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Secular stagnation is a term proposed by Keynesian economist Alvin Hansen back in the 1930s to explain the USA dismal economic performance during this period. The period in which sluggish growth and output, and employment levels well below potential, coincide with a problematically low (even negative) real interest rates even in the face of the extraordinarily easy monetary policy. Later a similar phenomenon occurred in Japan. that's why it is often called called Japanification of the economy. Secular stagnation returned to the USA in full force after the financial crisis of 2008 (so called The Long Recession), so this is the second time the USA society experience the same socio-economic phenomenon.
Formally it can be defined as any stagnation that lasts substantially longer then the business cycle (and dominates the business cycle induced variations of economic activities), the suppression of economic performance for a long (aka secular) period. It also can be viewed as the crisis of demand, when demand became systemically weak (which under neoliberalism is ensured by redistribution of wealth up).
The global stagnation we are experiencing is the logical result of the dominance of neoliberalism and a sign of its crisis an a ideology. It is somewhat similar to the crisis of Bolshevik's ideology in the USSR in 60th when everybody realized that the existing society cannot fulfill the key promise of higher living standards. And that over centralization of economic life naturally leads to stagnation. The analogy does not ends here, but this point is the most important.
Neoliberalism replaced over-centralization (with iron fist one party rule) with over-financialization (with iron fist rule of financial oligarchy), with generally the same result as for the economy ( In other words neoliberalism like bolshevism is equal to economic stagnation; extremes meet). The end of cheap oil did not help iether. In a sense neoliberalism might be viewed as the elite reaction to the end of cheap oil, when it became clear that there are not enough cookies for everyone.
This growth in the financial sector's profits has not been an accident; it is the result of engineered shift in the elite thinking, which changed government policies. The central question of politics is, in my view, "Who has a right to live and who does not". In the answer to this question, neoliberal subscribes to Social Darwinism: ordinary citizens should be given much less rather than more social protection. Such policies would have been impossible in 50th and 60th (A Short History of Neo-liberalism)
In 1945 or 1950, if you had seriously proposed any of the ideas and policies in today's standard neo-liberal toolkit, you would have been laughed off the stage at or sent off to the insane asylum. At least in the Western countries, at that time, everyone was a Keynesian, a social democrat or a social-Christian democrat or some shade of Marxist.
The idea that the market should be allowed to make major social and political decisions; the idea that the State should voluntarily reduce its role in the economy, or that corporations should be given total freedom, that trade unions should be curbed and citizens given much less rather than more social protection--such ideas were utterly foreign to the spirit of the time. Even if someone actually agreed with these ideas, he or she would have hesitated to take such a position in public and would have had a hard time finding an audience.
And this change in government polices was achieved in classic Bolsheviks coup d'état way, when yoiu first create the Party of "professional neoliberal revolutionaries". Who then push for this change and "occupy" strategic places like economics departments at the universities, privately funded think tanks, MSM, and then subvert one or both major parties. The crisis of "New Deal Capitalism" helped, but without network of think tanks and rich donors, the triumph of neoliberalism in the USA would have been impossible:
...one explanation for this triumph of neo-liberalism and the economic, political, social and ecological disasters that go with it is that neo-liberals have bought and paid for their own vicious and regressive "Great Transformation". They have understood, as progressives have not, that ideas have consequences. Starting from a tiny embryo at the University of Chicago with the philosopher-economist Friedrich von Hayek and his students like Milton Friedman at its nucleus, the neo-liberals and their funders have created a huge international network of foundations, institutes, research centers, publications, scholars, writers and public relations hacks to develop, package and push their ideas and doctrine relentlessly.
Most economists are acutely aware of the increasing role in economic life of financial markets, institutions and operations and the pursuit of prifits via excotic instruments such as derivatives (all this constituted financialization). This dominant feature of neoliberalism has huge the re-distributional implications, huge effects on the US economy, international dimensions and monetary system, depth and longevity of financial crises and unapt policy responses to them.
They have built this highly efficient ideological cadre because they understand what the Italian Marxist thinker Antonio Gramsci was talking about when he developed the concept of cultural hegemony. If you can occupy peoples' heads, their hearts and their hands will follow.
I do not have time to give you details here, but believe me, the ideological and promotional work of the right has been absolutely brilliant. They have spent hundreds of millions of dollars, but the result has been worth every penny to them because they have made neo-liberalism seem as if it were the natural and normal condition of humankind. No matter how many disasters of all kinds the neo-liberal system has visibly created, no matter what financial crises it may engender, no matter how many losers and outcasts it may create, it is still made to seem inevitable, like an act of God, the only possible economic and social order available to us.
Neoliberalism naturally leads to secular stagnation due to redistribution of wealth up. which undermines purchasing power of the 99%, or more correctly 99.9 of the population. In the USA this topic became hotly debated theme in establishment circles after Summers speech in 2013. Unfortunately it was suppressed in Presidential campaign of 2016. Please note that Sanders speaks about Wall Street shenanigans, but not about ideology of neoliberalism. No candidates tried to address this problem of "self-colonization" of the USA, which is probably crucial to "making America great again" instead of continued slide into what is called "banana republic" coined by American writer O. Henry (William Sydney Porter 1862–1910). Here is how Wikipedia described the term:
Banana republic or banana state is a pejorative political science term for politically unstable countries in Latin America whose economies are largely dependent on exporting a limited-resource product, e.g. bananas. It typically has stratified social classes, including a large, impoverished working class and a ruling plutocracy of business, political, and military elites. This politico-economic oligarchy controls the primary-sector productions to exploit the country's economy.
... ... ...
In economics, a banana republic is a country operated as a commercial enterprise for private profit, effected by a collusion between the State and favoured monopolies, in which the profit derived from the private exploitation of public lands is private property, while the debts incurred thereby are a public responsibility.
This topic is of great importance to the US elite because the USA is the citadel of neoliberalism. It also suggest that the natural way neoliberal economic system based on increasing of the level of inequality (redistribution of wealth up) should behave: after the initial economic boom (like in case of steroids use) caused by financialization of economy (as well as dissolution of the USSR), helped by off-shoring of manufacturing, the destructive effects of this temporary boost come into foreground. Redistribution of wealth up increases inequality which after a certain delay starts to undercuts domestic demand. It also tilts the demand more toward conspicuous consumption (note the boom of luxury cars sales in the USA).
But after inequality reaches certain critical threshold the economy faces extended period of low growth reflecting persistently weak private demand (purchasing power of lower 90% of population). People who mostly have low level service economy jobs (aka MC-jobs) can't buy that much. Earlier giants of American capitalism like Ford understood that, but Wall Street sharks do not and does not want. They operate under principle "Après nous le déluge" ("After us, the deluge").
An economic cycle enters recession when total spending falls below expected by producers and they realize that production level is too high relative to demand. What we have under neoliberalism is Marx's crisis of overproduction on a new level. At this level it is intrinsically connected with the parasitic nature of complete financialization of the economy. The focus on monetary policy and the failure to enact fiscal policy options is the key structural defect of neoliberalism ideology and can't be changed unless neoliberal ideology is abandoned. Which probably will not happen unless another huge crisis hits the USA. That might not happen soon. Bolshevism lasted more then 70 years. If we assume that the "age of neoliberalism" started at 1973 with Pinochet coup d'état in Chile, neoliberalism as a social system is just 43 years old (as of 2016). It still has some "time to live"(TTL) in zombies state due to the principle first formulated by Margaret Thatcher as TINA ("There Is No Alternative") -- the main competitor, bolshevism, was discredited by the collapse of the USSR and China leadership adoption of neoliberalism. While Soviet leadership simply abandoned the sinking ship and became Nouveau riche in a neoliberal society that followed, Chinese elite managed to preserved at least outer framework of the Marxist state and the political control of the Communist party (not clear for how long). But there was a neoliberal transformation of Chinese economy, initiated, paradoxically, by the Chinese Communist Party.
Currently, no other ideology, including old "New Deal" ideology can compete with neoliberal ideology, although things started to change with Sanders campaign in the USA on the left and Trump campaign on the right. Most of what we see as a negative reaction to neoliberalism in Europe generally falls into the domain of cultural nationalism.
The 2008 financial crisis, while discrediting neoliberalism as an ideology (in the same way as WWII discredited Bolshevism), was clearly not enough for the abandonment of this ideology. Actually neoliberalism proved to be remarkably resilient after this crisis. Some researchers claim that it entered "zombie state" and became more bloodthirsty and ruthless.
There is also religious overtones of neoliberalism which increase its longevity (similar to Trotskyism, and neoliberalism can be called "Trotskyism for rich"). So, from a small, unpopular sect with virtually no influence, neo-liberalism has become the major world religion with its dogmatic doctrine, its priesthood, its law-giving institutions and perhaps most important of all, its hell for heathen and sinners who dare to contest the revealed truth. Like in most cults adherents became more fanatical believers after the prophecy did not materialized. The USA elite tried partially alleviate this problem by resorting to military Keynesianism as a supplementary strategy. But while military budget was raised to unprecedented levels, it can't reverse the tendency. Persistent high output gap is now a feature of the US economy, not a transitory state.
But there is another factor in play here: combination of peak (aka "plato" ;-) oil and established correlation of the speed of economic growth and prices on fossil fuels and first of all on oil. Oil provides more than a third of the energy we use on the planet every day, more than any other energy source (How High Oil Prices Will Permanently Cap Economic Growth - Bloomberg). It is dominant fuel for transport and in this role it is very difficult to replace.
That means that a substantial increase of price of oil acts as a fundamental limiting factor for economic growth. And "end of cheap oil" simply means that any increase of supply of oil to support growing population on the planet and economic growth now requires higher prices. Which naturally undermine economic growth, unless massive injection of currency are instituted. that probably was the factor that prevented slide of the US economy into the recession in 2009-2012. Such a Catch-22.
Growth dampening potential of over $100-a-barrel oil is now a well established factor. Unfortunately, the reverse is not true. Drop of oil price to below $50 as happened in late 2014 and first half of 2015 did not increase growth rate of the USA economy. It might simply prevented it from sliding it into another phase of Great Recession. Moreover when economies activity drops, less oil is needed. Enter permanent stagnation.
Also there is not much oil left that can be profitably extracted at prices below $80. So the current oil price slump is a temporary phenomenon, whether it was engineered, or is a mixture of factors including temporary overcapacity . Sooner or later oil prices should return to level "above $80", as only at this level of oil price capital expenditures in new production make sense. That des not mean that oil prices can't be suppressed for another year or even two, but as Herbert Stein aptly noted "If something cannot go on forever, it will stop,"
Imagine the alien spaceship landed somewhere in the world. There would be denial, disbelief, fear, and great uncertainty for the future. World leaders would struggle to make sense of the events. The landing would change everything.
The secular stagnation (aka "end of permanent growth") is a very similar event. This also is the event that has potential to change everything, but it is much more prolonged in time and due to this less visible ("boiling frog effect"). Also this is not a single event, but a long sequence of related events that probably might last several decades (as Japan had shown) or even centuries. The current "Great Recession" might be just a prolog to those events. It is clearly incompatible with capitalism as a mode of production, although capitalism as a social system demonstrated over the years tremendous adaptability and it is too early to write it down completely. Also no clear alternatives exists.
A very slow recovery and the secular stagnation is characteristic of economies suffering from a balance-sheet recession (aka crisis of overproduction), as forcefully argued by Nomura’s Richard Koo and other economists. The key point is that private investment is down, not because of “policy uncertainty” or “increased regulation”, but because business-sector expectations about future profitability have become dramatically depressed — and rationally so — in a context characterized by heavy indebtedness (of both households and corporations). As businesses see the demand falls they scale down production which creates negative feedback look and depresses demand further.
|The key point is that private investment is down, not because of “policy uncertainty” or “increased regulation”, but because business-sector expectations about future profitability have become dramatically depressed — and rationally so — in a context characterized by heavy indebtedness (of both households and corporations). As businesses see the demand falls they scale down production which creates negative feedback look and depresses demand further.|
There are at least five different hypothesis about the roots of secular stagnation:
Summers’s remarks and articles were followed by an explosion of debate concerning “secular stagnation”—a term commonly associated with Alvin Hansen’s work from the 1930s to ’50s, and frequently employed in Monthly Review to explain developments in the advanced economies from the 1970s to the early 2000s.2 Secular stagnation can be defined as the tendency to long-term (or secular) stagnation in the private accumulation process of the capitalist economy, manifested in rising unemployment and excess capacity and a slowdown in overall economic growth. It is often referred to simply as “stagnation.” There are numerous theories of secular stagnation but most mainstream theories hearken back to Hansen, who was Keynes’s leading early follower in the United States, and who derived the idea from various suggestions in Keynes’s General Theory of Employment, Interest and Money (1936).
Responses to Summers have been all over the map, reflecting both the fact that the capitalist economy has been slowing down, and the role in denying it by many of those seeking to legitimate the system. Stanford economist John B. Taylor contributed a stalwart denial of secular stagnation in the Wall Street Journal. In contrast, Paul Krugman, who is closely aligned with Summers, endorsed secular stagnation on several occasions in the New York Times. Other notable economists such as Brad DeLong and Michael Spence soon weighed in with their own views.3
Three prominent economists have new books directly addressing the phenomena of secular stagnation.4 It has now been formally modelled by Brown University economists Gauti Eggertsson and Neil Mehrotra, while Thomas Piketty’s high-profile book bases its theoretical argument and policy recommendations on stagnation tendencies of capitalism. This explosion of interest in the Summers/Krugman version of stagnation has also resulted in a collection of articles and debate, edited by Coen Teulings and Richard Baldwin, entitled Secular Stagnation: Facts, Causes and Cures.5
Seven years after “The Great Financial Crisis” of 2007–2008, the recovery remains sluggish. It can be argued that the length and depth of the Great Financial Crisis is a rather ordinary cyclical crisis. However, the monetary and fiscal measures to combat it were extraordinary. This has resulted in a widespread sense that there will not be a return to “normal.” Summers/Krugman’s resurrection within the mainstream of Hansen’s concept of secular stagnation is an attempt to explain how extraordinary policy measures following the 2007–2008 crisis merely led to the stabilization of a lethargic, if not comatose, economy.
But what do these economists mean by secular stagnation? If stagnation is a reality, does their conception of it make current policy tools obsolete? And what is the relationship between the Summers/Krugman notion of secular stagnation and the monopoly-finance capital theory?
... ... ...
In “secular stagnation,” the term “secular” is intended to differentiate between the normal business cycle and long-term, chronic stagnation. A long-term slowdown in the economy over decades can be seen as superimposed on the regular business cycle, reflecting the trend rather than the cycle.
In the general language of economics, secular stagnation, or simply stagnation, thus implies that the long-run potential economic growth has fallen, constituting the first pillar of MISS. This has been most forcefully argued for by Robert Gordon, as well as Garry Kasparov and Peter Thiel.6 Their argument is that the cumulative growth effect of current (and future) technological changes will be far weaker than in the past. Moreover, demographic changes place limits on the development of “human capital.” The focus is on technology, which orthodox economics generally sees as a factor external to the economy and on the supply-side (i.e., in relation to cost). Gordon’s position is thus different than that of moderate Keynesians like Summers and Krugman, who focus on demand-side contradictions of the system.
In Gordon’s supply-side, technocratic view, there are forces at work that will limit the growth in productive input and the efficiency of these inputs. This pillar of MISS emphasizes that it is constraints on the aggregate supply-side of the economy that have diminished absolutely the long-run potential growth.
The second pillar of MISS, also a supply-side view, goes back at least to Joseph Schumpeter. To explain the massive slump of 1937, Schumpeter maintained there had emerged a growing anti-business climate. Moreover, he contended that the rise of the modern corporation had displaced the role of the entrepreneur; the anti-business spirit had a repressive effect on entrepreneurs’ confidence and optimism.7 Today, this second pillar of MISS has been resurrected suggestively by John B. Taylor, who argues the poor recovery is best “explained by policy uncertainty” and “increased regulation” that is unfavorable to business. Likewise, Baker, Bloom, and Davis have forcefully argued that political uncertainty can hold back private investment and economic growth.8
Summers and Krugman, as Keynesians, emphasize a third MISS pillar, derived from Keynes’s famous liquidity trap theory, which contends that the “full-employment real interest rate” has declined in recent years. Indeed, both Summers and Krugman demonstrate that real interest rates have declined over recent decades, therefore moving from an exogenous explanation (as in pillars one and two) to a more endogenous explanation of secular stagnation.9 The ultimate problem here is lack of investment demand, such that, in order for net investment to occur at all, interest rates have to be driven to near zero or below. Their strong argument is that there are now times when negative real interest rates are needed to equate saving and investment with full employment.
However, “interest rates are not fully flexible in modern economies”—in other words, market-determined interest rate adjustments chronically fail to achieve full employment. Summers contends there are financial forces that prohibit the real interest rate from becoming negative; hence, full employment cannot be realized.10
Some theorists contend that there has been demographic structural shifts increasing the supply of saving, thus decreasing interest rates. These shifts include an increase in life expectancy, a decrease in retirement age, and a decline in the growth rate of population.
Others, including Summers, point out that stagnation in capital formation (or accumulation) can be attributed to a decrease in the demand for loanable funds for investment. One mainstream explanation offered for this is that today’s new technologies and companies, such as Google, Microsoft, Amazon, and Facebook, require far less capital investment. Another hypothesis is that there has been an important decrease in the demand for loanable funds, although they argue this is due to a preference for safe assets. These factors can function together to keep the real interest rate very low. The policy implication of secular low interest rates is that monetary policy is more difficult to implement effectually; during a recession, it is weakened and can even become ineffectual.
Edward Glaeser, focusing on “secular joblessness,” places severe doubt on the first pillar of MISS, but then makes a very important additional argument. Glaeser rejects the notion that there has been a slowdown in technological innovation; innovation is simply “unrelenting.” Likewise, he is far less concerned with secular low real interest rates, which may be far more cyclical. “Therefore,” contends Glaeser, “stagnation is likely to be temporary.”
Nonetheless, Glaeser underscores secular joblessness, and thus the dysfunction of U.S. labor markets constitutes a fourth pillar of MISS: “The dysfunction in the labour market is real and serious, and seems unlikely to be solved by any obvious economic trend.” Somehow, then, the problem is due to a misfit of skills or “human capital” on the side of workers, who thus need retraining. “The massive secular trend in joblessness is a terrible social problem for the US, and one that the country must try to address” with targeted policy.11 Glaeser’s argument for the dysfunction of U.S. labor markets is based on recession-generated shocks to employment, specifically of less-skilled U.S. workers. After 1970, when workers lost their job, the damage to human capital became permanent. In short, when human capital depreciates due to unemployment, overall abilities and “talent” are “lost” permanently. This may be because the skills required in today’s economy need to be constantly practiced to be retained. Thus, there is a ratchet-like effect in joblessness caused by recessions, whereby recession-linked joblessness is not fully reversed during recoveries—and all this is related to skills (the human capital of the workers), and not to capital itself. According to Glaeser, the ratchet-like effect of recession-linked joblessness is further exacerbated by the U.S. social-safety net, which has “made joblessness less painful and increased the incentives to stay out of work.”12
Glaeser contends that, if his secular joblessness argument is correct, the macroeconomic fiscal interventions argued for by Summers and Krugman are off-base.13 Instead, the safety net should be redesigned in order to encourage rather than discourage people from working. Additionally, incentives to work need to be radically improved through targeted investments in education and workforce training.14 Such views within the mainstream debate, emphasizing exogenous factors, are generally promoted by freshwater (conservative) rather than saltwater (liberal) economists. Thus, they tend to emphasize supply-side or cost factors.
The fifth pillar of MISS contends that output and productivity growth are stagnant due to a failure to invest in infrastructure, education, and training. Nearly all versions of MISS subscribe to some version of this, although there are both conservative and liberal variations. Barry Eichengreen underscores this pillar and condemns recent U.S. fiscal developments that have “cut to the bone” federal government spending devoted to infrastructure, education, and training.
The fifth pillar of MISS necessarily reflects an imbalance between public and private investment spending. Many theorists maintain that the imbalance between public and private investment spending, hence secular stagnation, “is not inevitable.” For example, Eichengreen contends if “the US experiences secular stagnation, the condition will be self-inflicted. It will reflect the country’s failure to address its infrastructure, education and training needs. It will reflect its failure to…support aggregate demand in an effort to bring the long-term unemployed back into the labour market.”15
The sixth pillar of MISS argues that the “debt overhang” from the overleveraging of financial firms and households, as well as private and public indebtedness, are a serious drag on the economy. This position has been argued for most forcefully by several colleagues of Summers at Harvard, most notably Carmen Reinhart and Kenneth Rogoff.16 Atif Mian and Amir Sufi also argue that household indebtedness was the primary culprit causing the economic collapse of 2007–2008. Their policy recommendation is that the risk to mortgage borrowers must be reduced to avoid future calamities.17
As noted, the defenders of MISS do not necessarily support a compatibility between the above six pillars: those favored by conservatives are supply-side and exogenous in emphasis, while liberals tend towards demand-side and endogenous ones. Instead, most often these pillars are developed as competing theories to explain the warrant of some aspect of secular stagnation, and/or to defend particular policy positions while criticizing alternative policy positions. However, the concern here is not whether there is the possibility for a synthesis of mainstream views. Rather, the emphasis is on how partial and separate such explanations are, both individually and in combination.
As Krugman said "We now know that the economic expansion of 2003-2007 was driven by a bubble. You can say the same about the latter part of the 90s expansion; and you can in fact say the same about the later years of the Reagan expansion, which was driven at that point by runaway thrift institutions and a large bubble in commercial real estate." In other words blowing bubbles is the fundamental way neoliberal economy functions, not an anomaly.
As much as the USA population is accustomed to hypocrisy of the ruling elite and is brainwashed by MSM, this news, delivered to them personally by the crisis of 2008 was too much for them not question the fundamentals (A Primer on Neoliberalism):
Of course, the irony that those same institutions would now themselves agree that those “anti-capitalist” regulations are required is of course barely noted. Such options now being considered are not anti-capitalist. However, they could be described as more regulatory or managed rather than completely free or laissez faire capitalism, which critics of regulation have often preferred.
But a regulatory capitalist economy is very different to a state-based command economy, the style of which the Soviet Union was known for. The points is that there are various forms of capitalism, not just the black-and-white capitalism and communism. And at the same time, the most extreme forms of capitalism can also lead to the bigger bubbles and the bigger busts.
In that context, the financial crisis, as severe as it was, led to key architects of the system admitting to flaws in key aspects of the ideology.
At the end of 2008, Alan Greenspan was summoned to the U.S. Congress to testify about the financial crisis. His tenure at the Federal Reserve had been long and lauded, and Congress wanted to know what had gone wrong. Henry Waxman questioned him:
I found a flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak.
In other words, you found that your view of the world, your ideology, was not right, it was not working.
Precisely. That is precisely the reason I was shocked, because I had been going for 40 years or more with very considerable evidence that it was working exceptionally well.
[Greenspan’s flaw] warped his view about how the world was organized, about the sociology of the market. And Greenspan is not alone. Larry Summers, the president’s senior economic advisor, has had to come to terms with a similar error—his view that the market was inherently self-stabilizing has been “dealt a fatal blow.” Hank Paulson, Bush’s treasury secretary, has shrugged his shoulders with similar resignation. Even Jim Cramer from CNBC’s Mad Money admitted defeat: “The only guy who really called this right was Karl Marx.” One after the other, the celebrants of the free market are finding themselves, to use the language of the market, corrected.
— Raj Patel, Flaw , The Value of Nothing, (Picador, 2010), pp.4, 6-7
Now for the second time in history, the challenge is to save capitalism from itself: to recognize the great strengths of open, competitive markets while rejecting the extreme capitalism and unrestrained greed that have perverted so much of the global financial system in recent times. It took such a statesman as Franklin Delano Roosevelt to rebuild American capitalism after the Great Depression. New Deal policies allowed to rebuild postwar domestic demand, to engineer the Marshall Plan to rebuild Europe and to set in place the Bretton Woods system to govern international economic engagement.
With the abolishment of those policies blowing of one bubble after another, each followed by a financial crisis became standard chain of the events. Since 1973 we already have a half-dozen bubbles following by economic crisis. It started with Savings and loan crisis which partially was caused by the deregulation of S&Ls in 1980, by the Depository Institutions Deregulation and Monetary Control Act signed by President Jimmy Carter on March 31, 1980, an important step is a series that eliminated regulations initially designed to prevent lending excesses and minimize failures.
To hide this unpleasant fact neoliberals resort to so called the Great Neoliberal Lie:
What is neoliberalism
The fallacious and utterly misleading argument that the global economic crisis (credit crunch) was caused by excessive state spending, rather than by the reckless gambling of the deregulated, neoliberalized financial sector.
Just as with other pseudo-scientific theories and fundamentalist ideologies, the excuse that "we just weren't fundamentalist enough last time" is always there. The neoliberal pushers of the establishment know that pure free-market economies are as much of an absurd fairytale as 100% pure communist economies, however they keep pushing for further privatizations, tax cuts for the rich, wage repression for the ordinary, and reckless financial sector deregulations precisely because they are the direct beneficiaries of these policies. Take the constantly widening wealth gap in the UK throughout three decades of neoliberal policy. The minority of beneficiaries from this ever widening wealth gap are the business classes, financial sector workers, the mainstream media elite and the political classes. It is no wonder at all that these people think neoliberalism is a successful ideology. Within their bubbles of wealth and privilege it has been. To everyone else it has been an absolute disaster.
Returning to a point I raised earlier in the article; one of the main problems with the concept of "neoliberalism" is the nebulousness of the definition. It is like a form of libertarianism, however it completely neglects the fundamental libertarian idea of non-aggression. In fact, it is so closely related to that other (highly aggressive) US born political ideology of Neo-Conservatism that many people get the two concepts muddled up. A true libertarian would never approve of vast taxpayer funded military budgets, the waging of imperialist wars of aggression nor the wanton destruction of the environment in pursuit of profit.
Another concept that is closely related to neoliberalism is the ideology of minarchism (small stateism), however the neoliberal brigade seem perfectly happy to ignore the small-state ideology when it suits their personal interests. Take the vast banker bailouts (the biggest state subsidies in human history) that were needed to save the neoliberalised global financial sector from the consequences of their own reckless gambling, the exponential growth of the parasitic corporate outsourcing sector (corporations that make virtually 100% of their turnover from the state) and the ludicrous housing subsidies (such as "Help to Buy and Housing Benefits) that have fueled the reinflation of yet another property Ponzi bubble.
The Godfather of neoliberalism was Milton Friedman. He made the case that illegal drugs should be legalised in order to create a free-market drug trade, which is one of the very few things I agreed with him about. However this is politically inconvenient (because the illegal drug market is a vital source of financial sector liquidity) so unlike so many of his neoliberal ideas that have consistently failed, yet remain incredibly popular with the wealthy elite, Friedman's libertarian drug legalisation proposals have never even been tried out.
The fact that neoliberals are so often prepared to ignore the fundamental principles of libertarianism (the non-aggression principle, drug legalisation, individual freedoms, the right to peaceful protest ...) and abuse the fundamental principles of small state minarchism (vast taxpayer funded bailouts for their financial sector friends, £billions in taxpayer funded outsourcing contracts, alcohol price fixing schemes) demonstrate that neoliberalism is actually more like Ayn Rand's barmy (greed is the only virtue, all other "virtues" are aberrations) pseudo-philosophical ideology of objectivism than a set of formal economic theories.
The result of neoliberal economic theories has been proven time and again. Countries that embrace the neoliberal pseudo-economic ideology end up with "crony capitalism", where the poor and ordinary suffer "austerity", wage repression, revocation of labor rights and the right to protest, whilst a tiny cabal of corporate interests and establishment insiders enrich themselves via anti-competitive practices, outright criminality and corruption and vast socialism-for-the-rich schemes.
Neoliberal fanatics in powerful positions have demonstrated time and again that they will willingly ditch their right-wing libertarian and minarchist "principles" if those principles happen to conflict with their own personal self-interest. Neoliberalism is less of a formal set of economic theories than an error strewn obfuscation narrative to promote the economic interests, and justify the personal greed of the wealthy, self-serving establishment elite.
The 1930s, a well researched period of balance-sheet recession, provides some interesting perspective despite large historical distance. Roosevelt was no socialist, but his New Deal did frighten many businesses, especially large business which BTW attempted a coupe to remove him from is position. Fortunately for Roosevelt CIA did not exist yet. And New Deal government projects has been much bigger and bolder, then anything Obama ever tried, because Obama administration was constrained in its action by dominant neoliberal thinking. Like regulatory capture, which is an immanent feature of neoliberalism, there is also less known and less visible ideological capture of the government. Which also makes neoliberalism more similar to bolshevism as this ideological capture and related inability of the USSR elite to modernize the economy on some "mixed" principles, when over-centralization stopped working. It, along with the collapse of the ideology, probably was one of the main reasons of the collapse of the USSR. Chinese leadership managed to do this and introduced "new economic policies"(NEP).
Uner New deal regime when public investment and hence aggregate demand expanded, the economy started to grow anyway. Roosevelt did have a vision and he did convince the electorate about the way to go. Cheap optimism of Reagan, or even audacity of hope "Obama style" were not enough. After all, as Francis Bacon may remind us: “Hope is a good breakfast, but it is a bad supper” (Apophthegms, 1624).
Obama/Bernanke-style attempts to stimulate growth by pure injection of cheap money in this environment not only inflate new bubbles instead of old one, with which the fighting starts. They also lead to massive redistribution of wealth that makes the problem even worse:
Paul Krugman tells us that Larry Summers joined the camp concerned about secular stagnation in his I.M.F. talk last week, something that I had not picked up from prior coverage of the session. This is good news, but I would qualify a few of the points that Krugman makes in his elaboration of Summers' remarks.
First, while the economy may presently need asset bubbles to maintain full employment (a point I made in Plunder and Blunder: The Rise and Fall of the Bubble Economy), it doesn't follow that we should not be concerned about asset bubbles. The problem with bubbles is that their inflation and inevitable deflation lead to massive redistribution of wealth.
Larry Summers was the first establishment economist who conceded that this is the fact (Wikipedia)
... Larry Summers presented his view during November 2013 that secular (long-term) stagnation may be a reason that U.S. growth is insufficient to reach full employment: "Suppose then that the short term real interest rate that was consistent with full employment [i.e., the "natural rate"] had fallen to negative two or negative three percent. Even with artificial stimulus to demand you wouldn't see any excess demand. Even with a resumption in normal credit conditions you would have a lot of difficulty getting back to full employment."
Robert J. Gordon wrote in August 2012:
"Even if innovation were to continue into the future at the rate of the two decades before 2007, the U.S. faces six headwinds that are in the process of dragging long-term growth to half or less of the 1.9 percent annual rate experienced between 1860 and 2007. These include demography, education, inequality, globalization, energy/environment, and the overhang of consumer and government debt. A provocative 'exercise in subtraction' suggests that future growth in consumption per capita for the bottom 99 percent of the income distribution could fall below 0.5 percent per year for an extended period of decades".
One hypothesis is that high levels of productivity greater than the economic growth rate are creating economic slack, in which fewer workers are required to meet the demand for goods and services. Firms have less incentive to invest and instead prefer to hold cash. Journalist Marco Nappolini wrote in November 2013:
"If the expected return on investment over the short term is presumed to be lower than the cost of holding cash then even pushing interest rates to zero will have little effect. That is, if you cannot push real interest rates below the so-called short run natural rate [i.e., the rate of interest required to achieve the growth rate necessary to achieve full employment] you will struggle to bring forward future consumption, blunting the short run effectiveness of monetary policy...Moreover, if you fail to bring it below the long run natural rate there is a strong disincentive to increase fixed capital investment and a consequent preference to hold cash or cash-like instruments in an attempt to mitigate risk. This could cause longer-term hysteresis effects and reduce an economy's potential output."
The cost of energy is probably another reason of secular stagnation along with excessive public and private debt. Rising cost of energy is deadly for capitalism. Here are some comments that might clarify the situation:
This is the biggest crybaby column Krugman's ever written. He should be ashamed of himself and return his Nobel prize immediately. Has he ever put down Keynes long enough to read a little Marx? Here's Robert Brenner summing it up in 2009:
What mainly accounts for the long-term weakening of the real economy is a deep, and lasting, decline of the rate of return on capital investment since the end of the 1960s.
The failure of the rate of profit to recover is all the more remarkable, in view of the huge drop-off in the growth of real wages over the period.
The main cause, though not the only cause, of the decline in the rate of profit has been a persistent tendency to overcapacity in global manufacturing industries."
There's more, too. Instead of siding with crackpot Summers, Krugman should expand his research and be of some use to us all.
I am not sure that it is correct to think about public debt as internal debt. It's all about energy.
That means that public debt is to a large extent foreign due to unalterable oil consumption (and related trade deficits). And that completely changes the situation unless you are the owner of the world reserve currency.
But even in the latter case (exorbitant privilege as Valéry Giscard d'Estaing called it ) you can expect attacks on the status of the currency as world reserve currency. The growth is still supported via militarization, forced opening of foreign markets (with military force, if necessary) and conversion of the state into national security state. But as Napoleon admitted "You can do anything with bayonets except sit on them"
One positive thing about high public (and to a large extent foreign owned) debt in the USA is that it undermines what Bacevich called "new American militarism" (http://www.amazon.com/The-New-American-Militarism-Americans/dp/0195173384). Bacevich argues that this is distinct political course adopted by the "defense intellectuals," the evangelicals, and the neocons. And they will never regret their failed efforts such as Iraq invasion.
From Amazon review:
=== Quote ===
Bacevich clearly links our present predicaments both at home and abroad to the ever greater need for natural resources, especially oil from the Persian Gulf. He demolishes all of the reasons for our bellicosity based on ideals and links it directly to our insatiable appetite for oil and economic expansion. Naturally, like thousands of writers before him, he points out the need for a national energy policy based on more effective use of resources and alternative means of production.
=== End of Quote ==
As Heinberg explained fossil fuels, primarily oil, permeate every aspect of our modern culture - from agriculture to cities and a long-term perspective. In the age of almost 7 billion people demanding more and more of limited resources, the media, politicians and governments tend to only report short-term perspectives and ignore Heinberg's Five Axioms of Sustainability to the extent that these concepts are taboo to be spoken, discussed or thought (Heinberg, Richard (2007) Five Axioms of Sustainability):
1. (Tainter’s Axiom): Any society that continues to use critical resources unsustainably will collapse.
Exception: A society can avoid collapse by finding replacement resources.
Limit to the exception: In a finite world, the number of possible replacements is also finite.
2. (Bartlett’s Axiom): Population growth and/or growth in the rates of consumption of resources cannot be sustained.
3. To be sustainable, the use of renewable resources must proceed at a rate that is less than or equal to the rate of natural replenishment.
4. To be sustainable, the use of non-renewable resources must proceed at a rate that is declining, and the rate of decline must be greater than or equal to the rate of depletion.
The rate of depletion is defined as the amount being extracted and used during a specified time interval (usually a year) as a percentage of the amount left to extract.
5. Sustainability requires that substances introduced into the environment from human activities be minimized and rendered harmless to biosphere functions.
In cases where pollution from the extraction and consumption of non-renewable resources that has proceeded at expanding rates for some time threatens the viability of ecosystems, reduction in the rates of extraction and consumption of those resources may need to occur at a rate greater than the rate of depletion.
Archaeologist Joseph Tainter, in his classic study The Collapse of Complex Societies (1988), demonstrated that collapse is a frequent if not universal fate of complex societies and argued that collapse results from declining returns on efforts to support growing levels of societal complexity using energy harvested from the environment. Jared Diamond’s popular book Collapse: How Societies Choose to Fail or Succeed (2005) similarly makes the argument that collapse is the common destiny of societies that ignore resourse constraints. This axiom defines sustainability by the consequences of its absence—that is, collapse.
