more divergence from equilibrium occurs, the larger fat-tail risks become.
In ever-rising markets, 'buy-and-hold' strategies may only possibly be outsmarted by 'buy-the-dip' strategies. Whatever the outcome of risk events, be ready to buy the dip quickly and blindly. As more investors design themselves up to do so, the dips are shallower over time, leading to an S&P500 that never lost 3% in 2017, an historical milestone. Machine learning is another beautiful market innovation, but what is there to learn from the time series of the last several years, if not that buy- the-dip works, irrespective of what caused the dip. Big Data is yet another great concept, shaping the future of us all. Yet, most data ever generated in humankind dates back three years only, in and by itself a striking limitation. The quality of the deduction cannot exceed the quality of the time series upon which the data science was applied. If the time series is untrustworthy, as is heavily influenced by monumental public flows ($300bn per months), what trust can we put on any model output originating from it? What pattern recognition can we really be hopeful of getting, in the first place? May some of it just be a commercial disguise for going long, selling volatility and leveraging up in various shapes or forms? What is hype and what is real? A short and compromised data series makes it hard, if not possible, to really know. Once public flows abate and price discovery is let free again, then and only then will we be in a position to know the difference.
Low volatility does what trending markets alone cannot. A state of low volatility presents the appearance of stuporous, innocuous, narcotized markets, thus enticing new swathes of unfitting investors in, mostly retail-type 'weak hands'. Weak hands are investors who are brought to like investments by certain characteristics which are uncommon to the specific investment itself, such as featuring a low volatility. It is in this form that we see bond-like investors looking at the stock market for yield pick-up purposes, magnetized by levels of realized volatility similar to what fixed income used to provide with during the Great Moderation. It is in this form that Tech companies out of the US have started filling the coffers of not just Growth ETF, where they should rightfully reside, but also Momentum ETF, and even, incredibly, Low-Volatility ETF.
Low volatility is also a dominant input for Risk Parity funds and Target Volatility vehicles . The lower the volatility, the higher the leverage allowed in such players, mechanically. All of which are long-only players, joining public flows, again helping the market rise to record levels in the process, in circular reference. Rewarded by new inflows, the buying spree gathers momentum, in a virtuous circle. Valuations are no real input in the process, volatility is what matters the most. Volatility is not risk, except for them it is.
It goes further than that. It is not only the level of volatility that count, but its direction too . As volatility implodes, relentlessly, into historical lows never seen before in history, a plethora of investment strategies is launched to capitalize on just that, directly: Short Volatility vehicles . They are the best performing strategy of the last decade, by and large. The problem here is that, due to construction, as volatility got to single-digit territory, relatively small spikes are now enough to trigger wipe-out events on several of these instruments. Our analysis shows that if equity volatility doubles up from current levels (while still being half of what it was as recently as in August 2015), certain Short Vol ETFs may stand to lose up to 75% or more. Moreover, short positions on long-vol ETFs can lose up to 250% of capital. For some, 'termination events' are built into contracts for sudden losses of this magnitude, meaning that the notes would be prematurely withdrawn. It is one thing to expect a spike in volatility to cause losses, it is quite another to know that a minor move is all it takes to trigger a default event.
On such spikes in volatility, Morgan Stanley Quant Derivatives Strategy desk warns further that market makers may be forced to rebalance their exposure non-linearly on a spike in volatility. A drop in the S&P 500 of 5% in one day may trigger approximately $ 400mn of Vega notional of rebalancing (pag.48 here) . We estimate that half a trillion dollars of additional selling on S&P stocks may occur following a correction of between 5% and 10%. That is a lot of selling, pre-set in markets, waiting to strike. Unless you expect the market to not have another 5% sell-off, ever again.
For more details, we describe the role of these different players in a recent video presentation and in our June Investment Outlook and May Investment Outlook.
It's All One Big PositionWhat do ETFs, Risk Parity and Target Vol vehicles, Low Vol / Short Vol vehicles, trend-chasing algos, Machine Learning, behavioral Alternative Risk Premia, factor investing have in common? Except, of course, being the 'winners take all' of QE-driven markets. They all share one or more of the following risk factors: long-only, fully invested when not leveraged-up, short volatility, short correlation, short gamma Thanks to QE and NIRP, the whole market is becoming one single big position.
The 'Trend Factor' and the 'Volatility Factor' are over-whelming, making it inevitable for a high- beta, long-bias, short-vol proxy to disseminate across. Almost inescapably so, given the time series the asset management industry has to deal with, and derive its signals from.
Several classes of investors may move to sell in lock-steps if and when markets turn. The boost to asset prices and the zero-volatility environment created the conditions for systemic risks in the form of an over-compensation to the downside. Record-low volatility breeds market fragility, it precedes system instability.
Flows Matter, Both Ways!We will know soon if the fragility of markets is that bad. The undoing of loose monetary policies (NIRP, ZIRP) will create a liquidity withdrawal of over $1 trillion in 2018 alone (pag.61-62 here) . The reaction of the passive and quasi-passive communities will determine the speed of the adjustment in the pricing for both safe and risk assets, and how quickly risk provisions will re- enter portfolios. Such liquidity withdrawal will represent the first real crash-test for markets in 10 years.
As public spending on Wall Street abates, the risk is evident of seeing the whole market turning with it. The shocks of Trump and Brexit did not manage to derail markets for long, as public flows were overwhelming. Flows is what mattered, above all elusive, over-fitting economic narratives justifying price action at the margin. Flows may matter again now as they fade
Systemic Risk is Not Just About Banks: Look at FundsThe role of trending markets is known when it comes to systemic risks: a not sufficient but necessary condition. Most trends do not necessarily lead to systemic risks, but hardly systemic risks ever build up without a prolonged period of uptrend beforehand. Prolonged uptrends in any asset class hold the potential to instill the perception that such asset class will grow forever, irrespective of the fundamentals, and may thus lead to excessive risk taking, excess leverage, the formation of a bubble and, ultimately, systemic risks. The mind goes to the asset class of real estate, its undeterred uptrend into 2006/2007, its perception of perpetuity ("we have never had a decline in house prices on a nationwide basis'' Ben Bernanke) , the credit bubble built on banks hazardous activities on subprime mortgages as a result, and the systemic risks which emanated, with damages spanning well beyond the borders of real estate.
The role of volatility is also well-researched, especially low volatility. Hayman Minsky, in his " Financial Instability Hypothesis '' in 1977, analyses the behavioral changes induced by a reduction of volatility, postulating that economic agents observing a low risk are induced to increase risk taking, which may in turn lead to a crisis: "stability is destabilizing". In a recent study, Jon Danielsson, Director of the Systemic Risk Centre at the LSE, finds unambiguous support for the 'low volatility channel', insofar as prolonged periods of low volatility have a strong predictive power over the incidence of a banking crisis, owing to excess lending and excess leverage . The economic impact is the highest if the economy stays in the low volatility environment for five years : a 1% decrease in volatility below its trend translates in a 1.01% increase in the probability of a crisis. He also finds that, counter-intuitively, high volatility has little predictive power : very interesting, when the whole finance world at large is based on retrospective VAR metrics, and equivocates high volatility for high risk.
Both a persistent trend and prolonged low-volatility can lead banks to take excessive risks. But what about their impact on the asset management industry?
Thinking at the hard economic impact of the Great Depression (1929-1932) and the Great Recession (2007-2009), and the eminent role played by banks in both, it comes as little surprise that the banking sector captures all the attention. However, what remains to be looked into, and perhaps more worrying in today's environment, is the role of prolonged periods of uptrend and low-vol on the asset management industry
In 2014, the Financial Stability Board (FSB), an international body that makes recommendations to G20 nations on financial risks, published a consultation paper asking whether fund managers might need to be designated as " global systemically important financial institution " or G-SIFI, a step that would involve greater regulation and oversight. It did not result in much, as the industry lobbied in protest, emphasizing the difference between the levered balance sheet of a bank and the business of funds.
The reason for asking the question is evident: (i) sheer size , as the AM industry ballooned in the last few years, to now represent over [15trnXX] for just the top 5 US players!, (ii) funds have partially substituted banks in certain market-making activities, as banks dialed back their participation in response to tighter regulation and (iii) , funds can indeed do damage: think of LTCM in 1998, the fatal bailout of two Real Estate funds by Bear Stearns in 2007, the money market funds 'breaking the buck' in 2008 amongst others.
But it is not just sheer size that matters for asset managers. What may worry more is the positive feedback loops discussed above and the resulting concentration of bets in one single global pot , life-dependent on infinite momentum/trend and ever-falling volatility. Positive feedback loops are the link for the sheer size of the AM industry to become systemically relevant. Today more than ever, they morph market risks in systemic risks.
Volatility will not forever be low, the trend will not forever go: how bad a damage when it stops? As macro prudential policy is not the art of "whether or not it will happen" but of "what happens if", it is hard not to see this as a blind spot for policymakers nowadays.
ebworthen , Nov 22, 2017 10:55 AM
Let it Go , Nov 22, 2017 11:49 AMIn other words, it's a Ponzi scheme.
Batman11 , Nov 22, 2017 12:47 PMI have never seen it this bad, the numbers are all moutof wack!
It seems many of us are drawn to a good illusion and this proves true for most people in their daily life as well. In some ways, it could be said that our culture has become obsessed with avoiding what is real.
We must remember that politicians and those in power tend to throw people under the bus rather than rise up and take responsibility for the problems they create. The article below looks at how we have grown to believe things are fine.
http://The Allure Of Ilusions-Five Favorite Financial Myths.html
Batman11 -> Batman11 , Nov 22, 2017 12:51 PMThe real estate boom features all the unknowns in today's thinking, which is why they are global.
This simple equation is unknown.
Disposable income = wages – (taxes + the cost of living)
You can immediately see how high housing costs have to be covered by wages; business pays the high housing costs for expensive housing adding to costs and reducing profits. The real estate boom raises costs to business and makes your nation uncompetitive in a globalised world.
The unproductive lending involved that leads to financial crises.
The UK:
The economy gets loaded up with unproductive lending as future spending power has been taken to inflate the value of the nation's housing stock. Housing is more expensive and the future has been impoverished.
US:
Unproductive lending is not good for the economy and led directly to 1929 and 2008.
Neoliberalism's underlying economics, neoclassical economics, doesn't look at private debt and so no one really knew what they were doing.
The real estate boom feels good for a reason that is not known to today's thinkers.
Monetary theory has been regressing since 1856, when someone worked out how the system really worked.
Credit creation theory -> fractional reserve theory -> financial intermediation theory
"A lost century in economics: Three theories of banking and the conclusive evidence" Richard A. Werner
http://www.sciencedirect.com/science/article/pii/S1057521915001477
" banks make their profits by taking in deposits and lending the funds out at a higher rate of interest" Paul Krugman, 2015. He wouldn't know, that's financial intermediation theory.
Bank lending creates money, which pours into the economy fuelling the boom; it is this money creation that makes the housing boom feel so good in the general economy. It feels like there is lots of money about because there is.
The housing bust feels so bad because the opposite takes place, and money gets sucked out of the economy as the repayments overtake new lending. It feels like there isn't much money about because there isn't.
They were known unknowns, the people that knew weren't the policymakers to whom these things were unknown.
The global economy told policymakers there was something seriously wrong in 2008, but they ignored it, I didn't.
Batman11 -> Batman11 , Nov 22, 2017 1:25 PMThe most fundamental of all fundamentals was unknown.
The relationship between debt and money.
the money supply = all the debt in the system, public and private
M3 is going exponential before 2008, a credit bubble is underway (debt = money)
The FED and everyone else doesn't realise.
Batman11 -> Batman11 , Nov 22, 2017 1:31 PMThis is why austerity doesn't work in a balance sheet recession, e.g. Greece.
The IMF predicted Greek GDP would have recovered by 2015 with austerity.
By 2015 it was down 27% and still falling.
Oh dear.
Richard Koo had to explain the problem to the IMF.
https://www.youtube.com/watch?v=8YTyJzmiHGk
They had pushed Greece into debt deflation by cutting Government spending with austerity.
It wasn't just the IMF, the Troika all went along with this fatally flawed policy, this means the ECB and EU Commission also didn't know what they were doing.
Richard Koo had watched as Western "experts" told Japan to cut Government spending and seen the fall in GDP as the economy went downhill. The only way to get things going again was to increase Government spending and he has had decades to work out what was going on.
The Troika's bad economics has been wreaking havoc across the Club-Med.
Mark Blythe looks at the data.
https://www.youtube.com/watch?v=B6vV8_uQmxs&feature=em-subs_digest-vrecs
It comes out of knowledge that is missing from the mainstream.
Radical Marijuana , Nov 22, 2017 3:15 PMBalancing the budget ............ be careful you might head into debt deflation.
If the private sector aren't borrowing the Government needs to borrow to keep the money supply stable.
You don't want to end up like Greece do you?
Muppet , Nov 22, 2017 7:03 PMAnother superficially correct analysis of "Positive Feedback Loops create divergence from general equilibrium, and Systemic Risks." The vicious feedback loops which have the most leverage are all aspects of the funding of the political processes, which have resulted in runaway systems of legalized lies, backed by legalized violence, the most important of which are the ways that the powers of public governments enforce frauds by private banks, the big corporations that have grown up around those big banks.
About exponentially advancing technologies have enabled enforced frauds to become about exponentially more fraudulent. The underlying drivers were the ways that the combined money/murder systems developed, whose social successfulness became more and more based on maximizing maliciousness. From a superficial point of view, those results may appear to be due to incompetence, however, from a deeper point of view those results make sense as due to the excessively successful applications of the methods of organized crime through the political processes, due to the vicious feedback loops of the funding of those political processes.
The only connections between human laws and natural laws are the abilities to back up lies with violence. Natural selection pressures have driven Globalized Neolithic Civilization to develop the most dishonest artificial selection systems possible, while the continuation of the various vicious feedback loops that made and maintained those developments are driving about exponentially increasing dishonesty. Although the laws of nature are not going to stop working, and the laws of nature underpinned the runaway development of excessively successful vicious feedback loops of organized crime, on larger and larger scales, to result in Globalized Neolithic Civilization, the overall results are that Civilization is becoming about exponentially more psychotic. Since Civilization necessarily operates according to the principles and methods of organized crime, while those who became the biggest and best organized forms of organized crime, namely, banker dominated governments, also necessarily became most dishonest about themselves, and yet, their bullshit social stories continue to dominate the public schools, and mainstream mass media, as well as the publicly significant controlled "opposition" groups.
Political economy is INSIDE human ecology, and therefore, the greatest systematic risks are to be found in the tragic trajectory of human ecologies which are almost totally buried under maximized maliciousness. "Public debates" about the human death control systems are based on previously having being as deceitful and treacherous as possible regarding those topics. The most extreme forms of that manifest as the ways that money is measurement backed by murder. Of course, that the debt controls are backed by the death controls are issues which are generally not publicly admitted nor addressed.
Global Neolithic Civilization has become almost totally based on being able to enforce frauds, in ways which have become about exponentially more fraudulent, as the vicious feedback loops which enable that to happen automatically reinforce themselves to get worse, faster. The almost total triumph of enforced frauds has resulted in social "realities" which are becoming exponentially more insane, since the social successfulness of enforced frauds requires the most people do not understand that, because they have been conditioned to not want to understand that. Rather, almost everyone takes for granted deliberately ignoring and misunderstanding the laws of nature in the most absurdly backward ways possible, because of the long history of successful warfare based on deceits and treacheries becoming the more recent history of successful finance based on enforcing frauds, despite that tragic trajectory of vicious feedback loops resulting in about exponentially increasing overall fraudulence.
Various superficially correct analyses, such as the one in the article above, are typical of the content on Zero Hedge , which does not come remotely close to recognizing the degree to which the dominate natural languages and philosophy of science have undergone series of compromises with the biggest bullies' bullshit-based world views, which became the banksters' bullshit about economics. Although it is theoretically possible for human beings to better understand themselves and Civilization, it continues to become more and more politically impossible to do so, due to the ever increasing vicious feedback loops of enforced frauds achieving symbolic robberies ...
Although the laws of nature are never going to stop working, it is barely possible to exaggerate the degree to which Civilization overall is becoming about exponentially more psychotic, due to the social "realities" based on successfully enforcing frauds becoming more and more out of touch with the surrounding, relatively objective, physical and biological facts. The various superficially correct analyses presented on Zero Hedge regarding that kind of runaway collective psychosis, driven by the vicious feedback loops of the funding of all aspects of the funding of the political processes, tend to always grossly understate the seriousness of that situation, especially including the crucial issues of how to operate the human murder systems after the development of weapons of mass destruction, which is unavoidable due to the rapid development of globalized electronic monkey money frauds, backed by the threat of force from apes with atomic weapons.
Those who believe that possessing precious metals, or cryptocurrencies, etc., are viable solutions to those problems are not remotely close to being in the right order of magnitude. Although there is no doubt that exponentially more "money" is being made out of nothing as debts, in order to "pay" for strip-mining the natural resources of a still relatively fresh planet, and so, there is no doubt that the exponentially decreasing value of that "money" is driving the accumulation of apparent anomalies, such as outlined in the article above, the actually crucial issues continue to be the ways that money is measurement backed by murder, as the most abstract ways that private property are claims backed by coercions. Stop-gap individual responses to the runaway fraudulence, such as faith in possessing precious metals or cryptocurrencies, make some relative sense in terms of the public "money" supplies becoming exponentially more fraudulent, but otherwise dismally fail to be in the ball park of the significant issues driven by prodigious progress in physical sciences, WITHOUT any genuine progress in political sciences, other than to continue to be able to better enforce bigger frauds, through the elaborations of oxymoronic scientific dictatorships, which adamantly refuse to become more genuinely scientific about themselves.
Primates with about exponentially increasing physical technologies continue to deliberately ignore and misunderstand themselves as much as is humanly possible, due to the history of warfare making and maintaining the currently existing political economy, whose maliciousness is manifesting through runaway vicious feedback loops, whereby the excessively successful control of Civilization through applications of the methods of organized crime are resulting in that Civilization manifesting runaway criminal insanities. Indeed, in that context, where there is almost nothing but the central core of triumphant organized crime, namely bankster dominated governments, surrounded by various layers of controlled "opposition" groups, which stay within the same bullshit-based frames of reference regarding those phenomena, the overall situation is that society becoming about exponentially sicker and insane.
That Civilization has been driven by natural selection pressures to manifest runaway psychoses is not going to stop the laws of nature from continuing to work through that Civilization. However, that will nevertheless drive the currently dominate artificial selection systems to become increasingly psychotic, in ways whereby their vicious feedback loops are less and less able to be sanely responded to ... Although some human beings have better and better understood some general energy systems, e.g., electric and atomic energy, etc., since warfare was the oldest and best developed forms of social science and engineering, whose successfulness was based on being able to maximize maliciousness, and since those then enabled successful finance to become based on runaway enforced frauds, human beings living within Globalized Neolithic Civilization are so hidebound by adapting to living inside those vicious feedback loops based on being able to enforce frauds that those human beings are mostly unwilling and unable to better understand themselves as also manifestations of general energy systems.
As the report, embedded in the article, begins by quoting Leonardo da Vinci:
"Learn how to see. Realize that everything connects to everything else."
In general, "Asset Managers" are stuck inside taking for granted that everything they do has become almost totally based on being able to enforce frauds, despite some of them noticing the increasingly blatant ways that there are accumulating apparent anomalies in those systems, as vicious feedback loops drive those systems to become about exponentially more fraudulent, and therefore increasingly unbalanced. To come to better terms with those apparent anomalies requires going through series of intellectual scientific revolutions and profound paradigm shifts, which overall become ways that human beings better understand themselves as manifestations of general energy systems. However, since doing so requires recognizing how and why governments are necessarily the biggest forms of organized crime, dominated by the best organized gangsters, the banksters, it continues to be politically impossible to accomplish that.
At each open, algos compute the increase in their AUM from the prior day and their margin reach. They then begin buying. All algos do this. Buying whenever cash/margin exists; selling whenever profit targets exist. On pullbacks, the algos withdraw, volume evaporates, minimizing the drop. The algos collectively increase equity prices without consideration of the value of the money involved. Not valuations. No fundamentals. Just ones and zeroes. Just a program.
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Jun 19, 2015 | jessescrossroadscafe.blogspot.com
This video below may help one to understand some of the seemingly obtuse demands from the Troika with regard to Greece.
The video is a bit dated, but the debt scheme it describes remains largely unchanged. The primary development has been the creation of an experiment called the European Union and the character of the targets. One might also look to the wars of 'preventative intervention' and 'colour revolutions' that raise up puppet regimes for examples of more contemporary economic spoliation. From largely small and Third World countries, the candidates for debt peonage have become the smaller amongst the developed Western countries, the most vulnerable on the periphery. And even the domestic populations of the monetary powers, the US, Germany, and the UK, are now feeling the sting of financialisation, debt imposition through crises, and austerity. What used to only take place in South America and Africa has now taken place in Jefferson County Alabama. Corrupt officials burden taxpayers with unsustainable amounts of debt for unproductive, grossly overpriced projects.
It would be wrong in these instances to blame the whole country, the whole government, or all corporations, except perhaps for sleepwalking, and sometimes willfully, towards the abyss. For the most part a relatively small band of scheming and devious fellows abuse and corrupt every form of government and organization and law in order to achieve their private ambitions, often using various forms of intimidation and reward. It is an old, old story. And then there is the mass looting enable by the most recent financial crisis and Bank bailouts. If the people will not take on the chains of debt willingly, you impose them indirectly, while giving the funds to your cronies who will use them against the very people who are bearing the burdens, while lecturing them on moral values and thrift. It is an exceptionally diabolical con game.
The TPP and TTIP are integral initiatives in this effort of extending financial obligations, debt, and control. You might ask yourself why the House Republicans, who have fought the current President at every turn, blocking nominees and even stages many mock votes to repeatedly denounce a healthcare plan that originated in their own think tank and first implemented by their own presidential candidate, are suddenly championing that President's highest profile legislation, and against the opposition of his own party? The next step, after Greece is subdued, will be to extend that model to other, larger countries. And to redouble the austerity at home under cover of the next financial crisis by eliminating cash as a safe haven, and to begin the steady stream of digital 'bailing-in.'
This is why these corporatists and statists hate gold and silver, by the way. And why it is at the focal point of a currency war. It provides a counterweight to their monetary power. It speaks unpleasant truths. It is a safe haven and alternative, along with other attempts to supplant the IMF and the World Bank, for the rest of the world. So when you say, the Philippines deserved it, Iceland deserved it, Ireland deserved it, Africa deserves it, Jefferson County deserved it, Detroit deserved it, and now Greece deserves it, just keep in mind that some day soon they will be saying that you deserve it, because you stood by and did nothing.
Because when they are done with all the others, for whom do you think they come next? If you wish to see injustice stopped, if you wish to live up to the pledge of 'never again,' then you must stand for your fellows who are vulnerable. The economic hitmen have honed their skills among the poor and relatively defenseless, and have been coming closer to home in search of new hunting grounds and fatter spoils.
There is nothing 'new' or 'modern' about this. This is as old as Babylon, and evil as sin. It is the power of darkness of the world, and of spiritual wickedness in high places. The only difference is that it is not happening in the past or in a book, it is happening here and now.
"Economic powers continue to justify the current global system where priority tends to be given to speculation and the pursuit of financial gain. As a result, whatever is fragile, like the environment, is defenseless before the interests of the deified market, which becomes the only rule." Francis I, Laudato Si
https://www.youtube.com/watch?v=p7gxkgssngU
You may also find some information about the contemporary applications of these methods in The IMF's 'Tough Choices' On Greece by Jamie Galbraith.
"Plunderers of the world, when nothing remains on the lands to which they have laid waste by wanton thievery, they search out across the seas. 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, Agricola Posted by Jesse at 11:46 AM Email This BlogThis! Share to Twitter Share to Facebook Share to Pinterest
Category: currency war, debt peonage, debt slavery, neo-colonialism, new world order
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Mar 20, 2011 | naked capitalism
Spencer Thomas:
Very good post. Thank you.
Over the past three decades, large parts of our culture here in the US have internalized the lessons of the new Social Darwinism, with a significant body of literature to explain and justify it. Many of us have internalized, without even realizing it, the ideas of "dog eat dog", "every man for himself", "society should be structured like the animal kingdom, where the weak and sick simply die because they cannot compete, and this is healthy", and "everything that happens to you is your own fault. There is no such thing as circumstance that cannot be overcome, and certainly no birth lottery."
The levers pulled by politicians and the Fed put these things into practice, but even if we managed get different (better) politicians or Fed chairmen, ones who weren't steeped in this culture and ideology, we'd still be left with the culture in the population at large, and things like the "unemployed stigma" are likely to die very, very hard. Acceptance of the "just-world phenomenon" here in the US runs deep.
perfect stranger:
"Religion is just as vulnerable to corporate capture as is the government or the academy."
This is rather rhetorical statement, and wrong one. One need to discern spiritual aspect of religion from the religion as a tool.
Religion, as is structured, is complicit: in empoverishment, obedience, people's preconditioning, and legislative enabler in the institutions such as Supreme – and non-supreme – Court(s). It is a form of PR of the ruling class for the governing class.
DownSouth:
perfect stranger,
Religion, just like human nature, is not that easy to put in a box.
For every example you can cite where religion "is complicit: in empoverishment, obedience, people's preconditioning, and legislative enabler in the institution," I can point to an example of where religion engendered a liberating, emancipatory and revolutionary spirit.
Examples:
•Early Christianity •Nominalism •Early Protestantism •Gandhi •Martin Luther King
Now granted, there don't seem to be any recent examples of this of any note, unless we consider Chris Hedges a religionist, which I'm not sure we can do. Would it be appropriate to consider Hedges a religionist?
perfect stranger:
Yes, that maybe, just maybe be the case in early stages of forming new religion(s). In case of Christianity old rulers from Rome were trying to save own head/throne and the S.P.Q.R. imperia by adopting new religion.
You use examples of Gandhi and MLK which is highly questionable both were fighters for independence and the second, civil rights. In a word: not members of establishment just as I said there were (probably) seeing the religion as spiritual force not tool of enslavement.
Matt:
This link may provide some context:
http://en.wikipedia.org/wiki/Prosperity_theology
In particular, there seems to be an extremely popular variant of the above where the starting proposition "God makes moral people rich" is improperly converted to "Rich people are more moral" which is then readily negated to "Poor people are immoral" and then expanded to "Poor people are immoral, thus they DESERVE to suffer for it". It's essentially the theological equivalent of dividing by zero
DownSouth:
Rex,
I agree.
Poll after poll after poll has shown that a majority of Americans, and a rather significant majority, reject the values, attitudes, beliefs and opinions proselytized by the stealth religion we call "neoclassical economics."
That said, the ranks of the neoliberals are not small. They constitute what Jonathan Schell calls a "mass minority." I suspect the neoliberals have about the same level of popular support that the Nazis did at the time of their takeover of Germany in 1932, or the Bolsheviks had in Russia at the time of their takeover in 1917, which is about 20 or 25% of the total population.
The ranks of the neoliberals are made to appear far greater than they really are because they have all but exclusive access to the nation's megaphone. The Tea Party can muster a handful of people to disrupt a town hall meeting and it gets coast to coast, primetime coverage. But let a million people protest against bank bailouts, and it is ignored. Thus, by manipulation of the media, the mass minority is made to appear to be much larger than it really is.
The politicians love this, because as they carry water for their pet corporations, they can point to the Tea Partiers and say: "See what a huge upwelling of popular support I am responding to."
JTFaraday:
Well, if that's true, then the unemployed are employable but the mass mediated mentality would like them to believe they are literally and inherently unemployable so that they underestimate and under-sell themselves.
This is as much to the benefit of those who would like to pick up "damaged goods" on the cheap as those who promote the unemployment problem as one that inheres in prospective employees rather than one that is a byproduct of a bad job market lest someone be tempted to think we should address it politically.
That's where I see this blame the unemployed finger pointing really getting traction these days.
attempter:
I apologize for the fact that I only read the first few paragraphs of this before quitting in disgust.
I just can no longer abide the notion that "labor" can ever be seen by human beings as a "cost" at all. We really need to refuse to even tolerate that way of phrasing things. Workers create all wealth. Parasites have no right to exist. These are facts, and we should refuse to let argument range beyond them.
The only purpose of civilization is to provide a better way of living and for all people. This includes the right and full opportunity to work and manage for oneself and/or as a cooperative group. If civilization doesn't do that, we're better off without it.
psychohistorian:
I am one of those long term unemployed.
I suppose my biggest employment claim would be as some sort of IT techie, with numerous supply chain systems and component design, development, implementation, interfaces with other systems and ongoing support. CCNP certification and a history of techiedom going back to WEYCOS.
I have a patent (6,209,954) in my name and 12+ years of beating my head against the wall in an industry that buys compliance with the "there is no problem here, move on now" approach.
Hell, I was a junior woodchuck program administrator back in the early 70's working for the Office of the Governor of the state of Washington on CETA PSE or Public Service Employment. The office of the Governor ran the PSE program for 32 of the 39 counties in the state that were not big enough to run their own. I helped organize the project approval process in all those counties to hire folk at ( if memory serves me max of $833/mo.) to fix and expand parks and provide social and other government services as defined projects with end dates. If we didn't have the anti-public congress and other government leadership we have this could be a current component in a rational labor policy but I digress.
I have experience in the construction trades mostly as carpenter but some electrical, plumbing, HVAC, etc. also.
So, of course there is some sort of character flaw that is keeping me and all those others from employment ..right. I may have more of an excuse than others, have paid into SS for 45 years but still would work if it was available ..taking work away from other who may need it more .why set up a society where we have to compete as such for mere existence???????
One more face to this rant. We need government by the people and for the people which we do not have now. Good, public focused, not corporate focused government is bigger than any entities that exist under its jurisdiction and is kept updated by required public participation in elections and potentially other things like military, peace corps, etc. in exchange for advanced education. I say this as someone who has worked at various levels in both the public and private sectors there are ignorant and misguided folks everywhere. At least with ongoing active participation there is a chance that government would, once constructed, be able to evolve as needed within public focus .IMO.
Ishmael:
Some people would say I have been unemployed for 10 years. In 2000 after losing the last of my four CFO gigs for public companies I found it necessary to start consulting. This has lead to two of my three biggest winning years. I am usually consulting on cutting edge area of my profession and many times have large staffs reporting to me that I bring on board to get jobs done. For several years I subcontacted to a large international consulting firm to clean up projects which went wrong. Let me give some insight here.
- First, most good positions have gate keepers who are professional recruiters. It is near impossible to get by them and if you are unemployed they will hardly talk to you. One time talking to a recruiter at Korn Fery I was interviewing for a job I have done several times in an industry I have worked in several times. She made a statement that I had never worked at a well known company. I just about fell out of my chair laughing. At one time I was a senior level executive for the largest consulting firm in the world and lived on three continents and worked with companies on six. In addition, I had held senior positions for 2 fortune 500 firms and was the CFO for a company with $4.5 billion in revenue. I am well known at several PE firms and the founder of one of the largest mentioned in a meeting that one of his great mistakes was not investing in a very successful LBO (return of in excess of 20 multiple to investors in 18 months) I was the CFO for. In a word most recruiters are incompetent.
- Second, most CEO's any more are just insecure politicians. One time during an interview I had a CEO asked me to talk about some accomplishments. I was not paying to much attention as I rattled off accomplishments and the CEO went nuclear and started yelling at me that he did not know where I thought I was going with this job but the only position above the CFO job was his and he was not going anywhere. I assured him I was only interested in the CFO position and not his, but I knew the job was over. Twice feed back that I got from recruiters which they took at criticism was the "client said I seemed very assured of myself."
- Third, government, banking, business and the top MBA schools are based upon lying to move forward. I remember a top human resource executive telling me right before Enron, MCI and Sarbanes Oxley that I needed to learn to be more flexible. My response was that flexibility would get me an orange jump suit. Don't get me wrong, I have a wide grey zone, but it use to be in business the looked for people who could identify problems early and resolve them. Now days I see far more of a demand for people who can come up with PR spins to hide them. An attorney/treasurer consultant who partnered with me on a number of consulting jobs told me some one called me "not very charming." He said he asked what that meant, and the person who said that said, "Ish walks into a meeting and within 10 minutes he is asking about the 10,000 pound guerilla sitting in the room that no one wants to talk about." CEO do not want any challenges in their organization.
- Fourth, three above has lead to the hiring of very young and inexperienced people at senior levels. These people are insecure and do not want more senior and experienced people above them and than has resulted in people older than 45 not finding positions.
- Fifth, people are considered expendable and are fired for the lamest reasons anymore. A partner at one of the larger and more prestigious recruiting firms one time told me, "If you have a good consulting business, just stick with it. Our average placement does not last 18 months any more." Another well known recruiter in S. Cal. one time commented to me, "Your average consulting gig runs longer than our average placement."
With all of that said, I have a hard time understanding such statements as "@attempter "Workers create all wealth. Parasites have no right to exist." What does that mean? Every worker creates wealth. There is no difference in people. Sounds like communism to me. I make a good living and my net worth has grown working for myself. I have never had a consulting gig terminated by the client but I have terminated several. Usually, I am brought in to fix what several other people have failed at. I deliver basically intellectual properties to companies. Does that mean I am not a worker. I do not usually lift anything heavy or move equipment but I tell people what and where to do it so does that make me a parasite.
Those people who think everyone is equal and everyone deserves equal pay are fools or lazy. My rate is high, but what usually starts as short term projects usually run 6 months or more because companies find I can do so much more than what most of their staff can do and I am not a threat.
I would again like to have a senior challenging role at a decent size company but due to the reasons above will probably never get one. However, you can never tell. I am currently consulting for a midsize very profitable company (grew 400% last year) where I am twice the age of most people there, but everyone speaks to me with respect so you can never tell.
Lidia:
Ishmael, you're quite right. When I showed my Italian husband's resume to try and "network" in the US, my IT friends assumed he was lying about his skills and work history.
Contemporaneously, in Italy it is impossible to get a job because of incentives to hire "youth". Age discrimination is not illegal, so it's quite common to see ads that ask for a programmer under 30 with 5 years of experience in COBOL (the purple squirrel).
Hosswire
Some good points about the foolishness of recruiters, but a great deal of that foolishness is forced by the clients themselves. I used to be a recruiter myself, including at Korn Ferry in Southern California. I described the recruiting industry as "yet more proof that God hates poor people" because my job was to ignore resumes from people seeking jobs and instead "source" aka "poach" people who already had good jobs by dangling a higher salary in front of them. I didn't do it because I disparaged the unemployed, or because I could not do the basic analysis to show that a candidate had analogous or transferrable skills to the opening.
I did it because the client, as Yves said, wanted people who were literally in the same job description already. My theory is that the client wanted to have their ass covered in case the hire didn't work out, by being able to say that they looked perfect "on paper." The lesson I learned for myself and my friends looking for jobs was simple, if morally dubious. Basically, that if prospective employers are going to judge you based on a single piece of paper take full advantage of the fact that you get to write that piece of paper yourself.
