Mirowski's book is one of the best on the crisis: he mixes the eye of an anthropologist or journalist examining our daily lives
and then leaps up to 20,000 feet with ease to provide a wider intellectual and historical context. His take is novel, certainly
from the Left, but well informed of debates on the Right. Empirical, but with a theoretical lens as well. If you want to understand
not just the economics or politics of what happened, but to situate those events within a wider history of the ideas that played
in a role in the Recession, Mirowski has an incredibly erudite account.
Long review:
Mirowski is a member of the "Institute for New Economic Thinking", an non-profit aimed to correct the orthodoxies of economics,
"neoliberal" ideas in particular. He opens this book with a report from one of the first meetings, which happened to feature "bold
and original thinkers" like Ken "Excel for Dummies" Rogoff, Larry Summers and Niall Ferguson. The meeting ended with a timid call
to add an extra chapter to standard Econ101 textbooks briefly describing the crisis. Mirowski further rightly groans at hand-wringing
over "happiness measurements", morality in markets and peevish complaints of "greedy bankers" (as if avarice has only existed
in the past ten years.)
How did this rigidity come to be? Mirowski answers by suggesting that we must understand neoliberalism as a Russian doll. The
innermost doll of experts emerged from the Mont Pelerlin Society, an organization that was by design very hierarchical. He describes,
for instance, correspondence between Popper and Hayek. Popper, following his philosophy of open debate suggested that MPS should
have at least one respectable socialist. Hayek shut down this idea, insisting that agreement on first principles was a necessary
condition for membership. This tightly networked group of intellectuals slowly incubated neoliberalism and developed a political
strategy for propagating it.
Mirowski further points out that the Neoliberal Thought Collective were excellent sloganeers. Friedman's most famous academic
text, for instance, argues that a lack of government intervention caused the Great Depression: a series of rural bank failures
caused by an overly tight supply of money. However, when Friedman penned his Newsweek column he claimed with a straight face that
the government *caused* the Recession, that is, by a lack of action in expanding the supply of money and reducing interest rates.
This is how the Russian doll works: nuance for the insiders, ignorance for the outsiders.
There is a further layer to the doll though. Pivoting off of Foucault's final lectures at the College of France, Mirowski argues
that there is an everyday neoliberalism that has emerged. Beyond political theory and public policy, neoliberalism is experienced
on a quotidian level and it is on that potent terrain that it has survived the crisis. I, right now, am taking time out of my
day to write a book review which I will be paid nothing for, which is in the service of the Bezo empire to sell even more books
and probably destroy more local bookshops and which will be used to further quantify me into some bits of data in the sky so I
can be marketed to even more heavily. But but but: I am individually expressing myself! How free am I! The neoliberal self is
a creature coerced into being a "free" entrepreneur. It is the poor un/underemployed soul who thinks himself to be a failure or
inadequate because he was not lucky enough to ride the right wave. The old liberal arts dictum to "know thy self" becomes "express
thy self, and monetize it too!" This middle chapter here is the most engrossing part of the book. Mirowski delves into a sundry
of sources on our culture and then leverages a novel and erudite analysis of Foucault to bring it all into sharp focus.
In closing, it is truly ironic that the other review of this book is so gravely concerned that Mirowski might be a socialist.
We have a wonderful little anthropological artifact here of the NTC at work: "Whatever this book says, it's got 'Red' in a chapter
title. I am a Very Reasonable Person and thus must be suspicious." Let me assure him/her: there are no calls for a violent revolution
of the proletariat. On the contrary, Mirowski heads out to the outermost layer of the doll and analyzes why neoliberalism won.
In particular, he argues that the NTC provided a powerful account of the market as a natural entity that *cannot* be messed with.
Consequently, the Recession had nothing to do with the structure of capitalism itself, it was just a "once in a lifetime" moment
akin to a natural disaster. An act of God.
Mirowski's careful history here shows that just the opposite is true. There was a concerted effort to propagate a particular
ignorance and the Recession itself is by no means removed from that particular effort.
"... a friend of mine, born in Venice and a long-time resident of Rome, pointed out to me that dogs are a sign of loneliness. ..."
"... And the cafes and restaurants on weekends in Chicago–chockfull of people, each on his or her own Powerbook, surfing the WWW all by themselves. ..."
"... The preaching of self-reliance by those who have never had to practice it is galling. ..."
"... Katherine: Agreed. It is also one of the reasons why I am skeptical of various evangelical / fundi pastors, who are living at the expense of their churches, preaching about individual salvation. ..."
"... So you have the upper crust (often with inheritances and trust funds) preaching economic self-reliances, and you have divines preaching individual salvation as they go back to the house provided by the members of the church. ..."
George Monbiot on human loneliness and its toll. I agree with his observations. I have been cataloguing them in my head for
years, especially after a friend of mine, born in Venice and a long-time resident of Rome, pointed out to me that dogs are
a sign of loneliness.
A couple of recent trips to Rome have made that point ever more obvious to me: Compared to my North Side neighborhood in Chicago,
where every other person seems to have a dog, and on weekends Clark Street is awash in dogs (on their way to the dog boutiques
and the dog food truck), Rome has few dogs. Rome is much more densely populated, and the Italians still have each other, for good
or for ill. And Americans use the dog as an odd means of making human contact, at least with other dog owners.
But Americanization advances: I was surprised to see people bring dogs into the dining room of a fairly upscale restaurant
in Turin. I haven't seen that before. (Most Italian cafes and restaurants are just too small to accommodate a dog, and the owners
don't have much patience for disruptions.) The dogs barked at each other for while–violating a cardinal rule in Italy that mealtime
is sacred and tranquil. Loneliness rules.
And the cafes and restaurants on weekends in Chicago–chockfull of people, each on his or her own Powerbook, surfing the
WWW all by themselves.
That's why the comments about March on Everywhere in Harper's, recommended by Lambert, fascinated me. Maybe, to be less lonely,
you just have to attend the occasional march, no matter how disorganized (and the Chicago Women's March organizers made a few
big logistical mistakes), no matter how incoherent. Safety in numbers? (And as Monbiot points out, overeating at home alone is
a sign of loneliness: Another argument for a walk with a placard.)
In Britain, men who have spent their entire lives in quadrangles – at school, at college, at the bar, in parliament – instruct
us to stand on our own two feet.
With different imagery, the same is true in this country. The preaching of self-reliance by those who have never had to
practice it is galling.
Katherine: Agreed. It is also one of the reasons why I am skeptical of various evangelical / fundi pastors, who are living
at the expense of their churches, preaching about individual salvation.
So you have the upper crust (often with inheritances and trust funds) preaching economic self-reliances, and you have divines
preaching individual salvation as they go back to the house provided by the members of the church.
How universities, banks and the government turned student debt into America's next financial black hole...
On a wind-swept, frigid night in February 2009, a 37-year-old schoolteacher named Scott Nailor parked his rusted '92 Toyota Tercel
in the parking lot of a Fireside Inn in Auburn, Maine. He picked this spot to have a final reckoning with himself. He was going to
end his life.
Beaten down after more than a decade of struggle with student debt, after years of taking false doors and slipping into various
puddles of bureaucratic quicksand, he was giving up the fight. "This is it, I'm done," he remembers thinking. "I sat there and just
sort of felt like I'm going to take my life. I'm going to find a way to park this car in the garage, with it running or whatever."
Nailor's problems began at 19 years old, when he borrowed for tuition so that he could pursue a bachelor's degree at the University
of Southern Maine. He graduated summa cum laude four years later and immediately got a job in his field, as an English teacher.
Bu t he graduated with $35,000 in debt, a big hill to climb on a part-time teacher's $18,000 salary. He struggled with payments,
and he and his wife then consolidated their student debt, which soon totaled more than $50,000. They declared bankruptcy and defaulted
on the loans. From there he found himself in a loan "rehabilitation" program that added to his overall balance. "That's when the
noose began to tighten," he says.
The collectors called day and night, at work and at home. "In the middle of class too, while I was teaching," he says. He ended
up in another rehabilitation program that put him on a road toward an essentially endless cycle of rising payments. Today, he pays
$471 a month toward "rehabilitation," and, like countless other borrowers, he pays nothing at all toward his real debt, which he
now calculates would cost more than $100,000 to extinguish. "Not one dollar of it goes to principal," says Nailor. "I will never
be able to pay it off. My only hope to escape from this crushing debt is to die."
After repeated phone calls with lending agencies about his ever-rising interest payments, Nailor now believes things will only
get worse with time. "At this rate, I may easily break $1 million in debt before I retire from teaching," he says.
Nailor had more than once reached the stage in his thoughts where he was thinking about how to physically pull off his suicide.
"I'd been there before, that just was the worst of it," he says. "It scared me, bad."
He had a young son and a younger daughter, but Nailor had been so broken by the experience of financial failure that he managed
to convince himself they would be better off without him. What saved him is that he called his wife to say goodbye. "I don't know
why I called my wife. I'm glad I did," he says. "I just wanted her or someone to tell me to pick it up, keep fighting, it's going
to be all right. And she did."
From that moment, Nailor managed to focus on his family. Still, the core problem – the spiraling debt that has taken over his
life, as it has for millions of other Americans – remains.
Horror stories about student debt are nothing new. But this school year marks a considerable worsening of a tale that ought to
have been a national emergency years ago. The government in charge of regulating this mess is now filled with predatory monsters
who have extensive ties to the exploitative for-profit education industry – from Donald Trump himself to Education Secretary Betsy
DeVos, who sets much of the federal loan policy, to Julian Schmoke, onetime dean of the infamous DeVry University, whom Trump appointed
to police fraud in education.
Americans don't understand the student-loan crisis because they've been trained to view the issue in terms of a series of separate,
unrelated problems.
They will read in one place that as of the summer of 2017, a record 8.5 million Americans are in default on their student debt,
with about $1.3 trillion in loans still outstanding.
In another place, voters will read that the cost of higher education is skyrocketing, soaring in a seemingly market-defying arc
that for nearly a decade now has run almost double the rate of inflation. Tuition for a halfway decent school now frequently surpasses
$50,000 a year. How, the average newsreader wonders, can any child not born in a yacht afford to go to school these days?
In a third place, that same reader will see some heartless monster, usually a Republican, threatening to cut federal student lending.
The current bogeyman is Trump, who is threatening to slash the Pell Grant program by $3.9 billion, which would seem to put higher
education even further out of reach for poor and middle-income families. This too seems appalling, and triggers a different kind
of response, encouraging progressive voters to lobby for increased availability for educational lending.
But the separateness of these stories clouds the unifying issue underneath: The education industry as a whole is a con. In fact,
since the mortgage business blew up in 2008, education and student debt is probably our reigning unexposed nation-wide scam.
It's a multiparty affair, what shakedown artists call a "big store scheme," like in the movie The Sting : a complex deception
requiring a big cast to string the mark along every step of the way. In higher education, every party you meet, from the moment you
first set foot on campus, is in on the game.
America as a country has evolved in recent decades into a confederacy of widescale industrial scams. The biggest slices of our
economic pie – sectors like health care, military production, banking, even commercial and residential real estate – have become
crude income-redistribution schemes, often untethered from the market by subsidies or bailouts, with the richest companies benefiting
from gamed or denuded regulatory systems that make profits almost as assured as taxes. Guaranteed-profit scams – that's the last
thing America makes with any level of consistent competence. In that light, Trump, among other things, the former head of a schlock
diploma mill called Trump University, is a perfect president for these times. He's the scammer-in-chief in the Great American Ripoff
Age, a time in which fleecing students is one of our signature achievements.
It starts with the sales pitch colleges make to kids. The thrust of it is usually that people who go to college make lots more
money than the unfortunate dunces who don't. "A bachelor's degree is worth $2.8 million on average over a lifetime" is how Georgetown
University put it. The Census Bureau tells us similarly that a master's degree is worth on average about $1.3 million more than a
high school diploma.
But these stats say more about the increasing uselessness of a high school degree than they do about the value of a college diploma.
Moreover, since virtually everyone at the very highest strata of society has a college degree, the stats are skewed by a handful
of financial titans. A college degree has become a minimal status marker as much as anything else. "I'm sure people who take polo
lessons or sailing lessons earn a lot more on average too," says Alan Collinge of Student Loan Justice, which advocates for debt
forgiveness and other reforms. "Does that mean you should send your kids to sailing school?"
But the pitch works on everyone these days, especially since good jobs for Trump's beloved "poorly educated" are scarce to nonexistent.
Going to college doesn't guarantee a good job, far from it, but the data show that not going dooms most young people to an increasingly
shallow pool of the very crappiest, lowest-paying jobs. There's a lot of stick, but not much carrot, in the education game.
It's a vicious cycle. Since everyone feels obligated to go to college, most everyone who can go, does, creating a glut of graduates.
And as that glut of degree recipients grows, the squeeze on the un-degreed grows tighter, increasing further that original negative
incentive: Don't go to college, and you'll be standing on soup lines by age 25.
With that inducement in place, colleges can charge almost any amount, and kids will pay – so long as they can get the money. And
here we run into problem number two: It's too easy to find that money.
Parents, not wanting their kids to fall behind, will pay every dollar they have. But if they don't have the cash, there is a virtually
unlimited amount of credit available to young people. Proposed cuts to Pell Grants aside, the landscape is filled with public and
private lending, and students gobble it up. Kids who walk into financial-aid offices are often not told what signing their names
on the various aid forms will mean down the line. A lot of kids don't even understand the concept of interest or amortization tables
– they think if they're borrowing $8,000, they're paying back $8,000.
Nailor certainly was unaware of what he was getting into when he was 19. "I had no idea [about interest]," he says. "I just remember
thinking, 'I don't have to worry about it right now. I want to go to school.' " He pauses in disgust. "It's unsettling to remember
how it was like, 'Here, just sign this and you're all set.' I wish I could take the time machine back and slap myself in the face."
The average amount of debt for a student leaving school is skyrocketing even faster than the rate of tuition increase.
In 2016, for instance, the average amount of debt for an exiting college graduate was a staggering $37,172. That's a rise of six
percent over just the previous year. With the average undergraduate interest rate at about 3.7 percent, the interest alone costs
around $115 per month, meaning anyone who can't afford to pay into the principal faces the prospect of $69,000 in payments over 50
years.
So here's the con so far.
You must go to college because you're screwed if you don't.
Costs are outrageously high, but you pay them because you have to, and because the system makes it easy to borrow massive amounts
of money
The third part of the con is the worst: You can't get out of the debt.
Since government lenders in particular have virtually unlimited power to collect on student debt – preying on everything from
salary to income-tax returns – even running is not an option. And since most young people find themselves unable to make their full
payments early on, they often find themselves perpetually paying down interest only, never touching the principal. Our billionaire
president can declare bankruptcy four times, but students are the one class of citizen that may not do it even once.
October 2017 was supposed to represent the first glimmer of light at the end of this tunnel. This month marks the 10th anniversary
of the Public Service Loan Forgiveness program, one of the few avenues for wiping out student debt. The idea, launched by George
W. Bush, was pretty simple: Students could pledge to work 10 years for the government or a nonprofit and have their debt forgiven.
In order to qualify, borrowers had to make payments for 10 years using a complex formula. This month, then, was to start the first
mass wipeouts of debt in the history of American student lending. But more than half of the 700,000 enrollees have already been expunged
from the program for, among other things, failing to certify their incomes on time, one of many bureaucratic tricks employed to limit
forgiveness eligibility. To date, fewer than 500 participants are scheduled to receive loan forgiveness in this first round.
