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|Is it really necessary for every economist to be brain-dead apologist for the rich and powerful and predatory, in every damn breath?|
|Smith briskly takes a sledgehammer to any number of plaster saints
cluttering up the edifice of modern economics:
"assumptions that are patently ridiculous: that individuals are rational and utility-maximizing (which has become such a slippery notion as to be meaningless), that buyers and sellers have perfect information, that there are no transaction costs, that capital flows freely"
And then...papers with cooked figures, economists oblivious to speculative factors driving oil prices, travesty versions of Keynes's ideas that airbrush out its most characteristic features in the name of mathematical tractability.
And then...any number of grand-sounding theoretical constructs: the Arrow-Debreu theorem, the Dynamic Stochastic General Equilibrium model, the Black-Scholes option model, Value at Risk, CAPM, the Gaussian copula, that only work under blatantly unrealistic assumptions that go by high falutin' names - equilibrium, ergodicity, and so on.
The outcome of this pseudo-scientific botching is an imposing corpus of pretentious quackery that somehow elevates unregulated "free markets" into the sole mechanism for distribution of the spoils of economic activity. We are supposed to believe that by some alchemical process, maximum indulgence of human greed results in maximum prosperity for all. That's unfair to alchemy: compared with the threadbare scientific underpinnings of this economic dogma, alchemy is a model of rigor.
|How many others are being paid for punditry? Or has the culture of corruption
spread so far that the question is, Who isn't?
"MIT and Wharton and University of Chicago created the financial engineering instruments which, like Samson and Delilah, blinded every CEO. They didn't realize the kind of leverage they were doing and they didn't understand when they were really creating a real profit or a fictitious one."
When you see this "neoclassical" gallery of expensive intellectual prostitutes (sorry, respectable priests of a dominant religion) that pretend to be professors of economics in various prominent universities, it is difficult not to say "It's political economy stupid". Those lackeys of ruling elite are just handing microphone bought by financial oligarchy. Here is am Amazon.com review of ECONned How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism eBook Yves Smith that states this position well:
kievite:Neoclassical economics as a universal door opener for financial oligarchy
There are many good reviews of the book published already and I don't want to repeat them. But I think there is one aspect of the book that was not well covered in the published reviews and which I think is tremendously important and makes the book a class of its own: the use of neoclassical economics as a universal door opener for financial oligarchy. I hope that the term "econned" will became a new word in English language.
Neoclassical economics has become the modern religion with its own priests, sacred texts and a scheme of salvation. It was a successful attempt to legitimize the unlimited rule of financial oligarchy by using quasi-mathematical, oversimplified and detached for reality models. The net result is a new brand of theology, which proved to be pretty powerful in influencing people and capturing governments("cognitive regulatory capture"). Like Marxism, neoclassical economics is a triumph of ideology over science. It was much more profitable though: those who were the most successful in driving this Trojan horse into the gates were remunerated on the level of Wall Street traders.
Economics is essentially a political science. And politics is about perception. Neo-classical economics is all about manipulating the perception in such a way as to untie hands of banking elite to plunder the country (and get some cramps from the table for themselves). Yves contributed to our understanding how "These F#@king Guys" as Jon Steward defined them, economics professors from Chicago, Harvard, Columbia, Princeton and some other places warmed by flow of money from banks for specific services provided managed to serve as a fifth column helping Wall Street to plunder the country. The rhetorical question that a special counsel to the U.S. Army, Joseph Welch, asked Senator McCarthy: "Have you no sense of decency?" applies.
The main effect of neoclassical economics is elevating unregulated ( "free" in neoclassic economics speak) markets into the key mechanism for distribution of the results of economic activity with banks as all-powerful middlemen and sedating any opposition with pseudo-mathematical mumbo-jumbo. Complexity was used as a powerful smoke screen to conceal greed and incompetence. As a result financial giants were able to loot almost all sectors of economics with impunity and without any remorse, not unlike the brutal conquerors in Middle Ages.
The key to the success of this nationwide looting is that people should be brainwashed/indoctrinated to believe that by some alchemical process, maximum level of greed results in maximum prosperity for all. Collapse of the USSR helped in this respect driving the message home: look how the alternative ended, when in reality the USSR was a neo-feudal society. But the exquisite irony here is that Bolsheviks-style ideological brainwashing was applied very successfully to the large part of the US population (especially student population) using neo-classical economics instead of Marxism (which by-and-large was also a pseudo-religious economic theory with slightly different priests and the plan of salvation ;-). The application of badly constructed mathematical models proved to be a powerful tool for distorting reality in a certain, desirable for financial elite direction. One of the many definitions of Ponzi Scheme is "transfer liabilities to unwilling others." The use of detached from reality mathematical models fits this definition pretty well.
The key idea here is that neoclassical economists are not and never have been scientists: much like Marxist economists they always were just high priests of a dangerous cult -- neoliberalism -- and they are more then eager to stretch the truth for the benefit of the sect (and indirectly to their own benefit). All-in-all this is not unlike Lysenkoism: state support was and still is here, it is just working more subtly via ostracism, without open repressions. Look at Shiller story on p.9.
I think that one of lasting insights provided by Econned is the demonstration how the US society was taken hostage by the ideological views of the neoclassical economic school that has dominated the field at least for 30 or may be even 50 years. And that this ideological coup d'état was initiated and financed by banking establishment who was a puppeteer behind the curtain. This is not unlike the capture of Russia by Bolsheviks supported by German intelligence services (and Bolshevics rule lasted slightly longer -- 65 years). Bolsheviks were just adherents of similar wrapped in the mantle of economic theory religious cult, abeit more dangerous and destructive for the people of Russia then neoclassical economics is for the people of the USA. Quoting Marx we can say "History repeats itself, first as tragedy, second as farce".
That also means that there is no easy way out of the current situation. Ideologies are sticky and can lead to the collapse of society rather then peaceful evolution.
So it's no surprise that there is a strong evidence that neo-classical economics is not a science, it's a political ideology of financial oligarchy masquerading as science. Or a religious cult, if you wish.
|So it's no surprise that there is a strong evidence that neo-classical economics is not a science, it's a political ideology of financial oligarchy masquerading as science. Or a religious cult, if you wish.|
The cult which served as a Trojan horse for bankers to grab power and wealth by robbing fellow Americans. In a way this is a classic story of a parasite killing the host. The powers that be in academia put their imprimatur on economic ‘theory,’ select and indoctrinate its high priests to teach it, and with a host of media players grinding out arguments pro and con this and that, provide legitimacy sufficient for cover of bankers objectives. Which control the disposition and annuity streams of pension fund assets and related financial services. In his new documentary Inside Job, filmmaker Charles Ferguson provides strong evidence of a systematic mass corruption of economic profession (Yahoo! Finance):
Ferguson points to 20 years of deregulation, rampant greed (a la Gordon Gekko) and cronyism. This cronyism is in large part due to a revolving door between not only Wall Street and Washington, but also the incestuous relationship between Wall Street, Washington and academia.The conflicts of interest that arise when academics take on roles outside of education are largely unspoken, but a very big problem. “The academic economics discipline has been very heavily penetrated by the financial services industry,” Ferguson tells Aaron in the accompanying clip. “Many prominent academics now actually make the majority of their money from the financial services industry, not from teaching or research. [This fact] has definitely compromised the research work and the policy advice that we get from academia.”
... ... ...
Feguson is astonished by the lack of regulation demanding financial disclosure of all academics and is now pushing for it. “At a minimum, federal law should require public disclosure of all outside income that is in any way related to professors’ publishing and policy advocacy,” he writes. “It may be desirable to go even further, and to limit the total size of outside income that potentially generates conflicts of interest.”
The dismantling of economic schools that favor financial oligarchy interests over real research (and prosecuting academic criminals -- many prominent professors in Chicago, Harvard, Columbia and other prominent members of neo-classical economic church) require a new funding model. As neoliberalism itself, the neoclassical economy is very sticky. Chances for success of any reform in the current environment are slim to non existent.
Here is one apt quote from Zero Hedge discussion of Gonzalo Lira article On The Identity Of The False Religion Behind The Mask Of Economic Science zero hedge
"They analyze data for Christ sakes"
Just like Mishkin analyzed Iceland for $120k? a huge proportion in US [are] on Fed payroll, or beneficiaries of corporate thinktank cash; they are coverup lipstick and makeup; hacks for hire.
Like truth-trashing mortgage pushers, credit raters, CDO CDS market manipulators and bribe-fueled fraud enablers of all stripes -- they do it for the dough -- and because everybody else is doing it.
It's now a common understanding that "These F#@king Guys" as Jon Steward defined them, professors of neoclassical economics from Chicago, Harvard and some other places are warmed by flow of money from financial services industries for specific services provided managed to serve as a fifth column helping financial oligarchy to destroy the country. This role of neo-classical economists as the fifth column of financial oligarchy is an interesting research topic. Just don't expect any grants for it ;-).As Reinhold Niebuhr aptly noted in his classic Moral Man and Immoral Society
Since inequalities of privilege are greater than could possibly be defended rationally, the intelligence of privileged groups is usually applied to the task of inventing specious proofs for the theory that universal values spring from, and that general interests are served by, the special privileges which they hold.
I would like to stress it again: they are not and never have been scientists: they are just high priests of dangerous cult -- neoliberalism -- and they are more then eager to stretch the truth for the sect (and that means their own) benefits. Fifth column of financial oligarchy. All-in-all this is not unlike Lysenkoism: at some point state support became obvious as financial oligarchy gained significant share of government power (as Glass-Steagall repeal signified). It is just more subtle working via ostracism and flow of funding, without open repressions. See also Politicization of science and The Republican War on Science
Like Russia with Bolsheviks, the US society was taken hostage by the ideological views of the Chicago economic school that has dominated the field for approximately 50 years ( as minimum over 30 years). Actually the situation not unlike the situation with Lysenkoism is the USSR. It's pretty notable that the USA suffered 30 years of this farce, actually approximately the same amount of time the USSR scientific community suffered from Lysenkoism (1934-1965)
|"Over the past 30 years, the economics profession—in economics departments, and in business,
public policy, and law schools—has become so compromised by conflicts of interest that it now
functions almost as a support group for financial services and other industries whose profits
depend heavily on government policy.
The route to the 2008 financial crisis, and the economic problems that still plague us, runs straight through the economics discipline. And it's due not just to ideology; it's also about straightforward, old-fashioned money."
Peter Dormat noticed amazing similarity between medical researchers taking money from drug companies and economists. In case of medical researchers widespread corruption can at least be partially kept in check by rules of disclosure. Universities are being called out for their failure to disclose to public agencies the other, private grants researchers are pulling in. This is not perfect policing as the universities themselves get a cut of the proceeds, so that the conflict of interest exists but at least this is theirs too.
But there is no corresponding policy for economics. So for them there are not even rules to be broken. And this is not a bug, this is feature. In a sense corruption is officially institualized and expected in economics. Being a paid shill is the typical career of many professional economists. Some foundations require an acknowledgment in the published research they support, but that's all about “thank you”, not disclaimer about the level of influence of those who pay for the music exert on the selection of the tune. Any disclosure of other, privately-interested funding sources by economists is strictly voluntary, and in practice seldom occurs. Trade researchers can be funded by foreign governments or business associations and so on and so forth.
In this atmosphere pseudo-theories have currency and are attractive to economists who want to enrich themselves. That situation is rarely reflected in mainstream press. For example, there some superficial critiques of neo-classical economics as a new form of Lysenkoism (it enjoyed the support of the state) but MSM usually frame the meltdown of neo-classical economic theory something like "To all you corrupt jerks out there: shake off the old camouflage as it became too visible and find a new way misleading the masses...". At the same time it's a real shocker, what a bunch of toxic theories and ideologies starting from Reagan have done to the US economy.
That suggests that neo-economics such as Milton Friedman (and lower level patsies like Eugene Fama ) were just paid propagandists of a superficial, uninformed, and simplistic view of the world that was convenient to the ruling elite. While this is somewhat simplistic explanation, it's by-and-large true and that was one of the factors led the USA very close to the cliff... Most of their theories is not only just nonsense for any trained Ph.D level mathematician or computer scientist, they look like nonsense to any person with a college degree, who looks at them with a fresh, unprejudiced mind. There are several economic myths, popularized by well paid propagandists over the last thirty years, that are falling hard in the recent series of financial crises: the efficient market hypothesis, the inherent benefits of globalization from the natural equilibrium of national competitive advantages, and the infallibility of unfettered greed as a ideal method of managing and organizing human social behavior and maximizing national production.
I would suggest that and economic theory has a strong political-economic dimension. The cult of markets, ideological subservience and manipulation, etc. certainly are part of neo-classical economics that was influenced by underling political agenda this pseudo-theory promotes. As pdavidsonutk wrote: July 16, 2009 16:14
Keynes noted that "classical theorists resemble Euclidean geometers in a non Euclidean world who, discovering that in experience straight lines apparently parallel often meet, rebuke the lines for not keeping straight --as the only remedy for the unfortunate collisions. Yet in truth there is no remedy except to throw over the axiom of parallels to work out a non-Euclidean geometry. SOMETHING SIMILAR IS REQUIRED IN ECONOMICS TODAY. " [Emphasis added]
As I pointed out in my 2007 book JOHN MAYNARD KEYNES (Mentioned in this ECONOMIST article as a biography "of the master") Keynes threw over three classical axioms: (1) the neutral money axiom (2) the gross substitution axiom, and (3) the ergodic axiom.
The latter is most important for understanding why modern macroeconomics is dwelling in an Euclidean economics world rather than the non-Euclidean economics Keynes set forth.
The Ergodic axiom asserts that the future is merely the statistical shadow of the past so that if one develops a probability distribution using historical data, the same probability distribution will govern all future events till the end of time!! Thus in this Euclidean economics there is no uncertainty about the future only probabilistic risk that can reduce the future to actuarial certainty! In such a world rational people and firms know (with actuarial certainty) their intertemporal budget constrains and optimize -- so that there can never be an loan defaults, insolvencies, or bankruptcies.
Keynes argued that important economic decisions involved nonergodic processes, so that the future could NOT be forecasted on the basis of past statistical probability results -- and therefore certain human institutions had to be develop0ed as part of the law of contracts to permit people to make crucial decisions regarding a future that they "knew" they could not know and still sleep at night. When the future seems very uncertain, then rational people in a nonergodic world would decide not to make any decisions to commit their real resources -- but instead save via liquid assets so they could make decisions another day when the future seemed to them less uncertain.
All this is developed and the policy implications derived in my JOHN MAYNARD KEYNES (2007) book. Furthermore this nonergodic model is applied to the current financial and economic crisis and its solution in my 2009 book THE KEYNES SOLUTION: THE PATH TO GLOBAL PROSPERITY (Palgrave/Macmillan) where I tell the reader what Keynes would have written regarding today's domestic crisis in each nation and its international aspects.
Paul Davidson ghaliban wrote:July 16, 2009 15:34
I think you could have written a shorter article to make your point about the dismal state of economics theory and practice, and saved space to think more imaginatively about ways to reform.
A bit like biology, economics must become econology - a study of real economic systems. It must give up its physics-envy. This on its own will lead its practitioners closer to the truth.
Like biological systems, economic systems are complex, and often exhibit emergent properties that cannot be predicted from the analysis of component parts. The best way to deal with this is (as in biology) to start with the basic organizational unit of analysis - the individual, and then study how the individual makes economic decisions in larger and larger groups (family/community), and how groups take economic decisions within larger and larger forms of economic organization. From this, econologists should determine whether there are any enduring patterns in how aggregate economic decisions are taken. If there are no easily discernable patterns, and aggregate decisions cannot be predicted from a knowledge of individual decision-making preferences, then the theory must rely (as it does in biology) on computer simulations with the economy replicated in as much detail as possible to limit the scope for modeling error. This path will illuminate the "physiology" of different economies.
A second area of development must look into "anatomy" - the connections between actors within the financial system, the connections between economic actors within the real economy, and the connections between the real and financial economies. What are the precise links demand and supply links between these groups, and how does money really flow through the economic system? A finer knowledge of economic anatomy will make it easier to produce better computer simulations of the economy, which will make it a bit easier to study economic physiology.
In her interview What Exactly Is Neoliberalism Wendy Brown advanced some Professor Wolin ideas to a new level and provide explanation why "neoclassical crooks" like Professor Frederic Mishkin (of Financial Stability in Iceland fame) still rule the economics departments of the USA. They are instrumental in giving legitimacy to the neoliberal rule favoured by the financial oligarchy:
"... I treat neoliberalism as a governing rationality through which everything is "economized" and in a very specific way: human beings become market actors and nothing but, every field of activity is seen as a market, and every entity (whether public or private, whether person, business, or state) is governed as a firm. Importantly, this is not simply a matter of extending commodification and monetization everywhere-that's the old Marxist depiction of capital's transformation of everyday life. Neoliberalism construes even non-wealth generating spheres-such as learning, dating, or exercising-in market terms, submits them to market metrics, and governs them with market techniques and practices. Above all, it casts people as human capital who must constantly tend to their own present and future value. ..."
"... The most common criticisms of neoliberalism, regarded solely as economic policy rather than as the broader phenomenon of a governing rationality, are that it generates and legitimates extreme inequalities of wealth and life conditions; that it leads to increasingly precarious and disposable populations; that it produces an unprecedented intimacy between capital (especially finance capital) and states, and thus permits domination of political life by capital; that it generates crass and even unethical commercialization of things rightly protected from markets, for example, babies, human organs, or endangered species or wilderness; that it privatizes public goods and thus eliminates shared and egalitarian access to them; and that it subjects states, societies, and individuals to the volatility and havoc of unregulated financial markets. ..."
"... with the neoliberal revolution that homo politicus is finally vanquished as a fundamental feature of being human and of democracy. Democracy requires that citizens be modestly oriented toward self-rule, not simply value enhancement, and that we understand our freedom as resting in such self-rule, not simply in market conduct. When this dimension of being human is extinguished, it takes with it the necessary energies, practices, and culture of democracy, as well as its very intelligibility. ..."
"... For most Marxists, neoliberalism emerges in the 1970s in response to capitalism's falling rate of profit; the shift of global economic gravity to OPEC, Asia, and other sites outside the West; and the dilution of class power generated by unions, redistributive welfare states, large and lazy corporations, and the expectations generated by educated democracies. From this perspective, neoliberalism is simply capitalism on steroids: a state and IMF-backed consolidation of class power aimed at releasing capital from regulatory and national constraints, and defanging all forms of popular solidarities, especially labor. ..."
"... The grains of truth in this analysis don't get at the fundamental transformation of social, cultural, and individual life brought about by neoliberal reason. They don't get at the ways that public institutions and services have not merely been outsourced but thoroughly recast as private goods for individual investment or consumption. And they don't get at the wholesale remaking of workplaces, schools, social life, and individuals. For that story, one has to track the dissemination of neoliberal economization through neoliberalism as a governing form of reason, not just a power grab by capital. There are many vehicles of this dissemination -- law, culture, and above all, the novel political-administrative form we have come to call governance. It is through governance practices that business models and metrics come to irrigate every crevice of society, circulating from investment banks to schools, from corporations to universities, from public agencies to the individual. It is through the replacement of democratic terms of law, participation, and justice with idioms of benchmarks, objectives, and buy-ins that governance dismantles democratic life while appearing only to instill it with "best practices." ..."
"... Progressives generally disparage Citizens United for having flooded the American electoral process with corporate money on the basis of tortured First Amendment reasoning that treats corporations as persons. However, a careful reading of the majority decision also reveals precisely the thoroughgoing economization of the terms and practices of democracy we have been talking about. In the majority opinion, electoral campaigns are cast as "political marketplaces," just as ideas are cast as freely circulating in a market where the only potential interference arises from restrictions on producers and consumers of ideas-who may speak and who may listen or judge. Thus, Justice Kennedy's insistence on the fundamental neoliberal principle that these marketplaces should be unregulated paves the way for overturning a century of campaign finance law aimed at modestly restricting the power of money in politics. Moreover, in the decision, political speech itself is rendered as a kind of capital right, functioning largely to advance the position of its bearer, whether that bearer is human capital, corporate capital, or finance capital. This understanding of political speech replaces the idea of democratic political speech as a vital (if potentially monopolizable and corruptible) medium for public deliberation and persuasion. ..."
"... My point was that democracy is really reduced to a whisper in the Euro-Atlantic nations today. Even Alan Greenspan says that elections don't much matter much because, "thanks to globalization . . . the world is governed by market forces," not elected representatives. ..."
For the list of top articles see Recommended Links section
|I find an attempt to elevate academic finance and economics to sciences by using the word "scientism" to be bizarre. Finance models like CAPM, Black-Scholes and VAR all rest on assumptions that are demonstrably false, such as rational investors and continuous markets.|
May 23, 2019 | www.unz.com
No other country in the Middle East is as important in countering America's rush to provide Israel with another war than Iraq. Fortunately for Iran, the winds of change in Iraq and the many other local countries under similar threat, thus, make up an unbroken chain of border to border support. This support is only in part due to sympathy for Iran and its plight against the latest bluster by the Zio-American bully.
In the politics of the Middle East, however, money is at the heart of all matters. As such, this ring of defensive nations is collectively and quickly shifting towards the new Russo/Sino sphere of economic influence. These countries now form a geo-political defensive perimeter that, with Iraq entering the fold, make a US ground war virtually impossible and an air war very restricted in opportunity.
If Iraq holds, there will be no war in Iran.
In the last two months, Iraq parliamentarians have been exceptionally vocal in their calls for all foreign military forces- particularly US forces- to leave immediately. Politicians from both blocs of Iraq's divided parliament called for a vote to expel US troops and promised to schedule an extraordinary session to debate the matter ."Parliament must clearly and urgently express its view about the ongoing American violations of Iraqi sovereignty," said Salam al-Shimiri, a lawmaker loyal to the populist cleric Moqtada al-Sadr .
Iraq's ambassador to Moscow, Haidar Mansour Hadi, went further saying that Iraq "does not want a new devastating war in the region." He t old a press conference in Moscow this past week, "Iraq is a sovereign nation. We will not let [the US] use our territory," he said. Other comments by Iraqi Prime Minister Adil Abdul-Mahdi agreed. Other MPs called for a timetable for complete US troop withdrawal.
Then a motion was introduced demanding war reparations from the US and Israel for using internationally banned weapons while destroying Iraq for seventeen years and somehow failing to find those "weapons of mass destruction."
As Iraq/Iran economic ties continue to strengthen, with Iraq recently signing on for billions of cubic meters of Iranian natural gas, the shift towards Russian influence- an influence that prefers peace- was certified as Iraq sent a delegation to Moscow to negotiate the purchase of the Russian S-400 anti-aircraft system.
To this massive show of pending democracy and rapidly rising Iraqi nationalism, US Army spokesman, Colonel Ryan Dillon, provided the kind of delusion only the Zio-American military is known for, saying,
"Our continued presence in Iraq will be conditions-based, proportional to need, in coordination with and by the approval of the Iraqi government."
Good luck with that.
US influence in Iraq came to a possible conclusion this past Saturday, May 18, 2019, when it was reported that the Iraqi parliament would vote on a bill compelling the invaders to leave . Speaking about the vote on the draft bill, Karim Alivi, a member of the Iraqi parliament's national security and defense committee, said on Thursday that the country's two biggest parliamentary factions -- the Sairoon bloc, led by Shia cleric Muqtada al-Sadr, and the Fatah alliance, headed by secretary general of the Badr Organization, Hadi al-Ameri -- supported the bill. Strangely, Saturday's result has not made it to the media as yet, and American meddling would be a safe guess as to the delay, but the fact that this bill would certainly have passed strongly shows that Iraq well understands the weakness of the American bully: Iraq's own US militarily imposed democracy.
Iraq shares a common border with Iran that the US must have for any ground war. Both countries also share a similar religious demographic where Shia is predominant and the plurality of cultures substantially similar and previously living in harmony. Both also share a very deep seeded and deserved hatred of Zio- America. Muqtada al-Sadr, who, after coming out first in the 2018 Iraqi elections, is similar to Hizbullah's Hassan Nasrallah in his religious and military influence within the well trained and various Shia militias. He is firmly aligned with Iran as is Fattah Alliance. Both detest Zio- America.
A ground invasion needs a common and safe border. Without Iraq, this strategic problem for US forces becomes complete. The other countries also with borders with Iran are Armenia, Azerbaijan, Turkmenistan, Turkey, Afghanistan and Pakistan. All have several good reasons that they will not, or cannot, be used for ground forces.
With former Armenian President Robert Kocharian under arrest in the aftermath of the massive anti-government 2018 protests, Bolton can check that one off the list first. Azerbaijan is mere months behind the example next door in Armenia, with protests increasing and indicating a change towards eastern winds. Regardless, Azerbaijan, like Turkmenistan, is an oil producing nation and as such is firmly aligned economically with Russia. Political allegiance seems obvious since US influence is limited in all three countries to blindly ignoring the massive additional corruption and human rights violations by Presidents Ilham Aliyev and Gurbanguly Berdimuhamedow .
However, Russian economic influence pays in cash. Oil under Russian control is the lifeblood of both of these countries. Recent developments and new international contracts with Russia clearly show whom these leaders are actually listening to.
Turkey would appear to be firmly shifting into Russian influence. A NATO member in name only. Ever since he shot down his first- and last – Russian fighter jet, Turkish president Recep Tayyip Erdogan has thumbed his nose at the Americans. Recently he refused to succumb to pressure and will receive Iranian oil and, in July, the Russian S-400 anti-aircraft/missile system. This is important since there is zero chance Putin will relinquish command and control or see them missiles used against Russian armaments. Now, Erdogan is considering replacing his purchase of thirty US F-35s with the far superior Russian SU- 57 and a few S-500s for good measure.
Economically, America did all it could to stop the Turk Stream gas pipeline installed by Russia's Gazprom, that runs through Turkey to eastern Europe and will provide $billions to Erdogan and Turkey . It will commence operation this year. Erdogan continues to purchase Iranian oil and to call for Arab nations to come together against US invasion in Iran. This week, Turkish Defense Minister Hulusi Akar renewed Turkey's resolve, saying his country is preparing for potential American sanctions as a deadline reportedly set by the US for Ankara to cancel the S-400 arms deal with Russia or face penalties draws near.
So, Turkey is out for both a ground war and an air war since the effectiveness of all those S-400's might be put to good use if America was to launch from naval positions in the Mediterranean. Attacking from the Black Sea is out since it is ringed by countries under Russo/Sino influence and any attack on Iran will have to illegally cross national airspace aligned with countries preferring the Russo/Sino alliance that favours peace. An unprovoked attack would leave the US fleet surrounded with the only safe harbours in Romania and Ukraine. Ships move much slower than missiles.
Afghanistan is out, as the Taliban are winning. Considering recent peace talks from which they walked out and next slaughtered a police station near the western border with Iran, they have already won. Add the difficult terrain near the Iranian border and a ground invasion is very unlikely
Although new Pakistani President Amir Khan has all the power and authority of a primary school crossing guard, the real power within the Pakistani military, the ISI, is more than tired of American influence . ISI has propagated the Taliban for years and often gave refuge to Afghan anti-US forces allowing them to use their common border for cover. Although in the past ISI has been utterly mercenary in its very duplicitous- at least- foreign allegiances, after a decade of US drone strikes on innocent Pakistanis, the chance of ground-based forces being allowed is very doubtful. Like Afghanistan terrain also increases this unlikelihood.
Considerations as to terrain and location for a ground war and the resulting failure of not doing so was shown to Israel previously when, in 2006 Hizbullah virtually obliterated its ground attack, heavy armour and battle tanks in the hills of southern Lebanon. In further cautionary detail, this failure cost PM Ehud Olmert his job.
For the Russo/Sino pact nations, or those leaning in their direction, the definition of national foreign interest is no longer military, it is economic. Those with resources and therefore bright futures within the expanding philosophy and economic offerings of the Russo/Sino pact have little use any longer for the "Sorrows of Empire." These nation's leaders, if nothing more than to line their own pockets, have had a very natural epiphany: War is not, for them, profitable.
For Iran, the geographic, economic and therefore geo-political ring of defensive nations is made complete by Syria, Lebanon and Iraq. Syria, like Iraq, has every reason to despise the Americans and similar reasons to embrace Iran, Russia, China and border neighbour Lebanon. Syria now has its own Russian S-300 system which is already bringing down Israeli missiles. It is surprising that Lebanon has not requested a few S-300s of their own. No one knows what Hizbullah has up its sleeve, but it has been enough to keep the Israelis at bay. Combined with a currently more prepared Lebanese army, Lebanon under the direction of Nasrallah is a formidable nation for its size. Ask Israel.
Lebanon and Syria also take away the chance of a ground-based attack, leaving the US Marines and Army to stare longingly across the Persian Gulf open waters from Saudi Arabia or one of its too few and militarily insignificant allies in the southern Gulf region.
Friendly airspace will also be vastly limited, so also gone will be the tactical element of surprise of any incoming attack. The reality of this defensive ring of nations means that US military options will be severely limited. The lack of a ground invasion threat and the element of surprise will allow Iranian defences to prioritize and therefore be dramatically more effective. As shown in a previous article, "The Return of the Madness of M.A.D," Iran like Russia and China, after forty years of US/Israeli threats, has developed new weapons and military capabilities, that combined with tactics will make any direct aggression towards it by American forces a fair fight.
If the US launches a war it will go it alone except for the few remaining US lapdogs like the UK, France, Germany and Australia, but with anti-US emotions running as wild across the EU as in the southern Caspian nations, the support of these Zionist influenced EU leaders is not necessarily guaranteed.
Regardless, a lengthy public ramp-up to stage military assets for an attack by the US will be seen by the vast majority of the world- and Iran- as an unprovoked act of war. Certainly at absolute minimum Iran will close the Straits of Hormuz, throwing the price of oil skyrocketing and world economies into very shaky waters. World capitalist leaders will not be happy. Without a friendly landing point for ground troops, the US will either have to abandon this strategy in favour of an air war or see piles of body bags of US servicemen sacrificed to Israeli inspired hegemony come home by the thousands just months before the '20 primary season. If this is not military and economic suicide, it is certainly political.
Air war will likely see a similar disaster. With avenues of attack severely restricted, obvious targets such as Iran's non-military nuclear program and major infrastructure will be thus more easily defended and the likelihood of the deaths of US airmen similarly increased.
In terms of Naval power, Bolton would have only the Mediterranean as a launch pad, since using the Black Sea to initiate war will see the US fleet virtually surrounded by nations aligned with the Russo/Sino pact. Naval forces, it should be recalled, are, due to modern anti-ship technologies and weapons, now the sitting ducks of blusterous diplomacy. A hot naval war in the Persian Gulf, like a ground war, will leave a US death toll far worse than the American public has witnessed in their lifetimes and the US navy in tatters.
Trump is already reportedly seething that his machismo has been tarnished by Bolton and Pompeo's false assurances of an easy overthrow of Maduro in Venezuela. With too many top generals getting jumpy about him initiating a hot war with Iraq, Bolton's stock in trade-war is waning. Trump basks in being the American bully personified, but he and his ego will not stand for being exposed as weak. Remaining as president is necessary to stoke his shallow character. When Trump's limited political intelligence wakes up to the facts that his Zio masters want a war with Iran more than they want him as president, and that these forces can easily replace him with a Biden, Harris, Bernie or Warren political prostitute instead, even America's marmalade Messiah, will lose the flavor of his master's blood lust for war.
In two excellent articles in Asia times by Pepe Escobar, he details the plethora of projects, agreements, and cooperation that are taking place from Asia to the Mid-East to the Baltics . Lead by Russia and China this very quickly developing Russo/Sino pact of economic opportunity and its intentions of "soft power" collectively spell doom for Zio-America's only remaining tactics of influence: military intervention. States, Escobar:
"We should know by now that the heart of the 21 st Century Great Game is the myriad layers of the battle between the United States and the partnership of Russia and China. The long game indicates Russia and China will break down language and cultural barriers to lead Eurasian integration against American economic hegemony backed by military might."
The remaining civilized world, that which understands the expanding world threat of Zio-America, can rest easy. Under the direction of this new Russo/Sino influence, without Iraq, the US will not launch a war on Iran.
This growing Axis of Sanity surrounds Iran geographically and empathetically, but more importantly, economically. This economy, as clearly stated by both Putin and Xi, does not benefit from any further wars of American aggression. In this new allegiance to future riches, it is Russian and China that will call the shots and a shooting war involving their new client nations will not be sanctioned from the top.
However, to Putin, Xi and this Axis of Sanity: If American wishes to continue to bankrupt itself by ineffective military adventures of Israel's making, rather than fix its own nation that is in societal decline and desiccated after decades of increasing Zionist control, well
That just good for business!
About the Author: Brett Redmayne-Titley has published over 170 in-depth articles over the past eight years for news agencies worldwide. Many have been translated and republished. On-scene reporting from important current events has been an emphasis that has led to his many multi-part exposes on such topics as the Trans-Pacific Partnership negotiations, NATO summit, Keystone XL Pipeline, Porter Ranch Methane blow-out, Hizbullah in Lebanon, Erdogan's Turkey and many more. He can be reached at: live-on-scene ((at)) gmx.com. Prior articles can be viewed at his archive: www.watchingromeburn.uk
RealAmerican , says: May 23, 2019 at 11:40 pm GMTWhen Trump's limited political intelligence wakes up to the facts that his Zio masters want a war with Iran more than they want him as president, and that these forces can easily replace him with a Biden, Harris, Bernie or Warren political prostitute instead, even America's marmalade Messiah, will lose the flavor of his master's blood lust for war.Jim Christian , says: May 24, 2019 at 3:45 am GMT
I believe you are far too generous in your estimation of his ability to distinguish between flavors of any type. Otherwise, your analysis is insightful and thorough.The U.S. is in the same position today that we were aboard Nimitz back in 1980. Too far from Tehran to start a war or even to find our people. We are perhaps in even a far worse position in that today, Iran holds no hostages. There's nothing so 'noble' as 44 hostages to inspire war today. This here is merely at the behest of Israel and the deep state profit centers for mere fun and games and cash and prizes. Iran, overall, is nothing. Obama put Iran away for what, a billion-five? And Jared, Bolton and Pompeo dredged it all back up again? Care to guess the first-night expense of a shock and awe on Tehran? It's unthinkable.Alfred , says: May 24, 2019 at 4:56 am GMT
I used to like Israel. The Haifa-Tel Av-iv-Jerusalem-Galili loop was pretty cool. The PLO hadn't quite started their game, we could move freely about the country. It's where the whole thing started. And, unlike Italy and Spain, they treated us Americans ok. They were somewhat war torn. But now? They're a destructive monolith, they're good at hiding it and further, they make disastrous miscalculations. Eliminating Saddam was huge. Turns out, Saddam was the only sane one. The last vestiges of Saddam's nuclear program went up in the attacks on the Osirak reactor that Israel bombed in 1981. Why did they push for the elimination of Saddam afterwards? Why the lies? Miscalculation.
This here with Iran won't travel further than threats and horseshit. I hope. Lots of bleating and farting. Someone agrees. Oil dropped three or four bucks today."the resulting failure of not doing so was shown to Israel previously when, in 2016 Hezbollah virtually obliterated its ground attack, heavy amour and battle tanks in the hills of southern Lebanon."Ilyana_Rozumova , says: May 24, 2019 at 5:22 am GMT
2006 please!I do particularly agree that elimination of Sadam was the greatest mistake US committed in Middle East. Devastating mistake for US policy. In the final evaluation it did create the most powerful Shi_ite crescent that now rules the Levant. Organizing failing uprising in Turkey against Erdogan was probably mistake of the same magnitude. Everything is lost for US now in the ME.animalogic , says: May 24, 2019 at 7:10 am GMT
Threatening Iran is now simply grotesque.
Concerning the article. The article evaluating the situation in ME is outstanding and perfect. Every move of US is a vanity. There is no more any opportunity to achieve any benefit for US. Who is responsible for all those screw ups ? US or Israel?Great article, cheered me up enormously.Apex Predator , says: May 24, 2019 at 7:37 am GMT
However, the other side of the military coin is economic -- specifically sanctions on Iran (& China). Here ( I suspect) the US has prospects. Iran has said it has a "PhD" in sanctions busting. I hope that optimism is not misplaced. That US sanctions amount to a declaration of war on Iran is widely agreed. Sadly, it seems the EU in its usual spineless way will offer Iran more or less empty promises.Is the author unaware of the nation of Saudi Arabia and the fact that they are new BFFs with Israel. They have come out quite openly they'd like to see Iran attacked. That whole Sunni Wahabism vs. Shia thing is a heck of alot older than this current skirmish.peter mcloughlin , says: May 24, 2019 at 8:21 am GMT
Being that SA has a border w/ the Persian Gulf and that Kuwait who is even CLOSER may be agreeable to be a staging area, why the hand wringing about this nation & that nation, etc. The US would be welcome to stage an air and sea assault using Saudi bases followed up by amphibious troop deployment if need be. But given the proximity they could probably strong arm Kuwait to act as a land bridge, in a pinch.
So will we expect the follow up article discussing this glaring omission, or am I missing some great development re: S.Arabia's disposition and temperament regarding all this.The transformed relationship between Russia and Turkey illustrates perfectly the shifting sands of strategic alliances as we cross the desert towards destiny. https://www.ghostsofhistory.wordpress.com/The Alarmist , says: May 24, 2019 at 8:24 am GMTI don't know if Russia and China have been showing restraint or still don't feel up to taking Uncle on very publicly or even covertly. The author assumes they might be willing to step up now for Iran, but the action in places like Syria suggests they might not.joeshittheragman , says: May 24, 2019 at 9:47 am GMT
As for the costs of taking on Iran, while one cannot underestimate the cocksuredness of Uncle to take on Iran with a 2003 "Iraq will be a cakewalk" attitude, the resulting air war will likely not be as costly to Uncle as the author believes, but the thought of flag-draped coffins in the thousands will certainly deter a land invasion. If there is any action at all, it will be air interdiction and missile attack.
It is curious that Uncle has not already resorted to his favorite tactic of declaring a No-Fly zone already but instead merely hinted that airliner safety cannot be guaranteed; this is likely just another form of sanction since Iran receives money for each airliner that transits its airspace, and a couple of Uncle's putative allies supply Iran with ATC equipment and services.
Uncle's Navy has already demonstrated a willingness to shoot down an airliner in Iranian airspace, so it is no idle threat, kind of like the mobster looking at a picture of your family and saying, "Nice family you have there; it would be a shame if anything happened to them.""War is a Racket" by Gen Smedley Butler (USMC – recipient of two Medals of Honor – no rear echelon pogue) is a must read. As true today as it was back when he wrote it.Tom Welsh , says: May 24, 2019 at 11:18 am GMT"The Axis of Sanity" – I like it, I like it! Probably quite closely related to the "reality-based community".Amerimutt Golems , says: May 24, 2019 at 11:29 am GMTWalter , says: May 24, 2019 at 11:46 am GMT
If the US launches a war it will go it alone except for the few remaining US lapdogs like the UK, France, Germany and Australia, but with anti-US emotions running as wild across the EU as in the southern Caspian nations, the support of these Zionist influenced EU leaders is not necessarily guaranteed.
Stasi " Merkel muss weg " (Merkel must go) is too weak to even think about taking Germanstan into such a foolish adventure.
Maybe the Kosher Kingdom of simpletons, especially under American-born Turkish "Englishman" (((Boris Kemal Bey))), another psycho like (((Baron Levy's))) Scottish warmonger Blair.built-up in Iraq geewhiz!sarz , says: May 24, 2019 at 11:51 am GMT
Iraqi MP: US after Turning Ain Al-Assad into Central Airbase in Iraq
"Karim al-Mohammadawi told the Arabic-language al-Ma'aloumeh news website that the US wants to turn Ain al-Assad airbase which is a regional base for operations and command into a central airbase for its fighter jets.
He added that a large number of forces and military equipment have been sent to Ain al-Assad without any permission from the Iraqi government, noting that the number of American forces in Iraq has surpassed 50,000.
Al-Mohammadawi said that Washington does not care about Iraq's opposition to using the country's soil to target the neighboring states.
In a relevant development on Saturday, media reports said that Washington has plans to set up military bases and increasing its troops in Iraq, adding the US is currently engaged in expanding its Ain al-Assad military base in al-Anbar province."The prime minister of Pakistan is IMRAN Khan, not AMIR Khan. Makes you wonder about all the other assertions.The scalpel , says: Website May 24, 2019 at 12:03 pm GMT@Apex Predatorsally , says: May 24, 2019 at 12:25 pm GMT
The US would be welcome to stage an air and sea assault using Saudi bases followed up by amphibious troop deployment if need be. But given the proximity they could probably strong arm Kuwait to act as a land bridge, in a pinch.
Sea assault? Amphibious troop deployment? Are you serious? This is not WWII Normandy, Dorothy. That would be an unmitigated massacre. Weapons have improved a bit in the last 70 years if you have not noticed.
Also minor point, LOL, but Kuwait is a "landbridge" between Saudi Arabia and Iraq Unless you are proposing the US attacks Iraq (again!) which it would have to do to achieve a "landbridge" to Iran. Another good reason Iraq is acquiring the S-400.
More minor points: 1. South Iraq is ALL shiite. 2. Kuwait is SMALL i.e. a BIG target for thousands of missiles@Ilyana_Rozumova your question of responsibility is very intuitive.. two general answers.. both need deep analysis..follyofwar , says: May 24, 2019 at 12:28 pm GMT
first is a conspiracy of Israeli owned, Wall Street financed, war profiteering privatizing-pirate corporations These corporations enter, invade or control the war defeated place and privatize all of its infrastructure construction contracts from the defeated place or state (reason for massive destruction by bombing) and garner control over all the citizen services: retail oil and gas distribution, food supplies, electric power, communications, garbage and waste collection and disposal, street cleaning, water provisioning. traffic control systems, security, and so on.. Most of these corporations are privately owned public stock companies, controlled by the same wealthy Oligarchs that control "who gets elected and what the elected must do while in sitting in one of the seats of power at the 527 person USA.
2nd is the impact of the laws that deny competition in a nation sworn to a method of economics (capitalism) that depends on competition for its success. Another group of massive in size mostly global corporations again owned from Jerusalem, NYC, City of London, etc. financed at wall street, use rule of law to impose on Americans and many of the people of the world, a blanket of economic and anti competitive laws and monopoly powers. These monopolist companies benefit from the copyright and patent laws, which create monopolies from hot thin air. These laws of monopolies coupled to the USA everything is a secret government have devastated competitive capitalism in America and rendered American Universities high school level teaching but not learning bureaucracies.
Monopolies and state secrets between insider contractors were suppose to deny most of the world from competing; but without competition ingenuity is lost. Monopoly lordships and state secrets were supposed to make it easy for the monopoly powered corporations to overpower and deny any and all would be competition; hence they would be the only ones getting rich.. But China's Huawei will be Linux based and Tin not Aluminium in design, far superior technology to anything these monopoly powered retards have yet developed especially in the high energy communications technologies (like 5G, Artificial Intelligence, and Robotics). In other words copyrights, patents and the US military were suppose to keep the world, and the great ingenuity that once existed in the person of every American, from competing, but the only people actually forced out of the technology competition were the ingenious, for they were denied by copyright and patents to compete. Now those in power at the USA will make Americans pay again as the corporations that run things try to figure out how to catch up to the Chinese and Russian led Eastern world. Modi's election in India is quite interesting as both China and Russia supported it, yet, Modi says he is going to switch to the USA for copyrighted and patented stuff?
on the issue of continued USA presence in Iraq, Syria, Yemen, Lebanon, ..
"Our continued presence in Iraq will be conditions-based, proportional to need, in coordination with and by the approval of the Iraqi government." <that's a joke, first off, I never desired to be in Iraq, and I do not desire USA military or American presence in Iraq, do You? <blatant disregard for the needs of America.. IMO. Bring the troops home. If the USA would only leave Iraq to the Iraqis and get to work making America competitive again they would once again enjoy a great place in the world. But one thing i can tell you big giant wall street funded corporations, and reliance on degree credentials instead of job performance, will never be the reason America is great.This article by Mr. Titley is the most hopeful article I've yet read demonstrating the coming death of US hegemony, with most of the rest of the civilized world apparently having turned against the world's worst Outlaw Nation.
Trump has allowed madmen Bolton and Pompeo to get this country into an awful mess – all for the sake of Israel and the Zionists.
He needs to find a face-saving way to get out before Washington gets its long needed comeuppance. But how can Trump accomplish this as long as Bolton, in particular, continues to be the man who most has his ear? If Titley is correct, then Trump had better start listening to his military leaders instead.
Netanyahu and the Ziocons better think twice about their longed for dream of the destruction of Iran. The Jews always push things too far. Karma can be a bitch.
May 17, 2019 | www.nakedcapitalism.com
The fall of the Berlin Wall and the corresponding end of the Soviet Empire gave the fullest impetus imaginable to the forces of globalized capitalism, and correspondingly unfettered access to the world's cheapest labor. What was not to like about that? It afforded multinational corporations vastly expanded opportunities to fatten their profit margins and increase the bottom line with seemingly no risk posed to their business model.
Or so it appeared. In 2000, aerospace engineer L.J. Hart-Smith's remarkable paper, sardonically titled "Out-Sourced Profits – The Cornerstone of Successful Subcontracting," laid out the case against several business practices of Hart-Smith's previous employer, McDonnell Douglas, which had incautiously ridden the wave of outsourcing when it merged with the author's new employer, Boeing. Hart-Smith's intention in telling his story was a cautionary one for the newly combined Boeing, lest it follow its then recent acquisition down the same disastrous path.
Of the manifold points and issues identified by Hart-Smith, there is one that stands out as the most compelling in terms of understanding the current crisis enveloping Boeing: The embrace of the metric "Return on Net Assets" (RONA). When combined with the relentless pursuit of cost reduction (via offshoring), RONA taken to the extreme can undermine overall safety standards.
Related to this problem is the intentional and unnecessary use of complexity as an instrument of propaganda. Like many of its Wall Street counterparts, Boeing also used complexity as a mechanism to obfuscate and conceal activity that is incompetent, nefarious and/or harmful to not only the corporation itself but to society as a whole (instead of complexity being a benign byproduct of a move up the technology curve).