Ishmael:
Hosswire - I agree with your comment. There are poor recruiters like the one I sited but in general it is the clients fault. Fear of failure. All hires have at least a 50% chance of going sideways on you. Most companies do not even have the ability to look at a resume nor to interview. I did not mean to same nasty things about recruiters, and I even do it sometimes but mine.
I look at failure in a different light than most companies. You need to be continually experimenting and changing to survive as a company and there will be some failures. The goal is to control the cost of failures while looking for the big pay off on a winner.
Mannwich:
As a former recruiter and HR "professional" (I use that term very loosely for obvious reasons), I can honestly say that you nailed it. Most big companies looking for mid to high level white collar "talent" will almost always take the perceived safest route by hiring those who look the best ON PAPER and in a suit and lack any real interviewing skills to find the real stars. What's almost comical is that companies almost always want to see the most linear resume possible because they want to see "job stability" (e.g. a CYA document in case the person fails in that job) when in many cases nobody cares about the long range view of the company anyway. My question was why should the candidate or employee care about the long range view if the employer clearly doesn't?
Ishmael:
Manwhich another on point comment. Sometimes either interviewing for a job or consulting with a CEO it starts getting to the absurd. I see all the time the requirement for stability in a persons background. Hello, where have they been the last 15 years. In addition, the higher up you go the more likely you will be terminated sometime and that is especially true if you are hired from outside the orgnanization. Companies want loyalty from an employee but offer none in return.
The average tenure for a CFO anymore is something around 18 months. I have been a first party participant (more than once) where I went through an endless recruiting process for a company (lasting more than 6 months) they final hire some one and that person is with the company for 3 months and then resigns (of course we all know it is through mutual agreement).
Ishmael:
Birch:
The real problem has become and maybe this is what you are referring to is the "Crony Capitalism." We have lost control of our financial situation. Basically, PE is not the gods of the universe that everyone thinks they are. However, every bankers secret wet dream is to become a private equity guy. Accordingly, bankers make ridiculous loans to PE because if you say no to them then you can not play in their sand box any more. Since the govt will not let the banks go bankrupt like they should then this charade continues inslaving everyone.
This country as well as many others has a large percentage of its assets tied up in over priced deals that the bankers/governments will not let collapse while the blood sucking vampires suck the life out of the assets.
On the other hand, govt is not the answer. Govt is too large and accomplishes too little.
kevin de bruxelles:
The harsh reality is that, at least in the first few rounds, companies kick to the curb their weakest links and perceived slackers. Therefore when it comes time to hire again, they are loath to go sloppy seconds on what they perceive to be some other company's rejects. They would much rather hire someone who survived the layoffs working in a similar position in a similar company. Of course the hiring company is going to have to pay for this privilege. Although not totally reliable, the fact that someone survived the layoffs provides a form social proof for their workplace abilities.
On the macro level, labor has been under attack for thirty years by off shoring and third world immigration. It is no surprise that since the working classes have been severely undermined that the middle classes would start to feel some pressure. By mass immigration and off-shoring are strongly supported by both parties. Only when the pain gets strong enough will enough people rebel and these two policies will be overturned. We still have a few years to go before this happens.
davver:
Let's say I run a factory. I produce cars and it requires very skilled work. Skilled welding, skilled machinists. Now I introduce some robotic welders and an assembly line system. The plants productivity improves and the jobs actually get easier. They require less skill, in fact I've simplified each task to something any idiot can do. Would wages go up or down? Are the workers really contributing to that increase in productivity or is it the machines and methods I created?
Lets say you think laying off or cutting the wages of my existing workers is wrong. What happens when a new entrant into the business employs a smaller workforce and lower wages, which they can do using the same technology? The new workers don't feel like they were cut down in any way, they are just happy to have a job. Before they couldn't get a job at the old plant because they lacked the skill, but now they can work in the new plant because the work is genuinely easier. Won't I go out of business?
Escariot:
I am 54 and have a ton of peers who are former white collar workers and professionals (project managers, architects, lighting designers, wholesalers and sales reps for industrial and construction materials and equipment) now out of work going on three years. Now I say out of work, I mean out of our trained and experienced fields.
We now work two or three gigs (waiting tables, mowing lawns, doing free lance, working in tourism, truck driving, moving company and fedex ups workers) and work HARD, for much much less than we did, and we are seeing the few jobs that are coming back on line going to younger workers. It is just the reality. And for most of us the descent has not been graceful, so our credit is a wreck, which also breeds a whole other level of issues as now it is common for the credit record to be a deal breaker for employment, housing, etc.
Strangely I don't sense a lot of anger or bitterness as much as humility. And gratitude for ANY work that comes our way. Health insurance? Retirement accounts? not so much.
Mickey Marzick:
Yves and I have disagreed on how extensive the postwar "pact" between management and labor was in this country. But if you drew a line from say, Trenton-Patterson, NJ to Cincinatti, OH to Minneapolis, MN, north and east of it where blue collar manufacturing in steel, rubber, auto, machinery, etc., predominated, this "pact" may have existed but ONLY because physical plant and production were concentrated there and workers could STOP production.
Outside of these heavy industrial pockets, unions were not always viewed favorably. As one moved into the rural hinterlands surrounding them there was jealously and/or outright hostility. Elsewhere, especially in the South "unions" were the exception not the rule. The differences between NE Ohio before 1975 – line from Youngstown to Toledo – and the rest of the state exemplified this pattern. Even today, the NE counties of Ohio are traditional Democratic strongholds with the rest of the state largely Republican. And I suspect this pattern existed elsewhere. But it is changing too
In any case, the demonization of the unemployed is just one notch above the vicious demonization of the poor that has always existed in this country. It's a constant reminder for those still working that you could be next – cast out into the darkness – because you "failed" or worse yet, SINNED. This internalization of the "inner cop" reinforces the dominant ideology in two ways. First, it makes any resistance by individuals still employed less likely. Second, it pits those still working against those who aren't, both of which work against the formation of any significant class consciousness amongst working people. The "oppressed" very often internalize the value system of the oppressor.
As a nation of immigrants ETHNICITY may have more explanatory power than CLASS. For increasingly, it would appear that the dominant ethnic group – suburban, white, European Americans – have thrown their lot in with corporate America. Scared of the prospect of downward social mobility and constantly reminded of URBAN America – the other America – this group is trapped with nowhere to else to go.
It's the divide and conquer strategy employed by ruling elites in this country since its founding [Federalist #10] with the Know Nothings, blaming the Irish [NINA - no Irish need apply] and playing off each successive wave of immigrants against the next. Only when the forces of production became concentrated in the urban industrial enclaves of the North was this strategy less effective. And even then internal immigration by Blacks to the North in search of employment blunted the formation of class consciousness among white ethnic industrial workers.
Wherever the postwar "pact of domination" between unions and management held sway, once physical plant was relocated elsewhere [SOUTH] and eventually offshored, unemployment began to trend upwards. First it was the "rustbelt" now it's a nationwide phenomenon. Needless to say, the "pact" between labor and management has been consigned to the dustbin of history.
White, suburban America has hitched its wagon to that of the corporate horse. Demonization of the unemployed coupled with demonization of the poor only serve to terrorize this ethnic group into acquiescence. And as the workplace becomes a multicultural matrix this ethnic group is constantly reminded of its perilous state. Until this increasingly atomized ethnic group breaks with corporate America once and for all, it's unlikely that the most debilitating scourge of all working people – UNEMPLOYMENT – will be addressed.
Make no mistake about it, involuntary UNEMPLOYMENT/UNDEREMPLYEMT is a form of terrorism and its demonization is terrorism in action. This "quiet violence" is psychological and the intimidation wrought by unemployment and/or the threat of it is intended to dehumanize individuals subjected to it. Much like spousal abuse, the emotional and psychological effects are experienced way before any physical violence. It's the inner cop that makes overt repression unnecessary. We terrorize ourselves into submission without even knowing it because we accept it or come to tolerate it. So long as we accept "unemployment" as an inevitable consequence of progress, as something unfortunate but inevitable, we will continue to travel down the road to serfdom where ARBEIT MACHT FREI!
FULL and GAINFUL EMPLOYMENT are the ultimate labor power.
Eric:
It's delicate since direct age discrimination is illegal, but when circumstances permit separating older workers they have a very tough time getting back into the workforce in an era of high health care inflation. Older folks consume more health care and if you are hiring from a huge surplus of available workers it isn't hard to steer around the more experienced. And nobody gets younger, so when you don't get job A and go for job B 2 weeks later you, you're older still!
James:
Yves said- "This overly narrow hiring spec then leads to absurd, widespread complaint that companies can't find people with the right skills"
In the IT job markets such postings are often called purple squirrels. The HR departments require the applicant to be expert in a dozen programming languages. This is an excuse to hire a foreigner on a temp h1-b or other visa.
Most people aren't aware that this model dominates the sciences. Politicians scream we have a shortage of scientists, yet it seems we only have a shortage of cheap easily exploitable labor. The economist recently pointed out the glut of scientists that currently exists in the USA.
http://www.economist.com/node/17723223
This understates the problem. The majority of PhD recipients wander through years of postdocs only to end up eventually changing fields. My observation is that the top ten schools in biochem/chemistry/physics/ biology produce enough scientists to satisfy the national demand.
The exemption from h1-b visa caps for academic institutions exacerbates the problem, providing academics with almost unlimited access to labor.
The pharmaceutical sector has been decimated over the last ten years with tens of thousands of scientists/ factory workers looking for re-training in a dwindling pool of jobs (most of which will deem you overqualified.)
http://pipeline.corante.com/archives/2011/03/03/a_postdocs_lament.php
Abe, NYC:
I wonder how the demonization of the unemployed can be so strong even in the face of close to 10% unemployment/20% underemployment. It's easy and tempting to demonize an abstract young buck or Cadillac-driving welfare queen, but when a family member or a close friend loses a job, or your kids are stuck at your place because they can't find one, shouldn't that alter your perceptions? Of course the tendency will be to blame it all on the government, but there has to be a limit to that in hard-hit places like Ohio, Colorado, or Arizona. And yet, the dynamics aren't changing or even getting worse. Maybe Wisconsin marks a turning point, I certainly hope it does
damien:
It's more than just stupid recruiting, this stigma. Having got out when the getting was good, years ago, I know that any corporate functionary would be insane to hire me now. Socialization wears off, the deformation process reverses, and the ritual and shibboleths become a joke. Even before I bailed I became a huge pain in the ass as economic exigency receded, every bosses nightmare. I suffered fools less gladly and did the right thing out of sheer anarchic malice.
You really can't maintain corporate culture without existential fear – not just, "Uh oh, I'm gonna get fired," fear, but a visceral feeling that you do not exist without a job. In properly indoctrinated workers that feeling is divorced from economic necessity. So anyone who's survived outside a while is bound to be suspect. That's a sign of economic security, and security of any sort undermines social control.
youniquelikeme:
You hit the proverbial nail with that reply. (Although, sorry, doing the right thing should not be done out of malice) The real fit has to be in the corporate yes-man culture (malleable ass kisser) to be suited for any executive position and beyond that it is the willingness to be manipulated and drained to be able to keep a job in lower echelon.
This is the new age of evolution in the work place. The class wars will make it more of an eventual revolution, but it is coming. The unemployment rate (the actual one, not the Government one) globalization and off shore hiring are not sustainable for much longer.
Something has to give, but it is more likely to snap then to come easily. People who are made to be repressed and down and out eventually find the courage to fight back and by then, it is usually not with words.
down and out in Slicon Valley:
This is the response I got from a recruiter:
"I'm going to be overly honest with you. My firm doesn't allow me to submit any candidate who hasn't worked in 6-12 months or more. Recruiting brokers are probably all similar in that way . You are going to have to go through a connection/relationship you have with a colleague, co-worker, past manager or friend to get your next job .that's my advice for you. Best of luck "
I'm 56 years old with MSEE. Gained 20+ years of experience at the best of the best (TRW, Nortel, Microsoft), have been issued a patent. Where do I sign up to gain skills required to find a job now?
Litton Graft :
"Best of the Best?" I know you're down now, but looking back at these Gov'mint contractors you've enjoyed the best socialism money can by.
Nortel/TRW bills/(ed) the Guvmint at 2x, 3x your salary, you can ride this for decades. At the same time the Inc is attached to the Guvmint ATM localities/counties are giving them a red carpet of total freedom from taxation. Double subsidies.
I've worked many years at the big boy bandits, and there is no delusion in my mind that almost anyone, can do what I do and get paid 100K+. I've never understood the mindset of some folks who work in the Wermacht Inc: "Well, someone has to do this work" or worse "What we do, no one else can do" The reason no one else "can do it" is that they are not allowed to. So, we steal from the poor to build fighter jets, write code or network an agency.
Hosswire:
I used to work as a recruiter and can tell you that I only parroted the things my clients told me. I wanted to get you hired, because I was lazy and didn't want to have to talk to someone else next.
So what do you do? To place you that recruiter needs to see on a piece of paper that you are currently working? Maybe get an email or phone call from someone who will vouch for your employment history. That should not be that hard to make happen.
Francois T :
The "bizarre way that companies now spec jobs" is essentially a coded way for mediocre managers to say without saying so explicitly that "we can afford to be extremely picky, and by God, we shall do so no matter what, because we can!"
Of course, when comes the time to hire back because, oh disaster! business is picking up again, (I'm barely caricaturing here; some managers become despondent when they realize that workers regain a bit of the higher ground; loss of power does that to lesser beings) the same idiots who designed those "overly narrow hiring spec then leads to absurd, widespread complaint that companies can't find people with the right skills" are thrown into a tailspin of despair and misery. Instead of figuring out something as simple as "if demand is better, so will our business", they can't see anything else than the (eeeek!) cost of hiring workers. Unable to break their mental corset of penny-pincher, they fail to realize that lack of qualified workers will prevent them to execute well to begin with.
And guess what: qualified workers cost money, qualified workers urgently needed cost much more.
This managerial attitude must be another factor that explain why entrepreneurship and the formation of small businesses is on the decline in the US (contrary to the confabulations of the US officialdumb and the chattering class) while rising in Europe and India/China.
Kit:
If you are 55-60, worked as a professional (i.e., engineering say) and are now unemployed you are dead meat. Sorry to be blunt but thats the way it is in the US today. Let me repeat that : Dead Meat.
I was terminated at age 59, found absolutely NOTHING even though my qualifications were outstanding. Fortunately, my company had an old style pension plan which I was able to qualify for (at age 62 without reduced benefits). So for the next 2+ years my wife and I survived on unemployment insurance, severance, accumulated vacation pay and odd jobs. Not nice – actually, a living hell.
At age 62, I applied for my pension, early social security, sold our old house (at a good profit) just before the RE crash, moved back to our home state. Then my wife qualified for social security also. Our total income is now well above the US median.
Today, someone looking at us would think we were the typical corporate retiree. We surely don't let on any differently but the experience (to get to this point) almost killed us.
I sympathize very strongly with the millions caught in this unemployment death spiral. I wish I had an answer but I just don't. We were very lucky to survive intact.
Ming:
Thank you Yves for your excellent post, and for bringing to light this crucial issue.
Thank you to all the bloggers, who add to the richness of the this discussion.
I wonder if you could comment on this Yves, and correct me if I am wrong I believe that the power of labor was sapped by the massive available supply of global labor. The favorable economic policies enacted by China (both official and unofficial), and trade negotiations between the US government and the Chinese government were critical to creating the massive supply of labor.
Thank you. No rush of course.
Nexus:
There are some odd comments and notions here that are used to support dogma and positions of prejudice. The world can be viewed in a number of ways. Firstly from a highly individualised and personal perspective – that is what has happened to me and here are my experiences. Or alternatively the world can be viewed from a broader societal perspective.
In the context of labour there has always been an unequal confrontation between those that control capital and those that offer their labour, contrary to some of the views exposed here – Marx was a first and foremost a political economist. The political economist seeks to understand the interplay of production, supply, the state and institutions like the media. Modern day economics branched off from political economy and has little value in explaining the real world as the complexity of the world has been reduced to a simplistic rationalistic model of human behaviour underpinned by other equally simplistic notions of 'supply and demand', which are in turn represented by mathematical models, which in themselves are complex but merely represent what is a simplistic view of the way the world operates. This dogmatic thinking has avoided the need to create an underpinning epistemology. This in turn underpins the notion of free choice and individualism which in itself is an illusion as it ignores the operation of the modern state and the exercise of power and influence within society.
It was stated in one of the comments that the use of capital (machines, robotics, CAD design, etc.) de-skills. This is hardly the case as skills rise for those that remain and support highly automated/continuous production factories. This is symptomatic of the owners of capital wanting to extract the maximum value for labour and this is done via the substitution of labour for capital making the labour that remains to run factories highly productive thus eliminating low skill jobs that have been picked up via services (people move into non productive low skilled occupations warehousing and retail distribution, fast food outlets, etc). Of course the worker does not realise the additional value of his or her labour as this is expropriated for the shareholders (including management as shareholders).
The issue of the US is that since the end of WW2 it is not the industrialists that have called the shots and made investments it is the financial calculus of the investment banker (Finance Capital). Other comments have tried to ignore the existence of the elites in society – I would suggest that you read C.W.Mills – The Power Elites as an analysis of how power is exercised in the US – it is not through the will of the people.
For Finance capital investments are not made on the basis of value add, or contribution through product innovation and the exchange of goods but on basis of the lowest cost inputs. Consequently, the 'elites' that make investment decisions, as they control all forms of capital seek to gain access to the cheapest cost inputs. The reality is that the US worker (a pool of 150m) is now part of a global labour pool of a couple of billion that now includes India and China. This means that the elites, US transnational corporations for instance, can access both cheaper labour pools, relocate capital and avoid worker protection (health and safety is not a concern). The strategies of moving factories via off-shoring (over 40,000 US factories closed or relocated) and out-sourcing/in-sourcing labour is also a representations of this.
The consequence for the US is that the need for domestic labour has diminished and been substituted by cheap labour to extract the arbitrage between US labour rates and those of Chinese and Indians. Ironically, in this context capital has become too successful as the mode of consumption in the US shifted from workers that were notionally the people that created the goods, earned wages and then purchased the goods they created to a new model where the worker was substituted by the consumer underpinned by cheap debt and low cost imports – it is illustrative to note that real wages have not increased in the US since the early 1970's while at the same time debt has steadily increased to underpin the illusion of wealth – the 'borrow today and pay tomorrow' mode of capitalist operation. This model of operation is now broken. The labour force is now being demonized as there is a now surplus of labour and a need to drive down labour rates through changes in legislation and austerity programs to meet those of the emerging Chinese and Indian middle class so workers rights need to be broken. Once this is done a process of in-source may take place as US labour costs will be on par with overseas labour pools.
It is ironic that during the Regan administration a number of strategic thinkers saw the threat from emerging economies and the danger of Finance Capital and created 'Project Socrates' that would have sought to re-orientate the US economy from one that was based on the rationale of Finance Capital to one that focused in productive innovation which entailed an alignment of capital investment, research and training to product innovative goods. Of course this was ignored and the rest is history. The race to the lowest input cost is ultimately self defeating as it is clear that the economy de-industrialises through labour and capital changes and living standards collapse. The elites – bankers, US transnational corporations, media, industrial military complex and the politicians don't care as they make money either way and this way you get other people overseas to work cheap for you.
S P:
Neoliberal orthodoxy treats unemployment as well as wage supression as a necessary means to fight "inflation." If there was too much power in the hands of organized labor, inflationary pressures would spiral out of control as supply of goods cannot keep up with demand.
It also treats the printing press as a necessary means to fight "deflation."
So our present scenario: widespread unemployment along with QE to infinity, food stamps for all, is exactly what you'd expect.
The problem with this orthodoxy is that it assumes unlimited growth on a planet with finite resources, particularly oil and energy. Growth is not going to solve unemployment or wages, because we are bumping up against limits to growth.
There are only two solutions. One is tax the rich and capital gains, slow growth, and reinvest the surplus into jobs/skills programs, mostly to maintain existing infrastructure or build new energy infrastructure. Even liberals like Krugman skirt around this, because they aren't willing to accept that we have the reached the end of growth and we need radical redistribution measures.
The other solution is genuine classical liberalism / libertarianism, along the lines of Austrian thought. Return to sound money, and let the deflation naturally take care of the imbalances. Yes, it would be wrenching, but it would likely be wrenching for everybody, making it fair in a universal sense.
Neither of these options is palatable to the elite classes, the financiers of Wall Street, or the leeches and bureaucrats of D.C.
So this whole experiment called America will fail.
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Mar 20, 2011 | naked capitalism
Spencer Thomas:
Very good post. Thank you.
Over the past three decades, large parts of our culture here in the US have internalized the lessons of the new Social Darwinism, with a significant body of literature to explain and justify it. Many of us have internalized, without even realizing it, the ideas of "dog eat dog", "every man for himself", "society should be structured like the animal kingdom, where the weak and sick simply die because they cannot compete, and this is healthy", and "everything that happens to you is your own fault. There is no such thing as circumstance that cannot be overcome, and certainly no birth lottery."
The levers pulled by politicians and the Fed put these things into practice, but even if we managed get different (better) politicians or Fed chairmen, ones who weren't steeped in this culture and ideology, we'd still be left with the culture in the population at large, and things like the "unemployed stigma" are likely to die very, very hard. Acceptance of the "just-world phenomenon" here in the US runs deep.
perfect stranger:
"Religion is just as vulnerable to corporate capture as is the government or the academy."
This is rather rhetorical statement, and wrong one. One need to discern spiritual aspect of religion from the religion as a tool.
Religion, as is structured, is complicit: in empoverishment, obedience, people's preconditioning, and legislative enabler in the institutions such as Supreme – and non-supreme – Court(s). It is a form of PR of the ruling class for the governing class.
DownSouth:
perfect stranger,
Religion, just like human nature, is not that easy to put in a box.
For every example you can cite where religion "is complicit: in empoverishment, obedience, people's preconditioning, and legislative enabler in the institution," I can point to an example of where religion engendered a liberating, emancipatory and revolutionary spirit.
Examples:
•Early Christianity •Nominalism •Early Protestantism •Gandhi •Martin Luther King
Now granted, there don't seem to be any recent examples of this of any note, unless we consider Chris Hedges a religionist, which I'm not sure we can do. Would it be appropriate to consider Hedges a religionist?
perfect stranger:
Yes, that maybe, just maybe be the case in early stages of forming new religion(s). In case of Christianity old rulers from Rome were trying to save own head/throne and the S.P.Q.R. imperia by adopting new religion.
You use examples of Gandhi and MLK which is highly questionable both were fighters for independence and the second, civil rights. In a word: not members of establishment just as I said there were (probably) seeing the religion as spiritual force not tool of enslavement.
Matt:
This link may provide some context:
http://en.wikipedia.org/wiki/Prosperity_theology
In particular, there seems to be an extremely popular variant of the above where the starting proposition "God makes moral people rich" is improperly converted to "Rich people are more moral" which is then readily negated to "Poor people are immoral" and then expanded to "Poor people are immoral, thus they DESERVE to suffer for it". It's essentially the theological equivalent of dividing by zero
DownSouth:
Rex,
I agree.
Poll after poll after poll has shown that a majority of Americans, and a rather significant majority, reject the values, attitudes, beliefs and opinions proselytized by the stealth religion we call "neoclassical economics."
That said, the ranks of the neoliberals are not small. They constitute what Jonathan Schell calls a "mass minority." I suspect the neoliberals have about the same level of popular support that the Nazis did at the time of their takeover of Germany in 1932, or the Bolsheviks had in Russia at the time of their takeover in 1917, which is about 20 or 25% of the total population.
The ranks of the neoliberals are made to appear far greater than they really are because they have all but exclusive access to the nation's megaphone. The Tea Party can muster a handful of people to disrupt a town hall meeting and it gets coast to coast, primetime coverage. But let a million people protest against bank bailouts, and it is ignored. Thus, by manipulation of the media, the mass minority is made to appear to be much larger than it really is.
The politicians love this, because as they carry water for their pet corporations, they can point to the Tea Partiers and say: "See what a huge upwelling of popular support I am responding to."
JTFaraday:
Well, if that's true, then the unemployed are employable but the mass mediated mentality would like them to believe they are literally and inherently unemployable so that they underestimate and under-sell themselves.
This is as much to the benefit of those who would like to pick up "damaged goods" on the cheap as those who promote the unemployment problem as one that inheres in prospective employees rather than one that is a byproduct of a bad job market lest someone be tempted to think we should address it politically.
That's where I see this blame the unemployed finger pointing really getting traction these days.
attempter:
I apologize for the fact that I only read the first few paragraphs of this before quitting in disgust.
I just can no longer abide the notion that "labor" can ever be seen by human beings as a "cost" at all. We really need to refuse to even tolerate that way of phrasing things. Workers create all wealth. Parasites have no right to exist. These are facts, and we should refuse to let argument range beyond them.
The only purpose of civilization is to provide a better way of living and for all people. This includes the right and full opportunity to work and manage for oneself and/or as a cooperative group. If civilization doesn't do that, we're better off without it.
psychohistorian:
I am one of those long term unemployed.
I suppose my biggest employment claim would be as some sort of IT techie, with numerous supply chain systems and component design, development, implementation, interfaces with other systems and ongoing support. CCNP certification and a history of techiedom going back to WEYCOS.
I have a patent (6,209,954) in my name and 12+ years of beating my head against the wall in an industry that buys compliance with the "there is no problem here, move on now" approach.
Hell, I was a junior woodchuck program administrator back in the early 70's working for the Office of the Governor of the state of Washington on CETA PSE or Public Service Employment. The office of the Governor ran the PSE program for 32 of the 39 counties in the state that were not big enough to run their own. I helped organize the project approval process in all those counties to hire folk at ( if memory serves me max of $833/mo.) to fix and expand parks and provide social and other government services as defined projects with end dates. If we didn't have the anti-public congress and other government leadership we have this could be a current component in a rational labor policy but I digress.
I have experience in the construction trades mostly as carpenter but some electrical, plumbing, HVAC, etc. also.
So, of course there is some sort of character flaw that is keeping me and all those others from employment ..right. I may have more of an excuse than others, have paid into SS for 45 years but still would work if it was available ..taking work away from other who may need it more .why set up a society where we have to compete as such for mere existence???????
One more face to this rant. We need government by the people and for the people which we do not have now. Good, public focused, not corporate focused government is bigger than any entities that exist under its jurisdiction and is kept updated by required public participation in elections and potentially other things like military, peace corps, etc. in exchange for advanced education. I say this as someone who has worked at various levels in both the public and private sectors there are ignorant and misguided folks everywhere. At least with ongoing active participation there is a chance that government would, once constructed, be able to evolve as needed within public focus .IMO.
Ishmael:
Some people would say I have been unemployed for 10 years. In 2000 after losing the last of my four CFO gigs for public companies I found it necessary to start consulting. This has lead to two of my three biggest winning years. I am usually consulting on cutting edge area of my profession and many times have large staffs reporting to me that I bring on board to get jobs done. For several years I subcontacted to a large international consulting firm to clean up projects which went wrong. Let me give some insight here.
- First, most good positions have gate keepers who are professional recruiters. It is near impossible to get by them and if you are unemployed they will hardly talk to you. One time talking to a recruiter at Korn Fery I was interviewing for a job I have done several times in an industry I have worked in several times. She made a statement that I had never worked at a well known company. I just about fell out of my chair laughing. At one time I was a senior level executive for the largest consulting firm in the world and lived on three continents and worked with companies on six. In addition, I had held senior positions for 2 fortune 500 firms and was the CFO for a company with $4.5 billion in revenue. I am well known at several PE firms and the founder of one of the largest mentioned in a meeting that one of his great mistakes was not investing in a very successful LBO (return of in excess of 20 multiple to investors in 18 months) I was the CFO for. In a word most recruiters are incompetent.
- Second, most CEO's any more are just insecure politicians. One time during an interview I had a CEO asked me to talk about some accomplishments. I was not paying to much attention as I rattled off accomplishments and the CEO went nuclear and started yelling at me that he did not know where I thought I was going with this job but the only position above the CFO job was his and he was not going anywhere. I assured him I was only interested in the CFO position and not his, but I knew the job was over. Twice feed back that I got from recruiters which they took at criticism was the "client said I seemed very assured of myself."
- Third, government, banking, business and the top MBA schools are based upon lying to move forward. I remember a top human resource executive telling me right before Enron, MCI and Sarbanes Oxley that I needed to learn to be more flexible. My response was that flexibility would get me an orange jump suit. Don't get me wrong, I have a wide grey zone, but it use to be in business the looked for people who could identify problems early and resolve them. Now days I see far more of a demand for people who can come up with PR spins to hide them. An attorney/treasurer consultant who partnered with me on a number of consulting jobs told me some one called me "not very charming." He said he asked what that meant, and the person who said that said, "Ish walks into a meeting and within 10 minutes he is asking about the 10,000 pound guerilla sitting in the room that no one wants to talk about." CEO do not want any challenges in their organization.
- Fourth, three above has lead to the hiring of very young and inexperienced people at senior levels. These people are insecure and do not want more senior and experienced people above them and than has resulted in people older than 45 not finding positions.
- Fifth, people are considered expendable and are fired for the lamest reasons anymore. A partner at one of the larger and more prestigious recruiting firms one time told me, "If you have a good consulting business, just stick with it. Our average placement does not last 18 months any more." Another well known recruiter in S. Cal. one time commented to me, "Your average consulting gig runs longer than our average placement."
With all of that said, I have a hard time understanding such statements as "@attempter "Workers create all wealth. Parasites have no right to exist." What does that mean? Every worker creates wealth. There is no difference in people. Sounds like communism to me. I make a good living and my net worth has grown working for myself. I have never had a consulting gig terminated by the client but I have terminated several. Usually, I am brought in to fix what several other people have failed at. I deliver basically intellectual properties to companies. Does that mean I am not a worker. I do not usually lift anything heavy or move equipment but I tell people what and where to do it so does that make me a parasite.
Those people who think everyone is equal and everyone deserves equal pay are fools or lazy. My rate is high, but what usually starts as short term projects usually run 6 months or more because companies find I can do so much more than what most of their staff can do and I am not a threat.
I would again like to have a senior challenging role at a decent size company but due to the reasons above will probably never get one. However, you can never tell. I am currently consulting for a midsize very profitable company (grew 400% last year) where I am twice the age of most people there, but everyone speaks to me with respect so you can never tell.
Lidia:
Ishmael, you're quite right. When I showed my Italian husband's resume to try and "network" in the US, my IT friends assumed he was lying about his skills and work history.
Contemporaneously, in Italy it is impossible to get a job because of incentives to hire "youth". Age discrimination is not illegal, so it's quite common to see ads that ask for a programmer under 30 with 5 years of experience in COBOL (the purple squirrel).
Hosswire
Some good points about the foolishness of recruiters, but a great deal of that foolishness is forced by the clients themselves. I used to be a recruiter myself, including at Korn Ferry in Southern California. I described the recruiting industry as "yet more proof that God hates poor people" because my job was to ignore resumes from people seeking jobs and instead "source" aka "poach" people who already had good jobs by dangling a higher salary in front of them. I didn't do it because I disparaged the unemployed, or because I could not do the basic analysis to show that a candidate had analogous or transferrable skills to the opening.
I did it because the client, as Yves said, wanted people who were literally in the same job description already. My theory is that the client wanted to have their ass covered in case the hire didn't work out, by being able to say that they looked perfect "on paper." The lesson I learned for myself and my friends looking for jobs was simple, if morally dubious. Basically, that if prospective employers are going to judge you based on a single piece of paper take full advantage of the fact that you get to write that piece of paper yourself.
Ishmael:
Hosswire - I agree with your comment. There are poor recruiters like the one I sited but in general it is the clients fault. Fear of failure. All hires have at least a 50% chance of going sideways on you. Most companies do not even have the ability to look at a resume nor to interview. I did not mean to same nasty things about recruiters, and I even do it sometimes but mine.
I look at failure in a different light than most companies. You need to be continually experimenting and changing to survive as a company and there will be some failures. The goal is to control the cost of failures while looking for the big pay off on a winner.
Mannwich:
As a former recruiter and HR "professional" (I use that term very loosely for obvious reasons), I can honestly say that you nailed it. Most big companies looking for mid to high level white collar "talent" will almost always take the perceived safest route by hiring those who look the best ON PAPER and in a suit and lack any real interviewing skills to find the real stars. What's almost comical is that companies almost always want to see the most linear resume possible because they want to see "job stability" (e.g. a CYA document in case the person fails in that job) when in many cases nobody cares about the long range view of the company anyway. My question was why should the candidate or employee care about the long range view if the employer clearly doesn't?
Ishmael:
Manwhich another on point comment. Sometimes either interviewing for a job or consulting with a CEO it starts getting to the absurd. I see all the time the requirement for stability in a persons background. Hello, where have they been the last 15 years. In addition, the higher up you go the more likely you will be terminated sometime and that is especially true if you are hired from outside the orgnanization. Companies want loyalty from an employee but offer none in return.
The average tenure for a CFO anymore is something around 18 months. I have been a first party participant (more than once) where I went through an endless recruiting process for a company (lasting more than 6 months) they final hire some one and that person is with the company for 3 months and then resigns (of course we all know it is through mutual agreement).
Ishmael:
Birch:
The real problem has become and maybe this is what you are referring to is the "Crony Capitalism." We have lost control of our financial situation. Basically, PE is not the gods of the universe that everyone thinks they are. However, every bankers secret wet dream is to become a private equity guy. Accordingly, bankers make ridiculous loans to PE because if you say no to them then you can not play in their sand box any more. Since the govt will not let the banks go bankrupt like they should then this charade continues inslaving everyone.
This country as well as many others has a large percentage of its assets tied up in over priced deals that the bankers/governments will not let collapse while the blood sucking vampires suck the life out of the assets.
On the other hand, govt is not the answer. Govt is too large and accomplishes too little.
kevin de bruxelles:
The harsh reality is that, at least in the first few rounds, companies kick to the curb their weakest links and perceived slackers. Therefore when it comes time to hire again, they are loath to go sloppy seconds on what they perceive to be some other company's rejects. They would much rather hire someone who survived the layoffs working in a similar position in a similar company. Of course the hiring company is going to have to pay for this privilege. Although not totally reliable, the fact that someone survived the layoffs provides a form social proof for their workplace abilities.
On the macro level, labor has been under attack for thirty years by off shoring and third world immigration. It is no surprise that since the working classes have been severely undermined that the middle classes would start to feel some pressure. By mass immigration and off-shoring are strongly supported by both parties. Only when the pain gets strong enough will enough people rebel and these two policies will be overturned. We still have a few years to go before this happens.
davver:
Let's say I run a factory. I produce cars and it requires very skilled work. Skilled welding, skilled machinists. Now I introduce some robotic welders and an assembly line system. The plants productivity improves and the jobs actually get easier. They require less skill, in fact I've simplified each task to something any idiot can do. Would wages go up or down? Are the workers really contributing to that increase in productivity or is it the machines and methods I created?