Moreover, Trump has called for the program's elimination by 2018, meaning that any relief that begins this month is likely only
temporary. The only thing that is guaranteed to remain real for the immediate future are the massive profits being generated on the
backs of young people, who before long become old people who, all too often, remain ensnared until their last days in one of the
country's most brilliant and devious moneymaking schemes.
Everybody wins in this madness, except students. Even though many of the loans are originated by the state, most of them are serviced
by private or quasi-private companies like Navient – which until 2014 was the student-loan arm of Sallie Mae – or Nelnet, companies
that reported a combined profit of around $1 billion last year (the U.S. government made a profit of $1.6 billion in 2016!). Debt-collector
companies like Performant (which generated $141.4 million in revenues; the family of Betsy DeVos is a major investor), and most particularly
the colleges and universities, get to prey on the desperation and terror of parents and young people, and in the process rake in
vast sums virtually without fear of market consequence.
About that: Universities, especially public institutions, have successfully defended rising tuition in recent years by blaming
the hikes on reduced support from states. But this explanation was blown to bits in large part due to a bizarre slip-up in the middle
of a controversy over state support of the University of Wisconsin system a few years ago.
In that incident, UW raised tuition by 5.5 percent six years in a row after 2007. The school blamed stresses from the financial
crisis and decreased state aid. But when pressed during a state committee hearing in 2013 about the university's finances, UW system
president Kevin Reilly admitted they held $648 million in reserve, including $414 million in tuition payments. This was excess hidey-hole
cash the school was sitting on, separate and distinct from, say, an endowment fund.
After the university was showered with criticism for hoarding cash at a time when it was gouging students with huge price increases
every year, the school responded by saying, essentially, it only did what all the other kids were doing. UW released data showing
that other major state-school systems across the country were similarly stashing huge amounts of cash. While Wisconsin's surplus
was only 25 percent of its operating budget, for instance, Minnesota's was 29 percent, and Illinois maintained a whopping 34 percent
reserve.
When Collinge, of Student Loan Justice, looked into it, he found that the phenomenon wasn't confined to state schools. Private
schools, too, have been hoarding cash even as they plead poverty and jack up tuition fees. "They're all doing it," he says.
While universities sit on their stockpiles of cash and the loan industry generates record profits, the pain of living in debilitating
debt for many lasts into retirement. Take Veronica Martish. She's a 68-year-old veteran, having served in the armed forces in the
Vietnam era. She's also a grandmother who's never been in trouble and consid?ers herself a patriot. "The thing is, I tried to do
everything right in my life," she says. "But this ruined my life."
This is an $8,000 student loan she took out in 1989, through Sallie Mae. She borrowed the money so she could take courses at Quinebaug
Valley Community College in Connecticut. Five years later, after deaths in her family, she fell behind on her payments and entered
a loan-rehabilitation program. "That's when my nightmare began," she says.
In rehabilitation, Martish's $8,000 loan, with fees and interest, ballooned into a $27,000 debt, which she has been carrying ever
since. She says she's paid more than $63,000 to date and is nowhere near discharging the principal. "By the time I die," she says,
"I will probably pay more than $200,000 toward an $8,000 loan." She pauses. "It's a scam, you see. Nothing ever comes off the loan.
It's all interest and fees. And they chase you until you're old, like me. They never stop. Ever."
And that's the other thing about lending to students: It's the safest grift around.
There's probably no better symbol of the bankruptcy of the education industry than Trump University. The half-literate president's
effort at higher learning drew in suckers with pathetic promises of great real-estate insights (for instance, that Trump "hand-picked"
the instructors) and then charged them truckfuls of cash for get-rich-quick tutorials that students and faculty later described as
"almost completely worthless" and a "total lie." That Trump got to settle a lawsuit on this matter for $25 million and still managed
to be elected president is, ironically, a remarkable testament to the failure of our education system. About the only example that
might be worse is DeVry University, which told students that 90 percent of graduates seeking jobs found them in their fields within
six months of graduation. The FTC found those claims "false and unsubstantiated," and ordered $100 million in refunds and debt relief,
but that was in 2016 – before Trump put DeVry chief Schmoke, of all people, in charge of rooting out education fraud. Like a lot
of things connected to politics lately, it would be funny if it weren't somehow actually happening.?"Yeah, it's the fox guarding
the henhouse," says Collinge. "You could probably find a worse analogy."
But the real problem with the student-loan story is that it's so poorly understood by people not living the nightmare. There's
so much propaganda that blames the borrowers for taking on the debt in the first place that there's often little sympathy for people
in hopeless situations. To make matters worse, band-aid programs that supposedly offer help hypnotize the public into thinking there
are ways out, when the "help" is usually just another trick to add to the balance.
"That's part of the problem with the narrative," says Nailor, the schoolteacher. "People think that there's help, so what are
you complaining about? All you got to do is apply for help."
But the help, he says, coming from a for-profit predatory system, often just makes things worse. "It did for me," he says. "It
does for a lot of people."
The real flaw is associating "higher" education with value. Get a job. Earn an income. Find an interest for your free time.
Raise a family. Spare the four years of wasted time and money.
If you want to take the risk of going into debt to attend college, you better come out with skills that are in high demand.
Otherwise you are much better off going into the military, or going to trade school. BTW, thank the Clintons for making it
impossible to get out of student debt through bankruptcy.
If you want to give out loans to kids then you should accept the risk that they might default on that debt and leave you
with the tab. Let's stop the coddling the banker bullshit. They lobbied to make this loans extremely difficult to discharge
in bankruptcy. They wanted all the profit and none of the risk. Let them assume risk and they'll stop handing out loans to
unqualified borrowers.
Amen! If the money for an "education" is more difficult to obtain, that ought to be a clue as to the value of the information
/ training one is purchasing. The fact it's so easy to get is all one needs to know about the worth of what's being spewed
by those dispensing their so-called knowledge / truth.
Allow the lawful discharge through bankruptcy and punish every single financial institution, (and especially their individual
persons who oversaw the process), that has profited off of ballooning "principle" amounts that even come close to doubling
an original amount with ties to any government official that voted to place these kind of loans in such a category.
This is madness! "Woe to those who make unjust laws, to those who issue oppressive decrees,..." Isaiah 10:1
Finally at least one person gets it. The inability to discharge student loan debt through the taint of bankruptcy is one
of the greatest financial crimes of the last century. Entirely unAmerican. America used to be all about fresh starts. That
is one reason our business life is more vibrant than say many places in Europe with less benign laws. Same goes for individuals.
If you go through the pain of bankruptcy there is no reason you shouldnt get that debt discharged. Whomever voted for that
law, whether Clintons or others should be beaten to death.
Hobart's 38-week combo welder program costs $16,625. A trained kid willing to travel and work in the field would make more
than an engineering graduate who paid a quarter-million for his degree.
No mention made of the rats nest Social Justice program$ infesting college and university campuses across the country, at
untold cost, worthless sullshit.
Not that the student loan thing isn't another banker scam, but the lead story doesn't make sense.
Firstly, educators get
loan forgiveness after a decade or two of public service. And there are income contingent repayment plans. And lawyers have,
in fact, been able to get these things discharged. None of this changes the scam that is giving out high interest loans to
kids to pursue an education. But you might want to start with a sob story that makes more sense. How about a pediatrician with
400k in loans and making 100k a year living in a coastal city? Or how about the art history majors at private liberal arts
schools with 200k in debt making $10/hour as a barista? But teachers are one of the few groups that has an actual federal out.
Maybe. My wife is a teacher in a Title I, low income school, and had been for 13 years..... She also has about 13K remaining in student loans, originally federal direct and Perkins loans. With her over 10 years in title I schools, she should be able to get them forgiven, except that she consolidated these loans
before I met her, and now they are "serviced" by AES, a private lender, and they are no longer eligible for discharge. This I call the "Consolidation Scam."
Pay off debt before you have children. There is no law that you must have children, if the debt makes it impossible. I would
have liked a lot of tings but could not afford them.
Taibbi has some gall to blame Trump, DeVos and others for the student debt explosion, but not one word about Obama or the
government's takeover of the student loan market as part of Obamacare? The student loan market was folded into the ACA as part
of the fake accounting to make the ACA numbers "work". Every market the govenrment insinuates itself into - housing, health
care, college tuition, etc. - gets distorted and costs explode. Taibbi's yet another dishonest liberal.
Yikes- is this factual? If so fuck him. All name, no cattle.
Obama began his turn as destroyer in chief at the height of the Great Recession, everyone & their brother was running into
the safety of college & student loans to pay the bills. I recall watching the local parking lots swell. :) So there's that.
But numbers are off the charts every year because younger millennials expect the govt to forgive all those loans at some
point. That's how many thought 20 years ago & it's worse today.
"The nexus between the student loan program and ObamaCare is purely opportunistic. As the Affordable Care Act was passing
through Congress, its wheels greased by the wholly fraudulent assertion that it didn't need 60 votes to pass the Senate, the
administration decided to put in a provision eliminating the private student loan industry, fully federalizing the program.
What was not widely understood at the time was that it hoped to raid the funds paid by students to provide money for the bottomless
pit known as ObamaCare"
"... Today, it seems, the best description of the FBI's main activity is corporate enforcer for the white-collar mafia known as Wall Street. There is an analogy to organized crime, where the most powerful mobsters settled disputes between other gangs of criminals. Similarly, if a criminal gang is robbed by one of its own members, the mafia would go after the guilty party; the FBI plays this role for Wall Street institutions targeted by con artists and fraudsters. Compare and contrast a pharmaceutical company making opiates which is targeted by thieves vs. a black market drug cartel targeted by thieves. In one case, the FBI investigates; in the other, a violent vendetta ensues (such as street murders in Mexico). ..."
"... The FBI executives are rewarded for this service with lucrative post-retirement careers within corporate America – Louis Freeh went to credit card fraudster, MBNA, Richard Mueller to a corporate Washington law firm, WilmerHale, and Comey, before Obama picked him as Director, worked for Lockheed Martin and HSBC (cleaning up after their $2 billion drug cartel marketing scandal) after leaving the FBI in 2005. ..."
"... Some say they have a key role to play in national security and terrorism – but their record on the 2001 anthrax attacks is incredibly shady and suspicious. The final suspect, Bruce Ivins, is clearly innocent of the crime, just as their previous suspect, Steven Hatfill was. Ivins, if still alive, could have won a similar multi-million dollar defamation lawsuit against the FBI. All honest bioweapons experts know this to be true – the perpetrators of those anthrax letters are still at large, and may very well have had close associations with the Bush Administration itself. ..."
"... Comey's actions over the past year are certainly highly questionable, as well. Neglecting to investigate the Clinton Foundation ties to Saudi Arabia and other foreign governments and corporations, particularly things like State Department approval of various arms deals in which bribes may have been paid, is as much a dereliction of duty as neglecting to investigate Trump ties to Russian business interests – but then, Trump has a record of shady business dealings dating back to the 1970s, of strange bankruptcies and bailouts and government sales that the FBI never looked at either. ..."
I made the mistake of listening to NPR last week to find out what Conventional Wisdom had to say
about Trump firing Comey, on the assumption that their standardized Mister-Rogers-on-Nyquil voice
tones would rein in the hysteria pitch a little. And on the surface, it did-the NPR host and guests
weren't directly shrieking "the world is ending! We're all gonna die SHEEPLE!" the way they were
on CNN. But in a sense they were screaming "fire!", if you know how to distinguish the very minute
pitch level differences in the standard NPR Nyquil voice.
The host of the daytime NPR program asked his guests how serious, and how "unprecedented" Trump's
decision to fire his FBI chief was. The guests answers were strange: they spoke about "rule of law"
and "violating the Constitution" but then switched to Trump "violating norms"-and back again, interchanging
"norms" and "laws" as if they're synonyms. One of the guests admitted that Trump firing Comey was
100% legal, but that didn't seem to matter in this talk about Trump having abandoned rule-of-law
for a Putinist dictatorship. These guys wouldn't pass a high school civics class, but there they
were, garbling it all up. What mattered was the proper sense of panic and outrage-I'm not sure anyone
really cared about the actual legality of the thing, or the legal, political or "normative" history
of the FBI.
For starters, the FBI hardly belongs in the same set with concepts like "constitutional" or "
rule of law." That's because the FBI was never established by a law. US Lawmakers refused to approve
an FBI bureau over a century ago when it was first proposed by Teddy Roosevelt. So he ignored Congress,
and went ahead and set it up by presidential fiat. That's one thing the civil liberties crowd hates
discussing - how centralized US political power is in the executive branch, a feature in the constitutional
system put there by the holy Founders.
In the late 1970s, at the tail end of our brief Glasnost, there was a lot of talk in Washington
about finally creating a
legal charter for the FBI -70 years after its founding. A lot of serious ink was spilled trying
to transform the FBI from an extralegal secret police agency to something legal and defined. If you
want to play archeologist to America's recent history, you can find this in the New York Times' archives,
articles with headlines like
"Draft of Charter for F.B.I. Limits Inquiry Methods" :
The Carter Administration will soon send to Congress the first governing charter for the Federal
Bureau of Investigation. The proposed charter imposes extensive but not absolute restrictions
on the bureau's employment of controversial investigative techniques, .including the use of informers,
undercover agents and covert criminal activity.
The charter also specifies the duties and powers of the bureau, setting precise standards and
procedures for the initiation ,and conduct of investigations. It specifically requires the F.B.I.
to observe constitutional rights and establishes safeguards against unchecked harassment, break‐ins
and other abuses.
followed by the inevitable lament, like this editorial from the Christian Science Monitor a year
later, "Don't Forget the
FBI Charter". Which of course we did forget-that was Reagan's purpose and value for the post-Glasnost
reaction: forgetting. As historian Athan Theoharis
wrote , "After 1981, Congress never seriously considered again any of the FBI charter proposals."
The origins of the FBI have been obscured both because of its dubious legality and because of
its original political purpose-to help the president battle the all-powerful American capitalists.
It wasn't that Teddy Roosevelt was a radical leftist-he was a Progressive Republican, which sounds
like an oxymoron today but which was mainstream and ascendant politics in his time. Roosevelt was
probably the first president since Andrew Jackson to try to smash concentrated wealth-power, or at
least some of it. He could be brutally anti-labor, but so were the powerful capitalists he fought,
and all the structures of government power. He met little opposition pursuing his imperial Social
Darwinist ambitions outside America's borders-but he had a much harder time fighting the powerful
capitalists at home against Roosevelt's most honorable political obsession: preserving forests, parks
and public lands from greedy capitalists. An early FBI memo to Hoover about the FBI's origins explains,
"Roosevelt, in his characteristic dynamic fashion, asserted that the plunderers of the public
domain would be prosecuted and brought to justice."
According to New York Times reporter Tim Wiener's Enemies: A History of the FBI , it
was the Oregon land fraud scandal of 1905-6 that put the idea of an FBI in TR's hyperactive mind.
The scandal involved leading Oregon politicians helping railroad tycoon Edward Harriman illegally
sell off pristine Oregon forest lands to timber interests, and it ended with an Oregon senator and
the state's only two House representatives criminally charged and put on trial-along with dozens
of other Oregonians. Basically, they were raping the state's public lands and forests like colonists
stripping a foreign country-and that stuck in TR's craw.
TR wanted his attorney general-Charles Bonaparte (yes, he really was a descendant of that
Bonaparte)-to make a full report to on the rampant land fraud scams that the robber barons were
running to despoil the American West, and which threatened TR's vision of land and forest conservation
and parks. Bonaparte created an investigative team from the US Secret Service, but TR thought their
report was a "whitewash" and proposed a new separate federal investigative service within Bonaparte's
Department of Justice that would report only to the Attorney General.