Adapted from Wikipedia
Excluding the current, there were two period of stagnation in the USA history:
Construction of structures, residential, commercial and industrial, fell off dramatically during the depression, but housing was well on its way to recovering by the late 1930s.
The depression years were the period of the highest total factor productivity growth in the United States, primarily to the building of roads and bridges, abandonment of unneeded railroad track and reduction in railroad employment, expansion of electric utilities and improvements wholesale and retail distribution.
The war created pent up demand for many items as factories that once produced automobiles and other machinery converted to production of tanks, guns, military vehicles and supplies. Tires had been rationed due to shortages of natural rubber; however, the U.S. government built synthetic rubber plants. The U.S. government also built synthetic ammonia plants, aluminum smelters, aviation fuel refineries and aircraft engine factories during the war. After the war commercial aviation, plastics and synthetic rubber would become major industries and synthetic ammonia was used for fertilizer. The end of armaments production free up hundreds of thousands of machine tools, which were made available for other industries. They were needed in the rapidly growing aircraft manufacturing industry.
The memory of war created a need for preparedness in the United States. This resulted in constant spending for defense programs, creating what President Eisenhower called the military-industrial complex.
U.S. birth rates began to recover by the time of World War II, and turned into the baby boom of the postwar decades. A building boom commenced in the years following the war. Suburbs began a rapid expansion and automobile ownership increased.
High-yielding crops and chemical fertilizers dramatically increased crop yields and greatly lowered the cost of food, giving consumers more discretionary income. Railroad locomotives switched from steam to diesel power, with a large increase in fuel efficiency. Most importantly, cheap food essentially eliminated malnutrition in countries like the United States and much of Europe.
Many trends that began before the war continued:
- The use of electricity grew steadily as prices continued to fall, although at slower rate than in the early decades. More people purchased washing machines, dryers, refrigerators and other appliances. Air conditioning became increasingly prevalent in households and businesses. See:Diffusion of innovations#Diffusion data
- Infrastructures: The highway system continued to expand. Construction of the interstate highway system started in the late 1950s. The pipeline network continued to expand. Railroad track mileage continued its decline.
- Better roads and increased investment in the distribution system of trucks, warehouses and material-handling equipment, such as forklift trucks continued to reduce the cost of goods.
- Mechanization of agriculture increased dramatically, especially the use of combine harvesters. Tractor sales peaked in the mid-1950s.
One of the first researchers who clearly attributed secular stagnation problem to neoliberalism was Alan Nasser, Professor Emeritus of Political Economy and Philosophy at The Evergreen State College. In his September 22, 2005 paper ECONOMIC LAWS, STRUCTURAL TENDENCIES, SECULAR STAGNATION THEORY, AND THE FATE OF NEOLIBERALISM he pointed out the key features of secular stagnation long before Summers started to understand the problem and even befor the economic crash of 2008 ;-)
September 22, 2005 | alannasser.org
Alan Nasser Invited presentation, University of Lille,
"We have now grown used to the idea that most ordinary or natural growth processes (the growth of organisms, or popu- lations of organisms or, for example, of cities) is not merely limited, but self-limited, i.e. is slowed down or eventually brought to a standstill as a consequence of the act of growth itself. For one reason or another, but always for some reason, organisms cannot grow indefinitely, just as beyond a certain level of size or density a population defeats its own capacity for further growth."
Sir Peter Medawar, The Revolution of Hope
"A business firm grows and attains great strength, and afterwards perhaps stagnates and decays; and at the turning point there is a balancing or equilibrium of the forces of life and decay. And as we reach to the higher stages of our work, we shall need ever more and more to think of economic forces as those which make a young man grow in strength until he reaches his prime; after which he gradually becomes stiff and inactive, till at last he sinks to make room for other and more vigorous life."
Alfred Marshall, Principals of Economics (1890)
"Though Keynes's 'breakdown theory is quite different from Marx's, it has an important feature in common with the latter: in both theories, the breakdown is motivated by causes inherent to the working of the economic engine, not by the action of factors external to it."
Joseph Schumpeter, Ten Great Economists
In this paper I shall address two major issues. Firstly, I shall discuss the implications for economic theory of a conception of economic laws widely at variance with the empiricist and/or positivist account of what laws are, how they are discovered, and how they are related to theory. At the same time, I will reject one cornerstone of anti-positivist thought, namely the idea that one cannot provide an account of laws that is fundamentally the same for the natural and the social sciences. Thus, I shall argue that an anti-positivist account of laws is entirely compatible with a conception of scientific laws that applies to both the "hard" (natural) and the "soft" (social) sciences. I shall defend this position by showing its application to economics and economic laws. In doing so, I will compare and contrast both natural-scientific (primarily physical) laws and social-scientific (primarily economic) laws. Secondly, I will argue that perhaps the most significant economic law descriptive of mature capitalism is the law of secular stagnation. The latter states that it is the natural tendency of a developed, industrialized capitalist economy to default to a state of chronic excess capacity and underconsumption. And this is itself a result of the tendency in advanced capitalism for the economic surplus (roughly, the difference between the Gross Domectic Product and the cost of producing the GDP) to grow at a rate more rapid than the growth of profitable industrial investment opportunities. In the course of my discussion I will use the United States as a paradigm case, Much as Marx attempted to identify the underlying features of the accumulation process by reference to England during the Industrial Revulution.
This has in fact been the state of global capital since the end of the "Golden Age" and the commencement of the age of globalized Reaganism/Thatcherism, i.e. the Age of Neoliberalism. I date the transition as commencing in 1973, the last year of post-War Keynesian growth rates in the USA. In fact, I will argue, neoliberal economic policy exacerbates capitalism'a tendency to stagnation. Let me begin with an account of economic laws.
LAWS, GENERATIVE MECHANISMS AND TENDENCIES
On the Humean or radical empiricist (positivist) account of laws, the latter are descriptions of observed regularities. Presumably, the scientist observes a "constant conjunction" of different kinds of happening, and infers from the regularity of the conjunction that the latter could not be merely accidental, and so concludes that the observed pattern of regularities must be nomological or law-like. 'Sodium chloride dissolves in water' and 'Metal expands when heated' would be simple examples of the results of this account of how laws of nature are discovered.
That this empiricist account is flawed becomes evident when we consider full-fledged laws of a genuine natural science, e.g. physics. I emphasize that laws are components of theories, which themselves are constitutive of established scientific disciplines, such as physics, chemistry, and biology. In fact, the two "laws" mentioned at the end of the preceding paragraph are not laws of physics at all. Among the genuine laws of physics is, e.g., 'Falling bodies near the surface of the earth accelerate at a constant rate.' This law is certainly not established by the observation of repeated conjunctions of events. On the contrary, actually observed falling bodies in "open systems", that is, in the circumstances of everyday life, conspicuously fail to conform to this law. Yet this is not taken to refute the law. For the law describes the behavior of bodies in a vacuum, that is to say, in a "closed system", one created by the scientist, typically in a laboratory situation. Philosophers of science have tended to ignore the distinction between regularities observed only in closed systems, and conjunctions observed in everyday life, which, as such, have no value as contributions to scientific knowledge. These philosophers have, accordingly, written as if the regularities in question were features of open systems, of nature. This confusion impedes our understanding of all types of laws, from physical to economic.
This failure –until relatively recently- of philosophers of science to properly attend to the importance of laboratory work in the acquisition of scientific knowledge is due to the fact that these philosophers have focused almost exclusively on science as established theory, i.e. as a way of representing the world. They had ignored how these theories were actually established. That is, they paid little attention to experiment, which is a way of intervening in the world. This inattention to what happens in closed systems created in the laboratory led thinkers to miss the importance of the concept of tendencies or dispositions in grasping the concept of a law of science. Let us dwell on this point and its relation to economic laws.
It is not that our knowledge of natural laws is not based on observed regularities. The point, rather, is that these regularities are not found in nature. They are found in closed systems, elaborately designed experimental circumstances found in laboratories. Yet, we correctly believe that what we learn in experimental situations gives us knowledge that is not confined to these situations. We believe that what we learn from observations of repeated patterns in experiments gives us not only knowledge of the behavior of objects in laboratory circumstances, but also knowledge of these same (kinds of) objects as they behave in nature, in the open systems of everyday life. But scientifically significant repeated patterns are not found in the world of daily life. This raises profound epistemological and ontological questions.
The most significant epistemological question arises from the following consideration: Were it not for the intervention of the experimenter, closed-system regularities would not obtain. Hence, the experimenter is a causal agent of the pattern of regularities observed in the laboratory. It is these contrived conjunctions which we invoke to justify our belief in (usually causal) laws. And while these regularities are the (partial) result of the intervention of the experimenter, we do not believe that the experimenter in any way originates the laws whose existence is attested to by the contrived regularities. The question therefore arises: What justifies our (correct) belief that knowledge obtained in closed laboratory systems designed by an agent applies also in open systems, i.e. in nature, which of course is not designed by scientists and does not evidence the regularities found under designed experimental circumstances?
I want to suggest that this question comes to the same as the following question: What must nature be like, and what must experiment reveal, in order for experimental knowledge to be able to be legitimately extended to the world outside of the laboratory, i.e. to nature? Note that this is a Realist question: it asks what we must presuppose about the constitution of the world in order that our experimentally-based scientific beliefs be justified. This is the precise Realist counterpart to Kant's Idealist question: What must we presoppose our minds –as opposed to nature or the world- to be like in order for scientific knowledge to be possible? I will argue that the answer to our Realist question provides the conceptual resources to elucidate the general nature of economic laws and economic theory, and the nature of the subject matter investigated by economists.
I will argue that since we believe that what we learn by experimental observation justifies our claim to knowledge of the experimental objects as they behave in nature, we must assume that these objects possess natural structures, similar to what Aristotle and the scholastics called "natures" or "essences." A natural structure must be conceived as what Critical Realists call a generative mechanism (hereafter, GM). The latter is a specific mode of material organization. What GMs generate are tendencies or dispositions to behave in characteristic ways. The statement that a physical thing or a social institution or structure tends to generate characteristic regularities is a statement of a law. The natural structure of salt, expressed in chemistry as HCl, is such that when it is mixed with water, whose natural structure or organization is expressed as H2O, it tends to dissolve. Gases tend to expand when heated and falling bodies near the surface of the earth tend to accelerate at a constant rate. These are statements of chemical and physical laws. We shall see that precisely the same kind of analysis can be made of laws in economics.
Tendencies are not the same as trends. The latter are merely observed regularities; there need be no implication that an underlying structural feature of the thing in question generates the regularity. This feature of laws is reflected in ordinary language in non-scientific contexts: we might say "He has a tendency to exaggerate." We mean that a disposition to exaggerate is a natural expression of his underlying character. We do not usually mean that he exaggerates whenever it is possible for him to exaggerate. This is part of the meaning of 'tendency.' Thus, tendencies can exist without being exercised. This happens when, e.g. salt is not mixed with water. Salt's nomological tendency to dissolve in water remains its categorical property even in the absence of circumstances in which its tendency to dissolve can be exercised. In addition, tendencies can be exercised without being realized. This is the case in the natural sciences when we observe, in non-laboratory situations, falling bodies accelerating at different rates. Indeed, no falling body in open systems is observed to accelerate at a constant or the same rate. But of course this is not taken to falsify the law of falling bodies. In nature, GMs continue to act in their characteristic ways without producing the patterned outcomes observable in closed experimental systems. This is so because in nature a multiplicity of GMs combine, interact and collide such as to result in the (scientifically irrelevant) flux of phenomena of the everyday world. The realization of a natural tendency can, in other words, be offset by counteracting forces. Thus, empiricism's mistake is to fail to recognize that GMs operate independent of the effects they generate. That is, GMs endure and go on acting (in the way that experimental closure enables us to identify) in nature, i.e. in open systems, where patterned regularities do not prevail. Statements about tendencies are not equivalent, salva veritate, to statements about their effects. Laws may exist and exercise their tendencies or powers even though no Humean "constant conjunctions" are observed. (This would be the case if it happened that the practice of creating closed experimental conditions had never been engaged in, i.e. in a world without science.)
LAWS, GENERATIVE MECHANISMS AND TENDENCIES IN ECONOMICS
GMs are not confined to the natural world. Natural structures are not the only structures there are. Plainly, there are humanely constructed structures. Capitalism is one such structure. Structures of this kind, GMs, that are dynamic by nature, i.e. which are characteristically diachronic, be they natural or socially constituted, share the same ontology. This should not be confused with the radical empiricist (positivist) claim that the natural and the social sciences share the same method. Clearly they do not: closed experimental situations exist but are not typical i istic outcomes ceteris paribus, ie. other things being equal, i.e. ceteris absentibus, other things being absent. When we identify the tendency of a thing, we specify what will happen, as a matter of course, if interfering conditions are absent. That is the point of vacuums in the closed systems created in laboratory experiments: they permit exercised tendencies, i.e. tendencies in operation, to be realized. If we want to know what gases tend to do when acted upon by heat, we eliminate all potential counteracting forces by creating a vacuum in the chamber, so that both gas and heat can express their natures unimpeded.
Thus, implicit in both physical- and social-scientific practice is the crucial distinction between the exercise and the realization (or manifestation) of a tendency. This distinction is essential to structural analysis in economics because of the impossibility of creating the social equivalent of a vacuum in the social sciences, which deal with the open systems of everyday life, where a great many forces and tendencies collide. Accordingly, just as the law of the tendency of falling bodies to accelerate at a constant rate is not falsified by the failure of falling bodies to behave accordingly in open systems, so too, e.g., the law of the tendency of the growth of productive capacity to outpace the growth of profitable investment opportunities -the thesis of secular stagnation theory- is not undermined by the remarkable growth rates of the Golden Age. In both cases, the presence of offsetting factors prevents the structurally generated tendency from being realized or manifested. I argue that the same can be said for any putative economic law.
In social science –and this is most conspicuous in economics, the most theoretically developed of the human sciences- we compensate for the absence of experimentally closed systems by constructing their functional equivalent, which we might call, in terms redolent of Weber, an ideal-typical theoretical model. It is an unfortunate habit (perhaps a tendency in the above-elaborated sense…) of mainstream economists to employ these models as if they described the open-system observable facts of economic life. This is, I suspect, a consequence of the economic empiricist's mistake referred to above, namely to think that GMs, if they must be spoken of at all, are to be conceived as reducible to their effects. (Recall Hume's claim, inspired by his reading of Newton, to expunge all notions of "power", "generation" and "production" from his analyses.) But, as noted above, GMs in both the social and the natural sciences employ unrealistic models, i.e. models which do not pretend to offer the equivalent of a photographic representation of the world. In both natural-scientific experiments and social-scientific ideal-type models, an attempt is made to abstract from the nonessential. We seek to place the spotlight of theory on what is necessary to the situation, system or institution under investigation, and to prescind from the arbitrary and accidental. In economics we seek to identify those features of capitalism that make it what it is. This enables us to identify capitalism's distinct and characteristic tendencies, and to describe what will happen as a result of the exercise of these tendencies, ceteris absentibus.
That there are such tendencies seems to me to be uncontroversial. We all know, for example, that cyclical downturns are not mere empirical contingencies of capitalist development, but structurally generated tendencies which follow inexorably from the specific mode of organization (structure) of capitalism. And like all tendencies, their realization can be offset, as we have seen above, by counteracting factors, such as fiscal and monetary policy. Other examples would be what Marx called the tendencies of capital to concentrate and centralize. The tendency, and corresponding law, with which I will be primarily concerned in this paper is constitutive of the theory of secular stagnation, and is far more likely than the immediately foregoing examples to generate controversy. I refer to the tendency of mature capitalism to suffer from a chronic paucity of profitable industrial investment opportunities, relative to the great magnitude of its investable surplus. Let us look more closely at this tendency.
THE THEORY OF SECULAR STAGNATION
It is worth mentioning that the view that the continuous accumulation of capital is both essential to the normal development of capitalist societies and essentially self-limiting was held by virtually all of the major modern political economists, in the form of one version or another of the doctrine of the falling rate of profit. Adam Smith explained the secular decline of the profit rate by the increasing abundance of capital in a developing capitalist society. Ricardo and Mill believed that the rate of profit would be depressed by the diminishing productivity of the land which would drive up the price of wage goods and therefore of the wages of labor, and so drive down the profits of capital. Marx pointed to the increasing capital-intensity of industry and the paucity of working-class purchasing power relative to the productive capacity of the economy, as the principal threat to the profit rate. And Keynes held that in mature capitalist economies the "marginal efficiency of capital", i.e. the expected rate of return (over cost) on an additional unit of a given capital asset, would tend to decline. All these thinkers had an at least intuitive appreciation of the fact that the growth of capital tends to be terminally self-limiting. (It is worth citing a remark of Joseph Shumpeter at this point:
"Though Keynes's 'breakdown theory is quite different from Marx's, it has an important feature in common with the latter: in both theories, the breakdown is motivated by causes inherent to the working of the economic engine, not by the action of factors external to it.")
In my estimation, no one understood the underlying dynamics of the tendency to stagnation better than the Polish economist Michal Kalecki, who is known to have developed the essentials of Keynes's General Theory before Keynes himself (and to have produced far more elegant mathematical formulations thereof). Perhaps the best way to understand Kalecki's thought is to see him as having argued that certain features of a not-yet-mature industrializing economy persist after the process of industrialization has been accomplished, with the effect that the developed capitalist economy is saddled with a problem of chronic excess capacity. Let me sketch this train of thought.
In the course of their natural growth capitalist economies reach a level of industrial development characterizable as maturity, a point beyond which growth must either cease, or be sustained by exogenous (in a sense to be elucidated below) means. Straight away we are confronted with a rejection of an assumption that is implicit in mainstream neoclassical theory, viz. that both the supply and the demand curves shift, virtually automatically, to the right. On the stagnationist conceptualization of growth or development, the process of development is not everlasting, but rather is at some point accomplished. There is the period, industrialization, during which the economy is developing, and which culminates in a (finally) industrialized or developed infrastructure. At this stage there will have been built up, or "accumulated", a complement of plant and equipment in steel production, machine tools, power stations, transport systems, etc., that is capable of satisfying a level of consumption demand consistent with the moral limits of a reasonably civilized style of life, the constraints imposed by a finite fund of natural resources, and, most importantly for stagnation theory, the limited possibilities of what Marx called "expanded reproduction" imposed by the accumulation process itself.
This account point can be expanded as follows. During any period of industrialization, the growth of the capital goods industry (hereafter, following Marx, Department I, or DI) must outpace the growth of the consumption goods industries (hereafter, again following Marx, Department II, or DII). Indeed, it belongs to the nature of the process of industrialization that the demand for the output of DI cannot be a function of the behavior of consumption demand; during industrialization, investment demand is both rapid and relatively autonomous. For if the principal project is to develop the means of production, then a disproportionate share of national wealth must be devoted to investment/accumulation at the expense of consumption. Strategic capital goods such as transport and communications networks and steel mills cannot be built bit by bit. This is clear with respect to railroads (Recall Keynes's remark that "Two pyramids are better than one, and two masses for the dead better than one; but two railroads from London to York are not necessarily better than one."), but perhaps not as clear with respect to steel facilities.
Suppose 1) that the efficient production of steel requires equipment with the capacity to produce 200,000 tons of steel, and 2) that demand turns out to be for 300,000 tons. The investor has two alternatives, either to forgo an extra market or to take a chance and add another 200.000 tons. On the second alternative, the one virtually assured in a period of (rapid) industrialization, the manufacturer is left with a surplus capacity of 100,000 tons. Here we see, writ small, a crucial source of two basic tendencies of capitalist development, the unrelenting pressure to expand markets, and the tendency to overproduction of a specific kind, namely the overproduction of capital goods, the tendency to overaccumulation. Each of these tendencies is the basis of a corresponding law of economics: Wherever we find a competitive, profit-driven market economy, we must also find a system-driven tendency to expand markets, and: Wherever we find a competitive, profit-driven market economy, we must also find a system-driven tendency for the growth of productive capacity to outpace the growth of effective demand.
As we have seen, all the major classical political economists anticipated the stationary state; they all assumed that the period of development or industrialization would come to an end. Basic industries would be in place, and DI would be capable of meeting all the replacement and expansion demands of DII. Prescinding for the moment from the emergence of new industries, DI would no longer be a source of substantial expansion demand for its own output; most of DI's internal expansion demand would be extinct.
But this is not th hread of classical (and perhaps neoclassical) theory contains the assurance that the capitalist economy provides a mechanism that in the long run counteracts the tendency of the demand for the products of DI to peter out. As one might expect, this is the price mechanism, which brings about, in the circumstances described above, a falling rate of profit (or interest) and thereby a simultaneous check on accumulation and spur to consumption. The causal chain is simple: the fall of the profit rate would lower capital's share of national income, i.e. it would transfer income from capital to labor. Thus, the demand gap created by the sharp waning of DI's expansion demand would be made up by the increase in consumption demand, which would of course mean an expansion in the demand for the output of DII. Moreover, an immediate expansion of DII at the expense of DI in order to assure a rapid transition out of the stationary state would be entirely feasible given the adaptability of certain key industries in DI to new market conditions resulting from the newly-expanded purchasing power of the working class. The construction of new factories could, for example, yield to the construction of new homes.
The theoretical elegance of this scenario is impressive -almost inspirational- but, alas for illusions, the price mechanism does not work this way. For the above-mentioned transfer in national income from capital to labor is supposed to happen when industrialization comes to an end by virtue of its having been accomplished. But from the capitalists' perspective, it is as if nothing counts as industrialization coming to an end. New industries, for example, can create a situation functionally equivalent to industrialization. "Accumulate, accumulate, that is Moses and the prophets."
We have at this point arrived at a picture of a developed capitalist economy which is in a state of permanent industrialization. Excess capacity prevails and working-class income is stagnant or declining. Interestingly, this has in fact been the state of both the U.S. and the global economy since 1973. According to the foregoing analysis, this reflects the fact that the U.S. and global economies are now instances not merely of the exercise of the law of the tendency of mature capitalism to stagnate, but of its realization. To put it differently: these economies are now in their natural state.
But important questions immediately arise. Why are these economies in their natural state now? And if there is a structurally generated tendency for capitalist economies to stagnate, how shall we account for the historically unprecedented growth rates of the Golden Age? I have barely sketched an outline of a response to these challenges above: if there is indeed a tendency for capitalism to stagnate, then there must have been in operation during the Golden Age what I called "counteracting forces and tendencies" which had spent themselves by the mid-1970s. In the absence of new offsetting forces, the tendency to stagnate has, as we should expect, re-asserted itself. These claims require further elaboration, and it is to this task that I now turn.
SECULAR STAGNATION AND TRANSFORMATIONAL GROWTH
In order to account for the actual pattern of capitalist growth in the context of stagnation theory, we must reflect on the kind of growth required by capitalist economic arrangements. Mainstream theory does not distinguish between kinds of growth if and when it addresses the specific requirements of capitalist growth at all. This is, I believe, a serious error. I will begin by introducing the notion of transformational growth, which transforms the entire way of life of society and absorbs exceptionally large amounts of the investible surplus. My point shall be that a capitalist economy cannot sustain growth merely by producing more and more different types of widgets, in the absence of pervasive structural change. Growth sustained in the latter manner is transformational growth.
We are forced to introduce the concept of transformational growth for reasons related to my earlier discussion of the structural features of mature capitalism which generates a chronic tendency to stagnation. I will now embellish this analysis. It should be clear that capitalism cannot grow in the way in which a balloon grows: its growth cannot leave its proportions intact, i.e. such that there are no new products and no new processes of production. This is to say that a capitalist economy either undergoes transformational growth or it stagnates. The argument is as follows.
Investment expands productive capacity, which in turn requires that demand increase at the same rate as potential production. Without the required rate of demand growth, underutilization/excess capacity will discourage further investment or capital accumulation and the result will of course be stagnation. Let us not address this issue in the manner of the neoclassical economist, who seems to assume that both supply and demand curves can be counted on to perennially shift to the right (absent, of course, undue government interference). But this quaint assumption is belied by the enormous literature on the development and indispensability to capitalism of the marketing and advertising industries, which we might view as massive efforts to counteract Keynes's declining marginal propensity to consume by deliberately creating among the consuming masses a full panoply of "manufactured" consumption desires. These considerations point to the need constantly to exogenously stimulate consumption demand in order to narrow the demand gap generated by the tendency to overaccumulation. But they do not yet establish the need to generate a broad, nation-wide pattern of demand required by structural change and transformational growth.
What is needed at this point are concrete examples of the generators of transformational growth, and of exactly how these generators accomplish one of the fundamental features of transformational growth, the mobilization and coordination of the economic resources of the entire country into a grand national project which stimulates demand not merely for this and that consumption good, but for crucial commodities and institutions such as oil, steel rubber, and other primary products, and communication and transportation facilities. What this requires are what Paul Baran and Paul Sweezy termed, in their influential Monopoly Capital (Monthly Review Press, 1966), "epoch-making innovations". Edward Nell and Robert Heilbroner have characterized these same innovations as "transformative innovations". Let me approach transformative innovations by looking at the tendency to stagnation from yet another perspective, one which focuses on the role of competition as a major force behind the growth of both investment and consumption.
Competition reduces the need for investment by tending to increase both productivity and savings. Let us see how this happens. As a result of competition business is under continuous pressure to cut costs and produce more efficiently. To the extent that business succeeds in these respects, productive potential is increased. At the same time, competition also requires business to hold down wages and salaries and to pay out dividend and profit income relatively sparingly. Together, these pressures hold back both worker and capitalist consumption. The result is a tendency for productive capacity to expand faster than consumption. This means that there is no reason for investment to grow, for capital to achieve the required rate of accumulation, unless there are major pressures transforming the way people live. In the absence of such pressures, we may expect stagnation.
There are two dimensions of transformative innovations which are in fact two aspects of the same phenomenon. One dimension is solely technological, and the other points to changes in a population's entire way of life. Neither of these is part of a process of steady, balloon-like growth, nor is either automatically, or normally, generated by the fundamental capitalist dynamics identified by the mainstream textbooks. For this reason I have called the stimulus imparted by these innovations 'exogenous'. Let us look first at the technological dimension of transformative innovation.
This can be identified, after the owl of Minerva has spread its wings, by reflecting on some of the requirements of ideal-typical capitalism. Neoliberals correctly remind us that the bottom line is of course "freedom", primarily the freedom of capital to roam the world seeking markets, sources of cheap labor and investment opportunities. Microecenomic textbooks in fact tend to assume the perfect mobility of both capital and labor.
Let us focus on sources of power, which became especially important after the industrial revolution. Technological development resulted in the virtually total replacement of human and animal muscle power by inanimate sources of power, mainly water and steam. But reliance on water as a source of power places extreme limits on the mobility of capital, and hence on the possibilities of capitalist growth. Water power is site-specific, and the number of rivers and streams is limited. Moreover, the water had to be fast-running and productive facilities had to be located as far downstream as possible. And of course water power is only seasonally available. These restraints alone place an intolerable obstacle to the free and ongoing accumulation of capital. Here we find an overwhelming incentive to switch from water to steam power. This constitutes a huge stimulus to the accumulation of capital on a national scale.
Capitalism requires sources of power that are independent of nature and can be applied constantly wherever they are needed. And these are precisely what steam power made possible. It was now possible to set up productive facilities virtually anywhere; a major fetter to the accumulation of capital was removed. The universal mobility required by capital was now much more fully realized. At this point I want to emphasize that this technological /economic transformation was necessarily accompanied by profound social and cultural changes. For the steam engine's reduction of the seasonality of water power made possible a feature of work that is increasingly common on a global scale: the emergence of modern year-round work habits. With this change comes a dramatic transformation of our notions (and practices) of work and leisure, with all the consequences these have for the felt experience of everyday life. That is an instance of the second dimension of transformative innovation, i.e. its introduction of dramatic cultural changes, changes in the way populations live.
Much the same can be said for the subsequent shift to electrical power, which makes possible trolley cars, refrigerators (as opposed to what used to be called, in the U.S., "ice boxes"), ranges, toasters, radios, washing machines, fans, et al.
The railroad too is a transformative innovation par excellence. Consider the spectacular effects of railroad expansion: internal transport costs are sharply reduced; both new products and new geographical areas are brought into commercial markets; it is now possible to deliver exports to port with unprecedented efficiency, thereby encouraging the extensive development of the export sector; and impetus is provided to the development of the coal, iron and engineering industries. As with the steam engine, these technological and economic benefits wee necessarily accompanied by profound social and cultural changes. The railroads changed the way of life of the people by binding them as never before. The possibility now existed for mass production, mass consumption and indeed mass culture.
And of course the establishment of a national rail network absorbed massive amounts of investible capital, thereby spurring sustainable growth and offsetting the realization of the economic law that capitalist economies tend to stagnate. Apropos: in the latter third of the nineteenth century, railroad investment in the U.S. amounted to more than all investment in manufacturing industries.
And who can doubt that the transformative effects of the introduction of the automobile were epoch-making? The expansion of the automobile industry was the single most important force in the economic expansion of the 1920s. Car production increased threefold during this decade. (The automobile industry produced 12.7% of all manufactured output, employed 7.1% of all manufacturing workers, and paid 8.7% of all industrial wages.) Immediately after World War II the auto industry continued what was to be its breakneck expansion, and the possibilities created thereby constituted what was perhaps the most extensive transformation of the country's way of life in its history.
Consider the stimulus to capital accumulation and employment constituted by the following, each and all a consequence of the increasing automobilization of American society and culture: the migration of the population from the central city to the suburbs and exurbs (first made possible by the streetcar, before the major streetcar operations were bough and then quickly dismantled by the auto companies); the need for surfaced roads, road construction and maintenance, highway construction and maintenance (which had already accounted for 2% of GDP in 1929); the suburbanization of America, with the attendant construction of housing, schools, hospitals, workplaces, and more; the growth of shopping malls; the expansion of the credit industry; the spread of hotels and motels; and of course the growth of the tourism/travel industry. Never before had any population's way of living been transformed so profoundly in so short a period of time. And of course no one has failed to recognize that Americans' main symbol of their most precious possession, their personal freedom/liberty, is their ability to drive, solo, cars that have increasingly come to resemble tanks. Americans' liberty, embodied in the automobile, has become, literally, a commodity.
The long-term growth of the U.S. economy cannot be adequately explained or described without reference to these transformative innovations. None of these are required by the models of capital accumulation found in neoclassical, Keynesian or Marxian growth theory. After the civil war, growth in the last third of the nineteenth century was spurred primarily by the railroads. This stimulus fizzled, as railroad expansion began to slow down, around 1907, when, in spite of extensive electrification of urban (and even some rural) areas, the U.S. economy began a stretch of slow growth, which lasted until the outbreak of World War I. After the end of the War, the economy experienced a brief slump, which was followed by a period of fairly sustained expansion in the 1920s. The latter, as we have seen, was spurred mainly by the growth of the automobile industry. But the rate of growth of the automobile industry slowed down after 1926, and with it the rate of growth of almost all other manufacturing industries. And wages and employment had not risen as rapidly as production, productivity or profits.
In fact, the economic situation in the U.S. at the end of the 1920s bore a remarkable resemblance to the current economic situation in America. After 1926 overcapacity emerged in many key industries, the most significant of these being automobiles, textiles, and residential construction. Contractionary forces are cumulative: excess capacity caused business confidence to decline, with resulting cutbacks in spending on productive capacity in the consumer durables and capital goods industries. The economy was intensely unsound at the end of the 1920s, and the indications at the time were clear. Consumer demand was held down by a steadily growing inequality of income. Thus, an increasing percentage of total purchases were financed by credit in order to foster purchases of consumer durables. About seventy-five percent of all cars were sold on credit. Accordingly, both home mortgages and installment debt grew rapidly. This was the extension of a trend that had begun as early as 1922, when total personal debt began rising faster than disposable income. Thus, underconsumption and traces of excess capacity, key indicators of stagnationist forces, were in effect from the very beginning of the "roaring '20s". These tendencies became increasingly foregrounded over the course of the decade.
Excess capacity in key manufacturing industries was displacing workers from capital-intensive, technologically advanced sectors to industries relatively devoid of technological advance, i.e. service industries such as trade, finance and government. With capital unable to find sufficiently profitable investment opportunities in high-productivity industries, rampant speculative activity ensued, fostered by the growing concentration of income and therefore savings during the decade. More than two thirds of all personal savings was held by slightly over two percent of all families. The wanton optimism of the 1920s led those with substantial savings to want to get richer quickly, and with little effort. The stock market bubble that materialized at the end of the decade seemed to justify the expectations that fortunes could be made overnight in real estate and the stock market. When investors acted on these expectations, the existing bubble became bigger and hence more fragile. To those familiar with the current state of the U.S. economy, the present situation presents itself as history repeating itself -contra Marx- yet again as farce.
FROM GREAT DEPRESSION TO GOLDEN AGE TO NEOLIBERALISM
The mounting instabilities of the economy of the 1920s led to a Depression that was unresponsive to the Roosevelt administration's elevenfold increase in government spending. When U.S. entry into World War II finally brought about a resumption of growth, there was nonetheless an abiding fear among economists that once War spending ceased, the forces and tendencies that had generated the Depression might reassert themselves and exceptionally slow growth could resume. Instead, much to the surprise of many economists, American capitalism began the most sustained period of expansion in its entire history. The period from 1947 to 1973 has come to be called "The Golden Age", and appears, on the face of it, to be a fatal anomaly with respect to secular stagnation theory. After all, if the causes of the Great Depression were structural, and the exogenous stimulus provided by the War was what produced a resumption of growth, how was it possible that the economy, in the absence of powerful exogenous stimulus, exhibited an historically unprecedented period of long-term growth?
I have suggested that sustained national (as opposed to intra-national regional) growth has been engendered by the emergence of transformative innovations, and it is this kind of consideration that I believe offers the most plausible explanation both of Golden-Age expansion and of the petering out of this growth period and the resumption of (global) stagnation. Five stimuli to long-term growth were set in motion after the War, and these were for the most part exogenous in the sense indicated, and essentially limited. I will construe these stimuli as forces counteracting the tendency to stagnation. Once most of these stimuli had spent their potential, stagnationist tendencies re-asserted themselves, and overinvestment became evident once again. With profitable industrial investment opportunities in short supply, the economic surplus was invested instead in what became a vast proliferation of financial instruments. When the bubble created by this process finally burst, it was replaced with a housing bubble. Indeed a variety of bubbles, in financial assets, in housing, in credit, and a substantially overvalued dollar now threaten an historically unparalleled reassertion of the tendency to stagnation. But let us look first at the counteracting forces.
After the War, and as a result of wartime rationing, Americans had accumulated a very large fund of savings, and the time had come when these could finally be spent. This accounted for an immediate surge of consumption spending which temporarily averted the onset of recession. But the effectiveness of this source of spending was soon spent. What truly impelled the sustained growth of the Golden Age was 1) the resumption of a vast expansion of the automobile industry, and with it the stimulation of the broad range of investment and employment opportunities discussed above in connection with automobilization; 2) large-scale economic aid to Europe, which stimulated export demand; 3) a nationwide process of suburbanization, which, in tandem with the expansion of auto production, expanded significantly the demand for the output of every other major industry; 4) the emergence of what president Eisenhower christened the "military-industrial" complex, which provided additional stimulus to the industries most vulnerable to economic instability, the industries of DI, the capital goods sector; and finally 5) the steady and growing expansion of business and especially consumer credit, which in recent years has assumed elephantine proportions.