Lets say you think laying off or cutting the wages of my existing workers is wrong. What happens when a new entrant into the business employs a smaller workforce and lower wages, which they can do using the same technology? The new workers don't feel like they were cut down in any way, they are just happy to have a job. Before they couldn't get a job at the old plant because they lacked the skill, but now they can work in the new plant because the work is genuinely easier. Won't I go out of business?
Escariot:
I am 54 and have a ton of peers who are former white collar workers and professionals (project managers, architects, lighting designers, wholesalers and sales reps for industrial and construction materials and equipment) now out of work going on three years. Now I say out of work, I mean out of our trained and experienced fields.
We now work two or three gigs (waiting tables, mowing lawns, doing free lance, working in tourism, truck driving, moving company and fedex ups workers) and work HARD, for much much less than we did, and we are seeing the few jobs that are coming back on line going to younger workers. It is just the reality. And for most of us the descent has not been graceful, so our credit is a wreck, which also breeds a whole other level of issues as now it is common for the credit record to be a deal breaker for employment, housing, etc.
Strangely I don't sense a lot of anger or bitterness as much as humility. And gratitude for ANY work that comes our way. Health insurance? Retirement accounts? not so much.
Mickey Marzick:
Yves and I have disagreed on how extensive the postwar "pact" between management and labor was in this country. But if you drew a line from say, Trenton-Patterson, NJ to Cincinatti, OH to Minneapolis, MN, north and east of it where blue collar manufacturing in steel, rubber, auto, machinery, etc., predominated, this "pact" may have existed but ONLY because physical plant and production were concentrated there and workers could STOP production.
Outside of these heavy industrial pockets, unions were not always viewed favorably. As one moved into the rural hinterlands surrounding them there was jealously and/or outright hostility. Elsewhere, especially in the South "unions" were the exception not the rule. The differences between NE Ohio before 1975 – line from Youngstown to Toledo – and the rest of the state exemplified this pattern. Even today, the NE counties of Ohio are traditional Democratic strongholds with the rest of the state largely Republican. And I suspect this pattern existed elsewhere. But it is changing too
In any case, the demonization of the unemployed is just one notch above the vicious demonization of the poor that has always existed in this country. It's a constant reminder for those still working that you could be next – cast out into the darkness – because you "failed" or worse yet, SINNED. This internalization of the "inner cop" reinforces the dominant ideology in two ways. First, it makes any resistance by individuals still employed less likely. Second, it pits those still working against those who aren't, both of which work against the formation of any significant class consciousness amongst working people. The "oppressed" very often internalize the value system of the oppressor.
As a nation of immigrants ETHNICITY may have more explanatory power than CLASS. For increasingly, it would appear that the dominant ethnic group – suburban, white, European Americans – have thrown their lot in with corporate America. Scared of the prospect of downward social mobility and constantly reminded of URBAN America – the other America – this group is trapped with nowhere to else to go.
It's the divide and conquer strategy employed by ruling elites in this country since its founding [Federalist #10] with the Know Nothings, blaming the Irish [NINA - no Irish need apply] and playing off each successive wave of immigrants against the next. Only when the forces of production became concentrated in the urban industrial enclaves of the North was this strategy less effective. And even then internal immigration by Blacks to the North in search of employment blunted the formation of class consciousness among white ethnic industrial workers.
Wherever the postwar "pact of domination" between unions and management held sway, once physical plant was relocated elsewhere [SOUTH] and eventually offshored, unemployment began to trend upwards. First it was the "rustbelt" now it's a nationwide phenomenon. Needless to say, the "pact" between labor and management has been consigned to the dustbin of history.
White, suburban America has hitched its wagon to that of the corporate horse. Demonization of the unemployed coupled with demonization of the poor only serve to terrorize this ethnic group into acquiescence. And as the workplace becomes a multicultural matrix this ethnic group is constantly reminded of its perilous state. Until this increasingly atomized ethnic group breaks with corporate America once and for all, it's unlikely that the most debilitating scourge of all working people – UNEMPLOYMENT – will be addressed.
Make no mistake about it, involuntary UNEMPLOYMENT/UNDEREMPLYEMT is a form of terrorism and its demonization is terrorism in action. This "quiet violence" is psychological and the intimidation wrought by unemployment and/or the threat of it is intended to dehumanize individuals subjected to it. Much like spousal abuse, the emotional and psychological effects are experienced way before any physical violence. It's the inner cop that makes overt repression unnecessary. We terrorize ourselves into submission without even knowing it because we accept it or come to tolerate it. So long as we accept "unemployment" as an inevitable consequence of progress, as something unfortunate but inevitable, we will continue to travel down the road to serfdom where ARBEIT MACHT FREI!
FULL and GAINFUL EMPLOYMENT are the ultimate labor power.
Eric:
It's delicate since direct age discrimination is illegal, but when circumstances permit separating older workers they have a very tough time getting back into the workforce in an era of high health care inflation. Older folks consume more health care and if you are hiring from a huge surplus of available workers it isn't hard to steer around the more experienced. And nobody gets younger, so when you don't get job A and go for job B 2 weeks later you, you're older still!
James:
Yves said- "This overly narrow hiring spec then leads to absurd, widespread complaint that companies can't find people with the right skills"
In the IT job markets such postings are often called purple squirrels. The HR departments require the applicant to be expert in a dozen programming languages. This is an excuse to hire a foreigner on a temp h1-b or other visa.
Most people aren't aware that this model dominates the sciences. Politicians scream we have a shortage of scientists, yet it seems we only have a shortage of cheap easily exploitable labor. The economist recently pointed out the glut of scientists that currently exists in the USA.
http://www.economist.com/node/17723223
This understates the problem. The majority of PhD recipients wander through years of postdocs only to end up eventually changing fields. My observation is that the top ten schools in biochem/chemistry/physics/ biology produce enough scientists to satisfy the national demand.
The exemption from h1-b visa caps for academic institutions exacerbates the problem, providing academics with almost unlimited access to labor.
The pharmaceutical sector has been decimated over the last ten years with tens of thousands of scientists/ factory workers looking for re-training in a dwindling pool of jobs (most of which will deem you overqualified.)
http://pipeline.corante.com/archives/2011/03/03/a_postdocs_lament.php
Abe, NYC:
I wonder how the demonization of the unemployed can be so strong even in the face of close to 10% unemployment/20% underemployment. It's easy and tempting to demonize an abstract young buck or Cadillac-driving welfare queen, but when a family member or a close friend loses a job, or your kids are stuck at your place because they can't find one, shouldn't that alter your perceptions? Of course the tendency will be to blame it all on the government, but there has to be a limit to that in hard-hit places like Ohio, Colorado, or Arizona. And yet, the dynamics aren't changing or even getting worse. Maybe Wisconsin marks a turning point, I certainly hope it does
damien:
It's more than just stupid recruiting, this stigma. Having got out when the getting was good, years ago, I know that any corporate functionary would be insane to hire me now. Socialization wears off, the deformation process reverses, and the ritual and shibboleths become a joke. Even before I bailed I became a huge pain in the ass as economic exigency receded, every bosses nightmare. I suffered fools less gladly and did the right thing out of sheer anarchic malice.
You really can't maintain corporate culture without existential fear – not just, "Uh oh, I'm gonna get fired," fear, but a visceral feeling that you do not exist without a job. In properly indoctrinated workers that feeling is divorced from economic necessity. So anyone who's survived outside a while is bound to be suspect. That's a sign of economic security, and security of any sort undermines social control.
youniquelikeme:
You hit the proverbial nail with that reply. (Although, sorry, doing the right thing should not be done out of malice) The real fit has to be in the corporate yes-man culture (malleable ass kisser) to be suited for any executive position and beyond that it is the willingness to be manipulated and drained to be able to keep a job in lower echelon.
This is the new age of evolution in the work place. The class wars will make it more of an eventual revolution, but it is coming. The unemployment rate (the actual one, not the Government one) globalization and off shore hiring are not sustainable for much longer.
Something has to give, but it is more likely to snap then to come easily. People who are made to be repressed and down and out eventually find the courage to fight back and by then, it is usually not with words.
down and out in Slicon Valley:
This is the response I got from a recruiter:
"I'm going to be overly honest with you. My firm doesn't allow me to submit any candidate who hasn't worked in 6-12 months or more. Recruiting brokers are probably all similar in that way . You are going to have to go through a connection/relationship you have with a colleague, co-worker, past manager or friend to get your next job .that's my advice for you. Best of luck "
I'm 56 years old with MSEE. Gained 20+ years of experience at the best of the best (TRW, Nortel, Microsoft), have been issued a patent. Where do I sign up to gain skills required to find a job now?
Litton Graft :
"Best of the Best?" I know you're down now, but looking back at these Gov'mint contractors you've enjoyed the best socialism money can by.
Nortel/TRW bills/(ed) the Guvmint at 2x, 3x your salary, you can ride this for decades. At the same time the Inc is attached to the Guvmint ATM localities/counties are giving them a red carpet of total freedom from taxation. Double subsidies.
I've worked many years at the big boy bandits, and there is no delusion in my mind that almost anyone, can do what I do and get paid 100K+. I've never understood the mindset of some folks who work in the Wermacht Inc: "Well, someone has to do this work" or worse "What we do, no one else can do" The reason no one else "can do it" is that they are not allowed to. So, we steal from the poor to build fighter jets, write code or network an agency.
Hosswire:
I used to work as a recruiter and can tell you that I only parroted the things my clients told me. I wanted to get you hired, because I was lazy and didn't want to have to talk to someone else next.
So what do you do? To place you that recruiter needs to see on a piece of paper that you are currently working? Maybe get an email or phone call from someone who will vouch for your employment history. That should not be that hard to make happen.
Francois T :
The "bizarre way that companies now spec jobs" is essentially a coded way for mediocre managers to say without saying so explicitly that "we can afford to be extremely picky, and by God, we shall do so no matter what, because we can!"
Of course, when comes the time to hire back because, oh disaster! business is picking up again, (I'm barely caricaturing here; some managers become despondent when they realize that workers regain a bit of the higher ground; loss of power does that to lesser beings) the same idiots who designed those "overly narrow hiring spec then leads to absurd, widespread complaint that companies can't find people with the right skills" are thrown into a tailspin of despair and misery. Instead of figuring out something as simple as "if demand is better, so will our business", they can't see anything else than the (eeeek!) cost of hiring workers. Unable to break their mental corset of penny-pincher, they fail to realize that lack of qualified workers will prevent them to execute well to begin with.
And guess what: qualified workers cost money, qualified workers urgently needed cost much more.
This managerial attitude must be another factor that explain why entrepreneurship and the formation of small businesses is on the decline in the US (contrary to the confabulations of the US officialdumb and the chattering class) while rising in Europe and India/China.
Kit:
If you are 55-60, worked as a professional (i.e., engineering say) and are now unemployed you are dead meat. Sorry to be blunt but thats the way it is in the US today. Let me repeat that : Dead Meat.
I was terminated at age 59, found absolutely NOTHING even though my qualifications were outstanding. Fortunately, my company had an old style pension plan which I was able to qualify for (at age 62 without reduced benefits). So for the next 2+ years my wife and I survived on unemployment insurance, severance, accumulated vacation pay and odd jobs. Not nice – actually, a living hell.
At age 62, I applied for my pension, early social security, sold our old house (at a good profit) just before the RE crash, moved back to our home state. Then my wife qualified for social security also. Our total income is now well above the US median.
Today, someone looking at us would think we were the typical corporate retiree. We surely don't let on any differently but the experience (to get to this point) almost killed us.
I sympathize very strongly with the millions caught in this unemployment death spiral. I wish I had an answer but I just don't. We were very lucky to survive intact.
Ming:
Thank you Yves for your excellent post, and for bringing to light this crucial issue.
Thank you to all the bloggers, who add to the richness of the this discussion.
I wonder if you could comment on this Yves, and correct me if I am wrong I believe that the power of labor was sapped by the massive available supply of global labor. The favorable economic policies enacted by China (both official and unofficial), and trade negotiations between the US government and the Chinese government were critical to creating the massive supply of labor.
Thank you. No rush of course.
Nexus:
There are some odd comments and notions here that are used to support dogma and positions of prejudice. The world can be viewed in a number of ways. Firstly from a highly individualised and personal perspective – that is what has happened to me and here are my experiences. Or alternatively the world can be viewed from a broader societal perspective.
In the context of labour there has always been an unequal confrontation between those that control capital and those that offer their labour, contrary to some of the views exposed here – Marx was a first and foremost a political economist. The political economist seeks to understand the interplay of production, supply, the state and institutions like the media. Modern day economics branched off from political economy and has little value in explaining the real world as the complexity of the world has been reduced to a simplistic rationalistic model of human behaviour underpinned by other equally simplistic notions of 'supply and demand', which are in turn represented by mathematical models, which in themselves are complex but merely represent what is a simplistic view of the way the world operates. This dogmatic thinking has avoided the need to create an underpinning epistemology. This in turn underpins the notion of free choice and individualism which in itself is an illusion as it ignores the operation of the modern state and the exercise of power and influence within society.
It was stated in one of the comments that the use of capital (machines, robotics, CAD design, etc.) de-skills. This is hardly the case as skills rise for those that remain and support highly automated/continuous production factories. This is symptomatic of the owners of capital wanting to extract the maximum value for labour and this is done via the substitution of labour for capital making the labour that remains to run factories highly productive thus eliminating low skill jobs that have been picked up via services (people move into non productive low skilled occupations warehousing and retail distribution, fast food outlets, etc). Of course the worker does not realise the additional value of his or her labour as this is expropriated for the shareholders (including management as shareholders).
The issue of the US is that since the end of WW2 it is not the industrialists that have called the shots and made investments it is the financial calculus of the investment banker (Finance Capital). Other comments have tried to ignore the existence of the elites in society – I would suggest that you read C.W.Mills – The Power Elites as an analysis of how power is exercised in the US – it is not through the will of the people.
For Finance capital investments are not made on the basis of value add, or contribution through product innovation and the exchange of goods but on basis of the lowest cost inputs. Consequently, the 'elites' that make investment decisions, as they control all forms of capital seek to gain access to the cheapest cost inputs. The reality is that the US worker (a pool of 150m) is now part of a global labour pool of a couple of billion that now includes India and China. This means that the elites, US transnational corporations for instance, can access both cheaper labour pools, relocate capital and avoid worker protection (health and safety is not a concern). The strategies of moving factories via off-shoring (over 40,000 US factories closed or relocated) and out-sourcing/in-sourcing labour is also a representations of this.
The consequence for the US is that the need for domestic labour has diminished and been substituted by cheap labour to extract the arbitrage between US labour rates and those of Chinese and Indians. Ironically, in this context capital has become too successful as the mode of consumption in the US shifted from workers that were notionally the people that created the goods, earned wages and then purchased the goods they created to a new model where the worker was substituted by the consumer underpinned by cheap debt and low cost imports – it is illustrative to note that real wages have not increased in the US since the early 1970's while at the same time debt has steadily increased to underpin the illusion of wealth – the 'borrow today and pay tomorrow' mode of capitalist operation. This model of operation is now broken. The labour force is now being demonized as there is a now surplus of labour and a need to drive down labour rates through changes in legislation and austerity programs to meet those of the emerging Chinese and Indian middle class so workers rights need to be broken. Once this is done a process of in-source may take place as US labour costs will be on par with overseas labour pools.
It is ironic that during the Regan administration a number of strategic thinkers saw the threat from emerging economies and the danger of Finance Capital and created 'Project Socrates' that would have sought to re-orientate the US economy from one that was based on the rationale of Finance Capital to one that focused in productive innovation which entailed an alignment of capital investment, research and training to product innovative goods. Of course this was ignored and the rest is history. The race to the lowest input cost is ultimately self defeating as it is clear that the economy de-industrialises through labour and capital changes and living standards collapse. The elites – bankers, US transnational corporations, media, industrial military complex and the politicians don't care as they make money either way and this way you get other people overseas to work cheap for you.
S P:
Neoliberal orthodoxy treats unemployment as well as wage supression as a necessary means to fight "inflation." If there was too much power in the hands of organized labor, inflationary pressures would spiral out of control as supply of goods cannot keep up with demand.
It also treats the printing press as a necessary means to fight "deflation."
So our present scenario: widespread unemployment along with QE to infinity, food stamps for all, is exactly what you'd expect.
The problem with this orthodoxy is that it assumes unlimited growth on a planet with finite resources, particularly oil and energy. Growth is not going to solve unemployment or wages, because we are bumping up against limits to growth.
There are only two solutions. One is tax the rich and capital gains, slow growth, and reinvest the surplus into jobs/skills programs, mostly to maintain existing infrastructure or build new energy infrastructure. Even liberals like Krugman skirt around this, because they aren't willing to accept that we have the reached the end of growth and we need radical redistribution measures.
The other solution is genuine classical liberalism / libertarianism, along the lines of Austrian thought. Return to sound money, and let the deflation naturally take care of the imbalances. Yes, it would be wrenching, but it would likely be wrenching for everybody, making it fair in a universal sense.
Neither of these options is palatable to the elite classes, the financiers of Wall Street, or the leeches and bureaucrats of D.C.
So this whole experiment called America will fail.
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Nov 28, 2017 | voxeu.org
Ordoliberalism: A German oddity?>
Ordoliberalism: Whence it came
A distinctive trait – an idiosyncrasy – of German economics post-1945 is its reference to Ordo , an economic policy approach developed by Walter Eucken (1952/1990) and colleagues at Freiburg University, in response to the malfunctioning, highly cartelised economy of the Weimar Republic as well as in opposition to the statist, authoritarian interventionism of the Nazi regime. Of chief concern was the protection of individual freedom. Competitive markets were seen as most effective in assuring the conditions for individual liberty, including the reining in of private market power.
In international debates, on the other hand, ordoliberalism is alluded to mainly with negative connotations, at times as an even more malicious version of the often-decried neoliberalism (Brunnermeier et al. 2016). However, ordoliberalism comes in a number of varieties. In its purest version, it stresses political or government failures and largely (almost completely) disregards market failures. Coordination issues are, however, in mainstream economics of course the reason for why "eschewing demand management policies" is seen as flawed. And, somewhat puzzlingly, ordoliberalism calls for a strong state, mainly to contain market power which in a pure "laissez-faire [environment ends up] distorting the market mechanism by crippling the price mechanism through private interventions".
The market is cherished as a power-reducing tool, in particular to contain influential special interests, within the framework of a competitive order and the rule of law. This is in obvious contrast to the Chicago School liberalism which "celebrates the ascendancy of private market forces (and) strives for a lean state )".
Traces of this Ordo philosophy can be detected in EMU's "framework of rules to ensure a sound fiscal policy and sound money". But, then of course, those rules were honored in the breach, beginning with Germany (in 2003). Hence, ordoliberals hold that their principles were, in fact, never properly applied (Feld et al .) – probably rightly so. Alternatively, one can argue that the reference to ordoliberal principles is nothing but a mechanism to defend German interests as largest creditor in the recent sovereign debt and banking crises, as Charles Wyplosz holds. Ordo takes the backseat when national self-interest calls for: " Teutonomik trumps Ordnungsökonomik ", as Michael Burda points out.
The remaining chapters of the book focus on three different policy areas where the discrepancy between ordoliberalism and Anglo-Saxon-Latin pragmatism has become especially clear and relevant.
Principled monetary and financial policy: Underwriting stabilityThe ECB aims for a rate of increase of the harmonised consumer price index of below but close to 2%. This is, as Peter Praet stresses, perfectly in line with Eucken's emphasis on the "primacy of monetary policy". The ECB's lexicographic ordering of its objectives – an unrivalled priority for price stability – also fits, hand-in-glove, with ordoliberalism's insistence on a rule-based policy with a narrow mandate. Principles, however, do not suffice to develop the instruments needed to achieve the ultimate objective.
For ten years now, ever since the crisis broke, German media, but for rare exceptions, have treated its public with a highly skeptical assessment of ECB policy, based "on opinions expressed by many ordoliberal German economists". Relentlessly predicting doomsday (hyper-inflation, vanishing foundations of wealth and political instability), this has sapped support for the ECB significantly (Adalbert Winkler). What matters for ordoliberals are principles – not the outcome (Wyplosz 2012). In this view, asymmetric information or market imperfections have no place. This, of course, also lays bare the limitations of a principles-based policy approach which, regardless of circumstances, prohibits any discretion.
What's wrong with Eurozone?Whereas the Global Crisis led to a similar hit to the Eurozone's economy as to the US economy, recovery in the US case was much swifter. In addition, net exports were the major drivers of the EZ's mediocre performance – remarkable for such a big and rather closed economic area, and certainly not an approach which could be mimicked by everybody (Oliver Landmann). Further, the crisis opened "new asymmetries", challenging the EZ going forward. It is here that "conflicting narratives" about the appropriate design of policies come in.
On the one hand, the danger of excessive deficits, potentially "exacerbated by moral hazard from the anticipated likelihood of bailouts" was correctly acknowledged by ordos. But "rules that are too stringent to be credible can be worse than no rules at all" (Jeffrey Frankel). While explicit rules of the game are important, the EZ's "management of discretion is a key weakness".
On the other hand, largely ignoring demand-side effects has created larger, self-reinforcing output gaps in the EZ, deeper than was indicated, as correctly pointed out by the pragmatists (Ball 2014). And the fiscal straightjacket imposed by the Germans and other Nordic creditor governments on the EZ periphery left most of the macro-stabilisation task, i.e. demand-side macro management, at the ECB's door.
Discretion, inexorably, comes with the temptation to re-optimise or to postpone, i.e. 'kicking the can down the road'. It thus undermines the "liability principle" and ultimately the competitive system itself. If rules don't rule, arbitrariness reigns supreme and gaming the system becomes the default option. This argument holds a fortiori in a federal system, as Harold James stresses: "The more federal a country is, the more it has to insist on rules." But, by force of nature, rules cannot but remain incomplete, so the real issue is to negotiate "sustainable flexibility".
Clearly, international policy coordination becomes difficult when views about how the world works diverge. However, such discrepancies are particularly problematic when they exist within a monetary union: forcefully insisting on a principled, rule-based approach is – as a rule – opposed by more pragmatic orientations, regularly defended by France and Italy. In fact, when push comes to shove, consider the response to the banking crisis, German politics can also become very pragmatic (Thorsten Beck and Hans-Helmut Kotz).
Global imbalances – coordinating with different script booksOrdoliberals regard current-account surpluses from the viewpoint of small open economies, which Germany might have been at some point, but the Eurozone certainly is not. In any case, for some, their quasi-permanent current-account surpluses make the Germans "bad, really bad". However, as German observers (Clemens Fuest et al ., Christoph Schmidt) point out, the surplus is driven by fundamentals (ageing society) or temporary factors (cheap domestic currency, low commodity prices). Almost half of the surplus, in accounting terms, can thus be explained by fundamentals (Philipp Steinberg). However, "competing over net exports is a zero-sum game". For the same "reasons" of accounting a current-account surplus comes with net capital outflows (Richard Cooper). Within the EA, this implies adjustment without the security valve of a change in nominal exchange rates. Instead, migration, fiscal transfers or adjustment of relative prices – in particular real wages – have to do the job. A more expansionary fiscal policy as well as a stronger growth of wages, however, were anathemas in Germany (Jeromin Zettelmeyer, Agnès Bénassy-Quére). Instead, internal devaluation was asked from Germany's partners (Christopher Smart).
Beyond the economic analysis, however, protectionist threats, uncertainty about a too large net creditor position as well as the EZ rules in the "macroeconomic imbalances procedure" should Germany lead to being more perceptive in terms of accepting calls for capping its surplus.
Where do we go from here?In modern terms, the focus of ordoliberalism has been on microeconomic issues. Macro (stabilisation) policies, other than the stabilisation of the value of money, were seen of not much avail, if at all. In this regard, ordoliberalism shares a quite unconditional faith in the self-stabilising capacity of a market economy with the US freshwater schools of macroeconomics.
The Ordo school was – is – highly influential in German economics as well as, possibly more important, in politics and the public discourse. The post-WWII Wirtschaftswunder of the 1950s and 60s was understood as corroborating its analysis. Ordo philosophy also had a decisive impact on the institutional design of Europe's economic community (in particular competition policy and prohibition of state aid) as well subsequently on its monetary union (think of the ECB's mandate as well as the rule-based Stability and Growth Pact).
But in our second- (or third-) best world, markets are imperfect and fallible (as are public authorities, obviously). Contracts remain by necessity incomplete. Therefore, under certain circumstances, reasoned public intervention – discretionary judgment – is called for. This is, obviously, not a particularly German philosophy or American pragmatism. More plausibly, the Greeks – cf. Aristotle's Nicomachean Ethics – can claim copyright on this.
ReferencesBall, Laurence (2014), 'Long-Term Damage from the Great Recession in OECD Countries', NBER Working Paper 20185, May.
Beck, Thorsten and Hans-Helmut Kotz (2017), Ordoliberalism: A German oddity? , Vox eBook, CEPR Press, London.
Brunnermeier, Markus K., Harold James, Jean-Pierre Landau (2016), The Euro and the Battle of Ideas , Princeton: Princeton University Press.
Eucken, Walter (1952/1990) Grundsätze der Wirtschaftspolitik , 6th Edition. Mohr Siebeck: Tübingen
Wyplosz, Charles (2012) 'Fiscal Rules: Theoretical Issues and Historical Experiences', in: A. Alesina and F. Giavazzi (eds) Fiscal Policy After the Crisis , Chicago University Press, 2012.
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Sep 15, 2015 | Zero Hedge
SixIsNinE
yeah thanks Carly ... HP made bullet-proof products that would last forever..... I still buy HP workstation notebooks, especially now when I can get them for $100 on ebay .... I sold HP products in the 1990s .... we had HP laserjet IIs that companies would run day & night .... virtually no maintenance ... when PCL5 came around then we had LJ IIIs .... and still companies would call for LJ I's, .... 100 pounds of invincible Printing ! .
This kind of product has no place in the World of Planned-Obsolesence .... I'm currently running an 8510w, 8530w, 2530p, Dell 6420 quad i7, hp printers hp scanners, hp pavilion desktops, .... all for less than what a Laserjet II would have cost in 1994, Total.
Not My Real Name
I still have my HP 15C scientific calculator I bought in 1983 to get me through college for my engineering degree. There is nothing better than a hand held calculator that uses Reverse Polish Notation!
BigJim
HP used to make fantastic products. I remember getting their RPN calculators back in th 80's; built like tanks. Then they decided to "add value" by removing more and more material from their consumer/"prosumer" products until they became unspeakably flimsy. They stopped holding things together with proper fastenings and starting hot melting/gluing it together, so if it died you had to cut it open to have any chance of fixing it.
I still have one of their Laserjet 4100 printers. I expect it to outlast anything they currently produce, and it must be going on 16+ years old now.
Fuck you, HP. You started selling shit and now you're eating through your seed corn. I just wish the "leaders" who did this to you had to pay some kind of penalty greater than getting $25M in a severance package.
Automatic Choke
+100. The path of HP is everything that is wrong about modern business models. I still have a 5MP laserjet (one of the first), still works great. Also have a number of 42S calculators.....my day-to-day workhorse and several spares. I don't think the present HP could even dream of making these products today.
nope-1004
How well will I profit, as a salesman, if I sell you something that works? How valuable are you, as a customer in my database, if you never come back? Confucious say "Buy another one, and if you can't afford it, f'n finance it!" It's the growing trend. Look at appliances. Nothing works anymore.
Normalcy Bias
Son of Loki
GE to cut Houston jobs as work moves overseas http://www.bizjournals.com/houston/news/2015/09/15/ge-to-cut-houston-job... " Yes we can! "
Automatic Choke
hey big brother.... if you are curious, there is a damn good android emulator of the HP42S available (Free42). really it is so good that it made me relax about accumulating more spares. still not quite the same as a real calculator. (the 42S, by the way, is the modernization/simplification of the classic HP41, the real hardcord very-programmable, reconfigurable, hackable unit with all the plug-in-modules that came out in the early 80s.)
Miss Expectations
Imagine working at HP and having to listen to Carly Fiorina bulldoze you...she is like a blow-torch...here are 4 minutes of Carly and Ralph Nader (if you can take it): https://www.youtube.com/watch?v=vC4JDwoRHtk
Miffed Microbiologist
My husband has been a software architect for 30 years at the same company. Never before has he seen the sheer unadulterated panic in the executives. All indices are down and they are planning for the worst. Quality is being sacrificed for " just get some relatively functional piece of shit out the door we can sell". He is fighting because he has always produced a stellar product and refuses to have shit tied to his name ( 90% of competitor benchmarks fail against his projects). They can't afford to lay him off, but the first time in my life I see my husband want to quit...
unplugged
I've been an engineer for 31 years - our managements's unspoken motto at the place I'm at (large company) is: "release it now, we'll put in the quality later". I try to put in as much as possible before the product is shoved out the door without killing myself doing it.
AGuy
Do they even make test equipment anymore?
HP test and measurement was spun off many years ago as Agilent. The electronics part of Agilent was spun off as keysight late last year.HP basically makes computer equipment (PCs, servers, Printers) and software. Part of the problem is that computer hardware has been commodized. Since PCs are cheap and frequent replacements are need, People just by the cheapest models, expecting to toss it in a couple of years and by a newer model (aka the Flat screen TV model). So there is no justification to use quality components. Same is become true with the Server market. Businesses have switched to virtualization and/or cloud systems. So instead of taking a boat load of time to rebuild a crashed server, the VM is just moved to another host.
HP has also adopted the Computer Associates business model (aka Borg). HP buys up new tech companies and sits on the tech and never improves it. It decays and gets replaced with a system from a competitor. It also has a habit of buying outdated tech companies that never generate the revenues HP thinks it will.
BullyBearish
When Carly was CEO of HP, she instituted a draconian "pay for performance" plan. She ended up leaving with over $146 Million because she was smart enough not to specify "what type" of performance.
GeezerGeek
Regarding your statement "All those engineers choosing to pursue other opportunities", we need to realize that tech in general has been very susceptible to the vagaries of government actions. Now the employment problems are due to things like globalization and H1B programs. Some 50 years ago tech - meaning science and engineering - was hit hard as the US space program wound down. Permit me this retrospective:
I graduated from a quite good school with a BS in Physics in 1968. My timing was not all that great, since that was when they stopped granting draft deferments for graduate school. I joined the Air Force, but as an enlisted airman, not an officer. Following basic training, I was sent to learn to operate PCAM operations. That's Punched Card Accounting Machines. Collators. Sorters. Interpreters. Key punches. I was in a class with nine other enlistees. One had just gotten a Masters degree in something. Eight of us had a BS in one thing or another, but all what would now be called STEM fields. The least educated only had an Associate degree. We all enlisted simply to avoid being drafted into the Marines. (Not that there's anything wrong with the Marines, but all of us proclaimed an allergy to energetic lead projectiles and acted accordingly. Going to Canada, as many did, pretty much ensured never getting a job in STEM fields later in life.) So thanks to government action (fighting in VietNam, in this case) a significant portion of educated Americans found themselves diverted from chosen career paths. (In my case, it worked out fine. I learned to program, etc., and spent a total of over 40 years in what is now called IT. I think it was called EDP when I started the trek. Somewhere along the line it became (where I worked) Management Information Systems. MIS. And finally the department became simply Information Technology. I hung an older sign next to the one saying Information Technology. Somehow MIS-Information Technology seemed appropriate.)
Then I got to my first duty assignment. It was about five months after the first moon landing, and the aerospace industry was facing cuts in government aerospace spending. I picked up a copy of an engineering journal in the base library and found an article about job cuts. There was a cartoon with two janitors, buckets at their feet and mops in their hands, standing before a blackboard filled with equations. Once was saying to the other, pointing to one section, "you can see where he made his mistake right here...". It represented two engineers who had been reduced to menial labor after losing their jobs.
So while I resent all the H1Bs coming into the US - I worked with several for the last four years of my IT career, and was not at all impressed - and despise the politicians who allow it, I know that it is not the first time American STEM grads have been put out of jobs en masse. In some ways that old saying applies: the more things change, the more they stay the same.
If you made it this far, thanks for your patience.
adr
Just like Amazon, HP will supposedly make billions in profit analyzing things in the cloud that nobody looks at and has no use to the real economy, but it makes good fodder for Power Point presentations. I am amazed how much daily productivity goes into creating fancy charts for meetings that are meaningless to the actual business of the company.
IT'S ALL BULLSHIT!!!!!
I designed more products in one year for the small company I work for than a $15 billion corporation did throughout their entire design department employing hundreds of people. That is because 90% of their workday is spent preparing crap for meetings and they never really get anything meaningful done.
It took me one week to design a product and send it out for production branded for the company I work for, but it took six months to get the same type of product passed through the multi billion dollar corporation we license for. Because it had to pass through layer after layer of bullshit and through every level of management before it could be signed off. Then a month later somebody would change their mind in middle management and the product would need to be changed and go through the cycle all over again.
Their own bag department made six bags last year, I designed 16. Funny how I out produce a department of six people whose only job is to make bags, yet I only get paid the salary of one.
Maybe I'm just an imbecile for working hard.
Bear
You also have to add all the wasted time of employees having to sit through those presentations and the even more wasted time on Ashley Madison
cynicalskeptic
'Computers' cost as much - if not more time than they save, at least in corporate settings. Used to be you'd work up 3 budget projections - expected, worst case and best case, you'd have a meeting, hash it out and decide in a week. Now you have endless alternatives, endless 'tweaking' and changes and decisions take forever, with outrageous amounts of time spent on endless 'analysis' and presentations.
EVERY VP now has an 'Administrative Assistant' whose primary job is to develop PowerPoint presentations for the endless meetings that take up time - without any decisions ever being made.
Computers stop people from thinking. In ages past when you used a slide rule you had to know the order of magnitude of the end result. Now people make a mistake and come up with a ridiculous number and take it at face value because 'the computer' produced it.
Any exec worht anythign knew what a given line in their department or the total should be +or a small amount. I can't count the number of times budgets and analyses were WRONG because someone left off a few lines on a spreadsheet total.
Yes computer modeling for advanced tech and engineering is a help, CAD/CAM is great and many other applications in the tech/scientific world are a great help but letting computers loose in corporate and finance has produced endless waste AND - worsde - thigns like HFT (e.g. 'better' more effective ways to manipulate and cheat markets.
khnum
A recent lay off here turned out to be quite embarrassing for Parmalat there was nobody left that knew how to properly run the place they had to rehire many ex employees as consultants-at a costly premium
Anopheles
Consultants don't come at that much of a premium becaue the company doesn't have to pay benefits, vacation, sick days, or payroll taxes, etc. Plus it's really easy and cheap to get rid of consultants.
arrowrod
Obviously, you haven't worked as a consultant. You get paid by the hour. To clean up a mess. 100 hours a week are not uncommon. (What?, is it possible to work 100 hours a week? Yes, it is, but only for about 3 months.)
RaceToTheBottom
HP Executives are trying hard to bring the company back to its roots: The ability to fit into one garage...
PrimalScream
ALL THAT Meg Whitman needs to do ... is to FIRE EVERYBODY !! Then have all the products made in China, process all the sales orders in Hong Kong, and sub-contract the accounting and tax paperwork to India. Then HP can use all the profits for stock buybacks, except of course for Meg's salary ... which will keep rising astronomically!