All of these pernicious concepts are branches of the same poisoned tree: " shareholder capitalism ":
[A] notion best epitomized by Milton Friedman that the only social responsibility of a corporation is to increase its profits, laying the groundwork for the idea that shareholders, being the owners and the main risk-bearing participants, ought therefore to receive the biggest rewards. Profits therefore should be generated first and foremost with a view toward maximizing the interests of shareholders, not the executives or managers who (according to the theory) were spending too much of their time, and the shareholders' money, worrying about employees, customers, and the community at large. The economists who built on Friedman's work, along with increasingly aggressive institutional investors, devised solutions to ensure the primacy of enhancing shareholder value, via the advocacy of hostile takeovers, the promotion of massive stock buybacks or repurchases (which increased the stock value), higher dividend payouts and, most importantly, the introduction of stock-based pay for top executives in order to align their interests to those of the shareholders. These ideas were influenced by the idea that corporate efficiency and profitability were impinged upon by archaic regulation and unionization, which, according to the theory, precluded the ability to compete globally.
"Return on Net Assets" (RONA) forms a key part of the shareholder capitalism doctrine. In essence, it means maximizing the returns of those dollars deployed in the operation of the business. Applied to a corporation, it comes down to this: If the choice is between putting a million bucks into new factory machinery or returning it to shareholders, say, via dividend payments, the latter is the optimal way to go because in theory it means higher net returns accruing to the shareholders (as the "owners" of the company), implicitly assuming that they can make better use of that money than the company itself can.
It is an absurd conceit to believe that a dilettante portfolio manager is in a better position than an aviation engineer to gauge whether corporate investment in fixed assets will generate productivity gains well north of the expected return for the cash distributed to the shareholders. But such is the perverse fantasy embedded in the myth of shareholder capitalism.
Engineering reality, however, is far more complicated than what is outlined in university MBA textbooks. For corporations like McDonnell Douglas, for example, RONA was used not as a way to prioritize new investment in the corporation but rather to justify disinvestment in the corporation. This disinvestment ultimately degraded the company's underlying profitability and the quality of its planes (which is one of the reasons the Pentagon helped to broker the merger with Boeing; in another perverse echo of the 2008 financial disaster, it was a politically engineered bailout).
RONA in Practice
When real engineering clashes with financial engineering, the damage takes the form of a geographically disparate and demoralized workforce: The factory-floor denominator goes down. Workers' wages are depressed, testing and quality assurance are curtailed. Productivity is diminished, even as labor-saving technologies are introduced. Precision machinery is sold off and replaced by inferior, but cheaper, machines. Engineering quality deteriorates. And the upshot is that a reliable plane like Boeing's 737, which had been a tried and true money-spinner with an impressive safety record since 1967, becomes a high-tech death trap.
The drive toward efficiency is translated into a drive to do more with less. Get more out of workers while paying them less. Make more parts with fewer machines. Outsourcing is viewed as a way to release capital by transferring investment from skilled domestic human capital to offshore entities not imbued with the same talents, corporate culture and dedication to quality. The benefits to the bottom line are temporary; the long-term pathologies become embedded as the company's market share begins to shrink, as the airlines search for less shoddy alternatives.
You must do one more thing if you are a Boeing director: you must erect barriers to bad news, because there is nothing that bursts a magic bubble faster than reality, particularly if it's bad reality.
The illusion that Boeing sought to perpetuate was that it continued to produce the same thing it had produced for decades: namely, a safe, reliable, quality airplane. But it was doing so with a production apparatus that was stripped, for cost reasons, of many of the means necessary to make good aircraft. So while the wine still came in a bottle signifying Premier Cru quality, and still carried the same price, someone had poured out the contents and replaced them with cheap plonk.
And that has become remarkably easy to do in aviation. Because Boeing is no longer subject to proper independent regulatory scrutiny. This is what happens when you're allowed to " self-certify" your own airplane , as the Washington Post described: "One Boeing engineer would conduct a test of a particular system on the Max 8, while another Boeing engineer would act as the FAA's representative, signing on behalf of the U.S. government that the technology complied with federal safety regulations."
This is a recipe for disaster. Boeing relentlessly cut costs, it outsourced across the globe to workforces that knew nothing about aviation or aviation's safety culture. It sent things everywhere on one criteria and one criteria only: lower the denominator. Make it the same, but cheaper. And then self-certify the plane, so that nobody, including the FAA, was ever the wiser.
Boeing also greased the wheels in Washington to ensure the continuation of this convenient state of regulatory affairs for the company. According to OpenSecrets.org , Boeing and its affiliates spent $15,120,000 in lobbying expenses in 2018, after spending, $16,740,000 in 2017 (along with a further $4,551,078 in 2018 political contributions, which placed the company 82nd out of a total of 19,087 contributors). Looking back at these figures over the past four elections (congressional and presidential) since 2012, these numbers represent fairly typical spending sums for the company.
But clever financial engineering, extensive political lobbying and self-certification can't perpetually hold back the effects of shoddy engineering. One of the sad byproducts of the FAA's acquiescence to "self-certification" is how many things fall through the cracks so easily.
May 14, 2019 | www.zerohedge.com
Authored by Patrick Buchanan via The Unz Review,
As his limo carried him to work at the White House Monday, Larry Kudlow could not have been pleased with the headline in The Washington Post: "Kudlow Contradicts Trump on Tariffs."
The story began: "National Economic Council Director Lawrence Kudlow acknowledged Sunday that American consumers end up paying for the administration's tariffs on Chinese imports, contradicting President Trump's repeated inaccurate claim that the Chinese foot the bill."
A free trade evangelical, Kudlow had conceded on Fox News that consumers pay the tariffs on products made abroad that they purchase here in the U.S. Yet that is by no means the whole story.
A tariff may be described as a sales or consumption tax the consumer pays, but tariffs are also a discretionary and an optional tax.
If you choose not to purchase Chinese goods and instead buy comparable goods made in other nations or the USA, then you do not pay the tariff.China loses the sale. This is why Beijing, which runs $350 billion to $400 billion in annual trade surpluses at our expense is howling loudest. Should Donald Trump impose that 25% tariff on all $500 billion in Chinese exports to the USA, it would cripple China's economy. Factories seeking assured access to the U.S. market would flee in panic from the Middle Kingdom.
Tariffs were the taxes that made America great. They were the taxes relied upon by the first and greatest of our early statesmen, before the coming of the globalists Woodrow Wilson and FDR.
Tariffs, to protect manufacturers and jobs, were the Republican Party's path to power and prosperity in the 19th and 20th centuries , before the rise of the Rockefeller Eastern liberal establishment and its embrace of the British-bred heresy of unfettered free trade.
The Tariff Act of 1789 was enacted with the declared purpose, "the encouragement and protection of manufactures." It was the second act passed by the first Congress led by Speaker James Madison. It was crafted by Alexander Hamilton and signed by President Washington.
After the War of 1812, President Madison, backed by Henry Clay and John Calhoun and ex-Presidents Jefferson and Adams, enacted the Tariff of 1816 to price British textiles out of competition, so Americans would build the new factories and capture the booming U.S. market. It worked.
Tariffs financed Mr. Lincoln's War. The Tariff of 1890 bears the name of Ohio Congressman and future President William McKinley, who said that a foreign manufacturer "has no right or claim to equality with our own. He pays no taxes. He performs no civil duties."
That is economic patriotism, putting America and Americans first.
The Fordney-McCumber Tariff gave Presidents Warren Harding and Calvin Coolidge the revenue to offset the slashing of Wilson's income taxes, igniting that most dynamic of decades -- the Roaring '20s.
That the Smoot-Hawley Tariff caused the Depression of the 1930s is a New Deal myth in which America's schoolchildren have been indoctrinated for decades.
The Depression began with the crash of the stock market in 1929, nine months before Smoot-Hawley became law. The real villain: The Federal Reserve, which failed to replenish that third of the money supply that had been wiped out by thousands of bank failures. Milton Friedman taught us that.
A tariff is a tax, but its purpose is not just to raise revenue but to make a nation economically independent of others, and to bring its citizens to rely upon each other rather than foreign entities.
The principle involved in a tariff is the same as that used by U.S. colleges and universities that charge foreign students higher tuition than their American counterparts.
What patriot would consign the economic independence of his country to the "invisible hand" of Adam Smith in a system crafted by intellectuals whose allegiance is to an ideology, not a people?
What great nation did free traders ever build?
Free trade is the policy of fading and failing powers, past their prime. In the half-century following passage of the Corn Laws, the British showed the folly of free trade.
They began the second half of the 19th century with an economy twice that of the USA and ended it with an economy half of ours, and equaled by a Germany, which had, under Bismarck, adopted what was known as the American System.
Of the nations that have risen to economic preeminence in recent centuries -- the British before 1850, the United States between 1789 and 1914, post-war Japan, China in recent decades -- how many did so through free trade? None. All practiced economic nationalism.
The problem for President Trump?
Once a nation is hooked on the cheap goods that are the narcotic free trade provides, it is rarely able to break free. The loss of its economic independence is followed by the loss of its political independence, the loss of its greatness and, ultimately, the loss of its national identity.
Brexit was the strangled cry of a British people that had lost its independence and desperately wanted it back.
May 04, 2019 | angrybearblog.com
likbez, May 4, 2019 8:24 pmlikbez , May 4, 2019 10:11 pm
The F.B.I. surveillance didn't come out until after the election. Therefore it couldn't impact the election. McConnell threatened to shriek "partisan politics!" if Obama said anything publicly about the Russian issue. Obama didn't. Claims of partisan behavior? Bullshit.
What about proven attempts of entrapments and inserting spies into Trump campaign?
Mifsud and Halper's stories come to mind (Halper's story has an interesting "seduction" subplot with undercover FBI informant Azra Turk). FBI and Justice Department brass acted as dirty mafia style politicians. McCabe and Brennan are two shining examples here. Probably guided personally by Obama, who being grown in a family of CIA operatives probably know this color revolutions "kitchen" all too well.
BTW Hillary did destroy evidence from her "bathroom server" while under subpoena.
Looks like Robert Mueller was a dirty cop hired to confirm fairy tales of Russian collusion peddled by a Clinton wing of Dems (DemoRats) sing Trump. And he enjoyed the full support of several intelligence agencies brass (especially FBI brass; initially Stzkok was one of his investigators)
Before that Mueller was in charge of 9/11 and Anthrax scare investigations. So he is a card caring member of the neoliberal elite which converted the USA into what can be called the "National Security State"
Which looks like classic Mussolini Italy with two guiding principles of jurisprudence applied to political enemies:
(1) To my friends, everything; to my enemies, the law (originated in 1933) .
(2) Show me the man, and I'll show you the crime (that actually comes from Stalinism period of the USSR, but the spirit is the same) .
It was actually Barr who saved Trump from obstruction of justice charge. He based his defense on the interpretation of the statuses the following (actually very elegant) way:
In order for a person to obstruct justice, there must be some justice to obstruct. Hence, if the alleged obstructer did not commit the underlying crime being investigated, then his so-called obstruction did not impair justice; it just impaired a fruitless investigation
Of course, that upset DemoRats who want President Pence to speed up the destruction of the USA and adding a couple of new wars to list the USA is involved.
Mueller was extremely sloppy and one-sided in writing his final report. Which is given taking into account his real task: to sink Trump. As Nunes aptly observed about his treatment of Mifsud as a Russian agent :
"If he is, in fact, a Russian agent, it would be one of the biggest intelligence scandals for not only the United States, but also our allies like the Italians and the Brits and others. Because if Mifsud is a Russian agent, he would know all kinds of our intelligence agents throughout the globe
Yes, of course, in the current neo-McCarthyism atmosphere merely passing the salt to a Russian guest at a dinner party makes you "an unregistered foreign agent" of Russia bent on implementing Putin's evil plans and colliding with Russian government ;-).
It looks like you are unable/unwilling to understand the logic behind my post. With all due respect, the situation is very dangerous -- when the neoliberal elite relies on lies almost exclusively as a matter of policy (look at Kamala Harris questioning Barr -- she is not stupid, she is an evil, almost taken from Orwell 1984, character), IMHO the neoliberal society is doomed. Sooner or later.
Currently, the USA squabble over Parteigenosse Mueller Final Report between two factions of neoliberal elite makes the USA a joke in the eyes of the whole world and Democrats look like Italian Fascists in 30th: a party hell-bent of dominance which does not care about laws or legitimacy one bit and can use entrapment and other dirty methods to achieve its goals.
Hopefully, a more sound part of the USA elite, which Barr represents, will put some sand into those wheels. His decision to investigate the origin of Russiagate produced almost a heart attack for Pelosi. And the fact that he decided to skip his auto-da-fé at the House adds insult to injury. Poor Pelosi almost lost her mind.
Neoliberals and neoconservatives joined ranks behind Russiagate and continue to push it because otherwise they need to be held accountable for all the related neoliberal disasters in the USA since 1980th including sliding standard of living, disappearance of "good" jobs, sky-high cost of university education and medical insurance, and the last but not least, Hillary fiasco.
Trump ran to the left of Clinton in foreign policy and used disillusionment of working close with neoliberal Democratic Party to his advantage promising jobs, end of outsourcing, end of uncontrolled immigration, and increased standard of living. He betrayed all those promises, but, still, that's why he won.
And that why the neoliberal establishment must present his election as de facto illegitimate, because otherwise they would be forced to admit that the bipartisan consensus around both financialization driven economics (casino capitalism) and imperial, war on terror based interventionism that are the foundation of the USA neoliberal elite politics since Clinton has been a disaster for most ordinary Americans -- of all political persuasions.
Out of democratic challengers IMHO only Tulsi Gabbard can probably attract a sizable faction of former Trump supporters and she is the most reviled, ignored, and slandered by DNC liberals and neocons alike candidate.
The truth is that the color revolution against Donald Trump (a soft coup if you wish) failed. Now he badly needs to win in 2020 to avoid an indictment in NY State when he leaves the Presidency. It is just a matter of survival for him.
Neoliberal Democrats will help him by putting their weakest pro-war candidate like the aged, apparently slightly demented neocon Joe Biden. With his rabid neoliberal past, neocon foreign policy past, Ukrainian skeletons in the closet and probably participation in the Obama administration dirty and criminal attempt to derail Trump using intelligence agencies as the leverage.
Just like is the case with Boeing the situation for neoliberal democrats does not look promising. The world is starting to crash all around them.
May 13, 2019 | discussion.theguardian.com
MindandHeart , 13 Sep 2016 01:23I studied this phenomenon experientially for over 8 years among conservative Republican followers, and believe it is totally Cult behavior. I've seen contrary evidence literally "switch off" the thinking brain, erasing it, then finding the appropriate Party Line to answer. There seems to be no way to "de-program," that I know of. It is impervious to reason, evidence, or facts. When they were left with no other choices, I saw how Donald Trump was transformed from an initially appalling character to them into an image of a "leader of the Free World," in their realities. They had already been conditioned by some 30 years of Hillary bashing, to unmercifully hate her. Their leaders used the same propaganda machine on Obama. "Liberals" were the ultimate "enemy" and to blame for all our ills.
Barring further evidence to the contrary, I concluded that those most vulnerable to this Cult phenomenon had a strong, authoritarian religious upbringing in childhood, and perhaps some significant life hurt or trauma.
Many of our religious "leaders" have jumped on the gravy train, to control and exploit them, using the same methods used by Donald Trump. Scapegoating is constant. Questioning and critical thinking are not allowed. These folks were "primed" to believe and follow the superb conservative Republican media propaganda machine that now boasts 24/7 coverage "coast to coast." I read that the average American watches television 5 hours a day. The average American over 65 watches it 7 hours a day. Adolf Hitler would have loved it. Such fertile ground for dictators and demagogues. Now we have some, what, 13 million? programmed American zombies on our hands. Not only that, but ALL of us have been "affected" by the Hillary/Obama/"liberal" bashing to some extent. I don't know a single individual personally who speaks out enthusiastically for Hillary, even those going to vote for her: they always use apologies, excuses, caveats. By odds, that's just not normal. As John Dean wrote, Republicans can no longer govern, but they are superb at the "politics of personal destruction." They successfully purged their own moderates and liberals, turned the Grand Old Party's principles upside down, and created a Trump Godzilla. They've become a gang of thugs and thieves, the Poison Party. Some are playing "coy" right now, for the limelight they love -- and trying to hedge their bets. But if Trump wins he'll be welcomed with open arms, and he will fit right in, with what's now left of the GOP.
Sep 12, 2018 | www.youtube.com
The Agenda with Steve Paikin
The Agenda welcomes Pulitzer Prize-winning journalist Chris Hedges, who over the past decade and a half has made his name as a columnist, activist and author. He's been a vociferous public critic of presidents on both sides of the American political spectrum, and his latest book, 'America, the Farewell Tour,' is nothing short of a full-throated throttling of the political, social, and cultural state of his country.
Sep 05, 2018 | www.amazon.comChapter 1 - DECAY 1Chapter 2 - HEROIN______________________________________________59Chapter 3 - WORK________________________________________________83Chapter 4 - SADISM_____________________________________________112Chapter 5 - HATE_______________________________________________150Chapter 6 - GAMВIING___________________________________________203Chapter 7 - KKh KDOM___________________________________________230Acknowledgments________________________________________________311Notes----------------------------------------------------------315Bibliography___________________________________________________351Index----------------------------------------------------------359
I walked down a long service road into the remains of an abandoned lace factory. The road was pocked with holes Pilled with fetid water. There were saplings and weeds poking up from the cracks in the asphalt. Wooden crates, rusty machinery, broken glass, hulks of old Piling cabinets, and trash covered the grounds. The derelict complex, 288,000 square feet, consisted of two huge brick buildings connected by overhead, enclosed walkways.
The towering walls of the two buildings, with the service road running between them, were covered with ivy. The window panes were empty or had frames jagged with shards of glass. The thick wooden doors to the old loading docks stood agape. I entered the crumbling complex through a set of double wooden doors into a cavernous hall.
The wreckage of industrial America lay before me, home to flocks of pigeons that, startled by my footsteps over the pieces of glass and rotting floorboards, swiftly left their perches in the rafters and air ducts high above my head. They swooped, bleating and clucking, over the abandoned looms.
The Scranton Lace Company was America. It employed more than 1,200 workers on its imported looms, some of the largest ever built.
Gary Moreau, Author TOP 500 REVIEWER, September 5, 2018
Washington is fiddling but it is the capitalist collective that is setting the fires
Throughout history, all great civilizations have ultimately decayed. And America will not be an exception, according to former journalist and war correspondent, Chris Hedges. And while Hedges doesn't offer a date, he maintains we are in the final throes of implosion -- and it won't be pretty.
The book is thoroughly researched and the author knows his history. And despite some of the reviews it is not so much a political treatise as it is an exploration of the American underbelly -- drugs, suicide, sadism, hate, gambling, etc. And it's pretty dark; although he supports the picture he paints with ample statistics and first person accounts.
There is politics, but the politics provides the context for the decay. And it's not as one-dimensional as other reviewers seemed to perceive. Yes, he is no fan of Trump or the Republican leadership. But he is no fan of the Democratic shift to identity politics, or antifa, either.
One reviewer thought he was undermining Christianity but I didn't get that. He does not support "prosperity gospel" theology, but I didn't see any attempt to undermine fundamental religious doctrine. He is, after all, a graduate of Harvard Divinity School and an ordained Presbyterian minister.
He puts the bulk of the blame for the current state of decay, in fact, where few other writers do -- squarely on the back of capitalist America and the super-companies who now dominate nearly every industry. The social and political division we are now witnessing, in other words, has been orchestrated by the capital class; the class of investors, banks, and hedge fund managers who don't create value so much as they transfer it to themselves from others with less power. And I think he's spot on right.
We have seen a complete merger of corporate and political America. Politicians on both sides of the aisle serve at the pleasure of the capitalist elite because they need their money to stay in power. Corporations enjoy all the rights of citizenship save voting, but who needs to actually cast a ballot when you can buy the election.
And what the corpocracy, as I call it, is doing with all that power is continuing to reshuffle the deck of economic opportunity to insure that wealth and income continue to polarize. It's a process they undertake in the name of tax cuts for the middle class (which aren't), deregulation (which hurts society as a whole), and the outright transfer of wealth and property (including millions of acres of taxpayer-owned land) from taxpayers to shareholders (the 1%).
I know because I was part of it. As a former CEO and member of four corporate boards I had a front row seat from the 1970s on. The simplest analogy is that the gamblers rose up and took control of the casinos and the government had their backs in a kind of quid pro quo, all having to do with money.
They made it stick because they turned corporate management into the ultimate capitalists. The people who used to manage companies and employees are now laser focused on managing the companies' stock price and enhancing their own wealth. Corporate executives, in a word, became capitalists, not businessmen and women, giving the foxes unfettered control of the hen house.
They got to that position through a combination of greed -- both corporate management's and that of shareholder activists -- but were enabled and empowered by Washington. Beginning in the 1970s the Justice Department antitrust division, the Labor Department, the EPA, and other institutions assigned the responsibility to avoid the concentration of power that Adam Smith warned us about, and to protect labor and the environment, were all gutted and stripped of power.
They blamed it on globalism, but that was the result, not the cause. Gone are the days of any corporate sense of responsibility to the employees, the collective good, or the communities in which they operate and whose many services they enjoy. It is the corporate and financial elite, and they are now one and the same, who have defined the "me" world in which we now live.
And the process continues: "The ruling corporate kleptocrats are political arsonists. They are carting cans of gasoline into government agencies, the courts, the White House, and Congress to burn down any structure or program that promotes the common good." And he's right. And Trump is carrying those cans.
Ironically, Trump's base, who have been most marginalized by the corpocracy, are the ones who put him there to continue the gutting. But Hedges has an explanation for that. "In short, when you are marginalized and rejected by society, life often has little meaning. There arises a yearning among the disempowered to become as omnipotent as the gods. The impossibility of omnipotence leads to its dark alternative -- destroying like the gods." (Reference to Ernest Becker's The Denial of Death.)
The economic history and understanding of economic theory here is rich and detailed. Capitalism, as Marx and others pointed out, creates great wealth in the beginning but is doomed to failure due to its inability to continue to find sources of growth and to manage inequities in wealth creation. And you don't have to be a socialist to see that this is true. Capitalism must be managed. And our government is currently making no attempt to do so. It is, in fact, dynamiting the institutions responsible for doing so.
All told, this is a very good book. If you don't like reading about underbellies (I found the chapter devoted to sadism personally unsettling, being the father of two daughters.) you will find some of it pretty dark. Having said that, however, the writing is very good and Hedges never wallows in the darkness. He's clearly not selling the underbelly; he's trying to give it definition.
I did think that some of the chapters might have been broken down into different sub-chapters and there is a lack of continuity in some places. All told, however, I do recommend the book. There is no denying the fundamental thesis.
The problem is, however, we're all blaming it on the proverbial 'other guy.' Perhaps this book will help us to understand the real culprit -- the capitalist collective. "The merging of the self with the capitalist collective has robbed us of our agency, creativity, capacity for self-reflection, and moral autonomy." True, indeed.
S. Ferguson , September 1, 2018"Justice is a manifestation of Love..."Amazon Customer , September 7, 2018
The inimitable Hedges is not only a saint with a penetrating intelligence, but also a man of superior eloquence with the power to pull you into his descriptions of the collapse of western civilization. Hedges says that the new American Capitalism no longer produces products -- rather America produces escapist fantasies. I found this paragraph [page 233] particularly relevant. The act of being dedicated to the 'greater good' has in itself become dangerous.
Chris Hedges: "We do not become autonomous and free human beings by building pathetic, tiny monuments to ourselves. It is through self-sacrifice and humility that we affirm the sanctity of others and the sanctity of ourselves. Those who fight against cultural malice have discovered that life is measured by infinitesimal and often unacknowledged acts of solidarity and kindness. These acts of kindness spin outward to connect our atomized and alienated souls to others. The good draws to it the good. This belief -- held although we may never see empirical proof -- is profoundly transformative. But know this: when these acts are carried out on behalf of the oppressed and the demonized, when compassion defines the core of our lives, when we understand that justice is a manifestation of love, we are marginalized and condemned by our sociopathic elites."Great (Recycled) Hedges Rantsswisher , August 21, 2018
If you've never read Hedges - get it now. If you've read him before - there's nothing new here.
Chris Hedges is a writer who has a knack for seeing the big picture and connecting the dots. A chronic pessimist in the best sense, a bitter prophet warning us of the last days of the decaying empire, his page-turning prose carving through the morass of today's mania and derangement. For that, he's in the company somewhere between Cornel West and Morris Berman (the later, whose book Why America Failed, is better than this. If you're familiar with Hedges, but not Morris Berman, go find Berman instead).
I give this three stars only because there isn't much new here if you're familiar with his material. I felt this book to be an update of Empire of Illusion, punched up by old articles from his weekly column at Truthdig. Aside from the introductory chapter, he revisits themes of sadism, the decline of literacy, of labor, of democratic institutions, and so on, which are too familiar. The pages and pages detailing the BDSM craze I felt were excessive in their prurient voyeurism which journalistic approaches can fall into. Not saying he's wrong at all, but this tone could put off some readers, erring on excessive preacherly seminarian virtue signaling as he points out the sins of the world and shouts - "Look! Look at what we've done!"I'd give a million stars if possibleChrisD , September 5, 2018
Heartbreaking to read but so true. In our "truth is not truth" era Mr. Hedges once again writes the sad and shocking obituary for American Democracy and sounds the prophetic alarm to those revelers while Rome burns. All empires come and go but I never thought I'd be a witness to one. Something sick and traitorous has infected the soul of America and I fear it's going to be some demented combination of the worst elements in 1984 and Brave Bew World. The most important work currently published but will anyone listen? Will anything change?Well worth reading - an important perspective
The author is honest and intelligent. When you take a detailed look at reality it can seem harsh.
Don't shoot the messenger who has brought bad news. We need to know the truth. Read, listen, learn. Engage in positive actions to improve the situation.
Chris has given us a wake-up call.
May 08, 2019 | www.counterpunch.org
The recently released report on April jobs on first appearance, heavily reported by the media, shows a record low 3.6% unemployment rate and another month of 263,000 new jobs created. But there are two official US Labor dept. jobs reports, and the second shows a jobs market much weaker than the selective, 'cherry picked' indicators on unemployment and jobs creation noted above that are typically featured by the press.
Problems with the April Jobs Report
While the Current Establishment Survey (CES) Report (covering large businesses) shows 263,000 jobs created last month, the Current Population Survey (CPS ) second Labor Dept. report (that covers smaller businesses) shows 155,000 of these jobs were involuntary part time. This high proportion (155,000 of 263,000) suggests the job creation number is likely second and third jobs being created. Nor does it reflect actual new workers being newly employed. The number is for new jobs, not newly employed workers. Moreover, it's mostly part time and temp or low paid jobs, likely workers taking on second and third jobs.
Even more contradictory, the second CPS report shows that full time work jobs actually declined last month by 191,000. (And the month before, March, by an even more 228,000 full time jobs decline).
The much hyped 3.6% unemployment (U-3) rate for April refers only to full time jobs (35 hrs. or more worked in a week). And these jobs are declining by 191,000 while part time jobs are growing by 155,000. So which report is accurate? How can full time jobs be declining by 191,000, while the U-3 unemployment rate (covering full time only) is falling? The answer: full time jobs disappearing result in an unemployment rate for full time (U-3)jobs falling. A small number of full time jobs as a share of the total labor force appears as a fall in the unemployment rate for full time workers. Looked at another way, employers may be converting full time to part time and temp work, as 191,000 full time jobs disappear and 155,000 part time jobs increase.
And there's a further problem with the part time jobs being created: It also appears that the 155,000 part time jobs created last month may be heavily weighted with the government hiring part timers to start the work on the 2020 census–typically hiring of which starts in April of the preceding year of the census. (Check out the Labor Dept. numbers preceding the prior 2010 census, for April 2009, for the same development a decade ago).
Another partial explanation is that the 155,000 part time job gains last month (and in prior months in 2019) reflect tens of thousands of workers a month who are being forced onto the labor market now every month, as a result of US courts recent decisions now forcing workers who were formerly receiving social security disability benefits (1 million more since 2010) back into the labor market.
The April selective numbers of 263,000 jobs and 3.6% unemployment rate is further questionable by yet another statistic by the Labor Dept.: It is contradicted by a surge of 646,000 in April in the category, 'Not in the Labor Force', reported each month. That 646,000 suggests large numbers of workers are dropping out of the labor force (a technicality that actually also lowers the U-3 unemployment rate). 'Not in the Labor Force' for March, the previous month Report, revealed an increase of an additional 350,000 added to 'Not in the Labor Force' totals. In other words, a million–or at least a large percentage of a million–workers have left the labor force. This too is not an indication of a strong labor market and contradicts the 263,000 and U-3 3.6% unemployment rate.
Bottom line, the U-3 unemployment rate is basically a worthless indicator of the condition of the US jobs market; and the 263,000 CES (Establishment Survey) jobs is contradicted by the Labor Dept's second CPS survey (Population Survey).
GDP & Rising Wages Revisited
In two previous shows, the limits and contradictions (and thus a deeper explanations) of US government GDP and wage statistics were featured: See the immediate April 26, 2019 Alternative Visions show on preliminary US GDP numbers for the 1st quarter 2019, where it was shown how the Trump trade war with China, soon coming to an end, is largely behind the GDP latest numbers; and that the more fundamental forces underlying the US economy involving household consumption and real business investment are actually slowing and stagnating. Or listen to my prior radio show earlier this year where media claims that US wages are now rising is debunked as well.
Claims of wages rising are similarly misrepresented when a deeper analysis shows the proclaimed wage gains are, once again, skewed to the high end of the wage structure and reflect wages for salaried managers and high end professionals by estimating 'averages' and limiting data analysis to full time workers once again; not covering wages for part time and temp workers; not counting collapse of deferred and social wages (pension and social security payments); and underestimating inflation so that real wages appear larger than otherwise. Independent sources estimate more than half of all US workers received no wage increase whatsoever in 2018–suggesting once again the gains are being driven by the top 10% and assumptions of averages that distort the actual wage gains that are much more modest, if at all.
Ditto for GDP analysis and inflation underestimation using the special price index for GDP (the GDP deflator), and the various re-definitions of GDP categories made in recent years and questionable on-going GDP assumptions, such as including in GDP calculation the questionable inclusion of 50 million homeowners supposedly paying themselves a 'rent equivalent'.
A more accurate 'truth' about jobs, wages, and GDP stats is found in the 'fine print' of definitions and understanding the weak statistical methodologies that change the raw economic data on wages, jobs, and economic output (GDP) into acceptable numbers for media promotion.
Whether jobs, wages or GDP stats, the message here is that official US economic stats, especially labor market stats, should be read critically and not taken for face value, especially when hyped by the media and press. The media pumps selective indicators that make the economy appear better than it actually is. Labor Dept. methods and data used today have not caught up with the various fundamental changes in the labor markets, and are therefore increasingly suspect. It is not a question of outright falsification of stats. It's about failure to evolve data and methodologies to reflect the real changes in the economy.
Government stats are as much an 'art' (of obfuscation) as they are a science. They produce often contradictory indication of the true state of the economy, jobs and wages. Readers need to look at the 'whole picture', not just the convenient, selective media reported data like Establishment survey job creation and U-3 unemployment rates.
When so doing, the bigger picture is an US economy being held up by temporary factors (trade war) soon to dissipate; jobs creation driven by part time work as full time jobs continue structurally to disappear; and wages that are being driven by certain industries (tech, etc.), high end employment (managers, professionals), occasional low end minimum wage hikes in select geographies, and broad categories of 'wages' ignored.
Join the debate on Facebook More articles by: Jack Rasmus
Jack Rasmus is author of the recently published book, 'Central Bankers at the End of Their Ropes: Monetary Policy and the Coming Depression', Clarity Press, August 2017. He blogs at jackrasmus.com and his twitter handle is @drjackrasmus. His website is http://kyklosproductions.com .
May 07, 2019 | www.theamericanconservative.com
How the Medal of Freedom Became a Fraud Before we pass out any more of these devalued trophies, we need to figure out what "freedom" means. By Andrew J. Bacevich • May 7, 2019
As headlines go, the one appearing in The New York Times on November 16, 2018 does not qualify as a showstopper. "Trump Awards Medals of Freedom to Elvis, Babe Ruth and Miriam Adelson," the Times reported. Most readers taking note of this ceremony, which presidents have been hosting annually for over a half-century now, probably shrugged and poured themselves another cup of coffee. Yet here, in this accolade conferred on the King, the Bambino, and the wife of a casino mogul, we get a glimpse of how far down the road to perdition our beloved country has traveled.
For a century and a half after declaring its independence, the United States managed to survive -- nicely, in fact -- without any such means of conferring presidential favor. Only in the 1960s did John F. Kennedy discover this void in American civic life and set out to fill it. His decision to do so cannot be understood except in the context of the then-ongoing and frosty Cold War.
Kennedy's predecessor, Dwight D. Eisenhower, had made much ado about America's close association with the divine, inserting "under God" into the Pledge of Allegiance and signing legislation making "In God We Trust" the national motto. Here, according to Ike, was the essence of what distinguished us from our adversaries. We believed; they did not.
Under Kennedy, God suffered a demotion of sorts, supplanted by freedom in the hierarchy of objects deemed worthy of worship. In his famous inaugural address, Kennedy not only anointed freedom as the supreme value but also declared that it was in imminent peril. Simultaneously celebrating freedom -- implicitly defined as opposing communism -- while warning of its impending demise emerged as an abiding theme of JFK's abbreviated and largely undistinguished presidency.Advertisement
Considered in that context, the Medal of Freedom forms part of a larger effort to package in a single word America's mission, history's purpose, and the aspirations of all humanity, with Kennedy himself their foremost champion. According to the directive establishing the award, its aim was to honor individuals making an especially meritorious contribution to (1) the security or national interests of the United States, or (2) world peace, or (3) cultural or other significant public or private endeavors.
The criteria are worth noting. The first and second qualify as straightforward and unobjectionable, if perhaps not mutually consistent. The third criterion, by comparison, is broad and vague -- sufficiently elastic to include just about anyone doing anything that happens to catch a president's fancy.
Almost from the outset, recipients of the Medal of Freedom have tended to fall into one of three categories. In the first are individuals who testify to the incumbent president's preferred self-image. For Kennedy that meant sophistication and class. So the first tranche of those selected to receive the Medal of Freedom featured such notables as singer Marian Anderson, cellist Pablo Casals, photographer Edward Steichen, and literary critic Edmund Wilson.
The second category is all about virtue signaling, as exemplified by Richard Nixon's choices of labor leader David Dubinsky and composer Duke Ellington to receive the Medal of Freedom. Evidence suggesting that Nixon was particularly fond of left-leaning labor organizers or African Americans is sparse. Yet by honoring Dubinsky and Ellington, Nixon could strike an appearance of being broad-minded, tolerant, and even hip, at virtually no cost to himself.
In the third category are individuals chosen to make a political statement, more often than not catering to a particular constituency. Ronald Reagan's selection of Louis L'Amour, author of potboiler cowboy novels, pleased his Western fan base. Similarly, his choices of Milton Friedman, Clare Boothe Luce, and Albert Wohlstetter found favor with free marketeers, devout anti-communists, and neoconservatives, respectively.
Little of this mattered. The Medal of Freedom's substantive impact was on a par with the presidential pardon granted to a couple of lucky turkeys just prior to Thanksgiving each year. It amounted to little more than a photo-op. In the larger scheme of things, the Medal of Freedom did nothing to hasten the downfall of the Evil Empire. The best we can say is that it did not retard the eventual outcome of the long twilight struggle.
With the end of the Cold War, however, and especially after 9/11, the Medal of Freedom went from being irrelevant to somewhere between whimsical and fraudulent. Any correlation with freedom as such, never more than tenuous in the first place, dissolved altogether. For evidence, we need look no further than the current crop of awardees.
That the Sultan of Swat and Elvis each left an indelible mark on American life is no doubt the case. Yet Babe Ruth died in 1948 while Presley "left the building" in 1977. Awarding them the Medal of Freedom at this point adds nothing to their stature and smacks of presumption, more or less akin to the Congress promoting George Washington to the rank of General of the Armies back in 1976. Besides, if Ruth, why not Lou Gehrig? Why not the entire 1927 Yankees starting lineup? If Presley, why not Buddy Holly, Ritchie Valens, and the Big Bopper? Why not every member of the Rock & Roll Hall of Fame?
As for Ms. Adelson, while her philanthropic activities are admirable, they fall well short of being unique. In fact, her selection to receive this presidential bauble stems less from Adelson's charitable giving than from her marriage to a billionaire who donated $25 million to Donald Trump's 2016 presidential campaign while kicking in another $113 million to support the Republican Party two years later. The Adelson Medal of Freedom was bought and paid for many times over.
I do not mean to imply that Trump deserves principal blame for trivializing and degrading the Medal of Freedom. On that score, primary credit goes to George W. Bush, who conferred this ostensibly great distinction on three individuals who figured prominently in engineering the debacle of the Iraq war: former CIA director George "Slam Dunk" Tenet, General Tommy Franks, and failed American viceroy L. Paul Bremer. Passing out laurels to mediocrities who screw up: for evidence of the sense of entitlement that has come to pervade the American establishment, one need look no further.
President Barack Obama's contribution to the Medal of Freedom's decline in status was of a different order: he gave out medals like pieces of Halloween candy, his 123 being the most ever awarded by any president. As any list of honorees becomes longer, it necessarily becomes less selective. So Ellen DeGeneres got one from Obama, as did Ernie Banks, Michael Jordan, and basketball coach Dean Smith. All estimable individuals no doubt, but arguably not what JFK had in mind when he instituted the Medal of Freedom in the first place.
Whatever modest value JFK's initiative may once have possessed has long since dissipated. In the present moment, with Americans disagreeing vehemently as to what freedom requires, permits, or prohibits, it just might be time to give the Medal of Freedom a rest. Let's figure out what freedom means. Then it may once more become appropriate to honor those who exemplify it.
Andrew J. Bacevich is TAC 's writer at large. His new book Twilight of the American Century has just been published.
May 03, 2019 | www.unz.com
I was listening while driving to rightwing talk radio. It is BS just like NPR. It was about the great Trump economy compared to the terrible Obama one. The US hasn't had a great economy since jobs offshoring began in the 1990s, and with robotics about to launch Americans are unlikely ever again to experience a good economy.
The latest jobs report released today claims 236,000 new private sector jobs. Where are the jobs, if they in fact exist?
Manufacturing, that is making things, produced a mere 4,000 jobs.
The jobs are in domestic services. There are 54,800 jobs in "administrative and waste services." This category includes things such as employment services, temporary help services, and building services such as janitor services.
"Health care and social assistance" accounts for 52,600 jobs. This category includes things such as ambulatory health care services and individual and family services.
And there are 25,000 new waiters and bartenders.
Construction, mainly specialty trade contractors, added 33,000.
There are a few other jobs scattered about. Warehousing and storage had 5,400 new jobs.
Real estate rental and leasing hired 7,800.
Legal services laid off 700 people.
Architectural and engineering services lost 1,700 jobs.
There were 6,800 new managers.
The new jobs are not high value-added, high productivity jobs that provide middle class incomes.
In the 21st century the US economy has only served those who own stocks. The liquidity that the Federal Reserve has pumped into the economy has driven up stock prices, and the Trump tax cut has left corporations with more money for stock buybacks and dividend payments. The institute on Taxation and Economic Policy reports that 60 Fortune 500 companies paid no taxes on $79 billion in income, instead receiving a rebate of $4.3 billion. https://itep.org/notadime/
The sign of a good economy is when companies are reinvesting their profits and borrowed money in new plant and equipment to meet rising demand. Instead, US companies are spending more on buybacks and dividends than the total of their profits. In other words, the companies are going into debt in order to drive up their share prices by purchasing their own shares. The executives and shareholders are looting their own companies, leaving the companies less capitalized and deeper in debt. https://systemicdisorder.wordpress.com/2016/10/26/work-harder-for-speculators/
Meanwhile, for the American people the Trump regime's budget for 2020 delivers $845 billion in cuts to Medicare, $1.5 trillion in cuts to Medicaid, and $84 billion in cuts to Social Security disability benefits.
History is repeating itself: Let them eat cake. After me the deluge.
The French Revolution followed.
As is usual, the headline economic number is always the rosiest number .
Wages for production and nonsupervisory workers accelerated to a 3.4 percent annual pace, signaling gains for lower-paid employees.
That sounds pretty good. Except for the part where it is a lie.
For starters, it doesn't account for inflation .Labor Department numbers released Wednesday show that real average hourly earnings, which compare the nominal rise in wages with the cost of living, rose 1.7 percent in January on a year-over-year basis.
1.7% is a lot less than 3.4%.
While the financial news was bullish, the actual professionals took the news differently.
Wage inflation was also muted with average hourly earnings rising six cents, or 0.2% in April after rising by the same margin in March.
Average hourly earnings "were disappointing," said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets in New York.
Secondly, 1.7% is an average, not a median. For instance, none of this applied to you if you are an older worker .Weekly earnings for workers aged 55 to 64 were only 0.8% higher in the first quarter of 2019 than they were in the first quarter of 2007, after accounting for inflation, they found. For comparison, earnings rose 4.7% during that same period for workers between the ages of 35 and 54.
On the other hand, if you worked for a bank your wages went up at a rate far above average. This goes double if you are in management.Among the biggest standouts: commercial banks, which employ an estimated 1.3 million people in the U.S. Since Trump took office in January 2017, they have increased their average hourly wage at an annualized pace of almost 11 percent, compared with just 3.3 percent under Obama.
Finally, there is the reason for this incredibly small wage increase fo regular workers. Hint: it wasn't because of capitalism and all the bullsh*t jobs it creates. The tiny wage increase that the working class has seen is because of what the capitalists said was a terrible idea .For Americans living in the 21 states where the federal minimum wage is binding, inflation means that the minimum wage has lost 16 percent of its purchasing power.
But elsewhere, many workers and employers are experiencing a minimum wage well above 2009 levels. That's because state capitols and, to an unprecedented degree, city halls have become far more active in setting their own minimum wages.
Averaging across all of these federal, state and local minimum wage laws, the effective minimum wage in the United States -- the average minimum wage binding each hour of minimum wage work -- will be $11.80 an hour in 2019. Adjusted for inflation, this is probably the highest minimum wage in American history.
The effective minimum wage has not only outpaced inflation in recent years, but it has also grown faster than typical wages. We can see this from the Kaitz index, which compares the minimum wage with median overall wages.
So if you are waiting for capitalism to trickle down on you, it's never going to happen. span y gjohnsit on Fri, 05/03/2019 - 6:21pm
Teachers need free speech protectionThousands of South Carolina teachers rallied outside their state capitol Wednesday, demanding pay raises, more planning time, increased school funding -- and, in a twist, more legal protections for their freedom of speech
SC for Ed, the grassroots activist group that organized Wednesday's demonstration, told CNN that many teachers fear protesting or speaking up about education issues, worrying they'll face retaliation at work. Saani Perry, a teacher in Fort Mill, S.C., told CNN that people in his profession are "expected to sit in the classroom and stay quiet and not speak [their] mind."
To address these concerns, SC for Ed is lobbying for the Teachers' Freedom of Speech Act, which was introduced earlier this year in the state House of Representatives. The bill would specify that "a public school district may not willfully transfer, terminate or fail to renew the contract of a teacher because the teacher has publicly or privately supported a public policy decision of any kind." If that happens, teachers would be able to sue for three times their salary.
Teachers across the country are raising similar concerns about retaliation. Such fears aren't unfounded: Lawmakers in some states that saw strikes last year have introduced bills this year that would punish educators for skipping school to protest.
Apr 28, 2019 | angrybearblog.com
The New York Times has an illuminating article today summarizing recent research on the gender effects of mandatory overwork in professional jobs. Lawyers, people in finance and other client-centered occupations are increasingly required to be available round-the-clock, with 50-60 or more hours of work per week the norm. Among other costs, the impact on wage inequality between men and women is severe. Since women are largely saddled with primary responsibility for child care, even when couples ostensibly embrace equality on a theoretical level, the workaholic jobs are allocated to men. This shows up in dramatic differences between typical male and female career paths. The article doesn't discuss comparable issues in working class employment, but availability for last-minute changes in work schedules and similar demands are likely to impact men and women differentially as well.
What the article doesn't point out is that the situation it describes is a classic prisoners dilemma.* Consider law firms. They compete for clients, and clients prefer attorneys who are available on call, always prepared and willing to adjust to whatever schedule the client throws at them. Assume that most lawyers want sane, predictable work hours if they are offered without a severe penalty in pay. If law firms care about the well-being of their employees but also about profits, we have all the ingredients to construct a standard PD payoff matrix:
There is a penalty to unilateral cooperation, cutting work hours back to a work-life balance level. If your firm does it and the others don't, you lose clients to them.
There is a benefit to unilateral defection. If everyone else is cutting hours but you don't, you scoop up the lion's share of the clients.
Mutual cooperation is preferred to mutual defection. Law firms, we are assuming, would prefer a world in which overwork was removed from the contest for competitive advantage. They would compete for clients as before, but none would require their staff to put in soul-crushing hours. The alternative equilibrium, in which competition is still on the basis of the quality of work but everyone is on call 24/7 is inferior.
If the game is played once, mutual defection dominates. If it is played repeatedly there is a possibility for mutual cooperation to establish itself, but only under favorable conditions (which apparently don't exist in the world of NY law firms). The logical solution is some form of binding regulation.
The reason for bringing this up is that it strengthens the case for collective action rather than placing all the responsibility on individuals caught in the system, including for that matter individual law firms. Or, the responsibility is political, to demand constraints on the entire industry. One place to start would be something like France's right-to-disconnect law .
*I haven't read the studies by economists and sociologists cited in the article, but I suspect many of them make the same point I'm making here.Sandwichman said..."the situation it describes is a classic prisoners dilemma."