Three of these factors bear the two most important features of epoch-making innovations. The expansion of the auto industry, suburbanization, and the ever-increasing expansion and extension of credit all absorb massive amounts of investible surplus, and transform the mode of life of the entire population. In so doing they impart a massive push to the macro-growth process. The first two of these have their initial direct effect on investment. The third factor, the growing importance of credit, affects both investment and consumption, but the long-term trend of the credit industry in the U.S., evident now in hindsight, is much more significant in relation to consumption. There is now in the States a credit bubble of menacing proportions, with consumers now in debt to the tune of about107% of disposable income. The Marshall Plan (number 2 above) affected mainly and directly investment and employment, with boosts to consumption following thereupon. By the mid- to late-1970s, the employment-generating capacity of the military had declined. Washington determined, in the light of the defeat in Vietnam, that hi-tech warfare, which is of course technology- rather than labor-intensive, must replace traditional forms of subversion and aggression, in order to render less likely a repeat of the "Vietnam Syndrome."
It is worth mentioning that the military-industrial complex and the vast extension of consumer credit were what constituted what Joan Robinson called "bastard Keynesianism" in the United States. Recall that Keynes had insisted that fiscal and monetary policy were necessary but not sufficient conditions for avoiding stagnation. The tendency to stagnation could be offset for the long run only if some key industries were nationalized, and income redistributed. Nationalization would allow the State to offset lagging demand by providing cheap inputs to the private sector, thereby enabling lower prices. And redistributing income would transfer liquidity from those who had more than they could either consume or invest to those whose consumption demand was severely constrained.
American policymakers saw it as their challenge to reap the effects of nationalization and redistribution without actually nationalizing industries or redistributing income. The solution was ingenious: the military-industrial complex would be the functional equivalent of state-owned industries, and would, as noted above, stimulate the demand for the output of those very firms that produced capital goods. And the extension of consumer credit would allow working people to mortgage future years' incomes and spend more without a corresponding increase in either their private or their social wage.
As mentioned earlier, these forces counteracting the tendency to stagnation were all inherently limited and temporary. By the late 1960s, the automobile industry had achieved maturity, suburbanization had been accomplished, and aid to Europe had not only long ended, but had apparently created for America the economic equivalent of Frankenstein's monster. Europe and Japan were now formidable threats to U.S. economic hegemony. (Germany, for example, has overtaken the U.S. as an exporter of capital goods.) These three colossal absorbers of surplus were now no longer in operation. In the mid-1960s social spending had overtaken military spending as the larger share of government spending. And credit had begun to function as a supplement to declining real income, rather than a further addition to growing income.
These combined developments rendered the post-War counters to the realization of the tendency to stagnation obsolete. The result was the onset of stagnation not only in the U.S. but also worldwide. In America there has been overcapacity in autos, steel, shipbuilding and petrochemicals since the mid- to late-1970s.
This general picture is widely reflected in the business press. Business Week noted that "..supply outpaces demand everywhere, sending prices lower, eroding corporate profits and increasing layoffs" (Jan. 25, 1999, p. 118). The former chairman of General Electric claimed that "..there is excess capacity in almost every industry" (The New York Times, Nov. 16, 1997, p. 3). The Wall Street Journal noted that "..from cashmere to blue jeans, silver jewelry to aluminum cans, the world is in oversupply" (Nov. 30, 1998, p. A17). And The Economist fretted that " the gap between sales and capacity is "at its widest since the 1930s" (Feb. 20, 1999, p. 15). At this time excess capacity in steel is exceeding twenty percent, in autos it has fluctuated around 30%. And these figures look good in comparison to unused capacity numbers in the "industries of the future" of the "New Economy", semiconductors and telecommunications. Not long ago, ninety-seven percent of fibre optic capacity was idle.
MAINSTREAM ECONOMICS AND STAGNATION THEORY
Let us begin with the indisputable fact that the regime of neoliberalism has brought with it a substantial decline in economic growth. The most widely cited study on this issue, produced for the IECD by Angus Maddison, shows that the annual rate of growth of real global GDP fell from 4.9% in 1950-1973 to 3 % in 1973-1998, a drop of 39 %. Theoretical commitments can guide perception: neoliberal economists either denied or ignored the decline in global growth because of their reliance on Say's Law, that it is not possible for total demand to fall below full-capacity supply over the long run. In my earlier remarks I offered an explanation of sluggish growth rates since 1973. Many orthodox economics have done something similar: they have offered explanations of the initial rise in excess capacity. But what has not been explained is why global supply did not eventually adjust itself to the slower rate of demand growth, with the result that in the mid-1970s the global economy would enter a period of sluggish expansion. And it is worth mentioning that even Keynesian macro-theory is inadequate in this regard. It assumes that slow growth in aggregate demand will result in a proportionate decline in the growth of aggregate supply through its effect upon investment and therefore productivity.
An adequate explanation of the sustained character of excess capacity can be constructed from insights from Schumpeter, Marx and the contemporary economist James Crotty. The analysis that follows should be understood within the framework of the version of secular stagnation theory sketched above.
Before the shift to neoliberal policies by Jimmy Carter, Reagan and Thatcher, the global economy was already subject to downward pressures on demand growth resulting from two oil price shocks and the restrictive macro policy imposed in response to oil-price induced inflation. These impediments to demand growth were exacerbated by neoliberal policies. In combination, these forces led to a sharp rise in excess capacity in globally competing industries. At the same time competitive pressures were further intensified by the reduction of the market power of national oligopolies caused by the removal of protectionist barriers to the free movement of goods and money across national boundaries. Accordingly, competitive pressures between nations rose dramatically. In this context, normal stagnationist tendencies operated to further constrain global demand growth and further reproduce industrial capacity faster than either neoclassical or Keynesian theory could comprehend.
The Achilles Heel of neoclassical theory with respect to its inability to account for the persistence of overcapacity during the neoliberal period is its account of competition. So-called "perfect competition" is alleged to lead to maximum efficiency and the elimination of excess capacity. This claim appears inconsistent with the history of real-world, pre- and post-oligopolistic competition. Textbook-like competition has led to periodic market gluts or overproduction crises, price wars, plummeting profits, unbearable debt burdens and violent labor relations. Neoclassical theory banishes these demons with the aid of two assumptions which appear designed explicitly to make them impossible. The first assumption claims that production cost per unit rises rapidly as output increases, and the second that exit from low-profit industries is free or costless. If these assumptions were indeed true, then pure competition could not be shown to have stagnation- or depression-inducing effects. But these assumptions are, I shall suggest, false.
I will begin with the least plausible of these two assumptions. It states that there is free or costless exit from low-profit industries. But productive assets are typically immobile or irreversible, i.e., they are not liquid, and this forces a sizeable loss in the value of a firm's capital should it choose to leave an unprofitable industry. Whether they are sold on a second-hand market or reallocated to a different industry, productive assets will lose substantial value. Capital flowing out of the aerospace industry has been found to sell for one third of its replacement cost. Insolvent telecom firms in the U.S. have sold their assets for 20 cents on the dollar. And isn't this what one would expect? For it is usually poor profit prospects and/or great excess capacity that heighten a firm's incentive to leave an industry. But it is precisely those circumstances which deeply depress the price of industry-specific assets on the second-hand market, since the supply of these assets grows even as the demand for them has collapsed.
Before I turn to the slightly more plausible (yet still false) assumption -that unit production cost rises dramatically as output increases- I will outline the corollary of neoclassical theory itself which neoclassical economists seek to evade by introducing this assumption. The theory tells us that pure competition will force price down until it covers marginal cost. Now if unit production cost remained constant irrespective of the output level, then marginal production cost and average production cost per unit would be equal. When perfect competition forces price to equal marginal cost, total revenue will be equal to total production cost. But in this case there will be no revenue left over either to pay the "fixed" cost of maintaining capital stock in the face of depreciation or obsolescence, or to pay interest and/or dividends to investors. Thus, perfect competition is seen to cause the representative firm to suffer, in each production period, a loss that is equal to fixed costs. Keeping in mind that most important global industries have huge fixed costs, no industry could long survive the consequences of intense competition.
We seem to have found a tendency to stagnation or complete system breakdown where we would least expect to find it - in neoclassical theory itself. But the theory claims to have a response to this embarrassment. It simply denies the claim that appears to entail the undesired consequence, namely the claim that unit production cost remains constant no matter what the output level. Armed now with the (false) assumption that unit production cost rises rapidly as production increases, the conclusion is drawn that marginal cost and price are greater than average unit production cost. Thus, in equilibrium, the gap between price and average production cost is sufficiently large to cover all fixed costs. Let competition be as fierce as you wish, the typical firm will not lose money. Voila!
I have claimed that each of the rescuing assumptions discussed above is false. What would realistic assumptions about marginal cost and the reversibility of invested capital look like? To answer this question we must recognize the distinctive character of the dominant industries of global trade and investment. These industries include steel, autos, aircraft, shipbuilding, petrochemicals, consumer durables, electronics, semiconductors and banking. Studies of this type of industry suggest that marginal cost does not typically rise with output, with the rare exception of cases when the industry is producing near full capacity output. Marginal cost behaves as we would expect in cases of economies of scale: it remains constant or declines as capacity utilization rises. It follows that if free competition forces price to equal marginal cost in these industries, we should count on an ensuing wave of bankruptcies. Here again we see that neoclassical theory, corrected for unrealistic assumptions, seems to commit us to conceptualize mature capitalism as subject to the law of an inherent tendency to stagnation or worse.
The issue I am focusing on here turns on the dynamics of unrestricted competition among oligopolies in the context of economies of scale. The importance of economies of scale underscores the crucial similarity of all the dominant industries, including the new information-technology and telecommunications (ITC) industries. I stress this point because influential neoclassical economists have wanted to claim a significant difference, with respect to overcapacity problems, between the ITC industries and the other dominant industries. For purposes of explaining the persistence of excess capacity under neoliberalism, we want to remember that as scale economies grow, marginal costs fall as fixed costs per unit rise. Thus, the greater the economies of scale, the more destructive becomes the marginal cost pricing required by intense competition. With this in mind, we can more easily see that 1) these dynamics in especially conspicuous operation in the ITC industries, and 2) that such differences as there are between ITC and the other dominant oligopolies are insignificant for the analysis of secular stagnation theory, and of capitalist growth in general.
The key issue right now, recall, is the highly destructive consequences of the tendency of free competition among dominant industries to force price to equal marginal cost. That this is the case is easier to see in the ITC sector than in the other dominant industries. This is because in ITC marginal cost is often close to zero. Producing another copy of software or adding another customer to eBay is virtually costless. This has led many mainstream economists to argue that ITC industries are exempt from the laws of the neoclassical theory of perfect competition. Since ITC firms have marginal costs much lower than their large fixed costs, the argument goes, the possession of at least temporary monopoly power is the only guarantee of an incentive to produce anything at all. Without monopoly pricing power prices will be competed down to marginal cost and fixed costs will be unable to be covered. Thus, the motor of the "new economy" is said to be the constant pursuit of monopoly power. But, contrary to the neoclassical claim, none of this distinguishes significantly between ITC and other key industries. The drive to monopoly power is characteristic of all large corporations in the present age.
As Paul Sweezy argued in his Marshall Lectures, the typical firm in an oligopolized industry strives to be a monopolist. Each firm does this individually, and they all do it collectively. Individual firms seek monopoly status through the sales effort, where the firm's product is put forth as the best in the industry and as different from all the others. Firms within the same industry seek to approach monopoly status by collusion with respect to pricing policy, especially by agreeing to refrain from cutthroat price competition. For reasons developed at length above, therefore, all dominant firms, whether old- or new-economy operations, will tend to achieve monopoly status and to be chronically saddled with excess capacity.
A SCANDALOUSLY BRIEF LOOK AT SLOW-GROWTH CAPITALISM
We are in the midst of another unparalleled period of historical capitalism. Since the onset of stagnation, the median wage in the States has not changed at all for the vast majority of wage workers. Over the past six quarters the gowth of wage income has been negative. A brief sketch of the state of the U.S. economy toward the end of last year highlights features whose most plausible explanation may lie in the fact of secular stagnation. If stagnation theory is accurate, what follows is precisely what we would expect to find. The current state of the U.S. and the global economy is best understood, I believe, against the background too briefly elaborated above. Here is a picture of the U.S. economy today. The key to a healthy economy is job- and income-creating investment in capital goods, which in turn generates a virtuous cycle of further growth in investment, jobs and income. Ominously, the investment, growth, employment and income pictures are unprecedentedly dismal.
Compared to cyclical recoveries between 1949 and 1973, recoveries during the neoliberal period have been weak. Indeed, one or two of the post-1973 upturns has been weaker than some downturns during the Golden Age. Since the stock market collapse of four years ago, the situation has worsened. Growth rates since 2000 have been half their previous average. Even this weak performance required historically unprecedented fiscal and monetary stimulus: 13 rate cuts, three tax cuts, massive government deficits and record growth in money and credit.
Official figures mask the economy's most serious problems. Growth figures are annualized by U.S. statisticians. Thus, the much-touted 7.1% growth rate in the third quarter of 2003 was the one that would emerge after twelve months if the current trend were to continue. The same growth rate would have been reported in the eurozone as 1.8%. This is an uncommonly weak performance.
Investment data are equally misleading. Since the mid-1990s the Bureau of Economic Analysis (BEA) has adjusted upward actual business dollar outlays on computers and related equipment to take into account quality improvements (faster processors, bigger hard drives, more memory). BEA calls this "hedonic adjustment." Accordingly, the BEA estimates that business high-tech investment quadrupled between 1996 and 2002, from $70.9 to $283.7. But in actual dollars spent, the increase was only from $70.9 billion to $74.2 billion, very low by historic standards. The high-tech boom was both greatly exaggerated and misleading. After all, neither profits nor wages are taken in "hedonically adjusted" dollars.
The difference between real and hedonic outlays explains what would otherwise be a paradoxical feature of the years 2000-2003: government was reporting big increases in high-tech investment, while manufacturers were bemoaning declining sales.
Hedonic pricing has accounted for a steadily rising percentage of all reported capital investment. But if we look at actual dollars spent, we find that since 1998 the growth rate of business fixed investment has actually been declining. Real capital investment has in fact not been this weak since the Great Depression.
The fudging of investment figures also obscures the sorry state of the jobs market. The Commerce Department's figures on nonresidential investment for the third and fourth quarters of 2003 reported increases of, respectively, 12.8 and 9.6%. A closer look reveals that the "adjusted" hi-tech sector is the only bright spot, with production and capacity rising, respectively, 24.6% and 11.1% over the past year. But hi-tech is not where significant jobs increases are found. Employment in hi-tech has declined steadily through the so-called "recovery" since its 2001 peak.
In non-hi-tech manufacturing, where investment figures are not adjusted, production from January 2003 to January 2004 rose only 0.9%, while capacity actually declined -0.2%. This represents a record nineteen-straight-month decline in mainline manufacturing capacity. Since it is mainline manufacturing which employs almost 95% of all manufacturing workers, it comes as no surprise that for the first time since the Great Depression the economy has gone more than three years without creating any jobs.
The jobs crisis is even worse than it appears. Here again statistical sleight-of-hand, this time by the Bureau of Labor Statistics (BLS), obscures economic reality. Based on data gathered employing the "net birth/death adjustment," BLS announced in April, 2004, that the long-awaited jobs recovery had finally arrived. Nonfarm payrolls had allegedly surged by a whopping 308,000 in March, 2004. The birth/death model uses business deaths to "impute" employment from business births. Thus, as more businesses fail, more new jobs are imputed to have materialized through business births. This improbable statistical artefact accounts for about half of the reported 308,000 March, 2004 payroll increase.
The birth/death model is based on statistics covering 1998-2002. This was a period of explosive telecom and dot.com startups, quite unlike today's flat economic landscape. Thus, two thirds of the 947,000 new jobs BLS "imputed" for March-May, 2004, were never actually counted by BLS and never reported by any firm.
BlS's household and establishment surveys tell a more sobering story. March employment by private industry actually fell by 175,000, and the number of self-employed workers declined by 288,000. Without the simultaneous increase of 439,000 government jobs, the March job announcement would have been a calamity. And both average weekly hours and total hours worked declined markedly, even as (according to the dubious birth/death findings) the work force increased. This is the first time in U.S. history that net job growth has been negative 26 months into a recovery.
The wage and salary picture has also set grim records. During the current recovery, wage and salary growth has actually been negative, at -0.6%, in contrast to the average increase of 7.2% characteristic of this point into each of the other eight post-War recoveries. In fact, median family income in the post-War period exhibits an ominous trend. From 1947 to 1967, real median family income rose by 75%. But since 1967, it has grown by only 30%.
Labor's losses have been capital's gain: since the peak of the last recovery, in the first quarter of 2001, corporate profits have risen 62.2%, compared to the average of 13.9% at the same point in the last eight recoveries. Never in American history has any recorded recovery had such a lopsided balance in the distribution of income gains between labor and capital.
Given the dismal investment, wage/salary and employment pictures, how has it been possible for consumption to have risen to 71% of GDP in the early nineties, from its prior post-War average of 66%? The answer is a growth rate of consumer debt never seen before in America. For the first time ever, in March 2001, overall debt levels (mortgage debt plus consumer debt, mainly credit card debt and car loans) rose above annual disposable income. And from 2001 to 2004 consumer debt rose from 101% to 116% of disposable income. In the first half of 2004, consumer borrowing has been at its highest ever. It has declined slightly in the meantime. So has consumer spending. Should Americans decide to significantly increase their saving and service debts, while lowering correspondingly their consumption expenditures, the global economy could experience a major disruption.
Up until very recently, consumers had stepped up their borrowing to compensate for slowing income growth. Thus, such growth as the U.S. has experienced in recent years has been almost entirely consumption- and debt-driven. More fundamentally, it has been bubble-driven, fueled principally by bubbles in home values and credit.
Since the collapse of stock market/hi-tech bubbles in 2001, the illusory "wealth effect" has been sustained, and consumer spending thereby encouraged, by another bubble, the enormous inflation of house prices. The biggest increase in household debt came from home mortgage debt, especially home mortgage refinancing. With mortgage rates low and home prices rising, households' home equity ballooned. Bloated home equity then provided rising collateral to underwrite still more borrowing.
What makes this especially problematic is that over the last ten years, the average family has suffered under large increases in health premiums, housing costs, tuition fees and child care costs. As a result, households' and individuals' margin of protection against insolvency has dramatically declined. Filings for personal bankruptcy are approaching a record high.
There are indications that these weaknesses and imbalances in the economy are reaching a critical mass. The mortgage refi boom has fizzled, and consumer spending is beginning to decline. Two years ago the Fed's quarterly Beige Book reported a disturbing shift in the composition of credit spending: more and more families are using their credit cards to finance spending on essentials, such as food and energy.
It is no exaggeration to say that both the U.S. economy and the global economy are hugely dependent on the American consumer's increasing willingness to spend more than (s)he makes. (Imported goods have been a rising proportion of all goods purchased here.) Thus, a decline in U.S. consumer spending portends further declines in investment, jobs and income. From January to July of 2004, consumer spending rose at an annual rate of 2.8%, down from 3.3% in 2003 and 3.1 % in 2002. For perspective, during the boom years 1999-2000, growth rates were 5.1% and 4.7%.
Spending on consumer durables is the most significant indicator of healthy growth, and the drastically lower spending in this area is cause for alarm: spending for consumer durables was down to $23.5 billion in the first seven months of this year, in contrast to $71 billion on 2003 and $58 billion in 2002.
Should consumer spending continue to decline, the economy faces the genuine likelihood of a severe recession. Of course not a single American politician addresses this issue.
What is required is a shift from bubble-, debt-, and consumption-driven growth to investment- and income-driven growth. This in turn necessitates a decline in Americas principal export, jobs. Domestic job growth, a higher minimum wage, tax cuts aimed predominantly at low- and middle-income families, a sharp reduction in defense spending and a redirection of these funds to long-neglected and pressing social needs such as health care reform, the provision of universal pre-school, and across-the-board repair and upgrading of America's deteriorated infrastructure of roads, highways,tunnels and bridges, all these should be at the forefront of a Democratic administration's agenda. The restoration of infrastructure is especially labor intensive, and would generate an enormous number of productive jobs. And as a national project spearheaded by government initiative, government would emerge as a major employer.
All this si entirely incompatible with the overwhelming neoliberal bent of even the most "liberal" political leaders. It was after all Bill Clinton who urinated on the grave of Franklin Roosevelt when he proclaimed "the end of welfare as we know it".
As unfashionable as it is to suggest such a thing at a conference of economists, the only hope for the world's majority seems to be the revival of the kinds of mass movements witnessed here in May of 1968, and throughout the world during the 1960s. And time may be short.
Alan Nasser is Professor emeritus of Political Economy and Philosophy at The Evergreen State College. His book, The “New Normal”: Persistent Austerity, Declining Democracy and the Globalization of Resistance will be published by Pluto Press in 2013. If you would like to be notified when the book is released, please send a request to email@example.com
Thomas Palley » Blog Archive » Explaining Stagnation Why it Matters
John Bellamy Foster and Fred Magdoff clearly identify stagnation in their 2009 book The Great Financial Crisis: Causes and Consequences (HERE). They conclude with a section titled “Back to the real economy: the stagnation problem” and they write:
“It was the reality of economic stagnation beginning in the 1970s, as heterodox economists Ricardo Belliofiore and Joseph Halevi have recently emphasized, that led to the emergence of “the new financialized capitalist regime,” a kind of “paradoxical financial Keynesianiasm” whereby demand in the economy was stimulated primarily “thanks to asset-bubbles” (Foster and Magdoff, p.129).”
My own 2009 New America Foundation report, “America’s Exhausted Paradigm: Macroeconomic Causes of the Financial Crisis and Great Recession”, concluded (HERE):
“The bottom line is macroeconomic failure rooted in America’s flawed economic paradigm is the ultimate cause of the financial crisis and Great Recession…. Now, there is a grave danger that policymakers only focus on financial market reform and ignore reform of America’s flawed economic paradigm. In that event, though the economy may stabilize, it will likely be unable to escape the pull of economic stagnation. That is because stagnation is the logical next stage of the existing paradigm.”
That report became a core chapter in my 2012 book, From Financial Crisis to Stagnation, the blurb for which reads (HERE):
“The U.S. economy today is confronted with the prospect of extended stagnation. This book explores why…. Financial deregulation and the house price bubble kept the economy going by making ever more credit available. As the economy cannibalized itself by undercutting income distribution and accumulating debt, it needed larger speculative bubbles to grow. That process ended when the housing bubble burst. The earlier post–World War II economic model based on rising middle-class incomes has been dismantled, while the new neoliberal model has imploded. Absent a change of policy paradigm, the logical next step is stagnation. The political challenge we face now is how to achieve paradigm change.”
The big analytical difference between Foster and Magdoff and myself is that they see stagnation as inherent to capitalism whereas I see it as the product of neoliberal economic policy. Foster and Magdoff partake of the Baran-Sweezy tradition that recommends deeper socialist transformation. I use a structural Keynesian framework that recommends reconstructing the income and demand generation mechanism via policies that include rebuilding worker bargaining power, reforming globalization, and reining in corporations and financial markets.
Larry Summers’ story of serial bubbles delaying stagnation has substantial similarities with both accounts but he avoids blaming either capitalism or neoliberalism. That is hardly surprising as Summers has been a chief architect of the neoliberal system and remains committed to it, though he now wants to soften its impact. Instead, he appeals to the black box of “secular stagnation” as ultimate cause and suggests fiscal policies that would ameliorate the demand shortage problem. However, those policies would not remedy the root cause of stagnation as they leave the economic architecture unchanged.
Though Summers and Krugman are relative late-comers to the stagnation hypothesis, they have still done a great public service by drawing attention to it. Now that stagnation has been identified, the real debate can begin.
The questions are what caused stagnation and what must be done to restore shared prosperity? There is no guarantee we will answer those questions correctly (my prior is mainstream economists will continue their track record of getting it wrong). But it is absolutely certain we will not get the right answer if we do not ask the right question. So thank you Larry Summers and Paul Krugman for putting stagnation on the table. Let the debate begin.
Tha means the major defeat for “stabilization policies” that were supposed to smooth the capitalist industrial cycle and abolish panics. And the problem preceeds the 2008 panic itself.
The highly misleading unemployment rate calculated by the U.S. Department of Labor notwithstanding, there has been a massive growth in long-term unemployment in the U.S. in the wake of the crisis, as shown by the declining percentage of the U.S. population actually working.
The current situation also refute the key tenet of neoclassical economy (which is pseudo-religious doctrine, so that only increase fanatic devotion of its well-paid adherents). Neoclassical economists insisted that since a “free market economy” naturally tends toward an equilibrium with full employment of both workers and machines, the economy should should quickly return to “full employment” after a recession. This is not the case. See also Secular Stagnation Lawrence H. Summers
There were several uncessful attempts to explaint his situation from neoclassical positions. In Secular Stagnation, Coalmines, Bubbles, and Larry Summers - NYTimes.com Paul Krugman emphasized the liquidity trap – zero lower bound to interest rates which supposedly prevents spending from reaching a level sufficient for full employment.
Larry’s formulation of our current economic situation is the same as my own. Although he doesn’t use the words “liquidity trap”, he works from the understanding that we are an economy in which monetary policy is de facto constrained by the zero lower bound (even if you think central banks could be doing more), and that this corresponds to a situation in which the “natural” rate of interest – the rate at which desired savings and desired investment would be equal at full employment – is negative.
And as he also notes, in this situation the normal rules of economic policy don’t apply. As I like to put it, virtue becomes vice and prudence becomes folly. Saving hurts the economy – it even hurts investment, thanks to the paradox of thrift. Fixating on debt and deficits deepens the depression. And so on down the line.
This is the kind of environment in which Keynes’s hypothetical policy of burying currency in coalmines and letting the private sector dig it up – or my version, which involves faking a threat from nonexistent space aliens – becomes a good thing; spending is good, and while productive spending is best, unproductive spending is still better than nothing.
Larry also indirectly states an important corollary: this isn’t just true of public spending. Private spending that is wholly or partially wasteful is also a good thing, unless it somehow stores up trouble for the future. That last bit is an important qualification. But suppose that U.S. corporations, which are currently sitting on a huge hoard of cash, were somehow to become convinced that it would be a great idea to fit out all their employees as cyborgs, with Google Glass and smart wristwatches everywhere. And suppose that three years later they realized that there wasn’t really much payoff to all that spending. Nonetheless, the resulting investment boom would have given us several years of much higher employment, with no real waste, since the resources employed would otherwise have been idle.
OK, this is still mostly standard, although a lot of people hate, just hate, this kind of logic – they want economics to be a morality play, and they don’t care how many people have to suffer in the process.
But now comes the radical part of Larry’s presentation: his suggestion that this may not be a temporary state of affairs.
2. An economy that needs bubbles?
We now know that the economic expansion of 2003-2007 was driven by a bubble. You can say the same about the latter part of the 90s expansion; and you can in fact say the same about the later years of the Reagan expansion, which was driven at that point by runaway thrift institutions and a large bubble in commercial real estate.
So you might be tempted to say that monetary policy has consistently been too loose. After all, haven’t low interest rates been encouraging repeated bubbles?
But as Larry emphasizes, there’s a big problem with the claim that monetary policy has been too loose: where’s the inflation? Where has the overheated economy been visible?
So how can you reconcile repeated bubbles with an economy showing no sign of inflationary pressures? Summers’s answer is that we may be an economy that needs bubbles just to achieve something near full employment – that in the absence of bubbles the economy has a negative natural rate of interest. And this hasn’t just been true since the 2008 financial crisis; it has arguably been true, although perhaps with increasing severity, since the 1980s.
One way to quantify this is, I think, to look at household debt. Here’s the ratio of household debt to GDP since the 50s:
There was a sharp increase in the ratio after World War II, but from a low base, as families moved to the suburbs and all that. Then there were about 25 years of rough stability, from 1960 to around 1985. After that, however, household debt rose rapidly and inexorably, until the crisis struck.
So with all that household borrowing, you might have expected the period 1985-2007 to be one of strong inflationary pressure, high interest rates, or both. In fact, you see neither – this was the era of the Great Moderation, a time of low inflation and generally low interest rates. Without all that increase in household debt, interest rates would presumably have to have been considerably lower – maybe negative. In other words, you can argue that our economy has been trying to get into the liquidity trap for a number of years, and that it only avoided the trap for a while thanks to successive bubbles.
And if that’s how you see things, when looking forward you have to regard the liquidity trap not as an exceptional state of affairs but as the new normal.
3. Secular stagnation?
How did this happen? Larry explicitly invokes the notion of secular stagnation, associated in particular with Alvin Hansen (pdf). He doesn’t say why this might be happening to us now, but it’s not hard to think of possible reasons.
Back in the day, Hansen stressed demographic factors: he thought slowing population growth would mean low investment demand. Then came the baby boom. But this time around the slowdown is here, and looks real.
Think of it this way: during the period 1960-85, when the U.S. economy seemed able to achieve full employment without bubbles, our labor force grew an average 2.1 percent annually. In part this reflected the maturing of the baby boomers, in part the move of women into the labor force.
This growth made sustaining investment fairly easy: the business of providing Americans with new houses, new offices, and so on easily absorbed a fairly high fraction of GDP.
Now look forward. The Census projects that the population aged 18 to 64 will grow at an annual rate of only 0.2 percent between 2015 and 2025. Unless labor force participation not only stops declining but starts rising rapidly again, this means a slower-growth economy, and thanks to the accelerator effect, lower investment demand.
By the way, in a Samuelson consumption-loan model, the natural rate of interest equals the rate of population growth. Reality is a lot more complicated than that, but I don’t think it’s foolish to guess that the decline in population growth has reduced the natural real rate of interest by something like an equal amount (and to note that Japan’s shrinking working-age population is probably a major factor in its secular stagnation.)
There may be other factors – a Bob Gordonesque decline in innovation, etc.. The point is that it’s not hard to think of reasons why the liquidity trap could be a lot more persistent than anyone currently wants to admit.
4. Destructive virtue
If you take a secular stagnation view seriously, it has some radical implications – and Larry goes there.
Currently, even policymakers who are willing to concede that the liquidity trap makes nonsense of conventional notions of policy prudence are busy preparing for the time when normality returns. This means that they are preoccupied with the idea that they must act now to head off future crises. Yet this crisis isn’t over – and as Larry says, “Most of what would be done under the aegis of preventing a future crisis would be counterproductive.”
He goes on to say that the officially respectable policy agenda involves “doing less with monetary policy than was done before and doing less with fiscal policy than was done before,” even though the economy remains deeply depressed. And he says, a bit fuzzily but bravely all the same, that even improved financial regulation is not necessarily a good thing – that it may discourage irresponsible lending and borrowing at a time when more spending of any kind is good for the economy.
Amazing stuff – and if we really are looking at secular stagnation, he’s right.
Of course, the underlying problem in all of this is simply that real interest rates are too high. But, you say, they’re negative – zero nominal rates minus at least some expected inflation. To which the answer is, so? If the market wants a strongly negative real interest rate, we’ll have persistent problems until we find a way to deliver such a rate.
One way to get there would be to reconstruct our whole monetary system – say, eliminate paper money and pay negative interest rates on deposits. Another way would be to take advantage of the next boom – whether it’s a bubble or driven by expansionary fiscal policy – to push inflation substantially higher, and keep it there. Or maybe, possibly, we could go the Krugman 1998/Abe 2013 route of pushing up inflation through the sheer power of self-fulfilling expectations.
Any such suggestions are, of course, met with outrage. How dare anyone suggest that virtuous individuals, people who are prudent and save for the future, face expropriation? How can you suggest steadily eroding their savings either through inflation or through negative interest rates? It’s tyranny!
But in a liquidity trap saving may be a personal virtue, but it’s a social vice. And in an economy facing secular stagnation, this isn’t just a temporary state of affairs, it’s the norm. Assuring people that they can get a positive rate of return on safe assets means promising them something the market doesn’t want to deliver – it’s like farm price supports, except for rentiers.
Oh, and one last point. If we’re going to have persistently negative real interest rates along with at least somewhat positive overall economic growth, the panic over public debt looks even more foolish than people like me have been saying: servicing the debt in the sense of stabilizing the ratio of debt to GDP has no cost, in fact negative cost.
I could go on, but by now I hope you’ve gotten the point. What Larry did at the IMF wasn’t just give an interesting speech. He laid down what amounts to a very radical manifesto. And I very much fear that he may be right.
A secret question hovers over us, a sense of disappointment, a broken promise we were given as children about what our adult world was supposed to be like. I am referring not to the standard false promises that children are always given (about how the world is fair, or how those who work hard shall be rewarded), but to a particular generational promise—given to those who were children in the fifties, sixties, seventies, or eighties—one that was never quite articulated as a promise but rather as a set of assumptions about what our adult world would be like. And since it was never quite promised, now that it has failed to come true, we’re left confused: indignant, but at the same time, embarrassed at our own indignation, ashamed we were ever so silly to believe our elders to begin with.
Where, in short, are the flying cars? Where are the force fields, tractor beams, teleportation pods, antigravity sleds, tricorders, immortality drugs, colonies on Mars, and all the other technological wonders any child growing up in the mid-to-late twentieth century assumed would exist by now? Even those inventions that seemed ready to emerge—like cloning or cryogenics—ended up betraying their lofty promises. What happened to them?
We are well informed of the wonders of computers, as if this is some sort of unanticipated compensation, but, in fact, we haven’t moved even computing to the point of progress that people in the fifties expected we’d have reached by now. We don’t have computers we can have an interesting conversation with, or robots that can walk our dogs or take our clothes to the Laundromat.
As someone who was eight years old at the time of the Apollo moon landing, I remember calculating that I would be thirty-nine in the magic year 2000 and wondering what the world would be like. Did I expect I would be living in such a world of wonders? Of course. Everyone did. Do I feel cheated now? It seemed unlikely that I’d live to see all the things I was reading about in science fiction, but it never occurred to me that I wouldn’t see any of them.
At the turn of the millennium, I was expecting an outpouring of reflections on why we had gotten the future of technology so wrong. Instead, just about all the authoritative voices—both Left and Right—began their reflections from the assumption that we do live in an unprecedented new technological utopia of one sort or another.
The common way of dealing with the uneasy sense that this might not be so is to brush it aside, to insist all the progress that could have happened has happened and to treat anything more as silly. “Oh, you mean all that Jetsons stuff?” I’m asked—as if to say, but that was just for children! Surely, as grown-ups, we understand The Jetsons offered as accurate a view of the future as The Flintstones offered of the Stone Age.
Surely, as grown-ups, we understand The Jetsons offered as accurate a view of the future as The Flintstones did of the Stone Age.
Even in the seventies and eighties, in fact, sober sources such as National Geographic and the Smithsonian were informing children of imminent space stations and expeditions to Mars. Creators of science fiction movies used to come up with concrete dates, often no more than a generation in the future, in which to place their futuristic fantasies. In 1968, Stanley Kubrick felt that a moviegoing audience would find it perfectly natural to assume that only thirty-three years later, in 2001, we would have commercial moon flights, city-like space stations, and computers with human personalities maintaining astronauts in suspended animation while traveling to Jupiter. Video telephony is just about the only new technology from that particular movie that has appeared—and it was technically possible when the movie was showing. 2001 can be seen as a curio, but what about Star Trek? The Star Trek mythos was set in the sixties, too, but the show kept getting revived, leaving audiences for Star Trek Voyager in, say, 2005, to try to figure out what to make of the fact that according to the logic of the program, the world was supposed to be recovering from fighting off the rule of genetically engineered supermen in the Eugenics Wars of the nineties.
By 1989, when the creators of Back to the Future II were dutifully placing flying cars and anti-gravity hoverboards in the hands of ordinary teenagers in the year 2015, it wasn’t clear if this was meant as a prediction or a joke.
The usual move in science fiction is to remain vague about the dates, so as to render “the future” a zone of pure fantasy, no different than Middle Earth or Narnia, or like Star Wars, “a long time ago in a galaxy far, far away.” As a result, our science fiction future is, most often, not a future at all, but more like an alternative dimension, a dream-time, a technological Elsewhere, existing in days to come in the same sense that elves and dragon-slayers existed in the past—another screen for the displacement of moral dramas and mythic fantasies into the dead ends of consumer pleasure.