Herdee
That's where education gets you in America.The Government sold out America's manufacturing base to Communist China who holds the debt of the USA.Who would ever guess that right-wing neo-cons(neo-nazis) running the government would sell out to communists just to get the money for war? Very weird.
Really20
"Communist"? The Chinese government, like that of the US, never believed in worker ownership of businesses and never believed that the commerical banking system (whether owned by the state, or private corporations which act like a state) should not control money. Both countries believe in centralization of power among a few shareholders, who take the fruits of working people's labor while contributing nothing of value themselves (money being but a token that represents a claim on real capital, not capital itself.)
Management and investors ought to be separate from each other; management should be chosen by workers by universal equal vote, while a complementary investor board should be chosen by investors much as corporate boards are now. Both of these boards should be legally independent but bound organizations; the management board should run the business while the investor board should negotiate with the management board on the terms of equity issuance. No more buybacks, no more layoffs or early retirements, unless workers as a whole see a need for it to maintain the company.
The purpose of investors is to serve the real economy, not the other way round; and in turn, the purpose of the real economy is to serve humanity, not the other way around. Humans should stop being slaves to perpetual growth.
Really20
HP is laying off 80,000 workers or almost a third of its workforce, converting its long-term human capital into short-term gains for rich shareholders at an alarming rate. The reason that product quality has declined is due to the planned obsolescence that spurs needless consumerism, which is necessary to prop up our debt-backed monetary system and the capitalist-owned economy that sits on top of it.
NoWayJose
HP - that company that sells computers and printers made in China and ink cartridges made in Thailand?
Dominus Ludificatio
Another company going down the drain because their focus is short term returns with crappy products.They will also bring down any company they buy as well.
Barnaby
HP is microcosm of what Carly will do to the US: carve it like a pumpkin and leave the shell out to bake in the sun for a few weeks. But she'll make sure and poison the seeds too! Don't want anything growing out of that pesky Palm division...
Dre4dwolf
The world is heading for massive deflation. Computers have hit the 14 nano-meter lithography zone, the cost to go from 14nm to say 5nm is very high, and the net benefit to computing power is very low, but lets say we go from 14nm to 5nm over the next 4 years. Going from 5nm to 1nm is not going to net a large boost in computing power and the cost to shrink things down and re-tool will be very high for such an insignificant gain in performance.
What does that mean
- Computers (atleast non-quantum ones) have hit the point where about 80-90% of the potential for the current science has been tap'd
- This means that the consumer is not going to be put in the position where they will have to upgrade to faster systems for atleast another 7-8 years.... (because the new computer wont be that much faster than their existing one).
- If no one is upgrading the only IT sectors of the economy that stand to make any money are software companies (Microsoft, Apple, and other small software developers), most software has not caught up with hardware yet.
- We are obviously heading for massive deflation, consumer spending levels as a % are probably around where they were in the late 70s - mid 80s, this is a very deflationary environment that is being compounded by a high debt burden (most of everyones income is going to service their debts), that signals monetary tightening is going on... people simply don't have enough discretionary income to spend on new toys.
All that to me screams SELL consumer electronics stocks because profits are GOING TO DECLINE , SALES ARE GOING TO DECLINE. There is no way , no amount of buy backs will float the stocks of corporations like HP/Dell/IBM etc... it is inevitable that these stocks will be worth 30% less over the next 5 - 8 years
But what do I know? maybe I am missing something.
In anycase a lot of pressure is being put on HP to do all it can at any cost to boost the stock valuations, because so much of its stock is institution owned, they will strip the wallpaper off the walls and sell it to a recycling plant if it would give them more money to boost stock valuations. That to me signals that most of the people pressuring the board of HP to boost the stock, want them to gut the company as much as they can to boost it some trivial % points so that the majority of shares can be dumped onto muppets.
To me it pretty much also signals something is terribly wrong at HP and no one is talking about it.
PoasterToaster
Other than die shrinks there really hasn't been a lot going on in the CPU world since Intel abandoned its Netburst architecture and went back to its (Israeli created) Pentium 3 style pipeline. After that they gave up on increasing speed and resorted to selling more cores. Now that wall has been hit, they have been selling "green" and "efficient" nonsense in place of increasing power.
x86 just needs to go, but a lot is invested in it not the least of which is that 1-2 punch of forced, contrived obsolesence carried out in a joint operation with Microsoft. 15 years ago you could watch videos with no problem on your old machine using Windows XP. Fast forward to now and their chief bragging point is still "multitasking" and the ability to process datastreams like video. It's a joke.
The future is not in the current CPU paradigm of instructions per second; it will be in terms of variables per second. It will be more along the lines of what GPU manufacturers are creating with their thousands of "engines" or "processing units" per chip, rather than the 4, 6 or 12 core monsters that Intel is pushing. They have nearly given up on their roadmap to push out to 128 cores as it is. x86 just doesn't work with all that.
Dojidog
Another classic "Let's rape all we can and bail with my golden parachute" corporate leaders setting themselves up. Pile on the string of non-IT CEOs that have been leading the company to ruin. To them it is nothing more than a contest of being even worse than their predecessor. Just look at the billions each has lost before their exit. Compaq, a cluster. Palm Pilot, a dead product they paid millions for and then buried. And many others.
Think the split is going to help? Think again. Rather than taking the opportunity to fix their problems, they have just duplicated and perpetuated them into two separate entities.
HP is a company that is mired in a morass of unmanageable business processes and patchwork of antiquated applications all interconnected to the point they are petrified to try and uncouple them.
Just look at their stock price since January. The insiders know. Want to fix HP? All it would take is a savvy IT based leader with a boatload of common sense. What makes money at HP? Their printers and ink. Not thinking they can provide enterprise solutions to others when they can't even get their own house in order.
I Write Code
Let's not beat around the bush, they're outsourcing, firing Americans and hiring cheap labor elsewhere: http://www.bloomberg.com/news/articles/2015-09-15/hewlett-packard-to-cut-up-to-30-000-more-jobs-in-restructuring It's also shifting employees to low-cost areas, and hopes to have 60 percent of its workers located in cheaper countries by 2018, Nefkens said.
yogibear
Carly Fiorina: (LOL, leading a tech company with a degree in medieval history and philosophy) While at ATT she was groomed from the Affirmative Action plan.
Alma Mater: Stanford University (B.A. in medieval history and philosophy); University of Maryland (MBA); Massachusetts Institute of Technology
==================================================================
Patricia Russo: (Lucent) (Dedree in Political Science). Another lady elevated through the AA plan, Russo got her bachelor's degree from Georgetown University in political science and history in 1973. She finished the advanced management program at Harvard Business School in 1989
Both ladies steered their corporations to failure.
Clowns on Acid
It is very straightforward. Replace 45,000 US workers with 100,000 offshore workers and you still save millions of USD ! Use the "savings" to buy back stock, then borrow more $$ at ZIRP to buy more stock back.
You guys don't know nuthin'.
homiegot
HP: one of the worst places you could work. Souless.
Pancho de Villa
Ladies and Gentlemen! Integrity has left the Building!
space junk
I worked there for a while and it was total garbage. There are still some great folks around, but they are getting paid less and less, and having to work longer hours for less pay while reporting to God knows who, often a foreigner with crappy engrish skills, yes likely another 'diversity hire'. People with DEEP knowledge, decades and decades, have either gotten unfairly fired or demoted, made to quit, or if they are lucky, taken some early retirement and GTFO (along with their expertise - whoopsie! who knew? unintended consequences are a bitch aren't they? )....
If you look on a site like LinkedIN, it will always say 'We're hiring!'. YES, HP is hiring.....but not YOU, they want Ganesh Balasubramaniamawapbapalooboopawapbamboomtuttifrutti, so that they can work him as modern day slave labor for ultra cheap. We can thank idiot 'leaders' like Meg Pasty Faced Whitman and Bill 'Forced Vaccinations' Gates for lobbying Congress for decades, against the rights of American workers.
Remember that Meg 'Pasty Faced' Whitman is the person who came up with the idea of a 'lights out' datacenter....that's right, it's the concept of putting all of your computers in a building, in racks, in the dark, and maybe hiring an intern to come in once a month and keep them going. This is what she actually believed. Along with her other statement to the HP workforce which says basically that the future of HP is one of total automation.....TRANSLATION: If you are a smart admin, engineer, project manager, architect, sw tester, etc.....we (HP management) think you are an IDIOT and can be replaced by a robot, a foreigner, or any other cheap worker.
Race to the bottom is like they say a space ship approaching a black hole......after a while the laws of physics and common sense, just don't apply anymore.
InnVestuhrr
An era of leadership in computer technology has died, and there is no grave marker, not even a funeral ceremony or eulogy ... Hewlett-Packard, COMPAQ, Digital Equipment Corp, UNIVAC, Sperry-Rand, Data General, Tektronix, ZILOG, Advanced Micro Devices, Sun Microsystems, etc, etc, etc. So much change in so short a time, leaves your mind dizzy.
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Feb 22, 2017 | econospeak.blogspot.com
Sandwichman -> Sandwichman ... February 24, 2017 at 08:36 AM
John Kenneth Galbraith, from "The Great Crash 1929":
"In many ways the effect of the crash on embezzlement was more significant than on suicide. To the economist embezzlement is the most interesting of crimes. Alone among the various forms of larceny it has a time parameter. Weeks, months or years may elapse between the commission of the crime and its discovery. (This is a period, incidentally, when the embezzler has his gain and the man who has been embezzled, oddly enough, feels no loss. There is a net increase in psychic wealth.)
At any given time there exists an inventory of undiscovered embezzlement in – or more precisely not in – the country's business and banks.
This inventory – it should perhaps be called the bezzle – amounts at any moment to many millions [trillions!] of dollars. It also varies in size with the business cycle.
In good times people are relaxed, trusting, and money is plentiful. But even though money is plentiful, there are always many people who need more. Under these circumstances the rate of embezzlement grows, the rate of discovery falls off, and the bezzle increases rapidly.
In depression all this is reversed. Money is watched with a narrow, suspicious eye. The man who handles it is assumed to be dishonest until he proves himself otherwise. Audits are penetrating and meticulous. Commercial morality is enormously improved. The bezzle shrinks."
Sanwichman, February 24, 2017 at 05:24 AM
For nearly a half a century, from 1947 to 1996, real GDP and real Net Worth of Households and Non-profit Organizations (in 2009 dollars) both increased at a compound annual rate of a bit over 3.5%. GDP growth, in fact, was just a smidgen faster -- 0.016% -- than growth of Net Household Worth.
From 1996 to 2015, GDP grew at a compound annual rate of 2.3% while Net Worth increased at the rate of 3.6%....
-- Sanwichman
anne -> anne... February 24, 2017 at 05:25 AM
https://fred.stlouisfed.org/graph/?g=cOU6
January 15, 2017
Gross Domestic Product and Net Worth for Households & Nonprofit Organizations, 1952-2016
(Indexed to 1952)
https://fred.stlouisfed.org/graph/?g=cPq1
January 15, 2017
Gross Domestic Product and Net Worth for Households & Nonprofit Organizations, 1992-2016
(Indexed to 1992)
anne -> Sandwichman ... February 24, 2017 at 03:35 PM
The real home price index extends from 1890. From 1890 to 1996, the index increased slightly faster than inflation so that the index was 100 in 1890 and 113 in 1996. However from 1996 the index advanced to levels far beyond any previously experienced, reaching a high above 194 in 2006. Previously the index high had been just above 130.
Though the index fell from 2006, the level in 2016 is above 161, a level only reached when the housing bubble had formed in late 2003-early 2004.
Real home prices are again strikingly high:
http://www.econ.yale.edu/~shiller/data.htm Reply Friday, February 24, 2017 at 03:34 PM anne -> Sandwichman ... February 24, 2017
Valuation
The Shiller 10-year price-earnings ratio is currently 29.34, so the inverse or the earnings rate is 3.41%. The dividend yield is 1.93. So an expected yearly return over the coming 10 years would be 3.41 + 1.93 or 5.34% provided the price-earnings ratio stays the same and before investment costs.
Against the 5.34% yearly expected return on stock over the coming 10 years, the current 10-year Treasury bond yield is 2.32%.
The risk premium for stocks is 5.34 - 2.32 or 3.02%:
anne -> anne..., February 24, 2017 at 05:36 AM
What the robot-productivity paradox is puzzles me, other than since 2005 for all the focus on the productivity of robots and on robots replacing labor there has been a dramatic, broad-spread slowing in productivity growth.
However what the changing relationship between the growth of GDP and net worth since 1996 show, is that asset valuations have been increasing relative to GDP. Valuations of stocks and homes are at sustained levels that are higher than at any time in the last 120 years. Bear markets in stocks and home prices have still left asset valuations at historically high levels. I have no idea why this should be.
Sandwichman -> anne... February 24, 2017 at 08:34 AM
The paradox is that productivity statistics can't tell us anything about the effects of robots on employment because both the numerator and the denominator are distorted by the effects of colossal Ponzi bubbles.
John Kenneth Galbraith used to call it "the bezzle." It is "that increment to wealth that occurs during the magic interval when a confidence trickster knows he has the money he has appropriated but the victim does not yet understand that he has lost it." The current size of the gross national bezzle (GNB) is approximately $24 trillion.
Ponzilocks and the Twenty-Four Trillion Dollar Question
http://econospeak.blogspot.ca/2017/02/ponzilocks-and-twenty-four-trillion.html
Twenty-three and a half trillion, actually. But what's a few hundred billion? Here today, gone tomorrow, as they say.
At the beginning of 2007, net worth of households and non-profit organizations exceeded its 1947-1996 historical average, relative to GDP, by some $16 trillion. It took 24 months to wipe out eighty percent, or $13 trillion, of that colossal but ephemeral slush fund. In mid-2016, net worth stood at a multiple of 4.83 times GDP, compared with the multiple of 4.72 on the eve of the Great Unworthing.
When I look at the ragged end of the chart I posted yesterday, it screams "Ponzi!" "Ponzi!" "Ponz..."
To make a long story short, let's think of wealth as capital. The value of capital is determined by the present value of an expected future income stream. The value of capital fluctuates with changing expectations but when the nominal value of capital diverges persistently and significantly from net revenues, something's got to give. Either economic growth is going to suddenly gush forth "like nobody has ever seen before" or net worth is going to have to come back down to earth.
Somewhere between 20 and 30 TRILLION dollars of net worth will evaporate within the span of perhaps two years.
When will that happen? Who knows? There is one notable regularity in the data, though -- the one that screams "Ponzi!"
When the net worth bubble stops going up...
...it goes down.
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Mar 20, 2017 | medium.com
People are worried about robots taking jobs. Driverless cars are around the corner. Restaurants and shops increasingly carry the option to order by touchscreen. Google's clever algorithms provide instant translations that are remarkably good.
But the economy does not feel like one undergoing a technology-driven productivity boom. In the late 1990s, tech optimism was everywhere. At the same time, wages and productivity were rocketing upward. The situation now is completely different. The most recent jobs reports in America and Britain tell the tale. Employment is growing, month after month after month. But wage growth is abysmal. So is productivity growth: not surprising in economies where there are lots of people on the job working for low pay.
The obvious conclusion, the one lots of people are drawing, is that the robot threat is totally overblown: the fantasy, perhaps, of a bubble-mad Silicon Valley - or an effort to distract from workers' real problems, trade and excessive corporate power. Generally speaking, the problem is not that we've got too much amazing new technology but too little.
This is not a strawman of my own invention. Robert Gordon makes this case. You can see Matt Yglesias make it here. Duncan Weldon, for his part, writes:
We are debating a problem we don't have, rather than facing a real crisis that is the polar opposite. Productivity growth has slowed to a crawl over the last 15 or so years, business investment has fallen and wage growth has been weak. If the robot revolution truly was under way, we would see surging capital expenditure and soaring productivity. Right now, that would be a nice "problem" to have. Instead we have the reality of weak growth and stagnant pay. The real and pressing concern when it comes to the jobs market and automation is that the robots aren't taking our jobs fast enough.
And in a recent blog post Paul Krugman concluded:
I'd note, however, that it remains peculiar how we're simultaneously worrying that robots will take all our jobs and bemoaning the stalling out of productivity growth. What is the story, really?
What is the story, indeed. Let me see if I can tell one. Last fall I published a book: "The Wealth of Humans". In it I set out how rapid technological progress can coincide with lousy growth in pay and productivity. Start with this:
Low labour costs discourage investments in labour-saving technology, potentially reducing productivity growth.
Peter K. -> Peter K.... Monday, March 20, 2017 at 09:26 AM
Increasing labour costs by making the minimum wage a living wage would increase the incentives to boost productivity growth? No, the neoliberals and corporate Democrats would never go for it. They're trying to appeal to the business community and their campaign contributors wouldn't like it.
anne -> Peter K.... March 20, 2017 at 10:32 AM
https://twitter.com/paulkrugman/status/843167658577182725
Paul Krugman @paulkrugman
But is [Ryan Avent] saying something different from the assertion that recent tech progress is capital-biased?
If so, what?
anne -> Peter K.... March 20, 2017 at 10:33 AM
December 26, 2012
Capital-biased Technological Progress: An Example (Wonkish)
By Paul KrugmanEver since I posted about robots and the distribution of income, * I've had queries from readers about what capital-biased technological change – the kind of change that could make society richer but workers poorer – really means. And it occurred to me that it might be useful to offer a simple conceptual example – the kind of thing easily turned into a numerical example as well – to clarify the possibility. So here goes.
Imagine that there are only two ways to produce output. One is a labor-intensive method – say, armies of scribes equipped only with quill pens. The other is a capital-intensive method – say, a handful of technicians maintaining vast server farms. (I'm thinking in terms of office work, which is the dominant occupation in the modern economy).
We can represent these two techniques in terms of unit inputs – the amount of each factor of production required to produce one unit of output. In the figure below I've assumed that initially the capital-intensive technique requires 0.2 units of labor and 0.8 units of capital per unit of output, while the labor-intensive technique requires 0.8 units of labor and 0.2 units of capital.
[Diagram]
The economy as a whole can make use of both techniques – in fact, it will have to unless it has either a very large amount of capital per worker or a very small amount. No problem: we can just use a mix of the two techniques to achieve any input combination along the blue line in the figure. For economists reading this, yes, that's the unit isoquant in this example; obviously if we had a bunch more techniques it would start to look like the convex curve of textbooks, but I want to stay simple here.
What will the distribution of income be in this case? Assuming perfect competition (yes, I know, but let's deal with that case for now), the real wage rate w and the cost of capital r – both measured in terms of output – have to be such that the cost of producing one unit is 1 whichever technique you use. In this example, that means w=r=1. Graphically, by the way, w/r is equal to minus the slope of the blue line.
Oh, and if you're worried, yes, workers and machines are both paid their marginal product.
But now suppose that technology improves – specifically, that production using the capital-intensive technique gets more efficient, although the labor-intensive technique doesn't. Scribes with quill pens are the same as they ever were; server farms can do more than ever before. In the figure, I've assumed that the unit inputs for the capital-intensive technique are cut in half. The red line shows the economy's new choices.
So what happens? It's obvious from the figure that wages fall relative to the cost of capital; it's less obvious, maybe, but nonetheless true that real wages must fall in absolute terms as well. In this specific example, technological progress reduces the real wage by a third, to 0.667, while the cost of capital rises to 2.33.
OK, it's obvious how stylized and oversimplified all this is. But it does, I think, give you some sense of what it would mean to have capital-biased technological progress, and how this could actually hurt workers.
* http://krugman.blogs.nytimes.com/2012/12/08/rise-of-the-robots/
anne -> Peter K.... March 20, 2017 at 10:34 AM
http://krugman.blogs.nytimes.com/2012/12/08/rise-of-the-robots/
December 8, 2012
Rise of the Robots
By Paul KrugmanCatherine Rampell and Nick Wingfield write about the growing evidence * for "reshoring" of manufacturing to the United States. * They cite several reasons: rising wages in Asia; lower energy costs here; higher transportation costs. In a followup piece, ** however, Rampell cites another factor: robots.
"The most valuable part of each computer, a motherboard loaded with microprocessors and memory, is already largely made with robots, according to my colleague Quentin Hardy. People do things like fitting in batteries and snapping on screens.
"As more robots are built, largely by other robots, 'assembly can be done here as well as anywhere else,' said Rob Enderle, an analyst based in San Jose, California, who has been following the computer electronics industry for a quarter-century. 'That will replace most of the workers, though you will need a few people to manage the robots.' "
Robots mean that labor costs don't matter much, so you might as well locate in advanced countries with large markets and good infrastructure (which may soon not include us, but that's another issue). On the other hand, it's not good news for workers!
This is an old concern in economics; it's "capital-biased technological change," which tends to shift the distribution of income away from workers to the owners of capital.
Twenty years ago, when I was writing about globalization and inequality, capital bias didn't look like a big issue; the major changes in income distribution had been among workers (when you include hedge fund managers and CEOs among the workers), rather than between labor and capital. So the academic literature focused almost exclusively on "skill bias", supposedly explaining the rising college premium.
But the college premium hasn't risen for a while. What has happened, on the other hand, is a notable shift in income away from labor:
[Graph]
If this is the wave of the future, it makes nonsense of just about all the conventional wisdom on reducing inequality. Better education won't do much to reduce inequality if the big rewards simply go to those with the most assets. Creating an "opportunity society," or whatever it is the likes of Paul Ryan etc. are selling this week, won't do much if the most important asset you can have in life is, well, lots of assets inherited from your parents. And so on.
I think our eyes have been averted from the capital/labor dimension of inequality, for several reasons. It didn't seem crucial back in the 1990s, and not enough people (me included!) have looked up to notice that things have changed. It has echoes of old-fashioned Marxism - which shouldn't be a reason to ignore facts, but too often is. And it has really uncomfortable implications.
But I think we'd better start paying attention to those implications.
* http://www.nytimes.com/2012/12/07/technology/apple-to-resume-us-manufacturing.html
** http://economix.blogs.nytimes.com/2012/12/07/when-cheap-foreign-labor-gets-less-cheap/
anne -> anne... March 20, 2017 at 10:41 AM
https://fred.stlouisfed.org/graph/?g=d4ZY
January 30, 2017
Compensation of Employees as a share of Gross Domestic Income, 1948-2015
https://fred.stlouisfed.org/graph/?g=d507January 30, 2017
Compensation of Employees as a share of Gross Domestic Income, 1948-2015
(Indexed to 1948)
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Feb 22, 2017 | econospeak.blogspot.com
Sandwichman -> Sandwichman ... February 24, 2017 at 08:36 AM
John Kenneth Galbraith, from "The Great Crash 1929":
"In many ways the effect of the crash on embezzlement was more significant than on suicide. To the economist embezzlement is the most interesting of crimes. Alone among the various forms of larceny it has a time parameter. Weeks, months or years may elapse between the commission of the crime and its discovery. (This is a period, incidentally, when the embezzler has his gain and the man who has been embezzled, oddly enough, feels no loss. There is a net increase in psychic wealth.)
At any given time there exists an inventory of undiscovered embezzlement in – or more precisely not in – the country's business and banks.
This inventory – it should perhaps be called the bezzle – amounts at any moment to many millions [trillions!] of dollars. It also varies in size with the business cycle.
In good times people are relaxed, trusting, and money is plentiful. But even though money is plentiful, there are always many people who need more. Under these circumstances the rate of embezzlement grows, the rate of discovery falls off, and the bezzle increases rapidly.
In depression all this is reversed. Money is watched with a narrow, suspicious eye.
The man who handles it is assumed to be dishonest until he proves himself otherwise. Audits are penetrating and meticulous. Commercial morality is enormously improved. The bezzle shrinks."
Sanwichman, February 24, 2017 at 05:24 AM
For nearly a half a century, from 1947 to 1996, real GDP and real Net Worth of Households and Non-profit Organizations (in 2009 dollars) both increased at a compound annual rate of a bit over 3.5%. GDP growth, in fact, was just a smidgen faster -- 0.016% -- than growth of Net Household Worth.
From 1996 to 2015, GDP grew at a compound annual rate of 2.3% while Net Worth increased at the rate of 3.6%....
-- Sanwichman
anne -> anne... February 24, 2017 at 05:25 AM
https://fred.stlouisfed.org/graph/?g=cOU6
January 15, 2017
Gross Domestic Product and Net Worth for Households & Nonprofit Organizations, 1952-2016
(Indexed to 1952)
https://fred.stlouisfed.org/graph/?g=cPq1
January 15, 2017
Gross Domestic Product and Net Worth for Households & Nonprofit Organizations, 1992-2016
(Indexed to 1992)
anne -> Sandwichman ... February 24, 2017 at 03:35 PM
The real home price index extends from 1890. From 1890 to 1996, the index increased slightly faster than inflation so that the index was 100 in 1890 and 113 in 1996. However from 1996 the index advanced to levels far beyond any previously experienced, reaching a high above 194 in 2006. Previously the index high had been just above 130.
Though the index fell from 2006, the level in 2016 is above 161, a level only reached when the housing bubble had formed in late 2003-early 2004.
Real home prices are again strikingly high:
http://www.econ.yale.edu/~shiller/data.htm Reply Friday, February 24, 2017 at 03:34 PM anne -> Sandwichman ... February 24, 2017
Valuation
The Shiller 10-year price-earnings ratio is currently 29.34, so the inverse or the earnings rate is 3.41%. The dividend yield is 1.93. So an expected yearly return over the coming 10 years would be 3.41 + 1.93 or 5.34% provided the price-earnings ratio stays the same and before investment costs.
Against the 5.34% yearly expected return on stock over the coming 10 years, the current 10-year Treasury bond yield is 2.32%.
The risk premium for stocks is 5.34 - 2.32 or 3.02%:
anne -> anne..., February 24, 2017 at 05:36 AM
What the robot-productivity paradox is puzzles me, other than since 2005 for all the focus on the productivity of robots and on robots replacing labor there has been a dramatic, broad-spread slowing in productivity growth.
However what the changing relationship between the growth of GDP and net worth since 1996 show, is that asset valuations have been increasing relative to GDP. Valuations of stocks and homes are at sustained levels that are higher than at any time in the last 120 years. Bear markets in stocks and home prices have still left asset valuations at historically high levels. I have no idea why this should be.
Sandwichman -> anne... February 24, 2017 at 08:34 AM
The paradox is that productivity statistics can't tell us anything about the effects of robots on employment because both the numerator and the denominator are distorted by the effects of colossal Ponzi bubbles.
John Kenneth Galbraith used to call it "the bezzle." It is "that increment to wealth that occurs during the magic interval when a confidence trickster knows he has the money he has appropriated but the victim does not yet understand that he has lost it." The current size of the gross national bezzle (GNB) is approximately $24 trillion.
Ponzilocks and the Twenty-Four Trillion Dollar Question
http://econospeak.blogspot.ca/2017/02/ponzilocks-and-twenty-four-trillion.html
Twenty-three and a half trillion, actually. But what's a few hundred billion? Here today, gone tomorrow, as they say.
At the beginning of 2007, net worth of households and non-profit organizations exceeded its 1947-1996 historical average, relative to GDP, by some $16 trillion. It took 24 months to wipe out eighty percent, or $13 trillion, of that colossal but ephemeral slush fund. In mid-2016, net worth stood at a multiple of 4.83 times GDP, compared with the multiple of 4.72 on the eve of the Great Unworthing.
When I look at the ragged end of the chart I posted yesterday, it screams "Ponzi!" "Ponzi!" "Ponz..."
To make a long story short, let's think of wealth as capital. The value of capital is determined by the present value of an expected future income stream. The value of capital fluctuates with changing expectations but when the nominal value of capital diverges persistently and significantly from net revenues, something's got to give. Either economic growth is going to suddenly gush forth "like nobody has ever seen before" or net worth is going to have to come back down to earth.
Somewhere between 20 and 30 TRILLION dollars of net worth will evaporate within the span of perhaps two years.
When will that happen? Who knows? There is one notable regularity in the data, though -- the one that screams "Ponzi!"
When the net worth bubble stops going up...
...it goes down.
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Nov 22, 2017 | www.nakedcapitalism.com
Posted on November 21, 2017 by Yves Smith Yves here. Reader UserFriendly sent this post with the message, "I can confirm this." I can too. And before you try to attribute our reactions to being Americans, note that the study very clearly points out that its finding have been confirmed in "all of the world's regions".
By Bill Mitchell, Professor in Economics and Director of the Centre of Full Employment and Equity at the University of Newcastle, NSW, Australia. Originally published at billy blog
Here is a summary of another interesting study I read last week (published March 30, 2017) – Happiness at Work – from academic researchers Jan‐Emmanuel De Neve and George Ward. It explores the relationship between happiness and labour force status, including whether an individual is employed or not and the types of jobs they are doing. The results reinforce a long literature, which emphatically concludes that people are devastated when they lose their jobs and do not adapt to unemployment as its duration increases. The unemployed are miserable and remain so even as they become entrenched in long-term unemployment. Further, they do not seem to sense (or exploit) a freedom to release some inner sense of creativity and purpose. The overwhelming proportion continually seek work – and relate their social status and life happiness to gaining a job, rather than living without a job on income support. The overwhelming conclusion is that "work makes up such an important part of our lives" and that result is robust across different countries and cultures. Being employed leads to much higher evaluations of the quality of life relative to being unemployed. And, nothing much has changed in this regard over the last 80 or so years. These results were well-known in the 1930s, for example. They have a strong bearing on the debate between income guarantees versus employment guarantees. The UBI proponents have produced no robust literature to refute these long-held findings.
While the 'Happiness Study' notes that "the relationship between happiness and employment is a complex and dynamic interaction that runs in both directions" the authors are unequivocal:
The overwhelming importance of having a job for happiness is evident throughout the analysis, and holds across all of the world's regions. When considering the world's population as a whole, people with a job evaluate the quality of their lives much more favorably than those who are unemployed. The importance of having a job extends far beyond the salary attached to it, with non-pecuniary aspects of employment such as social status, social relations, daily structure, and goals all exerting a strong influence on people's happiness.
And, the inverse:
The importance of employment for people's subjective wellbeing shines a spotlight on the misery and unhappiness associated with being unemployed.
There is a burgeoning literature on 'happiness', which the authors aim to contribute to.
They define happiness as "subjective well-being", which is "measured along multiple dimensions":
life evaluation (by way of the Cantril "ladder of life"), positive and negative affect to measure respondents' experienced positive and negative wellbeing, as well as the more domain-specific items of job satisfaction and employee engagement. We find that these diverse measures of subjective wellbeing correlate strongly with each other
Cantril's 'Ladder of Life Scale' (or "Cantril Ladder") is used by polling organisations to assess well-being. It was developed by social researcher Hadley Cantril (1965) and documented in his book The pattern of human concerns .
You can learn more about the use of the 'Cantril Ladder' HERE .
As we read, the "Cantril Self-Anchoring Scale consists of the following":
Please imagine a ladder with steps numbered from zero at the bottom to 10 at the top. The top of the ladder represents the best possible life for you and the bottom of the ladder represents the worst possible life for you. On which step of the ladder would you say you personally feel you stand at this time? (ladder-present) On which step do you think you will stand about five years from now? (ladder-future)[Reference: Cantril, H. (1965) The pattern of human concerns , New Brunswick, Rutgers University Press.]
Christian Bjørnskov's 2010 article – How Comparable are the Gallup World Poll Life Satisfaction Data? – also describes how it works.
[Reference: Bjørnskov, C. (2010) 'How Comparable are the Gallup World Poll Life Satisfaction Data?', Journal of Happiness Studies , 11 (1), 41-60.]
The Cantril scale is usually reported as values between 0 and 10.
The authors in the happiness study use poll data from 150 nations which they say "is representative of 98% of the world's population". This survey data is available on a mostly annual basis since 2006.
The following graph (Figure 1 from the Study) shows "the self-reported wellbeing of individuals around the world according to whether or not they are employed."
The "bars measure the subjective wellbeing of individuals of working age" by employment status .
The results show the differences between having a job and being unemployed are "very large indeed" on the three well-being measures (life evaluation, positive and negative affective states).
People employed "evaluate the quality of their lives around 0.6 points higher on average as compared to the unemployed on a scale from 0 to 10."
The authors also conduct more sophisticated (and searching) statistical analysis (multivariate regression) which control for a range of characteristics (gender, age, education, marital status, composition of household) as well as to "account for the many political, economic, and cultural differences between countries as well as year-to-year variation".
The conclusion they reach is simple:
the unemployed evaluate the overall state of their lives less highly on the Cantril ladder and experience more negative emotions in their day-to-day lives as well as fewer positive ones. These are among the most widely accepted and replicated findings in the science of happiness Here, income is being held constant along with a number of other relevant covariates, showing that these unemployment effects go well beyond the income loss associated with losing one's job.
These results are not surprising. The earliest study of this sort of outcome was from the famous study published by Philip Eisenberg and Paul Lazersfeld in 1938. [Reference: Eisenberg, P. and Lazarsfeld, P. (1938) 'The psychological effects of unemployment', Psychological Bulletin , 35(6), 358-390.]
They explore four dimensions of unemployment:
I. The Effects of Unemployment on Personality.
II. Socio-Political Attitudes Affected by Unemployment.
III. Differing Attitudes Produced by Unemployment and Related Factors.
IV. The Effects of Unemployment on Children and Youth.
On the first dimension, they conclude that:
1. "unemployment tends to make people more emotionally unstable than they were previous to unemployment".
2. The unemployed experience feelings of "personal threat"; "fear"; "sense of proportion is shattered"; loss of "common sense of values"; "prestige lost in own eyes and as he imagines, in the eyes of his fellow men"; "feelings of inferiority"; loss of "self-confidence" and a general loss of "morale".
Devastation, in other words. They were not surprised because they note that:
in the light of the structure of our society where the job one holds is the prime indicator of status and prestige.
This is a crucial point that UBI advocates often ignore. There is a deeply entrenched cultural bias towards associating our work status with our general status and prestige and feelings of these standings. That hasn't changed since Eisenberg and Lazersfeld wrote up the findings of their study in 1938.
It might change over time but that will take a long process of re-education and cultural shift. Trying to dump a set of new cultural values that only a small minority might currently hold to onto a society that clearly still values work is only going to create major social tensions. Eisenberg and Lazarsfeld also considered an earlier 1937 study by Cantril who explored whether "the unemployed tend to evolve more imaginative schemes than the employed".
[Reference: Cantril, H. (1934) 'The Social Psychology of Everyday Life', Psychological Bulletin , 31, 297-330.]
The proposition was (is) that once unemployed, do people then explore new options that were not possible while working, which deliver them with the satisfaction that they lose when they become jobless. The specific question asked in the research was: "Have there been any changes of interests and habits among the unemployed?" Related studies found that the "unemployed become so apathetic that they rarely read anything". Other activities, such as attending movies etc were seen as being motivated by the need to "kill time" – "a minimal indication of the increased desire for such attendance".
On the third dimension, Eisenberg and Lazersfeld examine the questions – "Are there unemployed who don't want to work? Is the relief situation likely to increase this number?", which are still a central issue today – the bludger being subsidized by income support.