Now why didn't I think of that?
https://econospeak.blogspot.com/2016/04/zero-sum-foolery-4-of-4-wage-prisoners.html April 26, 2019 at 6:22 PM
Apr 27, 2019 | www.nakedcapitalism.com
I’m reading another article about debates over free speech on campus, this time at Williams College, an elite school in the northwestern corner of Massachusetts. A faculty petition asks to formalize and tighten the college’s policy on free speech by adopting the Chicago Principles, which state that “concerns about civility and mutual respect can never be used as a justification for closing off discussion of ideas, however offensive or disagreeable those ideas may be to some members of our community.” Over three hundred students, however, have signed a counterpetition arguing that speech which harms minorities should not be allowed.
... ... ...
I fear my post was overly subtle. Let me be more explicit and see if that helps. My argument was not about “free speech versus social justice warriors” or anything of the sort. It was about a relatively new response to politics I saw first hand at Evergreen and have read about at other institutions.
I lived through the experience of hearing activists protesting against emails and statements at public meetings on the grounds they (the activists) were being subjected to emotional distress. Even more remarkably, no one else openly questioned the basis on which this argument rested. The whole tenor of discussion had shifted, and the line between public and private had apparently been redrawn such that the private criterion of “how does this make me feel” could be employed as a reason to suppress, or at least discourage, political action.
It struck me that this was the characteristic shift of neoliberalism, reinterpreting the public sphere as simply another venue for applying the hedonic calculus of individual pleasure/pain. (Virginia-style public choice theory does something similar but in a very different way.) I grant that much more was entailed at Evergreen, just as neoliberalism entails far more than this one characteristic; nevertheless, the it-makes-me-feel-bad argument for narrowing the public sphere is historically new—yes?—and coincides with the more general neoliberal view that “the political is personal”.
Our feelings of personal well-being become political criteria of what is right and wrong for the community, just as our political agency is reduced to personal choice. (What am I not supposed to buy? What is the right language for me to use when talking to someone of identity X?)
I don’t want to add more to the stew, but one further point is relevant. The stories, all of them, that have been disseminated about what happened at Evergreen during 2017 and the runup to those events are incomplete if not simply false. This includes the testimony of Bret Weinstein, who is factually correct about the direct experiences he underwent but has no clue about the forces and interests that instigated them. Suffice it to say that the faculty and perhaps students of the political left were mostly bystanders in this imbroglio. (Anecdotal evidence: my radical students were not involved, and my students who were involved were not the radicals.)
They may have taken sides after the event, but the conflict was not about leftism, Marxism, radicalism or even social justice in any substantive sense. That’s worth pointing out because it provides a further dimension to the argument I made in my post. No significant political change was either proposed during or eventuated from the 2017 protests, except the ongoing dismantling of some of the college’s more experimental features in the face of a devastating budget crisis.
I am trying to understand how an ostensibly political event could be so deeply anti-political. There are structural aspects I haven’t brought up and don’t have time or space for: who did what and through what institutional mechanisms, etc. In this post I am simply trying to identify some of the underlying assumptions behind the rhetoric.
Jeremy Grimm , April 26, 2019 at 3:50 pm
This post makes an interesting encapsulation of Neoliberalism: “life is an accumulation of moments of utility and disutility”. I am not convinced this formulation is sufficient to characterize Neoliberalism. How well would this formulation distinguish between Neoliberals and Epicures?
“Although Epicureanism is a form of hedonism insofar as it declares pleasure to be its sole intrinsic goal, the concept that the absence of pain and fear constitutes the greatest pleasure, and its advocacy of a simple life, make it very different from “hedonism” as colloquially understood.” [https://en.wikipedia.org/wiki/Epicureanism]
Is ‘utility’ greatly different than ‘pleasure’ as Epicures frame that word?
I do like the last sentence of the post: “It’s the greatest power of an ideology that it can seep into the worldview of those who claim to oppose it.”...
Jeremy Grimm , April 26, 2019 at 4:57 pm
The topic of free speech per se free speech was excellently covered by Howard Zinn in his talk “Second Thoughts on the First Amendment”. [I received a copy of the mp3 of this speech as a premium from my contribution to Pacifica Radio WBAI. The lowest price mp3 or written transcript for the speech was at https://www.alternativeradio.org/products/zinh006/ transcript for $3 or mp3 download for $5.]
Zinn’s speech made it clear that free speech was no simple matter contained within the meaning of the words ‘free speech’. There are questions of the intent of speech — the effects of a speech … bad feelings? … inciting a riot — capacity for speech that spreads fear … spreading unwarranted panic the classic yelling “Fire” in a crowded building — questions of the forum? There is free speech on a street corner and free speech on television, and they differ greatly in kind, and there is defamatory and slanderous speech.
...The equation between speech and money our ‘Supremes’ made is little short of the complete debasement of the Supreme Court as a forum of jurisprudence. The ‘prudence’ must be expunges from any characterizations of their judgements FAVORABLE or otherwise. The Supreme Court does not interpret the laws of the land. Like our Legislatures they are ‘bought’ and ‘bot’ to the whims of money.
Adam Eran April 26, 2019 at 7:06 pm
I’d suggest the dispute is theological. Everyone wants a “higher power” to bless their particular approach. The neoliberal preference for comparing measurable effects, scoring them as costs or benefits, is the standard MBA religion. Why if you can’t measure it, it mustn’t exist!
The whole approach doesn’t require too much thinking, and has the imprimatur of “science” and “reason” both… Excellent gods, all. Graeber’s Debt: The First 5,000 Years makes a good case for the way our confusion of monetary with ethical comparisons has managed to bamboozle humanity for literally thousands of years. You see rich people deserve their wealth. They are good, and you can tell by the amount of money they have. See!
Code Name D, April 26, 2019 at 7:14 pm
Some speech has as its primary purpose making others suffer, through insult or instigating fear, and has little or no persuasive intent. That’s hate speech, and I don’t see a problem with curtailing it.
The problem is just about anything “becomes” “hate speach” as a means of censorship. Calling out Isrial’s influence on US politics becomes antisimitism. Being critical of Hillary is misogany. Hell, not liking Campain Marvel is an example of hate speach. Recently negative reviews of the movie were removed from Rotten Tomatos as an example.
You might imagin that a line could be drawn some where. But when ever you draw that line, it always migrates over time.
Sound of the Suburbs , April 27, 2019 at 6:58 am
Neoliberalism destroys itself, don't panic. A ridiculous economic model was rolled out globally that had no long term future. The standard debt fuelled growth model of neoliberalism. The UK:
Japan, UK, US, Euro-zone and China: At 25.30 mins you can see the super imposed private debt-to-GDP ratios.
China has seen their Minsky Moment coming and the debt fuelled growth model can no longer be used. Adair Turner took over at the FSA when Lehman Brothers collapsed and this gave him the incentive to find out what was going on.
Adair Turner has looked at the situation prior to the crisis where advanced economies were growing by 4 – 5%, but the debt was rising at 10 – 15%. This always was an unsustainable growth model; it had no long term future.
After 2008, the emerging markets adopted the unsustainable growth model and they too have now reached the end of the line. We are trying to maintain an economic model that never had a long term future as it only worked by adding more and more debt in an unsustainable way. The debt didn't grow with GDP. How can banks grow GDP with bank credit?
The UK: https://cdn.opendemocracy.net/neweconomics/wp-content/uploads/sites/5/2017/04/Screen-Shot-2017-04-21-at-13.53.09.png
Before 1980 – banks lending into the right places that result in GDP growth (business and industry, creating new products and services in the economy)
After 1980 – banks lending into the wrong places that don't result in GDP growth (real estate and financial speculation)
What happened in 1979?
The UK eliminated corset controls on banking in 1979 and the banks invaded the mortgage market and this is where the problem starts.
This is the key to a sustainable economic model that has a long term future as debt and GDP rise together.
Steve Ruis , April 27, 2019 at 8:57 am
I have a problem with any argument based upon hurt feelings. Just what the heck are "hurt feelings?" How do we tell when someone is sincere or faking said? How do we tell when someone is emotionally fragile? How do we tell when someone has distorted values (But Hitler is my hero!)? How do we shock college students out of their complacency? How do we challenge them with new ideas? Are we to stop talking about the theory of evolution because someone's religious sensibilities are offended?
Having said that it is my generation that jettisoned good manners and we are now suffering the affects of that. The foundation of communication is knowing your audience and how much information that can receive at a time and some forgoe any consideration of that effect to make a controversy where there is none. And political free speech is absolutely necessary if we are to be a country that governs ourselves.
The Heretic , April 27, 2019 at 2:41 pm
The free exchange of ideas, and the evolution of ideas via exposure of new facts and interpretations and disagreements is vitally important; all progress comes from this. However fake news, bullshit arguments, and its long lasting effects cannot be underestimated. An easy example of is the 'the measles vaccine causes autism' bullshit debacle, which both caused numerous children and adults to now needlessly contract measles and more importantly, caused ordinary people to doubt the integrity of the medical professionals, and even science in general.. the discussion needs to expand from between speaker and the hurt listener, to third parties who are listening, who may or may not have their agendas, but whose opinion can be shifted based on the debate.
Btw, tobacco industry bullshit, climate change denial bullshit, are other huge sources of untruth which has polluted the discussions of today
We need to have a discussion/teaching on how we can again have truthful debate, however painful, and be able to distinguish from bald lies , false narratives or bullshit which unfortunately clouds many debates.
We need to accept that the truth exists and that we must seek to discern it. We need a deep discussion on what is truth and how to search for it and understand it, realizing that although the truth exists, that one person's perception and experience of it may differ from that of Another persons. And we need this discussion and skill set to be widely distributed, in a sense like a mental vaccine to help combat against the Bullshit virus that pervades the discussion today.
martell , April 27, 2019 at 3:01 pm
I too have noticed a shift in rhetoric. A recent incident at my own institution comes to mind. A letter appeared in the student newspaper complaining about an awards ceremony for university athletes. Apparently, a male tennis player of color had given a speech in which he thanked the university for having provided him with the opportunity to sleep with lots of white women. The author of the letter of complaint, a female student-athlete of color who'd attended the ceremony, claimed that this made her feel "unsafe," and wondered why the university president, who was in attendance, had not put a stop to the offending speech. In the course of the discussion which followed publication of the letter, no university official publicly questioned whether the complaining student should have felt afraid in that setting (an awards ceremony on a university campus with hundreds of people, including the university president, in attendance). No university official publicly questioned whether feelings of fear, reasonable or not, are grounds for stopping a speech. Some faculty members did however create a circular letter supporting the complaining student and at least strongly suggesting official punitive actions against the offending student and his coaches. Debate then focused on whether his coaches should be fired.
Note that in this case the feelings in question are not just any unpleasant feelings. The problem with the offending speech was not that it provoked anger or sorrow. The problem was that it made her afraid. So, I'm skeptical of the explanation for the shift in rhetoric offered above, the one having to do with neoliberal habits of thought. Its not specific enough.
Peter Dorman , April 27, 2019 at 5:36 pm
Thanks for giving me a chance to take up a tangent I left out of the post in the interest of curtailing sprawl. The safety version of the I-feel-bad argument is interesting.
Here is one interpretation, very provisional. Despite its increasing popularity, the general claim that certain types of political debate or social expression should be off limits because it makes me feel uncomfortable has an uncertain status. Institutions don't have an explicit obligation to promote the moment-to-moment subjective well-being of participants. (Even neoliberal approaches to governance, like cost-benefit analysis, avoid this by basing their justification on postulates that identify current and prospective "utility", however dicey they may be in practice.)
Into the breach jumps the safety trope. Institutions do have an obligation to protect the safety of those they include and touch. Movements against rape and domestic violence as well as pathological police violence have invoked this responsibility, and rightly so. And student movements, in an apparent effort to establish a parallel, have expressed the feeling-bad argument as feeling-unsafe.
The problem, as you point out, is the difference between feeling and being unsafe. I'm not in a position to question whether you feel bad (I'm sure I would have felt furious if I had been in the awards ceremony you describe and heard a predatory remark like the athlete's), but I can question whether you really are as unsafe as you claim. (I agree with your point about the objective safety of being in the awards audience.) The catch, however, is that there is another cultural trope at work, the conflation of belief and knowledge. This is now firmly ensconced in the worldview of much of the left, or "left" as I would put it. It underlies the doctrine of positionality, transforming it from a version of ideology theory (which I respect) to an epistemology (which is preposterous). Come to think of it, its failure to admit the enormous sphere of intersubjectivity, the portion of reality we share and is subject to the rules of evidence, has a sort of neoliberal (specifically Hayekian) tinge to it.
So no, you don't get to say, "Actually, you are quite safe here." There is no shared reality to examine that could possibly overrule someone's feeling that they are unsafe. I have had this exact conversation with several students, but I also see versions of it in the popular media and even in a lot of "scholarly" work. The mantra of those faculty and administrators supporting (or in some cases collaborating with) protesters at Evergreen was "listen to the students", as if what we hear -- and yes, of course we should listen to them -- was thereby the factual state of the college we had to respond to. It's also a reason why about a tenth of the student body, which excluded many or most of the radicals (see above), had to be referred to as "the students". The "subjective perception = reality" formulation is incoherent in the face of competing, incompatible subjective perceptions.
There's always more, but I should stop here.
Apr 27, 2019 | angrybearblog.com
My reading is that the core psychological principle of neoliberalism, that life is an accumulation of moments of utility and disutility, is alive and well within certain sectors of the "left". A speech (or email or comment at a meeting) should be evaluated by how it makes us feel, and no one should have the right to make us feel bad.
Not sure about this "utility/disutility" dichotomy (probably you mean market fundamentalism -- belief that market ( and market mechanisms) is a self regulating, supernaturally predictive force that will guide human beings to the neoliberal Heavens), but, yes, neoliberalism infected the "left" and, especially, Democratic Party which was converted by Clinton into greedy and corrupt "DemoRats' subservient to Wall Street and antagonistic to the trade unions. And into the second War Party, which in certain areas is even more jingoistic and aggressive then Republicans (Obama color revolution in Ukraine is one example; Hillary Libya destruction is another; both were instrumental in unleashing the civil war on Syria and importing and arming Muslim fundamentalists to fight it).
It might make sense to view neoliberalism as a new secular religion which displaced Marxism on the world arena (and collapse of the USSR was in part the result of the collapse of Marxism as an ideology under onslaught of neoliberalism; although bribes of USSR functionaries and mismanagement of the economy due to over centralization -- country as a single gigantic corporation -- also greatly helped) .
Neoliberalism demonstrates the same level of intolerance (and actually series of wars somewhat similar to Crusades) as any monotheistic religion in early stages of its development. Because at this stage any adept knows the truth and to believe in this truth is to be saved; everything else is eternal damnation (aka living under "authoritarian regime" ;-) .
And so far there is nothing that will force the neoliberal/neocon Torquemadas to abandon their loaded with bombs jets as the tool of enlightenment of pagan states ;-)
Simplifying, neoliberalism can be viewed an a masterfully crafted, internally consistent amalgam of myths and pseudo theories (partially borrowed from Trotskyism) that justifies the rule of financial oligarchy and high level inequality in the society (redistribution of the wealth up). Kind of Trotskyism for the rich with the same idea of Permanent Revolution until global victory of neoliberalism.
That's why neoliberals charlatans like Hayek and Friedman were dusted off, given Nobel Prizes and promoted to the top in economics: they were very helpful and pretty skillful in forging neoliberal myths. Especially Hayek. A second rate economist who proved to be the first class theologian .
Promoting "neoliberal salvation" was critical for the achieving the political victory of neoliberalism in late 1979th and discrediting and destroying the remnants of the New Deal capitalism (already undermined at this time by the oil crisis)
Neoliberalism has led to the rise of corporate (especially financial oligarchy) power and an open war on labor. New Deal policies aimed at full employment and job security have been replaced with ones that aim at flexibility in the form of unstable employment, job loss and rising inequality.
This hypotheses helps to explain why neoliberalism as a social system survived after its ideology collapsed in 2008 -- it just entered zombie stage like Bolshevism after WWII when it became clear that it can't achieve higher standard of living for the population then capitalism.
Latest mutation of classic neoliberalism into "national neoliberalism" under Trump shows that it has great ability to adapt to the changing conditions. And neoliberalism survived in Russia under Putin and Medvedev as well, despite economic rape that Western neoliberals performed on Russia under Yeltsin with the help of Harvard mafia.
That's why despite widespread criticism, neoliberalism remains the dominant politico-economic theory amongst policy-makers both in the USA and internationally. All key global neoliberal global institutions, such as the G20, European Union, IMF, World bank, and WTO still survived intact and subscribe to neoliberalism. .
Neoliberalism has led to the rise of corporate (especially financial oligarchy) power and an open war on labor. New Deal policies aimed at full employment and job security have been replaced with ones that aim at flexibility in the form of unstable employment, job loss and rising inequality.
This hypotheses helps to explain why neoliberalism as a social system survived after its ideology collapsed in 2008 -- it just entered zombie stage like Bolshevism after WWII when it became clear that it can't achieve higher standard of living for the population then capitalism.
Latest mutation of classic neoliberalism into "national neoliberalism" under Trump shows that it has great ability to adapt to the changing conditions.
that's why despite widespread criticism, neoliberalism remains the dominant politico-economic theory amongst policy-makers both in the USA and internationally. All key global neoliberal global institutions, such as the G20, European Union, IMF, World bank, and WTO still survived intact and subscribe to neoliberalism. .
Apr 24, 2019 | crookedtimber.org
arcseconds 04.23.19 at 6:49 am 77@Faustusnotes #68:
For anyone of a social democratic (or lefter) persuasion, and/or see war as something that should only be used as an absolute last resort (due to it invariably being a moral horror), then the Democrats have indeed been the lesser of two evils, and Republican-lite.
Take Obama for instance. He ran a cleverly ambiguous campaign where he sounded to many as being progessive and left, a breath of fresh air, something finally that would put a stop to limitless capitalism and unwind the Bush era. But in fact he's a 'centrist', which really means thoroughly neoliberal. He's prepared to file some of the sharp edges off capitalism, but he neither promised nor offered a genuine alternative to a lightly regulated free market.
I mean, look at his most famous legacy: the health care reforms. This is a thoroughly market-based solution that leaves the marketplace largely as it was. Nationalization was nowhere in sight. And the policy was based on one his elecotoral opponent enacted when he was governing Massachusetts! It is literally the case that voting in Democrats at the national level gets you the policy of Republican presidential candidates.
Also, he's quite happy to unilaterally blow up stuff, including innocent people, in other countries, in order to crush his enemies and to look good domestically. We have no problems in calling this 'evil' when our enemies do anything like this.
Brian 04.21.19 at 2:43 pm (no link)I think the real question is not whether Trump is successful or not. That question is a red herring in American politics today. The real question is whether or not the Democratic "leadership" can allow nomination of a candidate that the Democrat rank and file want. Bernie Sanders should have won the nomination last time. But the superdelegate system gives a literal handful of mandarins the ability to fake the primary process. (I say that as someone who has significant issues with some of Sanders positions.)
Trump won because Hillary was a horrific candidate. Voters stayed home, disgusted. Trump won because the Obama administration didn't deliver hope nor change. He delivered a government of the corporate criminal bankers for them. Middle and working class America got screwed. Black people got screwed worst. Trump won because the utter corruption at the heart of the DNC was exposed for all to see in the emails. Trump win because of the Obama administration making a trade deal top secret classified and trying to force a vote through congress. Not seeing any point in voting, Democrats didnt.
All the evidence since shows the DNC leadership didn't learn anything. They are just as contemptuous of voters, just as manipulative with their window dressing as ever. The Democratic party is the party of endless war even more than the Republicans. It's a party that stopped every effort by Trump to wind down or end war posture with Russia and North Korea. There's now 2 parties in Netanyahu's pocket implementing Likuds insane middle east ideas.
Put some solar energy and LGBTQ butter on it with a side of women's rights bullshit and it's "Democrat". But the politicians are just as venal. The legislature just as wildly right wing war mongering.
The 1960's is long over. The Democratic party hasn't seen a new idea since and has converted to govern to the right of Nixon. Way to Nixon's right. The Democratic party is the tool of the Uber-ization of not just America, but the whole world. Flour and break the law to pauperize the working class, and suck money to a few in the SF Bay Area. That's policy now.
You can see it already. Sanders is ahead. But Buttigieg is being anointed. He's the perfect candidate. He's gay! He's out of the closet! And he's a corporate tool who can talk smoothly without speaking a clear word. Best of all, he has ZERO foreign policy experience or positions. So he'll be putty in the hands of the corporations that want endless war for profits. Wall Street wants him. And the street owns the Democratic party. Will he give a flying f*@k about the middle and working class? Will he be anything but another neo-liberal who can be differentiated from a neo-conservative only by mild difference in racism? (Overt vs.covert)
At least Buttigieg isn't Beto O'Rourke, the most completely empty skin in Congress. There's that.
All the evidence I see is no. The Democrat "leadership" don't understand. I predict a Trump win, or else a squeaker election that barely scrapes by with a win.
No matter what, the idiot Democrats won't get it. Pelosi will do her best to cast the Republicans anti-tax anti-government (federal) government culture war in concrete with balanced budget horse manure. The Democrats will continue to force a new cold war on Russia. They will keep backing companies that steal from the middle and working class. (Yes, Uber and Lyft are massive theft operations. They implemented taxi service without licenses. Those licenses cost a lot of money to those who bought them. They put the public at risk causing multiple deaths and assaults from unlicensed taxi drivers.)
Trump's appeal is that he at least talks a game of "f*@k you". Domestically it's all lies on all sides. He lies to everyone. But at least he doesn't lie smoothly like the "good Democrat" candidates do.
Apr 22, 2019 | economistsview.typepad.com
RC (Ron) Weakley said in reply to RC (Ron) Weakley... , April 20, 2019 at 10:11 AMhttps://deanbaker.net/books/the-end-of-loser-liberalism.htm
The End of Loser Liberalism: Making Markets Progressive
By Dean Baker
Most people define the central point of dispute between liberals and conservatives as being that liberals want the government to intervene to bring about outcomes that they consider fair, while conservatives want to leave things to the market. This is not true. Conservatives actually rely on the government all the time, but most importantly in structuring the market in ways that ensure that income will flow upwards. The framing that "conservatives like the market while liberals like the government," puts liberals in the position of seeming to want to tax the winners to help the losers.
This "loser liberalism" is bad policy and horrible politics. The efforts of liberals would be much better spent on battles over the structure of markets so that they don't redistribute income upward. This book describes some of the key areas in which progressives can focus their efforts to restructure markets so that more income flows to the bulk of the working population rather than just a small elite.
By releasing The End of Loser Liberalism: Making Markets Progressive under a Creative Commons license and as a free download, Baker walks the walk of one of his key arguments -- that copyrights are a form of government intervention in markets that leads to enormous inefficiency, in addition to redistributing income upward. (Hard copies are available for purchase, at cost.) Distributing the book for free not only enables it to reach a wider audience, but Baker hopes to drive home one of the book's main points via his own example. While the e-book is free, donations to the Center for Economic and Policy Research are welcomed.
[I love Dean Baker (almost all of the time at least).]
Apr 22, 2019 | economistsview.typepad.com
im1dc , April 21, 2019 at 01:21 PMAfter reading this I think Bernie has an excellent shot at winning in 2020
...people are angry and if they vote...
"U.S. billionaires worry about the survival of capitalism"
'For the first time in decades, U.S. politicians and members of the business elite are debating whether American-style capitalism has a future'
By Greg Jaffe...April 20, 2019
Apr 16, 2019 | www.theamericanconservative.com
...you may have missed weeks of debate on the Right over a reasonable comment made by the popular Fox News host.
"Market capitalism is not a religion. Market capitalism is a tool, like a staple gun or a toaster," Carlson said. "Any economic system that weakens and destroys families isn't worth having." Does this observation make Tucker a socialist? Hardly. As is often the case, TAC founding editor Patrick J. Buchanan was more than a decade ahead of the curve.
"To me, the country comes before the economy; and the economy exists for the people," Buchanan said in a 1998 speech to the Chicago Council on Foreign Relations. "I believe in free markets, but I do not worship them. In the proper hierarchy of things, it is the market that must be harnessed to work for man -- and not the other way around."
Kouros, says: April 16, 2019 at 2:05 pmMaybe someone should read a bit of Amartya Sen?John Roche, says: April 16, 2019 at 2:18 pm
https://aeon.co/ideas/why-amartya-sen-remains-the-centurys-great-critic-of-capitalismThe free market thinks these questions of culture, family and social cohesiveness are cute but ultimately irrelevant. Conservatives need to come to terms that global capital has no mercy or care for its concerns and ultimate ends. You cant tax credit your way out of that confrontation. City of God vs the city of man is still the battle.ked_x, says: April 16, 2019 at 2:53 pmIt would have been nice if the Conservative Movement had started this "search for answers" after the failure of the 2012 election where the Republican Party picked a vulture capitalist as a Presidential nominee.
Apr 18, 2019 | thesaker.is
The Saker: You recently wrote an article titled " Is the USS Ship of Fools Taking on Water? " in which you discuss the high level of stupidity in modern US politics? I have a simple question for you: do you think the Empire can survive Trump and, if so, for how long?
Dmitry Orlov: I think that the American empire is very much over already, but it hasn't been put to any sort of serious stress test yet, and so nobody realizes that this is the case. Some event will come along which will leave the power center utterly humiliated and unable to countenance this humiliation and make adjustments. Things will go downhill from there as everyone in government in media does their best to pretend that the problem doesn't exist. My hope is that the US military personnel currently scattered throughout the planet will not be simply abandoned once the money runs out, but I wouldn't be too surprised if that is what happens.
The Saker: Lastly, a similar but fundamentally different question: can the USA (as opposed to the Empire) survive Trump and, if so, how? Will there be a civil war? A military coup? Insurrection? Strikes? A US version of the Yellow Vests?
Dmitry Orlov: The USA, as some set of institutions that serves the interests of some dwindling number of people, is likely to continue functioning for quite some time. The question is: who is going to be included and who isn't? There is little doubt that retirees, as a category, have nothing to look forward to from the USA: their retirements, whether public or private, have already been spent. There is little doubt that young people, who have already been bled dry by poor job prospects and ridiculous student loans, have nothing to look forward to either.
But, as I've said before, the USA isn't so much a country as a country club. Membership has its privileges, and members don't care at all what life is like for those who are in the country but aren't members of the club. The recent initiatives to let everyone in and to let non-citizens vote amply demonstrates that US citizenship, by itself, counts for absolutely nothing. The only birthright of a US citizen is to live as a bum on the street, surrounded by other bums, many of them foreigners from what Trump has termed "shithole countries."It will be interesting to see how public and government workers, as a group, react to the realization that the retirements they have been promised no longer exist; perhaps that will tip the entire system into a defunct state.
And once the fracking bubble is over and another third of the population finds that it can no longer afford to drive, that might force through some sort of reset as well. But then the entire system of militarized police is designed to crush any sort of rebellion, and most people know that. Given the choice between certain death and just sitting on the sidewalk doing drugs, most people will choose the latter.
And so, Trump or no Trump, we are going to have more of the same: shiny young IT specialists skipping and whistling on the way to work past piles of human near-corpses and their excrement; Botoxed housewives shopping for fake organic produce while hungry people in the back of the store are digging around in dumpsters; concerned citizens demanding that migrants be allowed in, then calling the cops as soon as these migrants set up tents on their front lawn or ring their doorbell and ask to use the bathroom; well-to-do older couples dreaming of bugging out to some tropical gringo compound in a mangrove swamp where they would be chopped up with machetes and fed to the fish; and all of them believing that things are great because the stock market is doing so well.
At this rate, when the end of the USA finally arrives, most of the people won't be in a position to notice while the rest won't be capable of absorbing that sort of upsetting information and will choose to ignore it. Everybody wants to know how the story ends, but that sort of information probably isn't good for anyone's sanity. The mental climate in the US is already sick enough; why should we want to make it even sicker?
Chris Cosmos on April 17, 2019 , · at 11:23 am EST/EDTI love Orlov’s wit and general cynical attitude as it mirrors mine (perhaps not the wit). I think he seems to understand the Ukraine and Russia relatively well though I’m not in a position to question him on that but I do know something about the politics of NATO/EU/USA and their intentions and that Orlov gets.B.F. on April 17, 2019 , · at 5:29 pm EST/EDT
But he simply does not understand the USA. He’s been predicting collapse for some time and it has not occurred or come close to happening. Washington is filled with smart kleptocrats who understand they cannot afford to destroy the country that keeps on giving them the wealth and power they crave. Trump, can flounce around Washington and the rest of the country and do and say outrageous things and it has no effect on life whatsoever.
If anything the economy actually is “better” not as good as the cooked statistics indicate but things have improved for people I know in that area. Americans, despite the obvious propaganda nature of the media still are true-believers in the official Narrative because meaning and myth always trumps reality.
While, on the surface, people support ideas like higher minimum wage, universal health-care and other aspects of social democracy, it their masters say “no” then they’ll forgo it and take pride in their ability to endure suffering, early death, their children on heroin or meth, and so on.
Since I’m fairly “connected” to the lower/working class and its struggles in my part of the world I can assure you people almost enjoy suffering to a degree that foreigners easily miss and seldom ascribe it to the thieves and criminals who run our society. Americans strut around but feel powerless and don’t have a plan or think they can have a plan because they lack the conceptual frameworks to understand that their leadership is thoroughly rotten.
Having said that, I agree with Auslander, Americans don’t need the central government and would do better, initially, in a highly chaotic situation and establish their own order in their communities and rig up a new set of arrangements very quickly.
In some ways the fall of Washington would be the best thing to ever happen in my country.Chris CosmosAnonymous on April 17, 2019 , · at 7:08 pm EST/EDT
I am afraid you are wrong. Orlov does understand the US, just like I do, as I have lived in the US. Yes, Orlov has been predicting the collapse of the US, and it will happen. I would like to direct your attention to the following video (the second part is very interesting):
Will there be a civil war in the US, like in the 1861-1865 period ? No, I don’t think so. Will there be severe social disturbances ? Yes, these I do expect, leading to the break up of the US. The only part of the US which probably will emerge as a cohesive force will be the old South, Dixie land, which has history and tradition behind it. The US has been kicking the financial can down the road for a long time. This cannot last for ever.FB on April 17, 2019 , · at 11:45 am EST/EDT“The only part of the US which probably will emerge as a cohesive force will be the old South, Dixie land, which has history and tradition behind it. ”
Maybe, but actually I would say most regions of the USA have some kind of “old tradition” —and a lot nicer ones than that of the old racist South. I’ll take New England and the Maritimes any day over the steamy South where the kudzu creeps over I mean *everything*, the snakes proliferate, and you can’t survive the summer without AC 24/7.
Check out American Nations, by Colin Woodard.
KatherineWell…I just started in on this piece and already I have a major beef…Orlov’s notion that the dissolution of the Soviet Union was good for Russia…Anonymous on April 17, 2019 , · at 12:52 pm EST/EDT
China was [and arguably still is] an empire of diverse regions, ethnicities and religions…but how is that holding China back today, or during previous centuries of imperial glory…?
Clearly China doesn’t fit into Orlov’s idea of an empire as a ‘wealth pump’ that sucks from the periphery to enrich the center…this is true of course of exploitation-based imperial projects such as western colonialism…but is clearly not applicable to the Chinese model, which has been both the biggest and most durable empire in human history…so that is a big hole in Orlov’s ‘theory’…
It is true that the USSR was a fundamentally different kind of empire from the exploitative western colonialism…and it is also true that it ultimately did not succeed…although it managed to accomplish almost incomprehensible progress in modernization, science and technology…and industrialization…the foundations of Russian strength today rest squarely on the foundations put in place during the Stalin era…
Elsewhere on this site there is a brilliant series of essays by Ramin Mazaheri about the tumultuous cultural revolution of the 1960s…and why it was necessary…Russia also needed a cultural revolution around this time…the system needed to be rejigged to better serve the people…in living standard…fairness and justice…opportunity for social advance…etc…
But it never happened…instead the system became more sclerotic than ever…and the welfare of the people stagnated…at the very moment in time when the capitalist west, especially the United States, was able to reign in the appetites of its parasite class and provide the people with a decent share of its [largely ill-gotten, by means of global finance colonialism] gains…[during the postwar decades, the share of national wealth of the 0.1 percent fell to an all time low of about 7 percent…about a quarter of historic, and current levels]…
This was the golden age in the US…well paying jobs in industry were plentiful and the company president made perhaps ten times what the shop floor worker took home…a second household income was completely unnecessary…university education at state colleges was practically free…
The life of the Soviet citizen in the1960s was not too far behind…Stalin’s five year plans in the1930s had created an industrial powerhouse…it was Russia’s ability to produce that allowed it to prevail over Germany in the existential war…and despite the devastation of the people, cities and countryside Russia was able to quickly become a technological superpower…as an aerospace engineer I have a deep appreciation of the depth and breadth of Russian technical achievements and the basic scientific advances that made that possible…the US was laughably left in the dust, despite having skimmed the cream of Nazi Germany’s technical scientific talent…and contrary to what US propaganda would have the people believe…
... ... ...
Of course the massive Chinese empire has been adapting like this for centuries, if not millennia…Russia with the Soviet Union only needed to make similar smart adjustments…instead they threw out the baby with the bathwater…let’s see where Russia goes from here, but with people like Siluanov and Nabiullina in charge of the nation’s money, I am not optimistic…
But back to Orlov…let’s see where he goes after starting off very clumsily. .The acceleration of economic collapse in the West will be likely bring (overt) fascism and war–world war.
In particular, the AngloNazi sorry Anglosphere nations (Britain, Canada, Australia, New Zealand, and of course America) are a clear and present threat that should not be underestimated, discounted, or spin-doctored away.
As collapse intensifies, these Anglo American entities led by the USA will surely lash out in even more aggressive wars to maintain their unipolar world order that they have ruled over since the fall of the Soviet Union. The use of tactical nuclear weapons, bio-warfare, and other "exotic" weapons should not be ruled out.
At base, the Anglo Americans possess an inbred sense of economic entitlement. They whine like snowflakes about the foreign outsourcing of jobs or "illegal immigrants stealing our jobs" as a chauvinistic demand for a greater share of the economic spoils of imperialism.
But the Anglos studiously avoid facing the reality that their precious way of life, capitalist system, and Anglo-American world order itself are premised upon their own ruthless exploitation of the Global South and developing nations in general.
And God forbid that the Anglos lose their parasitic way of life and (horror) are compelled to live like the vast majority of humanity in the developing world from Africa to Asia to Latin America to the Middle East.
The disaffected middle classes and labor aristocracy of the Anglosphere will comprise the grassroots basis for 21st-century fascism, similar to how these socio-economic classes were the grassroots support for the German Third Reich or Mussolini's Italy in the 1930s-40s.
Trump and the MAGA hordes, as well as similar xenophobic and nationalist movements throughout the Anglosphere and Europe, are only a precursor to what is coming. They represent the grievances of the lower-middle classes within the Anglo American Empire and Europe who want a greater cut of the economic loot of empire for themselves–which necessitates an even more aggressive and militaristic grab for global resources, markets, and geopolitical power.
As Martin Lee has put it, the Beast reawakens.
Boswald Bollocksworth on April 17, 2019 · at 9:37 pm EST/EDT
He’s way too negative on the USA’s domestic prospects. Despite its absurdities, the US system is fundamentally robust and unlikely to suffer any major, sudden collapse, at least for many decades. It will certain decline further, plumbing the depths of depravity more than it has to date, but the system will chug along. The US has vacuumed up talent from all over the world, bolstering it’s economic capacity and the rents extracted by oligo. It’s day to day institutions, such as courts, post offices and the like function better now than they did in the 80s or 90s.
All the incentives are there to keep the thing together, with little real risk of some sort of succession movement or serious insurrection. The main advantages the US has on this score are it’s mass surveillance system, policing infrastructure and media. The US media can make the great bulk of the people believe absolutely anything, if given enough time.
The US capacity to meddle overseas will wither, after all how well can a submarine filled with drag queens and single mothers operate? And who’d be willing to endure shelling for a monstrosity like contemporary America?
But the domestic system is brilliantly designed, not going anywhere.
Apr 18, 2019 | thesaker.is
FB on April 17, 2019 , · at 5:05 pm EST/EDTWell after reading the entire piece, I must admit I'm not impressed
The main global dynamic right now is the Chinese industrial and economic juggernaut a geopolitically resurgent Russia and the unraveling of the dollar dominated global financial order
The problem with the west is not so much cultural as it is economic the west is a giant Ponzi scheme that must ultimately collapse as all 'financialized' economies have collapsed since the beginning of money as any careful reader of Michael Hudson can tell you
One morning we will wake up and the machine will be out of gas simple as that no money no funny
That's why the rest of the world is moving toward a trading system that circumvents the dollar, or any kind of so-called 'reserve' currency the US itself is shoving this process forward by weaponizing trade and finance by means of sanctions gone wild
There does not need to be any kind of universal trading currency in the digital age it is simply a matter of putting the settlement mechanisms in place and more important, bypassing the HUMAN exchange networks now in place ie the old boys club through which dollar denominated global trade now flows
Once these processes mature, there will be no way of perpetuating the western financial Ponzi scheme it has crashed before most recently a decade ago but has been kept on life support by negative interest rates, plus further impoverishment of the marginal class but once the reserve currency is gone, and with it the ability to print free money the machine is dead for good
At that point the west needs to earn its living the honest way that may be a tough transition
Whine Merchant , , April 14, 2019 at 9:16 pm
Apr 15, 2019 | www.theamericanconservative.com
The American foreign policy Blob's latest worry is that Venezuela's radical leftist government is reaching out to the Middle East for support against growing pressure from Washington.
Specifically, President Nicolás Maduro is reportedly trying to establish extensive political and financial links with Syrian President Bashar al-Assad and his ally in Lebanon, Hezbollah . The latter has repeatedly condemned U.S. policy towards Maduro , and already appears to have shadowy economic ties to Caracas. There are indications that Maduro's regime may be utilizing Hezbollah to launder funds from the illegal drug trade.
Washington's fear is that lurking behind an Assad-Hezbollah-Maduro alliance is America's arch-nemesis, Iran, which has close relations with both Assad and Hezbollah. Tehran's apparent objective would be to strengthen the Venezuelan regime, boost anti-U.S. sentiment in the Western Hemisphere, and perhaps acquire some laundered money from a joint Maduro-Hezbollah operation to ease the pain of U.S. economic sanctions re-imposed following the Trump administration's repudiation of the nuclear deal.
Although Iran, Assad, and Hezbollah remain primarily concerned with developments in their own region, the fear that they want to undermine Washington's power in its own backyard is not unfounded. But U.S. leaders should ask themselves why such diverse factions would coalesce behind that objective.Advertisement
It is hardly the only example of this to emerge in recent years, and the principal cause appears to be Washington's own excessively belligerent policies. That approach is driving together regimes that have little in common except the need to resist U.S. pressure. Washington's menacing posture undermines rather than enhances American security, and especially in one case -- provoking an expanding entente between Russia and China -- it poses a grave danger.
The current flirtation between Caracas and anti-American factions in the Middle East is not the first time that American leaders have worried about collaboration among heterogeneous adversaries. U.S. intelligence agencies and much of the foreign policy community warned for years about cooperation between Iran and North Korea over both nuclear and ballistic missile technology . During the Cold War, a succession of U.S. administrations expressed frustration and anger at the de facto alliance between the totalitarian Soviet Union and democratic India. Yet the underlying cause for that association was not hard to fathom. Both countries opposed U.S. global primacy. India was especially uneasy about Washington's knee-jerk diplomatic and military support for Pakistan , despite that country's history of dictatorial rule and aggression.
Alienating India was a profoundly unwise policy. So, too, has been Washington's longstanding obsession with weakening and isolating Iran and North Korea. Those two countries have almost nothing in common, ideologically, politically, geographically, or economically. One is a weird East Asian regime based on dynastic Stalinism, while the other is a reactionary Middle East Muslim theocracy. Without the incentive that unrelenting U.S. hostility provides, there is little reason to believe that Tehran and Pyongyang would be allies. But Washington's vehemently anti-nuclear policy towards both regimes, and the brutal economic sanctions that followed, have helped cement a de facto alliance between two very strange bedfellows.
Iranian and North Korean leaders have apparently reached the logical conclusion that the best way to discourage U.S. leaders from considering forcible regime change towards either of their countries was to cooperate in strengthening their respective nuclear and missile programs. Washington's regime change wars , which ousted Iraq's Saddam Hussein and Libya's Moammar Gaddafi -- and the unsuccessful attempt to overthrow Syria's Assad -- reinforced such fears.Nicaragua: Washington's Other Hemispheric Nemesis Washington's Incoherent Policy Towards Dictators
The most worrisome and potentially deadly case in which abrasive U.S. behavior has driven together two unlikely allies is the deepening relationship between Russia and China. Washington's "freedom of navigation" patrols in the South China Sea have antagonized Beijing, which has extensive territorial claims in and around that body of water. Chinese protests have grown in both number and intensity. Bilateral relations have also deteriorated because of Beijing's increasingly aggressive posture toward Taiwan and Washington's growing support for the island's de facto independence. The ongoing trade war between the United States and China has only added to the animosity. Chinese leaders see American policy as evidence of Washington's determination to continue its status of primacy in East Asia, and they seek ways to undermine it.
Russia's grievances against the United States are even more pronounced. The expansion of NATO to the borders of the Russian Federation, Washington's repeated trampling of Russian interests in the Balkans and the Middle East, the imposition of economic sanctions in response to the Crimea incident, the Trump administration's withdrawal from the Intermediate Nuclear Forces treaty, U.S. arms sales to Ukraine , and other provocations have led to a new cold war . Russia has moved to increase diplomatic, economic, and even military cooperation with China. Beijing and Moscow appear to be coordinating policies on an array of issues, complicating Washington's options .
Close cooperation between Russia and China is all the more remarkable given the extent of their bitterly competing interests in Central Asia and elsewhere. A mutual fear of and anger toward the United States, however, seems to have overshadowed such potential quarrels -- at least for now.
There even appears to be a "grand collusion" of multiple U.S. adversaries forming. Both Russia and China are increasing their economic links with Venezuela , and Russia's military involvement with the Maduro regime is also on the rise. Last month, Moscow dispatched two nuclear-capable bombers to Caracas along with approximately 100 military personnel. The latter contingent's mission was to repair and refurbish Venezuela's air defense system in light of Washington's menacing rhetoric. That move drew a sharp response from President Trump.
Moscow's policy toward the Assad government, Tehran, and Hezbollah has also become more active and supportive. Indeed, Russia's military intervention in Syria, beginning in 2015, was a crucial factor in tilting the war in favor of Assad's forces, which have now regained control over most of Syria. Washington is thus witnessing Russia getting behind two of its major adversaries: Venezuela and an Iran-led coalition in the Middle East.
This is a classic example of balancing behavior on the part of countries worried about a stronger power that pursues aggression. Historically, weaker competitors face a choice when confronting such a power: bandwagon or attempt to balance against that would-be hegemon. Some very weak nations may have little choice but to cower and accept dependent status, but most midsize powers (and even some small ones) will choose the path of defiance. As part of that balancing strategy, they tend to seek any allies that might prove useful, regardless of differences. When the perceived threat is great enough, such factors are ignored or submerged. The United States and Britain did so when they formed the Grand Alliance with the totalitarian Soviet Union in World War II to defeat Nazi Germany. Indeed, the American revolutionaries made common cause with two reactionary autocracies, France and Spain, to win independence from Britain.
The current U.S. policy has produced an array of unpleasant results, and cries out for reassessment. Washington has created needless grief for itself. It entails considerable ineptitude to foster collaboration between Iran and North Korea, to say nothing of adding Assad's secular government and Maduro's quasi-communist regime to the mix. Even worse are the policy blunders that have driven Russia to support such motley clients and forge ever-closer economic and military links with a natural rival like China. It is extremely unwise for any country, even a superpower, to multiply the number of its adversaries needlessly and drive them together into a common front. Yet that is the blunder the United States is busily committing.
Ted Galen Carpenter, a senior fellow in security studies at the Cato Institute and a contributing editor at , is the author of 12 books and more than 800 articles. His latest book is Gullible Superpower: U.S. Support for Bogus Foreign Democratic Movements (2019).
Higdon Kirt April 14, 2019 at 9:15 pm"I never thought I'd be saying this, but if the Soviet Union still existed, the United States would not dare to do what it is doing now" – said to me by an anti-Communist Romanian who had fled Romania when it was still Communist ruled. We were attending a demonstration against the Clinton air war which was the final death blow to Yugoslavia.
The emergence of a powerful anti-American world coalition is a good thing; US world hegemony has been good neither for the US nor for the world. The main danger is that the US, seeing its power slip away, will resort to all out war, even nuclear war. I pray that the US rulers are at least sane even if they are quite evil and over-bearing.
Current US foreign policy, set by the White House and Commander-in-Chief, reflects the beliefs of the Deplorables who put Trump into office: sadly, most of these dupes believe the myth of American Exceptionalism [copyright Sarah Palin]. The nexus of confusing social media and reality TV with genuine reality, and 1950s Hollywood jingoism, has them waiting for a crisis [possibly a gay Star Wars/Kardashian-type monster] that can only be saved before the final commercial by their 'Hero'.Fayez Abedaziz , , April 15, 2019 at 12:10 am
Hello,Christian J Chuba , , April 15, 2019 at 7:20 am
Let's see here.
It's gotten to the point where the great United States is ruled by Trump and the strangest of people, like freak Bolton and Pompeo and the Presidents son in law?
Are the voters nuts? The lousy choices of war mongers Hillary and Trump?
Look at the foreign leaders in the pictures.
Then look at the nasty hate filled, historically ignorant bums I named above.
They, the leaders of those four nations threaten no one and no other nation, but clown Trump and his advisers do every day.
Take away any power from Trump and his advisers, yeah, wishful thinking, I know, and read a book by Noam Chomsky or an article or three by Bernie Sanders and maybe you will see what a circus the white house is, of this nation. Ironically, America has never been LESS great. What a damn crying shame, know what I mean?