Might the cultural sensibility that came to be referred to as postmodernism best be seen as a prolonged meditation on all the technological changes that never happened? The question struck me as I watched one of the recent Star Wars movies. The movie was terrible, but I couldn’t help but feel impressed by the quality of the special effects. Recalling the clumsy special effects typical of fifties sci-fi films, I kept thinking how impressed a fifties audience would have been if they’d known what we could do by now—only to realize, “Actually, no. They wouldn’t be impressed at all, would they? They thought we’d be doing this kind of thing by now. Not just figuring out more sophisticated ways to simulate it.”
That last word—simulate—is key. The technologies that have advanced since the seventies are mainly either medical technologies or information technologies—largely, technologies of simulation. They are technologies of what Jean Baudrillard and Umberto Eco called the “hyper-real,” the ability to make imitations that are more realistic than originals. The postmodern sensibility, the feeling that we had somehow broken into an unprecedented new historical period in which we understood that there is nothing new; that grand historical narratives of progress and liberation were meaningless; that everything now was simulation, ironic repetition, fragmentation, and pastiche—all this makes sense in a technological environment in which the only breakthroughs were those that made it easier to create, transfer, and rearrange virtual projections of things that either already existed, or, we came to realize, never would. Surely, if we were vacationing in geodesic domes on Mars or toting about pocket-size nuclear fusion plants or telekinetic mind-reading devices no one would ever have been talking like this. The postmodern moment was a desperate way to take what could otherwise only be felt as a bitter disappointment and to dress it up as something epochal, exciting, and new.
In the earliest formulations, which largely came out of the Marxist tradition, a lot of this technological background was acknowledged. Fredric Jameson’s “Postmodernism, or the Cultural Logic of Late Capitalism” proposed the term “postmodernism” to refer to the cultural logic appropriate to a new, technological phase of capitalism, one that had been heralded by Marxist economist Ernest Mandel as early as 1972. Mandel had argued that humanity stood at the verge of a “third technological revolution,” as profound as the Agricultural or Industrial Revolution, in which computers, robots, new energy sources, and new information technologies would replace industrial labor—the “end of work” as it soon came to be called—reducing us all to designers and computer technicians coming up with crazy visions that cybernetic factories would produce.
End of work arguments were popular in the late seventies and early eighties as social thinkers pondered what would happen to the traditional working-class-led popular struggle once the working class no longer existed. (The answer: it would turn into identity politics.) Jameson thought of himself as exploring the forms of consciousness and historical sensibilities likely to emerge from this new age.
What happened, instead, is that the spread of information technologies and new ways of organizing transport—the containerization of shipping, for example—allowed those same industrial jobs to be outsourced to East Asia, Latin America, and other countries where the availability of cheap labor allowed manufacturers to employ much less technologically sophisticated production-line techniques than they would have been obliged to employ at home.
From the perspective of those living in Europe, North America, and Japan, the results did seem to be much as predicted. Smokestack industries did disappear; jobs came to be divided between a lower stratum of service workers and an upper stratum sitting in antiseptic bubbles playing with computers. But below it all lay an uneasy awareness that the postwork civilization was a giant fraud. Our carefully engineered high-tech sneakers were not being produced by intelligent cyborgs or self-replicating molecular nanotechnology; they were being made on the equivalent of old-fashioned Singer sewing machines, by the daughters of Mexican and Indonesian farmers who, as the result of WTO or NAFTA–sponsored trade deals, had been ousted from their ancestral lands. It was a guilty awareness that lay beneath the postmodern sensibility and its celebration of the endless play of images and surfaces.
Why did the projected explosion of technological growth everyone was expecting—the moon bases, the robot factories—fail to happen? There are two possibilities. Either our expectations about the pace of technological change were unrealistic (in which case, we need to know why so many intelligent people believed they were not) or our expectations were not unrealistic (in which case, we need to know what happened to derail so many credible ideas and prospects).
Most social analysts choose the first explanation and trace the problem to the Cold War space race. Why, these analysts wonder, did both the United States and the Soviet Union become so obsessed with the idea of manned space travel? It was never an efficient way to engage in scientific research. And it encouraged unrealistic ideas of what the human future would be like.
Could the answer be that both the United States and the Soviet Union had been, in the century before, societies of pioneers, one expanding across the Western frontier, the other across Siberia? Didn’t they share a commitment to the myth of a limitless, expansive future, of human colonization of vast empty spaces, that helped convince the leaders of both superpowers they had entered into a “space age” in which they were battling over control of the future itself? All sorts of myths were at play here, no doubt, but that proves nothing about the feasibility of the project.
Some of those science fiction fantasies (at this point we can’t know which ones) could have been brought into being. For earlier generations, many science fiction fantasies had been brought into being. Those who grew up at the turn of the century reading Jules Verne or H.G. Wells imagined the world of, say, 1960 with flying machines, rocket ships, submarines, radio, and television—and that was pretty much what they got. If it wasn’t unrealistic in 1900 to dream of men traveling to the moon, then why was it unrealistic in the sixties to dream of jet-packs and robot laundry-maids?
In fact, even as those dreams were being outlined, the material base for their achievement was beginning to be whittled away. There is reason to believe that even by the fifties and sixties, the pace of technological innovation was slowing down from the heady pace of the first half of the century. There was a last spate in the fifties when microwave ovens (1954), the Pill (1957), and lasers (1958) all appeared in rapid succession. But since then, technological advances have taken the form of clever new ways of combining existing technologies (as in the space race) and new ways of putting existing technologies to consumer use (the most famous example is television, invented in 1926, but mass produced only after the war.) Yet, in part because the space race gave everyone the impression that remarkable advances were happening, the popular impression during the sixties was that the pace of technological change was speeding up in terrifying, uncontrollable ways.
Alvin Toffler’s 1970 best seller Future Shock argued that almost all the social problems of the sixties could be traced back to the increasing pace of technological change. The endless outpouring of scientific breakthroughs transformed the grounds of daily existence, and left Americans without any clear idea of what normal life was. Just consider the family, where not just the Pill, but also the prospect of in vitro fertilization, test tube babies, and sperm and egg donation were about to make the idea of motherhood obsolete.
Humans were not psychologically prepared for the pace of change, Toffler wrote. He coined a term for the phenomenon: “accelerative thrust.” It had begun with the Industrial Revolution, but by roughly 1850, the effect had become unmistakable. Not only was everything around us changing, but most of it—human knowledge, the size of the population, industrial growth, energy use—was changing exponentially. The only solution, Toffler argued, was to begin some kind of control over the process, to create institutions that would assess emerging technologies and their likely effects, to ban technologies likely to be too socially disruptive, and to guide development in the direction of social harmony.
While many of the historical trends Toffler describes are accurate, the book appeared when most of these exponential trends halted. It was right around 1970 when the increase in the number of scientific papers published in the world—a figure that had doubled every fifteen years since, roughly, 1685—began leveling off. The same was true of books and patents.
Toffler’s use of acceleration was particularly unfortunate. For most of human history, the top speed at which human beings could travel had been around 25 miles per hour. By 1900 it had increased to 100 miles per hour, and for the next seventy years it did seem to be increasing exponentially. By the time Toffler was writing, in 1970, the record for the fastest speed at which any human had traveled stood at roughly 25,000 mph, achieved by the crew of Apollo 10 in 1969, just one year before. At such an exponential rate, it must have seemed reasonable to assume that within a matter of decades, humanity would be exploring other solar systems.
Since 1970, no further increase has occurred. The record for the fastest a human has ever traveled remains with the crew of Apollo 10. True, the commercial airliner Concorde, which first flew in 1969, reached a maximum speed of 1,400 mph. And the Soviet Tupolev Tu-144, which flew first, reached an even faster speed of 1,553 mph. But those speeds not only have failed to increase; they have decreased since the Tupolev Tu-144 was cancelled and the Concorde was abandoned.
None of this stopped Toffler’s own career. He kept retooling his analysis to come up with new spectacular pronouncements. In 1980, he produced The Third Wave, its argument lifted from Ernest Mandel’s “third technological revolution”—except that while Mandel thought these changes would spell the end of capitalism, Toffler assumed capitalism was eternal. By 1990, Toffler was the personal intellectual guru to Republican congressman Newt Gingrich, who claimed that his 1994 “Contract With America” was inspired, in part, by the understanding that the United States needed to move from an antiquated, materialist, industrial mind-set to a new, free-market, information age, Third Wave civilization.
There are all sorts of ironies in this connection. One of Toffler’s greatest achievements was inspiring the government to create an Office of Technology Assessment (OTA). One of Gingrich’s first acts on winning control of the House of Representatives in 1995 was defunding the OTA as an example of useless government extravagance. Still, there’s no contradiction here. By this time, Toffler had long since given up on influencing policy by appealing to the general public; he was making a living largely by giving seminars to CEOs and corporate think tanks. His insights had been privatized.
Gingrich liked to call himself a “conservative futurologist.” This, too, might seem oxymoronic; but, in fact, Toffler’s own conception of futurology was never progressive. Progress was always presented as a problem that needed to be solved.
Toffler might best be seen as a lightweight version of the nineteenth-century social theorist Auguste Comte, who believed that he was standing on the brink of a new age—in his case, the Industrial Age—driven by the inexorable progress of technology, and that the social cataclysms of his times were caused by the social system not adjusting. The older feudal order had developed Catholic theology, a way of thinking about man’s place in the cosmos perfectly suited to the social system of the time, as well as an institutional structure, the Church, that conveyed and enforced such ideas in a way that could give everyone a sense of meaning and belonging. The Industrial Age had developed its own system of ideas—science—but scientists had not succeeded in creating anything like the Catholic Church. Comte concluded that we needed to develop a new science, which he dubbed “sociology,” and said that sociologists should play the role of priests in a new Religion of Society that would inspire everyone with a love of order, community, work discipline, and family values. Toffler was less ambitious; his futurologists were not supposed to play the role of priests.
Gingrich had a second guru, a libertarian theologian named George Gilder, and Gilder, like Toffler, was obsessed with technology and social change. In an odd way, Gilder was more optimistic. Embracing a radical version of Mandel’s Third Wave argument, he insisted that what we were seeing with the rise of computers was an “overthrow of matter.” The old, materialist Industrial Society, where value came from physical labor, was giving way to an Information Age where value emerges directly from the minds of entrepreneurs, just as the world had originally appeared ex nihilo from the mind of God, just as money, in a proper supply-side economy, emerged ex nihilo from the Federal Reserve and into the hands of value-creating capitalists. Supply-side economic policies, Gilder concluded, would ensure that investment would continue to steer away from old government boondoggles like the space program and toward more productive information and medical technologies.
But if there was a conscious, or semi-conscious, move away from investment in research that might lead to better rockets and robots, and toward research that would lead to such things as laser printers and CAT scans, it had begun well before Toffler’s Future Shock (1970) and Gilder’s Wealth and Poverty (1981). What their success shows is that the issues they raised—that existing patterns of technological development would lead to social upheaval, and that we needed to guide technological development in directions that did not challenge existing structures of authority—echoed in the corridors of power. Statesmen and captains of industry had been thinking about such questions for some time.
Industrial capitalism has fostered an extremely rapid rate of scientific advance and technological innovation—one with no parallel in previous human history. Even capitalism’s greatest detractors, Karl Marx and Friedrich Engels, celebrated its unleashing of the “productive forces.” Marx and Engels also believed that capitalism’s continual need to revolutionize the means of industrial production would be its undoing. Marx argued that, for certain technical reasons, value—and therefore profits—can be extracted only from human labor. Competition forces factory owners to mechanize production, to reduce labor costs, but while this is to the short-term advantage of the firm, mechanization’s effect is to drive down the general rate of profit.
For 150 years, economists have debated whether all this is true. But if it is true, then the decision by industrialists not to pour research funds into the invention of the robot factories that everyone was anticipating in the sixties, and instead to relocate their factories to labor-intensive, low-tech facilities in China or the Global South makes a great deal of sense.
As I’ve noted, there’s reason to believe the pace of technological innovation in productive processes—the factories themselves—began to slow in the fifties and sixties, but the side effects of America’s rivalry with the Soviet Union made innovation appear to accelerate. There was the awesome space race, alongside frenetic efforts by U.S. industrial planners to apply existing technologies to consumer purposes, to create an optimistic sense of burgeoning prosperity and guaranteed progress that would undercut the appeal of working-class politics.
These moves were reactions to initiatives from the Soviet Union. But this part of the history is difficult for Americans to remember, because at the end of the Cold War, the popular image of the Soviet Union switched from terrifyingly bold rival to pathetic basket case—the exemplar of a society that could not work. Back in the fifties, in fact, many United States planners suspected the Soviet system worked better. Certainly, they recalled the fact that in the thirties, while the United States had been mired in depression, the Soviet Union had maintained almost unprecedented economic growth rates of 10 percent to 12 percent a year—an achievement quickly followed by the production of tank armies that defeated Nazi Germany, then by the launching of Sputnik in 1957, then by the first manned spacecraft, the Vostok, in 1961.
It’s often said the Apollo moon landing was the greatest historical achievement of Soviet communism. Surely, the United States would never have contemplated such a feat had it not been for the cosmic ambitions of the Soviet Politburo. We are used to thinking of the Politburo as a group of unimaginative gray bureaucrats, but they were bureaucrats who dared to dream astounding dreams. The dream of world revolution was only the first. It’s also true that most of them—changing the course of mighty rivers, this sort of thing—either turned out to be ecologically and socially disastrous, or, like Joseph Stalin’s one-hundred-story Palace of the Soviets or a twenty-story statue of Vladimir Lenin, never got off the ground.
After the initial successes of the Soviet space program, few of these schemes were realized, but the leadership never ceased coming up with new ones. Even in the eighties, when the United States was attempting its own last, grandiose scheme, Star Wars, the Soviets were planning to transform the world through creative uses of technology. Few outside of Russia remember most of these projects, but great resources were devoted to them. It’s also worth noting that unlike the Star Wars project, which was designed to sink the Soviet Union, most were not military in nature: as, for instance, the attempt to solve the world hunger problem by harvesting lakes and oceans with an edible bacteria called spirulina, or to solve the world energy problem by launching hundreds of gigantic solar-power platforms into orbit and beaming the electricity back to earth.
The American victory in the space race meant that, after 1968, U.S. planners no longer took the competition seriously. As a result, the mythology of the final frontier was maintained, even as the direction of research and development shifted away from anything that might lead to the creation of Mars bases and robot factories.
The standard line is that all this was a result of the triumph of the market. The Apollo program was a Big Government project, Soviet-inspired in the sense that it required a national effort coordinated by government bureaucracies. As soon as the Soviet threat drew safely out of the picture, though, capitalism was free to revert to lines of technological development more in accord with its normal, decentralized, free-market imperatives—such as privately funded research into marketable products like personal computers. This is the line that men like Toffler and Gilder took in the late seventies and early eighties.
In fact, the United States never did abandon gigantic, government-controlled schemes of technological development. Mainly, they just shifted to military research—and not just to Soviet-scale schemes like Star Wars, but to weapons projects, research in communications and surveillance technologies, and similar security-related concerns. To some degree this had always been true: the billions poured into missile research had always dwarfed the sums allocated to the space program. Yet by the seventies, even basic research came to be conducted following military priorities. One reason we don’t have robot factories is because roughly 95 percent of robotics research funding has been channeled through the Pentagon, which is more interested in developing unmanned drones than in automating paper mills.
A case could be made that even the shift to research and development on information technologies and medicine was not so much a reorientation toward market-driven consumer imperatives, but part of an all-out effort to follow the technological humbling of the Soviet Union with total victory in the global class war—seen simultaneously as the imposition of absolute U.S. military dominance overseas, and, at home, the utter rout of social movements.
For the technologies that did emerge proved most conducive to surveillance, work discipline, and social control. Computers have opened up certain spaces of freedom, as we’re constantly reminded, but instead of leading to the workless utopia Abbie Hoffman imagined, they have been employed in such a way as to produce the opposite effect. They have enabled a financialization of capital that has driven workers desperately into debt, and, at the same time, provided the means by which employers have created “flexible” work regimes that have both destroyed traditional job security and increased working hours for almost everyone. Along with the export of factory jobs, the new work regime has routed the union movement and destroyed any possibility of effective working-class politics.
Meanwhile, despite unprecedented investment in research on medicine and life sciences, we await cures for cancer and the common cold, and the most dramatic medical breakthroughs we have seen have taken the form of drugs such as Prozac, Zoloft, or Ritalin—tailor-made to ensure that the new work demands don’t drive us completely, dysfunctionally crazy.
With results like these, what will the epitaph for neoliberalism look like? I think historians will conclude it was a form of capitalism that systematically prioritized political imperatives over economic ones. Given a choice between a course of action that would make capitalism seem the only possible economic system, and one that would transform capitalism into a viable, long-term economic system, neoliberalism chooses the former every time. There is every reason to believe that destroying job security while increasing working hours does not create a more productive (let alone more innovative or loyal) workforce. Probably, in economic terms, the result is negative—an impression confirmed by lower growth rates in just about all parts of the world in the eighties and nineties.
But the neoliberal choice has been effective in depoliticizing labor and overdetermining the future. Economically, the growth of armies, police, and private security services amounts to dead weight. It’s possible, in fact, that the very dead weight of the apparatus created to ensure the ideological victory of capitalism will sink it. But it’s also easy to see how choking off any sense of an inevitable, redemptive future that could be different from our world is a crucial part of the neoliberal project.
At this point all the pieces would seem to be falling neatly into place. By the sixties, conservative political forces were growing skittish about the socially disruptive effects of technological progress, and employers were beginning to worry about the economic impact of mechanization. The fading Soviet threat allowed for a reallocation of resources in directions seen as less challenging to social and economic arrangements, or indeed directions that could support a campaign of reversing the gains of progressive social movements and achieving a decisive victory in what U.S. elites saw as a global class war. The change of priorities was introduced as a withdrawal of big-government projects and a return to the market, but in fact the change shifted government-directed research away from programs like NASA or alternative energy sources and toward military, information, and medical technologies.
Of course this doesn’t explain everything. Above all, it does not explain why, even in those areas that have become the focus of well-funded research projects, we have not seen anything like the kind of advances anticipated fifty years ago. If 95 percent of robotics research has been funded by the military, then where are the Klaatu-style killer robots shooting death rays from their eyes?
Obviously, there have been advances in military technology in recent decades. One of the reasons we all survived the Cold War is that while nuclear bombs might have worked as advertised, their delivery systems did not; intercontinental ballistic missiles weren’t capable of striking cities, let alone specific targets inside cities, and this fact meant there was little point in launching a nuclear first strike unless you intended to destroy the world.
Contemporary cruise missiles are accurate by comparison. Still, precision weapons never do seem capable of assassinating specific individuals (Saddam, Osama, Qaddafi), even when hundreds are dropped. And ray guns have not materialized—surely not for lack of trying. We can assume the Pentagon has spent billions on death ray research, but the closest they’ve come so far are lasers that might, if aimed correctly, blind an enemy gunner looking directly at the beam. Aside from being unsporting, this is pathetic: lasers are a fifties technology. Phasers that can be set to stun do not appear to be on the drawing boards; and when it comes to infantry combat, the preferred weapon almost everywhere remains the AK-47, a Soviet design named for the year it was introduced: 1947.
The Internet is a remarkable innovation, but all we are talking about is a super-fast and globally accessible combination of library, post office, and mail-order catalogue. Had the Internet been described to a science fiction aficionado in the fifties and sixties and touted as the most dramatic technological achievement since his time, his reaction would have been disappointment. Fifty years and this is the best our scientists managed to come up with? We expected computers that would think!
Overall, levels of research funding have increased dramatically since the seventies. Admittedly, the proportion of that funding that comes from the corporate sector has increased most dramatically, to the point that private enterprise is now funding twice as much research as the government, but the increase is so large that the total amount of government research funding, in real-dollar terms, is much higher than it was in the sixties. “Basic,” “curiosity-driven,” or “blue skies” research—the kind that is not driven by the prospect of any immediate practical application, and that is most likely to lead to unexpected breakthroughs—occupies an ever smaller proportion of the total, though so much money is being thrown around nowadays that overall levels of basic research funding have increased.
Yet most observers agree that the results have been paltry. Certainly we no longer see anything like the continual stream of conceptual revolutions—genetic inheritance, relativity, psychoanalysis, quantum mechanics—that people had grown used to, and even expected, a hundred years before. Why?
Part of the answer has to do with the concentration of resources on a handful of gigantic projects: “big science,” as it has come to be called. The Human Genome Project is often held out as an example. After spending almost three billion dollars and employing thousands of scientists and staff in five different countries, it has mainly served to establish that there isn’t very much to be learned from sequencing genes that’s of much use to anyone else. Even more, the hype and political investment surrounding such projects demonstrate the degree to which even basic research now seems to be driven by political, administrative, and marketing imperatives that make it unlikely anything revolutionary will happen.
Here, our fascination with the mythic origins of Silicon Valley and the Internet has blinded us to what’s really going on. It has allowed us to imagine that research and development is now driven, primarily, by small teams of plucky entrepreneurs, or the sort of decentralized cooperation that creates open-source software. This is not so, even though such research teams are most likely to produce results. Research and development is still driven by giant bureaucratic projects.
What has changed is the bureaucratic culture. The increasing interpenetration of government, university, and private firms has led everyone to adopt the language, sensibilities, and organizational forms that originated in the corporate world. Although this might have helped in creating marketable products, since that is what corporate bureaucracies are designed to do, in terms of fostering original research, the results have been catastrophic.
My own knowledge comes from universities, both in the United States and Britain. In both countries, the last thirty years have seen a veritable explosion of the proportion of working hours spent on administrative tasks at the expense of pretty much everything else. In my own university, for instance, we have more administrators than faculty members, and the faculty members, too, are expected to spend at least as much time on administration as on teaching and research combined. The same is true, more or less, at universities worldwide.
The growth of administrative work has directly resulted from introducing corporate management techniques. Invariably, these are justified as ways of increasing efficiency and introducing competition at every level. What they end up meaning in practice is that everyone winds up spending most of their time trying to sell things: grant proposals; book proposals; assessments of students’ jobs and grant applications; assessments of our colleagues; prospectuses for new interdisciplinary majors; institutes; conference workshops; universities themselves (which have now become brands to be marketed to prospective students or contributors); and so on.
As marketing overwhelms university life, it generates documents about fostering imagination and creativity that might just as well have been designed to strangle imagination and creativity in the cradle. No major new works of social theory have emerged in the United States in the last thirty years. We have been reduced to the equivalent of medieval scholastics, writing endless annotations of French theory from the seventies, despite the guilty awareness that if new incarnations of Gilles Deleuze, Michel Foucault, or Pierre Bourdieu were to appear in the academy today, we would deny them tenure.
There was a time when academia was society’s refuge for the eccentric, brilliant, and impractical. No longer. It is now the domain of professional self-marketers. As a result, in one of the most bizarre fits of social self-destructiveness in history, we seem to have decided we have no place for our eccentric, brilliant, and impractical citizens. Most languish in their mothers’ basements, at best making the occasional, acute intervention on the Internet.
If all this is true in the social sciences, where research is still carried out with minimal overhead largely by individuals, one can imagine how much worse it is for astrophysicists. And, indeed, one astrophysicist, Jonathan Katz, has recently warned students pondering a career in the sciences. Even if you do emerge from the usual decade-long period languishing as someone else’s flunky, he says, you can expect your best ideas to be stymied at every point:
You will spend your time writing proposals rather than doing research. Worse, because your proposals are judged by your competitors, you cannot follow your curiosity, but must spend your effort and talents on anticipating and deflecting criticism rather than on solving the important scientific problems. . . . It is proverbial that original ideas are the kiss of death for a proposal, because they have not yet been proved to work.
That pretty much answers the question of why we don’t have teleportation devices or antigravity shoes. Common sense suggests that if you want to maximize scientific creativity, you find some bright people, give them the resources they need to pursue whatever idea comes into their heads, and then leave them alone. Most will turn up nothing, but one or two may well discover something. But if you want to minimize the possibility of unexpected breakthroughs, tell those same people they will receive no resources at all unless they spend the bulk of their time competing against each other to convince you they know in advance what they are going to discover.
In the natural sciences, to the tyranny of managerialism we can add the privatization of research results. As the British economist David Harvie has reminded us, “open source” research is not new. Scholarly research has always been open source, in the sense that scholars share materials and results. There is competition, certainly, but it is “convivial.” This is no longer true of scientists working in the corporate sector, where findings are jealously guarded, but the spread of the corporate ethos within the academy and research institutes themselves has caused even publicly funded scholars to treat their findings as personal property. Academic publishers ensure that findings that are published are increasingly difficult to access, further enclosing the intellectual commons. As a result, convivial, open-source competition turns into something much more like classic market competition.
There are many forms of privatization, up to and including the simple buying up and suppression of inconvenient discoveries by large corporations fearful of their economic effects. (We cannot know how many synthetic fuel formulae have been bought up and placed in the vaults of oil companies, but it’s hard to imagine nothing like this happens.) More subtle is the way the managerial ethos discourages everything adventurous or quirky, especially if there is no prospect of immediate results. Oddly, the Internet can be part of the problem here. As Neal Stephenson put it:
Most people who work in corporations or academia have witnessed something like the following: A number of engineers are sitting together in a room, bouncing ideas off each other. Out of the discussion emerges a new concept that seems promising. Then some laptop-wielding person in the corner, having performed a quick Google search, announces that this “new” idea is, in fact, an old one; it—or at least something vaguely similar—has already been tried. Either it failed, or it succeeded. If it failed, then no manager who wants to keep his or her job will approve spending money trying to revive it. If it succeeded, then it’s patented and entry to the market is presumed to be unattainable, since the first people who thought of it will have “first-mover advantage” and will have created “barriers to entry.” The number of seemingly promising ideas that have been crushed in this way must number in the millions.
And so a timid, bureaucratic spirit suffuses every aspect of cultural life. It comes festooned in a language of creativity, initiative, and entrepreneurialism. But the language is meaningless. Those thinkers most likely to make a conceptual breakthrough are the least likely to receive funding, and, if breakthroughs occur, they are not likely to find anyone willing to follow up on their most daring implications.
Giovanni Arrighi has noted that after the South Sea Bubble, British capitalism largely abandoned the corporate form. By the time of the Industrial Revolution, Britain had instead come to rely on a combination of high finance and small family firms—a pattern that held throughout the next century, the period of maximum scientific and technological innovation. (Britain at that time was also notorious for being just as generous to its oddballs and eccentrics as contemporary America is intolerant. A common expedient was to allow them to become rural vicars, who, predictably, became one of the main sources for amateur scientific discoveries.)
Contemporary, bureaucratic corporate capitalism was a creation not of Britain, but of the United States and Germany, the two rival powers that spent the first half of the twentieth century fighting two bloody wars over who would replace Britain as a dominant world power—wars that culminated, appropriately enough, in government-sponsored scientific programs to see who would be the first to discover the atom bomb. It is significant, then, that our current technological stagnation seems to have begun after 1945, when the United States replaced Britain as organizer of the world economy.
Americans do not like to think of themselves as a nation of bureaucrats—quite the opposite—but the moment we stop imagining bureaucracy as a phenomenon limited to government offices, it becomes obvious that this is precisely what we have become. The final victory over the Soviet Union did not lead to the domination of the market, but, in fact, cemented the dominance of conservative managerial elites, corporate bureaucrats who use the pretext of short-term, competitive, bottom-line thinking to squelch anything likely to have revolutionary implications of any kind.
If we do not notice that we live in a bureaucratic society, that is because bureaucratic norms and practices have become so all-pervasive that we cannot see them, or, worse, cannot imagine doing things any other way.
Computers have played a crucial role in this narrowing of our social imaginations. Just as the invention of new forms of industrial automation in the eighteenth and nineteenth centuries had the paradoxical effect of turning more and more of the world’s population into full-time industrial workers, so has all the software designed to save us from administrative responsibilities turned us into part- or full-time administrators. In the same way that university professors seem to feel it is inevitable they will spend more of their time managing grants, so affluent housewives simply accept that they will spend weeks every year filling out forty-page online forms to get their children into grade schools. We all spend increasing amounts of time punching passwords into our phones to manage bank and credit accounts and learning how to perform jobs once performed by travel agents, brokers, and accountants.
Someone once figured out that the average American will spend a cumulative six months of life waiting for traffic lights to change. I don’t know if similar figures are available for how long it takes to fill out forms, but it must be at least as long. No population in the history of the world has spent nearly so much time engaged in paperwork.
In this final, stultifying stage of capitalism, we are moving from poetic technologies to bureaucratic technologies. By poetic technologies I refer to the use of rational and technical means to bring wild fantasies to reality. Poetic technologies, so understood, are as old as civilization. Lewis Mumford noted that the first complex machines were made of people. Egyptian pharaohs were able to build the pyramids only because of their mastery of administrative procedures, which allowed them to develop production-line techniques, dividing up complex tasks into dozens of simple operations and assigning each to one team of workmen—even though they lacked mechanical technology more complex than the inclined plane and lever. Administrative oversight turned armies of peasant farmers into the cogs of a vast machine. Much later, after cogs had been invented, the design of complex machinery elaborated principles originally developed to organize people.
Yet we have seen those machines—whether their moving parts are arms and torsos or pistons, wheels, and springs—being put to work to realize impossible fantasies: cathedrals, moon shots, transcontinental railways. Certainly, poetic technologies had something terrible about them; the poetry is likely to be as much of dark satanic mills as of grace or liberation. But the rational, administrative techniques were always in service to some fantastic end.
From this perspective, all those mad Soviet plans—even if never realized—marked the climax of poetic technologies. What we have now is the reverse. It’s not that vision, creativity, and mad fantasies are no longer encouraged, but that most remain free-floating; there’s no longer even the pretense that they could ever take form or flesh. The greatest and most powerful nation that has ever existed has spent the last decades telling its citizens they can no longer contemplate fantastic collective enterprises, even if—as the environmental crisis demands— the fate of the earth depends on it.
What are the political implications of all this? First of all, we need to rethink some of our most basic assumptions about the nature of capitalism. One is that capitalism is identical with the market, and that both therefore are inimical to bureaucracy, which is supposed to be a creature of the state.
The second assumption is that capitalism is in its nature technologically progressive. It would seem that Marx and Engels, in their giddy enthusiasm for the industrial revolutions of their day, were wrong about this. Or, to be more precise: they were right to insist that the mechanization of industrial production would destroy capitalism; they were wrong to predict that market competition would compel factory owners to mechanize anyway. If it didn’t happen, that is because market competition is not, in fact, as essential to the nature of capitalism as they had assumed. If nothing else, the current form of capitalism, where much of the competition seems to take the form of internal marketing within the bureaucratic structures of large semi-monopolistic enterprises, would come as a complete surprise to them.
Defenders of capitalism make three broad historical claims: first, that it has fostered rapid scientific and technological growth; second, that however much it may throw enormous wealth to a small minority, it does so in such a way as to increase overall prosperity; third, that in doing so, it creates a more secure and democratic world for everyone. It is clear that capitalism is not doing any of these things any longer. In fact, many of its defenders are retreating from claiming that it is a good system and instead falling back on the claim that it is the only possible system—or, at least, the only possible system for a complex, technologically sophisticated society such as our own.
But how could anyone argue that current economic arrangements are also the only ones that will ever be viable under any possible future technological society? The argument is absurd. How could anyone know?
Granted, there are people who take that position—on both ends of the political spectrum. As an anthropologist and anarchist, I encounter anticivilizational types who insist not only that current industrial technology leads only to capitalist-style oppression, but that this must necessarily be true of any future technology as well, and therefore that human liberation can be achieved only by returning to the Stone Age. Most of us are not technological determinists.
But claims for the inevitability of capitalism have to be based on a kind of technological determinism. And for that very reason, if the aim of neoliberal capitalism is to create a world in which no one believes any other economic system could work, then it needs to suppress not just any idea of an inevitable redemptive future, but any radically different technological future. Yet there’s a contradiction. Defenders of capitalism cannot mean to convince us that technological change has ended—since that would mean capitalism is not progressive. No, they mean to convince us that technological progress is indeed continuing, that we do live in a world of wonders, but that those wonders take the form of modest improvements (the latest iPhone!), rumors of inventions about to happen (“I hear they are going to have flying cars pretty soon”), complex ways of juggling information and imagery, and still more complex platforms for filling out of forms.
I do not mean to suggest that neoliberal capitalism—or any other system—can be successful in this regard. First, there’s the problem of trying to convince the world you are leading the way in technological progress when you are holding it back. The United States, with its decaying infrastructure, paralysis in the face of global warming, and symbolically devastating abandonment of its manned space program just as China accelerates its own, is doing a particularly bad public relations job. Second, the pace of change can’t be held back forever. Breakthroughs will happen; inconvenient discoveries cannot be permanently suppressed. Other, less bureaucratized parts of the world—or at least, parts of the world with bureaucracies that are not so hostile to creative thinking—will slowly but inevitably attain the resources required to pick up where the United States and its allies have left off. The Internet does provide opportunities for collaboration and dissemination that may help break us through the wall as well. Where will the breakthrough come? We can’t know. Maybe 3D printing will do what the robot factories were supposed to. Or maybe it will be something else. But it will happen.
About one conclusion we can feel especially confident: it will not happen within the framework of contemporary corporate capitalism—or any form of capitalism. To begin setting up domes on Mars, let alone to develop the means to figure out if there are alien civilizations to contact, we’re going to have to figure out a different economic system. Must the new system take the form of some massive new bureaucracy? Why do we assume it must? Only by breaking up existing bureaucratic structures can we begin. And if we’re going to invent robots that will do our laundry and tidy up the kitchen, then we’re going to have to make sure that whatever replaces capitalism is based on a far more egalitarian distribution of wealth and power—one that no longer contains either the super-rich or the desperately poor willing to do their housework. Only then will technology begin to be marshaled toward human needs. And this is the best reason to break free of the dead hand of the hedge fund managers and the CEOs—to free our fantasies from the screens in which such men have imprisoned them, to let our imaginations once again become a material force in human history.
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 14, 2019 | www.theguardian.com
popgoesthepop , 12 Apr 2019 10:26Four more years of Trump is in the works.jae426 -> gunnison , 12 Apr 2019 10:26
The fact that she lied about her ethnicity in the past in hopes of gaining a leg up will backfire spectacularly if she's the DNC nominee for POTUS. Conservatives will beat this point over and over and over.
Is the Left secretly trying to put Trump in the WH for another term? It sure looks like it.Thomas1178 -> Sheldon Hodges , 12 Apr 2019 10:25
the chances that Dems supporting a candidate who does not win the primary would boycott the election and put Trump back in the White House are vanishingly small this time around
They were warned that that would happen last time, and they still let it happen. The "Bernie bros" are back out in force, and not only have they not learnt their lesson, they feel validated by Clinton's defeat to the extent where they are even more determined that their old man should be the candidate and nobody else. These are people who abandoned the Democrats for Jill Stein, the Green Party candidate who managed to make Sarah Palin look intelligent. They will do it again because they are largely white, male and think just because they read liberal newspapers that means they don't have a sense of entitlement.
Both Michigan and Pennsylvania would have gone to Clinton if only 20% of Green voters hadn't lodged protest votes. These people don't want Elizabeth Warren, they don't want Kamala Harris, they don't want Beto O'Rourke, they don't want Pete Buttigieg. They want Bernie. If Bernie isn't the Democrat, they won't vote Democrat.