Until then, the US government had to rely on private contractors like the notorious, dreaded Pinkerton
Agency, who were great at strikebreaking, clubbing workers and shooting organizers, but not so good
at taking down down robber barons, who happened to also be important clients for the private detective
agencies.
In early 1908, Attorney General Bonaparte wrote to Congress asking for the legal authority (and
budget funds) to create a "permanent detective force" under the DOJ. Congress rebelled, denouncing
it as a plan to create an American okhrana . Democrat Joseph Sherley wrote that "spying
on men and prying into what would ordinarily be considered their private affairs" went against "American
ideas of government"; Rep. George Waldo, a New York Republican, said the proposed FBI was a "great
blow to freedom and to free institutions if there should arise in this country any such great central
secret-service bureau as there is in Russia."
So Congress's response was the opposite, banning Bonaparte's DOJ from spending any funds at all
on a proposed FBI. Another Congressman wrote another provision into the budget bill banning the DOJ
from hiring Secret Service employees for any sort of FBI type agency. So Bonaparte waited until Congress
took its summer recess, set aside some DOJ funds, recruited some Secret Service agents, and created
a new federal detective bureau with 34 agents. This was how the FBI was born. Congress wasn't notified
until the end of 1908, in a few lines in a standard report - "oh yeah, forgot to tell you-the executive
branch went ahead and created an American okhrana because, well, the ol' joke about dogs
licking their balls. Happy New Year!"
The sordid history of America's extralegal secret police-initially named the Bureau of Investigation,
changed to the FBI ("Federal") in the 30's, is mostly a history of xenophobic panic-mongering, illegal
domestic spying, mass roundups and plans for mass-roundups, false entrapment schemes, and planting
what Russians call "kompromat"- compromising information about a target's sex life-to blackmail or
destroy American political figures that the FBI didn't like.
The first political victim of J Edgar Hoover's kompromat was Louis Post, the assistant secretary
of labor under Woodrow Wilson. Post's crime was releasing over 1,000 alleged Reds from detention
facilities near the end of the FBI's Red Scare crackdown, when they jailed and deported untold thousands
on suspicion of being Communists. The FBI's mass purge began with popular media support in 1919,
but by the middle of 1920, some (not the FBI) were starting to get a little queasy. A legal challenge
to the FBI's mass purges and exiles in Boston ended with a federal judge denouncing the FBI. After
that ruling, assistant secretary Louis Post, a 71-year-old well-meaning progressive, reviewed the
cases against the last 1500 detainees that the FBI wanted to deport, and found that there was absolutely
nothing on at least 75 percent of the cases. Post's review threatened to undo thousands more FBI
persecutions of alleged Moscow-controlled radicals.
So one of the FBI's most ambitious young agents, J Edgar Hoover, collected kompromat on Post and
his alleged associations with other alleged Moscow-controlled leftists, and gave the file to the
Republican-controlled House of Representatives-which promptly announced it would hold hearings to
investigate Post as a left subversive. The House tried to impeach Post, but ultimately he defended
himself. Post's lawyer compared his political persecutors to the okhrana (Russia, again!):
"We in America have sunk to the level of the government of Russia under the Czarist regime," describing
the FBI's smear campaign as "even lower in some of their methods than the old Russian officials."
Under Harding, the FBI had a new chief, William Burns, who made headlines blaming the terror bombing
attack on Wall Street of 1920 that killed 34 people on a Kremlin-run conspiracy. The FBI claimed
it had a highly reliable inside source who told them that Lenin sent $30,000 to the Soviets' diplomatic
mission in New York, which was distributed to four local Communist agents who arranged the Wall Street
bombing. The source claimed to have personally spoken with Lenin, who boasted that the bombing was
so successful he'd ordered up more.
The only problem was that the FBI's reliable source, a Jewish-Polish petty criminal named Wolf
Lindenfeld, turned out to be a bullshitter-nicknamed "Windy Linde"-who thought his fake confession
about Lenin funding the bombing campaign would get him out of Poland's jails and set up in a comfortable
new life in New York.
By 1923, the FBI had thoroughly destroyed America's communist and radical labor movements-allowing
it to focus on its other favorite pastime: spying on and destroying political opponents. The FBI
spied on US Senators who supported opening diplomatic relations with the Soviet Union: Idaho's William
Borah, chairman of the Foreign Relations Committee; Thomas Walsh of the Judiciary Committee, and
Burton K Wheeler, the prairie Populist senator from Montana, who visited the Soviet Union and pushed
for diplomatic relations. Harding's corrupt Attorney General Dougherty denounced Sen. Wheeler as
"the Communist leader in the Senate" and "no more a Democrat than Stalin, his comrade in Moscow."
Dougherty accused Sen. Wheeler of being part of a conspiracy "to capture, by deceit and design, as
many members of the Senate as possible and to spread through Washington and the cloakrooms of Congress
a poison gas as deadly as that which sapped and destroyed brave soldiers in the last war."
Hoover, now a top FBI official, quietly fed kompromat to journalists he cultivated, particularly
an AP reporter named Richard Whitney, who published a popular book in 1924, "Reds In America" alleging
Kremlin agents "had an all-pervasive influence over American institutions; they had infiltrated every
corner of American life." Whitney named Charlie Chaplin as a Kremlin agent, along with Felix Frankfurter
and members of the Senate pushing for recognition of the Soviet Union. That killed any hope for diplomatic
recognition for the next decade.
Then the first Harding scandals broke-Teapot Dome, Veterans Affairs, bribery at the highest rungs.
When Senators Wheeler and Walsh opened bribery investigations, the FBI sent agents to the senators'
home state to drum up false bribery charges against Sen. Wheeler. The charges were clearly fake,
and a jury dismissed the charges. But Attorney General Dougherty was indicted for fraud and forced
to resign, as was his FBI chief Burns-but not Burns' underling Hoover, who stayed in the shadows.
"We want no Gestapo or Secret Police. FBI is tending in that direction. They are dabbling in
sex-life scandals and plain blackmail This must stop."
With the Cold War, the FBI became obsessed with homosexuals as America's Fifth Column under Moscow's
control. Homosexuals, the FBI believed, were susceptible to Kremlin kompromat-so the FBI collected
and disseminated its own kompromat on alleged American homosexuals, supposedly to protect America
from the Kremlin. In the early 1950s, Hoover launched the Sex Deviates Program to spy on American
homosexuals and purge them from public life. The FBI built up 300,000 pages of files on suspected
homosexuals and contacted their employers, local law enforcement and universities to "to drive homosexuals
from every institution of government, higher learning, and law enforcement in the nation," according
to Tim Weiner's book Enemies. No one but the FBI knows exactly how many Americans' lives and careers
were destroyed by the FBI's Sex Deviants Program but Hoover-who never married, lived with his mother
until he was 40, and traveled everywhere with his
"friend" Clyde Tolson .
In the 1952 election, Hoover was so committed to helping the Republicans and Eisenhower win that
he compiled and disseminated a 19-page kompromat file alleging that his Democratic Party rival Adlai
Stevenson was gay. The FBI's file on Stevenson was kept in the Sex Deviants Program section-it included
libelous gossip, claiming that Stevenson was one of Illinois' "best known homosexuals" who went by
the name "Adeline" in gay cruising circles.
In the 1960s, Hoover and his FBI chiefs collected kompromat on the sex lives of JFK and Martin
Luther King. Hoover presented some of his kompromat on JFK to Bobby Kennedy, in a concern-trollish
way claiming to "warn" him that the president was opening himself up to blackmail. It was really
a way for Hoover to let the despised Kennedy brothers know he could destroy them, should they try
to Comey him out of his FBI office. Hoover's kompromat on MLK's sex life was a particular obsession
of his-he now believed that African-Americans, not homosexuals, posed the greatest threat to become
a Kremlin Fifth Column. The FBI wiretapped MLK's private life, collecting tapes of his affairs with
other women, which a top FBI official then mailed to Martin Luther King's wife, along with a note
urging King to commit suicide.
FBI letter anonymously mailed to Martin Luther King Jr's wife, along with kompromat sex tapes
After JFK was murdered, when Bobby Kennedy ran for the Senate in 1964, he recounted another disturbing
FBI/kompromat story that President Johnson shared with him on the campaign trail. LBJ told Bobby
about a stack of kompromat files - FBI reports "detailing the sexual debauchery of members of the
Senate and House who consorted with prostitutes." LBJ asked RFK if the kompromat should be leaked
selectively to destroy Republicans before the 1964 elections. Kennedy recalled,
"He told me he had spent all night sitting up and reading the files of the FBI on all these
people. And Lyndon talks about that information and material so freely. Lyndon talks about everybody,
you see, with everybody. And of course that's dangerous."
Kennedy had seen some of the same FBI kompromat files as attorney general, but he was totally
opposed to releasing such unsubstantiated kompromat-such as, say, the Trump piss files-because doing
so would "destroy the confidence that people in the United States had in their government and really
make us a laughingstock around the world."
Imagine that.
Which brings me to the big analogy every hack threw around last week, calling Trump firing Comey
"Nixonian." Actually, what Trump did was more like the very opposite of Nixon, who badly wanted to
fire Hoover in 1971-2, but was too afraid of the kompromat Hoover might've had on him to make the
move. Nixon fell out with his old friend and onetime mentor J Edgar Hoover in 1971, when the ailing
old FBI chief refused to get sucked in to the Daniel Ellsberg/Pentagon Papers investigation, especially
after the Supreme Court ruled in favor of the New York Times. Part of the reason Nixon created his
Plumbers team of black bag burglars was because Hoover had become a bit skittish in his last year
on this planet-and that drove Nixon crazy.
Nixon called his chief of staff Haldeman:
Nixon: I talked to Hoover last night and Hoover is not going after this case [Ellsberg] as
strong as I would like. There's something dragging him.
Haldeman: You don't have the feeling the FBI is really pursuing this?
Nixon: Yeah, particularly the conspiracy side. I want to go after everyone. I'm not so interested
in Ellsberg, but we have to go after everybody who's a member of this conspiracy.
Hoover's ambitious deputies in the FBI were smelling blood, angling to replace him. His number
3, Bill Sullivan (who sent MLK the sex tapes and suicide note) was especially keen to get rid of
Hoover and take his place. So as J Edgar was stonewalling the Daniel Ellsberg investigation, Sullivan
showed up in a Department of Justice office with two suitcases packed full of transcripts and summaries
of illegal wiretaps that Kissinger and Nixon had ordered on their own staff and on American journalists.
The taps were ordered in Nixon's first months in the White House in 1969, to plug up the barrage
of leaks, the likes of which no one had ever seen before. Sullivan took the leaks from J Edgar's
possession and told the DOJ official that they needed to be hidden from Hoover, who planned to use
them as kompromat to blackmail Nixon.
Nixon decided he was going to fire J Edgar the next day. This was in September, 1971. But the
next day came, and Nixon got scared. So he tried to convince his attorney general John Mitchell to
fire Hoover for him, but Mitchell said only the President could fire J Edgar Hoover. So Nixon met
him for breakfast, and, well, he just didn't have the guts. Over breakfast, Hoover flattered Nixon
and told him there was nothing more in the world he wanted than to see Nixon re-elected. Nixon caved;
the next day, J Edgar Hoover unceremoniously fired his number 3 Bill Sullivan, locking him out of
the building and out of his office so that he couldn't take anything with him. Sullivan was done.
The lesson here, I suppose, is that if an FBI director doesn't want to be fired, it's best to
keep your kompromat a little closer to your chest, as a gun to hold to your boss's head. Comey's
crew already released the piss tapes kompromat on Trump-the damage was done. What was left to hold
back Trump from firing Comey? "Laws"? The FBI isn't even legal. "Norms" would be the real reason.
Which pretty much sums up everything Trump has been doing so far. We've learned the past two decades
that we're hardly a nation of laws, at least not when it comes to the plutocratic ruling class. What
does bind them are "norms"-and while those norms may mean everything to the ruling class, it's an
open question how much these norms mean to a lot of Americans outside that club.
The USA doesn't have a legal basis either, it is a revolting crown colony of the British Empire.
Treason and heresy all the way down. Maybe the British need to burn Washington DC again?
Wondered how Comey thought he could get away with his conviction and pardon of Sec Clinton.
Seems like part of the culture of FBI is a "above and beyond" the law mentality.
Back in the early 1970s a high school friend moved to Alabama because his father was transferred
by his employer.
My friend sent a post card describing among other things the fact that Alabama had done away
with the requirement of a math class to graduate high school, and substituted a required class
called "The Evils of Communism" complete with a text-book written by J. Edgar Hoover; Masters
of Deceit.
In Dallas,Texas my 1959 Civics class had to read the same book. We all were given paperback
copies of it to take home and read. It was required reading enacted by Texas legislature.
So I'd guess you weren't fooled by any of those commie plots of the sixties, like the campaigns
for civil rights or against the Vietnamese war.
I can't really brag, I didn't stop worrying about the Red Menace until 1970 or so, that's when
I started running into returning vets who mostly had no patience for that stuff.
We've learned the past two decades that we're hardly a nation of laws, at least not when
it comes to the plutocratic ruling class. What does bind them are "norms"
Or as David Broder put it (re Bill Clinton): he came in and trashed the place and it wasn't
his place.
It was David Broder's place. Of course the media play a key role with all that kompromat since
they are the ones needed to convey it to the public. The tragedy is that even many of the sensible
in their ranks such as Bill Moyers have been sucked into the kompromat due to their hysteria over
Trump. Ames is surely on point in this great article. The mistake was allowing secret police agencies
like the FBI and CIA to be created in the first place.
Sorry, my initial reaction was that people who don't know the difference between "rein" and
"reign" are not to be trusted to provide reliable information. Recognizing that as petty, I kept
reading, and presently found the statement that Congress was not informed of the founding of the
FBI until a century after the fact, which seems implausible. If in fact the author meant the end
of 1908 it was quite an achievement to write 2008.
Interesting to the extent it may be true, but with few sources, no footnotes, and little evidence
of critical editing who knows what that may be?
Who he is is irrelevant. I don't take things on faith because "the Pope said" or because Mark
Ames said. People who expect their information to be taken seriously should substantiate it.
So anything the FBI does to get rid of him must by definition be ok! Besides, surely our civic-minded
IC would never use their power on the Good Guys™!
Ah yes, the voice of "caution." And such attention to the lack of footnotes, in this day when
the curious can so easily cut and paste a bit of salient text into a search engine and pull up
a feast of parse-able writings and video, from which they can "judiciously assess" claims and
statements. If they care to spend the time, which is in such short supply among those who are
struggling to keep up with the horrors and revelations people of good will confront every blinking
day
Classic impeachment indeed. All from the height of "academic rigor" and "caution." Especially
the "apologetic" bit about "reign" vs "rein." Typos destroy credibility, don't they? And the coup
de grass (sic), the unrebuttable "plausibility" claim.
One wonders at the nature of the author's curriculum vitae. One also marvels at the yawning
gulf between the Very Serious Stuff I was taught in grade and high school civics and history,
back in the late '50s and the '60s, about the Fundamental Nature Of Our Great Nation and its founding
fathers and the Beautiful Documents they wrote, on the one hand, and what we mopes learn, through
a drip-drip-drip process punctuated occasionally by Major Revelations, about the real nature of
the Empire and our fellow creatures
PS: My earliest memory of television viewing was a day at a friend's house - his middle-class
parents had the first "set" in the neighborhood, I think an RCA, in a massive sideboard cabinet
where the picture tube pointed up and you viewed the "content" in a mirror mounted to the underside
of the lid. https://m.youtube.com/watch?v=5onSwx7_Cn0
The family was watching a hearing of Joe McCarthy's kangaroo court, complete with announcements
of the latest number in the "list of known Communists in the State Department" and how Commyanism
was spreading like an unstoppable epidemic mortal disease through the Great US Body Politic and
its Heroic Institutions of Democracy. I was maybe 6 years old, but that grainy black and white
"reality TV" content had me asking "WTF?" at a very early age. And I'd say it's on the commentor
to show that the "2008" claim is wrong, by something other than "implausible" as drive-by impeachment.