They concluded that:
the number is few. In spite of hopeless attempts the unemployed continually look for work, often going back again and again to their last place of work. Other writers reiterate this point.
So for decades, researchers in this area, as opposed to bloggers who wax lyrical on their own opinions, have known that the importance of work in our lives goes well beyond the income we earn. The non-pecuniary effects of not having a job are significant in terms of lost status, social alienation, abandonment of daily structure etc, and that has not changed much over history. The happiness paper did explore "how short-lived is the misery associated with being out of work" in the current cultural settings.
The proposition examined was that:
If the pain is only fleeting and people quickly get used to being unemployed, then we might see joblessness as less of a key public policy priority in terms of happiness.
They conclude that:
a number of studies have demonstrated that people do not adapt much, if at all, to being unemployed there is a large initial shock to becoming unemployed, and then as people stay unemployed over time their levels of life satisfaction remain low . several studies have shown that even once a person becomes re-employed, the prior experience of unemployment leaves a mark on his or her happiness.
So there is no sudden or even medium-term realisation that being jobless endows the individual with a new sense of freedom to become their creative selves, freed from the yoke of work. To bloom into musicians, artists, or whatever.
The reality is that there is an on-going malaise – a deeply entrenched sense of failure is overwhelming, which stifles happiness and creativity, even after the individual is able to return to work.
This negativity, borne heavily by the individual, however, also impacts on society in general.
The paper recognises that:
A further canonical finding in the literature on unemployment and subjective wellbeing is that there are so-called "spillover" effects.
High levels of unemployment "increase fear and heighten the sense of job insecurity". Who will lose their job next type questions?
The researchers found in their data that the higher is the unemployment rate the greater the anxiety among those who remain employed.
Conclusion
The overwhelming conclusion is that "work makes up such an important part of our lives" and that result is robust across different countries and cultures.
Being employed leads to much higher evaluations of the quality of life relative to being unemployed.
The unemployed are miserable and remain so even as they become entrenched in long-term unemployment. They do not seem to sense (or exploit) a freedom to release some inner sense of creativity and purpose.
The overwhelming proportion continually seek work – and relate their social status and life happiness to gaining a job, rather than living without a job on income support.
Modern Monetary Theory (MMT) allows us to understand that it is the government that chooses the unemployment rate – it is a political choice.
For currency-issuing governments it means their deficits are too low relative to the spending and saving decisions of the non-government sector.
For Eurozone-type nations, it means that in surrendering their currencies and adopting a foreign currency, they are unable to guarantee sufficient work in the face of negative shifts in non-government spending. Again, a political choice.
The Job Guarantee can be used as a vehicle to not only ensure their are sufficient jobs available at all times but also to start a process of wiping out the worst jobs in the non-government sector.
That can be done by using the JG wage to ensure low-paid private employers have to restructure their workplaces and pay higher wages and achieve higher productivity in order to attract labour from the Job Guarantee pool.
The Series So Far
This is a further part of a series I am writing as background to my next book with Joan Muysken analysing the Future of Work . More instalments will come as the research process unfolds.
The series so far:
- When Austrians ate dogs .
- Employment as a human right .
- The rise of the "private government .
- The evolution of full employment legislation in the US .
- Automation and full employment – back to the 1960s .
- Countering the march of the robots narrative .
- Unemployment is miserable and does not spawn an upsurge in personal creativity .
The blogs in these series should be considered working notes rather than self-contained topics. Ultimately, they will be edited into the final manuscript of my next book due in 2018. The book will likely be published by Edward Elgar (UK).
That is enough for today!
divadab , November 21, 2017 at 6:11 am
The Rev Kev , November 21, 2017 at 6:35 amPerhaps I'm utterly depressed but I haven't had a job job for over 5 years. Plenty of work, however, more than I can handle and it requires priorisation. But I am deliberately not part of the organized herd. I stay away from big cities – it's scary how managed the herd is in large groups – and I suppose that unemployment for a herd animal is rather distressing as it is effectively being kicked out of the herd.
Anyway my advice, worth what you pay for it but let he who has ears, etc. – is to go local, very local, grow your own food, be part of a community, manage your own work, and renounce the energy feast herd dynamics. "Unemployment", like "recession", is a mechanism of control. Not very practical advice for most, I realize, trapped in the herd as they are in car payments and mortgages, but perhaps aspirational?
nonclassical , November 21, 2017 at 10:24 amI think what is missing from this article is the term "identity." If you meet new people, often the conversation starts with what you do for a living. Your identity, in part, is what you do. You can call yourself a plumber, a writer, a banker, a consultant, a reporter but the point is this is part of your identity. When you lose your job long term, your identity here loses one of its main anchor points.
Worse, there is a deliberate stigma attached with being long term unemployed. In that article you have seen the word bludger being used. In parts of the US I have read of the shame of 'living off the county'. And yes, I have been there, seen that, and got the t-shirt. It's going to be interesting as mechanization and computers turn large portions of the population from workers to 'gig' workers. Expect mass demoralization.
jrs , November 21, 2017 at 12:13 pmyes the lives many of us have lived, no longer exist though we appear not notice, as we "can" live in many of same "ways" ..rather well known psychologist defined some 40 years ago, best to "drop through cracks"
sgt_doom , November 21, 2017 at 2:20 pmWell, you also lose money, maybe you become homeless etc. as you have nowhere else to turn (if there are kids involved to support it gets even scarier though there are some programs). Or maybe you become dependent on another person(s) to support you which is of course degrading as you know you must rely on them to live, whether it's a spouse or lover when you want to work and bring in money, or mom and dads basement, or the kindest friend ever who lets you sleep on their couch. I mean these are the things that really matter.
Privileged people whose main worry in unemployment would be losing identity, wow out of touch much? Who cares about some identity for parties, but the ability to have a stable decent life (gig work hardly counts) is what is needed.
jgordon , November 21, 2017 at 7:08 pmI believe your comment sums up the situation the best -- and most realistically.
skippy , November 22, 2017 at 12:45 amI normally wouldn't comment like this, but you have brought up some extremely important points about identity that I would like to address.
Recently I had the most intense mushroom experience of my entire life–so intense that my identity had been completely stripped and I was left in a formless state, at the level of seeing my bare, unvarnished animal neural circuitry in operation. Suddenly with a flash of inspiration I realized that the identity of everyone, all of us, is inextricably tied up in what we do and what we do for other people.
Following from that, I understood that if we passively rely on others for survival, whether it be relying on friends, family, or government, then we do not have an identity or reason for existing. And the inner self, the animal core of who we are, will realise this lack of identity (even if the concious mind denies it), and will continually generate feelings of profound depression and intense nihilism that will inevitably destroy us if the root cause is not addressed.
Before this experience I was somewhat ambivalent about my politics, but immediately after I knew that the political right was correct on everything important, from attitudes on sex to economic philosophy. People need a core of cultural stability and hard work to grow and become actualized. The alternative is rudderless dissatisfaction and envy that leads nowhere.
On the topic of giving "out of kindnes and goodwill", giving without demanding anything in return is a form of abuse, as it deprives those who receive our feel-good generosity the motivation to form a coherent identity. If the parents of a basement-dweller were truly good people, instead of supporting said dweller they'd drag her out by the ear and make her grow food in the yard or some such. Likewise, those who have supported you without also giving concrete demands and expecations in return have been unkind, and for your own good I hope that you will immediately remove yourself from their support. On the other hand, if you have been thoughtlessly giving because it warms the cockles of your heart, then stop it now. You are ruining other people this way, and if your voting habits are informed by this kind of malevolence I'd encourage you to change those as well.
Anyway the original poster is right about everything. Working and having a purpose in life is an entirely different animal from making money and being "successful" in the government-sponsored commercial economy. Society and government deliberately try to conflate the two for various reasons, primarily graft of labor and genius, but that is only a deliberate mis-framing that needlessly harms people when the mainstream economic system is in catastrophic decline, as ours is today. You should try to clear up this misconception within yourself as a way of getting better.
Well, I hope this message can give you a few different thoughts and help you find your way out of the existential angst you're caught in. Don't wallow in helplessness. Think of something useful to do, anything, whether it earns you money or not, and go out and start doing it. You'll be surprised at how much better you feel about yourself in no time.
Jeremy Grimm , November 21, 2017 at 12:33 pmThe problem is you said – I – had an extreme experience [burning bush], the truth was reviled to – I – and I alone during this extreme chemically altered state. Which by the way just happens to conform to a heap of environmental biases I collected. This is why sound methodology demands peer review. disheveled some people think Mister Toads Wild ride at Disneyland on psychotropics is an excellent adventure too.
Henry Moon Pie , November 21, 2017 at 7:00 amI think your observation about the importance of work to identity is most perceptive. This post makes too little distinction between work and a job and glosses over the place of work in defining who we are to ourselves and to others. I recall the scene in the movie "About a Boy" when the hero meets someone he cares about and she asks him what he does for a living.
I believe there's another aspect of work -- related to identity -- missing in the analysis of this post. Work can offer a sense of mission -- of acting as part of an effort toward a larger goal no individual could achieve alone. However you may regard the value in putting man on the moon there is no mistaking the sense of mission deeply felt by the engineers and technicians working on the project. What jobs today can claim service to a mission someone might value?
ambrit , November 21, 2017 at 8:29 amAgreed on your points. Wage slavery is nothing to aspire to. Self-determination within a context of an interdependent community is a much better way to live. We do our thing in the city, however.
UserFriendly , November 21, 2017 at 10:10 amFinding that "interdependent community" is the hard part. My experience has been that this endeavour is almost chance based; Serendipity if you will.
Here Down South, the churches still seem to have a stranglehold on small and mid scale social organization. One of the big effects of 'churching' is the requirement that the individual gave up personal critical thinking. Thus, the status quo is reinforced. One big happy 'Holy Circlejerk.'FelicityT , November 21, 2017 at 3:07 pmfrom the article
This is a crucial point that UBI advocates often ignore. There is a deeply entrenched cultural bias towards associating our work status with our general status and prestige and feelings of these standings.
That hasn't changed since Eisenberg and Lazersfeld wrote up the findings of their study in 1938. It might change over time but that will take a long process of re-education and cultural shift. Trying to dump a set of new cultural values that only a small minority might currently hold to onto a society that clearly still values work is only going to create major social tensions.
Yves Smith Post author , November 21, 2017 at 4:23 pmI would agree about the entenched cultural norms, etc. But not the pessimism and timeline for change. An individual can communicate a complex idea to millions in seconds, things move fast these days.
For me, it seems that what we (we being UBI/radical change proponents) are lacking is a compelling easily accessible story. Not just regarding UBI (as that is but one part of the trully revolutionary transformations that must occur) but encompassing everything.
We have countless think pieces, bits of academic writing, books, etc that focus on individual pieces and changes in isolation. But we've largely abandoned the all-encompassing narrative, which at their heart is precisely what religion offers and why it can be so seductive, successful, and resilient for so long.
The status quo has this type of story, it's not all that compelling but given the fact that it is the status quo and has inertia and tradition on its side (along with the news media, political, entertainment, etc) it doesn't have to be.
We need to abandon the single narrow issue activism that has become so prominent over the years and get back to engaging with issues as unseparable and intimately interconnected.
Tinkering around the edges will do nothing, a new political religion is what is required.
FelicityT , November 21, 2017 at 5:11 pmSorry, I disagree vehemently. Deeply held cultural attitudes are very slow to change and the study found that work being critical to happiness examined a large number of societies.
Look at feminism. I was a half-generation after the time when women were starting to get a shot at real jobs. IIRC, the first class that accepted women at Harvard Law School was in the 1950 and at Harvard Business School, 1965. And the number of first attendees was puny. The 1965 class at HBS had 10 8 women out of a graduating class of over 800; my class in 1981 had only 11% women.
In the 1980s, you saw a shift from the belief that women could do what men could do to promotion of the idea that women could/should be feminine as well as successful. This looked like seriously mixed messages, in that IMHO the earlier tendency to de-emphasize gender roles in the workplace looked like a positive development.
Women make less than 80% of what men do in the US. Even female doctors in the same specialities make 80% of their male peers.
The Speenhamland in the UK had what amounted to an income guarantee from the 1790s to 1832. Most people didn't want to be on it and preferred to work. Two generations and being on the support of local governments was still seen as carrying a stigma.
More generally, social animals have strongly ingrained tendencies to resent situations they see as unfair. Having someone who is capable of working not work elicits resentment from many, which is why most people don't want to be in that position. You aren't going to change that.
And people need a sense of purpose. There are tons of cases of rich heirs falling into drug addiction or alcoholism and despair because they have no sense of purpose in life. Work provides that, even if it's mundane work to support a family. That is one of the great dissservices the Democrats have done to the citizenry at large: sneering at ordinary work when blue-collar men were the anchors of families and able to take pride in that.
Yves Smith Post author , November 21, 2017 at 8:34 pmSo a few points.
Regarding the large number of societies, we often like to think we're more different than we actually are focusing on a few glaringly obvious differences and generalizing from there. Even going back a few hundred years when ideas travelled slower we were still (especially the "west" though the "east" wasn't all that much more different either) quite similar. So I'm less inclined to see the large number of societies as evidence.
Generally on societal changes and movements: The issue here is that the leadership has not changed, they may soften some edges here or there (only to resharpen them again when we're looking elsewhere) but their underlying ideologies are largely unchanged. A good mass of any population will go along to survive, whether they agree or not (and we find increasing evidence that many do not agree, though certainly that they do not agree on a single alternative).
It may be impossible to implement such changes in who controls the levers of power in a democratic fashion but it also may be immoral not implement such changes. Of course this is also clearly a similar path to that walked by many a demonized (in most cases rightfully so) dictator and despot. 'Tread carefully' are wise words to keep in mind.
Today we have a situation which reflects your example re: social animals and resentment of unfairness: the elite (who falls into this category is of course debatable, some individuals moreso than others). But they have intelligently, for their benefit, redirected that resentment towards those that have little. Is there really any logical connection between not engaging in wage labor (note: NOT equivalent to not working) and unfairness? Or is it a myth crafted by those who currently benefit the most?
That resentment is also precisely why it is key that a Basic income be universal with no means testing, everyone gets the same.
I think we should not extrapolate too much from the relatively small segment of the population falling into the the inherited money category. Correlation is not causation and all that.
It also seems that so often individuals jump to the hollywood crafted image of the layabout stoner sitting on the couch giggling at cartoons (or something similarly negative) when the concept of less wage labor is brought up. A reduction of wage labor does not equate to lack of work being done, it simply means doing much of that work for different reasons and rewards and incentives.
As I said in the Links thread today, we produce too much, we consume too much, we grow too much. More wage labor overall as a requirement for survival is certainly not the solution to any real problem that we face, its a massively inefficient use of resources and a massive strain on the ecosystems.
WobblyTelomeres , November 21, 2017 at 8:53 pmI am really gobsmacked at the sense of entitlement on display here. Why are people entitled to an income with no work? Being an adult means toil: cleaning up after yourself, cleaning up after your kids if you have them, if you are subsistence farmer, tending your crops and livestock, if you are a modern society denizen, paying your bills and your taxes on time. The idea that people are entitled to a life of leisure is bollocks. Yet you promote that.
Society means we have obligations to each other. That means work. In rejecting work you reject society.
And the touting of "creativity" is a top 10% trope that Thomas Frank called out in Listen, Liberal. It's a way of devaluing what the bottom 90% do.
flora , November 21, 2017 at 9:38 pmMy argument with the article is that, to me, it smacks of Taylorism. A follow-on study would analyze how many hours a laborer must work before the acquired sense of purpose and dignity and associated happiness began to decline. Would it be 30 hours a week of backbreaking labor before dignity found itself eroded? 40? 50? 60? When does the worker break? Just how far can we push the mule before it collapses?
The author alludes to this: "The overwhelming proportion relate their social status and life happiness to gaining a job"
Work equals happiness. Got it.
But, as a former robotics instructor, and as one who watches the industry (and former students), I see an automated future as damn near inevitable. Massive job displacement is coming, life as a minimum wage burger flipper will cease, with no future employment prospects short of government intervention (WPA and CCC for all, I say). I'm not a Luddite, obviously, but there are going to be a lot of people, billions, worldwide, with no prospect of employment. Saying, "You're lazy and entitled" is a bit presumptuous, Yves. Not everyone has your ability, not everyone has my ability. When the burger flipping jobs are gone, where do they go? When roombas mop the floors, where do the floor moppers go?
nihil obstet , November 21, 2017 at 10:05 pm"WPA and CCC for all, I say. "
+1
We could use a new Civilian Conservation Corps and and a Works Progress Administration. There's lots of work that needs doing that isn't getting done by private corporations.
WobblyTelomeres , November 21, 2017 at 10:14 pmThe outrage at non-work wealth and income would be more convincing if it were aimed also at owners of capital. About 30% of national income is passive -- interest, rents, dividends. Why are the owners of capital "entitled to an income with no work?" It's all about the morality that underlies the returns to capital while sugaring over a devaluation of labor. As a moral issue, everyone should share the returns on capital or we should tax away the interest, rents, and dividends. If it's an economic issue, berating people for their beliefs isn't a reason.
Yves Smith Post author , November 22, 2017 at 2:27 amWhy are the owners of capital "entitled to an income with no work?"
THIS!!!! So much, THIS!!!! But, what else is a Wobbly to say, eh?
IsotopeC14 , November 22, 2017 at 2:58 amThe overwhelming majority do work. The top 0.1% is almost entirely private equity managers who are able to classify labor income as capital gains through the carried interest loophole. Go look at the Forbes 400.
The 1% are mainly CEOs, plus elite professionals, like partners at top law and consulting firms and specialty surgeons (heart, brain, oncology). The CEOs similarly should be seen as getting labor income but have a lot of stock incentive pay (that is how they get seriously rich) which again gets capital gains treatment.
You are mistaking clever taking advantage of the tax code for where the income actually comes from. Even the kids of rich people are under pressure to act like entrepreneurs from their families and peers. Look at Paris Hilton and Ivanka as examples. They both could have sat back and enjoyed their inheritance, but both went and launched businesses. I'm not saying the kids of the rich succeed, or would have succeed to the extent they do without parental string-pulling, but the point is very few hand their fortune over to a money manager and go sailing or play the cello.
IsotopeC14 , November 22, 2017 at 1:34 amIsn't the brother of the infamous Koch duo doing exactly that? Actually, if all the .001%ers were like him, we'd all be better off
flora , November 21, 2017 at 9:09 pmWhat's your take on Rutger Bergman's ted talk? i think most jobs aren't real jobs at all, like marketing and ceo's. why can't we do 20 hour work weeks so we don't have huge amounts of unemployment? Note, I was "unemployed" for years since "markets" decide not to fund science in the US. Yay Germany At least I was fortunate enough to not be forced to work at Walmart or McDonalds like the majority of people with absolutely no life choices. Ah the sweet coercion of capitalism.
Andrew Dodds , November 22, 2017 at 2:48 amYour hopes for a UBI are undone by some of the real world observations I've made over many years, with regard to how a guaranteed income increase, of any measure, for a whole population of an area, affects prices. Shorter: income going up means prices are raised by merchants to capture the new income.
- Examples: A single industry town raises wages for all employees by 2% for the new calendar year. Within the first 2 weeks of the new year, all stores and restaurants and service providers in the town raise their prices by 2%. This happens every year there is a general wage increase.
- Example: Medicare part D passes and within 2 years, Pharma now having new captive customers whose insurance will pay for drugs, raise prices higher and higher, even on generic drugs.
- A more recent example: ACA passes with no drug price ceilings. Again, as with the passage of Medicare part D, Pharma raises drug prices to unheard of levels, even older and cheap but life saving drugs, in the knowledge that a new, large group will have insurance that will pay for the drugs – a new source of money.
Your assumption that any UBI would not be instantly captured by raised prices is naive, at best. It's also naive to assume companies would continue to pay wages at the same level to people still employed, instead of reducing wages and letting UBI fill in the rest. Some corporations already underpay their workers, then encourage the workers to apply for food stamps and other public supports to make up for the reduced wage.
The point of the paper is the importance of paid employment to a person's sense of well being. I agree with the paper.
jsn , November 21, 2017 at 11:28 amFor the vast majority, a UBI would be income-neutral – it would have to be, to avoid massive inflation. So people would receive a UBI, but pay more tax to compensate. The effect on prices would be zero.
The advantage of a UBI is mostly felt at the lower end, where insecure/seasonal work does now pay. At the moment, a person who went from farm labourer to Christmas work to summer resort work in the UK would certainly be working hard, but also relentlessly hounded by the DWP over universal credit. A UBI would make this sort of lifestyle possible.
Lambert Strether , November 22, 2017 at 1:44 amDavidab, Good for you, but your perspicacity is not scalable. People are social animals and your attitude toward "the herd", at least as expressed here, is that of a predator, even if your taste doesn't run toward predation. Social solutions will necessarily be scalable or they won't be solutions for long.
BJ , November 21, 2017 at 6:37 am> the organized herd a herd animal trapped in the herd
I don't think throwing 80% to 90% of the population into the "prey" bucket is especially perspicacious politically (except, of course, for predators or parasites). I also don't think it's especially perspicacious morally. You write:
Not very practical advice for most, I realize, trapped in the herd as they are in car payments and mortgages, but perhaps aspirational?
Let me translate that: "Trapped in the herd as many are to support spouses and children." In other words, taking the cares of the world on themselves in order to care for others.
divadab , November 21, 2017 at 7:41 amUnemployed stay at home dad here. My children are now old enough to no longer need a stay at home dad. Things I have done: picked up two musical instruments and last year dug a natural swimming pond by hand. Further, one would need to refute all the increased happiness in retirement (NBER). Why social security but not UBI? I get being part of the precariat is painful and this is a reality for most the unemployed no matter where you live in the world. A UBI is unworkable because it will never be large enough to make people's lives unprecarious. Having said that, I am almost positive if you gave every unemployed person 24 k a year and health benefits, there would be a mass of non working happy creative folks.
ambrit , November 21, 2017 at 8:34 amUBI seems to me to encourage non-virtuous behavior – sloth, irresponsibility, fecklessness, and spendthriftness. I like the Finnish model – unemployment insurance is not limited – except if you refuse work provided by the local job center. Lots of work is not being done all over America – we could guarantee honest work to all with some imagination. Start with not spraying roundup and rather using human labor to control weeds and invasive species.
I do agree that universal health insurance is necessary and sadly Obamacare is not that.
a different chris , November 21, 2017 at 9:19 amThe crux of this problem is the definition used for "non-virtuous behaviour." A new CCC is a good place to start though. (Your Tax Dollars At Work! [For some definition of tax dollars.]) As for BJ above, I would suppose that child rearing was his "employment" for years. good so far, but his follow-up is untypical. The 'Empty Nester' mother is a well known meme.
BJ , November 21, 2017 at 11:18 amSpendthriftness on 24K a year? Seriously? If we are disgorging unprofessional opinions, I will add my own: sloth and irresponsibility are more signs of depression rather than freedom from having to work. In fact, I believe (and I think much of the stuff here) supports the idea that people want to be seen as useful in some way. Doesn't include me! :) .. unfortunately, I have the charmingly named "dependents" so there you have it.
roadrider , November 21, 2017 at 9:23 amI lived 6 years as a grad student on 24k a year and would say it was easy. Only thing I would have to had worried about was awful health insurance. A two household each with 24k would be even easier, especially if you could do it in a low cost area. So I am not sure what you mean by spendthrift. But again it will never happen, so we will be stuck with what we have or most likely an even more sinister system. I guess I am advocating for a JG with unlimited number of home makers per household.
Jesper , November 21, 2017 at 10:55 amexcept if you refuse work provided by the local job center
And who's to say that the local "job center" has work that would be appropriate for every person's specific talents and interests? This is no better than saying that you should be willing to go work for some minimum-wage retail job with unpredictable scheduling and other forms of employer abuses after you lose a high-paying job requiring special talents. I have to call bullshit on this model. I went through a two-year stretch if unemployment in no small part because the vast majority of the available jobs for my skill set were associated with the MIC, surveillance state or the parasitic FIRE sector. I was able to do this because I had saved up enough FY money and had no debts or family to support.
I can also attest to the negative aspects of unemployment that the post describes. Its all true and I can't really say that I'e recovered even now, 2.5 years after finding another suitable job.
nonclassical , November 21, 2017 at 10:42 amThe job center in the neighbouring Sweden had the same function. Had is the important word. My guess is that the last time someone lost their unemployment insurance payout due to not accepting a job was in the early 1980s. Prior to that companies might, maybe, possibly have considered hiring someone assigned to them – full employment forced companies to accept what was offered. Companies did not like the situation and the situation has since changed.
Now, when full employment is a thing of the past, the way to lose unemployment insurance payouts is by not applying to enough jobs. An easily gamed system by people not wanting to work: just apply to completely unsuitable positions and the number of applications will be high. Many companies are therefore overwhelmed by applications and are therefore often forced to hire more people in HR to filter out the unsuitable candidates.
People in HR tend not to know much about qualifications and or personalities for the job so they tend to filter out too many. We're all familiar with the skills-shortage .
Next step of this is that the companies who do want to hire have to use recruitment agencies. Basically outsourcing the HR to another company whose people are working on commission. Recruiters sometimes know how to find 'talent', often they are the same kind of people with the same skills and backgrounds as people working in HR.To even get to the hiring manager a candidate has to go through two almost identical and often meaningless interviews. Recruiter and then HR. Good for the GDP I suppose, not sure if it is good for anything else.
But back on topic again, there is a second way of losing unemployment insurance payout: Time. Once the period covered has passed there is no more payouts of insurance. After that it it is time to live on savings, then sell all assets, and then once that is done finally go to the welfare office and prove that savings are gone and all assets are sold and maybe welfare might be paid out. People on welfare in Sweden are poor and the indignities they are being put through are many. Forget about hobbies and forget about volunteering as the money for either of those activities simply aren't available. Am I surprised by a report saying unemployed in Sweden are unhappy? Nope.
Jeremy Grimm , November 21, 2017 at 1:53 pmmeanwhile NYTimes testimonials Friday, show average family of 4 healthprofit costs (tripled, due to trump demise ACA) to be $30,000. per year, with around $10,000. deductible end of any semblance of affordable access, "murKa"
https://www.nytimes.com/2017/11/16/us/politics/obamacare-premiums-middle-class.html
Bill Smith , November 21, 2017 at 8:01 amWhat do you mean by virtuous behavior?
Where does a character like Bertie Wooster in "Jeeves" fit in your notions of virtuous behavior? Would you consider him more virtuous working in the management of a firm, controlling the lives and labor of others -- and humorously helped by his his brilliant valet, Jeeves, getting him out of trouble?
For contrast -- in class and social status -- take a beer-soaked trailer trash gentleman of leisure -- and for sake of argument blessed with less than average intelligence -- where would you put him to work where you'd feel pleased with his product or his service? Would you feel better about this fellow enjoying a six-pack after working 8 hours a day 5 days a week virtuously digging and then filling a hole in the ground while carefully watched and goaded by an overseer? [Actually -- how different is that from "using human labor to control weeds and invasive species"? I take it you're a fan of chain-gangs and making the poor pick up trash on the highways?]
What about some of our engineers and scientists virtuously serving the MIC? Is their behavior virtuous because they're not guilty of sloth, irresponsibility [in executing their work], fecklessness, and spendthriftness? On this last quality how do you feel about our government who pay the salaries for all these jobs building better ways to kill and maim?
BJ , November 21, 2017 at 11:07 amHow big is the swimming pool and how long did it take? Where did you put the dirt?
tegnost , November 21, 2017 at 9:32 amIt is a design by David Pagan Butler. It is his plunge pool design, deepend is 14 by 8 by 7 deep. I used the dirt to make swales around some trees. Win win all around.
BJ , November 21, 2017 at 11:25 amcurious to know whether you are married to someone with a job?
David Kane Miller , November 21, 2017 at 6:55 amThe answer is yes my spouse works. So I do have a schedule of waking up to make her lunch everyday, meeting her at lunch to walk, and making dinner when she gets home, but we do all those things on her days off so .
But again we would need to explain away, why people who are retired are happier? Just because they think they payed into social security? Try explaining to someone on the SS dole how the government spends money into existence and is not paid by taxes or that the government never saved their tax money, so there are not entitled to this money.
a different chris , November 21, 2017 at 9:23 amI hated working for other people and doing what they wanted. I began to feel some happiness when I had a half acre on which I could create my own projects. Things improved even more when I could assure myself of some small guaranteed income by claiming Social Security at age 62. To arise in the morning when I feel rested, with interesting projects like gardens, fences, small buildings ahead and work at my own pace is the essence of delight for me. I've been following your arguments against UBI for years and disagree vehemently.
Mel , November 21, 2017 at 9:42 amI feel I would behave the same as you, if I had the chance. *But* no statements about human beings are absolute, and because UBI would work for either of us does not mean it would work for the majority. Nothing devised by man is perfect.
tegnost , November 21, 2017 at 9:37 amIt's not you; it's not me. It's those deplorable people.
Lambert Strether , November 22, 2017 at 1:56 amfirst you had to buy the half acre in a suitable location, then you had to work many years to qualify for social security, the availability of which you paid for and feel you deserve. You also have to buy stuff for fences gardens and small buildings. At most that rhymes with a ubi but is significantly different in it's make up.
Carla , November 21, 2017 at 7:16 am> when I
hada half acre on which I could create my own projectsThat is, when you acquired the half acre, which not everyone can do. It seems to me there's a good deal of projecting going on with this thread from people who are, in essence, statistical outliers. But Mitchell summarizes the literature:
So for decades, researchers in this area, as opposed to bloggers who wax lyrical on their own opinions, have known that the importance of work in our lives goes well beyond the income we earn.
If the solution that works for you is going to scale, that implies that millions more will have to own land. If UBI depends on that, how does that happen? (Of course, in a post-collapse scenario, the land might be taken , but that same scenario makes the existence of institutions required to convey the UBI highly unlikely. )
Andrew , November 21, 2017 at 7:25 amVery glad to hear that Bill Mitchell is working on the "Future of Work" book, and to have this post, and the links to the other segments. Thank you, Yves!
I_Agree , November 21, 2017 at 11:26 amI don't agree with this statement. Never will. I'm the complete opposite. Give me more leisure time and you'll find me painting, writing, playing instruments and doing things that I enjoy. I recall back to when I was a student, I relished in the free time I got (believe me University gave me a lot of free time) between lectures, meaning I could enjoy this time pursuing creative activities. Sure I might be different than most people but I know countless people who are the same.
My own opinion is that root problem lies in the pathology of the working mentality, that 'work' and having a 'job' is so engrained into our society and mindset that once you give most people the time to enjoy other things, they simply can't. They don't know what to do with themselves and they eventually become unhappy, watching daytime TV sat on the sofa.
I recall back to a conversation with my mother about my father, she said to me, 'I don't know how your father is going to cope once he retires and has nothing to do' and it's that very example of where work for so many people becomes so engrained in their mindset, that they are almost scared of having 'nothing to do' as they say. It's a shame, it's this systemic working mentality that has led to this mindset. I'm glad I'm the opposite of this and proud by mother brought me up to be this way. Work, and job are not in my vocabulary. I work to live, not live to work.
nycTerrierist , November 21, 2017 at 12:18 pmI agree with Andrew. I think this data on the negative effects says more about how being employed fundamentally breaks the human psyche and turns them into chattel, incapable of thinking for themselves and destroying their natural creativity. The more a human is molded into a "good worker" the less they become a full fledged human being. The happiest people are those that have never placed importance on work, that have always lived by the maxim "work to live, not live to work". From my own experience every assertion in this article is the opposite of reality. It is working that makes me apathethic, uncreative, and miserable. The constant knowing that you're wasting your life, day after day, engaged in an activity merely to build revenue streams for the rich, instead of doing things that help society or that please you on a personal level, is what I find misery inducing.
jrs , November 21, 2017 at 12:48 pmI agree. If financial insecurity is removed from the equation -- free time can be used creatively for self-actualization, whatever form that may take: cultivating the arts, hobbies, community activities, worthy causes and projects. The ideology wafting from Mitchell's post smells to me like a rationale for wage slavery (market driven living, neo-liberalism, etc.)
FelicityT , November 21, 2017 at 3:18 pmBesides how are people supposed to spend their time "exploring other opportunities" when unemployed anyway? To collect unemployment which isn't exactly paying that much anyway, they have to show they are applying to jobs. To go to the movies the example given costs money, which one may tend to be short on when unemployed. They probably are looking for work regardless (for the income). There may still be some free time. But they could go back to school? Uh in case one just woke up from a rock they were under for 100 years, that costs money, which one may tend to be short on when unemployed, plus there is no guarantee the new career will pan out either, no guarantee someone is just chomping at the bit to hire a newly trained 50 year old or something. I have always taken classes when unemployed, and paid for it and it's not cheap.
Yes to use one's time wisely in unemployment in the existing system requires a kind of deep psychological maturity that few have, a kind of Surrender To Fate, to the uncertainty of whether one will have an income again or not (either that or a sugar daddy or a trust fund). Because it's not easy to deal with that uncertainty. And uncertainty is the name of the game in unemployment, that and not having an income may be the pain in it's entirety.
Yves Smith Post author , November 21, 2017 at 5:21 pmSadly this breaking down into a "good worker" begins for most shortly after they begin school. This type of education harms society in a myriad of ways including instilling a dislike of learning, deference to authority (no matter how irrational and unjust), and a destruction of a child's natural curiosity.
Yves Smith Post author , November 21, 2017 at 4:29 pmI don't buy your premise that people are "creative". The overwhelming majority do not have creative projects they'd be pursuing if they had leisure and income. Go look at retirees, ones that have just retired, are healthy, and have money.
Summer , November 21, 2017 at 6:25 pmYou are really misconstruing what the studies have found and misapplied it to your situation. Leisure time when you have a job or a role (being a student) is not at all the same as having time when you are unemployed, with or without a social safety net.
jrs , November 21, 2017 at 6:37 pm
- Work: that can be me hiring someone to cut my yard, or another type of one-off thing filled with precariousness.
- Job: that less temporary work, but by no means permanent. Just a step up from the precariousness of work.
- Career: that is work in the same field over a long period of time and it is more likely that someone will develop an identity through performing the work. Still precarious, but maybe more fulfilling.
- Sense of purpose: I was always under the impression that is something you have to give yourself. If it can be taken away by someone what was the purpose?
Lambert Strether , November 22, 2017 at 2:00 amone often has a role when unemployed: finding work. But it's not a very fulfilling one! But if one is trying to find work, it's not exactly the absence of a role either even if it still leaves significantly more free time than otherwise, maybe winning the lottery is the absence of a role.
But then it's also not like we give people a UBI even for a few years (at any time in adult life) to get an education. Only if they take out a student loan approaching the size of a mortgage or have parents willing to pony up are they allowed that (to pay not just for the education but to live because having a roof over one's head etc. is never free, a UBI via debt it might be called).
Jesper , November 21, 2017 at 7:47 am> Give me more leisure time and you'll find me painting, writing, playing instruments and doing things that I enjoy.