There is a diverse coalition of weaker countries opposing the U.S. because
A. Each have been the target of regime change and figure they they better pool their resources and help each other when they can 'the axis of resistance'.
B. The wolves are waiting at the wood's edge just waiting to humiliate the United States, the last flickering light of all that is good.
Well since we are a nation of narcissists we believe B because we cannot fathom that other countries act in their own interests.
Apr 16, 2019 | www.theamericanconservative.com
Sid, says: April 15, 2019 at 4:28 pm"The current U.S. policy has produced an array of unpleasant results, and cries out for reassessment."Fran Macadam , says: April 15, 2019 at 5:12 pm
"RE-assess" implies there was an original assessment. I've seen no evidence that this revolving-door administration ever "assessed" any foreign policy principles in the first place.
With no strategy to pursue, they mostly just react to random events around the world, treating each as equally meaningful -- like a dog chasing its tail.A country with 4% of the world's population, while consuming at one point 40% of the resources, is certainly not going to go gently from its perch.Bullwinkle J. Moose , says: April 15, 2019 at 7:42 pm
Probably the only instance we have of elites relinquishing power, is the SovietUnion of 1989.As generations replace generations, the world forgets which country has saved them again and again. Just wait until they cry-out for someone in a Red MAGA hat to save them just one more time –Владимир Славинский , says: April 15, 2019 at 8:47 pmWell, it is the correct assessment of to-day's reality. But is it something new? Back in 1994 great Samuel Huntington published well known article "Clash of Civilizations?" and predicted literally all what happened to USA if we will choose the road of being world policeman and "big brother". Among all – Russia and China united against America and even events in Ukraine as complete trouble for us. Alas, he was not listened and now almost forgotten. It is a shame!peter mcloughlin , says: April 16, 2019 at 4:49 amAlliances are forged out of interest, like the 'dynastic Stalinism' of North Korea and the 'Muslim theocracy' of Iran. As Ted Galen Carpenter points out: 'The most worrisome and potentially deadly case is the deepening relationship between Russia and China.' Interest cuts across all apparently unifying principles: family, kin, nation, religion, ideology, politics – everything. We unite with the enemies of our principles, because that is what serves our interest. An alliance between Moscow and Beijing is the one most likely to drag us into global confrontation. It is the interconnectedness of disputes that can turn a localized flashpoint into a world war. The pattern of history shows the pursuit of interest frequently 'undermines rather than enhances' those interests.Frankie P , says: April 16, 2019 at 6:14 am
https://www.ghostsofhistory.wordpress.com/The Israeli military officers have an inside joke that Hasan Nasrallah is unable to lie. Indeed, the Hezbollah leader is one of the most truthful and straightforward leader in the world. What else could explain the US Mainstream media making absolutely sure that deplorable American citizens never hear his speeches? They might notice that he makes a lot of sense, fights terrorism, and protects the people of Lebanon: Christians, Shiite muslims and Sunni muslims. I have seen Nasrallah answer a question about accusations of Hezbollah trafficking in the drug trade. I believe his unequivocal denial far more than I do the empty accusations that are linked and parroted by the author of this article.
Apr 15, 2019 | www.zerohedge.com
Though the Saudis have denied it, reports last month that the Kingdom was privately threatening to ditch the dollar as the currency of choice for its oil trade have helped reignite speculation that the greenback could soon lose its reserve currency status, as a few financial luminaries have warned.
Though many mainstream financial analysts categorically dismiss the idea that the dollar's dominance is in any way under threat, reports about the threats to the petrodollar have prompted many to question how exactly, does the average American benefit from the dollar's reserve currency status, and would the greenback's fall from grace have a negative, or positive, impact on the livelihood of the averagee American worker?
Well, economist Steve Keen has a few theories about what might happen if the dollar stops being the vessel via which a large plurality of global trade is conducted. And he shared his views with Erik Townsend during this week's episode of MacroVoices .
When most people think about the risks associated with the dollar losing its reserve status, runaway inflation probably ranks high on the list. But Keen believes these risks are probably overblown,for several reasons. First, importers often hedge out foreign exchange risk between two and five years out. And even once the dollar's weakness starts to bite, company's will often simply absorb some of the margin pressure to maintain market share. While prices might move marginally higher, Keen doubts the outcome would destabilize large swaths of the US economy, as the reserve alarmists have warned .
The real impact would be felt by Americans wanting to travel overseas, who would see their purchasing power collapse as the costs of traveling abroad skyrocket.
Erik: Now, most of the products that you see at Walmart in the United States are imported from China. It seems to me that, if this were to occur and there was a marked devaluation of the US dollar versus other currencies, that would result in a massive inflation shock in the real economy in the US because we don't have the manufacturing capacity to make widgets in the United States. That's all gone offshore, to the detriment, perhaps, of the American worker.
But we don't have that capacity. So if, all of a sudden, we have to pay much higher prices in dollars in order to generate the same price in yuan or yen or whatever for the imported goods, doesn't that result in a really big inflation shock inside the US?
Steve: It can. Inflation shocks, you have to look at them in a proper empirical context.
And most economists simply assume any currency devaluation will lead to an equivalent inflation spike in the country that is devaluing.
What actually happens quite frequently is firms will try to – first of all, you have long-term contracts determining prices that are often set out two to five years in advance, particularly for industrial goods.
But mainly we have importers putting a markup on their imports for their profit level. They are willing to cut their markup to hang onto market share to some extent. So you don't see a 100% pass-through of that sort of thing. You might see 30% pass-through. So if you had a 10-15-20% devaluation in the economy in the American dollar, then you could see, yes, a 5 or 7 maybe – I wouldn't say going beyond 10% – spike in the inflation rate.
But, yes, you could see that spike occurring. And it would also – obviously cramp the style of any Americans wanting to go on overseas holidays. So there would definitely be a decrease in the American living standards. And it would bring home to people, too, the extent to which you have been deindustrialized and relied upon this exorbitant privilege to get over it. If the exorbitant privilege goes, then you wear the full consequences of being deindustrialized in the last 25 years.
Similarly, worries that a weaker dollar would cause interest rates in the US to skyrocket are also overblown, Keen believes. Just look at Japan: Interest rates have been mired near zero for 15 years now, regardless of what's been happening with the yen. Because it's not the external market that sets interest rates in the US - that's now the Federal Reserve's job.
Steve: So I can see it as giving America quite a severe jolt. But it won't be something which causes interest rates to go sky-high. They will still be held in a band by the Federal Reserve. You might see rises in corporate rates and so on, but not large rises in the rates on American government debt.
Circling back to the inspiration for this topic, Townsend asked Keen if he really believes the Saudis seriously considering ditching the dollar, or if these leaks are merely idle threats. Keen believes it's the latter, given how dependent the Saudis are on American support in the form of both supplying arms and purchasing oil. The real risk for the dollar lies in Europe and China. Europe's search for an alternative to SWIFT, which was inspired by Trump's decision to ditch the Iran deal, was a major catalyst for this.
As Trump's belligerence toward America's enemies and allies has made the dollar's reserve status "intolerable" for many, Keen believes there's a "one in three" chance that the dollar loses its reserve status within ten years.
Erik: Steve, let's come to the current risks that the US dollar faces in terms of maintaining its reserve currency status and talk about how real they are. Is this talk from Saudi Arabia just saber-rattling? Or are they really serious about ditching the dollar? Likewise, we had another comment last week from, I believe it was a former undersecretary of the UN, calling for a global currency to replace the US dollar as the world's reserve currency. Are these things really at risk of actually happening?
Or is this just talk?
Steve: I think it's at risk of happening. I don't think the Saudis are going to go through with it though, because they're incredibly intimately tied up with American military power and it would just be too dangerous for them to do that. But I know China and Russia and, to some extent, Europe are talking about it because they are sick of the extent to which this is being used as a bullying tool by America. Particularly – just one recent example – the decision not to let Iran use the SWIFT system for international payments.
That could never have happened if the American dollar wasn't the reserve currency. And you get American imposing its political will on the rest of the world using the fact that it's the reserve currency. And of course that's become intolerable under Trump. So I think the odds are, let's say, one in three of a serious breakdown in that in the next 10 years.
That's not to say that this couldn't be stopped, but the more the US tries to impose its will on the rest of the world, the more likely other world powers will rebel.
But it could also be prevented. It's one of these things – it doesn't have the weight of financial numbers behind it like I could see with the credit crunch back in 2008 to say a crisis is inevitable.
But, certainly, there will be strains on the system and the American dominance can't be guaranteed. And the more America now tries to assert that dominance, the more likely it is to encourage one of those alternatives to be developed.
As history has proven time and time again, no reserve currency reigns forever...
...So, With America's allies and enemies looking for ways to mitigate their reliance on the dollar, what, ultimately, would be the impact if the world decides to ditch the greenback?
While the decline in demand would probably cause the dollar to weaken, that could benefit the American working class. Given that President Trump's confrontation approach to diplomacy has caused this process to accelerate, as Europe, Russia and China have repeatedly, this is one way in which what Keen describes as Trump's leveraging America's reserve-currency status as a "thug's tool" (by threatening sanctions against its enemies), could circuitously benefit the working class Americans who make up a large portion of his base.
Obviously, it's going to mean a reduction in demand for American dollars on foreign exchange markets, which must mean a fall in the price over time. And it will be complicated by the usual spot and hedge markets and so on. But, yes, seeing a fall in the value of the dollar, unless America's financial sector could no longer use the fact that it was American to have the power it has over financial institutions elsewhere in the world, so that the scale of the financial sector would be pulled back, your manufacturing sector would be more competitive. But, as you know, you don't have the industrial pattern you used to have.
You've still got some outstanding corporations and outstanding technological capability. But you don't have that machine tool background. T he skilled workers that used to exist there aren't there anymore. So there would be a serious shock to America with more expensive goods to be imported from overseas and a slow shift towards having a local manufacturing capability, making up for the damage of the last 25 years.
I can see a lot of social conflict out of that as well, but a positive for the American working class, who really have been done over in the last quarter century. And that's partly the reason why Trump has come about. And, ironically, Trump is part of the reason why this might come to an end, given how much he's used his bombast and the American reserve currency status as a thug's tool in foreign relations rather than an intelligent person's tool.
In summary, although every reserve currency in history has lost its status as its economic dominance has faded, the US might be the first to lose that status because of an organized rebellion that it helped provoke via its willingness to use sanctions and other tools as a weapon for punishing its adversaries and rewarding its friends.
Listen to the full interview below:
Apr 15, 2019 | www.project-syndicate.org
Peaceful Coexistence 2.0 Apr 10, 2019 Dani Rodrik
Today's Sino-American impasse is rooted in "hyper-globalism," under which countries must open their economies to foreign companies, regardless of the consequences for their growth strategies or social models. But a global trade regime that cannot accommodate the world's largest trading economy is a regime in urgent need of repair.
CAMBRIDGE – The world economy desperately needs a plan for "peaceful coexistence" between the United States and China. Both sides need to accept the other's right to develop under its own terms. The US must not try to reshape the Chinese economy in its image of a capitalist market economy, and China must recognize America's concerns regarding employment and technology leakages, and accept the occasional limits on access to US markets implied by these concerns.
The term "peaceful coexistence" evokes the Cold War between the US and the Soviet Union. Soviet leader Nikita Khrushchev understood that the communist doctrine of eternal conflict between socialist and capitalist systems had outlived its usefulness. The US and other Western countries would not be ripe for communist revolutions anytime soon, and they were unlikely to dislodge the Communist regimes in the Soviet bloc. Communist and capitalist regimes had to live side by side.
Peaceful coexistence during the Cold War may not have looked pretty; there was plenty of friction, with each side sponsoring its own set of proxies in a battle for global influence. But it was successful in preventing direct military conflict between two superpowers armed to the hilt with nuclear weapons. Similarly, peaceful economic coexistence between the US and China is the only way to prevent costly trade wars between the world's two economic giants
Today's impasse between the US and China is rooted in the faulty economic paradigm I have called "hyper-globalism," under which countries must open their economies to foreign companies maximally, regardless of the consequences for their growth strategies or social models. This requires that national economic models – the domestic rules governing markets –converge considerably. Without such convergence, national regulations and standards will appear to impede market access. They are treated as "non-tariff trade barriers" in the language of trade economists and lawyers.
Thus, the main US complaint against China is that Chinese industrial policies make it difficult for US companies to do business there. Credit subsidies keep state companies afloat and allow them to overproduce. Intellectual property rules make it easier for copyrights and patents to be overridden and new technologies to be copied by competitors. Technology-transfer requirements force foreign investors into joint ventures with domestic firms. Restrictive regulations prevent US financial firms from serving Chinese customers. President Donald Trump is apparently ready to carry out his threat of slapping additional punitive tariffs on $200 billion of Chinese exports if China does not yield to US demands in these areas.
For its part, China has little patience for arguments that its exports have been responsible for significant whiplash in US labor markets or that some of its firms are stealing technological secrets. It would like the US to remain open to Chinese exports and investment. Yet China's own opening to world trade was carefully managed and sequenced, to avoid adverse impacts on employment and technological progress.
Peaceful coexistence would require that US and China allow each other greater policy space, with international economic integration yielding priority to domestic economic and social objectives in both countries (as well as in others). China would have a free hand to conduct its industrial policies and financial regulations, in order to build a market economy with distinctive Chinese characteristics. The US would be free to protect its labor markets from social dumping and to exercise greater oversight over Chinese investments that threaten technological or national security objectives.
The objection that such an approach would open the floodgates of protectionism, bringing world trade to a halt, is based on a misunderstanding of what drives open trade policies. As the principle of comparative advantage indicates, countries trade because it is in their own interest. When they undertake policies that restrict trade, it is either because they reap compensating benefits elsewhere or because of domestic political failures (for example, an inability to compensate the losers).
In the first instance, freer trade is not warranted because it would leave society worse off. In the second case, freer trade may be warranted, but only to the extent that the political failure is addressed (and compensation is provided). International agreements and trade partners cannot reliably discriminate between these two cases. And even if they could, it is not clear they can provide the adequate remedy (enable compensation, to continue the example) or avoid additional political problems (capture by other special interests such as big banks or multinational firms).
Consider China in this light. Many analysts believe that China's industrial policies have played a key role in its transformation into an economic powerhouse. If so, it would be neither in China's interests, nor in the interest of the world economy, to curb such practices. Alternatively, it could be that these policies are economically harmful on balance, as others have argued. Even in that case, however, the bulk of the costs are borne by the Chinese themselves. Either way, it makes little sense to empower trade negotiators – and the special interests lurking behind them – to resolve fundamental questions of economic policy on which there is little agreement even among economists.
Those who worry about the slippery slope of protectionism should take heart from the experience under the General Agreement on Tariffs and Trade prior to the establishment of the World Trade Organization. Under the GATT regime, countries had much greater freedom to pursue their own economic strategies. Trade rules were both weaker and less encompassing. Yet world trade expanded (relative to global output) at a more rapid clip in the three and a half decades after World War II than it has under the post-1990 hyper-globalist regime. Similarly, one can make a convincing case that, thanks to its unorthodox growth policies, China today is a larger market for foreign exporters and investors than if it had stuck to WTO-compliant policies.
Finally, some may say that these considerations are irrelevant, because China has acceded to the WTO and must play by its rules. But China's entry into the WTO was predicated on the idea that it had become a Western-style market economy, or would become one soon. This has not happened, and there is no good reason to expect that it will (or should). A mistake cannot be fixed by compounding it.
A global trade regime that cannot accommodate the world's largest trading economy – China – is a regime in urgent need of repair.
Apr 12, 2019 | www.moonofalabama.org
Noirette , Apr 10, 2019 1:17:14 PM | link
Demise of the W system.
Nationalize the banks and all financial services from fancy hedge funds to scuzzy pay-day loaners. Force, insofar as poss, repatriation of 'abroad' capital. Put capital controls in place. ( -- > ..unemployment !)
Pass to a flat tax (Federal) of say 13% and make sure absolutely everyone pays it, including Corps at 15% or so? (Corp. tax in the US is absurd, hard to discuss as it always is in some kind of fin. landscape) .. Prison if need be. (> unemployment.) Let States be more free (other topic) Big fortunes/profits are basically confiscated to the tune of 70-90 % in the transition phase.
Break up Big Corps, particularly GAFAMs (Google, Apple, Facebk, Amazon, Microsft) into smaller pieces, with the 'rationale' (it might fly ...), Competition has to be encouraged, we can't have Monopolies!
Dismantle the 'foreign' military control (bases, etc. etc.) by 50% (again might fly.) Audit the Pentagon, cut, cut, all the graft and scams have to go. (Unemployment again) Quality controls of an independent type (one can dream) must be instored (see b's post) Repatriate the personnel (> unemployment)
Social etc. Set up a 2 tier health system. Tier 1 is basic, good, even excellent health care, nationalised (with some room for State characteristics), Tier 2 can be allowed to subsist, private clinics, private insurance (again, this might fly.) This means that 90% of private insurance has to go, the cos. must be terminated.
Dismantle Big Agri in favor of smaller, more 'lucrative' for their owners / managers, farms. So, all present subisdies to farms are cut, abolished, and -- ppl have to pay more for their food! (then what.. etc.)
My suggestions are perhaps not that great (badly tailored? too piece-meal, not adjusted to collapse?) but this is the kind of thing that needs to be discussed immediately and decided on, even if in a jerky and confrontational fashion.
The end of capitalism, in disguise. US pol structure does not allow for such, as the US (and other West, the US is just a stellar ex.) are ruled by rapacious coproratist (typo) oligarchs. Won't happen.
Bart Hansen , Apr 10, 2019 3:37:55 PM | linkNoirette recommends that we "Nationalize the banks and all financial services from fancy hedge funds to scuzzy pay-day loaners."karlof1 , Apr 10, 2019 4:03:44 PM | link
In Hudson's long interview with Siman he says, "...only a public bank can write down the debts -- like student debts today -- without hurting an independent oligarchic financial class."
I have not come to the part regarding how to cut the oligarchs loose.
To student debts and pay-day loan victims, one can add debts owed by small farmers and those underwater mortgage holders who were abandoned by Obama.I see MoA folk beginning to dig into Michael Hudson's 4-part interview with John Siman of Naked Capitalism , which is excellent. But, please ensure you're beginning with the first and going in order. IMO, going to Hudson's website is the best way to accomplish that. This is the main page. Part 1: "The Delphic Oracle as their Davos." Part 2: "Mixed economies and monopoly." Part 3: "The DNA of Western civilization is financially unstable." Part 4: "Up in Arms." Part 4 is at page top.karlof1 , Apr 10, 2019 4:31:44 PM | linkJohn Smith , Apr 10, 2019 5:54:34 PM | link
My favorite Hudson cite so far is from Part 2:
"Today's neoliberal wasteland is basically a reaction against the 19thcentury reformers, against the logic of classical British political economy. The hatred of Marx is ultimately the hatred of Adam Smith and John Stuart Mill, because neoliberals realize that Smith and Mill and Ricardo were all leading to Marx. He was the culmination of their free market views -- a market free from rentiers and monopolists.
"That was the immediate aim of socialism in the late 19thcentury. The logic of classical political economy was leading to a socialist mixed economy. In order to fight Marxism, you have to fight classical economics and erase memory of how civilization has dealt with (or failed to deal with) the debt and rent-extracting problems through the ages. The history of economic thought and the original free-market economics has to be suppressed. Today's choice is therefore between socialism or barbarism, as Rosa Luxemburg said."
What Hudson's providing is a political-economic template for a Beyond Sanders presidential candidate. Sanders, ICYMI, introduced the Senate's version of Medicare For All which is a fundamental component of the type of mixed economy Hudson's advocating.Neoliberalism promised freedom – instead it delivers stifling control
Creeping privatisation is rolling back the state to create a new, absolutist bureaucracy that destroys efficiency
Apr 08, 2019 | economistsview.typepad.com
anne , March 25, 2019 at 04:25 PMhttps://www.nytimes.com/2019/03/25/opinion/stephen-moore-federal-reserve.html
March 25, 2019
Trump's Kakistocracy Is Also a Hackistocracy: The invasion of hucksters has reached the Federal Reserve.
By Paul Krugman
It's no secret that Donald Trump has appointed a lot of partisan, unqualified hacks to key policy positions. A few months ago my colleague Gail Collins asked readers to help her select Trump's worst cabinet member. It was a hard choice, because there were so many qualified applicants.
The winner, by the way, was Wilbur Ross, the commerce secretary. That looks like an even better call now: Ross's department has reportedly prepared a report declaring that imports of European cars threaten U.S. national security. This is both ludicrous and dangerous. It gives Trump the right to start a new phase in his trade war that would inflict severe economic damage while alienating our allies -- and, as a result, undermine national security.
Until recently, however, one agency had seemed immune to the continuing hack invasion: the Federal Reserve, the single institution most crucial to economic policymaking. Trump's Fed nominees, have, by and large, been sensible, respected economists. But that all changed last week, when Trump said he planned to nominate Stephen Moore for the Fed's Board of Governors.
Moore is manifestly, flamboyantly unqualified for the position. But there's a story here that goes deeper than Moore, or even Trump; it's about the whole G.O.P.'s preference for hucksters over experts, even partisan experts.
About Moore: It goes almost without saying that he has been wrong about everything. I don't mean the occasional bad call, which all of us make. I mean a track record that includes predicting that George W. Bush's policies would produce a magnificent boom, Barack Obama's policies would lead to runaway inflation, tax cuts in Kansas would produce a "near immediate" boost to the state's economy, and much more. And, of course, never an acknowledgment of error or reflection on why he got it wrong.
Beyond that, Moore has a problem with facts. After printing a Moore op-ed in which all the key numbers were wrong, one editor vowed never to publish the man's work again. And a blizzard of factual errors is standard practice in his writing and speaking. It's actually hard to find cases where Moore got a fact right.
Yet Moore isn't some random guy who caught Trump's eye. He has long been a prominent figure in the conservative movement: a writer for the Wall Street Journal editorial page, chief economist of the Heritage Foundation, a fixture on the right-wing lecture circuit. Why?
You might say that the G.O.P. values partisan loyalty above professional competence. But that's only a partial explanation, because there are plenty of conservative economists with solid professional credentials -- and some of them are pretty naked in their partisanship, too. Thus, a who's who of well-known conservative economists rushed to endorse the Trump administration's outlandish claims about the benefits from its tax cut, claims they knew full well were unreasonable.
Nor has their partisanship been restrained and polite. Many of us are still mourning the death of Alan Krueger, the Princeton economist best known for research -- since vindicated by many other studies -- showing that increases in the minimum wage don't usually seem to reduce employment. Well, the Nobel-winning conservative economist James Buchanan denounced those pursuing that line of research as "a bevy of camp-following whores."
So conservatives could, if they wanted, turn for advice to highly partisan economists with at least some idea of what they're doing. Yet these economists, despite what often seem like pathetic attempts to curry favor with politicians, are routinely passed over for key positions, which go to almost surreally unqualified figures like Moore or Larry Kudlow, the Trump administration's chief economist.
Many people have described the Trump administration as a kakistocracy -- rule by the worst -- which it is. But it's also a hackistocracy -- rule by the ignorant and incompetent. And in this Trump is just following standard G.O.P. practice.
Why do hacks rule on the right? It may simply be that a party of apparatchiks feels uncomfortable with people who have any real expertise or independent reputation, no matter how loyal they may seem. After all, you never know when they might take a stand on principle.
In any case, there will eventually be a price to pay. True, there is, wrote Adam Smith, "a great deal of ruin in a nation." America isn't just an immensely powerful, wealthy, technologically advanced, peaceful country. We're also a nation with a long tradition of dedicated public service.
Even now -- as I can attest from personal interactions -- a great majority of those working for the Treasury Department, the State Department and so on are competent, hard-working people trying to do the best they can for their country.
But as top jobs systematically go to hacks, there is an inevitable process of corrosion. We're already seeing a degradation of the way our government responds to things like natural disasters. Well, there will be more and bigger disasters ahead. And the people in charge of dealing with those disasters will be the worst of the worst.
Apr 08, 2019 | www.wsws.org
niveb -> Mcomment, 4 days agoThe safety violations and regulatory blindness in this case appear to be so flagrant that it is difficult to believe that any engineers would not have advised against selling the 'plane.'
The problem was that the marketing department has been totally divorced from production and works as instructed by the financiers in Chicago whose concern is only for the next quarter's profits.
Had the corporation been publicly owned the compulsion to put a flawed and dangerous 'plane into the air would have been greatly mitigated -- one imagines that as soon as it was deemed operational massive bonuses were paid out to key individuals. Which is incidentally something that ought to be revealed if there is a proper trial.
So far as democratic control-workers management- is concerned is there any doubt that the views and opinions of those who built and tested the Max would have made it impossible for the psychopath financiers to sell the 'product' in an unsafe condition?
Apr 08, 2019 | www.moonofalabama.orgvk , Apr 7, 2019 5:50:27 PM | 55 ">link
From Michael Roberts' facebook:
Economists are ideologically biased - finds a survey of their views on modern economies conducted by Mark Horowitz, Associate Professor of Sociology at Seton Hall University, New Jersey, entitled Political Identity and Economists' Perceptions of Capitalist Crises.
Economists' Politics Loom Large in their Views of Capitalist Crises
"Surveying academic economists in the United States, we find the field quite skeptical of the prospects of capitalist crises. Despite considerable consensus, political orientation is a highly significant predictor of respondents' outlooks."
"economists are generally skeptical of the prospects of capitalist crises. Very few see mass structural unemployment on the horizon due to automation (Q2) or incompatibility between capitalism and secure or meaningful employment (Q4, Q5). Only a third or so anticipates global financial contagion (Q1), while even fewer affirm a systemic tendency toward monopoly (Q11). Finally, at least two-thirds believe the global economy will likely be capitalist in 200 years (Q8)".
Marx on 'vulgar political economy': "It was henceforth no longer a question, whether this theorem or that was true, but whether it was useful to capital or harmful, expedient or inexpedient, politically dangerous or not. In place of disinterested enquirers, there were hired prize-fighters; in place of genuine scientific research, the bad conscience and the evil intent of apologetic"
Apr 05, 2019 | magic-maths-money.blogspot.comI frequently refer to Gillian Tett's Fools' Gold as an account of ethical mathematical practice. Tett explains how J.P. Morgan came out of the 2008-2009 Financial Crisis because it used mathematics critically rather than blindly accepting the outputs of "black boxes". I felt the approach Tett described was oddly discordant with the attitude of mathematicians. During the crisis, I co-ordinated a response from UK mathematicians, through the Council of Mathematical Sciences, to criticism of the use of mathematics in finance, this information was also passed onto the UK Science Minister of the time.
The standard response from (senior) UK mathematicians was along the lines that finance hadn't used mathematics but abused it.
The solution was to have "more" and "better" mathematicians. This was underpinned by some adopting a logical positivist line, attributed to Hume, that the role of mathematicians is to describe the world as it is, not as it ought to be.
At the time I felt mathematicians were not examining the role of their discipline in the crisis; they were not behaving ethically. This was the start of my journey that transformed me from an "uncritical" (unethical?) mathematician to someone who feels mathematics is vital, so long as it is critical.
Apr 05, 2019 | www.commondreams.org
Why "free" why not "fair". Neoliberals are as dangerious as Big brother in 1994. Actually neoliberal state is as close to Big Brother regine described in 1994. We have total surveillance, with technological capabiltiies which probably exceed anything rulers of 1984 world possessed, Russiagate as "hour of anger", permanent war for permanent people (and total victory of "democracy") , and of course "[neoliberal] freedom is [debt[ slavery..." in neoliberal MSM.Fast forward from one Gilded Age to another. Citizens United, granting unions and corporations the right to spend unlimited amounts of money to advocate for and against political candidates, is often regarded as a singularly dangerous challenge to our democratic norms, especially with its infamous assertion that money is speech. Less attention, however, is pad to the context in which this decision occurred, including corporate consolidation in most sectors of the economy, obscene levels of economic inequality, and near religious reverence for deregulated markets.
Media consolidation itself has played an enormous role in driving up the cost of political campaigns. How did we get to this second Gilded Age and what lessons can we infer regarding our democratic prospects?
The post World War II decades saw white working class gains in income made possible by unionization, the GI bill, and a federal commitment to full employment. Positive as these gains were, they carried with them unintended consequences. Workers and employers, having less fear of depression, periodically drove wages and prices up.
Bursts of inflation and an unprecedented profit squeeze led to unemployment even in the midst of inflation, an unprecedented and unexpected circumstance. Blacks had been left out of the full benefits of the New Deal welfare state and raised demands not only for political equality but also for economic opportunity, one of Reconstruction's forgotten promises.
These events provided an opening for a group of academics who had long despised the New Deal welfare state. Notre Dame University 's Philip Mirowski Never Let a Serious Crisis G to Waste has provided a careful and detailed analysis of this neoliberal movement in American politics.
These neoliberals shared with their nineteenth- century predecessors a faith in markets, but with an important difference. Adam Smith and JS Mill saw markets as non-coercive means to allocate resources and produce goods and services. Neoliberals regarded markets as perfect information processing machines that could provide optimal solutions to all social problems. Hence a commitment not only to lift rent control on housing but also to privatize prisons, water and sewer systems, and to deregulate all aspects of personal finance and treat education and health care as commodities to be pursued on unregulated markets. An essential part of this faith in markets is the post Reagan view of corporate consolidation. Combinations are to be judged only on the basis of cheap products to the consumer.
Older antitrust concerns about worker welfare or threat to democracy itself are put aside. Corporate mergers and the emergence of monopoly are seen as reflections of the omniscient market. In practice, however as we shall see, such a tolerant attitude is not applied to worker associations.
Neoliberals differ from their classical predecessors in a second important way. Market is miraculous and a boon to many, but paradoxically only a strong state can assure its arrival and maintenance. Sometimes it may appear that the market is yielding iniquitous or unsustainable outcomes, which my lead to premature or disastrous rejection of its wisdom. The answer to this anger is more markets, but that requires a strong state staffed by neoliberals. They would have the capacity and authority to enact and impose these markets and distract the electorate and divert them into more harmless pursuits. Recognition of the need for a powerful state stands in partial contradiction to the neoliberal's professed deification of pure markets and was seldom presented to public gatherings. As Mirowski put it, neoliberals operated on the basis of a dual truth, an esoteric truth for its top scholars and theorists and an exoteric version for then public. Celebration of the spontaneous market was good enough for Fox News, whereas top neoliberal scholars discussed how to reengineer government in order to recast society.
The signs of neoliberalism are all around us. Worried about student debt? There is a widely advertised financial institution that will refinance your loan. Trapped in prison with no money for bail. There are corporations and products that will take care of that. Cancer cures, money for funerals and burial expenses can all be obtained via the market. Any problem the market creates the market can solve. The implications of this view have been ominous for democracy and social justice.
The neoliberal deification of markets has many parents. This mindset encouraged and was encouraged by a revolt against democracy. The wealthy had always been concerned that a propertyless working class might vote to expropriate them, but neoliberalism gave them further reason to bypass democracy. Markets were seen as better indicators of truth than democratic elections, though that point was seldom expressed as directly.
Here is FA Hayek's oblique expression of this concern: "if we proceed on the assumption that only the exercises of freedom that the majority will practice are important, we would be certain to create a stagnant society with all the characteristics of unfreedom."
The revolt against democracy has occurred on several different levels of the political process. The question of who can vote is just as contested as during Reconstruction, and not just in the South. As during Reconstruction, it does not take the form of explicit racial appeals. The strategy includes further limiting the time polls are open, reduction in the number of polling places, voter identification cards that take time and money to obtain. Who can vote is also a function of the racist legacy of our history, with prohibitions on voting by felons serving to exclude large numbers of potential voters, disproportionately minorities. It should be mentioned more than it is that these techniques also work to the disadvantage of poor whites. Political scientists Walter Dean Burnham and Thomas Ferguson point out: "In Georgia in 1942, for example, turnout topped out at 3.4 percent (that's right, 3.4 percent; no misprint). Why is no mystery: the Jim Crow system pushed virtually all African-Americans out of the system, while the network of poll taxes, registration requirements, literacy tests and other obstacles that was part of that locked out most poor whites from voting, too. Since the civil rights revolution, turnouts in the South have risen fitfully to national levels, amid much pushback, such as the raft of new voter ID requirements (though these are not limited to the South)."
Minorities, poor, and even substantial segments of the working class are further disadvantaged by efforts to defund the labor opposition. Unions have been the one big money source that Democrats had available, but as the party from Bill Clinton on increasingly became a kind of neoliberalism light, embracing corporate trade agreements with a little bit of job training assistance thrown in, unions lost members, many corporations forced decertification elections. Democrats lost not only financial resources but also the ground troops that had mobilized their voters.
One result of and partial driving force behind these changes is that both parties become big money parties. Burnham and Ferguson-( December 2014)- The President and the Democratic Party are almost as dependent on big money – defined, for example, in terms of the percentage of contributions (over $500 or $1000) from the 1 percent as the Republicans. To expect top down money-driven political parties to make strong economic appeals to voters is idle. Instead the Golden Rule dominates: Money-driven parties emphasize appeals to particular interest groups instead of the broad interests of working Americans that would lead their donors to shut their wallets.
As David Stockman, President Reagan's Budget Director once all but confessed,
"in the modern era the party has never really pretended to have much of a mass constituency. It wins elections by rolling up huge percentages of votes in the most affluent classes while seeking to divide middle and working class voters with various special appeals and striving to hold down voting by minorities and the poor."
Challenging this bipartisan money driven establishment becomes even more difficult as state level ballot access laws are notoriously hostile to third parties. Add to this the private, deceptively named Presidential Debate Commission, which specializes in depriving even candidates about whom large segment s of the population are curious access to the widely watched debates. Unfortunately the celebrated voting reform proposal, HR1, though containing some democratic initiatives such as early voting and automatic voter registration, makes it own contribution to economic and political consolidation.
Bruce Dixon, editor of Black Agenda Report, maintains that only two provisions of this bill are likely to become law and both are destructive: "by raising the qualifying amount from its current level of $5,000 in each of 20 states to $25,000 in 20 states. HR 1 would cut funding for a Green presidential candidate in half, and by making ballot access for a Green presidential candidate impossible in several states it would also guarantee loss of the party's ability to run for local offices." Dixon also predicts that some Democrats "will cheerfully cross the aisle to institutionalize the Pentagon, spies and cops to produce an annual report on the threat to electoral security.
"Democrats are a capitalist party, they are a government party, and this is how they govern. HR 1 reaches back a hundred years into the Democrat playbook politicians created a foreign menace to herd the population into World War 1, which ended in the Red Scare and a couple of red summers, waves of official and unofficial violence and deportations against US leftists and against black people. The Red Scare led to the founding of the FBI, the core of the nation's permanent political police . Fifty years ago these were the same civil servants who gave us the assassinations, the disinformation and illegality of COINTELPRO, and much, much more before that and since then. HR 1 says let's go to the Pentagon and the cops, let's order them to discover threats to the electoral system posed by Americans working to save themselves and the planet."
Dixon is surely right that both parties are capitalist parties, but capitalism itself has taken different forms. New Deal and neoliberal capitalism had far different implications for working class Americans. The New Deal itself was heavily influenced by Norman Thomas and the socialist tradition. In this regard, if what Paul Wellstone used to call the democratic wing of the Democratic Party wishes to see its ideals translated into practice, it must resist efforts to exclude third parties or to deny primary opponents an even playing field.
I am not claiming that there has been a carefully coordinated conspiracy among the individuals and groups that supported these policies, but leaders did act out of a general animus toward popular movements that further reinforced their reverence for corporate markets, and the faith in markets drove the worries about popular movements.
One positive conclusion to be drawn is that if this attack on democracy exists on several levels, activism might be fruitful in many domains and may have a spillover effect. Unions are still not dead, and there is a fight now for the soul of the Democratic Party and that fight might stimulate voter access and eligibility reforms. These in turn could reshape the party's orientation and ideology. Even at the Federal level Dark money is worrisome to many voters and could be an incentive to mobilize for better disclosure laws. There are ample fronts on which to fight and good reason to keep up the struggle.
Apr 04, 2019 | www.moonofalabama.org
psychohistorian , Apr 4, 2019 12:11:22 PM | link
The posting ended with
"But current American elites have no concept of own actions having consequences."
I believe that the current GLOBAL elites do understand exactly what they are doing and the potential consequences to the ongoing existence of private finance.
The war that is being waged is an attempt to keep private finance in charge of our world and they are losing I am pleased to report
Apr 04, 2019 | www.unz.com
Anja Böttcher , says: April 3, 2019 at 7:56 am GMT@Anon You are no Christians. USAism and all radical Protestantism is abusing the surface of Christianity for satanic anti-Christianity.
There is no Christianity but what is rooted in the old and everlasting Church of which Christ is the Head in the Holy Spirit, as laid in apostle's hands and transferred by Church fathers.
Christianity is genuinely collectivist, it has nothing to do with the perverted individualism of Anglosaxon background and does not agree with the inherent nihilistic energy of capitalism.
... ... ...
Apr 03, 2019 | www.zerohedge.com
Flankspeed60 , 2 hours ago link
Never thought Boeing would make Tesla look like a bunch of geniuses...
Jul 25, 2010 | blogs.ft.com
The future of fiscal policy was intensely debated in the FT last week. In this Exchange, I want to examine what is going on in the US and, in particular, what is going on inside the Republican party. This matters for the US and, because the US remains the world's most important economy, it also matters greatly for the world.
My reading of contemporary Republican thinking is that there is no chance of any attempt to arrest adverse long-term fiscal trends should they return to power. Moreover, since the Republicans have no interest in doing anything sensible, the Democrats will gain nothing from trying to do much either. That is the lesson Democrats have to draw from the Clinton era's successful frugality, which merely gave George W. Bush the opportunity to make massive (irresponsible and unsustainable) tax cuts. In practice, then, nothing will be done.
Indeed, nothing may be done even if a genuine fiscal crisis were to emerge. According to my friend, Bruce Bartlett , a highly informed, if jaundiced, observer, some "conservatives" (in truth, extreme radicals) think a federal default would be an effective way to bring public spending they detest under control. It should be noted, in passing, that a federal default would surely create the biggest financial crisis in world economic history.
To understand modern Republican thinking on fiscal policy, we need to go back to perhaps the most politically brilliant (albeit economically unconvincing) idea in the history of fiscal policy: "supply-side economics". Supply-side economics liberated conservatives from any need to insist on fiscal rectitude and balanced budgets. Supply-side economics said that one could cut taxes and balance budgets, because incentive effects would generate new activity and so higher revenue.
The political genius of this idea is evident. Supply-side economics transformed Republicans from a minority party into a majority party. It allowed them to promise lower taxes, lower deficits and, in effect, unchanged spending. Why should people not like this combination? Who does not like a free lunch?
How did supply-side economics bring these benefits? First, it allowed conservatives to ignore deficits. They could argue that, whatever the impact of the tax cuts in the short run, they would bring the budget back into balance, in the longer run. Second, the theory gave an economic justification – the argument from incentives - for lowering taxes on politically important supporters. Finally, if deficits did not, in fact, disappear, conservatives could fall back on the "starve the beast" theory: deficits would create a fiscal crisis that would force the government to cut spending and even destroy the hated welfare state.
In this way, the Republicans were transformed from a balanced-budget party to a tax-cutting party. This innovative stance proved highly politically effective, consistently putting the Democrats at a political disadvantage. It also made the Republicans de facto Keynesians in a de facto Keynesian nation. Whatever the rhetoric, I have long considered the US the advanced world's most Keynesian nation – the one in which government (including the Federal Reserve) is most expected to generate healthy demand at all times, largely because jobs are, in the US, the only safety net for those of working age.
True, the theory that cuts would pay for themselves has proved altogether wrong. That this might well be the case was evident: cutting tax rates from, say, 30 per cent to zero would unambiguously reduce revenue to zero. This is not to argue there were no incentive effects. But they were not large enough to offset the fiscal impact of the cuts (see, on this, Wikipedia and a nice chart from Paul Krugman).
Indeed, Greg Mankiw, no less, chairman of the Council of Economic Advisers under George W. Bush, has responded to the view that broad-based tax cuts would pay for themselves, as follows: "I did not find such a claim credible, based on the available evidence. I never have, and I still don't." Indeed, he has referred to those who believe this as " charlatans and cranks ". Those are his words, not mine, though I agree. They apply, in force, to contemporary Republicans, alas,
Since the fiscal theory of supply-side economics did not work, the tax-cutting eras of Ronald Reagan and George H. Bush and again of George W. Bush saw very substantial rises in ratios of federal debt to gross domestic product. Under Reagan and the first Bush, the ratio of public debt to GDP went from 33 per cent to 64 per cent. It fell to 57 per cent under Bill Clinton. It then rose to 69 per cent under the second George Bush . Equally, tax cuts in the era of George W. Bush, wars and the economic crisis account for almost all the dire fiscal outlook for the next ten years ( see the Center on Budget and Policy Priorities ).
Today's extremely high deficits are also an inheritance from Bush-era tax-and-spending policies and the financial crisis, also, of course, inherited by the present administration. Thus, according to the International Monetary Fund, the impact of discretionary stimulus on the US fiscal deficit amounts to a cumulative total of 4.7 per cent of GDP in 2009 and 2010, while the cumulative deficit over these years is forecast at 23.5 per cent of GDP . In any case, the stimulus was certainly too small, not too large.
The evidence shows, then, that contemporary conservatives (unlike those of old) simply do not think deficits matter, as former vice-president Richard Cheney is reported to have told former treasury secretary Paul O'Neill . But this is not because the supply-side theory of self-financing tax cuts, on which Reagan era tax cuts were justified, has worked, but despite the fact it has not. The faith has outlived its economic (though not its political) rationale.
So, when Republicans assail the deficits under President Obama , are they to be taken seriously? Yes and no. Yes, they are politically interested in blaming Mr Obama for deficits, since all is viewed fair in love and partisan politics. And yes, they are, indeed, rhetorically opposed to deficits created by extra spending (although that did not prevent them from enacting the unfunded prescription drug benefit, under President Bush). But no, it is not deficits themselves that worry Republicans, but rather how they are caused: deficits caused by tax cuts are fine; but spending increases brought in by Democrats are diabolical, unless on the military.
Indeed, this is precisely what John Kyl (Arizona), a senior Republican senator, has just said:
"[Y]ou should never raise taxes in order to cut taxes. Surely Congress has the authority, and it would be right to -- if we decide we want to cut taxes to spur the economy, not to have to raise taxes in order to offset those costs. You do need to offset the cost of increased spending, and that's what Republicans object to. But you should never have to offset the cost of a deliberate decision to reduce tax rates on Americans"
What conclusions should outsiders draw about the likely future of US fiscal policy?
First, if Republicans win the mid-terms in November, as seems likely, they are surely going to come up with huge tax cut proposals (probably well beyond extending the already unaffordable Bush-era tax cuts).
Second, the White House will probably veto these cuts, making itself even more politically unpopular.
Third, some additional fiscal stimulus is, in fact, what the US needs, in the short term, even though across-the-board tax cuts are an extremely inefficient way of providing it.
Fourth, the Republican proposals would not, alas, be short term, but dangerously long term, in their impact.
Finally, with one party indifferent to deficits, provided they are brought about by tax cuts, and the other party relatively fiscally responsible (well, everything is relative, after all), but opposed to spending cuts on core programmes, US fiscal policy is paralysed. I may think the policies of the UK government dangerously austere, but at least it can act.
This is extraordinarily dangerous. The danger does not arise from the fiscal deficits of today, but the attitudes to fiscal policy, over the long run, of one of the two main parties. Those radical conservatives (a small minority, I hope) who want to destroy the credit of the US federal government may succeed. If so, that would be the end of the US era of global dominance. The destruction of fiscal credibility could be the outcome of the policies of the party that considers itself the most patriotic.
In sum, a great deal of trouble lies ahead, for the US and the world.
Where am I wrong, if at all?
July 25, 2010 4:18pm in Financial crisis , Supply-side economics | 10 commentsEmail Share Print
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- Report Martin Wolf | July 25 5:04pm | Permalink
| OptionsBruce Bartlett writes "I think my friend Martin is a bit too hard on Reagan, who did try to cut spending and signed 11 major tax increases into law to bring down the deficit. And Bush 41 initiated a budget deal in 1990 that eventually led to budget surpluses. It was Bush 43 and his willing accomplices among the Republicans who controlled Congress that deserve the vast bulk of the blame."
This is my response: "Fair comment. But, as you have often noted, his followers have repudiated president Reagan's willingness to raise taxes. Nor are they making any credible commitments to large-scale cuts in public spending. It is also the case that, despite a boom in the 1980s, the end of the Reagan and George H. Bush era saw much higher public debt ratios than the beginning. I think you have to recognise that today's Republicans are Reagan's children and, as is often the case, are more uncompromising than their parents."
- Report ralbin | July 25 6:59pm | Permalink
| OptionsMr. Wolf - Your comment is entirely correct though perhaps incomplete. Implicit, and sometimes explicit, in the supply-side argument was that low taxes wouldn't involve any public sacrifices. The Republicans promised the benefits of the liberal state while arguing that the needed tax revenues wouldn't be needed. This is what made it and continues to make it a successful political strategy. This is an actual Big Lie.
Its worth delineating the other Big Lie of Republican political strategy, the the USA is so powerful that it can do anything it wants on the international stage. Add in consistent appeals to racial and religious bigotry (from which the personally decent Mr. Reagan was not immune) and you have almost the whole Republican political strategy of the last 30 years. Very successful and almost all of it based on deception and appeals to the electorate's worst tendencies.
- Report Kent Willard | July 25 7:06pm | Permalink
| OptionsRunning up the debt in order to default and cut spending is like having a heart attack in order to get serious about diet and exercise. It is crazy, but they will do it, and then blame it on someone else.
Any bets on a gov't shutdown attempt next year?