Given the content of the original post, and what people paying attention to all this stuff have
a pretty good idea is the general contours of a vast corruption and manipulation.
Interesting article on the history of the FBI, although the post-Hoover era doesn't get any
treatment. The Church Committee hearings on the CIA and FBI, after the exposure of notably
Operation CHAOS (early
60s to early 70s) by the CIA and
COINTELPRO(late 1950s to
early 1970s) by the FBI, didn't really get to the bottom of the issue although some reforms
were initiated.
Today, it seems, the best description of the FBI's main activity is corporate enforcer for
the white-collar mafia known as Wall Street. There is an analogy to organized crime, where the
most powerful mobsters settled disputes between other gangs of criminals. Similarly, if a criminal
gang is robbed by one of its own members, the mafia would go after the guilty party; the FBI plays
this role for Wall Street institutions targeted by con artists and fraudsters. Compare and contrast
a pharmaceutical company making opiates which is targeted by thieves vs. a black market drug cartel
targeted by thieves. In one case, the FBI investigates; in the other, a violent vendetta ensues
(such as street murders in Mexico).
The FBI executives are rewarded for this service with lucrative post-retirement careers within
corporate America – Louis Freeh went to credit card fraudster, MBNA, Richard Mueller to a corporate
Washington law firm, WilmerHale, and Comey, before Obama picked him as Director, worked for Lockheed
Martin and HSBC (cleaning up after their $2 billion drug cartel marketing scandal) after leaving
the FBI in 2005.
Maybe this is legitimate, but this only applies to their protection of the interests of large
corporations – as the 2008 economic collapse and aftermath showed, they don't prosecute corporate
executives who rip off poor people and middle-class homeowners. Banks who rob people, they aren't
investigated or prosecuted; that's just for people who rob banks.
When it comes to political issues and national security, however, the FBI has such a terrible
record on so many issues over the years that anything they claim has to be taken with a grain
or two of salt. Consider domestic political activity: from the McCarthyite 'Red Scare' of the
1950s to COINTELPRO in the 1960s and 1970s to targeting of environmental groups in the 1980s and
1990s to targeting anti-war protesters under GW Bush to their obsession with domestic mass surveillance
under Obama, it's not a record that should inspire any confidence.
Some say they have a key role to play in national security and terrorism – but their record
on the 2001 anthrax attacks is incredibly shady and suspicious. The final suspect, Bruce Ivins,
is clearly innocent of the crime, just as their previous suspect, Steven Hatfill was. Ivins, if
still alive, could have won a similar multi-million dollar defamation lawsuit against the FBI.
All honest bioweapons experts know this to be true – the perpetrators of those anthrax letters
are still at large, and may very well have had close associations with the Bush Administration
itself.
As far as terrorist activities? Many of their low-level agents did seem concerned about the
Saudis and bin Laden in the late 1990s and pre-9/11 – but Saudi investigations were considered
politically problematic due to "geostrategic relationships with our Saudi allies" – hence people
like John O'Neil and Coleen Rowley were sidelined and ignored, with disastrous consequences. The
Saudi intelligence agency role in 9/11 was buried for over a decade, as well. Since 9/11, most
of the FBI investigations seem to have involved recruiting mentally disabled young Islamic men
in sting operations in which the FBI provides everything needed. You could probably get any number
of mentally ill homeless people across the U.S., regardless of race or religion, to play this
role.
Comey's actions over the past year are certainly highly questionable, as well. Neglecting to
investigate the Clinton Foundation ties to Saudi Arabia and other foreign governments and corporations,
particularly things like State Department approval of various arms deals in which bribes may have
been paid, is as much a dereliction of duty as neglecting to investigate Trump ties to Russian
business interests – but then, Trump has a record of shady business dealings dating back to the
1970s, of strange bankruptcies and bailouts and government sales that the FBI never looked at
either.
Ultimately, this is because FBI executives are paid off not to investigate Wall Street criminality,
nor shady U.S. government activity, with lucrative positions as corporate board members and so
on after their 'retirements'. I don't doubt that many of their junior members mean well and are
dedicated to their jobs – but the fish rots from the head down.
As far as terrorist activities? Many of their low-level agents did seem concerned about
the Saudis and bin Laden in the late 1990s and pre-9/11 – but Saudi investigations were considered
politically problematic due to "geostrategic relationships with our Saudi allies" – hence people
like John O'Neil and Coleen Rowley were sidelined and ignored, with disastrous consequences.
The Clinton Administration had other priorities. You know, I think I'll let ex-FBI Director
Freeh explain what happened when the FBI tried to get the Saudis to cooperate with their investigation
into the bombing of the Khobar Towers.
"That September, Crown Prince Abdullah and his entourage took over the entire 143-room Hay-Adams
Hotel, just across from Lafayette Park from the White House, for six days. The visit, I figured,
was pretty much our last chance. Again, we prepared talking points for the president. Again,
I contacted Prince Bandar and asked him to soften up the crown prince for the moment when Clinton,
-- or Al Gore I didn't care who -- would raise the matter and start to exert the necessary pressure."
"The story that came back to me, from "usually reliable sources," as they say in Washington,
was that Bill Clinton briefly raised the subject only to tell the Crown Prince that he certainly
understood the Saudis; reluctance to cooperate. Then, according to my sources, he hit Abdullah
up for a contribution to the still-to-be-built Clinton presidential library. Gore, who was
supposed to press hardest of all in his meeting with the crown Prince, barely mentioned the
matter, I was told." -Louis J. Freeh, My FBI (2005)
In my defense I picked the book up to see if there was any dirt on the DNC's electoral funding
scandal in 1996. I'm actually glad I did. The best part of the book is when Freeh recounts running
into a veteran of the Lincoln Brigade and listens to how Hoover's FBI ruined his life despite
having broken no laws. As if a little thing like laws mattered to Hoover. The commies were after
our precious bodily fluids!
I'm not sure there are many functioning norms left within the national political leadership.
Seemed to me Gingrich started blowing those up and it just got worse from there. McConnell not
allowing Garland to be considered comes to mind
Thanks to Mark Ames now we know what Pres. Trump meant when he tweeted about his tapes with
AG Comey. Not some taped conversation between Pres. Trump & AG Comey but bunch of kompromat tapes
that AG Comey has provided Pres. Trump that might not make departing AG Comey looked so clean.
"... Sadly, Brennan's propaganda coup only works on what the Bell Curve crowd up there would call the dumbest and most technologically helpless 1.2σ. Here is how people with half a brain interpret the latest CIA whoppers. ..."
"... Convincing Americans in Russia's influence or Russia collusion with Trump was only a tool that would create pressure on Trump that together with the fear of paralysis of his administration and impeachment would push Trump into the corner from which the only thing he could do was to worsen relations with Russia. What American people believe or not is really secondary. With firing of Gen. Flynn Trump acted exactly as they wanted him to act. This was the beginning of downward slope. ..."
"... Anyway, the mission was accomplished and the relations with Russia are worse now than during Obama administration. Trump can concentrate on Iran in which he will be supported by all sides and factions including the media. Even Larry David will approve not only the zionist harpies like Pam Geller, Rita Katz and Ilana Mercer. ..."
"... The only part that is absurd is that Russia posed a bona fide threat to the US. I'm fine with the idea that he ruined Brennen's plans in Syria. But thats just ego we shouldn't have been there anyway. ..."
"... No one really cares about Ukraine. And the European/Russian trade zone? No one cares. The Eurozone has its hands full with Greece and the rest of the old EU. I have a feeling they have already gone way too far and are more likely to shrink than expand in any meaningful way ..."
"... " ..factions within the state whose interests do not coincide with those of the American people." ..."
"... All the more powerfully put because of its recognisably comical. understatement. Thank you Mr Whitney. Brilliant article that would be all over the mainstream media were the US MSM an instrument of American rather than globalist interests. ..."
"... A sad story, how the USA always was a police state, where the two percent rich manipulated the 98% poor, to stay rich. When there were insurrections federal troops restored order. Also FDR put down strikes with troops. ..."
"... The elephant in the room is Israel and the neocons , this is the force that controls America and Americas foreign policy , Brennan and the 17 intel agencies are puppets of the mossad and Israel, that is the brutal fact of the matter. ..."
"... "The absence of evidence suggests that Russia hacking narrative is a sloppy and unprofessional disinformation campaign that was hastily slapped together by over confident Intelligence officials who believed that saturating the public airwaves with one absurd story after another would achieve the desired result " ..."
"... But it DID achieve the desired result! Trump folded under the pressure, and went full out neoliberal. Starting with his missile attack on Syria, he is now OK with spending trillions fighting pointless endless foreign wars on the other side of the world. ..."
"... I think maybe half the US population does believe the Russian hacking thing, but that's not really the issue. I think that the pre-Syrian attack media blitz was more a statement of brute power to Trump: WE are in charge here, and WE can take you down and impeach you, and facts don't matter! ..."
"... Sometimes propaganda is about persuading people. And sometimes, I think, it is about intimidating them. ..."
"... The Brit secret service, in effect, created and trained not merely the CIA but also the Mossad and Saudi Arabia's General Intelligence Presidency. All four are defined by endless lies, endless acts of utterly amoral savagery. All 4 are at least as bad as the KGB ever was, and that means as bad as Hell itself. ..."
"... Traditional triumphalist American narrative history, as taught in schools up through the 60s or so, portrayed America as "wart-free." Since then, with Zinn's book playing a major role, it has increasingly been portrayed as "warts-only," which is of course at least equally flawed. I would say more so. ..."
"... Anyway, the mission was accomplished and the relations with Russia are worse now than during Obama administration. ..."
"... That pre-9/11 "cooperation" nearly destroyed Russia. Nobody in Russia (except, perhaps, for Pussy Riot) wants a return to the Yeltsin era. ..."
"... The CIA is the world largest criminal and terrorist organization. With Brennan the worst has come to the worst. The whole Russian meddling affair was initiated by the Obama/Clinton gang in cooperation with 95 percent of the media. Nothing will come out of it. ..."
"... [The key figures who had primary influence on both Trump's and Bush's Iran policies held views close to those of Israel's right-wing Likud Party. The main conduit for the Likudist line in the Trump White House is Jared Kushner, the president's son-in-law, primary foreign policy advisor, and longtime friend and supporter of Netanyahu. Kushner's parents are also long-time supporters of Israeli settlements on the occupied West Bank. ..."
"... Another figure to whom the Trump White House has turned is John Bolton, undersecretary of state and a key policymaker on Iran in the Bush administration. Although Bolton was not appointed Trump's secretary of state, as he'd hoped, he suddenly reemerged as a player on Iran policy thanks to his relationship with Kushner. Politico reports that Bolton met with Kushner a few days before the final policy statement was released and urged a complete withdrawal from the deal in favor of his own plan for containing Iran. ..."
"... Putin's dream of Greater Europe is the death knell for the unipolar world order. It means the economic center of the world will shift to Central Asia where abundant resources and cheap labor of the east will be linked to the technological advances and the Capital the of the west eliminating the need to trade in dollars or recycle profits into US debt. The US economy will slip into irreversible decline, and the global hegemon will steadily lose its grip on power. That's why it is imperative for the US prevail in Ukraine– a critical land bridge connecting the two continents– and to topple Assad in Syria in order to control vital resources and pipeline corridors. Washington must be in a position where it can continue to force its trading partners to denominate their resources in dollars and recycle the proceeds into US Treasuries if it is to maintain its global primacy. The main problem is that Russia is blocking Uncle Sam's path to success which is roiling the political establishment in Washington. ..."
"... Second, Zakharova confirms that the western media is not an independent news gathering organization, but a propaganda organ for the foreign policy establishment who dictates what they can and can't say. ..."
"... Such a truthful portrait of reality ! The ruling elite is indeed massively corrupt, compromised, and controlled by dark forces. And the police state is already here. For most people, so far, in the form of massive collection of personal data and increasing number of mandatory regulations. But just one or two big false-flags away from progressing into something much worse. ..."
"... Clearly the CIA was making war on Syria. Is secret coercive covert action against sovereign nations Ok? Is it legal? When was the CIA designated a war making entity – what part of the constitution OK's that? Isn't the congress obliged by constitutional law to declare war? (These are NOT six month actions – they go on and on.) ..."
"... Syria is only one of many nations that the CIA is attacking – how many countries are we attacking with drones? Where is congress? ..."
"... Close the CIA – give the spying to the 16 other agencies. ..."
Sadly, Brennan's propaganda coup only works on what the Bell Curve crowd up there would call
the dumbest and most technologically helpless 1.2σ. Here is how people with half a
brain interpret the latest CIA whoppers.
Again Mike Whitney does not get it. Though in the first part of the article I thought he
would. He was almost getting there. The objective was to push new administration into the
corner from which it could not improve relations with Russia as Trump indicated that he
wanted to during the campaign.
Convincing Americans in Russia's influence or Russia collusion
with Trump was only a tool that would create pressure on Trump that together with the fear of
paralysis of his administration and impeachment would push Trump into the corner from which
the only thing he could do was to worsen relations with Russia. What American people believe
or not is really secondary. With firing of Gen. Flynn Trump acted exactly as they wanted him
to act. This was the beginning of downward slope.
Anyway, the mission was accomplished and the relations with Russia are worse now than
during Obama administration. Trump can concentrate on Iran in which he will be supported by
all sides and factions including the media. Even Larry David will approve not only the
zionist harpies like Pam Geller, Rita Katz and Ilana Mercer.
The only part that is absurd is that Russia posed a bona fide threat to the US. I'm fine
with the idea that he ruined Brennen's plans in Syria. But thats just ego we shouldn't have
been there anyway.
No one really cares about Ukraine. And the European/Russian trade zone? No one cares. The
Eurozone has its hands full with Greece and the rest of the old EU. I have a feeling they
have already gone way too far and are more likely to shrink than expand in any meaningful
way
The one thing I am not positive about. If the elite really believe that Russia is a
threat, then Americans have done psych ops on themselves.
The US was only interested in Ukraine because it was there. Next in line on a map. The
rather shocking disinterest in investing money -- on both sides -- is inexplicable if it was
really important. Most of it would be a waste -- but still. The US stupidly spent $5 billion
on something -- getting duped by politicians and got theoretical regime change, but it was
hell to pry even $1 billion for real economic aid.
" ..factions within the state whose interests do not coincide with those of the American
people."
All the more powerfully put because of its recognisably comical. understatement. Thank you Mr Whitney. Brilliant article that would be all over the mainstream media were
the US MSM an instrument of American rather than globalist interests.
I am reading Howard Zinn, A Peoples History of the USA, 1492 to the Present.
A sad story, how the USA always was a police state, where the two percent rich manipulated
the 98% poor, to stay rich.
When there were insurrections federal troops restored order.
Also FDR put down strikes with troops.
You should be aware that Zinn's book is not, IMO, an honest attempt at writing history. It
is conscious propaganda intended to make Americans believe exactly what you are taking from
it.
The elephant in the room is Israel and the neocons , this is the force that controls America
and Americas foreign policy , Brennan and the 17 intel agencies are puppets of the mossad and
Israel, that is the brutal fact of the matter.
Until that fact changes Americans will continue to fight and die for Israel.