Nothing to breed resentment of "the creative class" here! Blowback from Speenhamland brought on the workhouses, so be careful what you wish for.diptherio , November 21, 2017 at 10:00 amAgain the UBI vs JG debate .
UBI won't happen and JG has been tried (and failed).
The argument that JG would allow the public sector to hire more people is demeaning to people already employed in the public sector and demonstrably false – people are hired into the public sector without there being a JG. It is most certainly possible to be against a JG while wanting more people working in the public sector.
The way forward is to have a government acting for people instead of for corporations. Increase the amount of paid vacations, reduce the pension age and stop with the Soviet style worship of work: While some people are apparently proud of their friends and relatives who died while at work it is also possible to feel sad about that.
Jesper , November 21, 2017 at 10:27 amJG has been tried (and failed).
When and where? The NCCC seemed to work pretty good here in the Western US.
Yves Smith Post author , November 21, 2017 at 4:39 pmThe JG was tried in Communist countries in Europe, Asia and Americas. The arguments then and there were the same as here and now, made by the same type of social 'scientists' (economists).
Would a JG be different here and now as the Republicans and Democrats are representing the best interests of the people? Or are they representing the same kind of interests as the Communist parties did?
tegnost , November 21, 2017 at 10:00 amData, please. The USSR fell because it was spending on its military to keep up with the US, a much larger economy. Countering your assertion we have this:
tegnost , November 21, 2017 at 10:15 amAs long as people argue that "it's not fair" to fix the inequality issue and employ things like debt jubilee or student loan forgiveness, or if we fix the ridiculous cost of health care what will all those insurance agents do then we will wind up with the real kind of class warfare, rather than the current punching from the top down, the punching will come from the bottom, because the situation is not fair now, it's just TINA according to those who profit from it. In my own life there is a balance of creativity and work, and I find work enables my creativity by putting some pressure on my time, i.e., I get up earlier, I practice at 8:30 am instead of sleeping til 10 and winding up with S.A..D., I go to bed rather than watch tv or drink to excess.. in other words i have some kind of weird schedule, I have days off sort of When I've been unemployed I feel the way s described in the article. I find the arguments in favor of ubi tend to come from people who already have assets, or jobs, or family who they take care of which is actually a job although uncommonly described as such. The only truth I see in real life is that the unemployed I am intimately familiar with first are mentally oppressed by the notion that to repair their situation will require they work every waking hour at substandard wages for the rest of their life and that is a major barrier to getting started, and that is a policy choice the gov't and elite classes purposefully made which created the precariat and will be their undoing if they are unable to see this.
j84ustin , November 21, 2017 at 10:08 amHey look, even the msm is looking at it
https://www.seattletimes.com/seattle-news/is-uprising-the-only-way-out-of-gross-inequality-maybe-so/hunkerdown , November 21, 2017 at 7:53 amAs someone who works in the public sector I never quite thought of it like that, thanks.
nonclassical , November 21, 2017 at 10:45 amDisappointing that there's no analysis in this context of less employment, as in shorter work weeks and/or days, as opposed to merely all or none.
Vatch , November 21, 2017 at 11:31 amsee – hear
(but no possibility without healthcare access, rather than healthtprofit)
jrs , November 21, 2017 at 1:04 pmInteresting point. I read a science fiction story in which the protagonist arrives for work at his full time job at 10:00 AM, and he's finished for the day at 4:00 PM. I can't remember the name of the story or novel, unfortunately.
Lambert Strether , November 22, 2017 at 2:02 amAgreed. And they already have it in places like Denmark. Why don't we talk about that? It actually exists unlike utopian schemes for either total UBI or total work guarantee (government job creation is not utopian, but imagining it will employ everyone is, and I would like the UBI to be more widely tried, but in this country we are nowhere close). Funny how utopia becomes more interesting to people than actual existing arrangements, even though of course those could be improved on too.
The Danish work arrangement is less than a 40 hour week, and mothers especially often work part-time but both sexes can. It's here in this country where work is either impossibly grueling or you are not working. No other choice. In countries with more flexible work arrangements more women actually work, but it's flexible and flexible for men who choose to do the parenting as well. I'm not saying this should be for parents only of course.
Otis B Driftwood , November 21, 2017 at 7:58 amBecause the JG sets the baseline for employment, which private companies must meet, the JG (unlike the UBI) can do this.
ambrit , November 21, 2017 at 8:38 amMy own situation is that I am unhappy in my well-paying job and would like nothing more than to devote myself to other interests. I'm thirty years on in a relationship with someone who grew up in bad financial circumstances and panics whenever I talk about leaving my job. I tell her that we have 2 years of living expenses in the bank but I can't guarantee making the same amount of money if I do leave my job. She has a job that she loves and is important and pays barely 1/2 of my own income. So she worries about her future with me. She worries about losing her home. I suppose that makes me the definition of a wage slave. And it makes for an increasingly unhappy marriage. I admire those who have faced similar circumstances and found a way through this. Sorry to vent, but this topic and the comments hit a nerve with me and I'm still trying to figure this out.
jrs , November 21, 2017 at 1:11 pmOtis; We are presently going through a period where that "two year cushion" has evaporated, for various reasons. We are seeing our way through this, straight into penury and privation. Take nothing for granted in todays' economy.
bronco , November 21, 2017 at 12:47 pmyes find the lower paying job that you like more first. If you just quit for nothing in the hopes of finding one it might not happen. Of course unemployment also happens sometimes, whether we want it or not.
Lambert Strether , November 22, 2017 at 2:03 amThe newer generations are worse when it comes to lifestyle. Those of that are older can at least remember a time without cellphones internet streaming services leasing a new car every 2 years etc.
What about the young? My niece and her husband should be all set , his mom sunk money into a home on the condition she moved into a mother in law apartment. So far so good right? 2 years in they are imploding even with the free child care she provides. Combined their wireless bill a month is over $300. The sit on the couch side by side and stream netflix shows to dueling iphones in front of a 65 inch tv that is not even turned on. Wearing headphones in silence.
Both driving new vehicles , both have gym memberships they don't use . They buy lattes 3 or 4 times a day which is probably another 500 a month.
My uncle passed away recently and my niece asked if she was in the will. It was literally her only communication on the subject. They are going under and could easily trim a few thousand a month from the budget but simply won't. No one in the family is going to lift a finger for them at this point they burned every possible bridge already. I have seen people living in cars plenty lately but I think these will be the first I see to living in brand new cars .
Somewhere along the line they got the impression that the american dream was a leased car a starbucks in one hand and an iphone in the other .
Confront them with the concept of living within a paycheck and they react like a patient hearing he has 3 months to live.
JBird , November 22, 2017 at 3:00 amAh. Reagan's "welfare queens" updated. Kids these days!
Thuto , November 21, 2017 at 8:00 amYeah being poor, never mind growing up poor, just well and truly sucks and it can really @@@@ you up. Gives people all sorts of issues. I'm rather like her, but I have had the joy of multi-hour commutes to unexciting soul crushing work. Happy, happy, joy, joy! However don't forget that with the current political economy things are likely to go bad in all sorts of ways. This whole site is devoted to that. My suggestion is to keep the job unless you have something lined up. Not being able to rent has it own stresses too. Take my word for it.
TroyMcClure , November 21, 2017 at 9:19 amI may be engaging in semantics but I think conflating work and jobs makes this article a bit of a mixed bag. I know plenty of people who are terribly unhappy in their jobs, but nonetheless extract a sense of wellbeing from having a stable source of INCOME to pay their bills (anecdotally speaking, acute stress from recent job losses is closely linked to uncertainty about how bills are going to be paid, that's why those with a safety net of accumulated savings report less stress than those without). Loss of status, social standing and identity and the chronic stress borne from these become evident much later I.e. when the unemployment is prolonged, accompanied of course by the still unresolved top-of-mind concern of "how to pay the bills".
As such, acute stress for the recently unemployed is driven by financial/income uncertainty (I.e. how am I going to pay the bills) whereas chronic stress from prolonged unemployment brings into play the more identity driven aspects like loss of social standing and status. For policy interventions to have any effects, policy makers would have to delineate the primary drivers of stress (or lack of wellbeing as the author calls it) during the various phases of the unemployment lifecycle. An Unemployment Insurance Fund (UIF) like we have here in South Africa appears to address the early stages of unemployment, and the accompanying acute stress, quite well by providing the income guarantee (for six months) that cushions the shock of losing a job. What's still missing of course are interventions that promote the quick return to employment for those on UIF, so maybe a middle of the road solution between UBI and a jobs guarantee scheme is how policy makers should be framing this, instead of the binary either/or we currently have.
Thuto , November 21, 2017 at 10:06 amLots' of people think they're unhappy with their jobs. Let them sit unemployed for 9 months and ask them if they want that job back. The usual parade of anecdata is on display here in the comments. Mitchell's real data and analysis in the article above still stand.
jrs , November 21, 2017 at 1:15 pmIf you'd read through my comment, and not rushed through it with a view of dishing out a flippant response, you'd have seen that nowhere do I question the validity of his data, I merely question how the argument is presented in some areas (NC discourages unquestioning deference to the views of experts no??). By the way, anecdotes do add to richer understanding of a nuanced and layered topic (as this one is) so your dismissal of them in your haste to invalidate people's observations is hardly helpful.
Lambert Strether , November 22, 2017 at 2:04 amYes people many not like their jobs but prefer the security of having them to not. Yes even if the boss sexually harasses one (as we are seeing is very common). Yes even if there is other workplace abuse. Yes even when it causes depression or PTSD (but if one stays with such a job long term it ruins the self confidence that is one prerequisite to get another job!). Yes even if one is in therapy because of job stress, sexual harassment or you name it. The job allows the having health insurance, allows the therapy, allows the complaining about the job in therapy to make it through another week.
Democrita , November 21, 2017 at 8:13 am> The usual parade of anecdata is on display here in the comments. Mitchell's real data and analysis in the article above still stand.
Ding ding ding!
jrs , November 21, 2017 at 1:40 pmWhen unemployed, the stress of worry about money may suppress the creative juices. Speaking from experience. People may well 'keep looking for jobs' because they know ultimately they need a job with steady income. The great experience of some freelancers notwithstanding, not all are cut out for it.
I would love to see some more about happiness or its lack in retirement–referenced by stay-at-home dad BJ , above.
I wonder, too, about the impact of *how* one loses one's job. Getting laid off vs fired vs quitting vs involuntary retirement vs voluntary, etc feel very different. Speaking from experience on that, too. I will search on these points and post anything of interest.
freedeomny , November 21, 2017 at 10:23 amThere are also other things that are degrading about the very process of being unemployed not mentioned here. What about the constant rejection that it can entail? One is unemployed and looking for work, one sends out resumes, many of them will never be answered, that's rejection. Then if one is lucky they get interviews, many will never lead to jobs, yet more rejection. Does the process of constant rejection itself have a negative effect on a human being whether it's looking for jobs or dates or whatever? Isn't it learned helplessness to if one keeps trying for something and keeps failing. Isn't that itself demoralizing entirely independent of any doubtful innate demoralizing quality of leisure.
Yves Smith Post author , November 21, 2017 at 5:15 pmI am not so sure if I agree with this article. I think it really depends on whether or not you have income to support yourself, hate or love your job, and the amount of outside interests you have, among other things. Almost everyone I know who lives in the NYC area and commutes into the city .doesn't like their job and finds the whole situation "soul-crushing".
Those that live in Manhattan proper are (feel) a bit better off. I for one stopped working somewhat voluntarily last year. I write somewhat because I began to dislike my job so much that it was interfering with my state of well being, however, if I had been allowed to work remotely I probably would have stuck it out for another couple of years.
I am close enough to 62 that I can make do before SS kicks in although I have completely changed my lifestyle – i.e. I've given up a materialistic lifestyle and live very frugally.
Additionally I saved for many years once I decided to embark on this path. I do not find myself depressed at all and the path this year has been very enriching and exciting (and scary) as I reflect on what I want for the future. I'm pretty sure I will end up moving and buying a property so that I can become as self sufficient as possible. Also, I probably will get a job down the line – but if I can't get one because I am deemed too old that will be ok as well. The biggest unknown for me is how much health insurance will cost in the future .
JBird , November 22, 2017 at 3:30 amThe article made clear that the studies included "unemployed but with income" from government support. It is amazing the degree to which readers ignore that and want to make the findings about "unemployed with no income".
Jamie , November 21, 2017 at 10:43 amThat's because we Americans all have work=good=worthy=blessed by God while workless=scum=worthless=accursed by God engraved into our collective soul. Our politics, our beliefs, are just overlays to that.
Even when we agree that the whole situation just crushes people into paste, and for which they have no defense regardless of how hard they work, how carefully they plan, or what they do, that underlay makes use feel that this is their/our fault. Any suggestions that at least some support can be decoupled from work, and that maybe work, and how much you earn, should not determine their value, brings the atavistic fear of being the "undeserving poor," parasites and therefore reprobated scum.
So we don't hear what you are saying without extra effort because it's bypassing our conscious thoughts.
Left in Wisconsin , November 21, 2017 at 12:02 pmAdd my voice to those above who feel that forced labor is the bane of existence, not the wellspring. All this study says to me is that refusing to employ someone in capitalist society does not make them happy. It makes them outcasts.
So, I say yes to a JG, because anyone who wants work should be offered work. But at the same time, a proper JG is not forced labor. And the only way to ensure that it is not forced labor, is to decouple basic needs from wage slavery.
jrs , November 21, 2017 at 1:31 pmI am critical of those who distinguish between the job and the income. Of course the income is critical to the dignity of the job. For many jobs, it is the primary source of that dignity. The notion that all jobs should provide some intrinsic dignity unrelated to the income, or that people whose dignity is primarily based on the income they earn rather than the work they do are deluded, is to buy in to the propaganda of "passion" being a requirement for your work and to really be blind to what is required to make a society function. Someone has to change the diapers, and wipe the butts of old people. (yes, I've done both.) It doesn't require passion and any sense of satisfaction is gone by about the second day. But if you could make a middle class living doing it, there would be a lot fewer unhappy people in the world.
It is well known that auto factory jobs were not perceived as good jobs until the UAW was able to make them middle class jobs. The nature of the actual work itself hasn't changed all that much over the years – mostly it is still very repetitive work that requires little specialized training, even if the machine technology is much improved. Indeed, I would guess that more intrinsic satisfaction came from bashing metal than pushing buttons on a CNC machine, and so the jobs may even be less self-actualizing than they used to be.
The capitalist myth is that the private sector economy generates all the wealth and the public sector is a claim on that wealth. Yet human development proves to us that this is not true – a substantial portion of "human capital" is developed outside the paid economy, government investment in R&D generates productivity growth, etc. And MMT demonstrates that we do not require private sector savings to fund public investment.
We are still a ways from having the math to demonstrate that government investment in caring and nurturing is always socially productive – first we need productivity numbers that reflect more than just private sector "product." But I think we are moving in that direction. Rather than prioritize a minimum wage JG of make-work, we should first simply pay people good wages to raise their own children or look after their elderly and disabled relatives. The MMT JG, as I understand it, would still require people to leave their kids with others to look after them in order to perform some minimum wage task. That is just dumb.
Whiskey Bob , November 21, 2017 at 1:34 pmMaybe it's dumb, it's certainly dumb in a system like the U.S. where work is brutal and often low paid and paid childcare is not well remunerated either. But caretakers also working seems to work in countries with greater income equality, good job protections, flexible work arrangements, and a decent amount of paid parental leave – yea Denmark, they think their children should be raised by professionals, but also work-life balance is still pretty good.
redleg , November 21, 2017 at 2:28 pmMy take is that capitalism has made the benefits and malus of having a job so ingrained into culture and so reinforced. Having a job is so closely linked to happiness because it gives you the money needed to pursue it.
A job affords you the ability to pursue whatever goals you want within a capitalist framework. "Everything" costs money and so having a job gives you the money to pay for those costs and go on to fulfill your pursuit of happiness.
Analyzing whether people are happy or not under these conditions seem apparent that it is going to lead to results heavily biased towards finding happiness through employment.
The unemployed are often living off someone else's income and feel like an undeserving parasite. Adults are generally ingrained with the culture that they have to grow up and be independent and be able to provide for a new family that they will start up. Becoming unemployed is like being emasculated and infantile, the opposite of what is expected of adults.
There's also that not having a job is increasingly being punished especially in the case of America. American wages have stayed either largely static or have worsened, making being unemployed that much more of a burden on family or friends. Unemployment has been demonized by Reaganism and has become systematically punishable for the long term unemployed. If you are unemployed for too long, you start losing government support. This compounds the frantic rush to get out of unemployment once unemployed.
There is little luxury to enjoy while unemployed. Life while unemployed is a frustrating and often disappointing hell of constant job applications and having many of them lead to nothing. The people providing support often start to become less so over time and become more convinced of laziness or some kind of lack of character or willpower or education or ability or whatever. Any sense of systemic failure is transplanted into a sense of personal failure, especially under neoliberalism.
I am not so sure about the case of Europe and otherwise. I am sure that the third world often has little or no social safety nets so having work (in exploitative conditions in many cases) is a must for survival.
Anyways, I wonder about the exact methodologies of these studies and I think they often take the current feelings about unemployment and then attempt to extrapolate talking points for UBI/JG from them. Yes, UBI wouldn't change culture overnight and it would take a very, very long time for people to let down their guard and adjust if UBI is to be implemented in a manner that would warrant trust. This article seems to understand the potential for that, but decides against it being a significant factor due to the studies emphasizing the malus of unemployment.
I wonder how different the results would be if there were studies that asked people how they would feel if they were unemployed under a UBI system versus the current system. I know a good number of young people (mostly under 30) who would love to drop out and just play video games all day. Though the significance of such a drastic demographic shift would probably lead to great political consequences. It would probably prove the anti-UBI crowd right in that under a capitalist framework, the capitalists and the employed wouldn't tolerate the unemployed and would seek to turn them into an underclass.
Personally I think a combination of UBI and JG should be pursued. JG would work better within the current capitalist framework. I don't think it is without its pitfalls due to similar possible issues (with the similar policy of full employment) either under Keynesianism (e.g. Milton Friedman sees it as inefficient) or in the USSR (e.g. bullshit jobs). There is the possibility of UBI having benefits (not having the unemployed be a burden but a subsidized contributer to the economy) so I personally don't think it should be fully disregarded until it is understood better. I would like it if there were better scientific studies to expand upon the implications of UBI and better measure if it would work or not. The upcoming studies testing an actual UBI system should help to end the debates once and for all.
ChrisPacific , November 21, 2017 at 5:30 pmMy $0.02: I have a creative pursuit (no money) and a engineering/physical science technical career (income!). I am proficient in and passionate about both. Over the last few years, the technical career became tenuous due to consolidation of regional consulting firms (endemic to this era)- wages flat to declining, higher work stress, less time off, conversation to contact employment, etc.- which has resulted in two layoffs.
During the time of tenuous employment, my art took on a darker tone. During unemployment the art stopped altogether.
I'm recently re-employed in a field that I'm not proficient. Both the peter principle and imposter syndrome apply. My art has resumed, but the topics are singular about despair and work, to the point that I feel like I'm constantly reworking the same one piece over and over again. And the quality has plummeted too.
In some fields (e.g. engineering), being a wage slave is the only realistic option due to the dominance of a small number of large firms. The big players crowd out independents and free lancers, while pressuring their own employees through just-high-enough wages and limiting time off. Engineering services is a relationship- based field, and the big boys (and they are nearly all boys) have vastly bigger networks to draw work from than a small firm unless that small firm has a big contact to feed them work (until they get gobbled up). The big firms also have more areas of expertise which limits how useful a boutique firm is to a client pool, except under very narrow circumstances. And if you are an introvert like most engineering people, there's no way to compete with big firms and their marketing staff to expand a network enough to compete.
In that way, consulting is a lot like art. To make a living at it you need either contacts or a sponsor. Or an inheritance.
nihil obstet , November 21, 2017 at 6:07 pmI would be interested to know what the definition of unemployment was for the purpose of this study (I couldn't find it in the supplied links). If it's simply "people who don't have a job," for example, then it would include the likes of the idle rich, retirees, wards of the state, and so on. Binary statements like this one do make it sound like the broad definition is the one in use:
When considering the world's population as a whole, people with a job evaluate the quality of their lives much more favorably than those who are unemployed.
The conclusion seems at odds with results I've seen for some of those groups – for example, I thought it was fairly well accepted that retirees who are supported by a government plan that is sufficient for them to live on were generally at least as happy as they had been during their working life.
If, on the other hand, the study uses a narrow definition (e.g. people who are of working age, want a job or need one to support themselves financially, but can't find one) then the conclusion seems a lot more reasonable. But that's a heavily loaded definition in economic and cultural terms. In that case, the conclusion (people are happier if they have a job) only holds true in the current prevailing model of society. It doesn't rule out the possibility of structuring society or the economy differently in such a way that people can be non-working and happy. The existence of one such population already (retirees) strongly suggests that outcomes like this are possible. A UBI would be an example of just such a restructuring of society, and therefore I don't think that this study and its result are necessarily a valid argument against it.
Summer , November 21, 2017 at 6:52 pmWhich makes a person happier -- being considered worthless by one's society or valuable? How many studies do we need to answer that question? Apparently, a lot, because studies like this one keep on going. The underlying assumption is that jobs make one valuable. So if you don't have a job you're worthless. Now, who's happier on the whole, people with jobs or the unemployed? That's surely good for a few more studies. Did you know that members of socially devalued groups (minorities, non-heteros, and the like) have higher rates of dysfunction, rather like the unemployed? Hmm, I wonder if there's maybe a similar principle at work. And my solution is not to turn all the people of color white nor to change all the women to men nor to "cure" gays. Well, maybe a few more conclusive studies of this kind will convince me that we must all be the same, toeing the line for those whom it has pleased God to dictate our values to us.
I am convinced that we shouldn't outlaw jobs, because I believe the tons of stories about happy people in their jobs However, I also believe we shouldn't force everyone into jobs, because I know tons of stories about happy people without jobs. You know, the stories that the JG people explain away: parents caring for their children (JG -- "oh, we'll make that a job!"), volunteers working on local planning issues (JG -- "oh, we'll make that a job, too. In fact, we'll make everything worth doing a job. The important thing is to be able to force people to work schedules and bosses, because otherwise, they'll all lie around doing nothing and be miserable"), the retired (JG -- "that's not really the same, but they'd be better off staying in a job"). And this is all before we get to those who can't really hold a job because of disability or geography or other responsibilities.
I support the JG over the current situation, but as to what we should be working for, the more I read the JG arguments, the more paternalistic and just plain narrow minded judgmental they seem.
Lambert Strether , November 22, 2017 at 1:24 amIf someone else gives you a sense of purpose and takes it away what was the purpose?
Data like that provided by Mitchell is important to demolishing the horrid "economic anxiety" frame much beloved by liberals, especially wonkish Democrats.* It's not (a) just feelings , to be solved by scented candles or training (the liberal version of rugged individualism) and (b) the effects are real and measurable. It's not surprising, when you think about it, that the working class is about work .
* To put this another way, anybody who has really suffered the crawling inwardness of anxiety, in the clinical sense, knows that it affects every aspect of one's being. Anxiety is not something deplorables deploy as cover for less than creditable motives.
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Nov 22, 2017 | www.nakedcapitalism.com
Posted on November 21, 2017 by Yves Smith Yves here. Reader UserFriendly sent this post with the message, "I can confirm this." I can too. And before you try to attribute our reactions to being Americans, note that the study very clearly points out that its finding have been confirmed in "all of the world's regions".
By Bill Mitchell, Professor in Economics and Director of the Centre of Full Employment and Equity at the University of Newcastle, NSW, Australia. Originally published at billy blog
Here is a summary of another interesting study I read last week (published March 30, 2017) – Happiness at Work – from academic researchers Jan‐Emmanuel De Neve and George Ward. It explores the relationship between happiness and labour force status, including whether an individual is employed or not and the types of jobs they are doing. The results reinforce a long literature, which emphatically concludes that people are devastated when they lose their jobs and do not adapt to unemployment as its duration increases. The unemployed are miserable and remain so even as they become entrenched in long-term unemployment. Further, they do not seem to sense (or exploit) a freedom to release some inner sense of creativity and purpose. The overwhelming proportion continually seek work – and relate their social status and life happiness to gaining a job, rather than living without a job on income support. The overwhelming conclusion is that "work makes up such an important part of our lives" and that result is robust across different countries and cultures. Being employed leads to much higher evaluations of the quality of life relative to being unemployed. And, nothing much has changed in this regard over the last 80 or so years. These results were well-known in the 1930s, for example. They have a strong bearing on the debate between income guarantees versus employment guarantees. The UBI proponents have produced no robust literature to refute these long-held findings.
While the 'Happiness Study' notes that "the relationship between happiness and employment is a complex and dynamic interaction that runs in both directions" the authors are unequivocal:
The overwhelming importance of having a job for happiness is evident throughout the analysis, and holds across all of the world's regions. When considering the world's population as a whole, people with a job evaluate the quality of their lives much more favorably than those who are unemployed. The importance of having a job extends far beyond the salary attached to it, with non-pecuniary aspects of employment such as social status, social relations, daily structure, and goals all exerting a strong influence on people's happiness.
And, the inverse:
The importance of employment for people's subjective wellbeing shines a spotlight on the misery and unhappiness associated with being unemployed.
There is a burgeoning literature on 'happiness', which the authors aim to contribute to.
They define happiness as "subjective well-being", which is "measured along multiple dimensions":
life evaluation (by way of the Cantril "ladder of life"), positive and negative affect to measure respondents' experienced positive and negative wellbeing, as well as the more domain-specific items of job satisfaction and employee engagement. We find that these diverse measures of subjective wellbeing correlate strongly with each other
Cantril's 'Ladder of Life Scale' (or "Cantril Ladder") is used by polling organisations to assess well-being. It was developed by social researcher Hadley Cantril (1965) and documented in his book The pattern of human concerns .
You can learn more about the use of the 'Cantril Ladder' HERE .
As we read, the "Cantril Self-Anchoring Scale consists of the following":
Please imagine a ladder with steps numbered from zero at the bottom to 10 at the top. The top of the ladder represents the best possible life for you and the bottom of the ladder represents the worst possible life for you. On which step of the ladder would you say you personally feel you stand at this time? (ladder-present) On which step do you think you will stand about five years from now? (ladder-future)[Reference: Cantril, H. (1965) The pattern of human concerns , New Brunswick, Rutgers University Press.]
Christian Bjørnskov's 2010 article – How Comparable are the Gallup World Poll Life Satisfaction Data? – also describes how it works.
[Reference: Bjørnskov, C. (2010) 'How Comparable are the Gallup World Poll Life Satisfaction Data?', Journal of Happiness Studies , 11 (1), 41-60.]
The Cantril scale is usually reported as values between 0 and 10.
The authors in the happiness study use poll data from 150 nations which they say "is representative of 98% of the world's population". This survey data is available on a mostly annual basis since 2006.
The following graph (Figure 1 from the Study) shows "the self-reported wellbeing of individuals around the world according to whether or not they are employed."
The "bars measure the subjective wellbeing of individuals of working age" by employment status .
The results show the differences between having a job and being unemployed are "very large indeed" on the three well-being measures (life evaluation, positive and negative affective states).
People employed "evaluate the quality of their lives around 0.6 points higher on average as compared to the unemployed on a scale from 0 to 10."
The authors also conduct more sophisticated (and searching) statistical analysis (multivariate regression) which control for a range of characteristics (gender, age, education, marital status, composition of household) as well as to "account for the many political, economic, and cultural differences between countries as well as year-to-year variation".
The conclusion they reach is simple:
the unemployed evaluate the overall state of their lives less highly on the Cantril ladder and experience more negative emotions in their day-to-day lives as well as fewer positive ones. These are among the most widely accepted and replicated findings in the science of happiness Here, income is being held constant along with a number of other relevant covariates, showing that these unemployment effects go well beyond the income loss associated with losing one's job.
These results are not surprising. The earliest study of this sort of outcome was from the famous study published by Philip Eisenberg and Paul Lazersfeld in 1938. [Reference: Eisenberg, P. and Lazarsfeld, P. (1938) 'The psychological effects of unemployment', Psychological Bulletin , 35(6), 358-390.]
They explore four dimensions of unemployment:
I. The Effects of Unemployment on Personality.
II. Socio-Political Attitudes Affected by Unemployment.
III. Differing Attitudes Produced by Unemployment and Related Factors.
IV. The Effects of Unemployment on Children and Youth.
On the first dimension, they conclude that:
1. "unemployment tends to make people more emotionally unstable than they were previous to unemployment".
2. The unemployed experience feelings of "personal threat"; "fear"; "sense of proportion is shattered"; loss of "common sense of values"; "prestige lost in own eyes and as he imagines, in the eyes of his fellow men"; "feelings of inferiority"; loss of "self-confidence" and a general loss of "morale".
Devastation, in other words. They were not surprised because they note that:
in the light of the structure of our society where the job one holds is the prime indicator of status and prestige.
This is a crucial point that UBI advocates often ignore. There is a deeply entrenched cultural bias towards associating our work status with our general status and prestige and feelings of these standings. That hasn't changed since Eisenberg and Lazersfeld wrote up the findings of their study in 1938.
It might change over time but that will take a long process of re-education and cultural shift. Trying to dump a set of new cultural values that only a small minority might currently hold to onto a society that clearly still values work is only going to create major social tensions. Eisenberg and Lazarsfeld also considered an earlier 1937 study by Cantril who explored whether "the unemployed tend to evolve more imaginative schemes than the employed".
[Reference: Cantril, H. (1934) 'The Social Psychology of Everyday Life', Psychological Bulletin , 31, 297-330.]
The proposition was (is) that once unemployed, do people then explore new options that were not possible while working, which deliver them with the satisfaction that they lose when they become jobless. The specific question asked in the research was: "Have there been any changes of interests and habits among the unemployed?" Related studies found that the "unemployed become so apathetic that they rarely read anything". Other activities, such as attending movies etc were seen as being motivated by the need to "kill time" – "a minimal indication of the increased desire for such attendance".
On the third dimension, Eisenberg and Lazersfeld examine the questions – "Are there unemployed who don't want to work? Is the relief situation likely to increase this number?", which are still a central issue today – the bludger being subsidized by income support.
They concluded that:
the number is few. In spite of hopeless attempts the unemployed continually look for work, often going back again and again to their last place of work. Other writers reiterate this point.
So for decades, researchers in this area, as opposed to bloggers who wax lyrical on their own opinions, have known that the importance of work in our lives goes well beyond the income we earn. The non-pecuniary effects of not having a job are significant in terms of lost status, social alienation, abandonment of daily structure etc, and that has not changed much over history. The happiness paper did explore "how short-lived is the misery associated with being out of work" in the current cultural settings.
The proposition examined was that:
If the pain is only fleeting and people quickly get used to being unemployed, then we might see joblessness as less of a key public policy priority in terms of happiness.
They conclude that:
a number of studies have demonstrated that people do not adapt much, if at all, to being unemployed there is a large initial shock to becoming unemployed, and then as people stay unemployed over time their levels of life satisfaction remain low . several studies have shown that even once a person becomes re-employed, the prior experience of unemployment leaves a mark on his or her happiness.
So there is no sudden or even medium-term realisation that being jobless endows the individual with a new sense of freedom to become their creative selves, freed from the yoke of work. To bloom into musicians, artists, or whatever.
The reality is that there is an on-going malaise – a deeply entrenched sense of failure is overwhelming, which stifles happiness and creativity, even after the individual is able to return to work.
This negativity, borne heavily by the individual, however, also impacts on society in general.
The paper recognises that:
A further canonical finding in the literature on unemployment and subjective wellbeing is that there are so-called "spillover" effects.
High levels of unemployment "increase fear and heighten the sense of job insecurity". Who will lose their job next type questions?
The researchers found in their data that the higher is the unemployment rate the greater the anxiety among those who remain employed.
Conclusion
The overwhelming conclusion is that "work makes up such an important part of our lives" and that result is robust across different countries and cultures.
Being employed leads to much higher evaluations of the quality of life relative to being unemployed.
The unemployed are miserable and remain so even as they become entrenched in long-term unemployment. They do not seem to sense (or exploit) a freedom to release some inner sense of creativity and purpose.
The overwhelming proportion continually seek work – and relate their social status and life happiness to gaining a job, rather than living without a job on income support.
Modern Monetary Theory (MMT) allows us to understand that it is the government that chooses the unemployment rate – it is a political choice.
For currency-issuing governments it means their deficits are too low relative to the spending and saving decisions of the non-government sector.
For Eurozone-type nations, it means that in surrendering their currencies and adopting a foreign currency, they are unable to guarantee sufficient work in the face of negative shifts in non-government spending. Again, a political choice.
The Job Guarantee can be used as a vehicle to not only ensure their are sufficient jobs available at all times but also to start a process of wiping out the worst jobs in the non-government sector.
That can be done by using the JG wage to ensure low-paid private employers have to restructure their workplaces and pay higher wages and achieve higher productivity in order to attract labour from the Job Guarantee pool.
The Series So Far
This is a further part of a series I am writing as background to my next book with Joan Muysken analysing the Future of Work . More instalments will come as the research process unfolds.
The series so far:
- When Austrians ate dogs .
- Employment as a human right .
- The rise of the "private government .
- The evolution of full employment legislation in the US .
- Automation and full employment – back to the 1960s .
- Countering the march of the robots narrative .
- Unemployment is miserable and does not spawn an upsurge in personal creativity .
The blogs in these series should be considered working notes rather than self-contained topics. Ultimately, they will be edited into the final manuscript of my next book due in 2018. The book will likely be published by Edward Elgar (UK).
That is enough for today!
divadab , November 21, 2017 at 6:11 am
The Rev Kev , November 21, 2017 at 6:35 amPerhaps I'm utterly depressed but I haven't had a job job for over 5 years. Plenty of work, however, more than I can handle and it requires priorisation. But I am deliberately not part of the organized herd. I stay away from big cities – it's scary how managed the herd is in large groups – and I suppose that unemployment for a herd animal is rather distressing as it is effectively being kicked out of the herd.
Anyway my advice, worth what you pay for it but let he who has ears, etc. – is to go local, very local, grow your own food, be part of a community, manage your own work, and renounce the energy feast herd dynamics. "Unemployment", like "recession", is a mechanism of control. Not very practical advice for most, I realize, trapped in the herd as they are in car payments and mortgages, but perhaps aspirational?
nonclassical , November 21, 2017 at 10:24 amI think what is missing from this article is the term "identity." If you meet new people, often the conversation starts with what you do for a living. Your identity, in part, is what you do. You can call yourself a plumber, a writer, a banker, a consultant, a reporter but the point is this is part of your identity. When you lose your job long term, your identity here loses one of its main anchor points.