- Report Dana Houle | July 25 7:09pm | Permalink
| OptionsI think you're assuming a lot about the results of the November elections that are far from certain. In fact, it's highly, highly unlikely that the Republicans will win the Senate, and not particularly likely they'll win the House. They will certainly pick up seats in the House, maybe a lot, but there are only a handful of Dem-held Senate seats that I would say today are pretty much lost for the Democrats (North Dakota, Arkansas), while there are also up to 8 Republican-held seats that could be in play. Democrats would have to lose 10 seats that they currently hold and not win any seats currently held by Republicans (even though 5 of those are open and Vitter in Louisiana is so scandal-plagued he may not survive). It's just about implausible the Democrats will lose a net of 10 or more seats.
Even in the House, Democrats will have to lose almost all the contested seats, at a time when the most recent generic ballot from Gallup shows Democrats nationally with an 8 point advantage and most of the vulnerable Democratic incumbents have huge cash advantages over their Republican challengers.
I agree with your interpretation of the political appeal of supply side economics, but I think you're greatly overestimating the ability of the Republicans to win enough seats in November to fully enact their fiscal will on the White House.
- Report toweypat | July 25 7:42pm | Permalink
| Options"Second, the White House will probably veto these cuts"
I wish I could agree. Given what we have seem from President Obama this past year and a half, I think he is just as likely to go along with them as part of some nebulous plan to angle for concessions from the other side, or simply to burnish his bipartisan credentials.
- Report JoelS | July 25 8:24pm | Permalink
| OptionsThanks for saying out loud what has been apparent: that Republicanism has become fundamentally destructive. I don't think there's any doubt that the empire is coming to an end, as all empires do, with the unwillingness of the populace to bear the costs and burdens. The tax revolt is, at its heart, a cancer destroying American power and prosperity.
This is doubly unhealthy because the United States needs a healthy opposition. In its absence, the Democrats are also becoming corrupt. Their electoral appeal has increasingly become: "Vote for us. We're not insane." That's necessary, of course, but hardly sufficient. So we end up with a health care bill with no cost containment, a financial regulatory bill that does not address the speculation and institutional giantism that was at the heart of the collapse, and a stimulus bill half the size that it should have been and heavily tilted against hiring the unemployed in favor of tax cuts. The Republicans would have done worse, but that is small comfort.
Where are you wrong? If anywhere, in having any doubts that we are on the path to destruction, will no reason to think that we will turn back.
- Report Till Schreiber | July 25 9:02pm | Permalink
| OptionsA wild card in the events you outline could be the report of the bipartisan commission on reducing the long-term budget deficit. Larry Summers mentioned it in his contribution to the austerity debate. If, and it's a big if, this report is substantive enough, it might provide cover for Republicans, Democrats, and the White House to tackle long-term deficits.
In addition, I also feel you are a bit generous in labeling the Democrats relatively fiscally responsible. Certainly, the president's budget had rather high projected deficits over the next decade (and beyond).
Ultimately, according to the CBO a lot comes down to health care costs, particularly Medicare. Reforming Medicare and controlling the explosion of costs currently projected for it is the key. Everything else is secondary.
- Report Edward Hatfield | July 25 9:22pm | Permalink
| OptionsAt last you have it spot on. There will have to be a crisis because Weston democracies will not vote for wage cuts. May be it could be done if the elite took a big cut first but that will not happen as most of the elite do not see the problem as their fault.
You recently replied to one of my emails about thestateBritainis in with the words
"I also don't understand this masochism" Well you surely must now
- Report Barry Thompson | July 25 9:24pm | Permalink
| OptionsJames Galbraith says you are wrong:
"So long as U.S. banks are required to accept U.S. government checks -- which is to say so long as the Republic exists -- then the government can and does spend without borrowing, if it chooses to do so Insolvency, bankruptcy, or even higher real interest rates are not among the actual risks to this system."
The only real risk to the system is inflation. The need for any sovereign government that can issue its own currency to balance its budget is merely a useful fiction, of political importance but not a real economic constraint.
Otherwise, keep up the great work!
- Report Richard W | July 25 9:25pm | Permalink
| Options' Those radical conservatives (a small minority, I hope) who want to destroy the credit of the US federal government may succeed. If so, that would be the end of the US era of global dominance. The destruction of fiscal credibility could be the outcome of the policies of the party that considers itself the most patriotic. '
That prospect holds no fear for the majority of contemporary Republican thinking in the party and throughout the conservative base. Withdrawal from NATO, UN and the global stage is precisely the plan. The contemporary Republican party is now more than ever aligned with the populist, reactionary and isolationist sentiments of conservative small town America. It will take many years, but I suspect America is on a long slide to an ungovernable failed state and eventual break-up of the union.
Steven D.Barmitt O'Bamney
Used to be an avid Krugman reader. But I get bored reading about how bad the Republicans are. Tell me something I don't know. The big story he won't write about is that the Republicans wouldn't be such a threat if Team D was worth a damn.
It's like they got the ball in 2009 with the field wide open for a touchdown. But since the game was fixed Team D just danced around their own 20-yard line looking for the feeble Republican defense to block them. Every time they have an opening for a good play they panic over the prospect of scoring big and contrive to fumble the ball. The most they ever want is field goals and to prevent the Republicans from running away with the game too much.
That's why Krugman can write about how scary the Republicans are. But so what? Everyone knows that. Why are they in such a position? That's the interesting story.Benedict@Large
Indeed, and seconded: Kruggers is irrelevant. However correct his critique may be, as far as it goes, it never goes far enough since he has chosen to mutilate himself into playing the role of partisan hack. There is a beam in the Republicans' eye? Well, there is a beam in his eye, too.
The spectacle of 2009-2010 cured me of any lingering desire to vote Democrat ever again – or to waste my time reading Krugman. If my choice is between voting against my own interests on the one hand, and voting against my interests on the other, I'll just stay home or else make my vote a protest against the party that assumes it has an unconditional right to my vote. Reading about how the Republicans are always wrong, with nary a mention of how Democrats are right there with them in the latrine of wrongness isn't worth a minute more of my time – and my time isn't even very valuable.tongorad
The problem (that leads to the boredom) with reading Krugman is not that he's always talking about how bad the Republicans are. That after all is true. The problem with reading Krugman is that he's always picking on the lowest hanging fruit; the easy cases that require no special nuance or understanding. Krugman is a smart man, and he is better than this. We have all too many of us capable of picking apart the 4th grade thinking and analysis that is so common in the GOP. To add Krugman to that list is a waste of (his and our) time.hidflect
Krugman is a smart man, and he is better than this.
Krugman is a collaborator. His wealth and prestige is built on his capacity for perpetuating falsehoods that have had vast and deadly consequences (Obama care, for instance).fresno dan
Not to mention he was a huge advocate of NAFTA. Something he never mentions.Ulysses
Krugman's defense of Obama care either indicates a lack of intellect, or in my view the more probable possibility, the inability to accept that the system is thoroughly corrupt, including most dems and economistsTom Allen
I think the most serious problem that Paul Krugman has, in accepting that the system is thoroughly corrupt, is his internalization of the meritocratic myth. The syllogism runs as follows:
1) I have "merit"
2)The system has lavished wealth and renown on me
3)Therefore, those who claim that our system "isn't really meritocratic" must themselves lack "merit," or be deluded from too much sentimentality, or too much attention to "exceptions that prove the rule."NotTimothyGeithner
He's also prone to defending politicians and economists with whom he's personal friends - and there are a lot of them. That's human nature, but it tends to make one skeptical of his objectivity when, for example, Larry Summers or Ben Bernanke is involved.jrs
He's also preaching to the choir. Who is Krugthullu's audience? Outside of New Yorkers, it's largely people who fantasize about finishing the Sunday crossword despite not actually trying and love to have a simplified "liberal" world view reinforced. Given how Obots use to swarm, would he have survived not towing the company line? Without his column, Krugthullu is just another economics professor without the backing of a billionaire who keeps him around as a pet. Maybe Warren Buffet would put up a nice fence to keep Krugthullu in his yard, but he would likely have to spend time in Omaha.
The flip side is Krugthullu has likely burned too many bridges to regain his 2009 status. The Obots can't handle criticism, and it's rather late to join the Obama anonymous support group.jo6pac
I mostly think they keep Krug around to justify "trade" agreements. That the little battles don't matter so much compared to "trade" agreements (and in fact they don't, on the issue of healthcare, "trade" agreements are a serious threat to even those countries with better medical systems. "Trade" agreements can override other political battles, even those where Krugs position might be decent).GlobalMisanthrope
Thanks for LOL, so true.flora
Yeah, I am completely mystified by his defense of the ACA. My employers think of themselves as good liberals (although they do not provide health insurance but rather a health stipend to a handful of top managers that we can apply toward our purchase of insurance on the exchange) and have trotted out Krugman on occasion when I have argued against the Act.
I was at a dinner party before Christmas with a diverse group of professionals hosted by a friend who is a wine maker. There were several people from the food and beverage industry, a university professor and her law school administrator spouse, an obstetrical surgeon, a rancher and three others I never got a chance to learn anything about. The subject of "Obamacare" came up. I was truly astonished by the completely fact-free conversation that ensued. So much so that I stayed silent for a long time, really not knowing what to say.
My friend, the host, noticed my expression and asked me what I thought about Obamacare. So I described it as the boondoggle that it is and went into some detail debunking many of the claims made by the other guests. Honestly, I mean they were more or less polite, but they didn't think I knew what I was talking about. What can account for this?
Well, one of the things that came out was that I was, by some distance, the lowest paid person at the table.
It's no excuse for someone who actually thinks and writes about public policy, but could it be that Krugman is like my fellow guests and just never had to think about the cost of his health insurance simply because he could always afford it. So, I mean, he's never done the math. He's just done the "responsible thing" and carried insurance his whole life.
Anyway, it was a cold shower to realize how intractable their belief in the system is. As I find myself saying a lot lately, I was not heartened.Lexington
The whole ACA thing reminds me of the urban renewal projects of the 50s and 60s. Those were supposedly progressive projects to replace blighted areas with modern housing. In fact it was political snake oil that didn't help the poor so much as help large cities fill their coffers. It replaced poor dwellings with middle class dwellings that increased the cities' tax revenues. The poor were left to fend for themselves as their poor but stable neighborhoods were destroyed. The designers of the projects thought they were doing good.
I wonder how many people sitting around the table with you tried to buy their mandated insurance on the ACA web portal or on the open market? ACA sounds good in theory.
It's no excuse for someone who actually thinks and writes about public policy, but could it be that Krugman is like my fellow guests and just never had to think about the cost of his health insurance simply because he could always afford it. So, I mean, he's never done the math. He's just done the "responsible thing" and carried insurance his whole life.
I have my frustrations with Krugman too, but I think progressives need to cut the guy some slack: he's a professor at Princeton, a Nobel laureate, and has a trophy case full of professional honours and twenty books plus a couple of hundred articles under his belt. He's in the sanctum sanctorum of the elite.
If he never penned another op ed or blog post or participated in another public debate it wouldn't make the slightest difference to his legacy. Yet there he is, the very model of a public intellectual, actually inviting non specialists to engage in a discussion about economics and public policy, and fighting the good fight for liberalism. You can be sure he isn't doing it to win plaudits from his peers. ...
Apr 03, 2019 | www.commondreams.org
Imagine this situation: Your country has had a military setback in a war that was supposed to be over after a few months of "shock and awe." Because of that war, it has lost the goodwill and prestige of much of the international community.
The national debt has grown to staggering size. Citizens complain bitterly about the government, especially the legislative branch, for being a bunch of do-nothings working solely for themselves or for special interest groups. In fact, the political scene has pretty much lost its center -- moderates are attacked by all sides as the political discourse becomes a clamor of increasingly extreme positions.
It seems there are election campaigns going on all the time, and they are increasingly vicious. The politicians just want to argue about moral issues -- sexuality, decadent art, the crumbling family and the like -- while pragmatic matters of governance seem neglected.
Sound familiar? That society was Germany of the 1920s -- the ill-fated Weimar Republic. But it also describes more and more the political climate in America today.
Germans were worried about the future of their country. They suffered from all sorts of terror, as assassinations, coup attempts and crime pulled their society apart. The left blamed the right; the right blamed the left, and the political center simply dried up.
To get themselves out of the mess, Germans might have demanded government that carefully mended fences with its allies and enemies; one that judiciously hammered out compromises among the various political parties and sought the middle path.
But we know that didn't happen. In Germany of the 1920s, as now in 21st-century America, appeals to reason and prudence were no way to get votes in times of crisis. Much more effective were appeals to the anger and fear of the German people. A politician could attract more votes by criticizing the government than by praising it, and a vicious negative campaign was usually more effective than a clean one. One of the problems of democracy is that voters aren't always rational, and appeals like these could be very effective.
As usually happens in times of distress, the Germans became a people for whom resolve was valued more highly than prudence, daring more than caution, and righteousness more than discretion. In many ways, they were a people not so different from today's Americans.
What was needed, the Germans thought, was a strong leader -- someone who would put an end to politics as usual; most of all, someone who could unite all the divisions in Germany and dispel the clamor. They found that leader in Adolf Hitler, and for a time, most Germans were glad they did.
Of course, America is not 1920s Germany, and we are certainly not on the verge of a fascist state. But neither have we experienced the deep crises the Germans faced. The setbacks of the Iraq/Afghan war are a far cry from the devastating loss of the First World War; we are not considered the scourge of the international community, and we don't need wheelbarrows full of money to buy a loaf of bread. But even in these relatively secure times, we have shown an alarming willingness to choose headstrong leadership over thoughtful leadership, to value security over liberty; to accept compromises to constitutional principles, and to defy the opinion of the rest of the world.
How would we react if things got worse? If we were to lose the war in Iraq, leaving a fundamentalist regime in place; if we endured several more major terrorist attacks; if the economy collapsed; if fuel prices reached $7 per gallon -- would we cling even more fiercely to our democratic ideals? Or would we instead demand greater surveillance, more secret prisons, more arrests for "conspiracies" that amount to little more than daydreams, and more quashing of dissent?
Our history suggests the latter. We Americans have had our flights from democracy -- the internment of Japanese-Americans in World War II, the Red Scare and the McCarthy era, Watergate -- but we have always pulled back from the brink and returned to normal.
The time is coming for us to pull back from the brink again. This must happen before the government gets so strong that it can completely demonize opposition, gain complete control of the media, and develop dossiers on all its citizens. By then it will be too late, and we'll have ourselves to blame.
Brian E. Fogarty, a sociology professor at the College of St. Catherine in St. Paul, is the author of " War, Peace, and the Social Order ."
Mar 31, 2019 | www.nakedcapitalism.com... ... ...
Running in the background, though, was a new, darker theme: That the post-2008 reforms had gone too far in restricting policymakers' discretion in crises. The trio most responsible for making the post-Lehman bailout revolution -- Ben Bernanke, Timothy Geithner, and Henry Paulson -- expressed their misgivings in a joint op-ed :
But in its post-crisis reforms, Congress also took away some of the most powerful tools used by the FDIC, the Fed and the Treasury the FDIC can no longer issue blanket guarantees of bank debt as it did in the crisis, the Fed's emergency lending powers have been constrained, and the Treasury would not be able to repeat its guarantee of the money market funds.
These powers were critical in stopping the 2008 panic The paradox of any financial crisis is that the policies necessary to stop it are always politically unpopular. But if that unpopularity delays or prevents a strong response, the costs to the economy become greater.
We need to make sure that future generations of financial firefighters have the emergency powers they need to prevent the next fire from becoming a conflagration.
Sotto voce fears of this sort go back to the earliest reform discussions. But the question surfaced dramatically in Timothy Geithner's 2016 Per Jacobsson Lecture, " Are We Safer? The Case for Strengthening the Bagehot Arsenal ." More recently, the Group of Thirty has advanced similar suggestions -- not too surprisingly, since Geithner was co-project manager of the report, along with Guillermo Ortiz, the former Governor of the Mexican Central Bank, who introduced the former Treasury Secretary at the Per Jacobson lecture.
Aside from the financial collapse itself, probably nothing has so shaken public confidence in democratic institutions as the wave of bailouts in the aftermath of the collapse. The redistribution of wealth and opportunity that the bailouts wrought surely helped fuel the populist surges that have swept over Europe and the United States in the last decade. The spectacle of policymakers rubber stamping literally unlimited sums for financial institutions while preaching the importance of austerity for everyone else has been unbearable to millions of people.
Especially in money-driven political systems, affording policymakers unlimited discretion also plainly courts serious risks. Put simply, too big to fail banks enjoy a uniquely splendid situation of "heads I win, tails you lose" when they take risks. Scholars whose research INET has supported, notably Edward Kane , have shown how the certainty of government bailouts advantages large financial institutions, directly affecting prices of their bonds and stocks.
For these reasons INET convened a panel at a G20 preparatory meeting in Berlin on " Moral Hazard Issues in Extended Financial Safety Nets ." The Power Point presentations of the three panelists are presented in the order in which they gave them, since the latter ones sometimes comment on Edward Kane 's analysis of the European banks. Kane, who coined the term "zombie bank" and who famously raised early alarms about American savings and loans, analyzed European banks and how regulators, including the U.S. Federal Reserve, backstop them.
Peter Bofinger , Professor of International and Monetary Economics at the University of Würzburg and an outgoing member of the German Economic Council, followed with a discussion of how the system has changed since 2008. Helene Schuberth , Head of the Foreign Research Division of the Austrian National Bank, analyzed changes in the global financial governance system since the collapse.
The panel took place as public discussion of a proposed merger between two giant German banks, the Deutsche Bank and Commerzbank, reached fever pitch. The panelists explored issues directly relevant to such fusions, without necessarily agreeing among themselves or with anyone at INET.
But the point Robert Johnson, INET's President, and I made some years back , amid an earlier wave of talk about using public money to bail out European banks, remains on target:
We are only interested observers of the arm wrestling between the various EU countries over the costs of bank rescues, state expenditures, and such. But we do think there is a clear lesson from the long history of how governments have dealt with bank failures . [If] the European Union needs to step in to save banks, there is no reason why they have to do it for free best practice in banking rescues is to save banks, but not bankers. That is, prevent the system from melting down with all the many years of broad economic losses that would bring, but force out those responsible and make sure the public gets paid back for rescuing the financial system.
The simplest way to do that is to have the state take equity in the banks it rescues and write down the equity of bank shareholders in proportion. This can be done in several ways -- direct equity as a condition for bailout, requiring warrants that can be exercised later, etc. The key points are for the state to take over the banks, get the bad loans rapidly out of those and into a "bad bank," and hold the junk for a decent interval so the rest of the market does not crater. When the banks come back to profitability, you can cash in the warrants and sell the stock if you don't like state ownership. That way the public gets its money back .at times states have even made a profit.
In 2019, another question, alas, is also piercing. In country after country, Social Democratic center-left parties have shrunk, in many instances almost to nothingness. In Germany the SPD gives every sign of following the French Socialist Party into oblivion. Would a government coalition in which the SPD holds the Finance Ministry even consider anything but guaranteeing the public a huge piece of any upside if they rescue two failing institutions?
The full article of Edward Kane
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WheresOurTeddy , March 29, 2019 at 11:49 am
Enforcement of financial laws is not our thing. Just ask Chuck Schumer of the #Non-Resistance:
Synoia , March 29, 2019 at 12:13 pm
It waz the Russians wot did it!
The ones Russing around the WasNeBos corridor.
Louis Fyne , March 29, 2019 at 12:17 pm
there needs to be an asset tax on/break up of the megas. End the hyper-agglomeration of deposits at the tail end.
not holding my breath though. (see NY state congressional delegation)
to be generous, tax starts at $300 billion. Even then it affects only a dozen or so US banks. But would be enough to clamp down on the hyper-scale of the largest US/world banks.
The world would be better off with lot more mid-sized regional players.
thesaucymugwump , March 29, 2019 at 12:17 pm
Anyone who mentions Timmy Geithner without spitting did not pay attention during the Obama reign of terror. He and Obama crowed about the Making Home Affordable Act, implying that it would save all homeowners in mortgage trouble, but conveniently neglected to mention that less than 100 banks had signed up. The thousands of non-signatories simply continued to foreclose. Not to mention Eric Holder's intentional non-prosecution of banksters. For these and many other reasons, especially his "Islamic State is only the JV team" crack, Obama was one of our worst presidents.
chuck roast , March 29, 2019 at 12:21 pm
Thank you Yves and Tom Ferguson.
Fergusons graph on DBK's default probabilities coincides with the ECB's ending its asset purchase programme and entering the "reinvestment phase of the asset purchase programme".
The worst of the euro zombie banks appear to be getting tense and nervous.
Maybe that is why Jerome Powell did his volte-face last month on gradually raising interest rates. Note that the Fed also reduced its automatic asset roll-off. I'm curious if the other euro-zombies in the "peers" return on equity chart are are experiencing volatility also.
Craig H. , March 29, 2019 at 1:04 pm
Apparently the worst fate you can suffer as long as you don't go Madoff is Fuld. According to wikipedia his company manages a hundred million which must be humiliating. It's not as humiliating as locking the guy up in prison would be by a very long stretch.
Greenspan famously lamented that there isn't anything the regulators can really do except make empty threats. This is dishonest. The regulations are not carved in stone like the ten commandments. In China they execute incorrigible financiers all the time.
John Wright , March 30, 2019 at 10:31 am
Greenspan was never willing to counter any problem that might irritate powerful financial constituencies.
For example, during the internet stock bubble of the late 1990's, Greenspan decried the "irrational exuberance" of the stock market.
The Greenspan Fed could have raised the margin requirement for stocks to buttress this view, but did not.
As I remembered reading, Greenspan was in poor financial shape when he got his Fed job.
His subsequent performance at the Fed apparently left him a wealthy man.
Real regulation by Greenspan may have adversely affected his wealth.
It may explain why Alan Greenspan would much rather let a financial bubble grow until it pops and then "fix it".
Procopius , March 31, 2019 at 12:30 am
Everybody forgets (or at least does not mention) that Greenspan was a member of the Class of '43, the (mostly Canadian) earliest members of the Objectivist Cult with guru Ayn Rand. Expecting him to act rationally is foolish. It may happen accidentally (we do not know why he chose to let the economy expand unhindered in 1999), but you cannot count on it. In a world with information asymmetry expecting markets to be concerned about reputation is ridiculous. To expect them to police themselves for long term benefit is even more ridiculous.
rd , March 29, 2019 at 3:06 pm
I think Finance is currently about 13% of the S&P 500, down from the peak of about 18% or so in 2007. I think we will have a healthy economy and improved political climate when Finance is about 8-10% of the S&P 500 which is about where I think finance plays a healthy, but not overwhelming rentier role in the economy.
Inode_buddha , March 29, 2019 at 4:51 pm
I think things will be much better when finance is about ~3% of the S&P 500, but no more than that.
Jan 06, 2017 | economistsview.typepad.comPeter K. -> Chris G ... , January 05, 2017 at 11:59 AMI've heard otherwise. The progressive neoliberals are just putting out disinformation.Peter K. -> Chris Lowery ... , January 05, 2017 at 07:30 AM
"At every point of the race, Mr. Trump was doing better among white voters without a college degree than Mitt Romney did in 2012 - by a wide margin. Mrs. Clinton was also not matching Mr. Obama's support among black voters."
"Mrs. Clinton's gains were concentrated among the most affluent and best-educated white voters, much as Mr. Trump's gains were concentrated among the lowest-income and least-educated white voters."
Trump won the Republican primary and general election.JF -> Chris Lowery ... , January 05, 2017 at 09:02 AM
""Trump dominated - in the primary and general elections - those districts represented by Congress's most conservative members," Tim Alberta wrote in National Review (he is now at Politico):
They once believed they were elected to advance a narrowly ideological agenda, but Trump's success has given them reason to question that belief.
Among these archconservatives, who in the past had been fanatical in their pursuit of ideological purity, the realization that they can no longer depend on unfailing support from their constituents has provoked deep anxiety."
These archconservatives who say that Trump's flimsy mandate is just based on just 80,000 votes in the rustbelt are in for a rude awakening. He won the primary. In Northern States. In Southern States. Everywhere.
It's hilarious that the progressive neoliberals like DeLong, Krugman, Drum, Yglesias etc have said exactly nothing about Trump's tweets at Congressional Republicans over the independent ethics committee.
There is a propaganda technique where you describe straw-person characterizations then undermine them. When in fact the whole longwinded campaign depends on readers and listeners not bothering or too tired to focus and see the mischaracterizations in the straw.Libezkova -> Chris Lowery ... , January 05, 2017 at 09:49 AM
This whole thing is an apologia, for propaganda purposes, as I see it. We all need to take care. It takes a lot of money and effort to organize such propaganda exercises. Please take care in using and reusing these type things."Trump has converted the GOP into a populist, America First party" is an overstatement. He definitely made some efforts in this direction, but it is premature to declare this "fait accompli".
If we consider two possibilities: "GOP establishment chew up Trump" and "Trump chew up GOP establishment" it is clear that possibility is more probable.
Theoretically that might give Democrats a chance, but I think the Clintonized Party is too corrupt to take this chance. "An honest politician is one who, when he is bought, will stay bought." ;-)
In any case, 2018 elections will be very interesting as I think that the process of a slow collapse of neoliberal ideology and the rise of the US nationalist movements ("far right") will continue unabated.
This is the same process that we see in full force in EU.
www.sott.netReprinted from RT
FBI and National Intelligence chiefs both agree with the CIA assessment that Russia interfered with the 2016 US presidential elections partly in an effort to help Donald Trump win the White House, US media report.
FBI Director James B. Comey and Director of National Intelligence James R. Clapper are both convinced that Russia was behind cyberattacks that targeted Democratic presidential candidate Hillary Clinton and her campaign chairman, John Podesta, The Washington Post and reported Friday, citing a message sent by CIA Director John Brennan to his employees.
"Earlier this week, I met separately with FBI [Director] James Comey and DNI Jim Clapper, and there is strong consensus among us on the scope, nature, and intent of Russian interference in our presidential election," the message said, according to officials who have seen it.
"The three of us also agree that our organizations, along with others, need to focus on completing the thorough review of this issue that has been directed by President Obama and which is being led by the DNI," it continued.
Comment: The FBI now flip-flops from its previous assessment: FBI rejects CIA assessment that Russia influenced presidential election to help Trump win, calling info "fuzzy and ambiguous"
... ... ...
Mar 25, 2019 | www.counterpunch.orgHere are three important lessons for the progressive left to consider now that it is clear the inquiry by special counsel Robert Mueller into Russiagate is never going to uncover collusion between Donald Trump's camp and the Kremlin in the 2016 presidential election.
Painting the pig's face
The left never had a dog in this race. This was always an in-house squabble between different wings of the establishment. Late-stage capitalism is in terminal crisis, and the biggest problem facing our corporate elites is how to emerge from this crisis with their power intact. One wing wants to make sure the pig's face remains painted, the other is happy simply getting its snout deeper into the trough while the food lasts.
Russiagate was never about substance, it was about who gets to image-manage the decline of a turbo-charged, self-harming neoliberal capitalism.
The leaders of the Democratic party are less terrified of Trump and what he represents than they are of us and what we might do if we understood how they have rigged the political and economic system to their permanent advantage.
It may look like Russiagate was a failure, but it was actually a success. It deflected the left's attention from endemic corruption within the leadership of the Democratic party, which supposedly represents the left. It rechannelled the left's political energies instead towards the convenient bogeymen targets of Trump and Russian president Vladimir Putin.
Mired in corruption
What Mueller found – all he was ever going to find – was marginal corruption in the Trump camp. And that was inevitable because Washington is mired in corruption. In fact, what Mueller revealed was the most exceptional forms of corruption among Trump's team while obscuring the run-of-the-mill stuff that would have served as a reminder of the endemic corruption infecting the Democratic leadership too.
An anti-corruption investigation would have run much deeper and exposed far more. It would have highlighted the Clinton Foundation, and the role of mega-donors like James Simons, George Soros and Haim Saban who funded Hillary's campaign with one aim in mind: to get their issues into a paid-for national "consensus".
Further, in focusing on the Trump camp – and relative minnows like Paul Manafort and Roger Stone – the Russiagate inquiry actually served to shield the Democratic leadership from an investigation into the much worse corruption revealed in the content of the DNC emails. It was the leaking / hacking of those emails that provided the rationale for Mueller's investigations. What should have been at the front and centre of any inquiry was how the Democratic party sought to rig its primaries to prevent party members selecting anyone but Hillary as their presidential candidate.
So, in short, Russiagate has been two years of wasted energy by the left, energy that could have been spent both targeting Trump for what he is really doing rather than what it is imagined he has done, and targeting the Democratic leadership for its own, equally corrupt practices.
But it's far worse than that. It is not just that the left wasted two years of political energy on Russiagate. At the same time, they empowered Trump, breathing life into his phony arguments that he is the anti-establishment president, a people's president the elites are determined to destroy.
Trump faces opposition from within the establishment not because he is "anti-establishment" but because he refuses to decorate the pig's snout with lipstick. He is tearing the mask off late-stage capitalism's greed and self-destructiveness. And he is doing so not because he wants to reform or overthrow turbo-charged capitalism but because he wants to remove the last, largely cosmetic constraints on the system so that he and his friends can plunder with greater abandon – and destroy the planet more quickly.
The other wing of the neoliberal establishment, the one represented by the Democratic party leadership, fears that exposing capitalism in this way – making explicit its inherently brutal, wrist-slitting tendencies – will awaken the masses, that over time it will risk turning them into revolutionaries. Democratic party leaders fear Trump chiefly because of the threat he poses to the image of the political and economic system they have so lovingly crafted so that they can continue enriching themselves and their children.
Trump's genius – his only genius – is to have appropriated, and misappropriated, some of the language of the left to advance the interests of the 1 per cent. When he attacks the corporate "liberal" media for having a harmful agenda, for serving as propagandists, he is not wrong. When he rails against the identity politics cultivated by "liberal" elites over the past two decades – suggesting that it has weakened the US – he is not wrong. But he is right for the wrong reasons.
TV's version of clickbait
The corporate media, and the journalists they employ, are propagandists – for a system that keeps them wealthy. When Trump was a Republican primary candidate, the entire corporate media loved him because he was TV's equivalent of clickbait, just as he had been since reality TV began to usurp the place of current affairs programmes and meaningful political debate.
The handful of corporations that own the US media – and much of corporate America besides – are there both to make ever-more money by expanding profits and to maintain the credibility of a political and economic system that lets them make ever more money.
The "[neo]liberal" corporate media shares the values of the Democratic party leadership. In other words, it is heavily invested in making sure the pig doesn't lose its lipstick. By contrast, Fox News and the shock-jocks, like Trump, prioritise making money in the short term over the long-term credibility of a system that gives them licence to make money. They care much less whether the pig's face remains painted.
So Trump is right that the "liberal" media is undemocratic and that it is now propagandising against him. But he is wrong about why. In fact, all corporate media – whether "liberal" or not, whether against Trump or for him – is undemocratic. All of the media propagandises for a rotten system that keeps the vast majority of Americans impoverished. All of the media cares more for Trump and the elites he belongs to than it cares for the 99 per cent.
Gorging on the main course
Similarly, with identity politics. Trump says he wants to make (a white) America great again, and uses the left's obsession with identity as a way to energize a backlash from his own supporters.
Just as too many on the left sleep-walked through the past two years waiting for Mueller – a former head of the FBI, the US secret police, for chrissakes! – to save them from Trump, they have been manipulated by liberal elites into the political cul-de-sac of identity politics.
Just as Mueller put the left on standby, into waiting-for-the-Messiah mode, so simple-minded, pussy-hat-wearing identity politics has been cultivated in the supposedly liberal bastions of the corporate media and Ivy League universities – the same universities that have turned out generations of Muellers and Clintons – to deplete the left's political energies. While we argue over who is most entitled and most victimised, the establishment has carried on raping and pillaging Third World countries, destroying the planet and siphoning off the wealth produced by the rest of us.
These liberal elites long ago worked out that if we could be made to squabble among ourselves about who was most entitled to scraps from the table, they could keep gorging on the main course.
The "[neo]liberal" elites exploited identity politics to keep us divided by pacifying the most maginalised with the offer of a few additional crumbs. Trump has exploited identity politics to keep us divided by inflaming tensions as he reorders the hierarchy of "privilege" in which those crumbs are offered. In the process, both wings of the elite have averted the danger that class consciousness and real solidarity might develop and start to challenge their privileges.
The Corbyn experience
3. But the most important lesson of all for the left is that support among its ranks for the Mueller inquiry against Trump was foolhardy in the extreme.
Not only was the inquiry doomed to failure – in fact, not only was it designed to fail – but it has set a precedent for future politicised investigations that will be used against the progressive left should it make any significant political gains. And an inquiry against the real left will be far more aggressive and far more "productive" than Mueller was.
If there is any doubt about that look to the UK. Britain now has within reach of power the first truly progressive politician in living memory, someone seeking to represent the 99 per cent, not the 1 per cent. But Jeremy Corbyn's experience as the leader of the Labour party – massively swelling the membership's ranks to make it the largest political party in Europe – has been eye-popping.
I have documented Corbyn's travails regularly in this blog over the past four years at the hands of the British political and media establishment. You can find many examples here.
Corbyn, even more so than the small, new wave of insurgency politicians in the US Congress, has faced a relentless barrage of criticism from across the UK's similarly narrow political spectrum. He has been attacked by both the rightwing media and the supposedly "liberal" media. He has been savaged by the ruling Conservative party, as was to be expected, and by his own parliamentary Labour party. The UK's two-party system has been exposed as just as hollow as the US one.
The ferocity of the attacks has been necessary because, unlike the Democratic party's success in keeping a progressive leftwinger away from the presidential campaign, the UK system accidentally allowed a socialist to slip past the gatekeepers. All hell has broken out ever since.
Simple-minded identity politics
What is so noticeable is that Corbyn is rarely attacked over his policies – mainly because they have wide popular appeal. Instead he has been hounded over fanciful claims that, despite being a life-long and very visible anti-racism campaigner, he suddenly morphed into an outright anti-semite the moment party members elected him leader.
I will not rehearse again how implausible these claims are. Simply look through these previous blog posts should you be in any doubt.
But what is amazing is that, just as with the Mueller inquiry, much of the British left – including prominent figures like Owen Jones and the supposedly countercultural Novara Media – have sapped their political energies in trying to placate or support those leading the preposterous claims that Labour under Corbyn has become "institutionally anti-semitic". Again, the promotion of a simple-minded identity politics – which pits the rights of Palestinians against the sensitivities of Zionist Jews about Israel – was exploited to divide the left.
The more the left has conceded to this campaign, the angrier, the more implacable, the more self-righteous Corbyn's opponents have become – to the point that the Labour party is now in serious danger of imploding.
A clarifying moment
Were the US to get its own Corbyn as president, he or she would undoubtedly face a Mueller-style inquiry, and one far more effective at securing the president's impeachment than this one was ever going to be.
That is not because a leftwing US president would be more corrupt or more likely to have colluded with a foreign power. As the UK example shows, it would be because the entire media system – from the New York Times to Fox News – would be against such a president. And as the UK example also shows, it would be because the leaderships of both the Republican and Democratic parties would work as one to finish off such a president.
In the combined success-failure of the Mueller inquiry, the left has an opportunity to understand in a much more sophisticated way how real power works and in whose favour it is exercised. It is moment that should be clarifying – if we are willing to open our eyes to Mueller's real lessons.
Jonathan Cook won the Martha Gellhorn Special Prize for Journalism. His latest books are " Israel and the Clash of Civilisations: Iraq, Iran and the Plan to Remake the Middle East" (Pluto Press) and " Disappearing Palestine: Israel's Experiments in Human Despair " (Zed Books). His website is http://www.jonathan-cook.net/
Mar 22, 2019 | sputniknews.com
The American aviation company has recently been immersed in a scandal after the crash of two 737 MAX 8 airliners in a span of less than six months. An official investigation into the catastrophes is ongoing, but some reports suggest that Boeing's automatic anti-stall system and a faulty sensor could be behind them. Boeing has won a three-year contract with the US Navy according to which it will upgrade 78 F/A-18 Super Hornets from Block II modifications to Block III, a company statement reads. The upgrades will include an enhanced network capability, longer range, reduced radar signature, an advanced cockpit system, and an enhanced communication system for the bomber jets. It will also extend the jets' service life from 6,000 hours to 10,000 hours.
Canadian, European Regulators to Hold Independent Reviews of Boeing 737 MAX
The aviation company will commence work on meeting the orders in the $4 billion contract "early in the next decade". The company noted that the contract saves some $395 million in taxpayer money, as it is a multi-year contract and thus the price for the work carried out during this period is fixed and will not be determined on a year-by-year basis.
The signing of the contract comes at a difficult time for Boeing, as its popular 737 MAX planes have wound up at the centre of an investigation after two aircraft in the series crashed in a span of less than six months. The crashes led to a global grounding of the planes, with the US being one of the last countries to do so. Although a probe into the reasons behind crashes is still ongoing, investigators have said that after seeing data from the black boxes, there are certain similarities between the two cases.
READ MORE: Captain on Boeing 737 Max: Pilots Were Fighting Against Aircraft System
The crashes have also forced the US military to start reviewing the training procedures for its pilots of large cargo and transport planes, including the president's Air Force One, citing the need to make sure they can handle emergency situations.
Mar 22, 2019 | larrysummers.com
My paper with Lukasz Rachel on secular stagnation and fiscal policy summarized here has attracted a number of interesting responses including from Martin Wolf , David Leonhardt , Martin Sandbu and Brad DeLong and also many participants at the Brookings conference.
I'm gratified that there seems to be general acceptance of the core secular stagnation argument. "Normal" policy settings of real interest rates in the 2 percent range, balanced primary budgets and stable financial markets are a prescription for stagnation and underemployment. Such economic success as the industrial world has enjoyed in recent decades has reflected a combination of very low real rates, big budget deficits, private leveraging up and asset bubbles.
No one from whom I have heard doubts the key conclusion that a combination of meaningfully positive real interest rates and balanced budgets would likely be a prescription for sustained recession if not depression in the industrial world.
Notice that this is a much more fundamental argument than the suggestion that the some effective lower bound on interest rates may impede stabilizing the economy. The argument is that because of chronic private sector tendency towards oversaving, economies may be prone to underemployment and financial stability absent policy responses which are themselves problematic.
This is an argument much more in the spirit of Keynes, the early Keynesians, and today's Post-Keynesians than the New Keynesians who have set the terms for much of contemporary macroeconomic discourse both in academia and in the world's central banks.
The central feature of New Keynesian models is an idea that economies have an equilibrium to which they naturally revert independent of policies pursued. Good central bank policy achieves a desired inflation target (assumed to be feasible) while minimizing the amplitude of fluctuations around that equilibrium.
In contrast contemporary experience, where inflation has been below target almost throughout the industrial world for a decade and is expected by markets to remain below target for decades, and where output is sustained only by large budget deficits or extraordinary monetary policies, suggest that central banks acting alone cannot necessarily attain inflation targets and that misguided policy could easily not just raise the volatility of output but also reduce its average level.
While there seems to be little doubt that real interest rates–short and long, ex ante and ex post -- have declined very substantially even as (other things equal) budget deficits and expanded social security programs should have increased them, there remains debate about how to analyze these trends. Lukasz and I argue that adjustment to balance saving and investment is the best way understand declining real rates. DeLong wonders about changing risk premiums and Wolf cites BIS work arguing that low rates reflect the monetary policy regime. There is no reason why there needs to be only one cause of low real rates so these factors may enter. But as I expect we will illustrate in the revised version of the paper, the largest part of the low frequency variation in ex ante real returns is accounted for by a downward trending factor common to all asset prices. This is illustrated for the US in the figure below. So risk premiums or factors specific to Treasuries are likely not high order.
Figure: Decline in US real asset returns
Granting that secular stagnation is a problem, there is the question of policy response. The right policy response will be the one that assures that full employment is maintained with a minimum of collateral problems. Sandbu argues against the notion of secular stagnation in part because he thinks it may lead in unconstructive directions like protectionism and because he believes that stagnation issues can be feasibly and relatively easily addressed by lowering rates. Wolf, relying on the BIS, is alarmed by the toxic effects of very low rates on financial stability in the short run and economic performance in the long run, and prefers fiscal stimulus. Leonhardt prefers a broad menu of measures to absorb saving and promote investment.
I am not certain of the right approach and I wish there was more evidence to bring to bear on the question. I can certain see the logic of the "zero is just another number" view, that holds that the current environment poses no new fundamental issues but just may require technical changes to make more negative interest rates possible. I am skeptical because (i) I am not sure how large the stimulus effect of rates going more negative is because of damage to banks, reduced interest income for consumers, and because capital cost is already not the barrier to investment; (ii) I wonder about the quality of any investment that was not made at a zero rate but was made at a negative rate; and (iii) I suspect that a world of significantly negative nominal rates if sustained will be a world of leveraging, risk seeking and bubbles. I have trouble thinking about behavior in situations where people and firms are paid to borrow!
I am inclined to prefer more reliance on reasonably managed fiscal policies as a response to secular stagnation: government borrowing at negative real rates and investing seems very attractive in a world where there are many projects with high social returns. Moreover, we are accustomed to thinking in terms of debt levels but it may be more appropriate to think in terms of sustained debt service levels. With near zero rates these are below average in most industrial countries. The content of fiscal policies is crucial. Measures which run up government debt without stimulating demand like large parts of the Trump tax cut are ill advised. In contrast measures which promote investment and raise the tax base down the road are much more attractive.
There are of course other measures beyond stabilization policies like fighting monopolies, promoting a more equal income distribution, and strengthening retirement security for which the desire to maintain macroeconomic stability provides an additional rationale.
Mar 21, 2019 | www.wsj.com
Thirty-five Congressional mandates sit unanswered, on everything from minimum seat space to secondary barriers protecting cockpits. The top job at the Federal Aviation Administration has been open for 14 months. Enforcement fines against major U.S. airlines have dropped 88% in the past two years, even as three-hour tarmac delays have more than doubled.
The Transportation Department under Secretary Elaine Chao has seemingly been delayed on a number of issues important to travelers. Even with airlines begging for rules on emotional-support animals , and both Republicans and Democrats expressing concerns about swollen fees, shrunken seating and punitive airline policies, the DOT has been loath to issue new regulations.
Airlines asked the department in late 2017 to kill a bunch of consumer-protection rules -- nothing on that so far, either.
Ethiopian Airlines' Boeing 737 MAX 8 Crash: Three Things to Know An investigation has been launched after an Ethiopian Airlines Boeing 737 MAX 8 crashed shortly after takeoff on Sunday, killing all on board. WSJ aerospace reporter Robert Wall discusses the possible focus of the investigation, and more. Photo: Getty Images
Now Ms. Chao's department, which includes the FAA, faces its toughest regulatory challenge: safety concerns on the Boeing 737 MAX. Two fatal crashes of the new airplane in the past five months have led several nations and some airlines to ground the jet.
So far, the FAA, siding with Boeing and U.S. airlines, says the plane is safe and a software fix is coming by the end of April. Sales of Boeing planes have been important to President Trump's trade and employment objectives. But pressure is mounting, and if investigators find the same system is responsible for both crashes, it will be increasingly difficult for the FAA and Ms. Chao to leave a plane with a fatal flaw in the air.
Consumer advocates say the Transportation Department has been invisible.
Inside U.S. Airlines' Decisions to Keep Flying the 737 MAX
Southwest, United and American faced worries from passengers and employees after the Ethiopian Airlines crash. They say data, not economics, drove their choices.
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THE MIDDLE SEAT
"There doesn't seem to be any meaningful enforcement going on," says John Breyault, vice president at the National Consumers League. "The DOT under Sec. Chao seems to be even less willing to engage in serious consumer protection efforts than it did under President Obama's watch, which is a pretty low bar."Newsletter Sign-up
The DOT declined to answer specific questions for this story. It offered a general statement saying it has improved its website in the past year and is giving consumers more information by including performance of regional partners with big-airline operating statistics. A DOT spokeswoman says it plans to issue rules on service animals later this year and plans to allow airlines to use electronic payment methods when compensating travelers for bumping them involuntarily from flights.
With its response, the department included a list of seven accomplishments under Ms. Chao, who also oversees surface transportation. None dealt with airline travel.
Airlines and many travelers applaud the Trump administration's aversion to regulation and willingness to let consumer choice discipline unpopular business decisions. Deregulating fares and schedules in 1978, after all, led to a boom in affordable, convenient travel .
In keeping with the push to reduce regulation, Ms. Chao's DOT stopped a number of rule-making efforts in progress at the end of the Obama administration. Among them: imposing requirements on disclosure of baggage and other fees at ticket purchase, as well as a review of how fees in the airline industry were affecting competition.
me title=Transportation Secretary Elaine Chao lists seven accomplishments during her administration, none of which deal with air travel. PHOTO: JIM LO SCALZO/EPA/SHUTTERSTOCK
Airlines applauded those moves. "There is a reluctance to regulate unless there's a market failure or some other type of safety or real unfair and deceptive practice that's going on," says Sharon Pinkerton, senior vice president for legislative and regulatory policy at Airlines for America, the industry's Washington, D.C., lobbying group.
"We're thankful for that, frankly," she added, "that their philosophy isn't to regulate every little thing."
The Transportation Department is the only stop for passenger rights since Congress exempted air travel in 1978 from any state or local regulation.
Recent changes in air travel have led to a host of new issues:
* Airlines have repeatedly asked DOT to adopt the definition of service animals in the Americans With Disabilities Act, which requires specific training for support animals. Cabins are full of untrained pets wearing service-animal vests to avoid high airline fees or shipping in crates in baggage compartments.
"We just think there should be one rule for the entire country," says Ms. Pinkerton of A4A. "There's no reason to have a more lenient approach to emotional-service animals in an environment like an airplane."
* Congress passed a law sponsored by Democrats and Republicans that requires DOT to establish minimum standards for seat size and legroom on planes and make each carrier post the amount of space available for each passenger on its website. The deadline is in October. Airlines and advocates say they've seen no action so far.
* Last year Congress also required that DOT hire a consumer advocate to help travelers resolve service complaints, report on how DOT is handling complaints and recommend improvements to enforce aviation consumer protection rules. The position remains open.
* DOT hasn't conducted compliance inspections at airline headquarters in more than two years, the Government Accountability Office reported in November . Compliance inspections, done routinely in past years, involve checking airline customer-service policies and passenger complaints received by airlines. They also make sure airlines are reporting data properly to DOT.