"The absence of evidence suggests that Russia hacking narrative is a sloppy and
unprofessional disinformation campaign that was hastily slapped together by over confident
Intelligence officials who believed that saturating the public airwaves with one absurd story
after another would achieve the desired result "
But it DID achieve the desired result! Trump folded under the pressure, and went full out
neoliberal. Starting with his missile attack on Syria, he is now OK with spending trillions
fighting pointless endless foreign wars on the other side of the world.
I think maybe half the US population does believe the Russian hacking thing, but that's
not really the issue. I think that the pre-Syrian attack media blitz was more a statement of
brute power to Trump: WE are in charge here, and WE can take you down and impeach you, and
facts don't matter!
Sometimes propaganda is about persuading people. And sometimes, I think, it is about
intimidating them.
Whitney is another author who declares the "Russians did it" narrative a psyop. He then
devotes entire columns to the psyop, "naww Russia didn't do it". There could be plenty to write about – recent laws that do undercut liberty, but no,
the Washington Post needs fake opposition to its fake news so you have guys like Whitney in
the less-mainstream fake news media.
So Brennan wanted revenge? Well that's simple enough to understand, without being too
stupid. But Whitney's whopper of a lie is what you're supposed to unquestionably believe. The
US has "rival political parties". Did you miss it?
The US is doing nothing more than acting as the British Empire 2.0. WASP culture was born of a Judaizing heresy: Anglo-Saxon Puritanism. That meant that the
WASP Elites of every are pro-Jewish, especially in order to wage war, physical and/or
cultural, against the vast majority of white Christians they rule.
By the early 19th century, The Brit Empire's Elites also had a strong, and growing, dose
of pro-Arabic/pro-Islamic philoSemitism. Most of that group became ardently pro-Sunni, and
most of the pro-Sunni ones eventually coalescing around promotion of the House of Saud, which
means being pro-Wahhabi and permanently desirous of killing or enslaving virtually all Shiite
Mohammedans.
So, by the time of Victoria's high reign, the Brit WASP Elites were a strange brew of
hardcoree pro-Jewish and hardcore pro-Arabic/islamic. The US foreign policy of today is an
attempt to put those two together and force it on everyone and make it work.
The Brit secret service, in effect, created and trained not merely the CIA but also the
Mossad and Saudi Arabia's General Intelligence Presidency. All four are defined by endless
lies, endless acts of utterly amoral savagery. All 4 are at least as bad as the KGB ever was,
and that means as bad as Hell itself.
Fair enough. I didn't know that about the foreword. If accurate, that's a reasonable
approach for a book.
Here's the problem.
Back when O. Cromwell was the dictator of England, he retained an artist to paint him. The
custom of the time was for artists to "clean up" their subjects, in a primitive form of
photoshopping.
OC being a religious fanatic, he informed the artist he wished to be portrayed as God had
made him, "warts and all." (Ollie had a bunch of unattractive facial warts.) Or the artist
wouldn't be paid.
Traditional triumphalist American narrative history, as taught in schools up through the
60s or so, portrayed America as "wart-free." Since then, with Zinn's book playing a major
role, it has increasingly been portrayed as "warts-only," which is of course at least equally
flawed. I would say more so.
All I am asking is that American (and other) history be written "warts and all." The
triumphalist version is true, largely, and so is the Zinn version. Gone With the Wind
and Roots both portray certain aspects of the pre-war south fairly accurately..
America has been, and is, both evil and good. As is/was true of every human institution
and government in history. Personally, I believe America, net/net, has been one of the
greatest forces for human good ever. But nobody will realize that if only the negative side
of American history is taught.
"There must be something really dirty in Russigate that hasn't yet come out to generate
this level of panic."
You continue to claim what you cannot prove.
But then you are a Jews First Zionist.
Russia-Gate Jumps the Shark
Russia-gate has jumped the shark with laughable new claims about a tiny number of
"Russia-linked" social media ads, but the US mainstream media is determined to keep a
straight face
Most of that group became ardently pro-Sunni, and most of the pro-Sunni ones eventually
coalescing around promotion of the House of Saud, which means being pro-Wahhabi and
permanently desirous of killing or enslaving virtually all Shiite Mohammedans.
Thanks for the laugh. During the 19th century, the Sauds were toothless, dirt-poor hicks
from the deep desert of zero importance on the world stage.
The Brits were not Saudi proponents, in fact promoting the Husseins of Hejaz, the guys
Lawrence of Arabia worked with. The Husseins, the Sharifs of Mecca and rulers of Hejaz, were
the hereditary enemies of the Sauds of Nejd.
After WWI, the Brits installed Husseins as rulers of both Transjordan and Iraq, which with
the Hejaz meant the Sauds were pretty much surrounded. The Sauds conquered the Hejaz in 1924,
despite lukewarm British support for the Hejaz.
Nobody in the world cared much about the Saudis one way or another until massive oil
fields were discovered, by Americans not Brits, starting in 1938. There was no reason they
should. Prior to that Saudi prominence in world affairs was about equal to that of Chad
today, and for much the same reason. Chad (and Saudi Arabia) had nothing anybody else
wanted.
'Putin stopped talking about the "Lisbon to Vladivostok" free trade area long ago" --
Michael Kenney
Putin was simply trying to sell Russia's application for EU membership with the
catch-phrase "Lisbon to Vladivostok". He continued that until the issue was triply mooted (1)
by implosion of EU growth and boosterism, (2) by NATO's aggressive stance, in effect taken by
NATO in Ukraine events and in the Baltics, and, (3) Russia's alliance with China.
It is surely still true that Russians think of themselves, categorically, as Europeans.
OTOH, we can easily imagine that Russians in Vladivostok look at things differently than do
Russians in St. Petersburg. Then again, Vladivostok only goes back about a century and a
half.
Anyway, the mission was accomplished and the relations with Russia are worse now than
during Obama administration.
I generally agree with your comment, but that part strikes me as a bit of an exaggeration.
While relations with Russia certainly haven't improved, how have they really worsened? The
second round of sanctions that Trump reluctantly approved have yet to be implemented by
Europe, which was the goal. And apart from that, what of substance has changed?
It's not surprising that 57 percent of the American people believe in Russian meddling.
Didn't two-thirds of the same crowd believe that Saddam was behind 9/11, too? The American
public is being brainwashed 24 hours a day all year long.
The CIA is the world largest criminal and terrorist organization. With Brennan the worst
has come to the worst. The whole Russian meddling affair was initiated by the Obama/Clinton
gang in cooperation with 95 percent of the media. Nothing will come out of it.
This disinformation campaign might be the prelude to an upcoming war.
Right now, the US is run by jerks and idiots. Watch the video.
Only dumb people does not know that TRUMP IS NETANYAHU'S PUPPET.
The fifth column zionist jews are running the albino stooge and foreign policy in the
Middle East to expand Israel's interest against American interest that is TREASON. One of
these FIFTH COLUMNISTS is Jared Kushner. He should be arrested.
[The key figures who had primary influence on both Trump's and Bush's Iran policies held
views close to those of Israel's right-wing Likud Party. The main conduit for the Likudist
line in the Trump White House is Jared Kushner, the president's son-in-law, primary foreign
policy advisor, and longtime friend and supporter of Netanyahu. Kushner's parents are also
long-time supporters of Israeli settlements on the occupied West Bank.
Another figure to whom the Trump White House has turned is John Bolton, undersecretary of
state and a key policymaker on Iran in the Bush administration. Although Bolton was not
appointed Trump's secretary of state, as he'd hoped, he suddenly reemerged as a player on
Iran policy thanks to his relationship with Kushner. Politico reports that Bolton met with
Kushner a few days before the final policy statement was released and urged a complete
withdrawal from the deal in favor of his own plan for containing Iran.
Bolton spoke with Trump by phone on Thursday about the paragraph in the deal that vowed it
would be "terminated" if there was any renegotiation, according to Politico. He was calling
Trump from Las Vegas, where he'd been meeting with casino magnate Sheldon Adelson, the third
major figure behind Trump's shift towards Israeli issues. Adelson is a Likud supporter who
has long been a close friend of Netanyahu's and has used his Israeli tabloid newspaper Israel
Hayomto support Netanyahu's campaigns. He was Trump's main campaign contributor in 2016,
donating $100 million. Adelson's real interest has been in supporting Israel's interests in
Washington -- especially with regard to Iran.]
Putin's dream of Greater Europe is the death knell for the unipolar world order. It
means the economic center of the world will shift to Central Asia where abundant resources
and cheap labor of the east will be linked to the technological advances and the Capital
the of the west eliminating the need to trade in dollars or recycle profits into US
debt. The US economy will slip into irreversible decline, and the global hegemon will
steadily lose its grip on power. That's why it is imperative for the US prevail in
Ukraine– a critical land bridge connecting the two continents– and to topple
Assad in Syria in order to control vital resources and pipeline corridors. Washington
must be in a position where it can continue to force its trading partners to denominate
their resources in dollars and recycle the proceeds into US Treasuries if it is to maintain
its global primacy. The main problem is that Russia is blocking Uncle Sam's path to
success which is roiling the political establishment in Washington.
American dominance is very much tied to the dollar's role as the world's reserve currency,
and the rest of the world no longer want to fund this bankrupt, warlike state –
particularly the Chinese.
First, it confirms that the US did not want to see the jihadist extremists
defeated by Russia. These mainly-Sunni militias served as Washington's proxy-army
conducting an ambitious regime change operation which coincided with US strategic
ambitions.
The CIA run US/Israeli/ISIS alliance.
Second, Zakharova confirms that the western media is not an independent news
gathering organization, but a propaganda organ for the foreign policy establishment who
dictates what they can and can't say.
They are given the political line and they broadcast it.
The loosening of rules governing the dissemination of domestic propaganda coupled with
the extraordinary advances in surveillance technology, create the perfect conditions for
the full implementation of an American police state. But what is more concerning, is
that the primary levers of state power are no longer controlled by elected officials but by
factions within the state whose interests do not coincide with those of the American
people. That can only lead to trouble.
At some point Americans are going to get a "War on Domestic Terror" cheered along by the
media. More or less the arrest and incarceration of any opposition following the Soviet
Bolshevik model.
On the plus side, everyone now knows that the Anglo-US media from the NY Times to the
Economist, from WaPo to the Gruniard, and from the BBC to CNN, the CBC and Weinstein's
Hollywood are a worthless bunch of depraved lying bastards.
Such a truthful portrait of reality ! The ruling elite is indeed massively corrupt,
compromised, and controlled by dark forces. And the police state is already here. For most
people, so far, in the form of massive collection of personal data and increasing number of
mandatory regulations. But just one or two big false-flags away from progressing into
something much worse.
The thing is, no matter how thick the mental cages are, and how carefully they are
maintained by the daily massive injections of "certified" truth (via MSM), along with
neutralizing or compromising of "troublemakers", the presence of multiple alternative sources
in the age of Internet makes people to slip out of these cages one by one, and as the last
events show – with acceleration.
It means that there's a fast approaching tipping point after which it'd be impossible for
those in power both to keep a nice "civilized" face and to control the "cage-free"
population. So, no matter how the next war will be called, it will be the war against the
free Internet and free people. That's probably why N. Korean leader has no fear to start
one.
All government secrecy is a curse on mankind. Trump is releasing the JFK murder files to the public. Kudos! Let us hope he will follow up with a full 9/11 investigation.
The objective was to push new administration into the corner from which it could not
improve relations with Russia as Trump indicated that he wanted to during the campaign.
Good point. That was probably one of the objectives (and from the point of view of the
deep-state, perhaps the most important objective) of the "Russia hacked our democracy"
narrative, in addition to the general deligitimization of the Trump administration.
And, keep in mind, Washington's Sunni proxies were not a division of the Pentagon; they
were entirely a CIA confection: CIA recruited, CIA-armed, CIA-funded and
CIA-trained.
Clearly the CIA was making war on Syria. Is secret coercive covert action against sovereign
nations Ok? Is it legal? When was the CIA designated a war making entity – what part of the constitution OK's
that? Isn't the congress obliged by constitutional law to declare war? (These are NOT six
month actions – they go on and on.)
Are committees of six congressman and six senators, who meet in secret, just avoiding the
grave constitutional questions of war? We the People cannot even interrogate these
politicians. (These politicians make big money in the secrecy swamp when they leave
office.)
Syria is only one of many nations that the CIA is attacking – how many countries are
we attacking with drones? Where is congress?
Spying is one thing – covert action is another – covert is wrong – it
goes against world order. Every year after 9/11 they say things are worse – give them
more money more power and they will make things safe. That is BS!
9/11 has opened the flood gates to the US government attacking at will, the various
peoples of this Earth. That is NOT our prerogative.
We are being exceptionally arrogant.
Close the CIA – give the spying to the 16 other agencies.
The book adhere to "classic" line of critique of neoliberalism as a new "secular religion" ( the author thinking is along the lines
of Gramsci idea of "cultural hegemony"; Gramsci did not use the term 'secular religion" at all, but this close enough concept) that
deified the market. It stress the role of the state in enforcing the neoliberalism.
The book adhere to "classic" line of critique of neoliberalism as a new "secular religion" ( the author thinking is along the
lines of Gramsci idea of "cultural hegemony"; Gramsci did not use the term 'secular religion" at all, but this is close enough
concept) that deified the market. It stresses the role of the state in enforcing the neoliberal ideology much like was the case
with Bolsheviks in the USSR:
Gramsci's question is still pressing: How and why do ordinary working folks come to accept a system where wealth is produced
by their collective labors and energies but appropriated individually by only a few at the top? The theory of hegemony suggests
that the answer to this question is not simply a matter of direct exploitation and control by the capitalist class. Rather,
hegemony posits that power is maintained through ongoing, ever-shifting cultural processes of winning the consent of the governed,
that is, ordinary people like you and me.
According to Gramsci, there was not one ruling class, but rather a historical bloc, "a moving equilibrium" of class interests
and values. Hegemony names a cultural struggle for moral, social, economic, and political leadership; in this struggle, a field
-- or assemblage -- of practices, discourses, values, and beliefs come to be dominant. While this field is powerful and firmly
entrenched, it is also open to contestation. In other words, hegemonic power is always on the move; it has to keep winning
our consent to survive, and sometimes it fails to do so.
Through the lens of hegemony, we can think about the rise of neoliberalism as an ongoing political project -- and class struggle
-- to shift society's political equilibrium and create a new dominant field. Specifically, we are going to trace the shift
from liberal to neoliberal hegemony. This shift is represented in the two images below.
Previous versions of liberal hegemony imagined society to be divided into distinct public and private spheres. The public
sphere was the purview of the state, and its role was to ensure the formal rights and freedoms of citizens through the rule
of law. The private sphere included the economy and the domestic sphere of home and family.
For the most part, liberal hegemony was animated by a commitment to limited government, as the goal was to allow for as
much freedom in trade, associations, and civil society as possible, while preserving social order and individual rights. Politics
took shape largely around the line between public and private; more precisely, it was a struggle over where and how to draw
the line. In other words, within the field of liberal hegemony, politics was a question of how to define the uses and limits
of the state and its public function in a capitalist society. Of course, political parties often disagreed passionately about
where and how to draw that line. As we'll see below, many advocated for laissez-faire capitalism, while others argued for a
greater public role in ensuring the health, happiness, and rights of citizens. What's crucial though is that everyone agreed
that there was a line to be drawn, and that there was a public function for the state.
As Figure 1.1 shows, neoliberal hegemony works to erase this line between public and private and to create an entire society
-- in fact, an entire world -- based on private, market competition. In this way, neoliberalism represents a radical reinvention
of liberalism and thus of the horizons of hegemonic struggle. Crucially, within neoliberalism, the state's function does not
go away; rather, it is deconstructed and reconstructed toward the new' end of expanding private markets.