You can dismiss this as much as you like, but I placed a bet on Trump winning the Republican nomination when he was the joke candidate and when he won the nomination I bet on him winning the presidency. I think that would be an even safer bet this time round.That's just funny. She's been behind some of the major legislation that enacted the things that Bernie Sanders talks about. And Wall Street is scared crapless of her -- why do you think they're going after her so hard?popgoesthepop -> WishesandHorses , 12 Apr 2019 10:23She lies about her ethnicity to get ahead in life? That may have something to do with it.Sheldon Hodges , 12 Apr 2019 10:22This conjecture is entirely fiction at best but centrist neo libeberal bollocks as a certainty. Warren was and is a republican. She is a corporate bootlicker, a thrall of Hillary and has no serious attachment to truth. I regret to admit that I am a US citizen, 68 years of age. I have wittnessed Warren's shameless plagirising of Bernie Sanders' arguments and am sickened to see her lionized by people who, if honest, should know better.Thomas1178 , 12 Apr 2019 10:21The columnist is right about Warren's intellectual stature and influence, and anyone who's looked at what she's accomplished for Massachusetts (or for that matter watched her takedown of the sleazy head of Wells Fargo during the Senate hearings) knows she's tough. She also has a *workable* vision of what the Democrats could offer Americans. From affordable childcare to making college tuition affordable again to helping out working-class people like the fisherman in Massachusetts, while reigning in the banks and making sure we don't have another crash – it's the blueprint.Patrician1985 , 12 Apr 2019 10:21
There's something hysterically funny about all the people who have signed in here, clearly skipped the article, just to yell "squirrel!" – or in this case -- "oh no she filled out the optional ethnicity box and it turns out her family stories were mistaken!"
What they're missing, what Warren is laying out and the article is pointing out, is what the GOP will really be up against in the future.I don't like this argument: she may not win the primary, but it's her ideas that will dominate the conversation.SolentBound , 12 Apr 2019 10:21
It worked for Bernie supporters to console themselves.
If we elect someone, it needs to be the person who will be passionate about that idea (as opposed to lukewarm like Pelosi is on Green New Deal). We need someone who knows what it will take to get it done. What will get in the way. How to get around it.
Warren not only had the idea for CFPB. She actually set it up. Then Obama lacked the moral courage and political spine to have her lead the agency - just because Wall Street had pressured the Democrats against it.
Warren is the right candidate for the right time. She has ideas to fix the country and doesn't just rail against people. That's why even Steve Bannon is scared of her policy positions that they could be theirs.
Democrats need to stop playing pundits and go with their heart. If they vote for someone they like less but because he (why is it always a 'he' who is electable?) can win - we will end up with a candidate no one really cares about and how is that a winning strategy?Democrat primary voters need to recognise that defeating Trump is going to be very difficult.JayThomas -> Rio de Janeiro , 12 Apr 2019 10:20
Since WW II, only Jimmy Carter and George Bush Sr. have failed to win re-election, in both cases to superb campaigners who captured the public's imagination and, critically, swing voters.
Which of the potential Democrat challengers is a Ronald Reagan or a Bill Clinton? Or, indeed, a Barack Obama?
For a dose of reality, Democrats could do worse than read Mike Bloomberg's piece on his decision to stay out of the race: https://www.bloomberg.com/opinion/articles/2019-03-05/our-highest-office-my-deepest-obligationAnd because nobody expects a politician to keep a promise, they have to find some other way to be convincing.BenjaminW , 12 Apr 2019 10:19Warren rules -- her policy ideas are creative, intelligent and moral, and the world would be an indescribably better place if people like her were ever allowed into positions of authority. That anyone on the planet would prefer to be represented by someone like Biden, never mind Trump, is utterly depressing.charlieblue , 12 Apr 2019 10:16Sadly, FOX News has already issued their proscribed talking points on Sen.Warren. You will find them listed and repeated anywhere Elizabeth's Warren's candidacy is discussed (including here). Most of it will be lies or exaggerations, claims that she received jobs and promotions based on her claims of Native American ancestry, claims that she received scholarships or some kind of preferential treatment by calling herself an "Indian". They will insist that this is an obvious character flaw, that she's a liar and some sort of cultural thief.Rio de Janeiro , 12 Apr 2019 10:13
Sadly, too many American's still imagine FOX News and it's ilk are purveyors of fact. They imagine the propaganda they are being fed about Elizabeth Warren is a truth the "mainstream media" won't mention. We saw all of this with Hillary Clinton. 30% of Republican voters still think Sec. Clinton ran a pedophile ring out of a DC pizza parlor.
If Sen.Warren, or any other rational candidate has a fair chance at running for President, if all the lies and propaganda of the right-wing media establishment are to be countered, the left and the center of US politics needs an effective counter to right-wing narrative.A presidential campaign is not about specific, detailed policy proposals. It's about a vision for the country. A vision that must be consistent with voters' feelings and expectations; and must be communicated in a clear, energetic way by an effective messenger. That's the way Reagan, Clinton, Obama and Trump won.outkast1213 -> newageblues , 12 Apr 2019 10:13
Does anybody remember Trump's healthcare policy?
People don't vote for policy manifestos. People vote for candidates that inspire and convince.The same Liz that stated as a Senator she had a better chance to effect change than as POTUS in 2016 now is a genius?GeorgeC , 12 Apr 2019 10:12If Warren is the 'intellectual powerhouse' of the Democratic party, then god help them. Not a word about 1 trillion dollar budget deficits and rising (under Trump)-but remember Obama was little better; in 15 years time the US state pension system will be bankrupt, various other states' pension schemes are also effectively bankrupt (see Illinois, Tennessee) as are various cities (Chicago), and all Warren and Trump can think of is more debt, and nor will MMT help (we know this is just deficit spending on steroids). None of these people are 'progressive' - by not tacking the key problem of runaway debt it just robs everyone by forcing a default - not an 'honest' one, but rather the route taken by all politicians, namely rapid devaluation of the currency; something that robs all people, and destroys savings. Instead all we get are jam today, and bankruptcy tomorrow.needaname100 -> Thomas1178 , 12 Apr 2019 10:11She changed her ethnicity from white to Native American at the University of Pennsylvania Law School. Also, a large majority of Americans have Native American DNA....and EW has less than the average American (which is 5%)...she has 0.20. She abused a privilege and got called out.Thomas1178 -> mwesqcpa , 12 Apr 2019 10:05She's too damn smart, is the problem. Along with all her qualifications she has also a lot of very solid wins that she brought home for the people of Massachusetts as a senator, from helping fisherman to low-income students suffering from college debt -- emphasizing that she's actually helped working class people and people in student debt should be a no brainer. And yet she seems not to have a savvy political operator advising her – she sure as hell hasn't gotten out ahead of the Native American thing, and I don't know why no one is doing that for her.LydiaLysette , 12 Apr 2019 10:03"Elizabeth Warren is the intellectual powerhouse of the Democratic party"
Then they really are in trouble.....
Just take 1 point....
"She has called for abolishing the electoral college, the unfair institution the US used to elect executives "
Well that requires a constitutional amendment, that requires a two thirds majority in both houses and then ratification by three quarters of the States. The ERA was proposed in 1923 didn't get through Congress until 1972 and is still short of the 38 State ratifications to adopt it. That's an issue of direct concern to at least half the population. The idea that a procedural change to the constitution for partisan benefit is getting through the process is blatantly laughable. Particularly as there appear to be about 27 states that have enhanced importance under the current system ( http://theconversation.com/whose-votes-count-the-least-in-the-electoral-college-74280 ) and only 13 are needed to kill it.
Apr 14, 2019 | discussion.theguardian.comHARPhilby -> HARPhilby , 12 Apr 2019 08:55ABT-Anybody But Trumpmoderate_rebel_rebel , 12 Apr 2019 08:55Warren has the same foreign policy as all the others, invade, sanction, destroy. Steal oil, gold and assets. The US has become a deluded neurotic police state rife with addiction and so addled it is no longer a force for good in any sphere.
In short it is now a part of the problem and no longer a part of any workable solution. Who becomes POTUS is therefore irrelevant.
Warren is flawed ideologically and personally, US citizens need to wake up and recognise that the POTUS is an irrelevant position with no authority and that until you tackle the neocon ridden nature of US politics nothing will ever change.
There is no hope in systems, only hope in people. Politics has become irrelevant in the face of our impending extinction.
Apr 12, 2019 | www.theguardian.com
It may well not be Warren who wins the Democratic nomination, but whoever does will be campaigning on her ideas
since her initial announcement in December, Warren's campaign has rolled out a series of detailed policy proposals in quick succession, outlining structural changes to major industries, government functions, and regulatory procedures that would facilitate more equitable representation in the federal government and overhaul the economy in favor of the working class. These policy proposals have made Warren the Democratic party's new intellectual center of gravity, a formidable influence who is steadily pushing the presidential primary field to the left and forcing all of her primary challengers to define their political positions against hers.
Warren has become the Democratic party's new intellectual center of gravity
Warren herself is an anti-trust nerd, having come to the Senate from a career as an academic studying corporate and banking law. On the stump, she's most detailed in the same areas where she is most passionate, like when she talks about about breaking up huge tech companies such as Amazon and Google, and implementing a 21st-century -- version of the Glass-Steagall act that would separate commercial and investment banking (she has also called for prosecuting and jailing bank executives who break the law). But her policy agenda is broader than that, taking on pocketbook issues that have resonance with working families.
Warren outlined a huge overhaul of the childcare system that would revolutionize the quality, cost and curriculum of early childhood education, with subsidies for families and a living wage for caregivers. It's a proposal that she talks about in the context of her own career when, as a young mother and fledgling legal mind, she almost had to give up a job as a law professor because childcare for her young son was too expensive.
Warren has also proposed a housing plan that would limit huge investors' abilities to buy up homes, give incentives for localities to adopt renters' protections, and build new public housing. Crucially, and uniquely, her housing plan would also provide home ownership grants to buyers in minority communities that have historically been "redlined", a term for the racist federal housing policies that denied federally backed mortgages to black families. The provision, aimed to help black and brown families buy their first homes, is a crucial step toward amending the racial wealth gap, and it has helped sparked a broader conversation within the party about the need to pay reparations to the descendants of slaves -- a concept that Warren has also endorsed.
Taking her cues from pro-democracy and voting rights advocates such as Stacey Abrams, Warren has also taken on anti-majoritarian constitutional provisions, aiming to make American democracy more representative and less structurally hostile to a progressive agenda. She has called for abolishing the electoral college , the unfair institution the US uses to elect chief executives that makes a vote in New York count less than a vote in Wyoming, and which has resulted in two disastrous Republican presidencies in the past two decades. She has advocated eliminating the filibuster , an archaic procedural quirk of the Senate that would keep the Democrats from ever passing their agenda if they were to regain control of that body. And she has signaled a willingness to pack the courts , another move that will be necessary to implement leftist policies such as Medicare for All -- because even if the next Democratic president can pass her agenda through Congress, she will not be able to protect it from the malfeasance of a federal bench filled with conservative Trump appointees eager to strike it down.
When other candidates campaign, Warren's strong policy positions force them to define themselves against her
Warren has been the first to propose all of these policies, and it is not difficult to see other candidates falling in line behind her, issuing belated and imitative policy proposals, or being forced to position themselves to her right. Warren has promised not to go negative against other Democrats , but her campaign's intellectual project also serves a political purpose: when other candidates campaign, her strong policy positions force them to define themselves against her.
After Warren announced her childcare overhaul, senators Kirsten Gillibrand and Kamala Harris rolled out plans similarly designed to combat gendered economic injustice, calling for guaranteed family leave and better teacher pay , respectively. After Warren rolled out her pro-democracy agenda of eliminating the electoral college, abolishing the filibuster and packing the courts, her ideological rival Bernie Sanders was forced to come out against both eliminating the filibuster and packing the courts , damaging his reputation with a party base who knew that without these interventions, a progressive agenda will probably never be enacted. The pressure eventually forced Sanders to cave to Warren's vision and concede that he would be open to eliminating the filibuster in order to pass Medicare for All.
There's still a long time before the first contests, and it's possible that Warren will succumb to the flaws that her critics see in her campaign. In particular, she might not be able to raise enough money. She's decided not to take any Pac money and not to fundraise with wealthy donors, a position that may be as much practical as it is principled: the super-rich are not likely to donate to Warren anyway, since she has such a detailed plan, called the Ultra Millionaire Tax , to redistribute their money. She may fall victim to the seemingly unshakable controversy over her old claims of Native American ancestry, and she seems doomed to be smeared and underestimated for her sex, called cold and unlikable for her intellect and then, as with other female candidates, derided as pandering when she tries to seem more relatable.
But it would be a mistake to write Warren off as a virtuous also-ran, the kind of candidate whose intellectual and moral commitments doom her in a race dominated by the deep divisions in the electorate and the craven demagoguery of the incumbent. Elizabeth Warren does not seem to be running for president to make a point, or to position herself for a different job. Instead, she is making bold interventions in the political imagination of the party. It may well not be Warren who wins the Democratic nomination, but whoever does will be campaigning on her ideas.Moira Donegan is a Guardian US columnist
CharlesLittle -> Ken Kutner , 12 Apr 2019 11:00Thanks Ken and Thomas. I couldn't have said it better myself. Are we going to pare down the list of Democratic candidates on the basis of one or two stupid missteps? Looking through the Bible, I note that Jesus lost his temper at the money-changers and put down the hard-working Martha. So, he's out too.geejay123 -> Beaufort100 , 12 Apr 2019 10:58Ex Veteran Tulsi Gabbard has a very good chance of taking votes from Trump's base imo.Ranger69 , 12 Apr 2019 10:57
All round the best democratic candidate to declare so far.Im just glad Gabbard made it to the debate stage. More progressives the better.SoonToBeDead -> T0nyN , 12 Apr 2019 10:57Not only the USA, with everyone becoming wealthier, the need for education has declined, across the western world, being liberal or educated has become a swear word. Social media and lazy journalists are doing the rest, its all propaganda now, and permanent contradictory stories means only simple messages cut through the noise, hatred, immigrants, islamophobia, anti-semitism, etc. are classic messages that get through and stir people's emotions. Intellect doesn't win elections with a gullible electorateBaronVonAmericano -> CharlesLittle , 12 Apr 2019 10:54She really is thin in all areas but financial regulation and consumer protection.zagrebZ -> alex13 , 12 Apr 2019 10:54
An excellent Commerce/Treasury secretary, or VP. But she lacks the cohesive vision that Sanders articulates.Trump IS dumb... Or do you want me to Google a few thousand references for you?FolkSpirit -> OliversTravels , 12 Apr 2019 10:48
'Moron'; 'Child-like'; 'Idiot'; 'Can barely read'...
Sound familiar? Words about Trump from his own staff.It was a mistake and it was self-interested and it was unethical. And it was a different time before tribal groups in the US developed and enforced laws regarding membership status. Had Trump not shown disdain for her and all native Americans by calling her Pocahontas as though it were a racial slur, few would have made a big deal from this mistake.Excession77 -> HarryFlashman , 12 Apr 2019 10:42
Warren did confess without need to do so that she had purchased distressed mortgages to turn a profit as a young lawyer like so many of her ethically misguided law colleagues.
If you are or intimately know more than two attorneys you know this was and in some towns and cities still is common practice for building wealth among lawyers who have first notice when these “deals” are posted at the local Court House. Find me a “clean” lawyer anywhere if you can and I doubt you can — they write law and protect themselves and wealthy constituents mightily in doing so.
If you can help remove most of them from political office and replace them with people working professions of greater merit I stand with you. Congress needs intellectual strength and diversity of backgrounds.
Shakespeare: “First, we kill the lawyers”.Tulsi Gabbard or don't bother.garlicbreakfast , 12 Apr 2019 10:41
Unfortunately she opposes wars of choice from the position of an impressive service record in Iraq so she gets ignored in favour of the ridiculous Elizabeth Warren here and in other places. Warren's window was last time anyway when she was coming off the back of viral public speeches about inequality.Posturing as a would-be American native and supporting racial retributions is as far from qualifying as an intellectual powerhouse as it gets. She would be better than Trump, obviously, but then anybody would.BaronVonAmericano , 12 Apr 2019 10:41While I'd prefer the genders reversed, I think she would be an ideal running mate for the front-runner among the declared candidates.Sheldon Hodges -> Londonsage , 12 Apr 2019 10:41
Sanders has much more assiduously defined the moral center that any candidate for president must have: unapologetic confrontation with the oligarchy. Warren is the intellectual weapon such an administration could deploy on the specifics of banking and anti-trust.
This is all the more practical given that Warren has failed to tie race, social justice and criminal justice issues all together in her values-based worldview -- certainly not to the extent that Sanders has, his being well beyond any other candidate's efforts.Because Obama was a canny corporate move to place someone that offered such qualities as intelligence and grammar in sharp relief to GW Bush while remaining closely controlled by the oligarchy.BigDave47 , 12 Apr 2019 10:30Intellectual powerhouse?
Do you include her fraudulent and offensive claims to Native American heritage in that? As CNN has reported, as far back as 1986 she was falsely claiming "American Indian" heritage on official documents. Despite repeated calls by the leaders of the Tribal Nations, she has still failed to apologise. That's some intellectual powerhouse..
Apr 14, 2019 | www.zerohedge.com
BMW ends pensions for workers
The era of US companies offering pensions is coming to a close.
The latest evidence: after freezing it's two UK pension plans in 2017, BMW will do the same for its remaining US plans.
Since 2011 new workers have not been offered a pension, but rather a defined contribution plan.
Workers who formerly had a pension will keep what they have accrued, but not accrue more. Current retirees receiving a pension will not be affected.
Apr 12, 2019 | peakoilbarrel.com
Graywulffe x Ignored says: 04/10/2019 at 5:55 pmNice summary, Ron. Brought to mind the old Oil Drum days. Thanks for taking the time to provide this information. Given the admittedly not high-confidence prognostications in Saudi/world oil production, it looks to me like the global economy may be in for at least one serious oil shock in the 2020s.
Yet another titanic wave on the Peak Oil ocean.
Apr 12, 2019 | peakoilbarrel.com
Carlos Diaz : 04/10/2019 at 1:44 pmIt's "coup de grâce."Adam Ash : 04/10/2019 at 5:27 pm
A great article that offers a more realistic view of the very old giant oil fields. It is very obvious that what they are doing to maintain production will result in a more rapid decline in the future. When that happens KSA will be in a lot of hurt, and the world will have an abrupt awakening.So my simple math says: 256 URR was to last 53 years, 74 URR at the same production rate will last 15 years. Seneca with a vengeance! Rite? EOLAWKI here we come!
add to that the usual woes of increasing internal oil consumption (3 mbd and rising fast) and the need to try and build their way out of their demise (requiring more oil and money), and the usual predictions of the 'export land model' look very reasonable, and disastrous for the House of Saud. There will be a tapered end, but the potential for acute instability in production and the in political and social environments of the country within the next decade is real.
Apr 12, 2019 | peakoilbarrel.com
Karen Fremerman : 04/10/2019 at 12:17 pmAt some point the Seneca Cliff will be hit. If they are doing all this advanced recovery to to keep flow rates up then fields will probably hit a wall and crash rather than slow decline. Is my thinking correct on that? KarenHugo : 04/11/2019 at 2:20 amDennisSchinzy : 04/11/2019 at 3:42 am
Oil consumption has been increasing in all sectors and the growing global economy will require more oil in industry. You seem to think oil is just used in transportation. NOT true.
Imagine oil production peaked today. In order for aviation to continue to grow, along with other industries that use oil. How many of the 98 million vehicles sold this year would need to be electric cars? How many electric motorcycles would have to be sold?
Knowing these answers gives us a real understanding of what needs to happen.Iron Mike : 04/11/2019 at 6:05 am
The Seneca cliff for World output requires heroic assumptions which are unlikely to be true in practice.
I strongly disagree with that assessment. I believe the probability of a Seneca cliff is increasing. I think oil extraction is an economic phenomena, not a geological phenomena. During economic expansion, a positive feedback loop is in place: oil extraction produces economic growth which encourages investment in oil extraction producing more economic growth. Once peak oil occurs, I anticipate that this feedback loop will go into reverse: decreased oil production will produce economic contraction which will discourage investment in oil extraction reducing extraction rates leading to economic collapse.
Without investment the IEA estimates that production would fall by 50% in 2025 and by 80% in 2040.
I actually think economic collapse is a great opportunity to introduce a new economic system. The one we have is not only unfair, it encourages environmental devastation.
David Graebner asks rhetorically how a theory such as neoclassic economics based on false hypotheses perdures. His answer is that you teach the biggest lies in the first year. That's why false preconceptions about the economy are so common. I think neoclassical economics chose the wrong mathematical tool to analyse the economy, they chose optimisation. I don't see anything optimal in the economy, I think differential systems would be a much more appropriate mathematical tool with which to analyse the economy, keeping track of money flows.
Our assessment of how the oil cycle will play out can be found here: https://www.tse-fr.eu/publications/oil-cycle-dynamics-and-future-oil-price-scenarios .Hi Ron,Fred Magyar : 04/11/2019 at 8:30 am
I assume a Seneca cliff scenario would imply rapid economic collapse, as a result i think there will be war over resources. Between which countries i don't know, but i assume U.S will go to war with Russia and or China, via direct war or proxy wars in regions were the countries national security depends on specific resources. So the middle east would as usual be a key area of conflict.
I believe a Seneca cliff scenario would be a catastrophic one hence the reaction to such a scenario would also be catastrophic.German Guy : 04/10/2019 at 12:53 pmU.S will go to war with Russia and or China, via direct war or proxy wars in regions were the countries national security depends on specific resources.
Perhaps! However modern warfare tends to be very energy intensive. It seems to me a rather safe bet that in a post peak oil world, mostly running on renewables, it might be more likely that societies will be trying to conserve their energy resources and not waste it on war.
But the verdict is not yet in, on whether or not humans are smarter than yeast!World demand is currently over 100 mb/day, while production is at about 99 mb/day. Does that mean we are using up the already produced reserves?Dennis Coyne : 04/10/2019 at 3:03 pmGerman Guy,
It simply means we are using oil that is being stored, the so-called oil stocks, eventually as these are reduced, oil prices start to rise and demand (consumption) decreases while supply (production) increases in response to the change in oil price.
Apr 12, 2019 | peakoilbarrel.com
Ron Patterson : 04/10/2019 at 4:06 pmWell, no, Ghawar is not declining at 2% per year. Ghawar did not start declining in 2004. And the southern two fields are not declining at all. The northern three fields reached their Seneca Cliff somewhere around 2010 and began declining at several times 2%. They will decline to near nothing in the next few years. Then Ghawar will have level production at somewhere around 2 million barrels per day and hold that level for a decade or two.Ron Patterson : 04/10/2019 at 7:08 pm
Ghawar cannot possibly be adequately described as one field. It is five different fields with five different decline and depletion rates.
When Saudi said, in 2006, that their average decline rate was down to almost 2%, that was the average for all their fields. Some fields were declining at a much faster rate and some fields were not declining at all. Khurais and Manifa were still to be ramped up. Those fields had been in mothballs and would be brought back on line. Now they are likely not declining at all but other fields are declining at a much faster rate than 2%.
But here is the important point. The depletion rate is another matter altogether. That figure is likely above 8% per year.Do you have production data for the various fields from 2006 to 2018?Eulenspiegel : 04/10/2019 at 10:41 am
Dennis, you know better than ask such a silly question. Saudi production of individual fields is a closely guarded secret.
Dennis, have you ever wondered why the Saudis keep all this data such a secret? Why don't they just let the actual data known to the world? What was the production data from Safaniya in 2018? Or what was the production data from Manifa in 2018? Or what was the production data from Khurais in 2018, or from Berri, or from all their other fields? And how did that compare to the production in 2017, or 2016?
Dennis, we don't know shit about any of this. We don't know because it is a closely guarded secret. Why, Dennis, Why?
They know Dennis, they know and they don't want you to know. Why?
I know why Dennis. Because what they actually report, which is almost nothing, is a lie. You simply choose to believe it. I do not. I choose to believe the analysis who try to figure out why they are lying. You choose to simply believe the Saudis.
Dennis, the idea that Saudi Arabia has 266 billion barrels of reserves is preposterous beyond belief. Even the Saudis realize that now are trying to slowly reduce that figure. Yet some people, like you, Robert Rapier and Michael Lynch, seemed perfectly ready to believe such an absurd figure. That just floored me. Goddammit, have some people gone insane?
Okay, I have said my peace here and showed my ignorance as to what Saudi Arabia actually can produce for the next 50 years. But you know, it is what they say they can produce.
You believe them. I don't. And neither of us can prove our case. And there it must rest until the actual production data comes in next year and next year and ..Good work Ron.
When this is true, that's the reason China is pushing electric travel as hard as they can.
They have more possibilites to know the truth (secret service) than we reading reports. And with SA and Russia having only round about 80 GB left, and producing each round about 10 mbpd, there are not many years left before a major oil incident.
I wonder why oil prices are that stable at the moment. Oil production fell hard this year so far, down everywhere except USA. And there the growth is decelerated.
And demand is still climbing, it will use up all the US growth projected by the optimistic EIA.
A 500 kbpd decline from OPEC is not included here, they still calculate with an increase from opec.
Last question: Where is Russia standing at the moment?
Apr 12, 2019 | peakoilbarrel.com
Chris Martensonx : 04/10/2019 at 11:05 amRon,Dennis Coyne : 04/10/2019 at 11:15 am
I'm wondering if you can help solve a mystery.
In the bond prospectus SA revealed their financials. Puzzling to me was the claim of revenue of $356 billion.
Because Brent averaged ~$75/bbl in 2018. Divide $356 by $75 and you come up with 4.75 Gbbl, which when we divide by 365 days in a year, we get 13 million barrels per day production.
I can't get their numbers to work. Even with a 10% premium on their grades of crude (generous), that leaves 11.7 mbd of production . I can't get anything to line up here.
Any ideas?Chris,Ron Patterson : 04/10/2019 at 11:31 am
They also produce NGL and natural gas, in 2016 it was about 1.94 Mb/d or 708 MMb of NGL, I have no idea what the average selling price is for NGL on World markets, it would depend on the mix of NGL of course.Saudi Arabia, in 2018 produced approximately 3.76 billion barrels of crude only. Their BOE produced was approximately 4.75 billion barrels. That would account for the revenue is they sold every barrel of it. But they consumed a lot themselves. So other than that I have no explanation. Do they count their own consumption as revenue?Dennis Coyne : 04/10/2019 at 11:54 amEIA has about 4.5 Gb of total liquids produced by KSA in 2018, that would imply $79/boe average selling price.
I suppose in accounting terms the Saudi Government could pay Aramco for the subsidized oil and the 4.75 Gbo would give us the $75/boe selling price.
Apr 12, 2019 | www.youtube.com
At least 60 companies reported an effective federal tax rate of zero, meaning they owe nothing in federal taxes for 2018, and that tax burden then falls on the rest of us. Senator Elizabeth Warren has a plan to fix that. She joins Stephanie Ruhle in her first interview since unveiling her proposal.
Patti Granros , 6 hours agoSome Person , 8 hours ago
Love Liz Warren. No BS. Policy-driven campaign! She's for the regular people, who keep this country going.Kamikapse , 7 hours ago
60 years ago every job offered health insurance, retirement plans, paid vacation, and all sorts of other benefits. It's time to have them pay a share of our societies costs, they use the same roads, breathe the same air, and drink the same water...Greg Miller , 9 hours ago
Warren has consistently amazed me with her proposals... I hope she will make it to the debates, since everyone's fawning over Bernie and Beto for their fundraising capabilities, I hope they are not trying to sink her...Kip Landingham , 6 hours ago
Warren Buffet, who saved 28 or so million on his, himself said trumps tax deal was foolish..but he also said he wouldn't turn it down, which i don't blame him on that..Google User , 1 hour ago
Senator Warren makes some excellent points (as usual): "market" implies a competitive environment, so when huge corps squeeze out competitors, it's no longer a "market". Corporations/rich individuals always say they made their profits themselves (independently of others or of any social structure systems). Really? If you were living/doing business on a mountaintop, disconnected from everyone else and any infrastructure support, you would have done just as well? That's a load of crap, and if they had any responsibility at all (as opposed to just pure greed), they'd be willing to give back a bit and contribute to the system(s) they build their wealth on.Tessmage Tessera , 7 hours ago
Elizabeth Warren you've got my attention.
The fact is that the wealthy all over the world do not want their position of privilege to be challenged. This is why Bernie Sanders has been saying (for several DECADES) that the only way to move our society forward is to build from the bottom up... not the top down. And he is 100% correct.
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 11, 2019 | talkingpointsmemo.comSen. Elizabeth Warren (D-MA) unveiled a major plank in her platform to tax the rich on Thursday, introducing plans for a new tax on all corporations that clear $100 million in annual profits.
Warren's "real corporate profits tax" is aimed at large corporations like Amazon that have generated huge profits in recent years while almost entirely avoiding federal taxes through a series of loopholes and credits.
"Because of relentless lobbying, our corporate income tax rules are filled with so many loopholes and exemptions and deductions that even companies that tell shareholders they have made more than a billion dollars in profits can end up paying no corporate income taxes," Warren wrote in a Medium post unveiling the plan. "Let's bring in the revenue we need to invest in opportunity for all Americans. And let's make this year the last year any company with massive profits pays zero federal taxes."
The plan would institute a seven percent tax on profits over $100 million in addition to current taxes. An economic analysis released by Warren's campaign estimated that at least 1,200 companies would be forced to pay new taxes under the plan, generating a net revenue boost of at least $1 trillion for the government.
Warren's plan is aimed at large corporations -- ones that have generally paid lower tax rates than smaller companies in recent years. The GOP tax cut law nearly doubled the number of publicly held companies that paid no federal taxes from 30 to 60 in the last year alone, according to a recent study from the left-leaning Institute on Taxation and Economic Policy.
This is the latest significant tax proposal the Massachusetts senator has unveiled as part of her campaign platform, which also includes a two percent surtax on people with more than $50 million in assets and a three percent surtax on those who have $1 billion.
The plans have earned her plaudits on the left and drawn concern from some more business-friendly moderate Democrats.
But so far, they haven't proven a game-changer in the presidential race. Warren continues to struggle to siphon off a significant chunk of voters who backed Sen. Bernie Sanders (I-VT) last election, her natural base of support. She's regularly polled in the mid- to upper-single digits in recent state and national polls, in the second tier of candidates.
And she raised just $6 million in her first quarter in the campaign, her team announced yesterday. That's not a terrible haul in a crowded field, especially since she's sworn off big donors, but it's nothing compared to the huge sums she pulled in as a Senate candidate -- and trailed even upstart South Bend Mayor Pete Buttigieg (D).
She also spent almost all of that money, having built out a large staff in the early primary states with a high payroll.
And Sanders isn't giving her much room on her left: He reintroduced a sweeping Medicare for all plan on Wednesday, which she cosponsored, a move that puts pressure on Warren and other Democrats to keep up as they try to woo the progressive wing of the party base.
Apr 09, 2019 | peakoilbarrel.com
Carlos Diaz: 04/08/2019 at 8:07 pmHickory: 04/09/2019 at 10:12 am
The decline is likely to be less steep than the increase
Have you heard about a Seneca cliff? It is called that way because Seneca in his letter number 91 to Lucillius (Epistulae Morales ad Lucilium), written towards the end of the year AD 64, a year before he died, refers to the fire that destroyed Lugdunum (Lyon) the summer of that year in the following terms:
It would be some consolation for the feebleness of our selves and our works, if all things should perish as slowly as they come into being; but as it is, increases are of sluggish growth, but the way to ruin is rapid.
It appears he knew almost two thousand years ago what you don't.I expect that a long slow declining tail of production will have some abrupt jolts downward along the way, and end up lower quicker as a result.Carlos Diaz: 04/09/2019 at 7:12 pm
The jolts downward will come as producing countries become failed states and the chaos disrupts operations.
For examples of how this comes to be, just look at the past 5 yrs of Venez and Libya as examples. Sure they may pick back up at some point, but overall effect is diminished global production, well below a theoretically well managed industry.
Secondly, (and likely a smaller effect) some deposits will likely be kept in the ground because of choices some cultures make. For example, I could see the USA deciding to keep its large remaining coal deposits largely in the ground after 2030. Canada could decide to put a big constraint on oil sand production, keeping just enough for domestic use, if they so desired.Why you think such scenario is so improbable? Venezuela is living a Seneca cliff in its oil production right now. Did anybody predicted it before it took place?
We have no idea of what will happen after Peak Oil. Some people assume nothing, while others think it will be the end of our civilization. Somewhere in between probably. But I fail to see how the economy can take it well if for most applications we can't substitute oil. The globalization is run on oil and its derivatives.
Your assumptions can only be valid at this side of the peak. If you think otherwise you fool yourself.
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 | economistsview.typepad.com
Fred C. Dobbs , April 07, 2019 at 06:00 AM(Liz swerves left!)
Here's how Elizabeth Warren is trying to outmaneuver Bernie Sanders
https://www.bostonglobe.com/news/politics/2019/04/05/warren-call-for-end-senate-filibuster/S3saQJayxQNZBPTXQ85x1O/story.html?event=event25 via @BostonGlobe
Liz Goodwin - April 5, 2019
NEW YORK -- Senator Elizabeth Warren lobbed another policy grenade into the Democratic primary Friday, announcing she supports drastically changing the Senate by eliminating its legendary filibuster to give her party a better chance of implementing its ambitious agenda.
The move puts her campaign rivals on the spot to explain how they would pass their own ambitious legislative priorities if the Senate keeps its rule in place requiring a 60-vote supermajority to advance most bills.
Warren's announcement allows her to swerve to the left of Senator Bernie Sanders of Vermont in a meaningful way at a time when she's straggling far behind him in early polls and grass-roots fund-raising.
Sanders, who popularized proposals like free college and Medicare for All among Democrats during his 2016 run for president, has been reluctant to support scrapping the filibuster. That raises questions about how he would be able to pass his sweeping proposals into law should he become president, given Democrats are extremely unlikely to have 60 seats in the Senate.
"I'm not running for president just to talk about making real, structural change," Warren told a group of activists at a conference organized by the Rev. Al Sharpton, where she announced her opposition to the filibuster. "I'm serious about getting it done. And part of getting it done means waking up to the reality of the United States Senate."
The appearance in New York caps off a three-week run that has seen Warren call for making it easier to send executives to jail for corporate crimes, unveil a proposal to break up farm monopolies, endorse forming a commission to study reparations for the descendants of slaves, and say she would like to abolish the Electoral College so presidents are elected by popular vote.
"Bernie Sanders, nobody's to his left on policy, but there's lots of running room on his left on procedural changes that would be necessary to enact those policies," said Brian Fallon, a former top Hillary Clinton aide and the founder of the liberal advocacy group Demand Justice.
Sanders said he's not "crazy about" the idea of getting rid of the filibuster in an interview in February, but said in a later statement that he is open to reform.
Getting rid of the Senate filibuster, which has been around since the mid-1800s, was once seen as a radical proposal that would undermine the chamber's ability to take a deliberative approach to major issues. But Democratic and Republican majorities have chipped away at it in recent years, jettisoning filibusters for Cabinet and Supreme Court nominees.
Just this week, Senate Republicans infuriated Democrats by unilaterally reducing the amount of debate time for other executive branch and judicial nominees before a filibuster could be ended.
The move to ditch the filibuster has gained currency among liberals frustrated that the Senate is more Republican than the general public because of liberals clustering on the coasts and the constitutional requirement that all states get two senators regardless of population.
President Trump and Barack Obama have complained about the filibuster, with Obama saying last year that it made it "almost impossible" to govern.
Though probably too wonky a proposal to reach the average voter, the debate over the Senate filibuster animates the Democratic activists who are watching the primary the most closely and whose support the candidates are vying to win. Those activists are unmoved by candidates who say they'll be able to persuade Republicans to sign onto their ambitious liberal legislation.
"The idea that you can win people over by inviting them over for drinks on the Truman Balcony -- that is completely out of vogue," Fallon said.
Other candidates have also called for getting rid of the filibuster, including Governor J*a*y Inslee of Washington and Representative Seth Moulton of Massachusetts, who is pondering a run. However, Warren is the first sitting senator in the race to do so. Senator Kamala Harris of California, who signed a letter in 2017 affirming the filibuster, now says she's conflicted about it.