In its response to the GAO, the department said it has a "robust and multifaceted program" to investigate airlines and enforce consumer protection requirements.
* An aviation consumer-protection advisory committee that is supposed to have one passenger advocate among four members has no one with any consumer aviation experience. The designated consumer advocate appointed by the Trump administration comes from a think tank favoring free markets over regulation, where she works on agriculture and trade issues.A Fine DistinctionAirlines have seen far fewer Transportation Department fines in the first two years of the Trump Administration. They've also experienced more long domestic tarmac delays over that time.
DOT enforcement fines against U.S. major airlines
Domestic three-hour tarmac delays
*2018 tarmac delays are through November only
Sources: WSJ compilation of DOT filings (fines); Bureau of Transportation Statistics (delays)
The tarmac delay rule is an example of one public policy that actually worked. Flights stranded at airports with passengers held on board with no food, water and in some cases limited working bathrooms became a major issue. In 2007, more than 1,600 domestic U.S. flights had tarmac delays of more than three hours, according to the Bureau of Transportation Statistics. Some stretched to 10 hours or more . In 2010, the Transportation Department enacted a rule to levy heavy fines on airlines for tarmac delays of more than three hours on domestic flights and four hours on international flights.
Airlines adjusted , investing in better tracking of flights on the ground and more resources to get people off stranded planes. Though airlines warned of massive cancellations if the rule was imposed, cancellations went down. So did tarmac delays: From 2011 to 2016, there were fewer than 100 a year on domestic flights.
But 2017 and 2018 saw three-hour tarmac delays more than double. At the same time, DOT enforcement against U.S. major airlines declined sharply.
In 2016, DOT levied a total of $4.7 million in fines against U.S. major carriers for all issues, not just tarmac delays. In 2017, that number dropped to $2.7 million, then to $560,000 in 2018. Only one fine, $1.5 million against Frontier Airlines in 2017, was for domestic tarmac delays. DOT did fine several foreign airlines for delays longer than four hours. And it hit American and Delta with tarmac delay fines last month, picking up the pace a bit.
Airlines say the increase in tarmac delays in 2017 and 2018 was a result of an increase in severe weather the past two years, not lax DOT enforcement.
Mar 20, 2019 | www.nakedcapitalism.com
Yves here. This post focuses on an important slice of history in what "freedom" has meant in political discourse in the US. But I wish it had at least mentioned how a well-funded, then extreme right wing effort launched an open-ended campaign to render US values more friendly to business. They explicitly sought to undo New Deal programs and weaken or end other social safety nets. Nixon Supreme Court Justice Lewis Powell codified the strategy for this initiative in the so-called Powell Memo of 1971.
One of the most effective spokesmen for this libertarian program was Milton Friedman, whose bestseller Free to Choose became the foundation for a ten-part TV series.
By Thom Hartman, a talk-show host and author of more than 25 books in print . He is a writing fellow at the Independent Media Institute . Produced by the Independent Media Institute
America is having a heated debate about the meaning of the word socialism . We'd be better served if, instead, we were debating the meaning of freedom .
The Oregonian reported last week that fully 156,000 families are on the edge of homelessness in our small-population state. Every one of those households is now paying more than 50 percent of its monthly income on rent, and none of them has any savings; one medical bill, major car repair or job loss, and they're on the streets.
While socialism may or may not solve their problem, the more pressing issue we have is an entire political party and a huge sector of the billionaire class who see homelessness not as a problem, but as a symptom of a "free" society.
The words freedom and liberty are iconic in American culture -- probably more so than with any other nation because they're so intrinsic to the literature, declarations and slogans of our nation's founding.
The irony -- of the nation founded on the world's greatest known genocide (the systematic state murder of tens of millions of Native Americans) and over three centuries of legalized slavery and a century and a half of oppression and exploitation of the descendants of those slaves -- is extraordinary. It presses us all to bring true freedom and liberty to all Americans.
But what do those words mean?
If you ask the Koch brothers and their buddies -- who slap those words on pretty much everything they do -- you'd get a definition that largely has to do with being "free" from taxation and regulation. And, truth be told, if you're morbidly rich, that makes a certain amount of sense, particularly if your main goal is to get richer and richer, regardless of your behavior's impact on working-class people, the environment, or the ability of government to function.
On the other hand, the definition of freedom and liberty that's been embraced by so-called "democratic socialist" countries -- from Canada to almost all of Europe to Japan and Australia -- you'd hear a definition that's closer to that articulated by Franklin D. Roosevelt when he proposed, in January 1944, a " second Bill of Rights " to be added to our Constitution.
FDR's proposed amendments included the right to a job, and the right to be paid enough to live comfortably; the right to "adequate food and clothing and recreation"; the right to start a business and run it without worrying about "unfair competition and domination by monopolies"; the right "of every family to a decent home"; the right to "adequate medical care to achieve and enjoy good health"; the right to government-based "protection from the economic fears of old age, sickness, accident, and unemployment"; and the right "to a good education."
Roosevelt pointed out that, "All of these rights spell security." He added, "America's own rightful place in the world depends in large part upon how fully these and similar rights have been carried into practice for our citizens. For unless there is security here at home there cannot be lasting peace in the world."
The other nations mentioned earlier took President Roosevelt's advice to heart. Progressive "social democracy" has kept Europe, Canada, and the developed nations of the East and South Pacific free of war for almost a century -- a mind-boggling feat when considering the history of the developed world since the 1500s.
Just prior to FDR winning the White House in the election of 1932, the nation had been treated to 12 years of a bizarre Republican administration that was the model for today's GOP. In 1920, Warren Harding won the presidency on a campaign of "more industry in government, less government in industry" -- privatize and deregulate -- and a promise to drop the top tax rate of 91 percent down to 25 percent.
He kept both promises, putting the nation into a sugar-high spin called the Roaring '20s, where the rich got fabulously rich and working-class people were being beaten and murdered by industrialists when they tried to unionize. Harding, Coolidge, and Hoover (the three Republican presidents from 1920 to 1932) all cheered on the assaults, using phrases like "the right to work" to describe a union-free nation.
In the end, the result of the " horses and sparrows " economics advocated by Harding ("feed more oats to the horses and there'll be more oats in the horse poop to fatten the sparrows" -- that generation's version of trickle-down economics) was the Republican Great Depression (yes, they called it that until after World War II).
Even though Roosevelt was fabulously popular -- the only president to be elected four times -- the right-wingers of his day were loud and outspoken in their protests of what they called "socialist" programs like Social Security, the right to unionize, and government-guaranteed job programs including the WPA, REA, CCC, and others.
The Klan and American Nazis were assembling by the hundreds of thousands nationwide -- nearly 30,000 in Madison Square Garden alone -- encouraged by wealthy and powerful "economic royalists" preaching "freedom" and " liberty ." Like the Kochs' Freedomworks , that generation's huge and well-funded (principally by the DuPonts' chemical fortune) organization was the Liberty League .
Roosevelt's generation had seen the results of this kind of hard-right "freedom" rhetoric in Italy, Spain, Japan and Germany, the very nations with which we were then at war.
Speaking of "the grave dangers of 'rightist reaction' in this Nation," Roosevelt told America in that same speech that: "[I]f history were to repeat itself and we were to return to the so-called 'normalcy' of the 1920s -- then it is certain that even though we shall have conquered our enemies on the battlefields abroad, we shall have yielded to the spirit of Fascism here at home."
Although right-wingers are still working hard to disassemble FDR's New Deal -- the GOP budget for 2019 contains massive cuts to Social Security, as well as to Medicare and Medicaid -- we got halfway toward his notion of freedom and liberty here in the United States:You're not free if you're old and deep in poverty, so we have Social Security (although the GOP wants to gut it). You're not free if you're hungry, so we have food stamps/SNAP (although the GOP wants to gut them). You're not free if you're homeless, so we have housing assistance and homeless shelters (although the GOP fights every effort to help homeless people). You're not free if you're sick and can't get medical care, so we have Medicare, Medicaid, and Obamacare (although the GOP wants to gut them all). You're not free if you're working more than 40 hours a week and still can't meet basic expenses, so we have minimum wage laws and the right to unionize (although the GOP wants to gut both). You're not free if you can't read, so we have free public schools (although the GOP is actively working to gut them). You're not free if you can't vote, so we've passed numerous laws to guarantee the right to vote (although the GOP is doing everything it can to keep tens of millions of Americans from voting).
The billionaire class and their wholly owned Republican politicians keep trying to tell us that "freedom" means the government doesn't provide any of the things listed above.
Instead, they tell us (as Ron Paul famously did in a GOP primary debate years ago) that, if we're broke and sick, we're "free" to die like a feral dog in the gutter.
Freedom is homelessness, in the minds of the billionaires who own the GOP.
Poverty, lack of education, no access to health care, poor-paying jobs, and barriers to voting are all proof of a free society, they tell us, which is why America's lowest life expectancy, highest maternal and childhood death rates, lowest levels of education, and lowest pay are almost all in GOP-controlled states .
America -- particularly the Democratic Party -- is engaged in a debate right now about the meaning of socialism . It would be a big help for all of us if we were, instead, to have an honest debate about the meaning of the words freedom and liberty .
cuibono , , March 20, 2019 at 2:53 am
Know Your Rights: https://www.youtube.com/watch?v=5lfInFVPkQs
WheresOurTeddy , , March 20, 2019 at 12:28 pm
I have been informed by Fox that knowing your rights is un-American
everydayjoe , , March 20, 2019 at 4:26 am
Let us not forget the other propaganda arm of Republican party and big money- Fox news. They spew the freedom nonsense while not adhering to any definition of the word.
I worked in the midwest as an Engineer in the 90s to early 2000s and saw plants being gutted/shifted overseas, Union influence curtailed and mid level and bottom pay stay flat for decades; all in the name of free market.
Sadly the same families that are the worst affected vote Republican! But we know all this and have known it for a while. What will change?
lyman alpha blob , , March 20, 2019 at 8:00 am
They want freedom -- for the wolves to eat the sheep.
PKMKII , , March 20, 2019 at 1:08 pm
And then act like it's fair because they don't have laws against the sheep eating the wolves.
Norb , , March 20, 2019 at 8:39 am
The intro to this post is spot on. The Powell memo outlined a strategy for a corporate coup d'eta. Is was completely successful. Now that the business class rules America, their only vision is to continue the quest and cannibalize the country and enslave its people by any means possible. What tools do they use to achieve these ends? -- debt, fear, violence and pandering to human vanity as a motivator. Again, very successful.
Instead of honest public debate- which is impossible when undertaken with liars and thieves, a good old manifesto or pamphlet like Common Sense is in order. Something calling out concrete action that can be taken by commoners to regain their social respect and power. That should scare the living daylights out of the complacent and smug elite.
Its that, or a lot of public infrastructure is gong to be broken up by the mob- which doesn't work out in the long run. The nations that learn to work with and inspire their populations will prosper- the rest will have a hard time of it. Look no further than America's fall.
Carla , , March 20, 2019 at 12:00 pm
Thank you, Norb. You've inspired me to start by reading Common Sense.
Jamie S , , March 20, 2019 at 9:13 am
This piece raises some important points, but aims too narrowly at one political party, when the D-party has also been complicit in sharing the framing of "freedom" as less government/regulation/taxation. After all, it was the Clinton administration that did welfare "reform", deregulation of finance, and declared the end of the era of "big government", and both Clinton and Obama showed willingness to cut Social Security and Medicare in a "grand bargain".
WJ , , March 20, 2019 at 12:10 pm
If in place of "the GOP," the author had written, "The national Democratic and Republican parties over the past fifty years," his claim would be much more accurate. To believe what he says about "the GOP," you have to pretend that Clinton, and Obama, and Pelosi, and Schumer, and Feinstein simply don't exist and never did. The author's implicit valorization of Obamacare is even more disheartening.
But perhaps this is the *point* of the piece after all? If I were a consultant to the DNC (and I make less than $100,000/yr so I am clearly not), I would advocate that they commission, underscore, and reward pieces exactly like this one. For the smartest ones surely grasp that the rightist oligarchic policy takeover has in fact happened, and that it has left in its wake millions of disaffected, indebted, uneducated, uninsured Americans.
(Suggesting that it hadn't was the worst idiocy of Clinton's 2016 campaign. It would have been much better had she admitted it and blamed it on the Republican Senate while holding dear old Obama up as a hamstrung martyr for the cause. I mean, this is what everybody at DailyKos already believes, and the masses -- being poor and uneducated and desperate -- can be brought around to believe anything, or anyway, enough of them can be.)
I would advocate that the DNC double down on its rightful claims to Roosevelt's inheritance, embrace phrases like "social democracy" and "freedom from economic insecurity," and shift leftward in all its official rhetoric. Admit the evisceration of the Roosevelt tradition, but blame it all on the GOP. Maybe *maybe* even acknowledge that past Democratic leaders were a little naive and idealistic in their pursuit of bipartisanship, and did not understand the truly horrible intentions of the GOP. But today's Democrats are committed to wresting back the rights of the people from the evil clutches of the Koch Republicans. This sort of thing.
Would my advice be followed? Or would the *really* smart ones in the room demure? If so, why do you think they would?
In short, I read this piece as one stage in an ongoing dialectic in the Democratic Party in the run-up to the 2020 election wherein party leaders try to determine how leftward its "official" rhetoric is able to sway before becoming *so* unbelievable (in light of historical facts) that it cannot serve as effective propaganda -- even among Americans!
NotTimothyGeithner , , March 20, 2019 at 1:34 pm
Team Blue elites are the children of Bill Clinton and the Third Way, so the echo chamber was probably terrible. Was Bill Clinton a bad President? He was the greatest Republican President! The perception of this answer is a key. Who rose and joined Team Blue through this run? Many Democrats don't recognize this, or they don't want to rock the boat. This is the structural problem with Team Blue. The "generic Democrat" is AOC, Omar, Sanders, Warren, and a handful of others.
Can the Team Blue elites embrace a Roosevelt identity? The answer is no. Their ideology is so wildly divergent they can't adjust without a whole sale conversion.
More succinctly, the Third Way isn't about helping Democrats win by accepting not every battle can be won. Its about advancing right wing politics and pretending this isn't what its about. If they are too clear about good policy, they will be accused of betrayal.
jefemt , , March 20, 2019 at 9:18 am
Freedom's just another word for nothin' left to lose Kris Kristofferson
shinola , , March 20, 2019 at 1:06 pm
"nothin' ain't worth nothin' but it's free"
Trick Shroade , , March 20, 2019 at 9:46 am
The modern GOP has a very brutalist interpretation of Christianity, one where the money changers bring much needed liquidity to the market.
where , , March 20, 2019 at 12:30 pm
it's been 2 generations, but we assure you, the wealth will eventually trickle down
Dwight , , March 20, 2019 at 1:51 pm
Be patient, the horse has to digest your oat.
The Rev Kev , , March 20, 2019 at 10:13 am
This article makes me wonder if the GOP is still a political party anymore. I know, I know, they have the party structure, the candidates, the budget and all the rest of it but when you look at their policies and what they are trying to do, the question does arise. Are they doing it because this is what they believe is their identity as a party or is it that they are simply a vehicle with the billionaires doing the real driving and recruiting? An obvious point is that among billionaires, they see no need to form their own political party which should be telling clue. Certainly the Democrats are no better.
Maybe the question that American should ask themselves is just what does it mean to be an American in the year 2020? People like Norman Rockwell and his Four Freedoms could have said a lot of what it meant some 60 years ago and his work has been updated to reflect the modern era ( https://www.galeriemagazine.com/norman-rockwell-four-freedoms-modern/ ) but the long and the short of it is that things are no longer working for most people anymore -- and not just in America. But a powerful spring can only be pushed back and held in place for so long before there is a rebound effect and I believe that I am seeing signs of this the past few years.
GF , , March 20, 2019 at 11:06 am
And don't forget FRD's Second Bill of Rights:
" a second Bill of Rights under which a new basis of security and prosperity can be established for all -- regardless of station, race, or creed.
Among these are:
The right to a useful and remunerative job in the industries or shops or farms or mines of the nation;
The right to earn enough to provide adequate food and clothing and recreation;
The right of every farmer to raise and sell his products at a return which will give him and his family a decent living;
The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad;
The right of every family to a decent home;
The right to adequate medical care and the opportunity to achieve and enjoy good health;
The right to adequate protection from the economic fears of old age, sickness, accident, and unemployment;
The right to a good education.
All of these rights spell security."
Frank Little , , March 20, 2019 at 10:20 am
America is having a heated debate about the meaning of the word socialism. We'd be better served if, instead, we were debating the meaning of freedom.
I agree, and we should also be having a debate about capitalism as it actually exists. In the US capitalism is always talked about in rosy non-specific terms (e.g. a preference for markets or support for entrepreneurship) while anybody who says they don't necessarily support capitalism has to answer for Stalin's gulag's or the Khmer Rouge. All the inequalities and injustices that have helped people like Howard Schultz or Jeff Bezos become billionaire capitalists somehow aren't part of capitalism, just different problems to be solved somehow but definitely not by questioning capitalism.
Last night I watched the HBO documentary on Elizabeth Holmes and Theranos and I couldn't help but laugh at all these powerful politicians, investors, and legal giants going along with someone who never once demonstrated or even explained how her groundbreaking innovation actually worked. $900 million was poured into that company before people realized something that a Stanford professor interviewed in the documentary saw when she first met Holmes. Fracking companies have been able to consistently raise funding despite consistently losing money and destroying the environment in the process. Bank balance sheets were protected while working people lost everything in the name of preserving American capitalism. I think it's good to debate socialism and capitalism, but there's not really any point if we aren't going to be talking about Actually Existing Capitalism rather than the hypothetical version that's trotted out anytime someone suggests an alternative.
Trick Shroade , , March 20, 2019 at 10:53 am
There was a great comment here on NC a little while ago, something to the effect of "capitalism has the logic of a cancer cell. It's a pile of money whose only goal is to become a bigger pile of money." Of course good things can happen as a side effect of it becoming a bigger pile of money: innovation, efficiencies, improved standard of living, etc. but we need government (not industry) regulation to keep the bad side effects of capitalism in check (like the cancer eventually killing its host).
Carey , , March 20, 2019 at 12:21 pm
"efficiency" is very often not good for the Commons, in the long term.
Frank Little , , March 20, 2019 at 12:31 pm
Shoot, must have missed that comment but it's a good metaphor. Reminds me of Capital vol. 1, which Marx starts with a long and dense treatment of the nature of commodities and commodification in order to capture this process whereby capitalists produce things people really do want or need in order to get at what they really want: return on their investment.
Jack Gavin , , March 20, 2019 at 12:36 pm
I also agree but I think we need to have a the same heated debate over what capitalism means. Over the years I have been subjected to (exposed) to more flavors of socialism than I can count. Yet, other than an introductory economics class way back when, no debatable words about what 'capitalism' is seems to get attention. Maybe it's time to do that and hope that some agreeable definition of 'freedom' falls out.
jrs , , March 20, 2019 at 12:42 pm
of course maybe socialism is the only thing that ever really could solve homelessness, given that it seems to be at this point a worldwide problem, although better some places than others (like the U.S. and UK).
Stratos , , March 20, 2019 at 11:11 am
This article lets the Dems off the hook. They have actively supported the Billionaire Agenda for decades now; sometimes actively (like when they helped gut welfare) and sometimes by enabling Repubs objectives (like voter suppression).
At this point in time, the Dem leadership is working to deep six Medicare for All.
With 'friends' like the Dems, who needs the Repubs?
WheresOurTeddy , , March 20, 2019 at 12:30 pm
our last democratic president was Carter
thump , , March 20, 2019 at 12:38 pm
1) In the history, a mention of the attempted coup against FDR would be good. See The Plot to Seize the White House by Jules Archer. ( Amazon link )
2) For the contemporary intellectual history, I really appreciated Nancy MacLean's Democracy in Chains . ( Amazon link ) Look her up on youtube or Democracy Now . Her book got a bit of press and she interviews well.
Bob of Newton , , March 20, 2019 at 1:58 pm
Please refer to these folks as 'rightwingers'. There are Democratic as well as Republicans who believe in this type of 'freedom'.
Jerry B , , March 20, 2019 at 2:38 pm
This post seems heavily slanted against the GOP and does not take into account how pro-business the Democrats have become. I tenuously agree with Yves intro that much of the current pro business value system campaign in the US was started with the political far right and the Lewis Powell Memo. And that campaign kicked into high gear during the Reagan Presidency.
But as that "pro business campaign" gained steam, the Democratic Party, IMO, realized that they could partake in the "riches" as well and sold their political soul for a piece of the action. Hartman's quote about the billionaire class should include their "wholly owned Republicans and Democrat politicians".
As Lambert mentions (paraphrasing), "The left puts the working class first. Both liberals and conservatives put markets first, liberals with many more layers of indirection (e.g., complex eligibility requirements, credentialing) because that creates niches from which their professional base benefits".
As an aside, while the pro-business/capitalism on steroids people have sought more "freedom", they have made the US and the world less free for the rest of us.
Also the over focusing on freedom is not uniquely GOP. As Hartman mentions, "the words freedom and liberty are iconic in American culture -- probably more so than with any other nation because they're so intrinsic to the literature, declarations and slogans of our nation's founding." US culture has taken the concept of freedom to an extreme version of individualism.
That is not surprising given our history.
The DRD4 gene is a dopamine receptor gene. One stretch of the gene is repeated a variable number of times, and the version with seven repeats (the "7R" form) produces a receptor protein that is relatively unresponsive to dopamine. Being unresponsive to dopamine means that people who have this gene have a host of related traits -- sensation and novelty seeking, risk taking, impulsivity, and, probably most consistently, ADHD. -- -- Seems like the type of people that would value extreme (i.e. non-collective) forms of freedom
The United States is the individualism poster child for at least two reasons. First there's immigration. Currently, 12 percent of Americans are immigrants, another 12 percent are children of immigrants, and everyone else except for the 0.9 percent pure Native Americans descend from people who emigrated within the last five hundred years.
And who were the immigrants?' Those in the settled world who were cranks, malcontents, restless, heretical, black sheep, hyperactive, hypomanic, misanthropic, itchy, unconventional, yearning to be free, yearning to be rich, yearning to be out of their, damn boring repressive little hamlet, yearning. -- -- Again seems like the type of people that would value freedom in all aspects of life and not be interested in collectivism
Couple that with the second reason -- for the majority of its colonial and independent history, America has had a moving frontier luring those whose extreme prickly optimism made merely booking passage to the New World insufficiently, novel -- and you've got America the individualistic.
The 7R variant mentioned above occurs in about 23 percent of Europeans and European Americans. And in East Asians? 1 percent. When East Asians domesticated rice and invented collectivist society, there was massive selection against the 7R variant. Regardless of the cause, East Asian cultural collectivism coevolved with selection against the 7R variant.
So which came first, 7R frequency or cultural style? The 4R and 7R variants, along with the 2R, occur worldwide, implying they already existed when humans radiated out of Africa 60,000 to 130,000 years ago. A high incidence of 7R, associated with impulsivity and novelty seeking, is the legacy of humans who made the greatest migrations in human history.
So it seems that many of the people who immigrated to the US were impulsive, novelty seeking, risk takers. As a counterpoint, many people that migrated to the US did not do so by choice but were forced from their homes and their countries by wars.
The point of this long comment is that for some people the concept of freedom can be taken to extreme -- a lack of gun control laws, financial regulation, extremes of wealth, etc. After a brief period in the 1940's, 1950's, and early 1960's when the US was more collective, we became greedy, consumerist, and consumption oriented, aided by the political and business elites as mentioned in the post.
If we want the US to be a more collective society we have to initially do so in our behaviors i.e. laws and regulations that rein in the people who would take the concept of freedom to an extreme. Then maybe over an evolutionary time period some of the move impulsive, sensation seeking, ADHDness, genes can be altered to a more balance mix of what makes the US great with more of the collective genes.
IMO, if we do not begin to work on becoming a collective culture now, then climate change, water scarcity, food scarcity, and resource scarcity will do it for us the hard way.
In these days of short attention spans I apologize for the long comment. The rest of my day is busy and I do not have more time to shorten the comment. I wanted to develop an argument for how the evolutionary and dysfunctional forms of freedom have gotten us to this point. And what we need to do to still have some freedom but also "play nice and share in the future sandbox of climate change and post fossil fuel society.
Mar 19, 2019 | crookedtimber.org
Glen Tomkins 03.09.19 at 5:25 pm ( 2 )"Monopoly" is such an ugly term. We prefer to call it "market power" these days, because of course it's a good thing if the job creators and their enterprises have more power to do all the good things they do for us.
It's clearly class warfare, if not racism, to use the term of abuse, "monopoly", when you mean "market power".
Mar 14, 2019 | www.youtube.com
What is Imperialism? How do empires end and what is the economics behind the fall of empires and what does this say about the future of America?
Professor Richard Wolff reveals the unexpected truth about imperialism on the Thom Hartmann program!
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Mar 19, 2019 | crookedtimber.org
by John Quiggin on March 9, 2019
That's the headline given to my latest piece in Inside Story
Here's the opening para
Two hundred years after the birth of Karl Marx and fifty years after the last Western upsurge of revolutionary ferment in 1968, the term "monopoly capitalism" might seem like a relic of outmoded enthusiasms. But economists are increasingly coming to the view that monopolies, and associated market failures, have never been a bigger problem.
and the conclusionShare this:
The problems of monopoly and inequality may seem so large as to defy any response. But we faced similar problems when capitalism first emerged, and Western countries came up with the responses that created the broad-based prosperity of the mid twentieth century. The internet, in particular, has the potential to enhance freedom and equality rather than facilitate corporate exploitation. The missing ingredient, so far, has been the political will.
hix 03.09.19 at 10:14 am ( 1 )Good read, just one minor complaint, why not just use a random stock screener to get current market cap data instead of 2016 ones:Glen Tomkins 03.09.19 at 5:25 pm ( 2 )
https://finance.yahoo.com/screener/unsaved/ca63a480-28d8-4809-bd40-fab28b414da2"Monopoly" is such an ugly term. We prefer to call it "market power" these days, because of course it's a good thing if the job creators and their enterprises have more power to do all the good things they do for us. It's clearly class warfare, if not racism, to use the term of abuse, "monopoly", when you mean "market power".Dipper 03.09.19 at 8:51 pm ( 3 )Of all the examples to choose, airlines would seem to be a bad one. They come and go with rapidity, and airlines are now being used as an example of how to reform banks.Collin Street 03.09.19 at 9:11 pm ( 4 )
Running the modern air industry needs lots of infrastructure and lots of regulations, so would seem to be an obvious place to have monopoly airlines. The critical thing that has happened has been the splitting of the infrastructure from the market-facing entities. So the booking systems, airport handling, and other services are all done by firms who don't directly face the paying customer. Pretty much anyone can set up an airline, and they can become quite big
Banking regulation is going in the direction of the airline industry. The idea being to split up the major systems and financial risk repositories from the market-facing companies. Hence, again, anyone can set up a bank.
One significant issue behind the growth in monopolies is regulation. The debate in the UK over the EU has included much discussion of regulation, much of it from a Remain/pro EU angle being that more regulation is a costless good. But there is an obvious and well-known cost, that regulation acts as a barrier to new entrants, and hence destroys innovation and creates conditions for monopolies, cartels, and oligopolies. It is surely no coincidence that the EU, an organisation that cannot look at any object without trying to regulate it, is sliding into recession and has effectively zero productivity increase this century. If you regulate what you have now, you just make the status quo your future. In the end, you just end up like the CBI, reduced to demanding more and more cheap labour to fuel your dinosaur members' wishes for more profit.
So. Split the resource-heavy stuff from the market-facing stuff, and try to avoid regulating your economy into a coma.Sure, monopoly's a problem.bad Jim 03.10.19 at 7:24 am ( 5 )
A significant fraction of the population can't keep track of their actual cost structures and will, cheerful and unknowing, sell at a loss. Unless you can exclude them from the market -- unless you have some mechanism for excluding people from the market -- the clearing price will be below the cost price: no market that does not have exclusion mechanisms can possibly be profitable.
That is to say: a profitable sector of industry requires exclusion mechanisms and all profit relies on rent .
The question we have to ask is, then: how do we distribute rent opportunities? We used to be able to use transport costs to create rent "naturally", but we can't do that any more: at least with monopoly some things still get made and some people still make money.
[honestly? I think uniform tariff barriers coupled with socialism [or socialism-approximating structures like dirigisme among firms with effectively-universally-held shares] are the only real solution.]Um. "Monopoly" triggers thoughts of a scotty dog and a flat iron. Regarding the minimum wage, I'm encouraged to see oligopsony mentioned, not just because I love rare words; it's only recently than in such discussions the more common word "monopsony" was used. But how else to explain how Walmart greeters and burger flippers, despite their disparate productivity and different employers, are paid the same meager wage?John Quiggin 03.10.19 at 7:36 am ( 6 )
It says something about our common discourse, by which I mean American politics, that people preach as though market power was as unimaginable as ethical conduct, the first of which is tacitly assumed and the second generally acknowledged as nonexistent.@Dipper I'm sure you'll sympathize when I observe that Australia is different from other places (a point you've often made about Britain), at least with respect to airlines.mpowell 03.11.19 at 3:52 pm ( 7 )
We've only had one successful entry on a substantial scale in the history of commercial aviation (when Virgin Blue displaced Ansett in 2001). Against that, there has been a long string of failed attempts to break up the duopoly (now consisting of two full-service airlines each with a low-cost subsidiary).
So, in an Australian publication, airlines are on obvious example.You argue that what has been missing is political will, but at the same time you acknowledge that new versions of the old solutions for these problems must be found. I would focus more on the latter than the former. Yes, the EU is creating stronger privacy protection now, but one of the main impacts will be to strengthen existing large players. Do we really want to move to a regulated monopoly model so quickly? These new markets have been evolving rapidly over the past 15 years and models of the internet economy that made sense even 10 years ago are now out-dated. I think we still need to figure out what people need out of these new provided services and how to get there. It seems a lot harder than simply breaking up the producers and distributers of basic commodities.hix 03.11.19 at 6:01 pm ( 8 )And here i was thinking Dipper would try to make his weak case with the strongest arguments- Ryanair or Easyjet*. Virgin Atlantic, really? While airlines in Europe are probably not the most obvious easy to comprehend example for monopoly or oligopoly one could pick, those terms are still quite accurate as a description of the current situation in most submarkets.Ronan 03.12.19 at 12:38 pm ( 9 )
*The crux with those two is that there are and were a gazillion other discount carriers, but non of those are sucesfull, Ryanair in particular in contrast produces an insane return on equity.Have you read 'Game of Mates' about cronyism among the elite in Australia ? Kind of interesting and eye opening(at least for an outsider like me) Might be of interest if you havent.Daniel 03.12.19 at 8:58 pm ( 10 )
https://www.smh.com.au/opinion/game-of-mates-how-billionaires-get-rich-at-our-expense-20170526-gwe0dp.htmlSpeaking of monopoly, I read one (or more) of your contributors say, "buy my book on Amazon." Amazon is the most dangerous monopolist, stay away.
Mar 19, 2019 | www.nakedcapitalism.com
Carla , , March 18, 2019 at 10:10 am
"Corporations must be in the service of the nation, not the other way around." Bingo! As long as corporations have the constitutional rights of "persons," they will continue to pummel those of us for whom constitutional rights were intended. Please urge your congress critter to sign on to cosponsor the We the People Amendment and implore your senators to introduce companion legislation in the U.S. Senate:
Note: Tulsi Gabbard and Ilhan Omar are original co-sponsors in the 116th Congress, but not yet AOC, so if anyone from her district is reading, give her office a call !
P.S. For those of you who had concerns about it, a section 3 has been added to the original resolution: "Nothing contained in this amendment shall be construed to abridge the freedom of the press."
Strictly speaking, this was unnecessary: the press has, and has always had, its first amendment rights BECAUSE it is the PRESS, not because of its corporate form. But people's inability to make that distinction caused so much angst that the sentence, redundant as it is, was added to the proposed amendment.
Mar 11, 2019 | angrybearblog.comHealthcare Hot Topics Politics US/Global Economics Brad DeLong got a huge amount of attention by saying it was time for neoliberals such as Brad DeLong to pass the baton to those to their left. Alarmingly, he seems to have written this first on twitter.
Zach Beuchamp rescued it from tawdry twitter to now very respectable blogosphere with an interview.
One interesting aspect is that Brad has very little criticism of 90s era Brad's policy proposals. Basically, the argument is that Democrats must stick together, because Republicans are purely partisan and no compromise with them is possible. I absolutely agree with Brad on this.
But I also want to look at criticisms of Clinton/Obama center left policy as policy.
Brad tries to come up with 2 examples
I could be confident in 2005 that [recession] stabilization should be the responsibility of the Federal Reserve. That you look at something like laser-eye surgery or rapid technological progress in hearing aids, you can kind of think that keeping a market in the most innovative parts of health care would be a good thing. So something like an insurance-plus-exchange system would be a good thing to have in America as a whole.
It's much harder to believe in those things now. That's one part of it. The world appears to be more like what lefties thought it was than what I thought it was for the last 10 or 15 years.
Now monetary vs fiscal policy is only considered right vs left because of the prominence and fanaticism of Milton Friedman. Is see no connection between laser eye surgery, hearing aids, and private health insurance. Medicare for all is not a National Health Service (note I am not conceding that a national health service would be bad for medical innovation). Brad did not advocate insurance/plus/exchange system in 1993. He (and Bentson, Summers and Rubin) advocated a payroll tax financed system not the Clinton-Clinton and Magaziner mess. I think he is stretching to get a second example.
I think the first isn't really left vs right and the second is and always was a bad political calculation. IIRC Obama certainly said that he thought single payer was better policy but politically impossible. That was the general line on the center left wonkosphere. I think the case for insurance-plus-exchange was at most a bad political argument disguised as a bad policy argument.
In another twitter thread (no not the one where he says twitter is a horrible medium for serious discussion) Paul Krugman comments
I want to focus on two of his tweets
Last point: wages. Here's where research has convinced me and others that wages are much less determined by supply and demand, much more determined by market power, than we used to believe. This implies a much bigger role for "predistribution" policies like minimum wage hikes 10/
Pro-union policies, and more than we used to think. "Let the market do its thing, but spend more on education/training and a bigger EITC" no longer sounds like wisdom 11/
I listed this as the one economist's mea culpa based on empirical evidence which came to my mind. A lot of center left economists used to oppose minimum wage increases and were convinced by empirical evidence (mostly by Card and Krueger) that this is actually good policy. But I don't see any problem with the EITC. Rather, economics 101 based arguments against the minimum wage and unions have been undermined by evidence*.
I think Krugman's problem with "a bigger EITC" is political. It appears on the Federal budget so deficit hawks won't allow a really huge increase. In contrast, people can think firms pay the minimum wage, so increasing it sounds like a cheap way to help the working poor.
More generally, I don't see any reason to abandone redistribution (like the EITC). In fact, I think that is both excellent policy and political dynamite. I note that Bill Clinton and Barack Obama campaigned promising to raise taxes on the rich and cut taxes on everyone else. Also they won. Other Democrats didn't promise that and they lost. A more progressive income tax is a relatively market respecting policy long supported by left of center economists. Oh and also Alexandria Ocasio Cortez. I don't think there is any evidence against the Clinton 1993 tax increase combined with EITC increase.
The fact that it is totally obvious that it is good politics (rejected absolutely by the Republican party and supported by most self identified Republicans) doesn't mean that it is too obvious to stress. It means debating redistribution vs predistribution is a distraction (which one here is not like the others) ?
I personally have criticisms of Bill Clinton type neoliberalism after the jump
OK so what can I add ?
I could bring up a really bad Clinton administration policy proposal based on neoliberalism: financial deregulation, and, in particular, Clinton's last act signing the commodity futures modernization act. This was absolutely policy based on pro free market beliefs of people who cared about fighting poverty (Rubin himself was a relative skeptic compared to other people and the Clinton Treasury whom I will not name and criticize).
I won't discuss welfare reform or the Clinton crime bill. Both were opposed by the center left wonks. That was politics not policy.
But there was strong support among neoliberal wonks for reinventing government, that is for outsourcing and replacing public provision of services with vouchers. There clearly was a strong view that the private sector is more efficient than the public sector. There was I think sincere support for reducing the number of Federal employees.
I think there is now strong evidence that the public sector is often more efficient than the private sector. Part of the case was politics disguised as policy. Voters hate the bloated Federal Bureacuracy (based on total fantasy about its size and cost). There is a theoretical argument that civil servants don't work because it is very hard to fire them. In fact, they do work. This is a failure of vulgar economics 101 in which people are assumed to care only about consumption and leisure.
In contrast there are huge problems with contracting out to private firms. The incentives civil servants face is enough to overcome the laziness of people less lazy than me (almost everyone) but it is nothing compared to the incentives private contractors have to take advantage of the government. What I always say is that a large state is costly, but the cost depends on the surface area -- it is very costly for the state for modestly paid civil servants negotiate with businessmen and highly paid private managers (before going out the revolving door). Reinventing government makes it more costly. The key example is not a Clinton reform (although Clinton reluctantly signed the bill) Medicare Advantage was supposed to cause Medicare to wither on the vine because the Centers for Medicare and Medicaid Services (CMS) couldn't compete with private insurance. By 2010 defenders of private insurance (crucially including Joe Lieberman) were absolutely determined to prevent the CMS from competing with private insurance, because they knew private insurance companies couldn't survive the competition.
Also school vouchers have been shown to have large negative effects on achievement.
I'd say considerable evidence of positive long term effects of welfare programs has accumulated. The assumption based on economimics 101 that welfare reduces pre-transfer income by distorting incentives has not fared so well. The evidence tends to suggest direct benefits. I promised not to discuss this one, because I am sure that welfare reform was based on political calculations not bad policy analysis (it was not a policy of the Rubin wing of the party -- Rubin advised Clinton to veto the bill).
Now on another topic. How about winning elections. Isn't that important too ?
In the interview, Brad discusses policy and parliamentary (in the USA Congressional) politics. He could also argue about electoral politics and say Democrats have to move left to win elections. In any case I will argue that.
Brad's argument is distantly related to the mobilize the base vs capture the center political strategies. He doesn't stress this in the twitter thread or the interview, but he could discuss voters and how few genuinely indpendent voters there are. Like me, he can vividly recall the 80s when lots of smart Democrats (and also Robert Waldmann) argued that the party had to move rightward to recapture the center. I recall reading something by Robert Kuttner about what the party needed was left populism and this was blocked by the power of money in the Democratic party (think Bernie Sanders back when Sanders was mayor of Burlington). When I first read that, I thought it was crazy. Now I think it is totally right. Also note that, by promoting the internet, Al Gore saved the party from centrists like Al Gore. Now candidates and candidate-candidates can raise huge amounts of money with small donations and don't have to get along with and flatter rich people. Obama proved this 8 years before Sanders proved it again.
There are fewer swing voters and much less ticket splitting than their used to be. This means that elections are determined mainly by whether young people vote. Sneering and Alexandria Ocasio Cortez is not good political strategy (also unwise unless one is a smart as she is and few people are).
* I have to say what I think of unions there was a liberaltarian argument that unions help insiders and create inequality (and support racial segregation). Also it was argued that unions prevented productivity growth by featherbeading and generally being rigid. These claims were never supported by evidence (empirically oriented labor economists like Richard Friedman always contested them}. In any case, the extreme decline of unions in the USA provides strong evidence that unions weren't the problem. They declined at the same time that there was a huge increase in inequality (there has also been an increase in racial wage differentials). Also their decline correlated with a marked decline in the rate of productivity growth. This is crude evidence, but detailed evidence long contradicted the case against unions. I think part of the shift is new evidence and part of the shift is more respect for evidence vs theory among economists. On the other hand, it's a whole lot easier to raise taxes on the rich and cut taxes on the non rich than to bring unions back.
Mar 17, 2019 | www.project-syndicate.org
Rising inequality and slow growth are widely recognized as key factors behind the spread of public discontent in advanced economies, particularly in the United States. But these problems are themselves symptoms of an underlying malady that the US political system may be unable to address.
The world's advanced economies are suffering from a number of deep-seated problems. In the United States, in particular, inequality is at its highest since 1928 , and GDP growth remains woefully tepid compared to the decades after World War II.
After promising annual growth of "4, 5, and even 6%," US President Donald Trump and his congressional Republican enablers have delivered only unprecedented deficits. According to the Congressional Budget Office's latest projections , the federal budget deficit will reach $900 billion this year, and will surpass the $1 trillion mark every year after 2021. And yet, the sugar high induced by the latest deficit increase is already fading, with the International Monetary Fund forecasting US growth of 2.5% in 2019 and 1.8% in 2020, down from 2.9% in 2018.
Many factors are contributing to the US economy's low-growth/high-inequality problem. Trump and the Republicans' poorly designed tax "reform" has exacerbated existing deficiencies in the tax code, funneling even more income to the highest earners. At the same time, globalization continues to be poorly managed, and financial markets continue to be geared toward extracting profits (rent-seeking, in economists' parlance), rather than providing useful services.
But an even deeper and more fundamental problem is the growing concentration of market power , which allows dominant firms to exploit their customers and squeeze their employees, whose own bargaining power and legal protections are being weakened . CEOs and senior executives are increasingly extracting higher pay for themselves at the expense of workers and investment.
For example, US corporate executives made sure that the vast majority of the benefits from the tax cut went into dividends and stock buybacks, which exceeded a record-breaking $1.1 trillion in 2018 . Buybacks raised share prices and boosted the earnings-per-share ratio, on which many executives' compensation is based. Meanwhile, at 13.7% of GDP , annual investment remained weak, while many corporate pensions went underfunded.
Evidence of rising market power can be found almost anywhere one looks. Large markups are contributing to high corporate profits . In sector after sector, from little things like cat food to big things like telecoms, cable providers, airlines, and technology platforms, a few firms now dominate 75-90% of the market, if not more; and the problem is even more pronounced at the level of local markets.
As corporate behemoths' market power has increased, so, too, has their ability to influence America's money-driven politics. And as the system has become more rigged in business's favor, it has become much harder for ordinary citizens to seek redress for mistreatment or abuse. A perfect example of this is the spread of arbitration clauses in labor contracts and user agreements, which allow corporations to settle disputes with employees and customers through a sympathetic mediator, rather than in court.
Multiple forces are driving the increase in market power. One is the growth of sectors with large network effects, where a single firm – like Google or Facebook – can easily dominate. Another is the prevailing attitude among business leaders, who have come to assume that market power is the only way to ensure durable profits. As the venture capitalist Peter Thiel famously put it , "competition is for losers."
Some US business leaders have shown real ingenuity in creating market barriers to prevent any kind of meaningful competition, aided by lax enforcement of existing competition laws and the failure to update those laws for the twenty-first-century economy. As a result, the share of new firms in the US is declining.
None of this bodes well for the US economy. Rising inequality implies falling aggregate demand, because those at the top of the wealth distribution tend to consume a smaller share of their income than those of more modest means.
Moreover, on the supply side, market power weakens incentives to invest and innovate. Firms know that if they produce more, they will have to lower their prices. This is why investment remains weak, despite corporate America's record profits and trillions of dollars of cash reserves. And besides, why bother producing anything of value when you can use your political power to extract more rents through market exploitation? Political investments in getting lower taxes yield far higher returns than real investments in plant and equipment. 1
Making matters worse, America's low tax-to-GDP ratio – just 27.1% even before the Trump tax cut – means a dearth of money for investment in the infrastructure, education, health care, and basic research needed to ensure future growth. These are the supply-side measures that actually do "trickle down" to everyone.
The policies for combating economically damaging power imbalances are straightforward. Over the past half-century, Chicago School economists , acting on the assumption that markets are generally competitive, narrowed the focus of competition policy solely to economic efficiency, rather than broader concerns about power and inequality. The irony is that this assumption became dominant in policymaking circles just when economists were beginning to reveal its flaws. The development of game theory and new models of imperfect and asymmetric information laid bare the profound limitations of the competition model.
The law needs to catch up. Anti-competitive practices should be illegal, period. And beyond that, there are a host of other changes needed to modernize US antitrust legislation. Americans' need the same resolve in fighting for competition that their corporations have shown in fighting against it.
The challenge, as always, is political. But with US corporations having amassed so much power, there is reason to doubt that the American political system is up to the task of reform. Add to that the globalization of corporate power and the orgy of deregulation and crony capitalism under Trump, and it is clear that Europe will have to take the lead.
Apr 27, 2017 | www.nakedcapitalism.comChris , April 27, 2017 at 3:48 pmLambert Strether Post author , April 27, 2017 at 4:26 pm
Years ago, while working in an Australian state public service department, we considered 'Yes Minister' to be a documentary, and used it amongst ourselves as training material.RUKidding , April 27, 2017 at 5:11 pm
My favorite episode is "Jobs for the Boys." My favorite line: "Great courage of course. But whatever possessed you?"
(Messing about with the VPN to get the full page )witters , April 27, 2017 at 8:19 pm
Indeed. I have used it as such, myself! Not snark.
A most excellent book and series. Should be required viewing.Huey Long , April 27, 2017 at 3:21 pm
Yes, Minister was a neoliberal attack on government as such. It set the "entrepreneurial" political hero/leader against the corrupt "civil service". It made the latter the "deep state", thereby tainting forever the welfare state as an evil hidden conspiracy that (mysteriously) pandered to the meritocratically worthless. If that is what you mean by "Deep State" then you can have it.
It is now known that a perfection of planned layout is achieved only by institutions on the point of collapse . [P]erfection of planning is a symptom of decay. During a period of exciting discovery or progress there is no time to plan the perfect headquarters. The time for that comes later, when all the important work has been done. Perfection, we know, is finality; and finality is death.
Following this line of reasoning, it seems to me that the US military establishment has been in decline ever since the Pentagon was built and the temporary Navy Dept. buildings erected on the National Mall were razed.
Being that the Pentagon opened in 1943 and the buildings on the Mall were razed in 1970, which roughly coincides with our costly imperial adventures in Korea and Vietnam, I think Parkinson's Law #6 is dead on here.