This view correlates well with the analysis of Professor Wendy Brown book "Undoing the Demos" and her paper "Neoliberalism
and the End of Liberal Democracy" (pdf is freely available)
In this sense neoliberalism are just "Trotskyism for the rich" with the same utopian dream of global neoliberal revolution,
but much more sinister motives. And is as ruthless in achieving its goals, if necessary bring neoliberal "regime change" on the
tips of bayonets, or via 'cultural revolutions".
If we follow the line of thinking put forward by Professor Philip Mirowski's in his book "Never Let a Serious Crisis Go to
Waste: How Neoliberalism Survived the Financial Meltdown," we can say that neoliberals essentially "reverse-engineered" Bolsheviks
methods of acquiring and maintaining political power, replacing "dictatorship of proletariat" with the "dictatorship of financial
oligarchy".
I would say more: The "professional revolutionary" cadre that were the core of Bolshevik's Party were replaced with well paid,
talented intellectual prostitutes at specially created neoliberal think tanks. And later "infiltrated" in economic departments
(kind of stealth coup d'état in academia financed by usual financial players).
Which eventually created a critical mass of ideas which were able to depose New Deal Capitalism ideology, putting forward the
set of remedies that restore the power the financial oligarchy enjoyed in 1920th. Technological changes such as invention of computers
and telecommunication revolution also helped greatly.
At the same time unlike Bolsheviks, neoliberals are carefully hiding their agenda. Funny, neoliberalism is the only known to
me major ideology which the US MSM are prohibited to mention by name ;-)
The role of state under neoliberalism is very close to the role of state under Bolsheviks' "dictatorship of proletariats".
It no way this still a liberal democracy -- this is what Sheldon Wolin called "inverted totalitarism". Less brutal then Bolsheviks'
regime, but still far from real democracy. Under neoliberalism the state is a powerful agent needed to enforce markets on unsuspecting
population in all spheres of life, whether they want it or not (supported by 12" guns of neoliberal MSM battleships):
As Figure 1.1 shows, neoliberal hegemony works to erase this line between public and private and to create an entire society
-- in fact, an entire world -- based on private, market competition. In this way, neoliberalism represents a radical reinvention
of liberalism and thus of the horizons of hegemonic struggle. Crucially, within neoliberalism, the state's function does not
go away; rather, it is deconstructed and reconstructed toward the new' end of expanding private markets. Consequently, contemporary
politics take shape around questions of how best to promote competition. For the most part, politics on both the left and right
have been subsumed by neoliberal hegemony. For example, while neoliberalism made its debut in Western politics with the right-wing
administrations of Ronald Reagan and Margaret Thatcher, leaders associated with the left have worked to further neoliberal
hegemony in stunning ways. As we will explore in more depth below and in die coming chapters, both U.S. presidents Bill Clinton
and Barack Obama have governed to create a privatized, market society. In other words, there is both a left and a right hegemonic
horizon of neoliberalism. Thus, moving beyond neoliberalism will ultimately require a whole new field of politics.
One of the most interesting part of the book is the brief analysis of the recent elections (with very precise characterization
of Hillary Clinton defeat as the defeat of the "neoliberal status quo"). The author claims that Trump supporters were mainly representatives
of the strata of the US society which were sick-and-tied of neoliberalism (note the percentage of Spanish speaking electorate
who voted for Trump), but they were taken for a ride, as instead of rejection of globalism and free movement of labor, Trump actually
represented more right wing, more bastardized version of "hard neoliberalism".
In the period which followed the elections Trump_vs_deep_state emerged as a kind of "neoliberalism in one country" -- much
like Stalin's "socialism in one country". It and did not care one bit about those who voted for him during election . As in classic
"The Moor has done his duty, the Moor can go."
So in a way Trump represents the mirror image of Obama who in the same way betrayed his votes (twice) acting from "soft neoliberalism"
position, while Trump is acting from "hard neoliberalism" position.
On the other hand, we saw' the rise of the Tea Party, a right-wing response to the crisis. While the Tea Party was critical
of status-quo neoliberalism -- especially its cosmopolitanism and embrace of globalization and diversity, which was perfectly
embodied by Obama's election and presidency -- it was not exactly anti-neoliberal. Rather, it was anti-left neoliberalism-,
it represented a more authoritarian, right [wing] version of neoliberalism.
Within the context of the 2016 election, Clinton embodied the neoliberal center that could no longer hold. Inequality. Suffering.
Collapsing infrastructures. Perpetual war. Anger. Disaffected consent. There were just too many fissures and fault lines in
the glossy, cosmopolitan world of left neoliberalism and marketized equality. Indeed, while Clinton ran on status-quo stories
of good governance and neoliberal feminism, confident that demographics and diversity would be enough to win the election,
Trump effectively tapped into the unfolding conjunctural crisis by exacerbating the cracks in the system of marketized equality,
channeling political anger into his celebrity brand that had been built on saying "f*** you" to the culture of left neoliberalism
(corporate diversity, political correctness, etc.) In fact, much like Clinton's challenger in the Democratic primary, Benie
Sanders, Trump was a crisis candidate.
... ... ...
In other words, Trump supporters may not have explicitly voted for neoliberalism, but that's what they got. In fact, as
Rottenberg argues, they got a version of right neoliberalism "on steroids" -- a mix of blatant plutocracy and authoritarianism
that has many concerned about the rise of U.S. fascism.
We can't know what would have happened had Sanders run against Trump, but we can think seriously about Trump, right and
left neoliberalism, and the crisis of neoliberal hegemony. In other words, we can think about where and how we go from here.
As I suggested in the previous chapter, if we want to construct a new world, we are going to have to abandon the entangled
politics of both right and left neoliberalism; we have to reject the hegemonic frontiers of both disposability and marketized
equality. After all, as political philosopher Nancy Fraser argues, what was rejected in the election of 2016 was progressive,
left neoliberalism.
While the rise of hyper-right neoliberalism is certainly nothing to celebrate, it does present an opportunity for breaking
with neoliberal hegemony. We have to proceed, as Gary Younge reminds us, with the realization that people "have not rejected
the chance of a better world. They have not yet been offered one."'
This article is one year old but still looks like it was written yesterday...
Notable quotes:
"... Some American military and intelligence officials were especially distressed by the president's determination to ignore the evidence. ..."
"... "None of this makes any sense," one officer told colleagues upon learning of the decision to bomb. "We KNOW that there was no chemical attack ... the Russians are furious. Claiming we have the real Intel and know the truth ... I guess it didn't matter whether we elected Clinton or Trump." ..."
"... Hersh's investigations have not only undermined evidence-free claims being promoted in the west to destabilise Assad's goverment but threatened a wider US policy seeking to "remake the Middle East". His work has challenged a political and corporate media consensus that portrays Russia's Vladimir Putin, Assad's main ally against the extremist Islamic forces fighting in Syria, as another dangerous monster the West needs to bring into line. ..."
"... For all these reasons, Hersh has found himself increasingly friendless. The New Yorker refused to publish his Syria investigations. Instead, he had to cross the Atlantic to find a home at the prestigious but far less prominent London Review of Books. ..."
On April 6, United States President Donald Trump authorized an early morning Tomahawk missile
strike on Shayrat Air Base in central Syria in retaliation for what he said was a deadly nerve
agent attack carried out by the Syrian government two days earlier in the rebel-held town of Khan
Sheikhoun.
Trump issued the order despite having been warned by the U.S. intelligence community that it
had found no evidence that the Syrians had used a chemical weapon.
The available intelligence made clear that the Syrians had targeted a jihadist meeting site
on April 4 using a Russian-supplied guided bomb equipped with conventional explosives.
Details of the attack, including information on its so-called high-value targets, had been
provided by the Russians days in advance to American and allied military officials in Doha, whose
mission is to coordinate all U.S., allied, Syrian and Russian Air Force operations in the region.
Some American military and intelligence officials were especially distressed by the president's
determination to ignore the evidence.
"None of this makes any sense," one officer told colleagues upon learning of the decision
to bomb. "We KNOW that there was no chemical attack ... the Russians are furious. Claiming we
have the real Intel and know the truth ... I guess it didn't matter whether we elected Clinton
or Trump."
Within hours of the April 4 bombing, the world's media was saturated with photographs and videos
from Khan Sheikhoun. Pictures of dead and dying victims, allegedly suffering from the symptoms
of nerve gas poisoning, were uploaded to social media by local activists, including the White
Helmets, a first responder group known for its close association with the Syrian opposition.
........................
https://www.welt.de/politik/ausland/article165905578/Trump-s-Red-Line.html
Hersh's investigations have not only undermined evidence-free claims being promoted in
the west to destabilise Assad's goverment but threatened a wider US policy seeking to "remake
the Middle East". His work has challenged a political and corporate media consensus that portrays
Russia's Vladimir Putin, Assad's main ally against the extremist Islamic forces fighting in Syria,
as another dangerous monster the West needs to bring into line.
For all these reasons, Hersh has found himself increasingly friendless. The New Yorker
refused to publish his Syria investigations. Instead, he had to cross the Atlantic to find a home
at the prestigious but far less prominent London Review of Books.
................
https://www.counterpunch.org/2017/06/27/hershs-new-syria-revelations-buried-from-view/
White House Says It Will Fake "Chemical Weapon Attack" In Syria
The White House claims that the Syrian government is preparing "chemical weapon attacks". This
is clearly not the case. Syria is winning the war against the country. Any such attack would clearly
be to its disadvantage.
Seymour Hirsh has been forced to get his stories published in Europe because the US and UK media
have conspired to ban his exposes of their fake news.
Hirsh has been a thorn in the side of the national security state ever since his expose of
the My Lai massacre in 1969...and they're doing their best to shut him up.
"Controlling the narrative" is politically correct term for censorship.
Notable quotes:
"... I suspect most of the people who write all that furious invective on the Internet, professional polemicists and semiliterate commenters alike, are lashing out because they've been hurt -- their sense of fairness or decency has been outraged, or they feel personally wounded or threatened. ..."
"... "controlling the narrative" by neoliberal MSM is the key of facilitating the neoliberal "groupthink". Much like was in the USSR with "communist" groupthink. This is a step in the direction of the theocratic society (which the USSR definitely was). ..."
"... In other words "controlling the narrative" is the major form of neoliberal MSM "war on reality" as the neoliberal ideology is now completely discredited and can be sustained only by cult-style methods. ..."
Maybe this is the same kind of clinical detachment doctors have to cultivate, a way of distancing oneself from the subject,
protecting yourself against a crippling empathy. I won't say that writers or artists are more sensitive than other people, but
it may be that they're less able to handle their own emotions.
It may be that art, like drugs, is a way of dulling or controlling pain. Eloquently articulating a feeling is one way to avoid
actually experiencing it.
Words are only symbols, noises or marks on paper, and turning the messy, ugly stuff of life into language renders it inert
and manageable for the author, even as it intensifies it for the reader.
It's a nerdy, sensitive kid's way of turning suffering into something safely abstract, an object of contemplation.
I suspect most of the people who write all that furious invective on the Internet, professional polemicists and semiliterate
commenters alike, are lashing out because they've been hurt -- their sense of fairness or decency has been outraged, or
they feel personally wounded or threatened.
"controlling the narrative" by neoliberal MSM is the key of facilitating the neoliberal "groupthink". Much like was in the
USSR with "communist" groupthink. This is a step in the direction of the theocratic society (which the USSR definitely was).
In other words "controlling the narrative" is the major form of neoliberal MSM "war on reality" as the neoliberal ideology
is now completely discredited and can be sustained only by cult-style methods.
They want to invoke your emotions in the necessary direction and those emotions serve as a powerful filter, a firewall which
will prevents you from seeing any alternative facts which taken as whole form an "alternative narrative".
It also creates certain taboo, such as "don't publish anything from RT", or you automatically become "Putin's stooge." But
some incoherent blabbing of a crazy neocon in Boston Globe is OK.
This is an old and a very dirty game, a variation of method used for centuries by high demand cults:
"Why, of course, the people don't want war. Why would some poor slob on a farm want to risk his life in a war when the best
that he can get out of it is to come back to his farm in one piece.
Naturally, the common people don't want war; neither in Russia nor in England nor in America, nor for that matter in Germany.
That is understood.
But, after all, it is the leaders of the country who determine the policy and it is always a simple matter to drag the people
along, whether it is a democracy or a fascist dictatorship or a Parliament or a Communist dictatorship
Voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell
them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works
the same way in any country."
– Hermann Goering (as told to Gustav Gilbert during the Nuremberg trials)
You need to be able to decipher this "suggested" set of emotions and detach it from the set of facts provided by neoliberal
MSM. It might help to view things "Sine ira et studio" (
https://en.wikipedia.org/wiki/Sine_ira_et_studio
)
That helps to destroy the official neoliberal narrative.
Here skepticism (whether natural or acquired) can be of great help in fighting groupthink pushed by neoliberal MSM.
We are all guilty of this one sidedness, but I think that we need to put some efforts to move in direction of higher level
of skepticism toward our own views and probably provide at least links to alternative views.
Nationalism really represent a growing threat to neoliberalism. It is clear the the rise of
nationalism was caused by the triumph of neoliberalism all over the globe. As neoliberal
ideology collapsed in 2008, thing became really interesting now. Looks like
1920th-1940th will be replayed on a new level with the USA neoliberal empire under stress from
new challengers instead of British empire.
Rumor about the death of neoliberalism are slightly exaggerated ;-). This social system still
has a lot of staying power. you need some external shock like the need of cheap oil (defined as
sustainable price of oil over $100 per barrel) to shake it again. Of some financial crisis similar
to the crisis of 2008. Currently there is still
no alternative social order that can replace it. Collapse of the USSR discredited both socialism even
of different flavors then was practiced in the USSR. National socialism would be a step back from
neoliberalism.
Notable quotes:
"... The retreat of [neo]liberalism is very visible in Asia. All Southeast Asian states have turned their backs on liberal democracy, especially Indonesia, the Philippines and Myanmar in the last decade. This NYT article notes that liberalism has essentially died in Japan, and that all political contests are now between what the west would consider conservatives: https://www.nytimes.com/2017/10/15/opinion/liberalism-japan-election.html ..."
"... What is today called "Liberalism" and "Conservatism" both are simply corrupted labels applied to the same top-down corporate-fascistic elite rule that I think Mr. Buchanan once referred to as "two wings of the same bird of prey." ..."
"... Nobody at the top cares about 'diversity.' They care about the easy profits that come from ever cheaper labor. 'Diversity' is not suicide but rather murder: instigated by a small number of very powerful people who have decided that the long-term health of their nations and civilization is less important than short-term profits and power. ..."
"... Hillary and Obama are to the right of the President that Buchanan served in his White House. Richard Nixon was to the Left of both Hillary and Obama. I can't even imagine Hillary accepting and signing into law a 'Clean Water Act' or enacting Price Controls to fight inflation. No way. Heck would freeze over before Hillary would do something so against her Banker Backers. ..."
"... It's sure that financial (neo)liberalism was in a growth phase prior to year 2000 (under Greenspan, the "Maestro") with a general belief that the economy could be "fine tuned" with risk eliminated using sophisticated financial instruments, monetary policy etc. ..."
"... If [neo] Liberalism is a package, then two heavy financial blows that shook the whole foundation were the collapse of the dot.com bubble (2000) and the mortgage bubble (2008). ..."
"... And, other (self-serving) neoliberal stories are now seen as false. For example, that the US is an "advanced post-industrial service economy", that out-sourcing would "free up Americans for higher skilled/higher wage employment" or that "the US would always gain from tariff free trade". ..."