The filibuster's defenders say it protects the rights of the minority party, and forces the majority to compromise. Senator Cory Booker of New Jersey, who also signed the 2017 letter, has said he is concerned that getting rid of the filibuster would mean Republicans would be able to more easily pass legislation in the future over Democrats' objections.
In her speech to the National Action Network's activists, a largely black crowd, Warren framed the filibuster as a tool of "racists" who used it for decades to block civil rights legislation, including a bill to make lynching a federal crime that was first introduced in the early 1900s. The legislation finally passed this year.
"We can't sit around for 100 years while climate change destroys our planet, while corruption pervades every nook and cranny of Washington, and while too much of a child's fate in life still rests on the color of their skin," she said.
After her speech, Warren told reporters that she is concerned about the bills Republicans would be able to pass without the filibuster, but that getting rid of it is worth it for Democrats. "Of course I'm worried. But I'm also worried about a minority that blocks real change that we need to make in this country," she said.
The calls to eliminate the filibuster are part of a larger debate among Democrats about reforming US democracy after they lost the 2000 and 2016 presidential elections despite winning the popular vote. Warren, along with several other Democrats, has also called to abolish the Electoral College. Warren, Harris, and former representative Beto O'Rourke of Texas are also open to the idea of the next president expanding the number of seats on the Supreme Court to offset its conservative majority.
Sanders, a self-described democratic socialist who pushes a host of liberal policies, has been more conservative on these proposals than many of his presidential campaign rivals. He is against expanding the court, arguing it would be a slippery slope that Republicans could also take advantage of, and is still on the fence about ditching the filibuster and abolishing the Electoral College.
Warren declined to call out her Senate colleagues when asked whether she was surprised they had not endorsed the idea of ending the filibuster. "All I can do is keep running the campaign I'm running and talking about these ideas," she said.
Apr 08, 2019 | www.youtube.com
monkeygraborange , 2 days agoBlissfulXerces , 2 days ago
JOURNALISM NO LONGER EXISTS... NOW IT'S ONLY THE MINISTRY OF PROPAGANDA!Flying Gabriel , 2 days ago
They are willing to damage our entire country for power. When do we end this?Shelly Kennedy , 2 days ago
Anonymous sources don't cut it anymore. You might as well say "we're making this up." Either put up or shut up.Chad Elmer , 2 days ago
Greenwald is a consistent voice of sanity from the political left. Need more such sane voices to restart cultural debate. Because as we all know, politics is downstream from culture.kim wiser , 2 days ago
"Continual attempt to remove independent thought and reasoning by big tech !"
He is right tribalism is wrong. What Covington and all the fake stories should teach us it to make sure that we look at the facts. The hard part is finding the good journalists so you can support them.
Sergio Sotelo , 2 days agoWest Kagle , 2 days ago
Why isn't anyone being prosecuted for these leaks?Will to Power , 2 days ago
. Gee.....I wonder why the big media firms are having to layoff huge numbers of their workforce? Could it be that they have destroyed their own credibility and the revenue is no longer there to support the bloated staffs they once had, because people are going elsewhere for their information?
The legal system isn't supposed to "damage" people, it is supposed to find them innocent or guilty. Shame on Mueller for appointing such disgraceful and unprofessional people.
Apr 06, 2019 | peakoilbarrel.com
Ron Patterson 04/06/2019 at 12:05 pmRemember Peak Oil? It's back!
It seems that the biggest Saudi field is losing its punch.
Years ago we used to talk a lot about peak oil, the prediction made by M. King Hubbert that the easy oil was going to run out, that it was going to get harder and harder to find the stuff, and it was going to get more and more expensive to get out of the ground.
Hubbert wrote in 1948: "How soon the decline may set in is not possible to say, Nevertheless the higher the peak to which the production curve rises, the sooner and sharper will be the decline."
According to the predictions made back in 2005, right about now the Saudis are running out and we are smack in the middle of confusion, heading for chaos. Of course we are not, we are flooded with fossil fuels, thanks to the fracking boom.
But according to Eric Reguly, writing in the Globe and Mail, there is trouble ahead, because that prediction about Saudi oil may not be that far off. He writes that the giant Ghawar field used to produce ten percent of the world's oil, five million barrels a day.
The US Permian shale basin now supplies 4.1 million barrels a day, but fracked wells run out pretty quickly, and the fracking companies are all losing money. Better sell that pickup truck; it may well cost a lot more to fill it. As Reguly concludes, the Ghawar field is indeed in trouble,"and if it does collapse, peak oil will come a bit sooner."
In fact, Ghawar is not as resilient as we were led to believe. We just found out that its output has fallen substantially since Aramco previously came clean on its reserves and production. If Ghawar is losing momentum fast, peak oil – remember that theory? – might be closer than we had thought. And Ghawar is just one of dozens of enormous conventional-oil reservoirs scattered around the planet that are in various stages of decline.
Those include the North Sea, Alaska's Prudhoe Bay, and Reguly reminds us that Mexico's Cantarell reservoir used to supply 2.1 million barrels a day and is now down to 135,000.
Apr 06, 2019 | www.theamericanconservative.com
Too often caught between Randian individualism on one hand and big-government collectivism on the other, America's working-class parents need a champion.
They might well have had one in Elizabeth Warren, whose 2003 book, The Two-Income Trap , co-authored with her daughter Amelia Warren Tyagi, was unafraid to skewer sacred cows. Long a samizdat favorite among socially conservative writers, the book recently got a new dose of attention after being spotlighted on the Right by Fox News's Tucker Carlson and on the Left by Vox's Matthew Yglesias .
The book's main takeaway was that two-earner families in the early 2000s seemed to be less, rather than more, financially stable than one-earner families in the 1970s. Whereas stay-at-home moms used to provide families with an implicit safety net, able to enter the workforce if circumstances required, the dramatic rise of the two-earner family had effectively bid up the cost of everyday life. Rather than the additional income giving families more breathing room, they argue, "Mom's paycheck has been pumped directly into the basic costs of keeping the children in the middle class."
Warren and Warren Tyagi report that as recently as the late 1970s, a married mother was roughly twice as likely to stay at home with her children than work full-time. But by 2000, those figures had almost reversed. Both parents had been pressed into the workforce to maintain adequate standards of living for their families -- the "two-income trap" of the book's title.Advertisement
What caused the trap to be sprung? Cornell University economist Francine Blau has helpfully drawn a picture of women's changing responsiveness to labor market wages during the 20th century. In her work with Laurence Kahn, Blau found that women's wage elasticities -- how responsive their work decisions were to changes in their potential wages -- used to be far more heavily driven by their husband's earning potential or lack thereof (what economists call cross-wage elasticity). Over time, Blau and Kahn found, women's responsiveness to wages -- their own or their husbands -- began to fall, and their labor force participation choices began to more closely resemble men's, providing empirical backing to the story Warren and Warren Tyagi tell.
Increasing opportunity and education were certainly one driver of this trend. In 1960, just 5.8 percent of all women over age 25 had a bachelor's degree or higher. Today, 41.7 percent of mothers aged 25 and over have a college degree. Many of these women entered careers in which they found fulfillment and meaning, and the opportunity costs, both financially and professionally, of staying home might have been quite high.
But what about the plurality of middle- and working-class moms who weren't necessarily looking for a career with a path up the corporate ladder? What was pushing them into full-time work for pay, despite consistently telling pollsters they wished they could work less?
The essential point, stressed by Warren and Warren Tyagi, was the extent to which this massive shift was driven by a desire to provide for one's children. The American Dream has as many interpretations as it does adherents, but a baseline definition would surely include giving your children a better life. Many women in America's working and middle classes entered the labor force purely to provide the best possible option for their families.The Student Loan Trap Up From Consumerism
In the search for good neighborhoods and good schools, a bidding war quickly became an arms race. There were "two words so powerful the families would pursue them to the brink of bankruptcy: safety and education ." The authors underplay the extent to which policy had explicitly sought to preserve home values, driven by their use as investment vehicles and retirement accounts, a dynamic covered expertly by William Fischel's The Homevoter Hypothesis . But their broader point is accurate -- rising house prices, aided and abetted by policy choices around land use, have made it harder for families to afford the cost of living in 21st-century America.
Another factor in the springing of the trap? Divorce. In her 2000 book about how feminism had failed women, Danielle Crittenden writes about how fear of dependency, especially in an era of no-fault divorce, had caused women to rank financial independence highly.
These two factors, along with others Warren and Warren Tyagi explore, made it difficult for families to unilaterally disarm without losing their place in the middle class. "Today's middle-class mother is trapped," they write. "She can't afford to work, and she can't afford to quit."
A quiet armistice may have been declared in the so-called "mommy wars," but the underlying pressures haven't gone away since The Two-Income Trap was published. If anything, they've gotten worse.
Warren and Warren Tyagi propose severing the link between housing and school districts through a "well-designed voucher program," calling the public education system "the heart of the problem." They correctly note that "schools in middle-class neighborhoods may be labeled 'public,'" but that parents effectively pay tuition by purchasing a home within a carefully selected school district. Breaking the cartel that ties educational outcomes to zip codes would increase choices for families and open the door to further educational pluralism.
Warren and Warren Tyagi are also unafraid to tell unpopular truths about the futility of additional funding for colleges (identifying "faith in the power of higher education [as] the new secular religion"), housing affordability ("direct subsidies are likely to add more ammunition to the already ruinous bidding wars, ultimately driving home prices even higher"), universal child care (which "would create yet another comparative disadvantage for single-income families trying to compete in the marketplace"), and usurious credit (Warren's long work on bankruptcy requires deeper treatment than this space allows, but their questioning of our over-reliance on consumer debt deserves a fuller hearing).
Warren's presidential campaign contains elements of this attempt to make life easier for families, but the shades of her vision of a pro-family economic policy seem paler than they were a decade and a half ago.
Her universal child care plan , for example, seemingly contradicts her prior stated worries about disadvantaging stay-at-home parents. While she explicitly -- and wisely -- steers clear of a subsidy-based approach, her attempt to "create a network of child care options" does less to directly support families who aren't looking for formal care. In a sense, Warren would replicate the public school experience for the under-five crowd -- if you don't want to participate, that's fine, but you'll bear the cost on your own. A true pro-family populism would seek to increase the choice set for all families, regardless of their work-life situations.
Warren's housing plan has similarly good intentions, seeking to increase the supply of affordable housing rather than simply trying to subsidize demand. Her competitive education grant would reward municipalities for relaxing restrictive zoning requirements. But while her campaign has yet to release a plan on education, it seems unlikely we'll see the kind of bold approach to educational choice she espoused in 2003. Populist sympathizers of all ideological stripes should hope I'm proven wrong.
Warren's attempt at pro-family progressive populism seems honest. If not for certain infamous biographical missteps, her personal story would be one of how America is still a land of opportunity -- the daughter of a Oklahoma department store salesman who worked her way to a law degree, a professorship, and a Senate seat. There's a congruence in her positioning of economic security as a family values issue and the resurgent interest in a pro-worker, pro-family conservative agenda. And unlike so many politicians, her personal experience seems to have instilled an understanding of why so many dual-earner families see work as a means to the end of providing a better life for their children rather than an end in itself.
A politician willing to question the sacred cows of double-income families, more money for schools, and easy credit is the kind of politician this populist moment requires. A candidate willing to call into question an economic model that prioritizes GDP growth over all else would boldly position himself or herself as being on the side of families whose vision of the American Dream involves a better life for their children, yet who are exhausted and hemmed in by costs.
How Warren needs to position her platform to navigate the vicissitudes of a Democratic Party primary will likely not be the best way to address the needs of the modern American family. But in a crowded field, an uncompromising vision of increased choice for families across all dimensions -- not just within the public school system, for example, but among all options of education -- would be an impressive accomplishment and a way of distinguishing herself from the pack. An explicit defense of parenthood as a social good would be unconventional but welcome.
Still, a marker of how far the conversation around families has shifted from the early 2000s is the extent to which Warren's and Warren Tyagi's view of parenthood as something more than an individual "lifestyle choice" would now be viewed as radical, particularly on the Left. "That may be true from the perspective of an individual choosing whether or not to have a child," they write, "but it isn't true for society at large. What happens to a nation that rewards the childless and penalizes the parents?"
What indeed. Paging the Elizabeth Warren of 2003 -- your country needs you.
Patrick T. Brown ( @PTBwrites ) is a master's of public affairs student at Princeton University's Woodrow Wilson School of Public and International Affairs.
JonF April 4, 2019 at 6:22 amDoe anyone think the middle and especially upper middle class would be in favor of a school choice plan that would cause their housing values to take hit? And there's another big roadblock with a school choice program: the need for transportation. Two years ago my next door neighbors who were able to place their young son in a good school across town sold their house and moved to be closer to the school since the daily cross-town commute at rush hour was just too much.grin without a cat , says: April 4, 2019 at 7:44 amThey might well have had one in Elizabeth Warren, whose 2003 book, The Two-Income Trap, co-authored with her daughter Amelia Warren Tyagi, was unafraid to skewer sacred cows.Chris Atwood , says: April 4, 2019 at 9:38 am
It's more recent than that. The first edition was 2003, but a second edition came out in 2016, by which time Mom probably knew she might be running for president. It's got a new introduction by the authors, so obviously it was done with their cooperation.
I haven't read either edition, so I don't know what's been changed in the new one.Great essay.Roy Fassel , says: April 4, 2019 at 10:30 am
I am struck again and again, by the unbelievable power of the forces in the political arena pushing everyone who is a Democrat because they are fiscally liberal* to ALSO become socially liberal,* and everyone who is a Republican because they are socially conservative* to ALSO become fiscally conservative.*
The net result of the laws of motion seem to systematically take the ideological space of "socially conservative, fiscally liberal" (the old New Deal) and push everyone in it either out to the usual left "fiscally liberal, socially liberal" or the usual right "socially conservative, fiscally conservative" quadrants.
This article shows how it's happening with Elizabeth Warren in one direction, and it's happened constantly with socially conservative Republicans who get yanked back to the proper quadrant anytime they try to move to a direction of economic policy that doesn't involve tax cuts for the rich and actually help their constituents.One can have all the opinions on better ways to do things for the good of society, but if those ideas are not politically viable, it creates a change in directions. Warren probably by now .realizes how complicated all of these policy issues are and the unintended consequence of these policies are always a factor and a risk. Elizabeth Warren seems to have a good grasp of complicated issues, but that never get her the support she would need to prevail in this campaign. We currently live in the age of "Fantasyland" spewed by both the Trump RINOs and the Lunatic Left. Warren is a thinker. That is not helpful these days.Sid Finster , says: April 4, 2019 at 10:55 amWhat happened is that Warren wants the Team D nomination, and Team D, like Team R, could not care less about the 99.9% of Americans who are not non-campaign bundlers or big contributors.Chris in Appalachia , says: April 4, 2019 at 11:46 am
In fact, Team D (again, just like Team R) is actively hostile to any proposal that might take money out of the pockets of the .1%, or otherwise affect the way the the economic pie is sliced.If this was the 1970s Warren would probably have supported busing. Pocahontas – leave my safe neighborhood, my children's schools, and my home equity alone. Because these well meaning social engineering schemes seldom work out as planned. As a middle class American I will probably get the short end of the stick.BradleyD , says: April 4, 2019 at 12:15 pm
Funny that policy makers never want to help families by taking a little chunk out of hedge funds and shareholders and vulture capitalists and sharing it with American workers. Talk about "the heart of the problem."My wife and I did a sort of calculation. In our state child care would be about 11,000 per child per year. Also, you can't drop them off if they are sick, so you have to use your sick days for them. Oh, and if you don't use the child care if you're on vacation, you still need to pay to hold the slot. With two kids and taxes, she has to clear well over 30k per year to about break even.EliteCommInc. , says: April 4, 2019 at 1:00 pm
Add in the fact you'll be missing out on their childhood, spending maybe three or so hours per day with them, is it really worth it?
The more I see the 'big tech' developments, they are basically things your pay for to let you work so you can afford to work. TaskRabbit, Fivrer, DoorDash, etc basically give you free time so you can work more."What happens to a nation that rewards the childless and penalizes the parents?"EliteCommInc. , says: April 4, 2019 at 1:13 pm
They become liberals, democrats, anarchists, socialists, communists . . . supporters of murdering children in the womb, efficiency advocates by way of eugenics . . . and other assorted malcontents against ordered society.This may be unfair as I have not read the book.rps , says: April 4, 2019 at 3:22 pm
But in my view, what has damaged economic sociology has been the shift in practice without any assessment what it would do to the traditional family dynamic between husbands and wives in family construction. That simply demanding that space be made for women and millions of women would seriously tighten the job market for all and disrupt the pillars upon which our nation was built, despite its problems.
Power dynamic, chivalry outran practical realities and that remains the case in increasingly stratifying civil demands.
And while I sympathetic to the complaint about bussing, that had a very little impact on the employment numbers which government and businesses and edication raced to fill the discrimination expectations with women, and primarily white women.
tired comment, but accurate nonetheless, so instead of hiring men in response to discrimination, those men were instead replaced by women, most of whom already had access via the cultural dynamics of the majority.Warren and Warren Tyagi propose severing the link between housing and school districts through a "well-designed voucher program," calling the public education system "the heart of the problem." [ ]Fran Macadam , says: April 4, 2019 at 4:34 pm
In my opinion, Warner's education voucher proposal by guaranteeing voucher dollar enrollment in the affluent zip codes ignores the heart of the education problem. Affluent zip codes do not ensure a child's academic success via 'better' teachers and educational materials. Public schools in the big cities are filled with teachers who have their masters and Ph.D's along with continuing education requirements.
Student success is fundamentally based upon parental commitment and community involvement. Are the parents committed to their children's academic success? Does the parent(s) provide a conducive and safe home environment? Does the child have a quiet space to study, do their homework and prepare for school? Does the parent(s) sit down and teach? Review the child's homework? Do the parents volunteer at the school? Are they involved with school events? Is education a top priority? Or is school a babysitting service to drop off and pick up?
Those affluent zip codes are more than a number. For the most part, they are a supportive community of families.
A child's academic success is assuredly tethered to the parental guiding hands. Simply, a child's success begins at home with parents who care about their children's future.She Woke up.Robert K U , says: April 4, 2019 at 6:47 pm
Careerism trumps sanity. In the age of #MeToo, it's got to be all about me.Probably, every conservative will agree, that the basic flaw is materialism. Thus, with materialism, personal values that cannot be sold or bought for money, are neglected in favour of the gross domestic product per capita philosophy. Such personal values are, for instance, family values, that is, children need both a mother, especially when they are below teenage, and a father, especially when they are teenagers, and perhaps most important, a father and a mother need one another. All this family thing does, however, not enter into the money economy of big government. Whence, on the side of families, those need to take quite brave choices, to choose morals above money. And on the side of the government, this needs to tax the rich and help the poor. In fact, according to the World Bank, economic growth is stimulated best, if governments help the poor directly, rather than with obscure subsidies to the economic system. However, there is also the difficulty with difficult access to regular jobs. By no doubt, abortion genosuicide decreases demand on the most simple of goods and services, causing unemployment for the poor, and driving up costs of raising children. Society then goes into socialism, with genosuicide instead of economic growth, while the money flows into pension funds of the upper middle class. Governments must simply help the poor. Humankind has always been able to produce twice the amount of good food that it needs, but bureaucratic governments keep the poor enslaved, to fill them with lie.Tim , says: April 4, 2019 at 7:19 pmWarren's academic work and cheeky refusal to fold under pressure when her nomination as Obama's consumer ('home ec.'?) finance czar was stymied by the GOP are worthy of respect. I'd like to see her make a strong run at the dem nomination, but am put off by her recent tendency to adopt silly far-left talking points and sentiments (her Native DNA, advocating for reparations, etc.). Nice try, Liz, but I'm still leaning Bernie's direction.EliteCommInc. , says: April 4, 2019 at 10:57 pm
As far as the details of the economic analysis related above, though, I am unqualified to make any judgment – haven't read the book. But one enormously significant economic development in the early 70s wasn't mentioned at all, so I assume she and her daughter passed it over as well. In his first term R. Milhouse Nixon untethered, once & for all, the value of the dollar from traditional hard currency. The economy has been coming along nicely ever since, except for one problematic aspect: with a floating currency we are all now living in an economic environment dominated by the vicissitudes of supplies and demands, are we not? It took awhile to effect the housing market, but signs of the difference it made began to emerge fairly quickly, and accelerated sharply when the tides of globalism washed lots of third world lucre up on our western shores. Now, as clearly implied by both Warren and the author of this article, young Americans whose parents may not have even been born back then – the early 70s – are probably permanently priced out of the housing market in places that used to have only a marginally higher cost of entry – i.e. urban California, where I have lived and worked for most of my nearly 60 years. In places like this even a 3-earner income may not suffice! Maybe we should bring back the gold standard, because it seems to me that as long as unfettered competition coupled to supply/demand and (EZ credit $) is the underlying dynamic of the American economy we're headed for the New Feudalism. Of course, nothing could be more conservative than that, right? What say you, TAColytes?"Maybe we should bring back the gold standard, because it seems to me that as long as unfettered competition coupled to supply/demand and (EZ credit $) is the underlying dynamic of the American economy we're headed for the New Feudalism."K squared , says: April 5, 2019 at 7:05 am
I take it you think the old one has departed.
It was in the area of how businesses and government were reciprocating unhealthy and unfair business practices is where I think her advocacy was most accurate. But she has abandoned all of that."Funny that policy makers never want to help families by taking a little chunk out of hedge funds and shareholders and vulture capitalists and sharing it with American workers."
Funny that Warren HAS brought up raising taxes on the rich.
Apr 05, 2019 | www.commondreams.org
"We can't sit around for 100 years while the rich and powerful get richer and more powerful and everyone else falls further and further behind."
The 2020 presidential candidate is expected to endorse the proposal in a speech at the National Action Network Convention in New York Friday morning.
"When Democrats next have power, we should be bold and clear: We're done with two sets of rules -- one for the Republicans and one for the Democrats," Warren is expected to say. "And that means when Democrats have the White House again, if Mitch McConnell tries to do what he did to President Obama and puts small-minded partisanship ahead of solving the massive problems facing this country, then we should get rid of the filibuster."
"I'm not running for president just to talk about making real, structural change. I'm serious about getting it done," the speech reads. "And part of getting it done means waking up to the reality of the United States Senate."
Getting rid of the filibuster -- the Senate procedure which allows a minority party to delay a vote by drawing out debate and block legislation from passing by requiring a "supermajority" of 60 senators to approve it -- would be a key step toward passing progressive measures, advocates say.
At the NAN Convention, Warren is expected to note that the filibuster has stopped the Senate from passing radical justice legislation for decades, including an anti-lynching bill which was first introduced a century ago but didn't pass until December 2018.
"It nearly became the law back then. It passed the House in 1922. But it got killed in the Senate -- by a filibuster. And then it got killed again. And again. And again," Warren plans to say. "More than 200 times. An entire century of obstruction because a small group of racists stopped the entire nation from doing what was right."
Advocates including Warren also say the end of the filibuster would make it easier for the Senate to pass meaningful legislation to combat the climate crisis and to further other progressive causes.
"We can't sit around for 100 years while the rich and powerful get richer and more powerful and everyone else falls further and further behind," Warren's speech reads. "We can't sit around for 100 years while climate change destroys our planet, while corruption pervades every nook and cranny of Washington, and while too much of a child's fate in life still rests on the color of their skin. Enough with that."
Warren joins fellow 2020 Democratic hopefuls Pete Buttigieg and Washington Gov. Jay Inslee in endorsing the end of the filibuster. Her speech Friday will represent her latest push for "structural change" that she says would have far-reaching positive effects on the lives of working Americans. Since announcing her candidacy in January she has called for a tax on the wealth of the richest Americans to combat economic inequality and fund progressive programs, a universal childcare plan, and a breakup of powerful tech giants , among other proposals.
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 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 ."
Apr 02, 2019 | peakoilbarrel.com
OFM x Ignored says: 03/30/2019 at 7:51 amI'm sure that so long as the world wide economy remains on its feet that there will be huge increases in demand for oil for transportation.
But nobody seems to give any thought here to things that will reduce demand. Cars will be driving themselves soon. Think about trains. Before too much longer, railroaders will be able to move stuff on trains almost as nimbly as truckers do today, at least on city to city basis when the cities are at least a couple of hundred miles apart. Long distance trucking may be a thing of the past within, like camera film and typewriters, within a couple of decades. These possibilities are worthy of thought if you are in the oil biz for the long haul.
Every country that imports oil is going to have a powerful incentive to reduce demand for it to the extent it can as depletion sooner or later pushes one exporting country after another into the importer category. Countries in the Middle East with oil and gas to export are going to find it so profitable to build wind and solar farms that they will be building them like mushrooms popping up after a spring rain, because they can sell some or maybe even most of the oil and gas they are burning now to generate electricity, thereby earning a big profit on their solar and wind farm investment.
My thinking is that these changes will actually PROLONG our dependence on oil, taken all around, by helping hold the price down so we can afford to run existing legacy equipment, and have affordable petrol based chemicals, etc. I don't think anybody currently in the biz needs to worry about selling out anytime soon, lol. But considerations such as these may have a huge impact on exploration and development starting within a decade or so.
Times change. Doom doesn't necessarily have anything to do with it.
Apr 02, 2019 | peakoilbarrel.com
Energy News x Ignored says: 04/01/2019 at 1:52 pmBrazil's oil production at 2,489 kb/day during February, which is down -142 from January
2018 average 2,587 kb/day
No press release yet, waiting to see if they mention the new FPSOs ANP -> http://www.anp.gov.br/
Apr 01, 2019 | www.zerohedge.com
Authored by Michael Snyder via The Economic Collapse blog,
Just like we witnessed during the last recession, major retailers are laying off tens of thousands of workers, and it looks like this will be the worst year for store closings in all of U.S. history. Many are referring to this as "the retail apocalypse" , and without a doubt this is one of the toughest stretches for retailers that we have ever seen. But many believe that what we have witnessed so far is just the beginning . After all, if retailers are struggling this much now, how bad will things be once the next recession really gets rolling? Of course the truth is that things have been rocky for the retail industry for quite a few years, but the numbers are telling us that this crisis is really starting to accelerate.
According to Challenger, Gray & Christmas, retail layoffs were up a whopping 92 percent in January and February compared to the same period a year ago. The following comes from NBC News
More than 41,000 people have lost their jobs in the retail industry so far this year -- a 92 percent spike in layoffs since the same time last year, according to a new report.
And the layoffs continue to mount, with JCPenney announcing this week it would be closing 18 stores in addition to three previously announced closures, as part of a "standard annual review."
Yes, competition from Internet commerce is hurting the traditional retail industry, but it certainly doesn't explain a 92 percent increase.
And very few retailers have been able to avoid this downsizing trend. At this point, even the largest retailer in the entire country has begun "quietly closing stores"
Walmart is closing at least 11 US stores across eight states.
The stores include one Walmart Supercenter in Lafayette, Louisiana, and Walmart Neighborhood Market stores in Arizona, California, Kansas, South Carolina, Tennessee, Virginia, and Washington.
For decades, Wal-Mart has been expanding extremely aggressively.
They have plenty of cash, and so the only way that it would make sense for them to close stores is if they anticipated that we are heading into a recession.
Here is a list of the addresses where Wal-Mart stores are closing
- 6085 W. Chandler Blvd., Chandler, Arizona
- 3900 W. Ina Road, Tucson, Arizona
- 1600 Saratoga Ave., San Jose, California
- 712 N. Western Ave., Liberal, Kansas
- 1229 NE. Evangeline Trwy., Lafayette, Louisiana
- 3603 Broad River Road, Columbia, South Carolina
- 1757 W. Andrew Johnson Hwy., Morristown, Tennessee
- 2501 University Commons Way, Knoxville, Tennessee
- 7000 Iron Bridge Road, North Chesterfield, Virginia
- 2864 Virginia Beach Blvd., Virginia Beach, Virginia
- 7809 NE. Vancouver Plaza Dr., Vancouver, Washington
Of course Wal-Mart is in far better shape than almost everyone else in the industry.
One of Wal-Mart's key competitors, Shopko, has just announced that they will be shutting down all of their stores
Shopko will liquidate its assets and close all of its remaining locations by mid-June.
The company was unable to find a buyer for the retail business and will begin winding down its operations beginning this week, the company said in statement released Monday. The decision to liquidate will bring an end to the brick-and-mortar business that began in 1962 with one location in Green Bay, Wisconsin.
And personally I was very saddened to learn that Lifeway Christian Bookstores has also decided to close all their brick and mortar stores
Lifeway Christian Bookstores announced last week it would be closing the doors of all 170 brick and mortar stores, in a pivot to focusing on digital and e-commerce.
"The decision to close our local stores is a difficult one," said Lifeway Chief Executive Officer Brad Waggoner. "While we had hoped to keep some stores open, current market projections show this is no longer a viable option."
Whenever I do an article like this, I always have some readers that try to convince me that this is only happening because of the growth of Internet retailing.
And yes, Internet retailing has been growing, but it still accounts for less than 10 percent of all U.S. retail sales. In addition, it is important to point out that Internet retailers had a very disappointing holiday season just like brick and mortar retailers did.
Ultimately, the truth is that the U.S. economy has been steadily slowing down in recent months. During the months of December, January and February, the amount of stuff being moved around the country by truck, rail and air was lower than during all of those same months a year earlier. The following comes from Wolf Richter
Now it's the third month in a row, and the red flag is getting more visible and a little harder to ignore about the goods-based economy: Freight shipment volume in the US across all modes of transportation – truck, rail, air, and barge – in February fell 2.1% from February a year ago, according to the Cass Freight Index , released today. The three months in a row of year-over-year declines are the first such declines since the transportation recession of 2015 and 2016.
I have a feeling that when we get the final numbers for March that they will show that this streak has now extended to four months.
Right now, unsold goods are starting to pile up in U.S. warehouses at a rate that we haven't seen since the last recession. Many retailers that are barely clinging to life will simply not survive if economic conditions continue to deteriorate.
Unfortunately, it appears that things are only going to get rougher for the U.S. economy in the months ahead. So more retail workers are going to get laid off, more stores are going to close, and there are going to be a lot more stories about our ongoing "retail apocalypse" in the mainstream media.
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.
Mar 31, 2019 | medium.com
At CNN's town hall event on Monday, the American people saw something we'd been told was impossible: Elizabeth Warren winning over a crowd.
The Massachusetts senator took aim at a variety of subjects: the Electoral College, Mississippi's racist state flag, the rise of white nationalism . Always, she was met with thunderous applause. Even a simple Bible verse -- from Matthew 25:35–40, about moral obligation to the poor and hungry -- prompted cheers so loud and prolonged that Warren had to pause and repeat herself in order to make her voice heard over the noise. Yet this was the same woman the media routinely frames as too wonky, too nerdy, too socially stunted. But then, Warren has always been an exceptionally charismatic candidate. We just forget that fact when she's campaigning -- due, in large part, to our deep and lingering distrust for female intelligence.
Warren is bursting with what we might call "charisma" in male candidates: She has the folksy demeanor of Joe Biden, the ferocious conviction of Bernie Sanders, the deep intelligence of fellow law professor Barack Obama. But Warren is not a man, and so those traits are framed as liabilities, rather than strengths. According to the media, Warren is an uptight schoolmarm, a " wonky professor ," a scold, a wimpy Dukakis, a wooden John Kerry, or (worse) a nerdier Al Gore.
The criticism has hit her from the left and right. The far-right Daily Caller accused her of looking weird when she drank beer ; on social media, conservatives spread vicious (and viciously ableist) rumors that Warren took antipsychotic drugs that treated "irritability caused by autism ." On the other end of the spectrum, Amber A'Lee Frost, the lone female co-host of the socialist podcast Chapo Trap House , wrote for The Baffler (and, when The Baffler retracted her article, for Jacobin) that Warren was " weak " and " not charismatic ." Frost deplored the "Type-A Tracy Flicks" who dared support "this Lisa Simpson of a dark-horse candidate."
Casting Warren as a sheltered, Ivory Tower type is odd, given that her politics and diction are not exactly elitist. Yet none of this is new; the same stereotypes were levied against Warren in 2011, during her Senate campaign.
Strangely, the first nerdification of Warren was a purely local phenomenon -- one which happened even as national media was falling in love with her. Jon Stewart publicly adored her , and her ingenuity in proposing the creation of the Consumer Financial Protection Bureau a few years prior earned her respect among the rising populist wing of the party. Her fame was further catapulted when a speech -- a video of Warren speaking, seemingly off-the-cuff , in a constituent's living room -- went viral. "Nobody in this country got rich on his own, nobody," Warren proclaimed, pointing up the ways entrepreneurs benefit from publicly funded services like roads and schools and fire departments.
"First-time candidates don't usually articulate a progressive economic message quite this well," the Washington Monthly declared . The New Yorker called it " the most important political speech of this campaign season. " That enthusiasm continued throughout Warren's first Senate bid. Writing for the New York Times , Rebecca Traister noted that "the early devotion to Warren recalls the ardor once felt by many for Obama." (Obama himself famously echoed Warren's message -- "you didn't build that" -- on the 2012 campaign trail.)
Locally, Warren prompted a much different discussion, with scores of Massachusetts analysts describing her as stiff and unlikable. Boston-based Democratic analyst Dan Payne bemoaned her "know-it-all style" and wished aloud she would " be more authentic I want her to just sound like a human being, not read the script that makes her sound like some angry, hectoring schoolmarm." In a long profile for Boston magazine, reporter Janelle Nanos quoted Thomas Whalen, a political historian at Boston University, who called Warren a "flawed candidate," someone who was " desperately trying to find a message that's going to resonate. " In that same article, Nanos asked Warren point-blank about her "likability problem." Warren's response seemed to stem from deep frustration: "People tell me everywhere I go why they care that I got in this race," she said. "I can't answer the question because I literally haven't experienced what you're talking about."
By demanding that Warren disguise her exceptional talents, we are asking her to lose. Thankfully, she's not listening.
There's an element of gaslighting here: It only takes a reporter a few sources -- and an op-ed columnist a single, fleeting judgment -- to declare a candidate "unlikable." After that label has been applied, any effort the candidate makes to win people over can be cast as "inauthentic." Likability is in this way a self-reinforcing accusation, one which is amplified every time the candidate tries to tackle it. (Recall Hillary Clinton, who was asked about her "likability" at seemingly every debate or town hall for eight straight years -- then furiously accused of pandering every time she made an effort to seem more "approachable.")
It's significant that the " I hate you; please respond" line of political sabotage only ever seems to be aimed at women. It's also revealing that, when all these men talked about how Warren could win them over, their "campaign" advice sounded suspiciously close to makeover tips. In his article, Payne advised Warren to "lose the granny glasses," "soften the hair," and employ a professional voice coach to "deepen her voice, which grates on some." Payne seemed to suggest that Elizabeth Warren look like a model and sound like a man -- anything to disguise the grisly reality of a smart woman making her case.
Warren won her Senate race, and the "schoolmarm" stereotype largely vanished as her national profile grew. By 2014, grassroots activists were begging her to run for president; by mid-2016, CNN had named her " Donald Trump's chief antagonist ." She's since given a stream of incendiary interviews and handed the contemporary women's movement its most popular meme . All this should be enough to prove any candidate's "charisma." Yet, now that she's thrown her hat into the presidential ring, the firebrand has become a Poindexter once again.
The digs at Warren's "professorial" style hurt her because, on some level, they're true. Warren really is an intellectual, a scholar; moreover, she really is running an exceptionally ideas-focused campaign, regularly turning out detailed and exhaustive policy proposals at a point when most of the other candidates don't even have policy sections on their websites. What's galling is the suggestion that this is a bad thing.