Mar 14, 2019 | www.nakedcapitalism.comYves here. Even though Martin Wolf's post makes many important observations, I feel the need to take issue with his conclusion. Economists have been and continue to be enormously successful as experts. PhDs in economics make roughly twice as much as those in other social sciences. Economists are the only social scientists to have a seat at the policy table. And they continue to do so, despite their colossal failure in the global financial crisis, with no serious change in the discipline and no loss of reputation of any prominent economists.
Neoclassical economics became important in large measure to show that markets delivered efficient outcomes, and efficiency was seen as tantamount to socially desirable. That's before considering that highly efficiency almost always comes at the expense of safety and robustness, and that efficient solutions may not be equitable.
The importance of economists as policy advisers grew in the post World War II era, after the USSR managed the impressive feat of industrializing in the 20th century. US officials were concerned that a command and control economy could beat a messy, consumer oriented capitalist one, and turned to economists to give guidance on how to achieve high growth rates so as to produce enough guns and butter.
As for the specific impetus for Wolf's article, it appears to be due to voters ignoring the dire warnings made by the Remain campaign during the Brexit referendum campaign that Brexit would have large economic costs. But based on reports after the vote came in, that repudiation came not just because the public might well have good reason not to believe economists as a result of the crisis, but how the Remain campaign carried itself in the debates. That side apparently made arrogant-seeming, data heavy arguments, while the Leavers made stirring appeals about sovereignty .a UK version of MAGA.
By Martin Wolf, Associate Editor and Chief Economics Commentator, Financial Times. Originally published at the Institute for New Economic Thinking website
"I think people in this country have had enough of experts."
Michael Gove, winner of the Brexit referendum (though loser in the game of politics, having failed to become leader of his party, and so, maybe, no true expert either) hit the nail on the head. The people of this country have, it seems, had enough of those who consider themselves experts, in some domains. The implications of this rejection of experts seem enormous. That should be of particular significance for economists, because economists were, after all, the "experts" against whom Mr. Gove was inveighing.
Yet it is not really true that the people of this country have had enough of experts. When they fall ill, they still go to licensed doctors. When they fly, they trust qualified pilots. When they want a bridge, they call upon qualified engineers. Even today, in the supposed "post-fact" world, such people are almost universally recognized as experts.
So, maybe the proper distinction to be made is between "trustworthy" experts and "untrustworthy" ones. The question then become what makes experts trustworthy -- not, I should stress, intrinsically trustworthy, but rather perceived by the public to be so.
One might make three, admittedly speculative, points about this distinction between experts deemed by the public to be deserving of trust and those who are not.
The first is that some forms of expertise appear simply to be more solidly based than others in a body of theory and/or evidence, with recognizable successes to their credit. By and large, doctors are associated with cures, pilots with keeping airplanes in the sky and engineers with bridges that stay up. Such successes -- and there are many other comparable fields of expertise -- self-evidently make people with the relevant expertise appear trustworthy.
The second is that some forms of expertise are more politically contentious than others. Nearly everybody, for example, agrees that curing people, flying airplanes and building bridges are good things. Social and political arrangements -- and economics is inescapably about social and political arrangements -- are always and everywhere contentious. They affect not only how people think the human world works, but also how it ought to work. These forms of expertise are about values.
The third point is that trust in expertise seems to be quite generally declining. This is partly perhaps because education is more widespread, which makes possession of an education appear in itself less authoritative. It is also partly because of the rapid dissemination of information. It is partly because of the easy formation of groups of the disaffected and dissemination of conspiracy theories. The internet and the new social media it has spawned have turned out to be powerful engines for the spreading of disinformation aimed at manipulation of the unwary.
It might be encouraging for economists that they are not the only experts who are mistrusted. Consider the anti-vaccination movement, hostility to evolutionary theory, or rejection of climate science. All these are the products of doubts fueled by a combination of core beliefs and suspicion of particular forms of expertise. The anti-vaccination movement is driven by parents' concerns about their children. The hostility to evolution is driven by religion. The rejection of climate science is clearly driven by ideology. Every climate denier I know is a free marketeer. Is this an accident? No. The desire to believe in the free market creates an emotional justification for denying climate science. In principle, after all, belief in free markets and in the physics of the climate system have absolutely nothing to do with each other.
So economists are in good company with other forms of politically or socially contentious expertise. But they have a special difficulty. Not only are they engaged in an essentially controversial, because political, arena, and so also an inherently ideological one, but they suffer to a high degree from the first point I made above: their "science", if science it is, just does not look to the public to be solidly based. It does not work as well as the public wants and economists have claimed. Economists claim a certain scientific status. But much of it looks to the outsider more like "scientism" -- the use of an incomprehensible intellectual apparatus to obscure ignorance rather than reveal truth.
This does not mean that economists don't know useful things. It is quite clear that they do. Markets are extraordinary institutions, for example. Economists' elucidation of markets or of the principle of comparative advantage is a great intellectual achievement. Yet suspicion of economics and economists is both long-standing and understandable.
The problem became far more serious after the financial crisis. The popular perception is that the experts -- macroeconomists and financial economists -- did not appreciate the dangers before the event and did not understand the longer-run consequences after it. Moreover, the popular perception seems to be in large part correct. This has damaged the acceptance of the expertise of economists to a huge extent.
So how, in this suspicious contemporary environment, might economists persuade the public they are experts who deserve to be listened to?
I decided to ask my colleagues this question. One answered that:
1. Good economists have a clear (if incomplete) understanding of how the world works. This is a pre-requisite to making it a better place.
2. Economists have a sense of scale. They understand the difference between big and small and how to make that distinction. This is vital for policy.
3. Economics is all about counterfactuals. It understands the relevant comparators even if they are difficult to work out.
4. Economists are experts on incentives and motivations and empirically try to measure them rather than relying on wishful thinking.
5. Generally, good economists are expert in understanding the limits of their knowledge and forecasting abilities.
Another colleague added:
The general public usually associate economists with:
-A small set of macroeconomic forecasts (growth, inflation mainly), and
-A belief that markets always produce perfect outcomes
And they attribute failure to them if either:
-point forecasts (inevitably) prove wrong, or
-markets produce some bad outcomes
Whereas the expertise of economists is really in the building blocks that enable you to construct sensible forecasts and to understand how people are likely to behave and respond to a given set of circumstances/policies. This structure for understanding the world allows economists to take on board new developments, understand whether they reflect a rejection of their existing theories or merely a (possibly tail) outcome that was consistent with their "model," and push forward their understanding of the world from there. Rather than throwing away all existing wisdom when circumstances change somewhat.
I agree with these propositions. Properly understood, economics remains very useful. One realizes this as soon as one is engaged with someone who knows nothing at all about the subject. But I still have four qualifications to make.
First, a large part of what economists actually do, namely forecasting, is not very soundly based. It would be a good idea if economists stated that loudly, strongly, and repeatedly. Indeed, there should be ceaseless public campaigning by the professional bodies, emphasizing what economists don't know. Of course, that would not -- as economists might predict -- be in their interests.
Second, in important areas of supposed economic expertise, the analytical basis is really weak. This is true of the operation of the monetary and financial systems. It is also true of the determinants of economic growth.
Third, economists are not disinterested outsiders. They are part of the political process. It is crucial to remember that certain propositions favor the interests of powerful people and groups. Economists can find themselves easily captured by such groups. "Invisible hand" theorems are particularly open to such abuse.
Finally, the division between economic aspects of society and the rest is, in my view, analytically unsound. The relationship between, say, economics and sociology or anthropology is not like that between physics and chemistry. The latter rests upon the former. But economics and anthropology lie side by side. I increasingly feel that the educated economist, certainly those engaged in policy, must also understand political science, sociology, anthropology, and sociology. Otherwise, they will fail to understand what is actually happening.
If I am right, the challenge is not just to purify economics of exaggerated claims, though that is indeed needed. It is rather to recognize the limited scope of economic knowledge. This does not mean there is no such thing as economic expertise: there is. But its scope and generality are more limited than many suppose.
Michael Gove was wrong, in my view, about expertise applied in the Brexit debate. But he was not altogether wrong about the expertise of economists. If we were more humble and more honest, we might be better recognized as experts able to contribute to public debate.
With this in mind, what should be the goal of an education in economics at the university level? A part of the answer will come from developments within the field. In time, the incorporation of new ideas and techniques may make the academic discipline better at addressing the intellectual and policy challenges the world now confronts.
Another part of the answer, however, must come from asking what an undergraduate education ought to achieve. The answer should not be to produce apprentices in a highly technical and narrow discipline taught as a branch of applied mathematics. For the great majority of those who learn economics, what matters is appreciation of both a few core ideas and of the complexity of the economic reality.
At bottom, economics is a field of inquiry and a way of thinking. Among its valuable core concepts are: opportunity cost, marginal cost, rent, sunk costs, externalities, and effective demand. Economics also allows people to make at least some sense of debates on growth, taxation, monetary policy, economic development, inequality, and so forth.
It is unnecessary to possess a vast technical apparatus to understand these ideas. Indeed the technical apparatus can get in the way of such an understanding. Much of the understanding can also be acquired in a decent, but not inordinately technical, undergraduate education. That is what I was fortunate enough to acquire in my own years studying philosophy, politics and economics at Oxford in the late 1960s. Today, I believe, someone with my background in the humanities would never become an economist. I am absolutely sure I would not have done so. It might be arrogant to make this claim. But I think that would have been a pity -- and not just for me.
In addition, it would be helpful to expose students to some of the heterodox alternatives to orthodox economics. This can only be selective. But exposure to the ideas of Hyman Minsky, for example, would be very helpful to anybody seeking to understand the macroeconomic implications of liberalized finance.
The teaching of economics to undergraduates must focus on core ideas, essential questions, and actual realities. Such a curriculum might not be the best way to produce candidates for PhD programs. So be it. The study of economics at university must not be seen through so narrow a lens. Its purpose is to produce people with a broad economic enlightenment. That is what the public debate needs. It is what education has to provide.
greg , March 14, 2019 at 1:14 am
I am afraid a worse problem with economists is that they don't seem interested in anyone's opinions except their own.
They even hold ecology in disdain, not having any interest in learning what is, in fact, the foundational system of their own 'science.' The booms and busts of capitalism show familiar patterns to ecologists. Why, ecologists even have equations for them!
But I guess ecology is just too simple for the attentions of economists : Stupid animals. They don't even use money! What kind of economy can that be?
So economists look for models everywhere except where to find them. The hubris of humanity, not needing to give due attention to the economies of 'animal' societies.
Sanxi , March 14, 2019 at 7:04 am
To Yves. Well, I nearly lack the heart to respond, but I feel I must. Taking yesterday's NC's lessons of looking at a human facing and having eye contact to remain human online, I now do both – a human sits next to me. I read aloud to her.
Ok, you are a strong advocate of becoming a certified economist. Because 1.they make a lot of money and 2. only they sit at the policy table.
Further claims made in your preamble: in no particular order of importance: something about efficient outcomes that may not be equitable; command & control and guns and butter; and sadly an analysis of Brexit voters in either camp.
(One exception to all that I say is those using MMT, certified, with a degree or not. Again something I first learned about on NC.)
Yesterday, somewhere in the NC collective was the notion that the above mentioned economists tell tho' we may be so out of balance with the world that our extinction as a species is a legitimate issue to discuss, that in the end there ain't any money to not only not fix the problem but not even deal with it. And these guys/gals you laud? I and others have argued this gang provided the intellectual nonsense that put us where we are now.
What is your point that Econ grads make the most amount of money compared to what? Philosophy majors? True or not I still say it's a waste of a life. Not the knowing, but the being of one. I don't see what value there is for civilization in general but specifically that just because they make a lot of money, it's good?
All social science grads you say v Econ grads make more money. I doubt that. Seems every school district requires a PhD in Education, and a PhD in Business is very lucrative (not saying useful, just pays well).
The policy table. I'm truly baffled as to what you refer. If they are the only ones at said table then it follows they are the only ones at it. In my long life I'm trying to think were we ever let an economist have the final say, or even a moderate say in any political, governmental, or military policy. Some input yes, but deterministic, no. If they were sitting at their own table, when asked they came to table with those that had the votes, give their opinion and then left. Sociological impact statements had far bigger influence on policy. And policy is no more then the data we can agree on to make decisions.
Sure, many governments, NGOs, multinationals all have jobs for economists but in someway this is self serving, not a necessity. Kuhn's book on "The Structure of Scientific Revolutions", does a good job of explain how authority gets established, vested, and in the end becomes useless. That it exists is not an argument that it is necessary or good. That there needs to be some way to define and explain things economic I no have issue with, that outside of MMT that is has been, using system theory I don't see it.
As to efficient outcomes that may not be equitable that speaks for itself. It doesn't. No 'may not' about it, said with respect.
As to command & control and guns and butter, seems like a long time ago. A long time ago, using science to help in making decisions was new and it took awhile to get it right, or at least to get it working.
(Small note, I have dual US & UK citizenships)
An analysis of Brexit voters in either camp. I can tell you why I voted the way I did but I need to make an appeal to Stephen Pinker's, "The Blank Slate". Either I have the free will to make a decision and accept responsibility for it or I don't. I believe I do and did. I voted to leave and yes their are economic impacts, as well as social, political, historical, psychological, and philosophical. As did in electing Trump. As did the 1776 revolution, as in the US Civil War, almost anything. Money is not everything nor the only thing. And the future isn't what it used to be. The Long Emergency is here.
skippy , March 14, 2019 at 7:15 am
Hayek liked banding around watery terms like freedom and liberty its when he stopped being an economist [political theory in times past] and jointed the ranks of ideologues .
Pay check included oops and health care .
Yves Smith Post author , March 14, 2019 at 1:17 pm
Boy are you shooting the messenger. I'm not saying the way the economics discipline has become influential is a good thing, but that is the way it is. How economics operates as a discipline is great for economists, so why should they change? So what if their prescription fail way too often? For instance, there haven't been any bad consequences to anyone who didn't see the crisis coming and (even worse) advocated bank deregulation, starting with Larry Summers (but he had plenty of company).
And you are simply wrong about the influence economists have. In the US, CBO budget scoring is fundamental to how Congress views various proposed programs, even though we have described how the CBOs methods are crap and the CBO operates as an a big enforcer of deficit hysteria (as in they play a politicized role). The Fed and other central banks, the most powerful single government economic actors, are all run by monetary economists. The IMF, another very powerful institution, has deeply embraced and implements neoliberal policies, namely, balanced budgets and squeezing labor (labor "reforms"). In the US, economists in op eds and even in Congressional testimony (see Bernanke for instance) argue for balanced budgets and argue the supposed necessity of cutting Social Security and Medicare and NEVER mention cutting military spending. They are acting not just as enforcers of overall spending, but by advocating what to cut, are influencing priorities.
Avery T , March 14, 2019 at 9:53 am
Back in my former life as an economist-in-training, I ran into ecological economics as a branch of natural resource economics. It was completely backwards – the extent ecological theory was brought in didn't extend beyond simple predator-prey-plant models, and the goal was to find the macroeconomic general equilibrium of biomass in the ecosystem.
That was probably just the most striking example of the institutional close-mindedness I saw back among the economists.
deplorado , March 14, 2019 at 3:08 am
Mr Wolf says, among the important concepts are "externalities" Like everything that supports economic activity. Economics reduces the real world to "externalities" and simple equations about things measured in crude tokens – money. How good can it be then.
Also, "Such a curriculum might not be the best way to produce candidates for PhD programs" – is that a goal in itself? Like, the world needs a certain amount of economics PhDs produced? What for?
Prof. Michael Hudson, Prof. Richard Wolff and others have long ago explained what's wrong with mainstream economics, but that can't be said in FT.
This reminds me of the party press during the Perestroika in the 80ies talking about reform in a similar soft and obfuscatory of the truth way, full of wishful recommendations, striking a demurely optimistic tone supposed to convey integrity. It was bullshit and when the real things started happening, everybody forgot about it, because it had no depth and no bearing on real life.
diptherio , March 14, 2019 at 10:40 am
It seems obvious to most people that not all values are commensurable with each other. For instance, things like literary and artistic quality, friendships, and human lives cannot defensibly be measured in dollar terms. However, this is just what economics attempts to do. Hence, environmental economics simply aims to put a dollar value on environmental quality (or degredation). Hence, the entirety of my Labor Economics course was focused on how you place a monetary value on a human life, when the human happens to die because of their job.
So, I tend to agree with you. The whole discipline is of questionable value, so long as economists refuse to accept some very basic truths and incorporate much more than money into their analyses.
JEHR , March 14, 2019 at 12:31 pm
That comment strikes me as strange because one of the weaknesses of classical economic models was the fact that how money works was not part of their inquiry.
The Rev Kev , March 14, 2019 at 4:00 am
In trying to judge the abilities of an expert, the best that most people can do is to see the results on what they practice. If a doctor has a reputation of getting his patients drug-addicted, then you would not go to them. If an engineer built a building but the roof constantly leaked, you would think twice about giving them another contract. But let us think about how well economists are judged. You might say that a lot of people in the UK discounted their advice during Brexit but it has been noted that a lot of the Leave campaign was based in depressed areas. Why were so many areas depressed? Because the people knew that the government was using the advice of economists as to which areas to prioritize for resources. And usually that meant London and its outer areas – which voted Remain.
People are fully aware of what happens too when WTO economists go into a country – social services are cut, public transport is cut way back, the cost of living for the poor skyrocket while the rich seem to be protected. And take a look at the economic state of the United States. Wages have flatlined since the 70s, infrastructure is falling into disrepair, whole swathes of the country are abandoned to their own devices, de-industrialisation is a fact, etc, etc etc but the point is that the people that were giving all the advice to have this done were economists like Ken Rogoff and his wonky austerity study. It may have been the politicians that pulled the trigger but it was economists that were loading the gun.
if you want a breed of economists more grounded in reality, then I would suggest having them work in a fulfillment center for a week to show the the consequences of what happens when you get priorities wrong. Certainly they need to study the work of economists like Hyman Minsky and Susan Strange who had gone out of fashion before the crash but the long and short of it is to see what works and what does not work. I do not mean to be insulting here but as far as I can see, modern economic theory has really been a theory for the top 20% and not for the rest of the population. And now we are seeing the result up close and personal and until this changes, people will not feel the need to take the advice of economist, even when they should. Martin Wolf is fortunate in having also a humanities background but how true is that nowadays?
Jos Oskam , March 14, 2019 at 4:04 am
The sentence " So, maybe the proper distinction to be made is between "trustworthy" experts and "untrustworthy" ones " is important. Unfortunately, in the article I miss a key aspect in making that distinction.
I seem to notice that the "trustworthy" areas of expertise in general tend to be removed from political ideas or preferences. Left or right, liberal or conservative, democrat or republican, it does not affect the way in which trustworthy experts go about their business. It does not influence the way in which a doctor cures patients, a pilot flies a plane or an engineer constructs a bridge. However, as soon as we start discussing things like the economy, talk is full of "liberal" or "left" economists as opposed to "conservative" or "right" economics. I have never heard of one bridge being more at risk of collapse because it was designed by a liberal engineer versus a conservative one, or the other way round. When discussing the strength of a bridge political leanings simply do not come into play, it is not a factor like the strength of the steel used. But for all economic debate, these leanings often seem to be the essence of the discussion.
Given the general public's intensifying distrust of politicians and all things political, it does not surprise me that disciplines tainted by political colouring (like economics) are considered "untrustworthy" compared to disciplines where political colouring is not a factor (like the aforementioned doctors, pilots and engineers).
Since economics *is* in fact very interwoven with politics, I think the general public will always treat economists the same way they treat politicians, that is with a healthy dose of distrust. And who can blame them?
Ptb , March 14, 2019 at 9:07 am
Yes, ability vs integrity.
And you can take 10 of the most honest and well meaning people, dedicated to the public good and advancement of learning, employ them in a structure set up to profit first and ask questions second, and the whole is going to be not the same as the sum of the parts.
bruce wilder , March 14, 2019 at 10:45 am
I'd say an unhealthy dose of distrust is more likely and more common.
People tend to treat conventional econospeak as so much blah, blah, blah and then turn around and credit or discredit what has been said on the basis of the tone with which it was said.
Economists working for the kleptocracy get a lot of mileage out of sounding serious, while talking complete rubbish. And, sadly, many economists working the left, get away with lame one-liners and a rudderless iconoclasm.
SJ , March 14, 2019 at 4:32 am
I had an e-mail exchange with Mr. Wolf many years ago – before the 2008 crash – where he basically told me that we live in the best of all possible worlds and that nothing needs to change – he has changed his tune since then, I suppose to try to avoid looking like a complete idiot and also to try to deflect criticism on to others. Maybe he has öearned something in the meantime, but maybe he is just faking for the sake of appearences.
deplorado , March 14, 2019 at 11:02 am
I think he is faking it. It's the party line. It is the beginning of the neoliberal Perestroika (see also Brad DeLong).
I quite like to look at it this way – it is very clarifying (as I lived in the Perestroika) and I recommend it. Don't for a moment trust the Perestroika – it is half-measures at best and purposeful deception at worst.
johnf , March 14, 2019 at 5:24 am
" The answer should not be to produce apprentices in a highly technical and narrow discipline taught as a branch of applied mathematics ." With apologies to Mr. Richter, economics is taught more like a branch of mathematical sophistry, and that is slighting the original sophists.
I was an undergraduate studying applied mathematics at the time and place, present day neoclassical economics was being developed, published and starting to be taught. I can think of just one economics-and-finance classmate who continued to study mathematics beyond first year calculus – which everyone had to take.
Our introductory numerical analysis professor was scathing about his colleagues at the other side of the Quads. He made it quite plain that we could not skip the rigor and "try to prove something like an economist". Pretty much all the econ students dropped his course when they discovered that. The specific problem they could not address, can be simply stated. If you know a number but don't know its error, you don't know the number. The difficulty the great mass of economists have with just that, excludes economics as a branch of applied mathematics.
bruce wilder , March 14, 2019 at 10:50 am
pretty much the sum total of neoclassical economics is trying to work out the counterfactual of how the economy would work if everyone had more-or-less complete information to work with.
introduce genuine uncertainty, and pretty much the whole apparatus turns topsy-turvy and all the "laws" of economics disappear or become highly contingent on circumstances unlikely to obtain.
Thuto , March 14, 2019 at 5:40 am
"Fixing" economics must start with a wholesale divestment from the idea of this profession being a "science", said divestment openly promoted by economists themselves. All manner of hardwired, warped thinking, to say nothing of obstinacy in changing one's views when confronted with contradictory evidence, results from people believing that they're scientists practising a real science. When such thinking seeps into the subconscious, the obstinacy is locked into place and even events of the scale of the GFC aren't enough to shake loose the erroneous biases held by the mainstream profession.
How else would an entire profession place so much faith in the predictive powers of its models if not having such faith resting on a (supposed) firm foundation of science? An engineer designing a beam for a bridge has justifiable faith in continuum mechanics (a real science) as a sound foundation for their work, economics is devoid of such sound foundations and its time the profession loudly and publicly declared this in an unprecedented act of intellectual honesty.
Additionally, we see weak to non-existent culpability enforcement when policy recommendations put on the table by economists wreck lives (as they have over decades), this in stark contrast with e.g. an engineer designing a bridge that collapses and kills hundreds. In other words, economists have outsized influence in matters of policy out of proportion with the amount of actual skin they have in the game. On the other side, this "economics is a science" narrative disarms a public already deficient in the marginal capacity for independent, critical thinking to question anything economists say, said public including politicians who, as aptly put by the Rev Kev, pull the trigger of a policy gun loaded by economists.
cnchal , March 14, 2019 at 8:50 am
>. . . economics is devoid of such sound foundations and its time the profession loudly and publicly declared this in an unprecedented act of intellectual honesty.
Not one economist, with their ass planted firmly on their throne at the policy table, will admit to that. The operating principle is venality.
Now that they have lost the respect of the peasants, I don't want them to matter again. What I would like to see is mass firings of eclownomists, so they can experience life as lived by the peasants, just once. It may even free up resources to pay people to actually do good things instead of perpetuating one failure after another, and being grossly rewarded for those failures.
dearieme , March 14, 2019 at 6:35 am
I think he gets the wrong end of the stick here: "Consider the anti-vaccination movement, hostility to evolutionary theory, or rejection of climate science."
No doubt there are occasions when vaccinations can do serious harm: a niece of mine was excused a standard vaccination because of a contra-indication in her family medical history.The anti-vaxers, though, seem to have elevated some small kernel of truth into a stupid all-encompassing doctrine without giving the matter enough critical thought.
The anti-evolutionists seem to have failed to devote any critical thought to the matter at all.
But the sceptics about "climate science" have deployed critical thinking to identify this new religion as being composed largely of incompetence, dishonesty, and hysteria. It's the likes of old Wolfie who are lacking in critical thought on this issue. Maybe he's one of those people who is uneducated in science, and so too easily swayed by chaps shouting excitedly about models, measurements, and so forth.
It's very odd. Goebbels Warming is now old enough that you can check the historical record of its predictions of dreadful tipping points, of the disappearance of snow from Britain, of the flooding of this and that Pacific island group, and so on. All false. So why should anyone rational believe a word of it? After all, almost from the beginning its proponents believed that the science was settled – it was inarguable. In which case why have their predictions proved so lousy?
Consult a poet: humankind cannot bear very much reality.
Consult an economist: incentives matter.
mle detroit , March 14, 2019 at 8:01 am
Dearie me, Dearieme, your comment appears to lack sources, citations, examples. Please provide.
Steve Ruis , March 14, 2019 at 8:38 am
So, Yves, you are saying ("Economists are the only social scientists to have a seat at the policy table," etc.) that economists are like weathermen. They still have a time slot on the evening news and are respected, even though their accuracy is abysmal. They make a lot of money doing this.
Basically, this is because we expect very little of economists and because they have stopped using ordinary language professionally, they have the status equivalent to someone actually helpful.
I think economics has become an asocial science with too many economists willing to provide some sort of academic cover for whatever the plutocrats want to do.
Arthur Dent , March 14, 2019 at 11:24 am
I think the analogy to meteorologists is interesting. As an engineer, I have some perspective on this.
In engineering design, frequent failure of what we design is generally undesirable. So we have our analytical tools based on both scientific theory and empirical data, and then apply a factor of safety (sometimes called factor of ignorance, but more accurately is a recognition that there is a probabilistic distribution of outcomes and the factors of safety shift the design towards success instead of high probability of failure).
Airline pilots operate similar to engineers in that they aren't flying close to the edge of the airplane's flight characteristics. Instead they stay in a zone quite a ways away from what the airplane could potentially do. This is one of the reasons that airplane travel is very safe, especially compared to car travel.
Meteorologists are trying to make predictions of the most likely scenario which means they are trying to hit the center of the distribution of the potential outcomes. As a results, they frequently are shown to have "missed" in that some other lower probability event occurred instead. Over the past couple of decades, we have gotten used to seeing weather forecasts with probabilities or ranges of outcomes.
I think the public presentation of economics has two separate problems, but both undermine economics credibility.
First, economics is a field that is trying to predict the most likely event and the range of potential outcomes, similar to the weather forecasts, but does not present the predictions this way. So people don't cut economists slack because their public presentations don't recognize the range of potential outcomes and the frank recognition of the inaccuracy of their predictions that we are used to with the weather people, especially once they get past 24 hrs of predictions.
Second, many of the economists that make public predictions are funded by interest groups. When we see a lawyer on TV, we know that he is being paid by a client to be an advocate and that is his job as a lawyer. So we may disregard what he has to say but we understand the context he is speaking in. However, the economists don't say who they are being paid by and so they are presumed to be independent experts when they are sometimes not. I believe this is a fundamental ethical issue within the economics profession.
So when the economics predictions (e.g. effects of tax cuts) fail to be accurate, it needs to be parsed out if it was simply a lower probability event or if the predictions were intentionally biased to begin with. None of this is well-addressed by the economics profession, which greatly undermines credibility.
JEHR , March 14, 2019 at 12:40 pm
jfleni , March 14, 2019 at 8:55 am
I was just getting used to the idea that economists are like clocks: right twice a
day -- at Noon and sundown!
Ptb , March 14, 2019 at 9:14 am
Economists also use the term 'efficiency' to denote pareto optimality, which causes much confusion.
Especially when communicating with both analytical people of a hard-sciencey or engineering background (efficiency = a context specific figure, some-measure-of-output/some-measure-of-input, strict limits in how far you can generalize), and business people (efficient = low cost)
bruce wilder , March 14, 2019 at 11:00 am
economists also routinely distinguish the allocative efficiency they focus upon almost exclusively from the kinds of technical or managerial efficiency that most of the rest of the world focuses upon, but they rarely admit that their focus is so narrow and does not generalize to encompass common sense notions of cost and efficiency -- it is almost as if they want to avoid the critical examination engineering enables while providing double-talk as cover for business people trying to privatize the profits while socializing the costs.
Matthew G. Saroff , March 14, 2019 at 9:50 am
Let me start by saying that I object to the term "Dismal Science" for economics.
This is not because of the "dismal" part, it's because of the "science" part.
That being said, the devaluing of expertise is due in large part to something not mentioned by Mr. Wolf: corruption, particularly for the field of macroeconomics.
We have seen this repeatedly in the past few decades, where nominally independent researchers have been found to slant their research to accommodate the results desired by their patrons. (The sad state of pharma and medical research come to mind as well)
In fact, ACCORDING TO THEIR OWN "RATIONAL ACTOR" THEORIES , academics in general, and economists in particular,will behave in ways that will most strongly benefit themselves, and not in ways that serve the truth or reality. (Studies have shown that economists are the most selfish academics )
I believe that if you discuss the devaluation of knowledge and expertise without discussing the pervasive corruption in western society, you are ignoring the proverbial elephant in the room.
john Wright , March 14, 2019 at 3:04 pm
I object to the "Dismal" part.
Economic Science is very optimistic that what they characterize as "economic growth" in using up the world's resources in its pursuit, is a "good thing".
Economists are selling a limitless planet on which humans will always "pull the rabbit out of the hat", to solve any resource issue, including climate change and overpopulation.
That being said, I view the economic profession, as largely practiced by its well-paid members, as a mechanism to justify what the political and business elite want to do.
The elite are simply getting what they pay to hear.
Steven Greenberg , March 14, 2019 at 10:02 am
I worked on simulation software for integrated circuits. My friend studied economics with all the famous people. When I described to him what I did if there seemed to be a discrepancy between what my simulator said and how the integrated circuit behaved in real life or the intuition that an electrical engineer had about how it would behave in real life he was amazed. I was amazed that he was amazed. How could you possibly believe a simulator that necessarily has bugs in it, if you don't track down discrepancies to understand which is right, your intuition or the simulator?
Sometimes, I had to be very inventive to find another way to make a complex calculation in a way that would test out if the simulator was right. If economics students are taught the math, but not how to check their work, and the necessity of checking their work, then they shouldn't be in positions to make policy recommendations.
bruce wilder , March 14, 2019 at 11:09 am
Many economists avoid operational modeling of the processes of the actual, institutional economy. And, that which does take place in narrowly conceived research by specialists is never allowed to feed back on the methods or theories embodied in the core doctrines.
WobblyTelomeres , March 14, 2019 at 3:32 pm
Other than setting Friedman's Chicago Boys upon Chile, isn't it very difficult to model/test anything macro in the real world?
bruce wilder , March 14, 2019 at 5:35 pm
One way mainstream macroeconomics defeats its own feeble efforts at empiricism is to set the problems in a frame of time-series regression analysis of highly aggregated data: national GDP and its high-level components year-by-year or quarter-by-quarter.
The behavior of tens or hundreds of millions of people reduced to statistics for largely formless accounting conventions relating to a single somewhat amorphous entity (a country) over time. History, however it happens, only ever happens one way, so there's always zero degrees of freedom in the aggregate time-series.
There is so little information left in the data, even the most clever econometricians would need a thousand years of data to "test" the most basic hypotheses. It is absurd to approach the task in the way they do.
Is it necessarily as difficult a task as they make it, to learn something useful about the way the economy works?
The problems of statistical aggregation and time-series are not rooted in the object of study -- the actual political economy -- so much as they are created by the conceptual apparatus.
In short form, economists have an analytic theory -- in form and epistemic status, something akin to Euclid's geometry. A geometry is not itself a map of the world and no one doing geometry confuses geometry with cartography or land surveying, but most economists do not understand that their theory is not itself a model of the actual political economy. Someone like Paul Krugman actually thinks he has "a map" of the political economy in, say, IS/LM . No student of geometry expects to find a dimensionless point in the bathroom or an isoceles triangle growing in the garden. Yet, economists regularly purport to casually observe perfectly competitive markets in equilibrium or the natural interest rate.
I think economists could do as well as, say, meteorologists or geologists in developing an empirically grounded understanding of the observable political economy, if they focused their attention on concrete and measurable mechanisms of the institutional economy and stopped talking meaninglessly about formless "markets" that have no existence.
Reality Bites , March 14, 2019 at 10:12 am
This article reminds me of why I stopped reading The Economist after the GFC. The Economist was quite explicit in advocating for a weak regulatory environment. I remember articles talking about how great it was for the Office of Thrift Supervision to regulate banks alongside others like the Fed because regulatory competition was good. After the GFC they were writing articles about how they opposed this all along.
It's not just that so many economists are wrong. It's that many times their models and predictions are wrong and they claim that it is either not what they argued for or 'externalities' intervened. Of course they never mentioned such externalities before. Many just outright conjure up unicorns. There were no shortage of economists claiming that the housing bubble was not a problem and the economy will grow to the point where things just naturally level off. Of course there was no accountability for those peddling these falsehoods.
Candy , March 14, 2019 at 11:01 am
I love the way people shrink down what Michael Gove said.
Here is his full exchange with his interviewer:
Gove: I think the people in this country have had enough of experts, with organizations from acronyms, saying --
Interviewer: They've had enough of experts? The people have had enough of experts? What do you mean by that?
Gove: People from organizations with acronyms saying that they know what is best and getting it consistently wrong.
Inteviewer: The people of this country have had enough of experts?
Gove: Because these people are the same ones who got consistently wrong what was happening.
shinola , March 14, 2019 at 12:04 pm
Perhaps it's changed since I started out as an econ. major in the mid '70's, but what disillusioned me was the total disregard for actual human behavior. Real people do NOT always behave rationally or honestly. Emotions/psychology do figure greatly in real people making "economic" decisions – just ask anyone who makes their living based on selling something.
Every economic model should be prefaced with "In an ideal world " (or perhaps more honestly "In an economist's construct of an ideal world )
Arizona Slim , March 14, 2019 at 12:18 pm
I share your disillusionment, shinola. I was a late 1970s econ major. By the time I graduated, I was done with economics.
hunkerdown , March 14, 2019 at 4:42 pm
Real people don't, but they should, say those who hire economists. If the algorithm doesn't work, change the inputs.
Wukchumni , March 14, 2019 at 12:09 pm
How many brand name economists up and quit in disgust 11 years ago when the powers that be decided to go against everything they stood for, and bailed out those that deserved to go down in financial flames?
not a one
bruce wilder , March 14, 2019 at 12:47 pm
A parenthetical lifted from Randy Wray's post responding to DeLong on MMT:
an exasperated Wynne Godley came into my office a couple of decades ago and announced that every [mainstream model] he had looked at was incoherent
That's the base problem, imho: economists are very successful as "experts" in a sociological sense, slotting into the role with firm claims on salary, status and ritual respect, as Yves Smith observed, but economics as a civic doctrine and a common frame of reference for political discourse is incoherent and economics as a scholarly discipline or "social science" fails methodological or epistemic standards.
There is a history of imperviousness to absolutely devastating critiques that isn't explained. Is that persistent "wrongness" related to professional success or only a by-product of an unfortunate pedagogy? Who puts the dogmatism into a dogma . . . and keeps it there?
(disclosure: i was a professional economist myself many years ago -- neither ambitious nor particularly successful, but I did attend ruling class schools for what that was worth)
deplorado , March 14, 2019 at 2:51 pm
Prof. Richard Werner has a fantastic talk (at the Russian Academy of Sciences) about, among other things, "the unresolved puzzles of modern economics" – to me the most striking there was how he dispenses with concept of "equilibrium".
He talks about the "puzzles" ~30 min in.
It is enough to see that and know that mainstream economists are little more than the high priests of the peculiar modern religion guiding our society.
Adam1 , March 14, 2019 at 3:21 pm
"The teaching of economics to undergraduates must focus on core ideas, essential questions, and actual realities."
Sadly Mr. Wolf suffers from the same delusions that so many mainstream economist suffer. They think they have actually considered "actual realities".
Yet the foundations of mainstream economics ignores these ACTUAL REALITIES
– Assumes Loanable Funds yet the Bank of England & the Bundesbank both publicly published research say endogenous money is correct. Loans create Deposits. They are clueless as to how finance works. I recall the infamous intro to econ question "If I double you income and double prices for beer, how much beer can you now purchase?" The standard econ answer is the same amount of beer. But in the real world the correct answer is you don't know. The professor never told you how large the fixed debt payments of the person were which most definitely impacts the amount of disposable income you have to buy beer. But then again most economists would likely fail any advanced accounting class. Long gone are the days when undergraduate economics students in economics had to take 2 or 3 semesters of accounting. Even my alma mater which is definitely heterodox in faculty and has MMT / UMKC taught faculty only require 1 these days. You need a strong foundation in accounting to be stock flow consistent in your modeling of a highly monetary modern economy.
– Assumes upward sloping supply curve is the market norm. At least 3 economic studies have attempted to measure this on large cross industry scales and every time concludes that over 1/2 of all businesses face downward sloping cost curves (natural monopoly stuff, and we wonder why industry concentration is the norm) and another 1/3 face flat cost curves. An upward sloping supply curve, for those not taking advanced or graduate level economics IS the assumed upward sloping marginal cost curve of the industry or nation if you're crazy enough to apply it at the macro level.
There are dozens more piss pore assumptions that underpin mainstream economics. In this day and age far more EMPIRICAL, real word data can be used to confirm what really makes an economy work, but sadly what we teach in college is garbage where the ACTUAL REALITIES are ignored.
Steven , March 14, 2019 at 5:07 pm
Soddy (paraphrasing John Ruskin) yet again:
a logical definition of wealth is absolutely needed for the basis of economics if it is to be a science."
Frederick Soddy, WEALTH, VIRTUAL WEALTH AND DEBT,
2nd edition, p. 102
Economists and financiers seem to be incapable of understanding we live on a finite planet. Nor do they seem to be able to get beyond equating money with wealth. It is much easier to just put a price on something like a Beethoven symphony (or call it 'priceless') than to attempt a definition of wealth. But for most of us the ingredients of a definition are much simpler. Topping the list has to be energy. You can't create it but you can dissipate it, i.e. render it useless, by for example manufacturing useless junk that falls apart quickly enough for people who run or own the business to make a lot of money.
Or if your customers can no longer afford the junk because you have automated or off-shored their jobs, you can sell guns and bombs to your wholly owned government – to use in blowing up people who stand in the way of your accumulating more of the money created by your bankers, financiers and politicians. Then there is the basic intelligence required to run the machinery and discern better – i.e. more energy and resource efficient – ways of doing things. With real wealth creation comes power. The Chinese may have figured this out. The West's 1%, its economists, bankers and politicians don't appear to have a clue.
RBHoughton , March 14, 2019 at 11:19 pm
Did Kenneth Rogoff apologise for his hit on Iceland and his subsequent dismay defense in Ferguson's "Inside Job"? At least one of the Chicago boys (Jonathan Sachs) has resiled from the opinions of Friedman and rejoined the human race but only after a raft of countries were ground down by the mill of the moneymen. Chile and Poland seem to have survived at horrible social cost but what of the others?
The plaint is partly true. When governments were advised by economists, they replaced the wishes of the electorate. The economist brought along their army of lawyers who instantly appeared as mercenary terrorists to browbeat and coerce officials with various threats to do as the moneymen asked and cease attending to the people. This is still the state of play in UK and USA and those core paper-issuers drag the 'also rans' along with carrots and sticks.
I believe the fault lies in lazy officials who seldom run trials on new ideas in limited areas but drop the entire country into one speculative foray after another. Its a shame that its not mentioned. There is no good reason why the whole country has to be volunteered for these new scheme. Why has the UK Treasury shut down every competing form of banking to the high street banks – the trust banks, coop bank, post office bank, municipal banks, mutuals – all thrown away as infringers of the BoE's monopoly. The country needs an Oliver Cromwell or Napoleon to lead it not the present bunch of ragamuffins and hooligans.
That brings me to the second problem the disastrous state of the representation. It is mainly due to the control factions have brought to bear on the selection of candidates for office. That has to stop and the way to do it to have primary assemblies of every 200-300 people who select one of their number to represent them. He's a school friend or neighbor and a known quantity. Several primary assemblies select a chap to represent them and so on up this new structure of democracy to the top.
The business community have sought to keep everyone's nose to the grindstone with statistics justifying under payment by understating inflation. That has to stop. The economics trade belongs with astrology and weather forecasting until it acknowledges the fundamentals that drive prices.
Yves Smith Post author , March 14, 2019 at 11:30 pm
It wasn't Ken Rogoff but Frederic Mishkin. He was on the Fed Board of Governors and had been vice chairman.
RBHoughton , March 15, 2019 at 4:00 am
Apologies to Mr Rogoff and grateful thanks to Yves for the correction. I'll take a pill now
Cal2 , March 15, 2019 at 12:29 am
It seems to me from my citizen's non-professional perspective that the only real economists are experts in resource extraction, manufacturing and end use of same.
IOW, a forester, mining, petroleum, construction engineer and even a naval admiral, sitting around a table, all beholden to and obeying the supreme chairmanship of an ecologist, would be a better and less destructive thing for the world than a bunch of money only maximum value extraction Wall Streeters controlling the engineers mentioned above.
Can there even be an economy without resource extraction? It seems like most new economic schemes are attempting this with humans bodies, credit ratings and bank accounts being the last available commodity.
Sound of the Suburbs , March 15, 2019 at 7:07 am
The economists got Ricardo's theory of comparative advantage, but they missed this:
"The interest of the landlords is always opposed to the interest of every other class in the community" Ricardo 1815 / Classical Economist
What does our man on free trade mean?
He was an expert on the small state, unregulated capitalism he observed in the world around him. He was part of the new capitalist class and the old landowning class were a huge problem with their rents that had to be paid both directly and through wages.
Disposable income = wages – (taxes + the cost of living)
Employees get less disposable income after the landlords rent has gone.
Employers have to cover the landlord's rents in wages reducing profit.
Ricardo is just talking about housing costs, employees all rented in those days.
Employees get their money from wages and so the employer pays through wages.
Look at the US cost of living:
The cost of living = housing costs + healthcare costs + student loan costs + food + other costs of living
Employees get their money from wages, so it is the employer that pays through wages, reducing profit and driving off shoring from the US.
Maximising profit requires minimising labour costs; i.e. wages.
China, Asia and Mexico look good, the US is awful.
(This is Michael Hudson's argument in a slightly different from)
There are some fundamental problems with today's economics, like this and the fact it doesn't look at money, debt or banks.
Also, it hasn't worked out financial markets are not like other markets.
The supply of stocks stays fairly fixed and central banks can create a "wealth effect" by just adding liquidity. More money is now chasing a fairly fixed number of financial assets and the price (e.g. stock market) goes up.
Mar 16, 2019 | turcopolier.typepad.com
Jack , 11 hours agoHarper,mourjou -> David Schuler , 2 hours ago
The media and the establishment are focused on Trump and his personality. They don't want to delve into the zeitgeist that allowed him to defeat two political dynasties. That's what they should be focused on.
It's a similar zeitgeist that caused Brexit. That elected Salvini and 5 Star in Italy. That's behind Gilets Jaunes who are now in their 18th week of protests in France. China going more totalitarian by the day under Chairman Xi.
The Party of Davos have ruled for 40-50 years. We've got unprecedented wealth inequality. We've got endless wars with no benefit for the Deplorables. All they have are opioids. More dying of that than automobile accidents. Health care, tuition, rents all rising. A double standard in tthe application of the law. Hypocrisy oozing from every pore of the ruling elites. Bribing their way to elite colleges while espousing meritocracy.
Is this what Howe & Strauss mean by the Fourth Turning?In Europe it was right-wing governments who were largely responsible for introducing elements of a welfare state as a means of protecting capitalism and preventing the spread of socialism. Most real socialists opposed the welfare state efforts as they regarded them as a smoke screen.Pat Lang Mod -> mourjou , 2 hours ago
If the 1% in the United States wish to enjoy the fruits of capitalism long term, they should do the same otherwise it'll be 1848 all over again. So yes, ""history repeats itself--the first as tragedy and then as farce", it's just that Marx was referring to larger events over a longer time frame than consecutive presidential elections.I remember that this was particularly true of Bismark. We already have a mixed economy in th US. Social Security, hospital emergency rooms, a graduated progressive income tax systems, local arrangements for giving low income people a break on property taxes both for real estate taxes and taxes on cars, etc. I suppose you are aware that people with higher incomes pay the great bulk of income taxes in the US? Are you familiar with the EITC https://en.wikipedia.org/wi... what kind of change do you want to make, a guaranteed government provided income? Forgiveness of college load debt? What?
Mar 13, 2019 | www.opendemocracy.net
One Born Every MinuteOne of many legacies left by the late cultural theorist, Stuart Hall, in Representation: Cultural Representations and Signifying Practices was to emphasise that to understand "the effects and consequences of representation" we must consider "historical specificity". That is, he writes, "the way representational practices operate in concrete historical situations, in actual practice". With this in mind, we want to consider some cultural trends that have surfaced in British austerity culture and how they are entangled with neoliberal rationalities and philosophies. Our aim is to explore whether we are seeing the emergence of a specific discursive formation that we might call 'austerity neoliberalism'. To suggest this is not only to draw links between austerity and neoliberalism – they are there to be sure – but, more than this, to raise questions about whether they are being put to work in contemporary capitalism in a way that is mutually reinforcing, coming to constitute a novel formation – like Hall's idea of 'authoritarian populism'.