"... The basic divide is surely Nationalism (America First) vs. Globalism (Neo-Liberalism), as shown by the last US Presidential election. ..."
"... Neoliberalism, of which the Clintons are acolytes, supports Free Trade and Open Borders. Although it claims to support World Government, in actual fact it supports corporatism. This is explicit in the TPPA Trump vetoed. Under the corporate state, the state controls the corporations, as Don Benito did in Italy. Under corporatism, the corporations tell the state what to do, as has been the case in America since at least the Clinton Presidency. ..."
"... But I recall that Pat B also said neoconservatism was on its way out a few years after Iraq war II and yet it's stronger than ever and its adherents are firmly ensconced in the joint chiefs of staff, the pentagon, Congress and the White House. It's also spawned a close cousin in liberal interventionism. ..."
Asked to name the defining attributes of the America we wish to become, many liberals would answer
that we must realize our manifest destiny since 1776, by becoming more equal, more diverse and more
democratic -- and the model for mankind's future.
Equality, diversity, democracy -- this is the holy trinity of the post-Christian secular state
at whose altars Liberal Man worships.
But the congregation worshiping these gods is shrinking. And even Europe seems to be rejecting
what America has on offer.
In a retreat from diversity, Catalonia just voted to separate from Spain. The Basque and Galician
peoples of Spain are following the Catalan secession crisis with great interest.
The right-wing People's Party and far-right Freedom Party just swept 60 percent of Austria's vote,
delivering the nation to 31-year-old Sebastian Kurz, whose anti-immigrant platform was plagiarized
from the Freedom Party. Summarized it is: Austria for the Austrians!
Lombardy, whose capital is Milan, and Veneto will vote Sunday for greater autonomy from Rome.
South Tyrol (Alto Adige), severed from Austria and ceded to Italy at Versailles, written off by
Hitler to appease Mussolini after his Anschluss, is astir anew with secessionism. Even the Sicilians
are talking of separation.
By Sunday, the Czech Republic may have a new leader, billionaire Andrej Babis. Writes The Washington
Post, Babis "makes a sport of attacking the European Union and says NATO's mission is outdated."
Platform Promise: Keep the Muslim masses out of the motherland.
To ethnonationalists, their countrymen are not equal to all others, but superior in rights. Many
may nod at Thomas Jefferson's line that "All men are created equal," but they no more practice that
in their own nations than did Jefferson in his
... ... ...
European peoples and parties are today using democratic means to achieve "illiberal" ends. And
it is hard to see what halts the drift away from liberal democracy toward the restrictive right.
For in virtually every nation, there is a major party in opposition, or a party in power, that holds
deeply nationalist views.
European elites may denounce these new parties as "illiberal" or fascist, but it is becoming apparent
that it may be liberalism itself that belongs to yesterday. For more and more Europeans see the invasion
of the continent along the routes whence the invaders came centuries ago, not as a manageable problem
but an existential crisis.
To many Europeans, it portends an irreversible alteration in the character of the countries their
grandchildren will inherit, and possibly an end to their civilization. And they are not going to
be deterred from voting their fears by being called names that long ago lost their toxicity from
overuse.
And as Europeans decline to celebrate the racial, ethnic, creedal and cultural diversity extolled
by American elites, they also seem to reject the idea that foreigners should be treated equally in
nations created for their own kind.
Europeans seem to admire more, and model their nations more, along the lines of the less diverse
America of the Eisenhower era, than on the polyglot America of 2017.
And Europe seems to be moving toward immigration polices more like the McCarran-Walter Act of
1950 than the open borders bill that Sen. Edward Kennedy shepherded through the Senate in 1965.
Kennedy promised that the racial and ethnic composition of the America of the 1960s would not
be overturned, and he questioned the morality and motives of any who implied that it would.
Liberalism is the naivete of 18th century elites, no different than today. Modernity as you
know it is unsustainable, mostly because equality isn't real, identity has value for most humans,
pluralism is by definition fractious, and deep down most people wish to follow a wise strongman
leader who represents their interests first and not a vague set of universalist values.
Blind devotion to liberal democracy is another one of those times when white people take an
abstract concept to weird extremes. It is short-sighted and autistically narrow minded. Just because
you have an oppressive king doesn't mean everyone should be equals. Just because there was slavery/genocide
doesn't mean diversity is good.
The retreat of [neo]liberalism is very visible in Asia. All Southeast Asian states have turned their
backs on liberal democracy, especially Indonesia, the Philippines and Myanmar in the last decade.
This NYT article notes that liberalism has essentially died in Japan, and that all political contests
are now between what the west would consider conservatives:
https://www.nytimes.com/2017/10/15/opinion/liberalism-japan-election.html
Good riddance. The idea that egalitarianism is more advanced than hierarchy has always been
false, and flies against the long arc of history. Time for nationalists around the world to smash
liberal democracy and build a new modernity based on actual humanism, with respect to hierarchies
and the primacy of majorities instead of guilt and pathological compassion dressed up as political
ideology.
"Liberalism" is not dying. "Liberalism" is dead, and has been since at least 1970.
What is today called "Liberalism" and "Conservatism" both are simply corrupted labels applied
to the same top-down corporate-fascistic elite rule that I think Mr. Buchanan once referred to
as "two wings of the same bird of prey."
Nobody at the top cares about 'diversity.' They care about the easy profits that come from
ever cheaper labor. 'Diversity' is not suicide but rather murder: instigated by a small number
of very powerful people who have decided that the long-term health of their nations and civilization
is less important than short-term profits and power.
Its been dead for nearly 20 years now. Liberalism has long been the Monty Python parrot nailed
to its perch. At this point, the term is mainly kept alive in right-wing attacks by people who
lack the imagination to change their habitual targets for so long.
To my eye, the last 'liberal' politician died in a susupicious plane crash in 2000 as the Bush
Republicans were taking the White House by their famous 5-4 vote/coup and also needed to claim
control of the Senate. So, the last authentic 'liberal' Senator, Paul Wellstone of MN was killed
in a suspicious plane crash that was never properly explained.
Hillary and Obama are to the right of the President that Buchanan served in his White House.
Richard Nixon was to the Left of both Hillary and Obama. I can't even imagine Hillary accepting
and signing into law a 'Clean Water Act' or enacting Price Controls to fight inflation. No way.
Heck would freeze over before Hillary would do something so against her Banker Backers.
And, at the root, that is the key. The 'Liberals' that the right now rails against are strongly
backed and supported by the Wall Street Banks and other corporate leaders. The 'Liberals' have
pushed for a government Of the Bankers, By the Bankers and For the Bankers. The 'Liberals' now
are in favor of Endless Unconstitutional War around the world.
Which can only mean that the term 'Liberal' has been so completely morphed away from its original
meanings to be completely worthless.
The last true Liberal in American politics was Paul Wellstone. And even by the time he died
for his sins, he was calling himself a "progressive" because after the Clintons and the Gores
had so distorted the term Liberal it was meaningless. Or it had come to mean a society ruled by
bankers, a society at constant war and throwing money constantly at a gigantic war machine, a
society of censorship where the government needed to control all music lyrics, the same corrupt
government where money could by anything from a night in the Lincoln Bedroom to a Presidential
Pardon or any other government favor.
Thus, 'Liberals' were a dead movement even by 2000, when the people who actually believed in
the American People over the profits of bankers were calling themselves Progressives in disgust
at the misuse of the term Liberal. And now, Obama and Hillary have trashed and distorted even
the term Progressive into bombing the world 365 days a year and still constantly throwing money
at the military machine and the problems it invents.
So, Liberalism is so long dead that if you exumed the grave you'd only find dust. And Pat must
be getting senile and just throwing back out the same lines he once wrote as a speechwriter for
the last Great Lefty President Richard Nixon.
Another question is whether this is wishful thinking from Pat or some kind of reality.
I think that he's right, that Liberalism is a dying faith, and it's interesting to check the
decline.
It's sure that financial (neo)liberalism was in a growth phase prior to year 2000 (under
Greenspan, the "Maestro") with a general belief that the economy could be "fine tuned" with risk
eliminated using sophisticated financial instruments, monetary policy etc.
If [neo] Liberalism is a package, then two heavy financial blows that shook the whole foundation
were the collapse of the dot.com bubble (2000) and the mortgage bubble (2008).
And, other (self-serving) neoliberal stories are now seen as false. For example, that the
US is an "advanced post-industrial service economy", that out-sourcing would "free up Americans
for higher skilled/higher wage employment" or that "the US would always gain from tariff free
trade".
In fact, the borderless global "world is flat" dogma is now seen as enabling a rootless hyper-rich
global elite to draw on a sea of globalized serf labour with little or no identity, while their
media and SWJ activists operate a scorched earth defense against any sign of opposition.
The basic divide is surely Nationalism (America First) vs. Globalism (Neo-Liberalism),
as shown by the last US Presidential election.
A useful analogy might be Viktor Orbán. He started out as a leader of a liberal party, Fidesz,
but then over time started moving to the right. It is often speculated that he started it for
cynical reasons, like seeing how the right was divided and that there was essentially a vacuum
there for a strong conservative party, but there's little doubt he totally internalized it. There's
also little doubt (and at the time he and a lot of his fellow party leaders talked about it a
lot) that as he (they) started a family and having children, they started to realize how conservatism
kinda made more sense than liberalism.
With Kurz, there's the possibility for this path. However, he'd need to start a family soon
for that to happen. At that age Orbán was already married with children
Neoliberalism, of which the Clintons are acolytes, supports Free Trade and Open Borders.
Although it claims to support World Government, in actual fact it supports corporatism. This is
explicit in the TPPA Trump vetoed. Under the corporate state, the state controls the corporations,
as Don Benito did in Italy. Under corporatism, the corporations tell the state what to do, as
has been the case in America since at least the Clinton Presidency.
Richard Nixon was a capitalist, not a corporatist. He was a supporter of proper competition
laws, unlike any President since Clinton. Socially, he was interventionist, though this may have
been to lessen criticism of his Vietnam policies. Anyway, his bussing and desegregation policies
were a long-term failure.
Price Control was quickly dropped, as it was in other Western countries. Long term Price Control,
as in present day Venezuela, is economically disastrous.
Let's hope liberalism is a dying faith and that is passes from the Western world. If not it will
destroy the West, so if it doesn't die a natural death then we must euthanize it. For the evidence
is in and it has begat feminism, anti-white racism, demographic winter, mass third world immigration
and everything else that ails the West and has made it the sick and dying man of the world.
But I recall that Pat B also said neoconservatism was on its way out a few years after
Iraq war II and yet it's stronger than ever and its adherents are firmly ensconced in the joint
chiefs of staff, the pentagon, Congress and the White House. It's also spawned a close cousin
in liberal interventionism.
What Pat refers to as "liberalism" is now left wing totalitarianism and anti-white hatred and
it's fanatically trying to remain relevant by lashing out and blacklisting, deplatforming, demonetizing,
and physically assaulting all of its enemies on the right who are gaining strength much to their
chagrin. They resort to these methods because they can't win an honest debate and in a true free
marketplace of ideas they lose.
"... What we know, first and foremost, is that it hardly matters what Trump says because what he says is as likely as not to have
no relationship to the truth, no relationship to what he said last year during the campaign or even what he said last week. ..."
One of the best summary observations in this regard is from Washington Post columnist
Steven Pearlstein , who writes on business and financial matters but whose conclusions could apply as well to Trump's handling
of a wide range of foreign and domestic matters: " What we know, first and foremost, is that it hardly matters what Trump
says because what he says is as likely as not to have no relationship to the truth, no relationship to what he said last year
during the campaign or even what he said last week. What he says bears no relationship to any consistent political or policy
ideology or world-view. What he says is also likely to bear no relationship to what his top advisers or appointees have said or
believe, making them unreliable interlocutors even if they agreed among themselves, which they don't. This lack of clear policy
is compounded by the fact that the president, despite his boasts to the contrary, knows very little about the topics at hand and
isn't particularly interested in learning. In other words, he's still making it up as he goes along."
Many elements of dismay can follow from the fact of having this kind of president. We are apt to get a better idea of which
specific things are most worthy of dismay as the rest of this presidency unfolds. I suggest, however, that a prime, overarching
reason to worry is Trump's utter disregard for the truth. Not just a disregard, actually, but a determination to crush the truth
and to instill falsehood in the minds of as many people as possible. The Post 's fact checker,
Glenn Kessler , summarizes the situation by noting that "the pace and volume of the president's misstatements" are so great
that he and other fact checkers "cannot possibly keep up."
Kessler also observes how Trump's handling of falsehoods is qualitatively as well as quantitatively different from the
garden variety of lying in which many politicians indulge: "Many will drop a false claim after it has been deemed false. But Trump
just repeats the claim over and over." It is a technique reminiscent of the Big Lie that totalitarian regimes have used, in which
the repetition and brazenness of a lie help lead to its acceptance.
The problem is fundamental, and relates to a broad spectrum of policy issues both foreign and domestic, because truth-factual
reality -- is a necessary foundation to consider and evaluate and debate policy on any subject. Crushing the truth means not just
our having to endure any one misdirected policy; it means losing the ability even to address policy intelligently. To the extent
that falsehood is successfully instilled in the minds of enough people, the political system loses what would otherwise be its
ability to provide a check on policy that is bad policy because it is inconsistent with factual reality.
"... What we know, first and foremost, is that it hardly matters what Trump says because what he says is as likely as not to have
no relationship to the truth, no relationship to what he said last year during the campaign or even what he said last week. ..."
One of the best summary observations in this regard is from Washington Post columnist
Steven Pearlstein , who writes on business and financial matters but whose conclusions could apply as well to Trump's handling
of a wide range of foreign and domestic matters: " What we know, first and foremost, is that it hardly matters what Trump
says because what he says is as likely as not to have no relationship to the truth, no relationship to what he said last year
during the campaign or even what he said last week. What he says bears no relationship to any consistent political or policy
ideology or world-view. What he says is also likely to bear no relationship to what his top advisers or appointees have said or
believe, making them unreliable interlocutors even if they agreed among themselves, which they don't. This lack of clear policy
is compounded by the fact that the president, despite his boasts to the contrary, knows very little about the topics at hand and
isn't particularly interested in learning. In other words, he's still making it up as he goes along."
Many elements of dismay can follow from the fact of having this kind of president. We are apt to get a better idea of which
specific things are most worthy of dismay as the rest of this presidency unfolds. I suggest, however, that a prime, overarching
reason to worry is Trump's utter disregard for the truth. Not just a disregard, actually, but a determination to crush the truth
and to instill falsehood in the minds of as many people as possible. The Post 's fact checker,
Glenn Kessler , summarizes the situation by noting that "the pace and volume of the president's misstatements" are so great
that he and other fact checkers "cannot possibly keep up."
Kessler also observes how Trump's handling of falsehoods is qualitatively as well as quantitatively different from the
garden variety of lying in which many politicians indulge: "Many will drop a false claim after it has been deemed false. But Trump
just repeats the claim over and over." It is a technique reminiscent of the Big Lie that totalitarian regimes have used, in which
the repetition and brazenness of a lie help lead to its acceptance.
The problem is fundamental, and relates to a broad spectrum of policy issues both foreign and domestic, because truth-factual
reality -- is a necessary foundation to consider and evaluate and debate policy on any subject. Crushing the truth means not just
our having to endure any one misdirected policy; it means losing the ability even to address policy intelligently. To the extent
that falsehood is successfully instilled in the minds of enough people, the political system loses what would otherwise be its
ability to provide a check on policy that is bad policy because it is inconsistent with factual reality.