Yes, male candidates have suffered from being too smart -- just ask Gore, who ran on climate change 20 years before it was trendy. But just as often, their intelligence helps them. Obama's sophistication and public reading lists endeared him to liberals. And just a few days ago, Indiana Mayor Pete Buttigieg was widely praised for learning Norwegian in order to read an author's untranslated works. Yet, Warren is dorky, a teacher's pet, a try-hard Tracy Flick, or Lisa Simpson. A "know-it-all."
The "schoolmarm" stereotype now applied to Warren has always been used to demean educated women. In the Victorian era, we called them "bluestockings" -- unmarried, unattractive women who had dared to prioritize intellectual development over finding a man. They are, in the words of one contemporary writer, " frumpy and frowly in the extreme, with no social talents ." Educators say that 21st century girls are still afraid to talk in class because of "sexist bullying" which sends the message that smart girls are unfeminine: "For girls, peers tell them 'if you are swotty and clever and answer too many questions, you are not attractive ,'" claims Mary Bousted, joint general-secretary of the U.K.'s National Education Union. Female academics still report being made to feel " unsexual, unattractive, unwomanly, and unnatural. " We can deplore all this as antiquated thinking, but even now, grown men are still demanding that Warren ditch her glasses or "soften" her hair -- to work on being prettier so as to make her intelligence less threatening.
Warren is cast as a bloodless intellectual when she focuses on policy, a scolding lecturer when she leans into her skills as a rabble-rouser; either way, her intelligence is always too much and out of place. Her eloquence is framed, not as inspiring, but as "angry" and "hectoring." Being an effective orator makes her "strident." It's not solely confined to the media, but reporters seem anxious to signal-boost anyone who complains: Anonymous male colleagues call her "irritating," telling Vanity Fair that "she projects a 'holier than thou' attitude" and that " she has a moralizing to her. " That same quality in male candidates is hailed as moral clarity.
Warren is accused, in plain language, of being uppity -- a woman who has the bad grace to be smarter than the men around her, without downplaying it to assuage their egos. But running in a presidential race is all about proving that you are smarter than the other guy. By demanding that Warren disguise her exceptional talents, we are asking her to lose. Thankfully, she's not listening. She is a smart woman, after all.
Mar 30, 2019 | www.moonofalabama.org
dh-mtl , Mar 30, 2019 5:00:04 PM | link
The U.S. desperately needs Venezuelan oil.
They lost control of Saudi Arabia, after trying to take down MBS and then betraying him by unexpectedly allowing waivers on Iranian oil in November.
The U.S. cannot take down Iran without Venezuelan oil. What is worse, right now they don't have access to enough heavy oil to meet their own needs.
Controlling the world oil trade is central to Trump's strategy for the U.S. to continue its empire. Without Venezuelan oil, the U.S. is a bit player in the energy markets, and will remain so.
Having Russia block the U.S. in Venezuela adds insult to injury. After Crimea and Syria, now Venezuela, Russia exposes the U.S. as a loud mouthed-bully without the capacity to back up its threats, a 'toothless tiger', an 'emperor without clothes'.
If the U.S. cannot dislodge Russia from Venezuela, its days as 'global hegemon' are finished. For this reason the U.S. will continue escalating the situation with ever-riskier actions, until it succeeds or breaks.
In the same manor, if Russia backs off, its resistance to the U.S. is finished. And the U.S. will eventually move to destroy Russia, like it has been actively trying to do for the past 30 years. Russia cannot and will not back off.
Venezuela thus becomes the stage where the final act in the clash of empires plays out. Will the world become a multi-polar world, in which the U.S. becomes a relatively isolated and insignificant pole? Or will the world become more fully dominated by a brutal, erratic hegemon?
All options are on the table. For both sides!
Dec 20, 2018 | www.nytimes.com
The president and the senator both want you to know that our system is "rigged."
... ... ...
For decades, the left sought to dethrone the idea of truth. Truth was not an absolute. It was a matter of power. Of perspective. Of narrative. "Truth is a thing of this world," wrote Michel Foucault. "Each society has its regime of truth, its 'general politics' of truth: that is, the types of discourse which it accepts and makes function as true."
Then Kellyanne Conway gave us "alternative facts" and Rudy Giuliani said, " Truth isn't truth" -- and progressives rushed to defend the inviolability of facts and truth.
For decades, the left sought to dethrone reverence for the Constitution. "The Constitution," wrote progressive historian Howard Zinn, "serves the interests of a wealthy elite" and enables "the elite to keep control with a minimum of coercion, a maximum of law -- all made palatable by the fanfare of patriotism and unity."
Then Donald Trump attacked freedom of the press and birthright citizenship, and flouted the emoluments clause, and assailed the impartiality of the judiciary. And progressives rediscovered the treasure that is our Constitutional inheritance.
... ... ...
To an audience of nearly 500 new graduates and their families at the historically black college, the Massachusetts senator laid out a bleak vision of America. "The rules are rigged because the rich and powerful have bought and paid for too many politicians," she said. "The rich and powerful want us pointing fingers at each other so we won't notice they are getting richer and more powerful," she said. "Two sets of rules: one for the wealthy and the well-connected. And one for everybody else," she said.
"That's how a rigged system works," she said.
It was a curious vision coming from a person whose life story, like that of tens millions of Americans who have risen far above their small beginnings, refutes her own thesis. It was curious, also, coming from someone who presumably believes that various forms of rigging are required to un-rig past rigging. Affirmative action in college admissions and aggressive minority recruitment in corporations are also forms of "rigging."
But however one feels about various types of rigging, the echo of Trump was unmistakable. "It's being proven we have a rigged system," the president said at one of his rallies last year . "Doesn't happen so easy. But this system -- gonna be a lot of changes. This is a rigged system."
Trump's claim that the system is rigged represents yet another instance of his ideological pickpocketing of progressives. From C. Wright Mills ("The Power Elite") to Noam Chomsky ("Manufacturing Consent"), the animating belief of the far left has been, as Tom Hayden put it, that we live in a "false democracy," controlled by an unaccountable, deceitful and shadowy elite. Trump has names for it: the globalists; the deep state; the fake news. Orange, it turns out, is the new red.
Of course, Warren and Trump have very different ideas as to just who the malefactors of great wealth really are. Is it Sheldon Adelson or George Soros? The Koch brothers or the Ford Foundation? Posterity will be forgiven if it loses track of which alleged conspiracy to rig the system was of the far-right and which was of the far left.
What it will remember is that here was another era in which a president and one of his leading opponents abandoned the prouder traditions of American politics in favor of paranoid ones. Compare Warren's grim message to Bill Clinton's sunny one from his first inaugural: "There is nothing wrong with America that cannot be cured by what is right with America."
At some point, it will be worth asking Senator Warren: Rigged compared to when? A generation ago a black president would have been unthinkable. Two generations ago, a woman on the Supreme Court. And rigged compared to what? Electoral politics in Japan, which have been dominated by a single party for decades? The class system in Brazil, dominated by a single race for centuries?
Bret L. Stephens has been an Opinion columnist with The Times since April 2017. He won a Pulitzer Prize for commentary at The Wall Street Journal in 2013 and was previously editor in chief of The Jerusalem Post.Larry Bennett Cooperstown NY Dec. 20, 2018 Times Pick
Warren is saying the system is rigged to suppress the middle class and poor in favor of the wealthy, which is easy to substantiate. Trump is saying the system is rigged to suppress the white right, which is easy to refute. One statement is an economic fact, the other is a racist trope. There is no equivalence here. ScottW Chapel Hill, NC Dec. 20, 2018
Sen. Warren supports Medicare for All, meaningful banking/financial regulations, regulations that benefit consumers, a living wage, etc. Trump supports none of these policies--not a one. Trying to equate Trump with Warren is just stupid.
Terry Gilbert, AZ Dec. 20, 2018 Times Pick
Comparing Elizabeth Warren to Trump is disingenuous. Trump is just ranting and defensive, without any evidence to back up his claims. What Elizabeth Warren is saying is just a matter of paying attention. I don't need to list all the ways in which money buys everything in politics. It's always a matter of following the money. Bret Stephens conveniently avoids looking at economics. His supposed counterexamples are at best irrelevant to the issue: We've had a black President. We have women on the Supreme Court. How are those examples proof that the system isn't rigged in favor of the wealthy and corporations? No doubt he thinks Plutocracy is part of the natural order of things. He should go back to the Wall Street Journal where his myopia is more appropriate. MarnS Nevada Dec. 20, 2018 Times Pick
Unfortunately Bret there are no "optimists" in the GOP, including yourself being one who has bounced back and forth in your positions regarding the Trump presidency. Though you have found your way on CNN or MSNBC spouting your disappointments about the state of the nation, the fact remains is that your a hardened, right wing opinion writer who may have less of an ideal when it comes to America being a democratic nation. No, you can conveniently ignore the actions of your conservative party in there gerrymandering, in their changing the rules for governors of the Democrat persuasion, or gross deliberate voter suppression that has placed your party in power positions by, in effect, stealing elections. You are a writer with a forked tongue trying, at times in a passive manner, to separate yourself from Trump, and the evilness of the current GOP Party without understanding that the definition of "conservative" has changed to the radical. And that is documented by your writings in the WSJ. Yet, you cannot even dream about truly being on the left side of an argument other than beating your breast with the fact that the GOP has disappeared, as we have known it, in the hands of radicalism (which prior to Trump you participated in the escalation of radical conservatism), and your party can never be revived as it once was...and we all pray it never will be so.
JPM Hays, KS Dec. 20, 2018 Times Pick
This analysis completely ignores the outrageous, overarching influence of money and financial privilege over American politics. Equating Bill Clinton's dalliance with Trump's disrespect for all norms of decency and the truth? Please. Warren is right. Just look at the legislative obscenity of the recent tax bill and then try and equivocate they left and the right. I am not buying this false equivalency.
Patrick Schenectady Dec. 20, 2018 Times Pick
FYI, Foucault was offering critiques of "regimes of truth," not of truth itself. That's very different. Like most historians, he spent an impressive amount of time in archives where he collected evidence in order to write books that give truthful accounts of the past. You make a caricature of Foucault, and then of the entire left.
Rich Casagrande Slingerlands, NY Dec. 20, 2018 Times Pick
Please, Elizabeth Warren is nothing like Trump. She's a brilliant, honest, tireless fighter for ordinary Americans. She wants a fair shake for them, just as FDR wanted a fair shake -- a "New Deal" -- for our Country. While much of the rest of the world was turning to communism or fascism, FDR saved American capitalism by shaking it up. Oh how we could use a large dose of that today.
WDP Long Island Dec. 20, 2018 Times Pick
Whoa! Line by line, Mr Stephens offers statements that are way off base and should be refuted. Are you saying you disagree with Warren? Do you think the "system" in America for the last 400 years has not been generally "rigged" against African-Americans? But the gist of his column, and the main argument of conservatives these days, is that the left and the right are equally out of line; that what the right says and does may be bad, but the left does the same sort of thing and is just as bad. This is not true Bret, and you know it. The left desperately tries to find the high road, and anyone who supports Trump these days or believes in most of his policies is either someone who has abandoned morality or is a fool. And that is the truth, Bret.
Hannacroix Cambridge, MA Dec. 20, 2018 Times Pick
Calling out our system as "rigged" is nothing new for Sen. Warren. She's been stating that publicly since being a regular Bill Moyer's guest on his PBS program 20 years ago -- and clearly already on a "prep for national politics" stump. What undercuts her own integrity regarding "rigged" is that she chose, after much wait & anticipation, to throw her support to Hillary Clinton in the summer of 2016. Not Bernie Sanders. She knew HRC had little integrity. And it's highly likely she knew the DNC primary was rigged in favor of Clinton -- as it's widely been proven.
My point here highlights one of several reasons why Sen. Warren is unelectable in the 2020 presidential general election. This is not to compare her in any way to Trump -- he's a venal, disturbed & dangerous traitor to our country. However, if winning the WH in 2020 is the goal, Elizabeth Warren ain't got the goods to get the necessary votes across our Republic.
Longestaffe Pickering Dec. 20, 2018 Times Pick
There's a good case to be made that the far left exists in two separate dimensions. I offer myself in evidence. Among the policies and social changes I advocate: Medicare for all Aggressively progressive taxation.
I don't recognize any freedom to corner as much wealth as one can while other people must labor at two or three jobs just to feed their families on peanut butter.
I do think there's a bit of rigging afoot. Restrictions on the ownership of firearms comparable to those in Japan.
A society free from all forms of identity discrimination or prejudice. I'm bitterly opposed to racism, anti-Semitism, sexism, homophobia; any example you care to give, including those without short handles, such as prejudice against Muslims or transgender people.
Yes, I know I have this in common with decent conservatives, but I'm thinking of partisan realities in the US today. I should add that I don't mind the prospect of WASPS like me becoming just another minority.
But-- I can't picture myself as a socialist -- hair combed straight back, and all that.
The rigorously progressive personality type rubs me the wrong way. Leftist cant grates on every fiber of my being. Che Guevara T-shirts make the lip curl. When my knee jerks, it jerks against things like that old leftist conceit that truth is what you make it. I look at the far-left agenda and see a lot to like. I look at the far-left milieu and see didactic arrogance, frigidity, and pat attitudes. I'm a Democrat in disarray.
John Wilson Maine Dec. 20, 2018 Times Pick
The so-called "left" in America (moderates anywhere else on the globe) have never varied from saying that money = power. They still say that today, and raise money like crazy for candidates thereby proving their own point.
Conservatives in America (far-right extremists anywhere else on the globe) are much quieter about the influence of dough, but raise money like crazy for candidates thereby proving the "left's" point.
Reality? Money in America is everything. Period. Just try to run for office, influence policy, and/or change the direction of the country as a sole, intelligent, concerned poor person and see how far you get.
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.
Dec 09, 2018 | www.nakedcapitalism.com
kees_popinga , December 8, 2018 at 12:43 pm
Tucker Carlson: "Trump is not capable" Weltwoche (Anita)
Carlson is saying Trump's not "capable" of sustained focus on the sausage-making of right-wing policy.
The clickbait (out of context) headline makes it sound like a more general diss. I'm not supporting Trump here [standard disclaimer], but these gotcha headlines are tiresome.
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/
Sep 18, 2018 | lrb.co.ukOne might object that Trump, a billionaire TV star, does not resemble his followers. But this misses the powerful intimacy that he establishes with them, at rallies, on TV and on Twitter. Part of his malicious genius lies in his ability to forge a bond with people who are otherwise excluded from the world to which he belongs. Even as he cast Hillary Clinton as the tool of international finance, he said:
I do deals – big deals – all the time. I know and work with all the toughest operators in the world of high-stakes global finance. These are hard-driving, vicious cut-throat financial killers, the kind of people who leave blood all over the boardroom table and fight to the bitter end to gain maximum advantage.
With these words he brought his followers into the boardroom with him and encouraged them to take part in a shared, cynical exposure of the soiled motives and practices that lie behind wealth. His role in the Birther movement, the prelude to his successful presidential campaign, was not only racist, but also showed that he was at home with the most ignorant, benighted, prejudiced people in America. Who else but a complete loser would engage in Birtherism, so far from the Hollywood, Silicon Valley and Harvard aura that elevated Obama, but also distanced him from the masses?
The consistent derogation of Trump in the New York Times or on MSNBC may be helpful in keeping the resistance fired up, but it is counterproductive when it comes to breaking down the Trump coalition. His followers take every attack on their leader as an attack on them. 'The fascist leader's startling symptoms of inferiority', Adorno wrote, 'his resemblance to ham actors and asocial psychopaths', facilitates the identification, which is the basis of the ideal. On the Access Hollywood tape, which was widely assumed would finish him, Trump was giving voice to a common enough daydream, but with 'greater force' and greater 'freedom of libido' than his followers allow themselves. And he was bolstering the narcissism of the women who support him, too, by describing himself as helpless in the grip of his desires for them.
Adorno also observed that demagoguery of this sort is a profession, a livelihood with well-tested methods. Trump is a far more familiar figure than may at first appear. The demagogue's appeals, Adorno wrote, 'have been standardised, similarly to the advertising slogans which proved to be most valuable in the promotion of business'. Trump's background in salesmanship and reality TV prepared him perfectly for his present role. According to Adorno,
the leader can guess the psychological wants and needs of those susceptible to his propaganda because he resembles them psychologically, and is distinguished from them by a capacity to express without inhibitions what is latent in them, rather than by any intrinsic superiority.
To meet the unconscious wishes of his audience, the leader
simply turns his own unconscious outward Experience has taught him consciously to exploit this faculty, to make rational use of his irrationality, similarly to the actor, or a certain type of journalist who knows how to sell their sensitivity.
All he has to do in order to make the sale, to get his TV audience to click, or to arouse a campaign rally, is exploit his own psychology.
Using old-fashioned but still illuminating language, Adorno continued:
The leaders are generally oral character types, with a compulsion to speak incessantly and to befool the others. The famous spell they exercise over their followers seems largely to depend on their orality: language itself, devoid of its rational significance, functions in a magical way and furthers those archaic regressions which reduce individuals to members of crowds.
Since uninhibited associative speech presupposes at least a temporary lack of ego control, it can indicate weakness as well as strength. The agitators' boasting is frequently accompanied by hints of weakness, often merged with claims of strength. This was particularly striking, Adorno wrote, when the agitator begged for monetary contributions. As with the Birther movement or Access Hollywood, Trump's self-debasement – pretending to sell steaks on the campaign trail – forges a bond that secures his idealised status.
Since 8 November 2016, many people have concluded that what they understandably view as a catastrophe was the result of the neglect by neoliberal elites of the white working class, simply put. Inspired by Bernie Sanders, they believe that the Democratic Party has to reorient its politics from the idea that 'a few get rich first' to protection for the least advantaged.
Yet no one who lived through the civil rights and feminist rebellions of recent decades can believe that an economic programme per se is a sufficient basis for a Democratic-led politics.
This holds as well when it comes to trying to reach out to Trump's supporters. Of those providing his roughly 40 per cent approval ratings, half say they 'strongly approve' and are probably lost to the Democrats. But if we understand the personal level at which pro-Trump strivings operate, we may better appeal to the other half, and in that way forestall the coming emergency.
Mar 23, 2019 | twitter.com
MoveOn 1:32 PM - 21 Mar 2019
& the list of 2020 presidential candidates who have made the decision to
#SkipAIPAC continues to grow. Thank you for your leadership here @PeteButtigieg , @ewarren , @BernieSanders , @KamalaHarris , @JulianCastro , @BetoORourke , @JayInslee ... who is next?
Mar 21, 2019 | peakoilbarrel.com
HuntingtonBeach x Ignored says: 03/19/2019 at 1:20 am"Perfect Storm" Drives Oil Prices Higher
"The latest Brent rally has brought prices to our peak forecast of $67.5/bbl, three months early," Goldman Sachs wrote in a note. The investment bank said that "resilient demand growth" and supply outages could push prices up to $70 per barrel in the near future. It's a perfect storm: "supply loses are exceeding our expectations, demand growth is beating low consensus expectations with technicals supportive and net long positioning still depressed," the bank said.
The outages in Venezuela could swamp the rebound in supply from Libya, Goldman noted. But the real surprise has been demand. At the end of 2018 and the start of this year, oil prices hit a bottom and concerns about global economic stability dominated the narrative. But, for now at least, demand has been solid. In January, demand grew by 1.55 million barrels per day (mb/d) year-on-year. "Gasoline in particular is surprising to the upside, helped by low prices, confirming our view that the weakness in cracks at the turn of the year was supply driven," Goldman noted. "This comforts us in our above consensus 1.45 mb/d [year-on-year] demand growth forecast."
Mar 20, 2019 | www.aol.com
In 2016, Cannon wrote that Warren would indeed bring more warmth than Clinton, pointing to an anecdote she shared on Facebook about how she would bake her mother a "heart shaped cake" as a child. He contrasted that with Clinton's sarcastic "I suppose I could have stayed home and baked cookies" comment from 1992 , which was a response to ongoing questions about why she chose to continue her law practice when her husband was governor of Arkansas.
For some Bernie Sanders supporters, meanwhile, praising Warren was a way to deflect accusations of sexism. In a 2016 Huffington Post opinion piece titled, "I Despise Hillary Clinton And It Has Nothing to Do With Her Gender," Isaac Saul wrote that he "and many Sanders supporters would vote for Elizabeth Warren if she were in the race over Hillary or Bernie." ( Saul apologized to Clinton for being a "smug young journalist" and "Bernie Bro" in a follow up article months later, writing that his views of her changed after he endeavored to learn more about her history).
So what's going on here? Has Warren become incredibly unlikable over the past two years? Or is this change more an indication of her growing power. High-achieving women, sociologist Marianne Cooper wrote in a 2013 Harvard Business Review article , are judged differently than men because "their very success -- and specifically the behaviors that created that success -- violates our expectations about how women are supposed to behave." When women act competitively or assertively rather than warm and nurturing, Cooper writes, they "elicit pushback from others for being insufficiently feminine and too masculine." As a society, she says, "we are deeply uncomfortable with powerful women. In fact, we don't often really like them."
Nov 02, 2017 | www.washingtonpost.com
The former interim head of the Democratic Party just accused Hillary Clinton's campaign of "unethical" conduct that "compromised the party's integrity." The Clinton campaign's alleged sin: A hostile takeover of the Democratic National Committee before her primary with Sen. Bernie Sanders had concluded.
Donna Brazile's op-ed in Politico is the equivalent of taking the smoldering embers of the 2016 primary and throwing some gasoline on them. Just about everything she says in the piece will inflame Sanders's passionate supporters who were already suspicious of the Democratic establishment and already had reason to believe -- based on leaked DNC emails -- that the committee wasn't as neutral in the primary as it was supposed to be.
But the op-ed doesn't break too much new provable, factual ground, relying more upon Brazile's own perception of the situation and hearsay. In the op-ed, Brazile says:
Clinton's campaign took care of the party's debt and "put it on a starvation diet. It had become dependent on her campaign for survival, for which [Clinton] expected to wield control of its operations." She described Clinton's control of the DNC as a "cancer." Gary Gensler, the chief financial officer of Clinton's campaign, told her the DNC was (these are Brazile's words) "fully under the control of Hillary's campaign, which seemed to confirm the suspicions of the Bernie camp." She "couldn't write a news release without passing it by Brooklyn."
Then-Chairwoman Debbie Wasserman Schultz, whose pressured resignation after the leaked emails left Brazile in charge as interim chairwoman, "let Clinton's headquarters in Brooklyn do as it desired" because she didn't want to tell the party's leaders how dire the DNC's financial situation was. Brazile says Wasserman Schultz arranged a $2 million loan from the Clinton campaign without the consent of party officers like herself, contrary to party rules.
Brazile sums it up near the end: "If the fight had been fair, one campaign would not have control of the party before the voters had decided which one they wanted to lead. This was not a criminal act, but as I saw it, it compromised the party's integrity."
None of this is truly shocking. In fact, Brazile is largely writing about things we already knew about. The joint fundraising agreement between the Clinton campaign and the DNC was already known about and the subject of derision among Sanders's supporters. But it's worth noting that Sanders was given a similar opportunity and passed on using it, as Brazile notes.
There were also those emails from the DNC hack released by WikiLeaks that showed some at the DNC were hardly studiously neutral . One email chain discussed bringing Sanders's Jewish religion into the campaign, others spoke of him derisively, and in one a lawyer who worked for both Clinton and the DNC advised the committee on how to respond to questions about the Clinton joint fundraising committee. The emails even cast plenty of doubt on Brazile's neutrality, given she shared with the Clinton campaign details of questions to be asked at a pair of CNN forums for the Democratic candidates in March 2016, before she was interim chair but when she was still a DNC official. Brazile, who was a CNN pundit at the time, lost her CNN job over that.
The timeline here is also important. Many of those emails described above came after it was abundantly clear that Clinton would be the nominee, barring a massive and almost impossible shift in primary votes. It may have been in poor taste and contrary to protocol, but the outcome was largely decided long before Sanders ended his campaign. Brazile doesn't dwell too much on the timeline, so it's not clear exactly how in-the-bag Clinton had the nomination when the alleged takeover began. It's also not clear exactly what Clinton got for her alleged control.
This is also somewhat self-serving for Brazile, given the DNC continued to struggle during and after her tenure, especially financially . The op-ed is excerpted from her forthcoming book, "Hacks: The Inside Story of the Break-ins and Breakdowns That Put Donald Trump in the White House." Losses like the one in 2016 will certainly lead to plenty of finger-pointing, and Brazile's book title and description allude to it containing plenty of that.
But taking on the Clintons is definitely something that most in the party wouldn't take lightly. And Brazile's allegation that Clinton was effectively controlling the DNC is the kind of thing that could lead to some further soul-searching and even bloodletting in the Democratic Party. It's largely been able to paper over its internal divisions since the primary season in 2016, given the great unifier for Democrats that is President Trump.
Sanders himself has somewhat toned down his criticism of the DNC during that span, but what he says -- especially given he seems to want to run again in 2020 -- will go a long way in determining how the party moves forward.
Mar 15, 2019 | www.nytimes.com
... ... ...
Warren is trying to treat not just the symptoms but the underlying disease. She has proposed a universal child-care and pre-K program that echoes the universal high school movement of the early 20th century. She favors not only a tougher approach to future mergers, as many Democrats do, but also a breakup of Facebook and other tech companies that have come to resemble monopolies. She wants to require corporations to include worker representatives on their boards -- to end the era of "shareholder-value maximization," in which companies care almost exclusively about the interests of their shareholders, often at the expense of their workers, their communities and their country.
Warren was also the first high-profile politician to call for an annual wealth tax , on fortunes greater than $50 million. This tax is the logical extension of research by the economist Thomas Piketty and others, which has shown how extreme wealth perpetuates itself. Historically, such concentration has often led to the decline of powerful societies. Warren, unlike some Democrats, comfortably explains that she is not socialist. She is a capitalist and, like Franklin D. Roosevelt, is trying to save American capitalism from its own excesses.
"Sometimes, bigger ideas are more possible to accomplish," Warren told me during a recent conversation about the economy at her Washington apartment. "Because you can inspire people."
... ... ...
Warren's agenda is a series of such bold ideas. She isn't pushing for a byzantine system of tax credits for child care. She wants a universal program of pre-K and child care, administered locally, with higher pay for teachers and affordable tuition for families.
And to anyone who asks, "But how will you pay for that?" Warren has an answer. Her wealth tax would raise more than $250 billion a year, about four times the estimated cost of universal child care. She is, in her populist way, the fiscal conservative in the campaign.
... ... ...
David Leonhardt is a former Washington bureau chief for the Times, and was the founding editor of The Upshot and head of The 2020 Project, on the future of the Times newsroom. He won the 2011 Pulitzer Prize for commentary, for columns on the financial crisis. @DLeonhardt • Facebook [Sign up for David Leonhardt's daily newsletter with commentary on the news and reading suggestions from around the web.]
Mar 16, 2019 | peakoilbarrel.com
I am now of the opinion that 2018 will be the peak in crude oil production, not 2019 as I earlier predicted. Russia is slowing down and may have peaked. Canada is slowing down and Brazil is slowing down. OPEC likely peaked in 2016. It is all up to the USA. Can shale oil save us from peak oil?
OPEC + Russia + Canada, about 57% of world oil production.
Jeff says: 03/14/2019 at 1: 50 pm
"I am now of the opinion that 2018 will be the peak in crude oil production, not 2019 as I earlier predicted. Russia is slowing down and may have peaked. Canada is slowing down and Brazil is slowing down. OPEC likely peaked in 2016. It is all up to the USA. Can shale oil save us from peak oil?"
IEA´s Oil 2019 5y forecast has global conventional oil on a plateau, i.e. declines and growth match each other perfectly and net growth will come from LTO, NGL, biofuels and a small amount of other unconventional and "process gains".
Iran is ofc a jocker, since it can quickly add supply. Will be interesting to see how Trump will proceed.
Carlos Diaz x Ignored says: 03/14/2019 at 3:23 pmI am quite original in my opinion about Peak Oil. I think it took place in late 2015. I will explain. If we define Peak Oil as the maximum in production over a certain period of time we will not know it has taken place for a long time, until we lose the hope of going above. That is not practical, as it might take years.Dennis Coyne x Ignored says: 03/14/2019 at 4:57 pm
I prefer to define Peak Oil as the point in time when vigorous growth in oil production ended and we entered an undulating plateau when periods of slow growth and slow decline will alternate, affected by oil price and variable demand by economy until we reach terminal decline in production permanently abandoning the plateau towards lower oil production.
The 12-year rate of growth in C+C production took a big hit in late 2015 and has not recovered. The increase in 2 Mb since is just an anemic 2.5% over 3 years or 0.8% per year, and it keeps going down. This is plateau behavior since there was no economic crisis to blame. It will become negative when the economy sours.
Peak Oil has already arrived. We are not recognizing it because production still increases a little bit, but we are in Peak Oil mode. Oil production will decrease a lot more easily that it will increase over the next decade. The economy is going to be a real bitch.Carlos Diaz,Carlos Diaz x Ignored says: 03/14/2019 at 7:18 pm
Interesting thesis, keep in mind that the price of oil was relatively low from 2015 to 2018 because for much of the period there was an excess of oil stocks built up over the 2013 to 2015 period when output growth outpaced demand growth due to very high oil prices. Supply has been adequate to keep oil prices relatively low through March 2019 and US sanctions on Iran, political instability in Libya and Venezuela, and action by OPEC and several non-OPEC nations to restrict supply have resulted in slower growth in oil output.
Eventually World Petroleum stocks will fall to a level that will drive oil prices higher, there is very poor visibility for World Petroleum Stocks, so there may be a 6 to 12 month lag between petroleum stocks falling to critically low levels and market realization of that fact, by Sept to Dec 2019 this may be apparent and oil prices may spike (perhaps to $90/b by May 2020).
At that point we may start to see some higher investment levels with higher output coming 12 to 60 months later (some projects such as deep water and Arctic projects take a lot of time to become operational, there may be some OPEC projects that might be developed as well, there are also Canadian Oil sands projects that might be developed in a high oil price environment.
I define the peak as the highest 12 month centered average World C+C output, but it can be define many different ways.So Dennis,Dennis Coyne x Ignored says: 03/14/2019 at 9:20 pm
Our capability to store oil is very limited considering the volume being moved at any time from production to consumption. I understand that it is the marginal price of the last barrel of oil that sets the price for oil, but given the relatively inexpensive oil between 2015 and now, and the fact that we have not been in an economical crisis, what is according to you the cause that world oil production has grown so anemically these past three years?
Do you think that if oil had been at 20$/b as it used to be for decades the growth in consumption/production would have been significantly higher?
I'll give you a hint, with real negative interest rates and comparatively inexpensive oil most OECD economies are unable to grow robustly.
To me Peak Oil is an economical question, not a geological one. The geology just sets the cost of production (not the price) too high, making the operation uneconomical. It is the economy that becomes unable to pump more oil. That's why the beginning of Peak Oil can be placed at late 2015.
The economic system has three legs, cheap energy, demographic growth, and debt growth. All three are failing simultaneously so we are facing the perfect storm. Social unrest is the most likely consequence almost everywhere.Carlos,Carlos Diaz x Ignored says: 03/15/2019 at 5:03 am
If prices are low that means there is plenty of oil supply relative to demand. It also means that some oil cannot be produced profitably, so oil companies invest less and oil output grows more slowly.
So you seem to have the story backwards. Low oil prices means low growth in supply.
So if oil prices were $20/b, oil supply would grow more slowly, we have had an oversupply of oil that ls what led to low oil prices. When oil prices increase, supply growth will ne higher. Evause profits will be higher and there will be more investment.No Dennis,Schinzy x Ignored says: 03/15/2019 at 11:18 am
It is you who has it backwards, as you only see the issue from an oil price point of view, and oil price responds to supply and demand, and higher prices are an estimulus to higher production.
But there is a more important point of view, because oil is one of the main inputs of the economy. If the price of oil is sufficiently low it stimulates the economy. New businesses are created, more people go farther on vacation, and so on, increasing oil demand and oil production. If the price is sufficiently high it depresses the economy. A higher percentage of wealth is transferred from consumer countries to producing countries and consumer countries require more debt. During the 2010-2014 period high oil prices were sustained by the phenomenal push of the Chinese economy, while European and Japanese economies suffered enormously and their oil consumption depressed and hasn't fully recovered since.
In the long term it is the economy that pumps the oil, and that is what you cannot understand.
Oil limits → Oil cost → Oil Price ↔ Economy → Oil demand → Oil production
The economy decides when and how Peak Oil takes place. If you knew that you wouldn't bother with all those models.
And in my opinion the economy already decided in late 2015 when the drive to increase oil production to compensate for low oil prices couldn't be sustained.Carlos,Dennis Coyne x Ignored says: 03/15/2019 at 3:01 pm
Your reasoning is close to mine. See https://www.tse-fr.eu/publications/oil-cycle-dynamics-and-future-oil-price-scenarios .Carlos,Mario C Vachon x Ignored says: 03/15/2019 at 6:39 pm
Both supply and demand matter. I understand economics quite well thank you. You are correct that the economy is very important, it will determine oil prices to some degree especially on the demand side of the market. If one looks at the price of oil and economic growth or GDP, there is very little correlation.
The fact is the World economy grew quite nicely from 2011 to 2014 when oil prices averaged over $100/b.
There may be some point that high oil prices are a problem, apparently $100/b in 2014 US$ is below that price. Perhaps at $150/b your argument would be correct. Why would the economy need more oil when oil prices are low? The low price is a signal that there is too much oil being produced relative to the demand for oil.
I agree the economy will be a major factor in when peak oil occurs, but as most economists understand quite well, it is both supply and demand that will determine market prices for oil.
My models are based on the predictions of the geophysicists at the USGS (estimating TRR for tight oil) and the economists at the EIA (who attempt to predict future oil prices). Both predictions are used as inputs to the model along with past completion rates and well productivity and assumptions about potential future completion rates and future well productivity, bounded by the predictions of both the USGS and the EIA along with economic assumptions about well cost, royalties and taxes, transport costs, discount rate, and lease operating expenses.
Note that my results for economically recoverable resources are in line with the USGS TRR mean estimates and are somewhat lower when the economic assumptions are applied (ERR/TRR is roughly 0.85), the EIA AEO has economically recoverable tight oil resources at about 115% of the USGS mean TRR estimate. The main EIA estimate I use is their AEO reference oil price case (which may be too low with oil prices gradually rising to $110/b (2017$) by 2050.
Assumptions for Permian Basin are royalties and taxes 33% of wellhead revenue, transport cost $5/b, LOE=$2.3/b plus $15000/month, annual discount rate is 10%/year and well cost is $10 million, annual interest rate is 7.4%/year, annual inflation rate assumed to be 2.5%/year, income tax and revenue from natural gas and NGL are ignored all dollar costs in constant 2017 US$.You do incredible work Dennis and I believe you are correct. Demand for oil is relatively inelastic which accounts for huge price swings when inventories get uncomfortably high or low. If supply doesn't keep up with our needs, price will rise to levels that will eventually create more supply and create switching into other energy sources which will reduce demand.Carlos Diaz x Ignored says: 03/15/2019 at 6:57 pmDennis Coyne x Ignored says: 03/16/2019 at 7:33 am
Why would the economy need more oil when oil prices are low? The low price is a signal that there is too much oil being produced relative to the demand for oil.
You don't seem to be aware of historical oil prices. For inflation adjusted oil prices since 1946 oil (WTI) spent:
27 years below $30
13 years at ~ $70
18 years at ~ $40
10 years at ~ $90
5 years at ~ $50
And the fastest growth in oil production took place precisely at the periods when oil was cheapest.
You simply cannot be more wrong about that.
And your models are based on a very big assumption, that the geology of the reserves is determinant for Peak Oil. It is not. There is plenty of oil in the world, but the extraction of most of it is unaffordable. The economy will decide (has decided) when Oil Peak takes place and what happens afterwards. Predictions/projections aren't worth a cent as usual. You could save yourself the trouble.Carlos,Dennis Coyne x Ignored says: 03/16/2019 at 7:34 am
I use both geophysics and economics, it is not one or the other it is both of these that will determine peak oil.