Worse, there is a deliberate stigma attached with being long term unemployed. In that article you have seen the word bludger being used. In parts of the US I have read of the shame of 'living off the county'. And yes, I have been there, seen that, and got the t-shirt. It's going to be interesting as mechanization and computers turn large portions of the population from workers to 'gig' workers. Expect mass demoralization.
jrs , November 21, 2017 at 12:13 pmyes the lives many of us have lived, no longer exist though we appear not notice, as we "can" live in many of same "ways" ..rather well known psychologist defined some 40 years ago, best to "drop through cracks"
sgt_doom , November 21, 2017 at 2:20 pmWell, you also lose money, maybe you become homeless etc. as you have nowhere else to turn (if there are kids involved to support it gets even scarier though there are some programs). Or maybe you become dependent on another person(s) to support you which is of course degrading as you know you must rely on them to live, whether it's a spouse or lover when you want to work and bring in money, or mom and dads basement, or the kindest friend ever who lets you sleep on their couch. I mean these are the things that really matter.
Privileged people whose main worry in unemployment would be losing identity, wow out of touch much? Who cares about some identity for parties, but the ability to have a stable decent life (gig work hardly counts) is what is needed.
jgordon , November 21, 2017 at 7:08 pmI believe your comment sums up the situation the best -- and most realistically.
skippy , November 22, 2017 at 12:45 amI normally wouldn't comment like this, but you have brought up some extremely important points about identity that I would like to address.
Recently I had the most intense mushroom experience of my entire life–so intense that my identity had been completely stripped and I was left in a formless state, at the level of seeing my bare, unvarnished animal neural circuitry in operation. Suddenly with a flash of inspiration I realized that the identity of everyone, all of us, is inextricably tied up in what we do and what we do for other people.
Following from that, I understood that if we passively rely on others for survival, whether it be relying on friends, family, or government, then we do not have an identity or reason for existing. And the inner self, the animal core of who we are, will realise this lack of identity (even if the concious mind denies it), and will continually generate feelings of profound depression and intense nihilism that will inevitably destroy us if the root cause is not addressed.
Before this experience I was somewhat ambivalent about my politics, but immediately after I knew that the political right was correct on everything important, from attitudes on sex to economic philosophy. People need a core of cultural stability and hard work to grow and become actualized. The alternative is rudderless dissatisfaction and envy that leads nowhere.
On the topic of giving "out of kindnes and goodwill", giving without demanding anything in return is a form of abuse, as it deprives those who receive our feel-good generosity the motivation to form a coherent identity. If the parents of a basement-dweller were truly good people, instead of supporting said dweller they'd drag her out by the ear and make her grow food in the yard or some such. Likewise, those who have supported you without also giving concrete demands and expecations in return have been unkind, and for your own good I hope that you will immediately remove yourself from their support. On the other hand, if you have been thoughtlessly giving because it warms the cockles of your heart, then stop it now. You are ruining other people this way, and if your voting habits are informed by this kind of malevolence I'd encourage you to change those as well.
Anyway the original poster is right about everything. Working and having a purpose in life is an entirely different animal from making money and being "successful" in the government-sponsored commercial economy. Society and government deliberately try to conflate the two for various reasons, primarily graft of labor and genius, but that is only a deliberate mis-framing that needlessly harms people when the mainstream economic system is in catastrophic decline, as ours is today. You should try to clear up this misconception within yourself as a way of getting better.
Well, I hope this message can give you a few different thoughts and help you find your way out of the existential angst you're caught in. Don't wallow in helplessness. Think of something useful to do, anything, whether it earns you money or not, and go out and start doing it. You'll be surprised at how much better you feel about yourself in no time.
Jeremy Grimm , November 21, 2017 at 12:33 pmThe problem is you said – I – had an extreme experience [burning bush], the truth was reviled to – I – and I alone during this extreme chemically altered state. Which by the way just happens to conform to a heap of environmental biases I collected. This is why sound methodology demands peer review. disheveled some people think Mister Toads Wild ride at Disneyland on psychotropics is an excellent adventure too.
Henry Moon Pie , November 21, 2017 at 7:00 amI think your observation about the importance of work to identity is most perceptive. This post makes too little distinction between work and a job and glosses over the place of work in defining who we are to ourselves and to others. I recall the scene in the movie "About a Boy" when the hero meets someone he cares about and she asks him what he does for a living.
I believe there's another aspect of work -- related to identity -- missing in the analysis of this post. Work can offer a sense of mission -- of acting as part of an effort toward a larger goal no individual could achieve alone. However you may regard the value in putting man on the moon there is no mistaking the sense of mission deeply felt by the engineers and technicians working on the project. What jobs today can claim service to a mission someone might value?
ambrit , November 21, 2017 at 8:29 amAgreed on your points. Wage slavery is nothing to aspire to. Self-determination within a context of an interdependent community is a much better way to live. We do our thing in the city, however.
UserFriendly , November 21, 2017 at 10:10 amFinding that "interdependent community" is the hard part. My experience has been that this endeavour is almost chance based; Serendipity if you will.
Here Down South, the churches still seem to have a stranglehold on small and mid scale social organization. One of the big effects of 'churching' is the requirement that the individual gave up personal critical thinking. Thus, the status quo is reinforced. One big happy 'Holy Circlejerk.'FelicityT , November 21, 2017 at 3:07 pmfrom the article
This is a crucial point that UBI advocates often ignore. There is a deeply entrenched cultural bias towards associating our work status with our general status and prestige and feelings of these standings.
That hasn't changed since Eisenberg and Lazersfeld wrote up the findings of their study in 1938. It might change over time but that will take a long process of re-education and cultural shift. Trying to dump a set of new cultural values that only a small minority might currently hold to onto a society that clearly still values work is only going to create major social tensions.
Yves Smith Post author , November 21, 2017 at 4:23 pmI would agree about the entenched cultural norms, etc. But not the pessimism and timeline for change. An individual can communicate a complex idea to millions in seconds, things move fast these days.
For me, it seems that what we (we being UBI/radical change proponents) are lacking is a compelling easily accessible story. Not just regarding UBI (as that is but one part of the trully revolutionary transformations that must occur) but encompassing everything.
We have countless think pieces, bits of academic writing, books, etc that focus on individual pieces and changes in isolation. But we've largely abandoned the all-encompassing narrative, which at their heart is precisely what religion offers and why it can be so seductive, successful, and resilient for so long.
The status quo has this type of story, it's not all that compelling but given the fact that it is the status quo and has inertia and tradition on its side (along with the news media, political, entertainment, etc) it doesn't have to be.
We need to abandon the single narrow issue activism that has become so prominent over the years and get back to engaging with issues as unseparable and intimately interconnected.
Tinkering around the edges will do nothing, a new political religion is what is required.
FelicityT , November 21, 2017 at 5:11 pmSorry, I disagree vehemently. Deeply held cultural attitudes are very slow to change and the study found that work being critical to happiness examined a large number of societies.
Look at feminism. I was a half-generation after the time when women were starting to get a shot at real jobs. IIRC, the first class that accepted women at Harvard Law School was in the 1950 and at Harvard Business School, 1965. And the number of first attendees was puny. The 1965 class at HBS had 10 8 women out of a graduating class of over 800; my class in 1981 had only 11% women.
In the 1980s, you saw a shift from the belief that women could do what men could do to promotion of the idea that women could/should be feminine as well as successful. This looked like seriously mixed messages, in that IMHO the earlier tendency to de-emphasize gender roles in the workplace looked like a positive development.
Women make less than 80% of what men do in the US. Even female doctors in the same specialities make 80% of their male peers.
The Speenhamland in the UK had what amounted to an income guarantee from the 1790s to 1832. Most people didn't want to be on it and preferred to work. Two generations and being on the support of local governments was still seen as carrying a stigma.
More generally, social animals have strongly ingrained tendencies to resent situations they see as unfair. Having someone who is capable of working not work elicits resentment from many, which is why most people don't want to be in that position. You aren't going to change that.
And people need a sense of purpose. There are tons of cases of rich heirs falling into drug addiction or alcoholism and despair because they have no sense of purpose in life. Work provides that, even if it's mundane work to support a family. That is one of the great dissservices the Democrats have done to the citizenry at large: sneering at ordinary work when blue-collar men were the anchors of families and able to take pride in that.
Yves Smith Post author , November 21, 2017 at 8:34 pmSo a few points.
Regarding the large number of societies, we often like to think we're more different than we actually are focusing on a few glaringly obvious differences and generalizing from there. Even going back a few hundred years when ideas travelled slower we were still (especially the "west" though the "east" wasn't all that much more different either) quite similar. So I'm less inclined to see the large number of societies as evidence.
Generally on societal changes and movements: The issue here is that the leadership has not changed, they may soften some edges here or there (only to resharpen them again when we're looking elsewhere) but their underlying ideologies are largely unchanged. A good mass of any population will go along to survive, whether they agree or not (and we find increasing evidence that many do not agree, though certainly that they do not agree on a single alternative).
It may be impossible to implement such changes in who controls the levers of power in a democratic fashion but it also may be immoral not implement such changes. Of course this is also clearly a similar path to that walked by many a demonized (in most cases rightfully so) dictator and despot. 'Tread carefully' are wise words to keep in mind.
Today we have a situation which reflects your example re: social animals and resentment of unfairness: the elite (who falls into this category is of course debatable, some individuals moreso than others). But they have intelligently, for their benefit, redirected that resentment towards those that have little. Is there really any logical connection between not engaging in wage labor (note: NOT equivalent to not working) and unfairness? Or is it a myth crafted by those who currently benefit the most?
That resentment is also precisely why it is key that a Basic income be universal with no means testing, everyone gets the same.
I think we should not extrapolate too much from the relatively small segment of the population falling into the the inherited money category. Correlation is not causation and all that.
It also seems that so often individuals jump to the hollywood crafted image of the layabout stoner sitting on the couch giggling at cartoons (or something similarly negative) when the concept of less wage labor is brought up. A reduction of wage labor does not equate to lack of work being done, it simply means doing much of that work for different reasons and rewards and incentives.
As I said in the Links thread today, we produce too much, we consume too much, we grow too much. More wage labor overall as a requirement for survival is certainly not the solution to any real problem that we face, its a massively inefficient use of resources and a massive strain on the ecosystems.
WobblyTelomeres , November 21, 2017 at 8:53 pmI am really gobsmacked at the sense of entitlement on display here. Why are people entitled to an income with no work? Being an adult means toil: cleaning up after yourself, cleaning up after your kids if you have them, if you are subsistence farmer, tending your crops and livestock, if you are a modern society denizen, paying your bills and your taxes on time. The idea that people are entitled to a life of leisure is bollocks. Yet you promote that.
Society means we have obligations to each other. That means work. In rejecting work you reject society.
And the touting of "creativity" is a top 10% trope that Thomas Frank called out in Listen, Liberal. It's a way of devaluing what the bottom 90% do.
flora , November 21, 2017 at 9:38 pmMy argument with the article is that, to me, it smacks of Taylorism. A follow-on study would analyze how many hours a laborer must work before the acquired sense of purpose and dignity and associated happiness began to decline. Would it be 30 hours a week of backbreaking labor before dignity found itself eroded? 40? 50? 60? When does the worker break? Just how far can we push the mule before it collapses?
The author alludes to this: "The overwhelming proportion relate their social status and life happiness to gaining a job"
Work equals happiness. Got it.
But, as a former robotics instructor, and as one who watches the industry (and former students), I see an automated future as damn near inevitable. Massive job displacement is coming, life as a minimum wage burger flipper will cease, with no future employment prospects short of government intervention (WPA and CCC for all, I say). I'm not a Luddite, obviously, but there are going to be a lot of people, billions, worldwide, with no prospect of employment. Saying, "You're lazy and entitled" is a bit presumptuous, Yves. Not everyone has your ability, not everyone has my ability. When the burger flipping jobs are gone, where do they go? When roombas mop the floors, where do the floor moppers go?
nihil obstet , November 21, 2017 at 10:05 pm"WPA and CCC for all, I say. "
+1
We could use a new Civilian Conservation Corps and and a Works Progress Administration. There's lots of work that needs doing that isn't getting done by private corporations.
WobblyTelomeres , November 21, 2017 at 10:14 pmThe outrage at non-work wealth and income would be more convincing if it were aimed also at owners of capital. About 30% of national income is passive -- interest, rents, dividends. Why are the owners of capital "entitled to an income with no work?" It's all about the morality that underlies the returns to capital while sugaring over a devaluation of labor. As a moral issue, everyone should share the returns on capital or we should tax away the interest, rents, and dividends. If it's an economic issue, berating people for their beliefs isn't a reason.
Yves Smith Post author , November 22, 2017 at 2:27 amWhy are the owners of capital "entitled to an income with no work?"
THIS!!!! So much, THIS!!!! But, what else is a Wobbly to say, eh?
IsotopeC14 , November 22, 2017 at 2:58 amThe overwhelming majority do work. The top 0.1% is almost entirely private equity managers who are able to classify labor income as capital gains through the carried interest loophole. Go look at the Forbes 400.
The 1% are mainly CEOs, plus elite professionals, like partners at top law and consulting firms and specialty surgeons (heart, brain, oncology). The CEOs similarly should be seen as getting labor income but have a lot of stock incentive pay (that is how they get seriously rich) which again gets capital gains treatment.
You are mistaking clever taking advantage of the tax code for where the income actually comes from. Even the kids of rich people are under pressure to act like entrepreneurs from their families and peers. Look at Paris Hilton and Ivanka as examples. They both could have sat back and enjoyed their inheritance, but both went and launched businesses. I'm not saying the kids of the rich succeed, or would have succeed to the extent they do without parental string-pulling, but the point is very few hand their fortune over to a money manager and go sailing or play the cello.
IsotopeC14 , November 22, 2017 at 1:34 amIsn't the brother of the infamous Koch duo doing exactly that? Actually, if all the .001%ers were like him, we'd all be better off
flora , November 21, 2017 at 9:09 pmWhat's your take on Rutger Bergman's ted talk? i think most jobs aren't real jobs at all, like marketing and ceo's. why can't we do 20 hour work weeks so we don't have huge amounts of unemployment? Note, I was "unemployed" for years since "markets" decide not to fund science in the US. Yay Germany At least I was fortunate enough to not be forced to work at Walmart or McDonalds like the majority of people with absolutely no life choices. Ah the sweet coercion of capitalism.
Andrew Dodds , November 22, 2017 at 2:48 amYour hopes for a UBI are undone by some of the real world observations I've made over many years, with regard to how a guaranteed income increase, of any measure, for a whole population of an area, affects prices. Shorter: income going up means prices are raised by merchants to capture the new income.
- Examples: A single industry town raises wages for all employees by 2% for the new calendar year. Within the first 2 weeks of the new year, all stores and restaurants and service providers in the town raise their prices by 2%. This happens every year there is a general wage increase.
- Example: Medicare part D passes and within 2 years, Pharma now having new captive customers whose insurance will pay for drugs, raise prices higher and higher, even on generic drugs.
- A more recent example: ACA passes with no drug price ceilings. Again, as with the passage of Medicare part D, Pharma raises drug prices to unheard of levels, even older and cheap but life saving drugs, in the knowledge that a new, large group will have insurance that will pay for the drugs – a new source of money.
Your assumption that any UBI would not be instantly captured by raised prices is naive, at best. It's also naive to assume companies would continue to pay wages at the same level to people still employed, instead of reducing wages and letting UBI fill in the rest. Some corporations already underpay their workers, then encourage the workers to apply for food stamps and other public supports to make up for the reduced wage.
The point of the paper is the importance of paid employment to a person's sense of well being. I agree with the paper.
jsn , November 21, 2017 at 11:28 amFor the vast majority, a UBI would be income-neutral – it would have to be, to avoid massive inflation. So people would receive a UBI, but pay more tax to compensate. The effect on prices would be zero.
The advantage of a UBI is mostly felt at the lower end, where insecure/seasonal work does now pay. At the moment, a person who went from farm labourer to Christmas work to summer resort work in the UK would certainly be working hard, but also relentlessly hounded by the DWP over universal credit. A UBI would make this sort of lifestyle possible.
Lambert Strether , November 22, 2017 at 1:44 amDavidab, Good for you, but your perspicacity is not scalable. People are social animals and your attitude toward "the herd", at least as expressed here, is that of a predator, even if your taste doesn't run toward predation. Social solutions will necessarily be scalable or they won't be solutions for long.
BJ , November 21, 2017 at 6:37 am> the organized herd a herd animal trapped in the herd
I don't think throwing 80% to 90% of the population into the "prey" bucket is especially perspicacious politically (except, of course, for predators or parasites). I also don't think it's especially perspicacious morally. You write:
Not very practical advice for most, I realize, trapped in the herd as they are in car payments and mortgages, but perhaps aspirational?
Let me translate that: "Trapped in the herd as many are to support spouses and children." In other words, taking the cares of the world on themselves in order to care for others.
divadab , November 21, 2017 at 7:41 amUnemployed stay at home dad here. My children are now old enough to no longer need a stay at home dad. Things I have done: picked up two musical instruments and last year dug a natural swimming pond by hand. Further, one would need to refute all the increased happiness in retirement (NBER). Why social security but not UBI? I get being part of the precariat is painful and this is a reality for most the unemployed no matter where you live in the world. A UBI is unworkable because it will never be large enough to make people's lives unprecarious. Having said that, I am almost positive if you gave every unemployed person 24 k a year and health benefits, there would be a mass of non working happy creative folks.
ambrit , November 21, 2017 at 8:34 amUBI seems to me to encourage non-virtuous behavior – sloth, irresponsibility, fecklessness, and spendthriftness. I like the Finnish model – unemployment insurance is not limited – except if you refuse work provided by the local job center. Lots of work is not being done all over America – we could guarantee honest work to all with some imagination. Start with not spraying roundup and rather using human labor to control weeds and invasive species.
I do agree that universal health insurance is necessary and sadly Obamacare is not that.
a different chris , November 21, 2017 at 9:19 amThe crux of this problem is the definition used for "non-virtuous behaviour." A new CCC is a good place to start though. (Your Tax Dollars At Work! [For some definition of tax dollars.]) As for BJ above, I would suppose that child rearing was his "employment" for years. good so far, but his follow-up is untypical. The 'Empty Nester' mother is a well known meme.
BJ , November 21, 2017 at 11:18 amSpendthriftness on 24K a year? Seriously? If we are disgorging unprofessional opinions, I will add my own: sloth and irresponsibility are more signs of depression rather than freedom from having to work. In fact, I believe (and I think much of the stuff here) supports the idea that people want to be seen as useful in some way. Doesn't include me! :) .. unfortunately, I have the charmingly named "dependents" so there you have it.
roadrider , November 21, 2017 at 9:23 amI lived 6 years as a grad student on 24k a year and would say it was easy. Only thing I would have to had worried about was awful health insurance. A two household each with 24k would be even easier, especially if you could do it in a low cost area. So I am not sure what you mean by spendthrift. But again it will never happen, so we will be stuck with what we have or most likely an even more sinister system. I guess I am advocating for a JG with unlimited number of home makers per household.
Jesper , November 21, 2017 at 10:55 amexcept if you refuse work provided by the local job center
And who's to say that the local "job center" has work that would be appropriate for every person's specific talents and interests? This is no better than saying that you should be willing to go work for some minimum-wage retail job with unpredictable scheduling and other forms of employer abuses after you lose a high-paying job requiring special talents. I have to call bullshit on this model. I went through a two-year stretch if unemployment in no small part because the vast majority of the available jobs for my skill set were associated with the MIC, surveillance state or the parasitic FIRE sector. I was able to do this because I had saved up enough FY money and had no debts or family to support.
I can also attest to the negative aspects of unemployment that the post describes. Its all true and I can't really say that I'e recovered even now, 2.5 years after finding another suitable job.
nonclassical , November 21, 2017 at 10:42 amThe job center in the neighbouring Sweden had the same function. Had is the important word. My guess is that the last time someone lost their unemployment insurance payout due to not accepting a job was in the early 1980s. Prior to that companies might, maybe, possibly have considered hiring someone assigned to them – full employment forced companies to accept what was offered. Companies did not like the situation and the situation has since changed.
Now, when full employment is a thing of the past, the way to lose unemployment insurance payouts is by not applying to enough jobs. An easily gamed system by people not wanting to work: just apply to completely unsuitable positions and the number of applications will be high. Many companies are therefore overwhelmed by applications and are therefore often forced to hire more people in HR to filter out the unsuitable candidates.
People in HR tend not to know much about qualifications and or personalities for the job so they tend to filter out too many. We're all familiar with the skills-shortage .
Next step of this is that the companies who do want to hire have to use recruitment agencies. Basically outsourcing the HR to another company whose people are working on commission. Recruiters sometimes know how to find 'talent', often they are the same kind of people with the same skills and backgrounds as people working in HR.To even get to the hiring manager a candidate has to go through two almost identical and often meaningless interviews. Recruiter and then HR. Good for the GDP I suppose, not sure if it is good for anything else.
But back on topic again, there is a second way of losing unemployment insurance payout: Time. Once the period covered has passed there is no more payouts of insurance. After that it it is time to live on savings, then sell all assets, and then once that is done finally go to the welfare office and prove that savings are gone and all assets are sold and maybe welfare might be paid out. People on welfare in Sweden are poor and the indignities they are being put through are many. Forget about hobbies and forget about volunteering as the money for either of those activities simply aren't available. Am I surprised by a report saying unemployed in Sweden are unhappy? Nope.
Jeremy Grimm , November 21, 2017 at 1:53 pmmeanwhile NYTimes testimonials Friday, show average family of 4 healthprofit costs (tripled, due to trump demise ACA) to be $30,000. per year, with around $10,000. deductible end of any semblance of affordable access, "murKa"
https://www.nytimes.com/2017/11/16/us/politics/obamacare-premiums-middle-class.html
Bill Smith , November 21, 2017 at 8:01 amWhat do you mean by virtuous behavior?
Where does a character like Bertie Wooster in "Jeeves" fit in your notions of virtuous behavior? Would you consider him more virtuous working in the management of a firm, controlling the lives and labor of others -- and humorously helped by his his brilliant valet, Jeeves, getting him out of trouble?
For contrast -- in class and social status -- take a beer-soaked trailer trash gentleman of leisure -- and for sake of argument blessed with less than average intelligence -- where would you put him to work where you'd feel pleased with his product or his service? Would you feel better about this fellow enjoying a six-pack after working 8 hours a day 5 days a week virtuously digging and then filling a hole in the ground while carefully watched and goaded by an overseer? [Actually -- how different is that from "using human labor to control weeds and invasive species"? I take it you're a fan of chain-gangs and making the poor pick up trash on the highways?]
What about some of our engineers and scientists virtuously serving the MIC? Is their behavior virtuous because they're not guilty of sloth, irresponsibility [in executing their work], fecklessness, and spendthriftness? On this last quality how do you feel about our government who pay the salaries for all these jobs building better ways to kill and maim?
BJ , November 21, 2017 at 11:07 amHow big is the swimming pool and how long did it take? Where did you put the dirt?
tegnost , November 21, 2017 at 9:32 amIt is a design by David Pagan Butler. It is his plunge pool design, deepend is 14 by 8 by 7 deep. I used the dirt to make swales around some trees. Win win all around.
BJ , November 21, 2017 at 11:25 amcurious to know whether you are married to someone with a job?
David Kane Miller , November 21, 2017 at 6:55 amThe answer is yes my spouse works. So I do have a schedule of waking up to make her lunch everyday, meeting her at lunch to walk, and making dinner when she gets home, but we do all those things on her days off so .
But again we would need to explain away, why people who are retired are happier? Just because they think they payed into social security? Try explaining to someone on the SS dole how the government spends money into existence and is not paid by taxes or that the government never saved their tax money, so there are not entitled to this money.
a different chris , November 21, 2017 at 9:23 amI hated working for other people and doing what they wanted. I began to feel some happiness when I had a half acre on which I could create my own projects. Things improved even more when I could assure myself of some small guaranteed income by claiming Social Security at age 62. To arise in the morning when I feel rested, with interesting projects like gardens, fences, small buildings ahead and work at my own pace is the essence of delight for me. I've been following your arguments against UBI for years and disagree vehemently.
Mel , November 21, 2017 at 9:42 amI feel I would behave the same as you, if I had the chance. *But* no statements about human beings are absolute, and because UBI would work for either of us does not mean it would work for the majority. Nothing devised by man is perfect.
tegnost , November 21, 2017 at 9:37 amIt's not you; it's not me. It's those deplorable people.
Lambert Strether , November 22, 2017 at 1:56 amfirst you had to buy the half acre in a suitable location, then you had to work many years to qualify for social security, the availability of which you paid for and feel you deserve. You also have to buy stuff for fences gardens and small buildings. At most that rhymes with a ubi but is significantly different in it's make up.
Carla , November 21, 2017 at 7:16 am> when I
hada half acre on which I could create my own projectsThat is, when you acquired the half acre, which not everyone can do. It seems to me there's a good deal of projecting going on with this thread from people who are, in essence, statistical outliers. But Mitchell summarizes the literature:
So for decades, researchers in this area, as opposed to bloggers who wax lyrical on their own opinions, have known that the importance of work in our lives goes well beyond the income we earn.
If the solution that works for you is going to scale, that implies that millions more will have to own land. If UBI depends on that, how does that happen? (Of course, in a post-collapse scenario, the land might be taken , but that same scenario makes the existence of institutions required to convey the UBI highly unlikely. )
Andrew , November 21, 2017 at 7:25 amVery glad to hear that Bill Mitchell is working on the "Future of Work" book, and to have this post, and the links to the other segments. Thank you, Yves!
I_Agree , November 21, 2017 at 11:26 amI don't agree with this statement. Never will. I'm the complete opposite. Give me more leisure time and you'll find me painting, writing, playing instruments and doing things that I enjoy. I recall back to when I was a student, I relished in the free time I got (believe me University gave me a lot of free time) between lectures, meaning I could enjoy this time pursuing creative activities. Sure I might be different than most people but I know countless people who are the same.
My own opinion is that root problem lies in the pathology of the working mentality, that 'work' and having a 'job' is so engrained into our society and mindset that once you give most people the time to enjoy other things, they simply can't. They don't know what to do with themselves and they eventually become unhappy, watching daytime TV sat on the sofa.
I recall back to a conversation with my mother about my father, she said to me, 'I don't know how your father is going to cope once he retires and has nothing to do' and it's that very example of where work for so many people becomes so engrained in their mindset, that they are almost scared of having 'nothing to do' as they say. It's a shame, it's this systemic working mentality that has led to this mindset. I'm glad I'm the opposite of this and proud by mother brought me up to be this way. Work, and job are not in my vocabulary. I work to live, not live to work.
nycTerrierist , November 21, 2017 at 12:18 pmI agree with Andrew. I think this data on the negative effects says more about how being employed fundamentally breaks the human psyche and turns them into chattel, incapable of thinking for themselves and destroying their natural creativity. The more a human is molded into a "good worker" the less they become a full fledged human being. The happiest people are those that have never placed importance on work, that have always lived by the maxim "work to live, not live to work". From my own experience every assertion in this article is the opposite of reality. It is working that makes me apathethic, uncreative, and miserable. The constant knowing that you're wasting your life, day after day, engaged in an activity merely to build revenue streams for the rich, instead of doing things that help society or that please you on a personal level, is what I find misery inducing.
jrs , November 21, 2017 at 12:48 pmI agree. If financial insecurity is removed from the equation -- free time can be used creatively for self-actualization, whatever form that may take: cultivating the arts, hobbies, community activities, worthy causes and projects. The ideology wafting from Mitchell's post smells to me like a rationale for wage slavery (market driven living, neo-liberalism, etc.)
FelicityT , November 21, 2017 at 3:18 pmBesides how are people supposed to spend their time "exploring other opportunities" when unemployed anyway? To collect unemployment which isn't exactly paying that much anyway, they have to show they are applying to jobs. To go to the movies the example given costs money, which one may tend to be short on when unemployed. They probably are looking for work regardless (for the income). There may still be some free time. But they could go back to school? Uh in case one just woke up from a rock they were under for 100 years, that costs money, which one may tend to be short on when unemployed, plus there is no guarantee the new career will pan out either, no guarantee someone is just chomping at the bit to hire a newly trained 50 year old or something. I have always taken classes when unemployed, and paid for it and it's not cheap.
Yes to use one's time wisely in unemployment in the existing system requires a kind of deep psychological maturity that few have, a kind of Surrender To Fate, to the uncertainty of whether one will have an income again or not (either that or a sugar daddy or a trust fund). Because it's not easy to deal with that uncertainty. And uncertainty is the name of the game in unemployment, that and not having an income may be the pain in it's entirety.
Yves Smith Post author , November 21, 2017 at 5:21 pmSadly this breaking down into a "good worker" begins for most shortly after they begin school. This type of education harms society in a myriad of ways including instilling a dislike of learning, deference to authority (no matter how irrational and unjust), and a destruction of a child's natural curiosity.
Yves Smith Post author , November 21, 2017 at 4:29 pmI don't buy your premise that people are "creative". The overwhelming majority do not have creative projects they'd be pursuing if they had leisure and income. Go look at retirees, ones that have just retired, are healthy, and have money.
Summer , November 21, 2017 at 6:25 pmYou are really misconstruing what the studies have found and misapplied it to your situation. Leisure time when you have a job or a role (being a student) is not at all the same as having time when you are unemployed, with or without a social safety net.
jrs , November 21, 2017 at 6:37 pm
- Work: that can be me hiring someone to cut my yard, or another type of one-off thing filled with precariousness.
- Job: that less temporary work, but by no means permanent. Just a step up from the precariousness of work.
- Career: that is work in the same field over a long period of time and it is more likely that someone will develop an identity through performing the work. Still precarious, but maybe more fulfilling.
- Sense of purpose: I was always under the impression that is something you have to give yourself. If it can be taken away by someone what was the purpose?
Lambert Strether , November 22, 2017 at 2:00 amone often has a role when unemployed: finding work. But it's not a very fulfilling one! But if one is trying to find work, it's not exactly the absence of a role either even if it still leaves significantly more free time than otherwise, maybe winning the lottery is the absence of a role.
But then it's also not like we give people a UBI even for a few years (at any time in adult life) to get an education. Only if they take out a student loan approaching the size of a mortgage or have parents willing to pony up are they allowed that (to pay not just for the education but to live because having a roof over one's head etc. is never free, a UBI via debt it might be called).
Jesper , November 21, 2017 at 7:47 am> Give me more leisure time and you'll find me painting, writing, playing instruments and doing things that I enjoy.
Nothing to breed resentment of "the creative class" here! Blowback from Speenhamland brought on the workhouses, so be careful what you wish for.diptherio , November 21, 2017 at 10:00 amAgain the UBI vs JG debate .
UBI won't happen and JG has been tried (and failed).
The argument that JG would allow the public sector to hire more people is demeaning to people already employed in the public sector and demonstrably false – people are hired into the public sector without there being a JG. It is most certainly possible to be against a JG while wanting more people working in the public sector.
The way forward is to have a government acting for people instead of for corporations. Increase the amount of paid vacations, reduce the pension age and stop with the Soviet style worship of work: While some people are apparently proud of their friends and relatives who died while at work it is also possible to feel sad about that.
Jesper , November 21, 2017 at 10:27 amJG has been tried (and failed).
When and where? The NCCC seemed to work pretty good here in the Western US.
Yves Smith Post author , November 21, 2017 at 4:39 pmThe JG was tried in Communist countries in Europe, Asia and Americas. The arguments then and there were the same as here and now, made by the same type of social 'scientists' (economists).
Would a JG be different here and now as the Republicans and Democrats are representing the best interests of the people? Or are they representing the same kind of interests as the Communist parties did?
tegnost , November 21, 2017 at 10:00 amData, please. The USSR fell because it was spending on its military to keep up with the US, a much larger economy. Countering your assertion we have this:
tegnost , November 21, 2017 at 10:15 amAs long as people argue that "it's not fair" to fix the inequality issue and employ things like debt jubilee or student loan forgiveness, or if we fix the ridiculous cost of health care what will all those insurance agents do then we will wind up with the real kind of class warfare, rather than the current punching from the top down, the punching will come from the bottom, because the situation is not fair now, it's just TINA according to those who profit from it. In my own life there is a balance of creativity and work, and I find work enables my creativity by putting some pressure on my time, i.e., I get up earlier, I practice at 8:30 am instead of sleeping til 10 and winding up with S.A..D., I go to bed rather than watch tv or drink to excess.. in other words i have some kind of weird schedule, I have days off sort of When I've been unemployed I feel the way s described in the article. I find the arguments in favor of ubi tend to come from people who already have assets, or jobs, or family who they take care of which is actually a job although uncommonly described as such. The only truth I see in real life is that the unemployed I am intimately familiar with first are mentally oppressed by the notion that to repair their situation will require they work every waking hour at substandard wages for the rest of their life and that is a major barrier to getting started, and that is a policy choice the gov't and elite classes purposefully made which created the precariat and will be their undoing if they are unable to see this.
j84ustin , November 21, 2017 at 10:08 amHey look, even the msm is looking at it
https://www.seattletimes.com/seattle-news/is-uprising-the-only-way-out-of-gross-inequality-maybe-so/hunkerdown , November 21, 2017 at 7:53 amAs someone who works in the public sector I never quite thought of it like that, thanks.
nonclassical , November 21, 2017 at 10:45 amDisappointing that there's no analysis in this context of less employment, as in shorter work weeks and/or days, as opposed to merely all or none.
Vatch , November 21, 2017 at 11:31 amsee – hear
(but no possibility without healthcare access, rather than healthtprofit)
jrs , November 21, 2017 at 1:04 pmInteresting point. I read a science fiction story in which the protagonist arrives for work at his full time job at 10:00 AM, and he's finished for the day at 4:00 PM. I can't remember the name of the story or novel, unfortunately.
Lambert Strether , November 22, 2017 at 2:02 amAgreed. And they already have it in places like Denmark. Why don't we talk about that? It actually exists unlike utopian schemes for either total UBI or total work guarantee (government job creation is not utopian, but imagining it will employ everyone is, and I would like the UBI to be more widely tried, but in this country we are nowhere close). Funny how utopia becomes more interesting to people than actual existing arrangements, even though of course those could be improved on too.
The Danish work arrangement is less than a 40 hour week, and mothers especially often work part-time but both sexes can. It's here in this country where work is either impossibly grueling or you are not working. No other choice. In countries with more flexible work arrangements more women actually work, but it's flexible and flexible for men who choose to do the parenting as well. I'm not saying this should be for parents only of course.
Otis B Driftwood , November 21, 2017 at 7:58 amBecause the JG sets the baseline for employment, which private companies must meet, the JG (unlike the UBI) can do this.
ambrit , November 21, 2017 at 8:38 amMy own situation is that I am unhappy in my well-paying job and would like nothing more than to devote myself to other interests. I'm thirty years on in a relationship with someone who grew up in bad financial circumstances and panics whenever I talk about leaving my job. I tell her that we have 2 years of living expenses in the bank but I can't guarantee making the same amount of money if I do leave my job. She has a job that she loves and is important and pays barely 1/2 of my own income. So she worries about her future with me. She worries about losing her home. I suppose that makes me the definition of a wage slave. And it makes for an increasingly unhappy marriage. I admire those who have faced similar circumstances and found a way through this. Sorry to vent, but this topic and the comments hit a nerve with me and I'm still trying to figure this out.
jrs , November 21, 2017 at 1:11 pmOtis; We are presently going through a period where that "two year cushion" has evaporated, for various reasons. We are seeing our way through this, straight into penury and privation. Take nothing for granted in todays' economy.
bronco , November 21, 2017 at 12:47 pmyes find the lower paying job that you like more first. If you just quit for nothing in the hopes of finding one it might not happen. Of course unemployment also happens sometimes, whether we want it or not.