Neoliberalism is a contested term. Gill & Scharff describe it as "a mode of political and economic rationality characterised by privatisation, deregulation and a rolling back and withdrawal of the state from many areas of social provision". In its place is the market – market exchange seen as an ethic in itself, capable of guiding human action , and spreading out across social life so that it reconfigures relations between " governing and governed, power and knowledge, sovereignty and territoriality ". Our own interests have focussed on the role and force of neoliberalism in remaking subjectivity in ways that construct the individual, as Lisa Duggan and Wendy Brown suggest, as a calculating, entrepreneurial and 'responsibilised' subject, wholly responsible for their own life outcomes. We are interested not simply in how this construction erases structural inequalities and exculpates brutal social and economic forces, but also in how it materialises new ways of being in the world – that diminish what it is to be human.
There are clear links between neoliberalism and austerity. As Tracy Jensen and others, such as Kim Allen et al. , comment, the "objectives of 'austerity' align neatly with those of neo-liberalism: to discipline labour, to reduce the role of state and to redistribute income, wealth and power from labour to capital". Britain has seen vast changes to the socio-economic landscape thrust forward under the rationale that austerity measures are needed to pull the country out of recession and place it on the road to recovery. We have seen a devastating increase in social inequality. Increasing changes to welfare provisions like the bedroom tax and cuts to disability and sickness benefits, harsh benefits sanctions and reorganisations and cut backs to state-led services at the same time as rises in homelessness , food bank usage and deprivation have emerged.
However as some scholars have argued, austerity is not only an economic programme of 'fiscal management', but also a site of ideological and 'discursive struggle' – and this struggle plays out across government, public sites and popular culture in particular ways with very real material outcomes. As Tracey Jensen and Imogen Tyler point out in a special issue on 'Austerity Parenting' in 2012, the "public narrative of austerity" increasingly upholds the individual as responsible for their own social and economic status, as well as accountable for their own locality, a bustling economy and increasing independence from the state. Some have explored the emerging importance of thrift , nostalgia or gendered domestic entrepreneurship to show how austerity is shaping current formations of the self in the cultural sphere. Other examples of this are studies on the 'stay-at-home mother' , the 'recessionista' and the book, Gendering the Recession .
We want to briefly consider three other useful ways of thinking together 'austerity' and 'neoliberalism'. First, and continuing our psychosocial focus, we wish to draw attention to the increasing emphasis on 'character' in contemporary Britain. As Anna Bull and Kim Allen have put it in a recent call for paper s, "A growing number of policy initiatives and reports have asserted the importance of nurturing character in children and young people – with qualities such as 'grit', 'optimism', 'resilience', 'zest', and 'bouncebackability' located as preparing young people for the challenges of the 21st century and enabling social mobility." Resilience, in particular, has become the neoliberal trait par excellence for surviving austerity. As Mark Neocleous argues :
"Good subjects will 'survive and thrive in any situation', they will 'achieve balance' across several insecure and part-time jobs, they have 'overcome life's hurdles' such as facing retirement without a pension to speak of, and just 'bounce back' from whatever life throws, whether it be cuts to benefits, wage freezes or global economic meltdown."
Likewise, the new focus on 'confidence' as a panacea for gender inequality operates within the 'psychic life of neoliberalism' turning away from collective resistance against injustice, and towards a remodeling and upgrading of the self.
In turn, looking at the parenting and family policy that emerged under the coalition government there has been an emphasis on how character can solve the ills of 'poor parenting', which constructs working-class families as 'bad' parents in need of monitoring and disciplining. Tracey Jensen argues that the preoccupation with 'tough love' in social policy places increased prominence upon parents' character to realise children's social mobility. This, she asserts, " names the crisis of social immobility as one of parental indulgence, failure to set boundaries, moral laxity and disciplinary incompetence", seeing the responsibility of class inequalities placed on an individual's shoulders.
New forms of surveillance are also a key part of austerity neoliberalism. Austerity has seen a rolling back of the state furthering neoliberal mentalities, such as the increasing withdrawal of welfare support and pushing of individuals on welfare into work . This rolling back of the welfare state has occurred as the state attempts increasingly to observe its citizens and intervene into private life across multiple domains (schools, health, obesity, etc.). Val Gillies explores how, following New Labour's cue, the coalition government gradually increased its intervention into the family at ever-earlier stages. For example, she notes how under the Family Nurse Partnerships certain pregnant women whose unborn child is considered 'at risk' of social exclusion are assigned nurses who will teach them parenting skills to ensure social exclusion of the unborn child does not occur. As Gillies, among others , suggests, these types of surveillance mechanisms and interventional practices often target the most marginalised in society, retaining and reifying longheld inequalities around gender, class and 'race'.
Lastly, austerity neoliberalism has seen a simultaneous idealisation and dismantling of the state in the cultural realm. Recent research on televisual birth explores how Channel 4's award-winning show, One Born Every Minute , obscures the current context and effects of austerity by emphasising the importance of individual narratives of conflict and resolution through the mothers, families and midwives featured. On the one hand, the NHS/state is idealised but, on the other hand, there is a systematic failure to engage with how austerity has impacted on maternal care, midwifery and maternity wards. This one example of recent " spectacular dramatizations of the paradoxes of the political present " sees nurses and midwives depicted through a soft-focus image of self-sacrifice, care and romance, seen as 'angels', whose virtues are put to work to obscure a healthcare system that often seems to be at breaking point. This idealisation of hospital life and silence around austerity effects works to distract attention away from the material effects of austerity, cloaking them in a rosy glow in which 'love' and 'goodness' can seemingly compensate for a crumbling NHS.
In all three examples – the new cultural obsession with 'character', the intensification of surveillance, and the romanticisation of welfare and healthcare workers – we see not simply austerity at work, nor simply the impact of neoliberalism, but a distinctive formation where the two become mutually reinforcing. The UK has been through periods of austerity in the recent past – not least in the 1920s and 1930s and in the post-war period. However difficult these periods were (e.g. marked by considerable economic hardship and rationing), what is significant is that they were shaped by entirely different ideological and cultural framings – not by neoliberalism. It is the systematic and patterned framing of austerity measures through an individualizing neoliberal discourse that distinguishes the current formation as one of austerity neoliberalism. Austerity does not necessarily have to be neoliberal and neoliberalism does not have any necessary connection to austerity. But taken together they represent a toxic combination, one that attacks us body and soul.
Part of the Anti-Austerity and Media Activism series with Goldsmiths.
Mar 13, 2019 | mainlymacro.blogspot.com
Friday, 21 October 2016 Neoliberalism and austerity I like to treat neoliberalism not as some kind of coherent political philosophy, but more as a set of interconnected ideas that have become commonplace in much of our discourse. That the private sector entrepreneur is the wealth creator, and the state typically just gets in their way. That what is good for business is good for the economy, even when it increases monopoly power or involves rent seeking. Interference in business or the market, by governments or unions, is always bad. And so on. As long as these ideas describe the dominant ideology, no one needs to call themselves neoliberal.
I do not think austerity could have happened on the scale that it did without this dominance of this neoliberal ethos. Mark Blyth has described austerity as the biggest bait and switch in history. It took two forms. In one the financial crisis, caused by an under regulated financial sector lending too much, led to bank bailouts that increased public sector debt. This leads to an outcry about public debt, rather than the financial sector. In the other the financial crisis causes a deep recession which - as it always does - creates a large budget deficit. Spending like drunken sailors goes the cry, we must have austerity now.
In both cases the nature of what was going on was pretty obvious to anyone who bothered to find out the facts. That so few did so, which meant that the media largely went with the austerity narrative, can be partly explained by a neoliberal ethos. Having spent years seeing the big banks lauded as wealth creating titans, it was difficult for many to comprehend that their basic business model was fundamentally flawed and required a huge implicit state subsidy. On the other hand they found it much easier to imagine that past minor indiscretions by governments were the cause of a full blown debt crisis.
You might point out that austerity was popular, but then so was bashing bankers. We got austerity in spades, while bankers at worst got lightly tapped. You could say that the Eurozone crisis was pivotal, but this would be to ignore two key facts. The first is that austerity plans were already well laid on the political right in both the UK and US before that crisis. The second is that the Eurozone crisis went beyond Greece because the ECB failed to act as every central bank should: as a sovereign lender of last resort. It changed its mind two years later, but I do not think it is overly cynical to say that this delay was partly strategic. Furthermore the Greek crisis was made far worse than it should have been because politicians used bailouts to Greece as a cover to support their own fragile banks. Another form of bait and switch.
While in this sense austerity might have been a useful distraction from the problems with neoliberalism made clear by the financial crisis, I think a more important political motive was that it appeared to enable the more rapid accomplishment of a key neoliberal goal: shrinking the state. It is no coincidence that austerity typically involved cuts in spending rather than higher taxes: the imagined imperative to cut the deficit was used as a cover to cut government spending. I call it deficit deceit. In that sense too austerity goes naturally with neoliberalism.
All this suggests that neoliberalism made 2010 austerity more likely to happen, but I do not think you can go further and suggest that austerity was somehow bound to happen because it was necessary to the 'neoliberal project'. For a start, as I said at the beginning, I do not see neoliberalism in those functionalist terms. But more fundamentally, I can imagine governments of the right not going down the austerity path because they understood the damage it would do. Austerity is partly a problem created by ideology, but it also reflects incompetent governments that failed to listen to good economic advice.
An interesting question is whether the same applies to right wing governments in the UK and US that used immigration/race as a tactic for winning power. We now know for sure, with both Brexit and Trump, how destructive and dangerous that tactic can be. As even the neoliberal fantasists who voted Leave are finding out, Brexit is a major setback for neoliberalism. Not only is it directly bad for business, it involves (for both trade and migration) a large increase in bureaucratic interference in market processes. To the extent she wants to take us back to the 1950s, Theresa May's brand of conservatism may be very different from Margaret Thatcher's neoliberal philosophy.
Posted by Mainly Macro at 00:54 Email This BlogThis! Share to Twitter Share to Facebook Share to Pinterest Labels: austerity , deficit deceit , Mark Blyth , neoliberalism29 comments:
paul , 22 October 2016 at 14:44
You excellently encapsulate neoliberalism with the motto " That what is good for business is good for the economy, even when it increases monopoly power or involves rent seeking. " -I'd add that it CAN be good for an individual country's economy in a zero-sum way because terms of trade can be so much improved if a country provides lucrative investment opportunities due to rent seeking being streamlined. It may be bad for the global economy and yet good for us at the expense of people elsewhere. We import real goods in exchange for foreign oligarchs holding stakes in our inflating land prices.Anonymous , 21 October 2016 at 02:18
Sorry Mr or Mrs Ms Stone what good for business is bad for all economies,simply what you do to one side of the equation you must do to the other,by favouring on side of the equation you must corrupt the other side ,Hence stagnation,QE,Nirp,Zirp,negative.rates /bonds etc etc,nothing they do will fix the problem until they trade fairly,the two side of the equation are intrinsically too each other,even Helicopter money unless it is targeted at those who have lost out in this what is good for business then it will achieve nothing it can'tPhil , 21 October 2016 at 02:27
You forgot the financiers funding the Tory Party in the 2010 and 2015 elections, so using philosophical conservatism's hatred of those on benefits and immigrants to deflect from investment bankers and hedge funds' once in 300 years incompetence.
Then, in 2015, contrary to financiers' wishes, a referendum is promised for 2016, and subsequently lost.
Will the financiers keep funding the UKIP-Tories?
Will the Leave group fund the UKIP-Tories instead?
Will May keep talking about the 'national interest' as she, in Bentham's phrase, 'chains the living to the dead' with a Brexit the under-50s and better educated never wanted?
Will the woman I saw puzzling over the drop in the exchange rate on the Friday after the vote ever go on holiday abroad again?
Tune in next time...Anonymous , 21 October 2016 at 03:14
We got austerity in spades, while bankers at worst got lightly tapped.
Paging Daniel Davies ...Ralph Musgrave , 23 October 2016 at 10:24
What is the formal definition of austerity, a cut in spending, a cut compared to trend, a decrease in the deficit, something else?stone , 21 October 2016 at 03:49
You aren't supposed to ask awkward questions like that. The important thing about the word "neoliberalism" is that it sounds technical and has no less than SEVEN syllables - which is impressive. Using the word cows your opposition into submission...:-)Anonymous , 21 October 2016 at 05:28
I worry that neoliberalism amounts to a cashing out and unraveling of the broad based prosperity previously built up by social democracy. Current account deficits are willingly funded by investors using rent seeking opportunities to extract from the UK population. But when its all wrung dry that's the end of it.Anonymous , 21 October 2016 at 08:20
Keeping a clear mind this is actually a very good read too.Richard Layman , 22 October 2016 at 05:21
Slavoj Zizek sees this as a crisis in capitalism. We were willing to bail out banks to save it, but let Greeks suffer under austerity.Anonymous , 21 October 2016 at 09:30
YESS a crisis in capitalism. That's why I have always been astounded at the claims that "Obama is a socialist" "The US government is taking over the economy" post 2008 crisis. Yes, government stepped in to protect capital as much as it was able to do so.Anonymous , 21 October 2016 at 10:54
SWL's usual left-wing stuff.paul , 22 October 2016 at 15:31
I find criticisms of neo-liberalism by mainstream economists odd and incredibly hypocrticial. When neo-liberals were king, such as during the 1990s, and they could show that free trade and free and deregulated markets (goods financial and labour markets) were so good, economists were only too happy to show how this was exactly what their theories showed.
Now when it is less fashionable, they say, well we knew that all the time. Well why weren't you saying this during the 1990s and up to 2007?StuartP , 24 October 2016 at 01:56
Anonymous Understand where any cycle is,is very important in real terms there was a vast potential untapped locked into Western economies,which for sometime worked because that is what the economy need to re-balance & go forward,however some felt that that was a linear utopia when it was a cylindrical & was already turning into a strain on the other side of the equation,with previous downturns,that if they realised what was going on would have stopped it.
However because they were taught the earth was flat they never understood the gravity of their actions.All they ever did was re-balance the economies of the seventies only to push them into being un-balanced in the other direction by the 90's & since then it's been downhill all the way.Bobc Mountain , 21 October 2016 at 11:46
The thing to do is this: list the things you don't like, and then blame 'neo-liberalism'.
A bit like the Guardian used to do with 'capitalism'.pewartstoat , 22 October 2016 at 13:22
I am quite unclear what Mrs May's "brand of conservatism" is.
I have seen it persuasively argued that the party's basic purpose for the last century has been to keep Labour out of office.
Considering how varied the approaches of successive post-WWII Tory administrations have been it seems fair to characterize their policies as eclectic.
I have an idea what MacMillan and Thatcher stood for; what does May stand for?
I have no idea.Anonymous , 24 October 2016 at 05:26
The 1950s, as Simon correctly notes.Brett Ruiz , 21 October 2016 at 12:05
"I have seen it persuasively argued that the party's basic purpose for the last century has been to keep Labour out of office."
When it comes to "years in power" the Conservatives have a considerable lead over Labour.
By the time of 2020 election, 75 years will have passed since 1945 when the UK elected its first-ever majority Labour government.
In that time we will have had 18 months of Con/ConDem government for every 12 months of Lab/LibLab.paul , 22 October 2016 at 15:33
This seems like a weak caricature of neoliberalism in need of serious citations.Denis Drew , 21 October 2016 at 13:48
No Brett it's a very good description of what happened & how the mentality of flat earth economist paved the path to ruin.Richard Layman , 22 October 2016 at 05:17
Culture, culture, culture. We have to build an anti-neoliberal culture. How? Unions, unions, unions.
Full scale re-unionization (I don't say "massive" which implies extraordinary -- what is extraordinary is 5% union density in private business; that's like 20/10 BP) will create a broad and deep consensus for (let's call it what it is) normal, grownup economics.
States can add to federal labor protections but not subtract (e.g., minimum wage). In the absence of actually working protection of organizing (not just organizers) states should feel free to impose certification elections where labor market warping is found.
Union busting should be a felony (taken at least as seriously as taking a movie in the movies ;-]) -- but mandating elections could be the most direct remedy for union blocking.
Intimidating union organizing is illegal everywhere -- and nowhere/nowhere practicably. If caught firing an organizer, then, at most you must rehire her. Doesn't matter if you fully compensate her income loss and never fire her again -- you got away with the real bank robbery money; you barred the certification election.
Remedy that would make the clearest economic logic: a finding of union busting should lead to a mandatory certification election. Most would expect this sanction needs to take place at the federal level (NLRB preemption). This could be possible if Hillary pulls enough reps and senators with her. Perfect issue to attract Donald's AND BERNIE'S blue collar workers.
I believe this sanction could be done at the state level because the federal setup protects organizers (in theory if not so much in reality) but offers no protection for the act of organizING itself (except for categorizing it as illegal). If there is no DIRECT protection for organizing to preempt (not in any SUBSTANTIVE way), then I would argue that the states could mandate an election (upon the finding union blocking).
There may even be a tricky (as in convoluted) First Amendment argument: the federal setup cannot constitutionally void state protection of the First Amendment right to associate commercially by the imposition of a setup that provides no (as in zero) protection of it's own.Per Kurowski , 22 October 2016 at 05:39
This is just an aside. I am not an economist. I took a bunch of economics classes in college but I didn't do particularly well because at least then I wasn't so great at graphical reasoning not to mention higher mathematics.
But I definitely learned about the difference between macro and micro economics, and about Keynesian economics and how the government "should" "step in" and spend when the economy is failing.
I understand the general neoliberalism paradigm.
But somehow there is a major failure in economics understanding/education if it is the case that most of us who took some classes in it (especially all those VSPs and the educated people who read newspapers etc.) would reflexively support the application of microeconomic responses ("austerity," "getting your household finances in order" the household being the national government) to macroeconomic problems.עוגן רודן , 22 October 2016 at 11:25
"the financial crisis, caused by an under regulated financial sector lending too much"
I can't believe there is still so much ignorance about what happened and is happening.
Do you think totally unregulated banks could have leveraged their equity over 50 times? Of course not! They did so because regulators concocted the risk weighted capital requirements with which 2004 Basel II allowed banks to leverage their equity, and the support they received from society, 62.5 times to 1, if the asset only had an AAA to AA rating.
And frankly to talk about neoliberalism, and not of non-transparent statism, when since the Basel Accord in 1988, the risk weight for the sovereign were set at 0% and for We the People at 100%, is ludicrous.
Below an aide memoire on some of the monstrosities of such regulations. objections.
http://perkurowski.blogspot.com/2016/04/here-are-17-reasons-for-why-i-believe.htmlAnonymous , 26 October 2016 at 07:19
You wrote above: ..... the Eurozone crisis went beyond Greece because the ECB failed to act as every central bank should: as a sovereign lender of last resort.....
I would put it differently. The European crisis was caused by net importing countries within the Eurozone, like Greece, and to less extent Portugal and Spain, that financed their imports by taking loans from the exporting countries. Most of this loans went to consumption and white elephant projects. This had to blow up one day. So it happened in 2009. The question is after it became obvious that it can't go on forever, what next? Should be the debts annulated, and creating a precedent, that there is no obligation to repay the debts? Or should be cleare to certain extent, that debts have to be repaid even if partly, and when the time of repayment comes, it will be very tough.pewartstoat , 22 October 2016 at 13:18
+1pewartstoat , 24 October 2016 at 00:54
I'd argue that neoliberalism is fairly coherent and very authoritarian, an element you've omitted from your description. David Harvey describes it well. I'd agree with the rest of your analysis though. Austerity was more opportunistic than instrumental: a case of not letting a good crisis go to waste; a form of scorched-earth policy. You're also right about May which is why I predict she'll be out of office in a year's time: she isn't a neoliberal and the party donors won't like that. It would appear that she's been a very dark horse all these years.StuartP , 24 October 2016 at 03:30
For a broader definition of neoliberalism that takes identity and subjectivity into account read this:
http://averypublicsociologist.blogspot.fi/2016/10/theresa-may-and-thatcherism.htmlRandom , 27 October 2016 at 16:42
I think you've got the wrong end of the stick: it is the pro-state control lot that are keen on monopolies. Liberals (neo and otherwise) are keen on markets and competition.
The area where liberals like monopolies is in the support of property ownership, particularly intellectual property. A patent is a 20-year, legally enforceable monopoly on an invention. This is provided in exchange for sharing the knowhow and protects the incentive to innovate.StuartP , 31 October 2016 at 02:43
"Liberals" are a fan of private armies then? There is a reason the government has a monopoly on monopoly. So that the elected bodies are the 'big man' in the country, not anybody else.
It's not the sector the company/organisation is in that is the issue. It's down to how old and moribund the organisational structure is.
As to patents, the state can fund whatever research is required, and then issue the results on an open patent.
There is no need for private sector like large pharma companies and private intellectual property. In fact as certain things (giving example of drug development again as it is a good one) gets more and more risky inevitably it will have to be socialised.
Liberals have always identified a role for the state and other public institutions. So, no, private armies have never been part of a liberal political philosophy.
I am sure that writers, film-makers, musicians etc would disagree with the notion that there is no need for private intellectual property. Creativity is rather hard, copying it is quite easy.
All patents are 'open' to read and learn from, that is the point. Again, invention is hard and copying is easy.
Of course, if you really want to experience state economic control, you are free to leave our liberal democracy, though there are few places you could move to. When people have the choice, state control over everything really isn't popular.
Jun 01, 2015 | newpol.org
(New Politics Vol. XV No. 3, Whole Number 59) [PDF] [Print]
Ask anyone what neoliberalism means and they'll tell you it's an economic system that corresponds to a particular economic philosophy. But any real-world economic system has a corresponding political system to promote and sustain it. Milton Friedman, who has become known as the father of neoliberal thinking, claims in his text Capitalism and Freedom that "the role of the government is t o do something that the market cannot do for itself, namely, to determine, arbitrate, and enforce the rules of the game."* While neoliberalism's advocates like to claim that the political system that corresponds to their economic preference is a democratic, minimal state, in practice, the neoliberal state has demonstrated quite the opposite tendency.
This essay will begin by sketching out the core tenets of neoliberal theory, tracing its history from the classical liberal tradition of the Enlightenment. I will then present some hypotheses on how relations between the neoliberal state and society operate, contrasting the state theories of Ralph Miliband and Nicos Poulantzas to create a framework that shows how the neoliberal state is a product and enforcer of anti-democratic practices . I will argue that the implementation of neoliberal economic policy, and the subsequent evolution of the neoliberal state, has historically been completed through anti-democratic methods. Further, in an effort to produce social relations that are more favorable to the accumulation of capital, austerity is employed as a tool to move further toward a market society, creating a larger, more interventionist state and promoting authoritarianism.
Neoliberalism in Theory
The term neoliberal is often convoluted, confused, and misinterpreted, especially in the American context where the center-left Democratic Party has traditionally held the title of liberal. The original liberals, or classical liberals as they are usually called, were those Enlightenment-era thinkers of Western European origin who desired to limit the authority of the feudal state and defended individual rights by restricting the power of the state, the crown, the nobility, and the church. The "neo" prefix serves as a romantic symbol, an attempt at establishing a (sometimes forced) common ground with historical figures like Adam Smith and the classical liberals, who challenged the tendencies of the monarchy to interfere in the economy for its own gain, producing inefficiency. Neoliberal economic thinkers are famously known for deriding government intervention in the economy, precisely because they trace their foundation to a period when markets were seen not just as a source of better economic outcomes, but as a weapon to challenge concentrated political power.
This revamping of liberalism appeared in the twentieth century at a time when its proponents believed they were facing a similar struggle against the expanded state apparatuses of Europe -- communist, social-democratic, and fascist. Friedrich Hayek, whose text The Road to Serfdom , published in 1944, is arguably the most celebrated of the neoliberal canon, sought to show how government interference in the economy forms the basis of fascist and other totalitarian regimes, contrary to the then widely accepted notion that it was capitalist crisis that had produced fascism in Europe. For Hayek, the strong state, whether in the form of fascism, Soviet communism, or the creeping socialism of the British Labour Party, was to be eschewed.
If neoliberalism springs from a desire to combat the growing power and influence of the state, how is it that neoliberalism has produced not only a very robust state apparatus, but, as I will argue, an authoritarian one? The answer is that neoliberalism in practice has been quite different from its theory.
The Necessities of the State in Neoliberal Theory
As David Harvey points out in A Brief History of Neoliberalism, the neoliberals' economic ideals suffer from inevitable contradictions that require a state structure to regulate them. The first of these contradictions revolves around the role of law to ensure the individual's superiority over the collective in the form of private ownership rights and intellectual property rights (patents and copyrights). A judicial system is necessary to designate and regulate the interaction between private actors on the market. While intimations of the regulatory state can be seen in this formulation, it is hardly anything controversial. Only the most extreme of laissez-faire economic thinkers would not acknowledge the requirement of a state structure that creates the space for and regulates contracts.
The second contradiction derives from the elites' historical ambivalence regarding democracy and mass participation. If the people were free to make decisions about their lives democratically, surely the first thing they would do is interfere with the property rights of the elite, posing an existential threat to the neoliberal experiment. Whether these popular aspirations take the form of drives towards unionization, progressive taxation, or pushing for social policies that require the redistribution of resources, the minimal state cannot be so minimal that it is unable to respond to and crush the democratic demands of citizens. After all, as pointed out in the first contradiction, the neoliberal state exists in theory to guarantee the rights of the individual over the demands of a majority. Therefore, a system must be put in place that protects against the "wrong" decisions of a public that is supposed to buy, sell, act, and choose freely.
Two Levels of Authoritarianism
Any method that seeks to subvert the democratic demands of citizens, whether through force, coercion, or social engineering, is authoritarian. I argue here that the neoliberal state is authoritarian in two distinct but related forms. First, the historical imposition of neoliberalism on nation-states is the result of anti-democratic forces. Second, the maintenance of neoliberalism requires a market society achieved through a transformation in civil society. For this transformation to take place, welfare states must be slimmed down by austerity policies in order to turn over to the market potentially lucrative sectors of the social economy (in health care, education, social security, and so on). Public resources must become privatized; the public good must be produced by private initiative. Neoliberal economic policy can only function with a state that encourages its growth by actively shaping society in its own image, and austerity is the tool to push for that transformation. While the subversion of democracy is clearly authoritarian, the drive towards a market society and the social engineering necessary to maintain that society are further expressions of the de facto authoritarianism of neoliberalism and the neoliberal state.
Austerity traditionally has been defined as the economic policies surrounding deficit cutting. When public debt runs too high, according to the theory, the accounts must be balanced by cutting spending and raising taxes. It is important to look past the theory to see the results of austerity in practice and understand austerity as a social-historical force. To do this, one must define austerity from the perspective of its victims.
Pablo Iglesias, leader of the Podemos party in Spain, in his February 17 appearance on the Democracy Now! show, did just that by arguing that austerity is when people are forced out of their homes, when social services do not work, when public schools lack resources, when countries do not have sovereignty and become the colonies of financial powers. He closes by saying that austerity is the end of democracy, because without democratic control of the economy, there is no democracy.
The State and Society
The nature of how the state affects society has been a contentious topic within left traditions. Most notably, the debate between Ralph Miliband and Nicos Poulantzas that took place in the pages of the New Left Review in the early 1970s refreshed the study of the state. Miliband, in his The State in Capitalist Society , stressed an instrumentalist position, arguing that the reproduction of capitalism in society is due to the socialization of the ruling class in the tradition of capitalist dogma. As a large proportion of those who dominate the state and control its levers come from an elite education (he was writing from the perspective of British politics in the mid-twentieth century), it's no surprise that they believe their theories to be correct and just, while the state they run serves the interests of capital. The writings of Poulantzas, in particular Political Power and Social Classes , argued a structuralist position strongly influenced by the thought of Louis Althusser.
He claimed that the relation between the ruling class and the state was an objective relation, meaning that the coincidence of bourgeois ideology with the ideology of the state was a matter of how the system itself is organized. Their two state theories, the former arguing that the state is an instrument of the ruling class and the latter arguing that the state is the objective result of the capitalist system, shed light on the differences in conceptualizing not only the capitalist state, but how the state relates to and is legitimized by society. Is the market society a result of policies implemented by individuals in power who are trained in a particular neoliberal tradition, or an objective outcome of capitalist social relations that are the superstructural product of a system?
What could arguably be the genius of neoliberalism is the way in which it takes these two approaches to state theory and blends them. On the one hand, for Miliband, the neoliberal state is the extension of ruling-class free-market ideology, propagated by government bureaucrats, military officials, and technocrats who can speak no other language than that of the privileged status of capital and who hold the belief that they are serving the greater good. On the other hand, as Poulantzas suggested, neoliberalism needs to ensure its own survival by bending civil society, political institutions, and democracy to its will.
A state that so blatantly puts the rights and needs of one small class of citizens over others cannot be installed without a struggle. And further analysis shows us that once neoliberal regimes come into power, a certain degree of social engineering and coercion are necessary in order to guarantee the submission of the population and ensure the smooth accumulation of capital.
In what follows, I would like to lay out how neoliberal austerity regimes were installed, and also draw on hypotheses of how they are maintained. However, as each socio-political system is unique in its history, culture, norms, and traditions, the manifestation and maintenance of the neoliberal state differs depending on whether we are talking about core countries or peripheral ones, to use the terminology of World Systems Theory. The common denominator is the empowering of elites over the masses with the assistance of international forces through military action or financial coercion -- a globalized dialectic of ruling classes.
Peripheral Neoliberal States
In the periphery, those countries that have been dominated by colonial and neocolonial developed countries, economic and political trends beginning in the 1970s show that neoliberalism has been installed by the use of force. The Latin American experience demonstrates how neoliberalism was established through military operations and coups d'état. In Chile, the democratically elected president Salvador Allende was overthrown and the U.S.-backed dictatorship of Augusto Pinochet proceeded to crush labor unions and popular movements, privatizing a chunk of the public sector. When Pinochet stepped down, initiating a transition to democracy, he left behind the constitution that he had signed and put in place after the coup. Demands to chip away at this "constitution of the dictatorship," as it is referred to in Chile, are present in Chilean social movements, most recently the student movements seeking to reform the deeply unequal private higher education system. The reforms that were the bedrock of a reactionary counter-revolution in the country were brought about through force, violence, and physical coercion as seen in the torture and systematic repression of the regime's opponents.
The maintenance of such a regime could only be guaranteed through the dissolution of civil society to ensure that all avenues of dissent were illegal. Political representation in the National Congress was impossible because it was dissolved as civil liberties were proscribed. Organizations of a civil society, including unions, political parties, and groups set up by the Catholic Church to tend to the needs of the families of the disappeared, were treated as opposition organizations and were forbidden. It is estimated that tens of thousands of Chileans were tortured, while up to 200,000 were exiled, shocking the population into submission through fear. The laws regulating dissent were so strict that when the plebiscite was held to transition to democracy, special arrangements needed to be made to allow political groups the ability to organize and campaign, an attempt to reinvigorate a minimal civic culture in the country.
While Chile was the first and one of the main examples of the growth of neoliberalism, it has been far from unique. Economic "shock therapy" has become central to U.S. foreign policy, from Argentina in 1976 to the reintegration of post-communist states into the global capitalist economy. A quick comparison between countries listed as "not-free" by Freedom House and those that employ free-market neoliberal policies stresses this point. From Kazakhstan and Azerbaijan in Central Asia, to the crisis-ridden state of Mexico, and the neoliberal reforms of dictators in the Middle East and North Africa, the notion that capitalism and democracy form a symbiotic relationship and support each other has been debunked. The dissolution of civil society goes hand in hand with the imposition of a neoliberal state through violence, in order to ensure that threats to the state's activities remain unchallenged.
Core Neoliberal States
In core countries, meanwhile, austerity and authoritarianism follow a different pattern. There, neoliberal political systems have been created through financial coercion and are held hostage by financial interests due to the economic "necessities" created by bankruptcies and budget deficits. The test in this case is New York City, where the consequences of the depression of 1974-75 run deep. Kim Moody, in From Welfare State to Real Estate , traces the political and economic alliance that took advantage of social pressures from deindustrialization, white flight, and global economic crisis to implement the reforms that would give rise to a complete transformation of the city's social fabric. His analysis shows how a united business elite was able to thwart the democratic interests of the city's working classes by using the budget, the deficit, and financial coercion to rein in what they saw as an unsustainable welfare state. A crisis regime was put in place representing a business class unified in its desire to reshape the social democratic polity of New York City, using the city government to achieve this transformation. What began as a move by bankers to shut the city out of the bond market evolved by 1975 into the establishment of the Emergency Financial Control Board, which set its sights on imposing tuition on the City University of New York system, increasing the fares for mass transit, and limiting welfare payments. It's a story that has become all too familiar in the twenty-first century and a tactic that is being replayed in other cities, states, and nations.
Given the history of uninterrupted constitutional rule in the United States, the installation of neoliberalism requires the engineering of society through the transformation of institutions. By giving the market the freedom to determine when wages will be lowered, when jobs will be shed, and when communities will be destroyed, while simultaneously dismantling social welfare programs to increase the market's authority, a social crisis is produced that requires a police force to maintain order. This relationship has inspired the work of sociologist Loïc Wacquant for two decades. Combining a Marxist materialist approach to observe the socio-economic conditions that have influenced the growth of the American penal system with a Durkheimian symbolic perspective, which stresses how the prison serves as a symbol of disciplining power, his work Punishing the Poor argues that the expansion of correctional facilities should be seen as correlated with the rise of the neoliberal state. He notes how "welfare reform" corresponded with the expansion of the imprisoned population, signaling a shift in how contemporary neoliberal society treats the most vulnerable among us. This means that not only do prisons and jails serve as the place to physically keep those who have been convicted of criminal behavior, but they also serve as an alternative source of labor-power harvesting. The Thirteenth Amendment to the U.S. Constitution explicitly allows penal labor, and while this has historically been organized by state-run corporations such as UNICOR, recent legislation allows the private sector to tap into the penal labor pool. Meant as an alternative to outsourcing, this practice is referred to as "smart-sourcing" (see www.unicor.gov/services/contact_helpdesk/).
The consequences of neoliberal reform and the penal society in the United States are related in more ways than one. While prisons are filled with those who have been affected by the welfare-to-workfare policies and war-on-drugs-era sentencing laws of the 1980s and 1990s, prisons are also an example of the process of privatizing government institutions and insuring that those institutions create profit for private investors, making the neoliberal state an agent in this wealth redistribution. The process of regulatory capture, where special interests are able to control the agencies that are supposed to be regulating them in the public interest, illustrates this point. While the market dictates the scope of what is possible for state institutions that are beholden to government funding, the market also creates the conditions, during periods of financial crisis, that lead to the bankrupting of state institutions through austerity measures and the privatization of these public assets.
Europe has also been subjected to the establishment of neoliberalism through financial coercion; however, the European case presents us with an instance of unprecedented democratic subversion on behalf of international capital. This is not to say that the establishment of neoliberalism has been imposed from the outside with no domestic encouragement, but rather that Europe presents us with a particular case of an alliance between the bourgeoisie of individual European nation-states and their counterparts in international institutions such as the European Union (EU) and the European Central Bank (ECB). The rise of the political party Syriza in Greece and the election of Alexis Tsipras as prime minister, while nurturing a cautious hope, has also shown the extent to which the democratic aspirations of the citizens of Greece are sabotaged for the benefit of financial interests represented by the European Commission, the ECB, and the International Monetary Fund. The sovereignty of European countries is being attacked by advocates of neoliberalism under the guise of EU and ECB policy. In Italy, the technocratic government of Mario Monti was appointed without an election following the resignation of Silvio Berlusconi. Meanwhile in Ireland, the ECB held the democratically elected government in a stranglehold by attaching a series of austerity conditions to any bailout agreement. In practice, democratic demands must be made within the tight parameters that have been established by bankers, making a mockery of democracy itself.
The manifestation and maintenance of neoliberalism in Europe can be understood through the changing notions of citizenship in European countries. While at one time the citizenry was the sole constituency, a new group has evolved that claims dominance over the nation-state: creditors. According to the German political economist Wolfgang Streeck, in his work Buying Time: The Crisis of Democratic Capitalism , the growth of creditors has placed a strain on the state, allowing unelected and anti-democratic authorities to regulate how the state handles its relations with its citizens, and defining the nature of state-society relations. The introduction of this "constituency" of opposing interests into the political equation holds the polity of Europe within a loop. On the one hand, the government is supposed to be representative of the people, while on the other, international forces are recognized as citizens and therefore claim a voice in how the government conducts its business. While the neoliberal state was imposed through financial coercion, it is maintained through the creation of new political constituencies.
By blending the state theories of Miliband and Poulantzas, we are able to see the neoliberal state in a multidimensional form. It is not solely the result of the decisions of those in power, but also a complex system that constructs its own acquiescence. The neoliberal state is a qualitatively distinct form of the capitalist state. Its authoritarianism is present not only in its unquestioned defense of the interests of capital, but also in the way that it actively seeks to shape society to be more favorable to its goals. Peripheral countries have borne the burden of this violence as their position within the world system is secondary and practically dispensable. Core countries require a much more skilled intervention through the introduction of reforms and the transformation of institutions to solidify obedience in the form of the market society. Austerity, understood as a social-historical force, is the tool of the neoliberal state to subvert democracy and promote authoritarianism.
Mar 11, 2019 | www.nakedcapitalism.com
Kurtismayfield , , March 10, 2019 at 10:52 am
Re:Wall Street Democrats
They know, however, that they've been conned, played, and they're absolute fools in the game.
Thank you Mr. Black for the laugh this morning. They know exactly what they have been doing. Whether it was deregulating so that Hedge funds and vulture capitalism can thrive, or making sure us peons cannot discharge debts, or making everything about financalization. This was all done on purpose, without care for "winning the political game". Politics is economics, and the Wall Street Democrats have been winning.
notabanker , , March 10, 2019 at 12:26 pm
For sure. I'm quite concerned at the behavior of the DNC leadership and pundits. They are doubling down on blatant corporatist agendas. They are acting like they have this in the bag when objective evidence says they do not and are in trouble. Assuming they are out of touch is naive to me. I would assume the opposite, they know a whole lot more than what they are letting on.
urblintz , , March 10, 2019 at 12:49 pm
I think the notion that the DNC and the Democrat's ruling class would rather lose to a like-minded Republican corporatist than win with someone who stands for genuine progressive values offering "concrete material benefits." I held my nose and read comments at the kos straw polls (where Sanders consistently wins by a large margin) and it's clear to me that the Clintonista's will do everything in their power to derail Bernie.
polecat , , March 10, 2019 at 1:00 pm
"It's the Externalities, stupid economists !" *should be the new rallying cry ..
rd , , March 10, 2019 at 3:26 pm
Keynes' "animal spirits" and the "tragedy of the commons" (Lloyd, 1833 and Hardin, 1968) both implied that economics was messier than Samuelson and Friedman would have us believe because there are actual people with different short- and long-term interests.
The behavioral folks (Kahnemann, Tversky, Thaler etc.) have all shown that people are even messier than we would have thought. So most macro-economic stuff over the past half-century has been largely BS in justifying trickle-down economics, deregulation etc.
There needs to be some inequality as that provides incentives via capitalism but unfettered it turns into France 1989 or the Great Depression. It is not coincidence that the major experiment in this in the late 90s and early 2000s required massive government intervention to keep the ship from sinking less than a decade after the great unregulated creative forces were unleashed.
MMT is likely to be similar where productive uses of deficits can be beneficial, but if the money is wasted on stupid stuff like unnecessary wars, then the loss of credibility means that the fiat currency won't be quite as fiat anymore. Britain was unbelievably economically powerfully in the late 1800s but in half a century went to being an economic afterthought hamstrung by deficits after two major wars and a depression.
So it is good that people like Brad DeLong are coming to understand that the pretty economic theories have some truths but are utter BS (and dangerous) when extrapolated without accounting for how people and societies actually behave.
Chris Cosmos , , March 10, 2019 at 6:43 pm
I never understood the incentive to make more money -- that only works if money = true value and that is the implication of living in a capitalist society (not economy)–everything then becomes a commodity and alienation results and all the depression, fear, anxiety that I see around me. Whereas human happiness actually comes from helping others and finding meaning in life not money or dominating others. That's what social science seems to be telling us.
Oregoncharles , , March 10, 2019 at 2:46 pm
" He says we are discredited. Our policies have failed. And they've failed because we've been conned by the Republicans."
That's welcome, but it's still making excuses. Neoliberal policies have failed because the economics were wrong, not because "we've been conned by the Republicans." Furthermore, this may be important – if it isn't acknowledged, those policies are quite likely to come sneaking back, especially if Democrats are more in the ascendant., as they will be, given the seesaw built into the 2-Party.
The Rev Kev , , March 10, 2019 at 7:33 pm
Might be right there. Groups like the neocons were originally attached the the left side of politics but when the winds changed, detached themselves and went over to the Republican right. The winds are changing again so those who want power may be going over to what is called the left now to keep their grip on power. But what you say is quite true. It is not really the policies that failed but the economics themselves that were wrong and which, in an honest debate, does not make sense either.
marku52 , , March 10, 2019 at 3:39 pm
"And they've failed because we've been conned by the Republicans.""
Not at all. What about the "free trade" hokum that DeJong and his pal Krugman have been peddling since forever? History and every empirical test in the modern era shows that it fails in developing countries and only exacerbates inequality in richer ones.
That's just a failed policy.
I'm still waiting for an apology for all those years that those two insulted anyone who questioned their dogma as just "too ignorant to understand."
Glen , , March 10, 2019 at 4:47 pm
He created FAILED policies. He pushed policies which have harmed America, harmed Americans, and destroyed the American dream.
Kevin Carhart , , March 10, 2019 at 4:29 pm
It's intriguing, but two other voices come to mind. One is Never Let a Serious Crisis Go To Waste by Mirowski and the other is Generation Like by Doug Rushkoff.
Neoliberalism is partially entrepreneurial self-conceptions which took a long time to promote. Rushkoff's Frontline shows the Youtube culture. There is a girl with a "leaderboard" on the wall of her suburban room, keeping track of her metrics.
There's a devastating VPRO Backlight film on the same topic. Internet-platform neoliberalism does not have much to do with the GOP.
It's going to be an odd hybrid at best – you could have deep-red communism but enacted for and by people whose self-conception is influenced by decades of Becker and Hayek? One place this question leads is to ask what's the relationship between the set of ideas and material conditions-centric philosophies? If new policies pass that create a different possibility materially, will the vise grip of the entrepreneurial self loosen?
Partially yeah, maybe, a Job Guarantee if it passes and actually works, would be an anti-neoliberal approach to jobs, which might partially loosen the regime of neoliberal advice for job candidates delivered with a smug attitude that There Is No Alternative. (Described by Gershon). We take it seriously because of a sense of dread that it might actually be powerful enough to lock us out if we don't, and an uncertainty of whether it is or not.
There has been deep damage which is now a very broad and resilient base. It is one of the prongs of why 2008 did not have the kind of discrediting effect that 1929 did. At least that's what I took away from _Never Let_.
Brad DeLong handing the baton might mean something but it is not going to ameliorate the sense-of-life that young people get from managing their channels and metrics.
Take the new 1099 platforms as another focal point. Suppose there were political measures that splice in on the platforms and take the edge off materially, such as underwritten healthcare not tied to your job. The platforms still use star ratings, make star ratings seem normal, and continually push a self-conception as a small business. If you have overt DSA plus covert Becker it is, again, a strange hybrid,
Jeremy Grimm , , March 10, 2019 at 5:13 pm
Your comment is very insightful. Neoliberalism embeds its mindset into the very fabric of our culture and self-concepts. It strangely twists many of our core myths and beliefs.
Raulb , , March 10, 2019 at 6:36 pm
This is nothing but a Trojan horse to 'co-opt' and 'subvert'. Neoliberals sense a risk to their neo feudal project and are simply attempting to infiltrate and hollow out any threats from within.
There are the same folks who have let entire economics departments becomes mouthpieces for corporate propaganda and worked with thousands of think tanks and international organizations to mislead, misinform and cause pain to millions of people.
They have seeded decontextualized words like 'wealth creators' and 'job creators' to create a halo narrative for corporate interests and undermine society, citizenship, the social good, the environment that make 'wealth creation' even possible. So all those take a backseat to 'wealth creator' interests. Since you can't create wealth without society this is some achievement.
Its because of them that we live in a world where the most important economic idea is protecting people like Kochs business and personal interests and making sure government is not 'impinging on their freedom'. And the corollary a fundamental anti-human narrative where ordinary people and workers are held in contempt for even expecting living wages and conditions and their access to basics like education, health care and living conditions is hollowed out out to promote privatization and become 'entitlements'.
Neoliberalism has left us with a decontextualized highly unstable world that exists in a collective but is forcefully detached into a context less individual existence. These are not mistakes of otherwise 'well meaning' individuals, there are the results of hard core ideologues and high priests of power.
Dan , , March 10, 2019 at 7:31 pm
Two thumbs up. This has been an ongoing agenda for decades and it has succeeded in permeating every aspect of society, which is why the United States is such a vacuous, superficial place. And it's exporting that superficiality to the rest of the world.
VietnamVet , , March 10, 2019 at 7:17 pm
I read Brad DeLong's and Paul Krugman's blogs until their contradictions became too great. If anything, we need more people seeing the truth. The Global War on Terror is into its 18th year. In October the USA will spend approximately $6 trillion and will have accomplish nothing except to create blow back. The Middle Class is disappearing. Those who remain in their homes are head over heels in debt.
The average American household carries $137,063 in debt. The wealthy are getting richer.
The Jeff Bezos, Warren Buffett and Bill Gates families together have as much wealth as the lowest half of Americans. Donald Trump's Presidency and Brexit document that neoliberal politicians have lost contact with reality. They are nightmares that there is no escaping. At best, perhaps, Roosevelt Progressives will be reborn to resurrect regulated capitalism and debt forgiveness.
But more likely is a middle-class revolt when Americans no longer can pay for water, electricity, food, medicine and are jailed for not paying a $1,500 fine for littering the Beltway.
A civil war inside a nuclear armed nation state is dangerous beyond belief. France is approaching this.