Of course oil prices have increased, the cheapest oil gets produced first and oil gradually gets more expensive as the marginal barrel produced to meet demand at the margin is more costly to produce.
Real Oil Prices do not correlate well with real economic growth and on a microeconomic level the price of oil will affect profits and willingness of oil companies to invest which in turn will affect future output. Demand will be a function of both economic output and efficiency improvements in the use of oil.
Thanks Mario.Dennis Coyne x Ignored says: 03/16/2019 at 10:49 amCarlos,HHH x Ignored says: 03/15/2019 at 9:44 pm
Also keep in mind that during the 1945-1975 period economic growth rates were very high as population growth rates were very high and the World economy was expanding rapidly as population grew and the World rebuilt in the aftermath of World War 2. Oil was indeed plentiful and cheap over this period and output grew rapidly to meet expanding World demand for oil. The cheapness of the oil led to relatively inefficient use of the resource, as constraints in output became evident and more expensive offshore, Arctic oil were extracted oil prices increased and there was high volatility due to Wars in the Middle east and other political developments. Oil output (C+C) since 1982 has grown fairly steadily at about an 800 kb/d annual average each year, oil prices move up and down in response to anticipated oil stock movements and are volatile because these estimates are often incorrect (the World petroleum stock numbers are far from transparent.)
On average since the Iran/Iraq crash in output (1982-2017) World output has grown by about 1.2% per year and 800 kb/d per year on average, prices have risen or fallen when there was inadequate or excess stocks of petroleum, this pattern (prices adjusting to stock levels) is likely to continue.
There has been little change when we compare 1982 to 1999 to 1999-2017 (divide overall period of interest in half) for either percentage increase of absolute increase in output.
I would agree that severe shortages of oil supply relative to demand (likely apparent by 2030) is likely to lead to an economic crisis as oil prices rise to levels that the World economy cannot adjust to (my guess is that this level will be $165/b in 2018$). Potentially high oil prices might lead to faster adoption of alternative modes of transport that might avert a crisis, but that is too optimistic a scenario even for me.China will be in outright deflation soon enough. Economic stimulus is starting to fail in China. They can't fill the so called bathtub up fast enough to keep pace with the water draining out the bottom. So to speak.Lightsout x Ignored says: 03/16/2019 at 6:25 am
Interest rates in China will soon be exactly where they are in Europe and Japan. Maybe lower.
In order to get oil to $90-$100 the value of the dollar is going to have to sink a little bit. In order to get oil to $140-$160 the dollar has to make a new all time low. Anybody predicting prices shooting up to $200 needs the dollar index to sink to 60 or below.
The reality is oil is going to $20. Because the rest of the world outside the US is failing. Dennis makes some nice graphs and charts and under his assumptions his charts and graphs are correct. But his assumptions aren't correct.
We got $20 oil and an economic depression coming.
Peak Oil is going to be deflationary as hell. Higher prices aren't in the cards even when a shortage actually shows up. We will get less supply at a lower price. Demand destruction is actually going to happen when economies and debt bubbles implode so we actually can't be totally sure we are ever going to see an actual shortage.
We could very well be producing 20-30% less oil than we do now and still not have a shortage.
Oh and EV's are going to have to compete with $20 oil not $150 oil.You are assuming that the oil is priced in dollars there are moves underway that raise two fingers to that.Dennis Coyne x Ignored says: 03/16/2019 at 7:41 am
https://www.scmp.com/economy/china-economy/article/2174453/china-and-russia-look-ditch-dollar-new-payments-system-moveHHH,Dennis Coyne x Ignored says: 03/16/2019 at 9:56 am
When do you expect the oil price to reach $20/b? We will have to see when this occurs.
It may come true when EVs and AVs have decimated demand for oil in 2050, but not before. EIA's oil price reference scenario from AEO 2019 below. That is a far more realistic prediction (though likely too low especially when peak oil arrives in 2025), oil prices from $100 to $160/b in 2018 US$ are more likely from 2023 to 2035 (for three year centered average Brent oil price).
HHH,HHH x Ignored says: 03/16/2019 at 6:50 pm
My assumptions are based on USGS mean resource estimates and EIA oil price estimates, as well as BIS estimates for the World monetary and financial system.
Your assumption that oil prices are determined by exchange rates only is not borne out by historical evidence. Exchange rates are a minor, not a major determinant of oil prices.Dennis,
Technically speaking. The most relevant trendline on price chart currently comes off the lows of 2016/02/08. It intersects with 2017/06/19. You draw the trendline on out to where price is currently. Currently price is trying to backtest that trendline.
On a weekly price chart i'd say it touches the underside of that trendline sometime in April in the low 60's somewhere between $62-$66 kinda depends on when it arrives there time wise. The later it takes to arrive there the higher price will be. I've been trading well over 20 years can't tell you how many times i've seen price backtest a trendline after it's been broken. It's a very common occurrence. And i wouldn't short oil until after it does.
But back to your question. $20 oil what kind of timetable. My best guess is 2021-2022. Might happen 2020 or 2023. And FED can always step in and weaken the dollar. Fundamentally the only way oil doesn't sink to $20 is the FED finds a way to weaken the dollar.
But understand the FED is the only major CB that currently doesn't have the need to open up monetary policy. It's really the rest of the worlds CB ultra loose monetary policy which is going to drive oil to $20.
Jul 07, 2011 | bloomberg.com
Elizabeth Warren has infuriated bankers and alienated half of Washington, all in the name of a new consumer protection agency she may not get to runElizabeth Warren's admirers often refer to her as a grandmother from Oklahoma. This is technically true. It's also what you might call posturing. Warren, 62, is a Harvard professor and perhaps the country's top expert on bankruptcy law. Over the past four years she has managed to stoke a fervent debate over the government's role in protecting American consumers from what she sees as the predatory practices of financial institutions, and she has positioned herself as the person to oversee a new federal agency to rewrite the rules of lending. Warren is a grandma from Oklahoma in roughly the same way Ralph Nader is a pensioner with a thing about cars.
If the grandmother perception is plausible, it's largely because Warren has a gift for parables and for placing herself in the middle of them as the embodiment of moral force. Thus, her account of the precise moment she realized that changing the way banks lend was going to require a new federal bureaucracy -- and that it was up to her to create it.
Warren begins her tale in the spring of 2007, before the housing crash and the financial crisis. She was on a plane back to Boston after a series of discouraging meetings with credit-card company executives. She had tried to sell them on an idea called the "clean card" that grew out of her academic work and her side gig as a guest on such shows as Dr. Phil , where she dispensed empathy and advice to audience members who were one bad check away from losing everything. The concept was simple: Offer the equivalent of a Good Housekeeping Seal of Approval to any credit-card company that disclosed all of its costs and fees up front, no fine print.
After a few meetings in which she was politely rebuffed, one executive walked Warren to the door and, with his arm around her, let her in on a trade secret: If he admitted that his card's actual rate was 17 percent, while his competitors were still claiming theirs was only 2.9 percent, his customers would desert him for the seemingly cheaper option, seal of approval or not. No credit-card company would ever go along with a clean card unless all of them did. And the only way to get all of them to do it was to require it by law.
At this point, Warren says, the banker made a confession. "We recognize that we have an unsustainable model, and it cannot work forever," she says he told her. "If we told people how much these things cost, they wouldn't use them."
Here she pauses for effect, and to take a sip of herbal tea. Warren is slight and kinetic, with wide, pale blue eyes behind rimless glasses. She punctuates her sentences with exclamations like "Holy guacamole!" It's difficult to tell whether these are spontaneous or deliberately deployed to soften her imposing professorial mien. Warren, who grew up poor and went to college on a debate scholarship, understands the power of expression. When she wants to underline a point, she leans in to conspire with her listener; then her voice goes quiet, as it does when she says she knew instantly the condescending executive was right. Her clean card was a flop.
And so, on the flight home, Warren turned to the problem of how to push those credit-card companies into doing the right thing. By landing time, she says, she had her answer: a powerful new federal agency whose sole mission would be to protect consumers, not only from confusing credit cards but from what she calls the "tricks and traps" of all dangerous financial products. The same way the Consumer Product Safety Commission guards against dangerous household products or the Food and Drug Administration watches out for contaminated produce and quack medications. The way Warren tells it, she pulled a piece of paper out of her backpack and got to work right there on the plane. "I started sketching out the problem and what the agency should look like."
It's a good story, even if the timeline is a little off. Warren's aides say she first pitched the idea of a consumer financial protection agency to then-Senator Barack Obama's office months before her fateful meeting with the executive. Whatever the idea's provenance, there's no doubting its influence. In a summer 2007 article in the journal Democracy , Warren outlined what her guardian agency would look like. "It is impossible to buy a toaster that has a one-in-five chance of bursting into flames and burning down your house," she wrote. "But it is possible to refinance an existing home with a mortgage that has the same one-in-five chance of putting the family out on the street -- and the mortgage won't even carry a disclosure of that fact to the homeowner." One was effectively regulated. The other was not.
The annals of academia are stuffed with provocative proposals. Most die in the library. A little over four years after she first dreamed it up, Warren's has become a reality. Last summer, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act, a package of financial reforms meant to prevent another economic meltdown. One of the bill's pillars is Warren's watchdog agency, now called the Consumer Financial Protection Bureau.
On July 21, exactly a year after Dodd-Frank became law, the CFPB is scheduled to open for business with a broad mandate to root out "unfair, deceptive, or abusive" lending practices. Consolidating functions previously scattered across seven different agencies, the bureau will have the power to dictate the terms of every consumer lending product on the market, from mortgages and credit cards to student, overdraft, and car loans. It will supervise not only banks and credit unions but credit-card companies, mortgage servicers, credit bureaus, debt collectors, payday lenders, and check-cashing shops. Dozens of researchers will track trends in the lending market and keep an eye on new products. Teams of examiners will prowl the halls of financial institutions to ensure compliance. The bureau is already at work on its first major initiative: simplifying the bewildering bank forms you sign when you buy a house.
Warren's life is a blur of building and promoting the agency she dreamed up -- and that she may never get to lead. On leave from Harvard, she has spent hundreds of hours on Capitol Hill visiting with members of Congress, Democrat and Republican, and flown across the country meeting with the heads of the nation's major banks and many smaller ones. If most financial firms have yet to embrace the bureau, she's made some headway, at least, among the community banks. "Some of my colleagues have not gotten there yet because they are convinced she's close to the antichrist," says Roger Beverage, the head of the Oklahoma Bankers Assn. "I don't think she's doing anything but speaking from the heart on community banks."
One other person she has not yet won over: Barack Obama. The President has not nominated her to head the bureau. Instead, last fall he gave her the title of special assistant to the President and special adviser to the Treasury and tasked her with getting the place up and running. For now, she is the non-head of a non-agency. The White House refuses to say whether Obama will eventually put her up for the job, allowing only that he is considering several candidates. In the coded language of appointment politics, it is a signal that they are seriously considering passing Warren over for someone else. A White House official says the Administration would like to have a nominee in place before Congress leaves for its August recess.
There's a reason for their wariness. The White House is reluctant to antagonize congressional Republicans in the middle of contentious negotiations over the federal debt ceiling. Warren's position requires Senate approval, and Republicans, many of whom regard the CFPB as more clumsy government meddling in the free market, are vehemently opposed to allowing its creator to be installed at its helm. Republicans have used a parliamentary maneuver to keep the Senate from officially adjourning for its traditional summer break, thus depriving Obama of the opportunity to sidestep their objections and make Warren a recess appointment.
"She's probably a nice person, as far as I know," says Senator Richard Shelby (R-Ala.), the ranking member of the Banking Committee, which will hold hearings on the eventual nominee for the post. Shelby has said Warren is too ideological to lead the agency, a judgment shared by many of his Republican colleagues. "She's a professor and all this," he says in a tone that makes it clear he is not paying her a compliment. "To think up something, to create something of this magnitude, and then look to be the head of it, I wouldn't do that," Shelby says. "It looks like you created yourself a good job, a good power thing."
Warren is not waiting for permission to do the job she may never get. She and her small team have hired hundreds of people, at a recent clip of more than 80 per month. The agency has already outgrown its office space and is divided between two buildings in downtown Washington -- with branches to be opened across the country. A fledgling staff of researchers is cranking out the CFPB's first reports, and its first bank examiners are being trained. Meanwhile, the office softball team has compiled a 2-3 record.
Above all, an institutional culture is emerging, and it is largely loyal to Warren and her idea of what the agency should be. She has attracted several top hires from outside the federal government. The bureau's chief operating officer, Catherine West, was previously president of Capital One; its head of research, Sendhil Mullainathan, is a behavioral economist and star Harvard professor; the chief of enforcement, Richard Cordray, is the former attorney general of Ohio; Raj Date, her deputy and head of the bureau's Research, Markets and Regulation Div., is a former banker at Capital One and Deutsche Bank. Warren, whose reputation as a scholar rests on her pioneering use of bankruptcy data, has imbued the place with her faith in quantitative analysis. Researchers she recruited and hired have begun to build the bureau's database of financial information, with a broad mandate to keep track of lending markets and find ways to make financial information more easily digestible.
While Washington bickers, Warren has built the CFPB largely to her specs and almost entirely free of interference from Congress and the Administration, which devotes most of its attention to fixing the economy. Few Cabinet secretaries can claim to have left as indelible a mark on the departments they lead as Elizabeth Warren has already left on the one she doesn't.
The CFPB's main offices are on two floors of a russet-colored office building a few blocks northwest of the White House. The government-gray cubicles and hallways spill over with new hires -- many of them young -- working 12- and 14-hour days elbow to elbow, pale and exuding a dogged cheerfulness that suggests that, no, they do not miss the sun. By the elevator bank is a calendar counting down the days until July 21.
Ten years ago, before she became a liberal icon, Warren was a popular Harvard professor known for taking a maternal interest in the students she chose as research assistants. She was famous, but only in the small corner of academia that cared about bankruptcy. "In my opinion she is the best bankruptcy scholar in the country," says Samuel Bufford, a law professor at Penn State who got to know Warren decades ago as a bankruptcy judge in California's Central District.
Work Warren did with Jay Westbrook, a law professor at the University of Texas at Austin, and Teresa Sullivan, a sociologist who is now president of the University of Virginia, reshaped the scholarly understanding of bankruptcy. Analyzing thousands of filings and interviewing many of the debtors themselves, they found that those who go bankrupt weren't, as commonly assumed, primarily poor or financially reckless. A great many of them were solidly middle class and had been driven to bankruptcy by circumstances they did not choose or could not control: the loss of a job, a medical disaster, or a divorce. The explosion in consumer credit in recent decades had only exacerbated the situation -- almost without realizing it, households could now slide faster and further into debt than ever before.
Warren, Westbrook, and Sullivan all saw their bankruptcy findings as a window into the broader travails of the financially fragile middle class. More than her co-authors, though, Warren sought a larger audience for the message. In 2003, along with her daughter, Amelia Warren Tyagi, she wrote The Two-Income Trap: Why Middle-Class Mothers & Fathers Are Going Broke , a book that combined arguments about the political and economic forces eroding middle-class financial stability with practical advice about how households could fight them. The language was sharper than in her academic work: "Subprime lending, payday loans, and the host of predatory, high-interest loan products that target minority neighborhoods should be called by their true names: legally sanctioned corporate plans to steal from minorities," Warren and Tyagi wrote.
The book got attention and Warren became a frequent TV guest. She was invited to give speeches and sit on panels on bankruptcy and debt. She was a regular on comedian Al Franken's radio show on the now defunct Air America network. "She's quite brilliant. She was always just an excellent guest," recalls Franken, now a Democratic U.S. Senator from Minnesota. "She has a very good sense of humor."
In 2003, Warren attended a fundraiser in Cambridge for Barack Obama, then running for U.S. Senate. When she walked up to shake his hand, he greeted her with two words: "predatory lending." As a senator, Obama would occasionally call Warren for her thoughts, though the two never became close.
It was the financial crisis that made Warren a star. In November 2008, in a nod to her growing reputation as a consumer advocate, Senate Majority Leader Harry Reid chose Warren to chair the congressional panel overseeing the TARP financial rescue program. The reports she helped produce over the next two and a half years and the hearings she helped lead gave the panel a higher profile than even its creators had predicted, as she articulated concerns that many Americans had about the wisdom of a massive Wall Street bailout. In perhaps her most famous moment, Warren grilled Treasury Secretary Timothy Geithner on AIG's share of the aid money and how it was that so much of it had ended up simply reimbursing the investment banks the insurer owed money.
Warren used her role on the panel, and the newfound visibility it gave her, to push for her agency. She worked the idea into a special report the committee released in January 2009, among a list of recommendations to head off fut ure financial crises. She wrote op-ed pieces, was on TV constantly, and met with at least 80 members of Congress. She also brought the idea to the Administration. Over a long lunch at an Indian restaurant in Washington, she pitched the concept to White House economic adviser Lawrence Summers, whom she knew from his tenure as Harvard's president. Inside Treasury, the idea was taken up by Michael Barr, a key architect of Dodd-Frank and a lawyer Warren had known for years. At least within the White House, Barr recalls, it wasn't hard to build support. "I think there was a general consensus that built pretty quickly that this was a good option," he says. "I didn't get any significant pushback on the idea." Barr's inside advocacy, combined with Warren's PR blitz, paid off. In June 2009, Obama released a "white paper" laying out his own financial regulatory proposals, and Warren's agency was in it.
Among the CFPB staff there is a strongly held belief that they have the opportunity not only to reshape an industry but reinvent what a government agency can be, to rescue the idea of bureaucracy from its association with sclerosis and timidity. People there emphasize that they are creating a 21st century agency. Still, there's a throwback Great Society feel to the place, with its faith in the abilities of very smart unelected administrators, armed with data, to iron out the inefficiencies and injustices of the world. "Nobody looks at consumer finance regulation as it existed over the past decade and says, 'Yeah, that seemed to work all right, let's do more of that,' " says Raj Date, a square-jawed 40-year-old who speaks in the confident, numbers-heavy parlance of Wall Street.
Regardless of whether the CFPB has a director by its July 21 "transfer date," there are certain things it will immediately begin to do. One is to send teams of examiners into banks and credit unions to make sure they are complying with existing consumer finance regulations. When the bureau is fully staffed up -- initially, it will have some 500 employees and an annual budget of around $500 million -- a majority of the people who work there will be examiners. The bureau has only supervisory power over banks with assets of more than $10 billion, though the rules it writes will still apply to smaller banks. Banks on the low end of the scale will see a team of examiners for a few weeks every two years, unless there are specific complaints to investigate. Most of the biggest banks, those with assets of $100 billion and up, will have CFPB examiners in residence year-round. The examiners will go to work parsing the terms of mortgages and other loans, searching for evidence of consumer harm. They'll look at how the products are marketed and sold to make sure it's done transparently, that costs and fees are disclosed up front.
What the bureau will not be able to do without a director is send its examiners into nonbank financial institutions. Dodd-Frank gives the CFPB jurisdiction over payday lenders, check cashers, mortgage brokers, student loan companies, and the like. Because this is an expansion of regulatory powers, it will not take effect until a permanent director is in place.
The bureau is less willing to discuss the specifics of what will happen when it finds evidence of wrongdoing. The press office refused to make the head of enforcement, Richard Cordray, available for an interview. Like other enforcement agencies, the CFPB will have a variety of measures at its fingertips: It will be able to give firms a talking-to, or issue so-called "supervisory guidance" papers on problematic financial products. It will be able to send cease-and-desist orders. And if all else fails, the bureau will be able to take offenders to court.
The CFPB will also have broad rule-making powers over everything from credit-card marketing campaigns to car loan terms to the size of bank overdraft fees. For now, it has confined itself to initiatives less likely to arouse wide opposition among financial firms. The major one at the moment is developing a clear, simple, two-page mortgage form that merges the two confusing ones borrowers now confront. Bureau staff met with consumer advocates and mortgage brokers last fall, then put up two versions of a possible new form on the bureau's website, where consumers were invited to leave critiques. About 14,000 people weighed in. The forms are now being shown to focus groups around the country. A new version is due out in August.
This lengthy process is meant to demonstrate the bureau's commitment to a sort of radical openness to counter accusations that it's a body of unaccountable bureaucrats. In another gesture, Warren's calendar is posted on the website so that anyone can see who has a claim on her time. The undeniable sense among bureau staffers that they are political targets tempers that commitment to transparency a bit. The press office is jittery about allowing reporters to talk to staff on the record, and Warren agreed to two interviews on the condition that Bloomberg Businessweek allow her to approve quotes before publication.
If the supervision and enforcement division is the long arm of the bureau, its eyes and brain will be Research, Markets and Regulations, headed by Raj Date. Teams of analysts will follow various markets -- credit cards, mortgages, or student loans -- to spot trends and examine new products. Economists and other social scientists on staff will help write financial disclosure forms that make intuitive sense. The benefits of this sort of work, Date argues, will extend beyond just protecting consumers. It will help spot signs of more systemic risks. If the bureau and its market research teams had been in place five years ago, he says, they would have spotted evidence of the coming mortgage meltdown and could have coordinated with the bureau's enforcement division to head it off. "If it was someone's job to be in touch with the marketplace and monitor what was going on," Date says, "it would have been very difficult not to notice that three different kinds of mortgages had gone from nothing to a very surprising share of the overall marketplace in the span of, honestly, like three years."
Were it not for a head of prematurely gray hair, Patrick McHenry could still pass for the college Republican he once was. Elected to Congress from North Carolina seven years ago at age 29, he speaks through an assiduous smile and arches his eyebrows as he listens -- furrowing them quizzically at arguments he disagrees with. In late May, McHenry assumed the role of Warren's chief antagonist in Congress. At an oversight hearing he was chairing, McHenry accused Warren of misleading Congress about whether she had given advice to Treasury and Justice Dept. officials who were investigating companies for mortgage fraud. McHenry said she had concealed her conversations. Warren insisted she had disclosed them.
The hearing then took a bizarre turn. McHenry called for a recess so members of the committee could go to the House floor for a vote. Warren replied that she had agreed to testify for an hour and could not stay any longer. "Congressman, you are causing problems," she said. "We had an agreement." Offended, McHenry shot back: "You're making this up, Ms. Warren. This is not the case." Warren's response, an outraged gasp, was played on cable news.
In a conversation a month later in his Capitol Hill office, McHenry is eager to emphasize that his problem is not with Warren, but with the bureau itself. That's not to say he feels he has anything to apologize for. "I've asked questions of a litany of Administration officials from Democrat and Republican Administrations, and I've never seen an action by any witness like I saw that day," he says.
Like most congressional Republicans -- and a broad array of business groups, including the Chamber of Commerce, the Financial Services Roundtable, and the National Association of Federal Credit Unions -- McHenry opposed the creation of the CFPB and voted against Dodd-Frank. At the time, the bureau's opponents argued that its seemingly noble goals would not only hurt financial firms -- depriving them of the ability to compensate for risky borrowers by charging higher interest rates -- they would also hurt borrowers. The prospect of limits on the sort of rates and fees they could charge would cause banks and payday lenders alike to lend less and to not lend at all to marginal borrowers at a time when the economy needed as much credit as it could get.
Where it's not actively harmful, McHenry argues, the bureau will be redundant. If there's fraud or deceptive marketing in the consumer lending market, the federal government can prosecute it through the Federal Trade Commission. Clearer mortgage forms are all well and good, but Congress can take care of that, he says, noting that he introduced legislation for a simpler mortgage form three years ago. In response to arguments like these, Warren simply points to the record of those existing regulators: the Fed and the Housing & Urban Development Dept. have haggled over a simpler mortgage form for years. As for fears that the bureau will cap the interest rates companies can charge, she notes that Dodd-Frank explicitly prevents it from doing that.
Warren has been uncharacteristically tightlipped about her own ambitions. She refuses to say whether she even wants the job and has never publicly expressed a desire for it. In a way, the White House may do her a favor by not nominating her. If the President decides to go with a compromise candidate to appease Republicans, she will be spared the indignity of being tossed aside. She can't be said to have lost a job she was never offered.
Yet Warren gives the distinct impression that she will not suffer long if the President passes her over. Harvard has more than its share of celebrity professors who have gone to Washington and returned. The experience could also lead to a different kind of life in politics: Democrats in Massachusetts have been urging her to come home to run for Senate against Republican Scott Brown. There would be books to write, television appearances to make, and, who knows, maybe a show of her own. And whatever happens, she will get to tell the second half of the story of how she started a government agency. Whether the story ends with her confirmation or being driven from town, it's almost certain that the character of Elizabeth Warren will come out looking just fine.( Corrects the year Elizabeth Warren moved to Washington to work at the Consumer Financial Protection Bureau )
Mar 19, 2019 | www.nakedcapitalism.com
rc, March 18, 2019 at 4:01 pm
Elizabeth Warren had a good speech at UC-Berkeley. She focused on the middle class family balance sheet and risk shifting. Regulatory policies and a credit based monetary system have resulted in massive real price increases in inelastic areas of demand such as healthcare, education and housing eroding purchasing power.
Further, trade policies have put U.S. manufacturing at a massive disadvantage to the likes of China, which has subsidized state-owned enterprises, has essentially slave labor costs and low to no environmental regulations. Unrestrained immigration policies have resulted in a massive supply wave of semi- and unskilled labor suppressing wages.
Recommended initial steps to reform:
1. Change the monetary system-deleverage economy with the Chicago Plan (100% reserve banking) and fund massive infrastructure lowering total factor costs and increasing productivity. This would eliminate
2. Adopt a healthcare system that drives HC to 10% to 12% of GDP. France's maybe? Medicare model needs serious reform but is great at low admin costs.
3. Raise tariffs across the board or enact labor and environmental tariffs on the likes of China and other Asian export model countries.
4. Take savings from healthcare costs and interest and invest in human capital–educational attainment and apprenticeships programs.
5. Enforce border security restricting future immigration dramatically and let economy absorb labor supply over time.
Video of UC-B lecture: https://www.youtube.com/watch?v=akVL7QY0S8A&feature=youtu.be
Jerry B, March 18, 2019 at 5:26 pm
As I have said in other comments, I like Liz Warren a lot within the limits of what she is good at doing (i.e. not President) such as Secretary of the Treasury etc. And I think she likes the media spotlight and to hear herself talk a little to much, but all quibbling aside, can we clone her??? The above comment and video just reinforce "Stick to what you are really good at Liz!".
I am not a Liz Warren fan boi to the extent Lambert is of AOC, but it seems that most of the time when I hear Warren, Sanders, or AOC say something my first reaction is "Yes, what she/he said!".
Mar 17, 2019 | angrybearblog.comPolitics Taxes/regulation I just had an unusual experience. I was convinced by an op-ed. One third of the way through "Elizabeth Warren Actually Wants to Fix Capitalism" by David Leonhardt, I was planning to contest one of Leonhard's assertions. Now I am convinced.
The column praises Elizabeth Warren. Leonhardt (like his colleague Paul Krugman) is careful to refrain from declaring his intention to vote for her in the primary. I am planning to vote for her. I mostly agreed with the column to begin with, but was not convinced by Leonard's praise of Warren's emphasis on aiming for more equal pre-fiscal distribution of income rather than just relying on taxes and transfers to redistribute.
In particular, I was not convinced by
This history suggests that the Democratic Party's economic agenda needs to become more ambitious. Modest changes in the top marginal tax rate or in middle-class tax credits aren't enough. The country needs an economic policy that measures up to the scale of our challenges.
Here two issues are combined. One is modest vs major changes. The other is that predistribution is needed in addition to redistribution, as discussed even more clearly here
"Clinton and Obama focused on boosting growth and redistribution," Gabriel Zucman, a University of California, Berkeley, economist who has advised Warren, says. "Warren is focusing on how pretax income can be made more equal."
The option of a large change in the top marginal tax rate and a large middle class tax credit isn't considered in the op-ed. I think this would be excellent policy which has overwhelming popular support as measured by polls (including the support of a large fraction of self declared Republicans). I note from time to time that, since 1976 both the Democrats who have been elected president campaigned on higher taxes on high incomes and lower taxes on the middle class (and IIRC none of the candidates who lost did).
This is also one of my rare disagreements with Paul Krugman , and, finally one of my rare disagreements with Dean Baker ( link to a book which I haven't read).
After the jump, I will make my usual case. But first, I note Leonardt's excellent argument for why "soak the rich and spread it out thin" isn't a sufficient complete market oriented egalitarian program. It is phrased as a question.
"How can the next president make changes that will endure, rather than be undone by a future president, as both Obama's and Clinton's top-end tax increases were?"
Ahh yes. High taxes on high income and high wealth would solve a lot of problems. But they will be reversed. New programs such as Obamacare or Warren's proposed universal pre-K and subsidized day care will not. Nor will regulatory reforms such as mandatory paid sick leave and mandatory paid family leave. I am convinced that relatively complicated proposals are more politically feasible, not because it is easier to implement them, but because it is very hard to eliminate programs used by large numbers of middle class voters.
I'd note that I had already conceded the advantage of a regulatory approach which relies on the illusion that the costs must be born by the regulated firms. Here I note that fleet fuel economy standards are much more popular than increased gasoline taxes. One is a market oriented approach. The other is one that hides behind the market as consumers don't know that part of the price of a gas guzzler pays the shadow price of reducing fleet average milage.
OK my usual argument after the jump
It is unusual for me to disagree with Baker, Leonhardt, and (especially) Krugman. I am quite sure that the Democratic candidate for president should campaign on higher taxes on the rich and lower taxes for the non-rich.
To be sure, I can see that that isn't the only possible policy improvement. Above, I note the advantages of hiding spending by mandating spending by firms and of creating entitlements which are very hard for the GOP to eliminate. I'd add that we have to do a lot to deal with global warming. Competition policy is needed for market efficiency. I think unions and restrictions on firing without cause have an effect on power relations which is good in addition to the effect on income distribution.
But I don't understand the (mildly) skeptical tone. I will set up and knock down some straw men
1) Total straw -- US voters are ideological conservatives and operational liberals. They reject soaking the rich, class war, and redistribution. To convince them to help the non rich, one has to disguise what one is doing.
This is especially silly, and no one in the discussion argues this (anymore -- people used to argue this). The polls and elections are clear. US voters want higher taxes on high incomes and on the wealthy. Also Congress has gone along -- the effective tax rate on the top 1% was about the same after Obama as before Reagan
2) Extremely high marginal tax rates are bad for the economy. Here this is often conceded, in particular by people arguing for modest increases in the top marginal tax rate. The claim is not supported by actual evidence. In particular the top rate was 70% during the 60s boom.
3) High tax rates cause tax avoidance. This reduces efficiency and also means that they don't generate the naively expected revenue. There is very little evidence that this is a huge issue . In particular there was a huge increase in tax sheltering after the 1981 Kemp-Roth tax cuts and reforms. It is possible to design a tax code which makes avoidance difficult (as shown by the 1986 Kemp-Bradley tax reform). It is very hard to implement such a code without campaigning on soaking the rich and promoting class uh struggle.
4) More generally, redistribution does not work -- the post tax income distribution is not equalized because the rich find a way. This is super straw again. All the international and time series evidence points the other way.
I don't see a political or policy argument against a large increase in taxes on high incomes (70% bracket starting at $400,000 a year) used to finance a large expansion of the EITC (so most households receive it).
I think a problem is that a simple solution does not please nerds. I think another is that a large fraction of the elite would pay the high taxes and it is easier to trick them into trying to make corporations pay the costs.
But I really don't understand.
Denis Drew , March 17, 2019 3:51 pmBert Schlitz , March 17, 2019 10:14 pm
First, whenever anybody (that I hear or read) talks about what to do with the revenue from higher taxes on the rich, they always suggest this or that government program (education, medical, housing). I always think of putting more money back in the pockets of my middle 59% incomes to make up for the higher consumer prices they will have to pay when the bottom 40% get unionized.
Of course the 59% can use that money to pay taxes for said government programs -- money is fungible. But, that re-inserts an important element or dimension or facet which seems perpetually forgotten (would not be in continental Europe or maybe French Canada).
Don't forget: predistribution goal = a reunionized labor market. Don't just look to Europe for redistribution goals -- look at their predistribution too.run75441 , March 18, 2019 6:09 am
Nobody in the 60's that was taxed at a marginal 70% rate paid 70%. The top effective rate was about 32-38%, which was far higher than today, but you get the point. The income tax code was as much control of where investment would take place as much as anything ..Ronald Reagan whined about this for years. Shove it grease ball. There was a reason why.
Redistribution won't work because the system is a debt based ponzi scheme. The US really hasn't grown much since 1980, instead you have had the growth in debt.
You need to get rid of the federal reserve system's banks control of the financial system, which they have had since the 1830's in terms of national control(from Hamilton's Philly, which was the financial epicenter before that) and de Rothschild free since the 1930's(when the bank of de Rothschild ala the Bank of England's reserve currency collapsed). Once we have a debt free currency that is usury free, then you can develop and handle intense changes like ecological problems ala Climate Change, which the modern plutocrats cannot and will not solve.
They have been ramming debt in peoples face since 1950 and since 1980 it has gotten vulgar. They know they are full of shit and can't win a fair game.Robert Waldmann , March 18, 2019 4:47 pm
Would you agree a secure healthcare system without work requirements for those who can not afford healthcare is a form of pre-distribution of income? Today's ACA was only a step in the right direction and is being tampered with by ideologs to limit its reach. It can be improved upon and have a socio-economic impact on people. Over at Medpage where I comment on healthcare, the author makes this comment:
"Investing in improvements in patients' social determinants of health -- non-medical areas such as housing, transportation, and food insecurity -- is another potentially big area, he said. "It's a major opportunity for plans to position around this and make it real. The more plans can address social determinants of health, [the more] plans can become truly organizations dedicated to health as opposed to organizations dedicated to incurring medical costs, and that to me is a bright future and a bright way to position the industry."
Many of the "social determinants of health" are not consciously decided by the patient and are predetermined by income, social status or politics, and education. What is being said in this paragraph makes for nice rhetoric and is mostly unachievable due to the three factors I suggested. And yes, you can make some progress. People can make healthy choices once the pre-determinants to doing so are resolved.
Another factor which was left dangling when Liebermann decided to be an ass is Long Term Healthcare for the elderly and those who are no longer capable. Medicare is only temporary and Medicaid forces one to be destitute. There is a large number of people who are approaching the time when they will need such healthcare till death. We have no plans for this tsunami of people.
The tax break was passed using Reconciliation. In 7-8 years out, there is a planned shift in taxes to be levied on the middle income brackets to insure the continuamce of Trump's tax break for the 100 or so thousand households it was skewed towards. If not rescinding the tax break then it should be fixed so it sunsets as did Bush's tax break due to its budget creating deficit. Someone running for the Pres position should be discussing this and pointing out how Republicans have deliberately undermined the middle income brackets.
We should not limit solutions to just income when there are so many areas we are lacking in today.
Mu $.02.run75441 , March 18, 2019 9:01 pm
I guess I consider food stamps, Medicare, Medicaid, Social Security old age pensions and disability pensions to be redistribution. My distinction is whether it is tax financed. Providing goods or services as in Medicare and food stamps seems to me basically the same as providing cash as in TANF and old age pensions.
There is also a difference between means tested and age dependent eligiability, but I don't consider it fundamental.
I assert that Medicare (especially plan B) is a kind of welfare basically like TANF and food stamps.
(and look forward to a calm and tranquil discussion of that opinion).
Medicare is 41% funded by general revenues. The rest comes from payroll taxes and beneficiary premiums. Advantage plans cost more than traditional Medicare for providing the same benefits and also extract a premium fee. I do not believe I have been mean to you. I usually question to learn more. I am happy to have your input.
I am writing for Consumer Safety Org on Woman's healthcare this time and also an article on the Swiss struggling to pay for cancer fighting drugs.
I am always looking for input.