Lambert Strether , November 22, 2017 at 2:03 amThe newer generations are worse when it comes to lifestyle. Those of that are older can at least remember a time without cellphones internet streaming services leasing a new car every 2 years etc.
What about the young? My niece and her husband should be all set , his mom sunk money into a home on the condition she moved into a mother in law apartment. So far so good right? 2 years in they are imploding even with the free child care she provides. Combined their wireless bill a month is over $300. The sit on the couch side by side and stream netflix shows to dueling iphones in front of a 65 inch tv that is not even turned on. Wearing headphones in silence.
Both driving new vehicles , both have gym memberships they don't use . They buy lattes 3 or 4 times a day which is probably another 500 a month.
My uncle passed away recently and my niece asked if she was in the will. It was literally her only communication on the subject. They are going under and could easily trim a few thousand a month from the budget but simply won't. No one in the family is going to lift a finger for them at this point they burned every possible bridge already. I have seen people living in cars plenty lately but I think these will be the first I see to living in brand new cars .
Somewhere along the line they got the impression that the american dream was a leased car a starbucks in one hand and an iphone in the other .
Confront them with the concept of living within a paycheck and they react like a patient hearing he has 3 months to live.
JBird , November 22, 2017 at 3:00 amAh. Reagan's "welfare queens" updated. Kids these days!
Thuto , November 21, 2017 at 8:00 amYeah being poor, never mind growing up poor, just well and truly sucks and it can really @@@@ you up. Gives people all sorts of issues. I'm rather like her, but I have had the joy of multi-hour commutes to unexciting soul crushing work. Happy, happy, joy, joy! However don't forget that with the current political economy things are likely to go bad in all sorts of ways. This whole site is devoted to that. My suggestion is to keep the job unless you have something lined up. Not being able to rent has it own stresses too. Take my word for it.
TroyMcClure , November 21, 2017 at 9:19 amI may be engaging in semantics but I think conflating work and jobs makes this article a bit of a mixed bag. I know plenty of people who are terribly unhappy in their jobs, but nonetheless extract a sense of wellbeing from having a stable source of INCOME to pay their bills (anecdotally speaking, acute stress from recent job losses is closely linked to uncertainty about how bills are going to be paid, that's why those with a safety net of accumulated savings report less stress than those without). Loss of status, social standing and identity and the chronic stress borne from these become evident much later I.e. when the unemployment is prolonged, accompanied of course by the still unresolved top-of-mind concern of "how to pay the bills".
As such, acute stress for the recently unemployed is driven by financial/income uncertainty (I.e. how am I going to pay the bills) whereas chronic stress from prolonged unemployment brings into play the more identity driven aspects like loss of social standing and status. For policy interventions to have any effects, policy makers would have to delineate the primary drivers of stress (or lack of wellbeing as the author calls it) during the various phases of the unemployment lifecycle. An Unemployment Insurance Fund (UIF) like we have here in South Africa appears to address the early stages of unemployment, and the accompanying acute stress, quite well by providing the income guarantee (for six months) that cushions the shock of losing a job. What's still missing of course are interventions that promote the quick return to employment for those on UIF, so maybe a middle of the road solution between UBI and a jobs guarantee scheme is how policy makers should be framing this, instead of the binary either/or we currently have.
Thuto , November 21, 2017 at 10:06 amLots' of people think they're unhappy with their jobs. Let them sit unemployed for 9 months and ask them if they want that job back. The usual parade of anecdata is on display here in the comments. Mitchell's real data and analysis in the article above still stand.
jrs , November 21, 2017 at 1:15 pmIf you'd read through my comment, and not rushed through it with a view of dishing out a flippant response, you'd have seen that nowhere do I question the validity of his data, I merely question how the argument is presented in some areas (NC discourages unquestioning deference to the views of experts no??). By the way, anecdotes do add to richer understanding of a nuanced and layered topic (as this one is) so your dismissal of them in your haste to invalidate people's observations is hardly helpful.
Lambert Strether , November 22, 2017 at 2:04 amYes people many not like their jobs but prefer the security of having them to not. Yes even if the boss sexually harasses one (as we are seeing is very common). Yes even if there is other workplace abuse. Yes even when it causes depression or PTSD (but if one stays with such a job long term it ruins the self confidence that is one prerequisite to get another job!). Yes even if one is in therapy because of job stress, sexual harassment or you name it. The job allows the having health insurance, allows the therapy, allows the complaining about the job in therapy to make it through another week.
Democrita , November 21, 2017 at 8:13 am> The usual parade of anecdata is on display here in the comments. Mitchell's real data and analysis in the article above still stand.
Ding ding ding!
jrs , November 21, 2017 at 1:40 pmWhen unemployed, the stress of worry about money may suppress the creative juices. Speaking from experience. People may well 'keep looking for jobs' because they know ultimately they need a job with steady income. The great experience of some freelancers notwithstanding, not all are cut out for it.
I would love to see some more about happiness or its lack in retirement–referenced by stay-at-home dad BJ , above.
I wonder, too, about the impact of *how* one loses one's job. Getting laid off vs fired vs quitting vs involuntary retirement vs voluntary, etc feel very different. Speaking from experience on that, too. I will search on these points and post anything of interest.
freedeomny , November 21, 2017 at 10:23 amThere are also other things that are degrading about the very process of being unemployed not mentioned here. What about the constant rejection that it can entail? One is unemployed and looking for work, one sends out resumes, many of them will never be answered, that's rejection. Then if one is lucky they get interviews, many will never lead to jobs, yet more rejection. Does the process of constant rejection itself have a negative effect on a human being whether it's looking for jobs or dates or whatever? Isn't it learned helplessness to if one keeps trying for something and keeps failing. Isn't that itself demoralizing entirely independent of any doubtful innate demoralizing quality of leisure.
Yves Smith Post author , November 21, 2017 at 5:15 pmI am not so sure if I agree with this article. I think it really depends on whether or not you have income to support yourself, hate or love your job, and the amount of outside interests you have, among other things. Almost everyone I know who lives in the NYC area and commutes into the city .doesn't like their job and finds the whole situation "soul-crushing".
Those that live in Manhattan proper are (feel) a bit better off. I for one stopped working somewhat voluntarily last year. I write somewhat because I began to dislike my job so much that it was interfering with my state of well being, however, if I had been allowed to work remotely I probably would have stuck it out for another couple of years.
I am close enough to 62 that I can make do before SS kicks in although I have completely changed my lifestyle – i.e. I've given up a materialistic lifestyle and live very frugally.
Additionally I saved for many years once I decided to embark on this path. I do not find myself depressed at all and the path this year has been very enriching and exciting (and scary) as I reflect on what I want for the future. I'm pretty sure I will end up moving and buying a property so that I can become as self sufficient as possible. Also, I probably will get a job down the line – but if I can't get one because I am deemed too old that will be ok as well. The biggest unknown for me is how much health insurance will cost in the future .
JBird , November 22, 2017 at 3:30 amThe article made clear that the studies included "unemployed but with income" from government support. It is amazing the degree to which readers ignore that and want to make the findings about "unemployed with no income".
Jamie , November 21, 2017 at 10:43 amThat's because we Americans all have work=good=worthy=blessed by God while workless=scum=worthless=accursed by God engraved into our collective soul. Our politics, our beliefs, are just overlays to that.
Even when we agree that the whole situation just crushes people into paste, and for which they have no defense regardless of how hard they work, how carefully they plan, or what they do, that underlay makes use feel that this is their/our fault. Any suggestions that at least some support can be decoupled from work, and that maybe work, and how much you earn, should not determine their value, brings the atavistic fear of being the "undeserving poor," parasites and therefore reprobated scum.
So we don't hear what you are saying without extra effort because it's bypassing our conscious thoughts.
Left in Wisconsin , November 21, 2017 at 12:02 pmAdd my voice to those above who feel that forced labor is the bane of existence, not the wellspring. All this study says to me is that refusing to employ someone in capitalist society does not make them happy. It makes them outcasts.
So, I say yes to a JG, because anyone who wants work should be offered work. But at the same time, a proper JG is not forced labor. And the only way to ensure that it is not forced labor, is to decouple basic needs from wage slavery.
jrs , November 21, 2017 at 1:31 pmI am critical of those who distinguish between the job and the income. Of course the income is critical to the dignity of the job. For many jobs, it is the primary source of that dignity. The notion that all jobs should provide some intrinsic dignity unrelated to the income, or that people whose dignity is primarily based on the income they earn rather than the work they do are deluded, is to buy in to the propaganda of "passion" being a requirement for your work and to really be blind to what is required to make a society function. Someone has to change the diapers, and wipe the butts of old people. (yes, I've done both.) It doesn't require passion and any sense of satisfaction is gone by about the second day. But if you could make a middle class living doing it, there would be a lot fewer unhappy people in the world.
It is well known that auto factory jobs were not perceived as good jobs until the UAW was able to make them middle class jobs. The nature of the actual work itself hasn't changed all that much over the years – mostly it is still very repetitive work that requires little specialized training, even if the machine technology is much improved. Indeed, I would guess that more intrinsic satisfaction came from bashing metal than pushing buttons on a CNC machine, and so the jobs may even be less self-actualizing than they used to be.
The capitalist myth is that the private sector economy generates all the wealth and the public sector is a claim on that wealth. Yet human development proves to us that this is not true – a substantial portion of "human capital" is developed outside the paid economy, government investment in R&D generates productivity growth, etc. And MMT demonstrates that we do not require private sector savings to fund public investment.
We are still a ways from having the math to demonstrate that government investment in caring and nurturing is always socially productive – first we need productivity numbers that reflect more than just private sector "product." But I think we are moving in that direction. Rather than prioritize a minimum wage JG of make-work, we should first simply pay people good wages to raise their own children or look after their elderly and disabled relatives. The MMT JG, as I understand it, would still require people to leave their kids with others to look after them in order to perform some minimum wage task. That is just dumb.
Whiskey Bob , November 21, 2017 at 1:34 pmMaybe it's dumb, it's certainly dumb in a system like the U.S. where work is brutal and often low paid and paid childcare is not well remunerated either. But caretakers also working seems to work in countries with greater income equality, good job protections, flexible work arrangements, and a decent amount of paid parental leave – yea Denmark, they think their children should be raised by professionals, but also work-life balance is still pretty good.
redleg , November 21, 2017 at 2:28 pmMy take is that capitalism has made the benefits and malus of having a job so ingrained into culture and so reinforced. Having a job is so closely linked to happiness because it gives you the money needed to pursue it.
A job affords you the ability to pursue whatever goals you want within a capitalist framework. "Everything" costs money and so having a job gives you the money to pay for those costs and go on to fulfill your pursuit of happiness.
Analyzing whether people are happy or not under these conditions seem apparent that it is going to lead to results heavily biased towards finding happiness through employment.
The unemployed are often living off someone else's income and feel like an undeserving parasite. Adults are generally ingrained with the culture that they have to grow up and be independent and be able to provide for a new family that they will start up. Becoming unemployed is like being emasculated and infantile, the opposite of what is expected of adults.
There's also that not having a job is increasingly being punished especially in the case of America. American wages have stayed either largely static or have worsened, making being unemployed that much more of a burden on family or friends. Unemployment has been demonized by Reaganism and has become systematically punishable for the long term unemployed. If you are unemployed for too long, you start losing government support. This compounds the frantic rush to get out of unemployment once unemployed.
There is little luxury to enjoy while unemployed. Life while unemployed is a frustrating and often disappointing hell of constant job applications and having many of them lead to nothing. The people providing support often start to become less so over time and become more convinced of laziness or some kind of lack of character or willpower or education or ability or whatever. Any sense of systemic failure is transplanted into a sense of personal failure, especially under neoliberalism.
I am not so sure about the case of Europe and otherwise. I am sure that the third world often has little or no social safety nets so having work (in exploitative conditions in many cases) is a must for survival.
Anyways, I wonder about the exact methodologies of these studies and I think they often take the current feelings about unemployment and then attempt to extrapolate talking points for UBI/JG from them. Yes, UBI wouldn't change culture overnight and it would take a very, very long time for people to let down their guard and adjust if UBI is to be implemented in a manner that would warrant trust. This article seems to understand the potential for that, but decides against it being a significant factor due to the studies emphasizing the malus of unemployment.
I wonder how different the results would be if there were studies that asked people how they would feel if they were unemployed under a UBI system versus the current system. I know a good number of young people (mostly under 30) who would love to drop out and just play video games all day. Though the significance of such a drastic demographic shift would probably lead to great political consequences. It would probably prove the anti-UBI crowd right in that under a capitalist framework, the capitalists and the employed wouldn't tolerate the unemployed and would seek to turn them into an underclass.
Personally I think a combination of UBI and JG should be pursued. JG would work better within the current capitalist framework. I don't think it is without its pitfalls due to similar possible issues (with the similar policy of full employment) either under Keynesianism (e.g. Milton Friedman sees it as inefficient) or in the USSR (e.g. bullshit jobs). There is the possibility of UBI having benefits (not having the unemployed be a burden but a subsidized contributer to the economy) so I personally don't think it should be fully disregarded until it is understood better. I would like it if there were better scientific studies to expand upon the implications of UBI and better measure if it would work or not. The upcoming studies testing an actual UBI system should help to end the debates once and for all.
ChrisPacific , November 21, 2017 at 5:30 pmMy $0.02: I have a creative pursuit (no money) and a engineering/physical science technical career (income!). I am proficient in and passionate about both. Over the last few years, the technical career became tenuous due to consolidation of regional consulting firms (endemic to this era)- wages flat to declining, higher work stress, less time off, conversation to contact employment, etc.- which has resulted in two layoffs.
During the time of tenuous employment, my art took on a darker tone. During unemployment the art stopped altogether.
I'm recently re-employed in a field that I'm not proficient. Both the peter principle and imposter syndrome apply. My art has resumed, but the topics are singular about despair and work, to the point that I feel like I'm constantly reworking the same one piece over and over again. And the quality has plummeted too.
In some fields (e.g. engineering), being a wage slave is the only realistic option due to the dominance of a small number of large firms. The big players crowd out independents and free lancers, while pressuring their own employees through just-high-enough wages and limiting time off. Engineering services is a relationship- based field, and the big boys (and they are nearly all boys) have vastly bigger networks to draw work from than a small firm unless that small firm has a big contact to feed them work (until they get gobbled up). The big firms also have more areas of expertise which limits how useful a boutique firm is to a client pool, except under very narrow circumstances. And if you are an introvert like most engineering people, there's no way to compete with big firms and their marketing staff to expand a network enough to compete.
In that way, consulting is a lot like art. To make a living at it you need either contacts or a sponsor. Or an inheritance.
nihil obstet , November 21, 2017 at 6:07 pmI would be interested to know what the definition of unemployment was for the purpose of this study (I couldn't find it in the supplied links). If it's simply "people who don't have a job," for example, then it would include the likes of the idle rich, retirees, wards of the state, and so on. Binary statements like this one do make it sound like the broad definition is the one in use:
When considering the world's population as a whole, people with a job evaluate the quality of their lives much more favorably than those who are unemployed.
The conclusion seems at odds with results I've seen for some of those groups – for example, I thought it was fairly well accepted that retirees who are supported by a government plan that is sufficient for them to live on were generally at least as happy as they had been during their working life.
If, on the other hand, the study uses a narrow definition (e.g. people who are of working age, want a job or need one to support themselves financially, but can't find one) then the conclusion seems a lot more reasonable. But that's a heavily loaded definition in economic and cultural terms. In that case, the conclusion (people are happier if they have a job) only holds true in the current prevailing model of society. It doesn't rule out the possibility of structuring society or the economy differently in such a way that people can be non-working and happy. The existence of one such population already (retirees) strongly suggests that outcomes like this are possible. A UBI would be an example of just such a restructuring of society, and therefore I don't think that this study and its result are necessarily a valid argument against it.
Summer , November 21, 2017 at 6:52 pmWhich makes a person happier -- being considered worthless by one's society or valuable? How many studies do we need to answer that question? Apparently, a lot, because studies like this one keep on going. The underlying assumption is that jobs make one valuable. So if you don't have a job you're worthless. Now, who's happier on the whole, people with jobs or the unemployed? That's surely good for a few more studies. Did you know that members of socially devalued groups (minorities, non-heteros, and the like) have higher rates of dysfunction, rather like the unemployed? Hmm, I wonder if there's maybe a similar principle at work. And my solution is not to turn all the people of color white nor to change all the women to men nor to "cure" gays. Well, maybe a few more conclusive studies of this kind will convince me that we must all be the same, toeing the line for those whom it has pleased God to dictate our values to us.
I am convinced that we shouldn't outlaw jobs, because I believe the tons of stories about happy people in their jobs However, I also believe we shouldn't force everyone into jobs, because I know tons of stories about happy people without jobs. You know, the stories that the JG people explain away: parents caring for their children (JG -- "oh, we'll make that a job!"), volunteers working on local planning issues (JG -- "oh, we'll make that a job, too. In fact, we'll make everything worth doing a job. The important thing is to be able to force people to work schedules and bosses, because otherwise, they'll all lie around doing nothing and be miserable"), the retired (JG -- "that's not really the same, but they'd be better off staying in a job"). And this is all before we get to those who can't really hold a job because of disability or geography or other responsibilities.
I support the JG over the current situation, but as to what we should be working for, the more I read the JG arguments, the more paternalistic and just plain narrow minded judgmental they seem.
Lambert Strether , November 22, 2017 at 1:24 amIf someone else gives you a sense of purpose and takes it away what was the purpose?
Data like that provided by Mitchell is important to demolishing the horrid "economic anxiety" frame much beloved by liberals, especially wonkish Democrats.* It's not (a) just feelings , to be solved by scented candles or training (the liberal version of rugged individualism) and (b) the effects are real and measurable. It's not surprising, when you think about it, that the working class is about work .
* To put this another way, anybody who has really suffered the crawling inwardness of anxiety, in the clinical sense, knows that it affects every aspect of one's being. Anxiety is not something deplorables deploy as cover for less than creditable motives.
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Nov 16, 2017 | economistsview.typepad.com
djb , November 16, 2017 at 01:46 AM
non accelerating inflation rate of unemployment is a better termPaine -> djb... , November 16, 2017 at 05:18 AMthere is nothing "natural" about that rate
there are many factors that play a role, but the most important are
1. monopoly power is the most important, without monopoly power, in a perfectly competitive market, excessive inflation is not possible
2. factors that affect bargaining power OF workers
Controlling inflation solely by focusing on workers wages since 1980 but allowing monopoly power and economic rents to skyrocket since 1980 is the main reason for the extreme inequality that has developed
These are important conjecturesJF -> djb... , November 16, 2017 at 08:26 AMWe may indeed have chosen to repress wage rates while allowing Firms market power over output prices and wages.
And firms share of total Economic rents and E rent rates themselves and thus total gross profits to rise.
Largely unchecked by policy moves
Prima facie evidence of distorted labor market where buyers of labor have control.djb -> JF... , November 16, 2017 at 01:59 PMAt the very least, the next democratic President should use their weekly address to point out the metrics relating economic gains, net wealth gains, productivity gains, to wage gains. The Presudent should remind employers to fairly share the gains.
Once the metrics indicate distortion in the labor markets the President will then introduce corrective legislation using the public communications weight behind this free market notion of a fair labor market, using these metrics.
Let us try this bully pulpit, public communications effort with the idea of building public momentum for correctives, and maybe we will return to the 1960s future when gains were more proportionally shared. Perhaps we wont need much legislation at all, afterall we had one generation comport with fairness, you know, rational expectations.
We can expect to do that again, especially as all new economists will be trained on the why and on how to accomplish this metric of shared gains. One can only hope.
I know this may not exactly fit your MMT modelif we don't allow median wages to go up to match production/productivity
and if economic rents continue to go up disproportionally then we need to do a redistribution, ideally by taxes, to get the median wage to keep pace with production/productivity
otherwise demand for products will eventually falter, making us all poorer for it
if demand cannot be kept up by wages, then the only option is loans and we have seen in 2008 the catastrophic results of that
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Nov 16, 2017 | economistsview.typepad.com
15, 2017 Should We Reject the Natural Rate Hypothesis? Olivier Blanchard:
Should We Reject the Natural Rate Hypothesis?, by Olivier Blanchard, PIIE : Fifty years ago, Milton Friedman articulated the natural rate hypothesis. It was composed of two sub-hypotheses: First, the natural rate of unemployment is independent of monetary policy. Second, there is no long-run tradeoff between the deviation of unemployment from the natural rate and inflation. Both propositions have been challenged. Blanchard reviews the arguments and the macro and micro evidence against each and concludes that, in each case, the evidence is suggestive but not conclusive. Policymakers should keep the natural rate hypothesis as their null hypothesis but keep an open mind and put some weight on the alternatives. [ paper ]Posted by Mark Thoma on Wednesday, November 15, 2017 at 10:22 AM in Academic Papers , Economics , Macroeconomics | Permalink Comments (9)
CommentsYou can follow this conversation by subscribing to the comment feed for this post.
Paine , November 15, 2017 at 03:44 PM
"there is a strong case, although not an overwhelming case, to allow U.S. output to exceed potential for some time, so as to reintegrate some of the workers who left the labor force during the last ten years."Paine -> Paine ... , November 15, 2017 at 03:49 PMBlanchard calls for exploring the unknown regions
of lower and lower unemploymentLower UE rates
Instead of accelerating output price inflation
Or even wage inflation
Given possible productivity pick ups
We may discover
We get a return to higher and higher participation
Not an unhappy result after allThe parting of the ways with the likes of Blanchard and krugman might comePaine -> Paine ... , November 15, 2017 at 03:51 PM
When at long last wage rates do begin to rise faster then
Say
labor productivity plus three percentBut if the acceleration of the expected rate of change
of the rate of output price change
accelerates slowlyWe'll have plenty of policy means and time to moderate the expansion of demand
Given the political willOr better consider the imposition of a mark up warrant systemPaine -> Paine ... , November 15, 2017 at 03:58 PM
On selected firms and sectorsWhat is completely missed by looking at the impact of a slump on long run output capacityPaine -> Paine ... , November 15, 2017 at 04:01 PM
Is the actual lost output out of existing capacity
And the misery this inflicts now
for many too many
Ten years of sub possible output
Contain How many weeks upon weeks
of reduced Welfare for too many souls ?If average slack is now 7%anne -> Paine ... , November 15, 2017 at 03:58 PM
And could
with aggressive macro nautics
be reduced to 2%We
each of us only live in the now
and for only a single all too brief life timeThis is arguing well, I agree and am grateful.Paine -> anne... , November 15, 2017 at 04:08 PMBlanchards uses the definition of potential outputPaine -> Paine ... , November 15, 2017 at 04:11 PM
That suggests over production has to be off set by under productionI.e. Potential output is not technical maximum output by any means
PO
Is more like a rate of output and consequent rate of existing factor utilization
That does not unduly
stress
the various institutional arrangements and practices
Or overly tax
the stability of existing social norms
Considered necessary
to sustaining the good of society
thru
It's gradual development over timeThere is another set of conflicting visionsanne -> Paine ... , November 15, 2017 at 04:11 PM
One of which
That any class pov might hatchA vision
Perhaps too Faustian for most souls of that class
That is restless
to push faster
To Venture more
Face uncertainty with boldness even audacityNice, nice.
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Nov 15, 2017 | www.nakedcapitalism.com
Alex Azar: Can There Be Uglier Scenarios than the Revolving Door? Posted on November 15, 2017 by Lambert Strether By Lambert Strether
Clearly, Alex Azar, nominated yesterday for the position of Secretary of Health and Human Services by the Trump Administration, exemplifies the case of the "revolving door," through which Flexians slither on their way to (or from) positions of public trust. Roy Poses ( cross-posted at NC ) wrote, when Azar was only Acting Secretary:
Last week we noted that Mr Trump famously promised to “drain the swamp” in Washington. Last week, despite his previous pledges to not appoint lobbyists to powerful positions, he appointed a lobbyist to be acting DHHS Secretary. This week he is apparently strongly considering Mr Alex Azar, a pharmaceutical executive to be permanent DHHS Secretary, even though the FDA, part of DHHS, has direct regulatory authority over the pharmaceutical industry, and many other DHHS policies strongly affect the pharmaceutical industry. (By the way, Mr Azar was also in charge of one lobbying effort.)
So should Mr Azar be confirmed as Secretary of DHHS, the fox guarding the hen house appears to be a reasonable analogy.
Moreover, several serious legal cases involving bad behavior by his company, and multiple other instances of apparently unethical behavior occurred on Mr Azar’s watch at Eli Lilly. So the fox might be not the most reputable member of the species.
So you know the drill…. The revolving door is a species of conflict of interest . Worse, some experts have suggested that the revolving door is in fact corruption. As we noted here , the experts from the distinguished European anti-corruption group U4 wrote ,
The literature makes clear that the revolving door process is a source of valuable political connections for private firms. But it generates corruption risks and has strong distortionary effects on the economy , especially when this power is concentrated within a few firms.
The ongoing parade of people transiting the revolving door from industry to the Trump administration once again suggests how the revolving door may enable certain of those with private vested interests to have excess influence, way beyond that of ordinary citizens, on how the government works, and that the country is still increasingly being run by a cozy group of insiders with ties to both government and industry. This has been termed crony capitalism.
Poses is, of course, correct. (Personally, I've contained my aghastitude on Azar, because I remember quite well how Liz Fowler transitioned from Wellpoint to being Max Baucus's chief of staff when ObamaCare was being drafted to a job in Big Pharma , and I remember quite well the deal with Big Pharma Obama cut, which eliminated the public option , not that the public option was anything other than a decreasingly gaudy "progressive" bauble in the first place.)
In this post, I'd like to add two additional factors to our consideration of Azar. The first: Democrat credentialism makes it hard for them to oppose Azar. The second: The real damage Azar could do is on the regulatory side.[1]
First, Democrat credentialism. Here is one effusive encomium on Azar. From USA Today, "Who is Alex Azar? Former drugmaker CEO and HHS official nominated to head agency" :
"I am glad to hear that you have worked hard, and brought fair-minded legal analysis to the department," Democratic Sen. Max Baucus said at Azar's last confirmation hearing.
And:
Andy Slavitt, who ran the Affordable Care Act and the Centers for Medicare & Medicaid Services during the Obama administration, said he has reason to hope Azar would be a good secretary.
"He is familiar with the high quality of the HHS staff, has real-world experience enough to be pragmatic, and will hopefully avoid repeating the mistakes of his predecessor," Slavitt said.
So, if Democrats are saying Azar is "fair-minded" and "pragmatic" -- and heaven forfend that the word "corruption"[2] even be mentioned -- how do they oppose him, even he's viscerally opposed to everything Democrats supposedly stand for? (Democrats do this with judicial nominations, too.) Azar may be a fox, alright, but the chickens he's supposedly guarding are all clucking about how impeccable his qualifications are!
Second, let's briefly look at Azar's bio. Let me excerpt salient detail from USA Today :
1. Azar clerked for Supreme Court Justice Antonin Scalia .
2. Azar went to work for his mentor, Ken Starr , who was heading the independent counsel investigation into Bill and Hillary Clinton's Whitewater land deal.
3. Azar had a significant role in another major political controversy when the outcome of the 2000 presidential election hinged on a recount in Florida . Azar was on the Bush team of lawyers whose side ultimately prevailed [3]
For any Democrat with a memory, that bio provokes one of those "You shall know them by the trail of the dead" moments. And then there's this:
When Leavitt replaced Thompson in 2005 and Azar became his deputy, Leavitt delegated a lot of the rule-making process to Azar.
So, a liberal Democrat might classify Azar as a smooth-talking reactionary thug with a terrible record and the most vile mentors imaginable, and on top of it all, he's an effective bureaucratic fixer. What could the Trump Administration possibly see in such a person? Former (Republican) HHS Secretary Mike Leavitt explains:
"Understanding the administrative rule process in the circumstance we're in today could be extraordinarily important because a lot of the change in the health care system, given the fact that they've not succeeded legislatively, could come administratively."
We outlined the administration strategy on health care in "Trump Adminstration Doubles Down on Efforts to Crapify the Entire Health Care System (Unless You're Rich, of Course)" . There are three prongs:
1) Administratively, send ObamaCare into a death spiral by sabotaging it
2) Legislatively, gut Medicaid as part of the "tax refom" package in Congress
3) Through executive order, eliminate "essential health benefits" through "association health plans"
As a sidebar, it's interesting to see that although this do-list is strategically and ideologically coherent -- basically, your ability to access health care will be directly dependent on your ability to pay -- it's institutionally incoherent, a bizarre contraption screwed together out of legislation, regulations, and an Executive order. Of course, this incoherence mirrors to Rube Goldberg structure of ObamaCare itself, itself a bizarre contraption, especially when compared to the simple, rugged, and proven single payer system. ( Everything Obama did with regulations and executive orders, Trump can undo, with new regulations and new executive orders . We might compare ObamaCare to a child born with no immune system, that could only have survived within the liberal bubble within which it was created; in the real world, it's not surprising that it's succumbing to opportunistic infections.[2])
On #1, The administration has, despite its best efforts, not achieved a controlled flight into terrain with ObamaCare; enrollment is up. On #2, the administration and its Congressional allies are still dickering with tax reform. And on #3 . That looks looks like a job for Alex Azar, since both essential health benefits and association health plans are significantly affected by regulation.
So, yes, there are worse scenarios than the revolving door; it's what you leave behind you as the door revolves that matters. It would be lovely if there were a good old-fashioned confirmation battle over Azar, but, as I've pointed out, the Democrats have tied their own hands. Ideally, the Democrats would junk the Rube Goldberg device that is ObamaCare, rendering all of Azar's regulatory expertise null and void, but that doesn't seem likely, given that they seem to be doing everything possible to avoid serious discussion of policy in 2018 and 2020.
NOTES
[1] I'm leaving aside what will no doubt be the 2018 or even 2020 issue of drug prices, since for me that's subsumed under the issue of single payer. If we look only at Azar's history in business, real price decreases seem unlikely. Business Insider :
Over the 10-year period when Azar was at Lilly, the price of insulin notched a three-fold increase. It wasn't just Lilly's insulin product, called Humalog. The price of a rival made by Novo Nordisk has also climbed, with the two rising in such lockstep that you can barely see both trend lines below.
The gains came despite the fact that the insulin, which as a medication has an almost-century-long history, hasn't really changed since it was first approved.
Nice business to be in, eh? Here's that chart:
It's almost like Lilly (Azar's firm) and Novo Nordisk are working together, isn't it?
[2] Anyhow, as of the 2016 Clinton campaign , the Democrat standard -- not that of Poses, nor mine -- is that if there's no quid pro quo, there's no corruption.
[3] And, curiously, "[HHS head Tommy] Thompson said HHS was in the eye of the storm after the 2001 terrorist attacks, and Azar had an important role in responding to the resulting public health challenges, as well as the subsequent anthrax attacks "
MedicalQuack , November 15, 2017 at 10:31 am
diptherio , November 15, 2017 at 11:25 amOh please, stop quoting Andy Slavitt, the United Healthcare Ingenix algo man. That guy is the biggest crook that made his money early on with RX discounts with his company that he and Senator Warren's daughter, Amelia sold to United Healthcare. He's out there trying to do his own reputation restore routine. Go back to 2009 and read about the short paying of MDs by Ingenix, which is now Optum Insights, he was the CEO and remember it was just around 3 years ago or so he sat there quarterly with United CEO Hemsley at those quarterly meetings. Look him up, wants 40k to speak and he puts the perception out there he does this for free, not so.
a different chris , November 15, 2017 at 2:01 pmI think you're missing the context. Lambert is quoting him by way of showing that the sleazy establishment types are just fine with him. Thanks for the extra background on that particular swamp-dweller, though.
petal , November 15, 2017 at 12:52 pmNot just the context, it's a quote in a quote. Does make me think Slavitt must be a real piece of work to send MQ so far off his rails
sgt_doom , November 15, 2017 at 1:21 pmAlex Azar is a Dartmouth grad (Gov't & Economics '88) just like Jeff Immelt (Applied Math & Economics '78). So much damage to society from such a small department!
Jen , November 15, 2017 at 7:56 pmNice one, petal !!!
Really, all I need to know about the Trumpster Administration:
From Rothschild to . . . .
https://en.wikipedia.org/wiki/Wilbur_Ross
Since 2014, Ross has been the vice-chairman of the board of Bank of Cyprus PCL, the largest bank in Cyprus.
He served under U.S. President Bill Clinton on the board of the U.S.-Russia Investment Fund. Later, under New York City Mayor Rudy Giuliani, Ross served as the Mayor's privatization advisor.
jo6pac , November 15, 2017 at 2:13 pmOr from a "small liberal arts college" (which is a university in all but name, because alumni).
Tim Geitner ('82 – Goverment)
Hank Paulson ('68 – English)Alfred , November 15, 2017 at 2:53 pmWell it's never ending game in the beltway and we serfs aren't in it.
https://consortiumnews.com/2017/11/15/trump-adds-to-washingtons-swamp/
I don't believe that the President's "swamp" ever consisted of crooked officials, lobbyists, and cronies I think it has always consisted of those regulators who tried sincerely to defend public interests.
It was in the sticky work of those good bureaucrats that the projects of capitalists and speculators bogged down. It is against their efforts that the pickup-driving cohort of Trump_vs_deep_state (with their Gadsden flag decals) relentlessly rails.
Trump has made much progress in draining the regulatory swamp (if indeed that is the right way to identify it), and no doubt will make considerably more as time wears on, leaving America high and dry. The kind of prevaricator Trump is may simply be the one who fails to define his terms.
Henry Moon Pie , November 15, 2017 at 4:13 pm
I think we've moved past the revolving door. We hear members of the United States Senate publicly voice their concerns about what will happen if they fail to do their employers' bidding (and I'm not talking about "the public" here). In the bureaucracy, political appointees keep accruing more and more power even as they make it clearer and clearer that they work for "the donors" and not the people. Nowhere is this more true than the locus through which passes most of the money: the Pentagon. The fact that these beribboned heroes are, in fact, setting war policy on their own makes the knowledge that they serve Raytheon and Exxon rather than Americans very, very troubling.
I suspect Azar's perception is that he is just moving from one post to another within the same company.
Watt4Bob , November 15, 2017 at 5:28 pm
Larry , November 15, 2017 at 8:01 pmPerfect cartoon over at Truthout
I'm amazed there is enough private security available on this planet to keep these guys safe.
Big pharma indeed has so much defense from the supposed left. It combines their faith in technological progress, elite institutions, and tugs on the heart strings with technology that can save people from a fate of ill health or premature death. Of course, the aspect of the laws being written to line the pockets of corrupt executives is glossed over. While drug prices and medical costs spiral ever higher, our overall longevity and national health in the US declines. That speaks volumes about what Democrats really care about.