The key here is whether Russia will stop transit of gas via Ukraine or not.
Notable quotes:
"... A more far-reaching result from the Stockholm proceedings was the intention to void the traditional (Gazprom) formula for gas prices which is based on a linkage to the price of oil. Instead, the price of gas will be tied directly to the spot gas market such as the European hub. ..."
"... In traditional Gazprom contracts, the price of gas depends on the price of oil, and only up to 15% of the price is a spot gas component. For decades, this contractual linkage of the price of gas to oil was largely accepted as being open and fair. ..."
"... the Stockholm arbitration declared that Naftogaz must honor their contract, and buy from Gazprom 5 billion cubic meters of gas annually. As it turns out the "take or pay" clause remains in force, but the volume has been significantly reduced. ..."
"... The irony is that while this is a loss of face for Kiev politically, economically it benefits the Ukrainian consumer. To date, Ukraine's purchases of "reverse gas" from Europe has been far more expensive than that which was contracted reliably over the years by Gazprom. ..."
After 2014, Ukraine claimed that it was being overcharged, and therefore Naftogaz refused to
pay Gazprom their contracted price for gas. Instead, it paid unilaterally a different amount
that it subjectively considered "fair."
Gazprom, in keeping with mutually contracted terms and conditions, could only issue an
invoice for the resulting underpayment, and after Naftogaz still refused to pay (a debt of
approx. $2 billion), made any further deliveries of gas contingent on prepayment.
The arbitration additionally upheld Gazprom's position and denied Naftogaz any right to a
refund for gas priced between May 2011 and April 2014 or collect any of the claimed
"overcharged gas" totaling approximately $14 billion for that period. In sum, the price Kiev
claimed was "inflated" was judged as in Stockholm as baseless.
Therefore, the question of who is accountable and responsible for settling debt has been
clarified in Stockholm. Naftogaz must pay Gazprom $2 billion plus a fine calculated at 0.03%
per day for each day this debt remains unpaid. This fine has already reached $3 million since
the court decision on December 22nd, and if it not paid can reach an annualized figure of $216
million and still keep growing daily.
Like any political and economic story, there is quite a bit that does not make the flashy
headlines, but plays a role in contributing to the noise surrounding an issue. Naftogaz takes
satisfaction in that the settlement allowed that the gas price for the second quarter of 2014
was to be reduced from $485 to $352 per 1000 cubic meters, or 27%, thereby "saving" Ukraine
about $ 1.8 billion for 2014-2015. The price of $485 was in fact fixed for that one quarter,
and it was higher than the market price. The reason was that the March referendum and
subsequent reunification of Crimea within the Russian Federation happened then. Up until that
time, Russia had given Ukraine a discount of $100 per one thousand cubic meters of gas as
payment for renting the Crimean base for the Black Sea fleet. The Kharkov treaty with Ukraine
which dealt with the naval base was therefore canceled, as Crimea was once again Russia.
Without this discount, the price increased by that same discounted $100 in the contracted
quarterly price fix.
Key is Stockholm's recognition that the Russian gas price for Ukraine in 2011-2014 was fair,
which is much more important than the price fixed in that second quarter in question. It is
worth noting in the next third quarter of 2014 Gazprom was prepared to provide Ukraine with a
market price for gas again. However, as we all know today, since June 2014 Naftogaz has refused
to buy gas from Russia for political reasons and calling it an "aggressor nation."
A more far-reaching result from the Stockholm proceedings was the intention to void the
traditional (Gazprom) formula for gas prices which is based on a linkage to the price of oil.
Instead, the price of gas will be tied directly to the spot gas market such as the European
hub. Should this occur, then the future gas price for Ukraine will be linked to the cost of
fuel in the European hub. This would be a major departure from the traditional pricing Gazprom
has used for decades, and might set a precedent for other buyers of Russian gas, who might also
want to change their price formulation. In traditional Gazprom contracts, the price of gas
depends on the price of oil, and only up to 15% of the price is a spot gas component. For
decades, this contractual linkage of the price of gas to oil was largely accepted as being open
and fair.
Since 2014, Ukraine has been buying reverse gas from Europe at such European spot hub
prices, and it has so far been more expensive than the traditional Gazprom contract. It is also
worth noting that spot prices are far more volatile, are seasonally demand-affected, and as
winter is a peak consumption season the prices can and do increase dramatically.
Why did Gazprom take their initial large claims to court knowing beforehand that it would be
impossible to get the tens of billions of dollars from Naftogaz or Ukraine without ruining both
through default? The first reason is that a "take or pay" clause was a key and mutually agreed
covenant of the contractual relationship, not a point to be discarded unilaterally by any
single party. The second reason was as a response to Naftogaz multi-billion lawsuit on the
transit of gas from Russia through Ukraine to Europe. The Ukrainian side believes that Gazprom
should pay them extra for not sending 110 billion cubic meters of gas through pipelines
annually across Ukraine. In the transit contract, there is no obligation for any such volumes
to be transited through Ukraine's pipelines.
To sum up this drama, the Stockholm arbitration declared that Naftogaz must honor their
contract, and buy from Gazprom 5 billion cubic meters of gas annually. As it turns out the
"take or pay" clause remains in force, but the volume has been significantly reduced. How this
volume of 5 billion cubic meters was arrived at remains a mystery, but one which will surely
become clear over time. The political spin, however, will be interesting to observe since
Ukraine must now buy (and pay for) this Russian gas. How will Kiev explain now having to buy
Russian gas when since 2014 it stridently proclaimed it shall never buy fuel from "that
aggressor nation."
The irony is that while this is a loss of face for Kiev politically, economically it
benefits the Ukrainian consumer. To date, Ukraine's purchases of "reverse gas" from Europe has
been far more expensive than that which was contracted reliably over the years by Gazprom. Now
Kiev will have to find the funds to pay for Gazprom's gas, settle their debt and ever-growing
fines, plus meet the rest of their energy needs by purchasing expensive reverse gas from
Europe. It will take spin that is a lot more imaginative from Kiev to package this settlement
into a believable political victory, and very creative accounting to get the money to pay for
it.
The key here is whether Russia will stop transit of gas via Ukraine or not.
Notable quotes:
"... A more far-reaching result from the Stockholm proceedings was the intention to void the traditional (Gazprom) formula for gas prices which is based on a linkage to the price of oil. Instead, the price of gas will be tied directly to the spot gas market such as the European hub. ..."
"... In traditional Gazprom contracts, the price of gas depends on the price of oil, and only up to 15% of the price is a spot gas component. For decades, this contractual linkage of the price of gas to oil was largely accepted as being open and fair. ..."
"... the Stockholm arbitration declared that Naftogaz must honor their contract, and buy from Gazprom 5 billion cubic meters of gas annually. As it turns out the "take or pay" clause remains in force, but the volume has been significantly reduced. ..."
"... The irony is that while this is a loss of face for Kiev politically, economically it benefits the Ukrainian consumer. To date, Ukraine's purchases of "reverse gas" from Europe has been far more expensive than that which was contracted reliably over the years by Gazprom. ..."
After 2014, Ukraine claimed that it was being overcharged, and therefore Naftogaz refused to
pay Gazprom their contracted price for gas. Instead, it paid unilaterally a different amount
that it subjectively considered "fair."
Gazprom, in keeping with mutually contracted terms and conditions, could only issue an
invoice for the resulting underpayment, and after Naftogaz still refused to pay (a debt of
approx. $2 billion), made any further deliveries of gas contingent on prepayment.
The arbitration additionally upheld Gazprom's position and denied Naftogaz any right to a
refund for gas priced between May 2011 and April 2014 or collect any of the claimed
"overcharged gas" totaling approximately $14 billion for that period. In sum, the price Kiev
claimed was "inflated" was judged as in Stockholm as baseless.
Therefore, the question of who is accountable and responsible for settling debt has been
clarified in Stockholm. Naftogaz must pay Gazprom $2 billion plus a fine calculated at 0.03%
per day for each day this debt remains unpaid. This fine has already reached $3 million since
the court decision on December 22nd, and if it not paid can reach an annualized figure of $216
million and still keep growing daily.
Like any political and economic story, there is quite a bit that does not make the flashy
headlines, but plays a role in contributing to the noise surrounding an issue. Naftogaz takes
satisfaction in that the settlement allowed that the gas price for the second quarter of 2014
was to be reduced from $485 to $352 per 1000 cubic meters, or 27%, thereby "saving" Ukraine
about $ 1.8 billion for 2014-2015. The price of $485 was in fact fixed for that one quarter,
and it was higher than the market price. The reason was that the March referendum and
subsequent reunification of Crimea within the Russian Federation happened then. Up until that
time, Russia had given Ukraine a discount of $100 per one thousand cubic meters of gas as
payment for renting the Crimean base for the Black Sea fleet. The Kharkov treaty with Ukraine
which dealt with the naval base was therefore canceled, as Crimea was once again Russia.
Without this discount, the price increased by that same discounted $100 in the contracted
quarterly price fix.
Key is Stockholm's recognition that the Russian gas price for Ukraine in 2011-2014 was fair,
which is much more important than the price fixed in that second quarter in question. It is
worth noting in the next third quarter of 2014 Gazprom was prepared to provide Ukraine with a
market price for gas again. However, as we all know today, since June 2014 Naftogaz has refused
to buy gas from Russia for political reasons and calling it an "aggressor nation."
A more far-reaching result from the Stockholm proceedings was the intention to void the
traditional (Gazprom) formula for gas prices which is based on a linkage to the price of oil.
Instead, the price of gas will be tied directly to the spot gas market such as the European
hub. Should this occur, then the future gas price for Ukraine will be linked to the cost of
fuel in the European hub. This would be a major departure from the traditional pricing Gazprom
has used for decades, and might set a precedent for other buyers of Russian gas, who might also
want to change their price formulation. In traditional Gazprom contracts, the price of gas
depends on the price of oil, and only up to 15% of the price is a spot gas component. For
decades, this contractual linkage of the price of gas to oil was largely accepted as being open
and fair.
Since 2014, Ukraine has been buying reverse gas from Europe at such European spot hub
prices, and it has so far been more expensive than the traditional Gazprom contract. It is also
worth noting that spot prices are far more volatile, are seasonally demand-affected, and as
winter is a peak consumption season the prices can and do increase dramatically.
Why did Gazprom take their initial large claims to court knowing beforehand that it would be
impossible to get the tens of billions of dollars from Naftogaz or Ukraine without ruining both
through default? The first reason is that a "take or pay" clause was a key and mutually agreed
covenant of the contractual relationship, not a point to be discarded unilaterally by any
single party. The second reason was as a response to Naftogaz multi-billion lawsuit on the
transit of gas from Russia through Ukraine to Europe. The Ukrainian side believes that Gazprom
should pay them extra for not sending 110 billion cubic meters of gas through pipelines
annually across Ukraine. In the transit contract, there is no obligation for any such volumes
to be transited through Ukraine's pipelines.
To sum up this drama, the Stockholm arbitration declared that Naftogaz must honor their
contract, and buy from Gazprom 5 billion cubic meters of gas annually. As it turns out the
"take or pay" clause remains in force, but the volume has been significantly reduced. How this
volume of 5 billion cubic meters was arrived at remains a mystery, but one which will surely
become clear over time. The political spin, however, will be interesting to observe since
Ukraine must now buy (and pay for) this Russian gas. How will Kiev explain now having to buy
Russian gas when since 2014 it stridently proclaimed it shall never buy fuel from "that
aggressor nation."
The irony is that while this is a loss of face for Kiev politically, economically it
benefits the Ukrainian consumer. To date, Ukraine's purchases of "reverse gas" from Europe has
been far more expensive than that which was contracted reliably over the years by Gazprom. Now
Kiev will have to find the funds to pay for Gazprom's gas, settle their debt and ever-growing
fines, plus meet the rest of their energy needs by purchasing expensive reverse gas from
Europe. It will take spin that is a lot more imaginative from Kiev to package this settlement
into a believable political victory, and very creative accounting to get the money to pay for
it.
The key here is whether Russia will stop transit of gas via Ukraine or not.
Notable quotes:
"... A more far-reaching result from the Stockholm proceedings was the intention to void the traditional (Gazprom) formula for gas prices which is based on a linkage to the price of oil. Instead, the price of gas will be tied directly to the spot gas market such as the European hub. ..."
"... In traditional Gazprom contracts, the price of gas depends on the price of oil, and only up to 15% of the price is a spot gas component. For decades, this contractual linkage of the price of gas to oil was largely accepted as being open and fair. ..."
"... the Stockholm arbitration declared that Naftogaz must honor their contract, and buy from Gazprom 5 billion cubic meters of gas annually. As it turns out the "take or pay" clause remains in force, but the volume has been significantly reduced. ..."
"... The irony is that while this is a loss of face for Kiev politically, economically it benefits the Ukrainian consumer. To date, Ukraine's purchases of "reverse gas" from Europe has been far more expensive than that which was contracted reliably over the years by Gazprom. ..."
After 2014, Ukraine claimed that it was being overcharged, and therefore Naftogaz refused to
pay Gazprom their contracted price for gas. Instead, it paid unilaterally a different amount
that it subjectively considered "fair."
Gazprom, in keeping with mutually contracted terms and conditions, could only issue an
invoice for the resulting underpayment, and after Naftogaz still refused to pay (a debt of
approx. $2 billion), made any further deliveries of gas contingent on prepayment.
The arbitration additionally upheld Gazprom's position and denied Naftogaz any right to a
refund for gas priced between May 2011 and April 2014 or collect any of the claimed
"overcharged gas" totaling approximately $14 billion for that period. In sum, the price Kiev
claimed was "inflated" was judged as in Stockholm as baseless.
Therefore, the question of who is accountable and responsible for settling debt has been
clarified in Stockholm. Naftogaz must pay Gazprom $2 billion plus a fine calculated at 0.03%
per day for each day this debt remains unpaid. This fine has already reached $3 million since
the court decision on December 22nd, and if it not paid can reach an annualized figure of $216
million and still keep growing daily.
Like any political and economic story, there is quite a bit that does not make the flashy
headlines, but plays a role in contributing to the noise surrounding an issue. Naftogaz takes
satisfaction in that the settlement allowed that the gas price for the second quarter of 2014
was to be reduced from $485 to $352 per 1000 cubic meters, or 27%, thereby "saving" Ukraine
about $ 1.8 billion for 2014-2015. The price of $485 was in fact fixed for that one quarter,
and it was higher than the market price. The reason was that the March referendum and
subsequent reunification of Crimea within the Russian Federation happened then. Up until that
time, Russia had given Ukraine a discount of $100 per one thousand cubic meters of gas as
payment for renting the Crimean base for the Black Sea fleet. The Kharkov treaty with Ukraine
which dealt with the naval base was therefore canceled, as Crimea was once again Russia.
Without this discount, the price increased by that same discounted $100 in the contracted
quarterly price fix.
Key is Stockholm's recognition that the Russian gas price for Ukraine in 2011-2014 was fair,
which is much more important than the price fixed in that second quarter in question. It is
worth noting in the next third quarter of 2014 Gazprom was prepared to provide Ukraine with a
market price for gas again. However, as we all know today, since June 2014 Naftogaz has refused
to buy gas from Russia for political reasons and calling it an "aggressor nation."
A more far-reaching result from the Stockholm proceedings was the intention to void the
traditional (Gazprom) formula for gas prices which is based on a linkage to the price of oil.
Instead, the price of gas will be tied directly to the spot gas market such as the European
hub. Should this occur, then the future gas price for Ukraine will be linked to the cost of
fuel in the European hub. This would be a major departure from the traditional pricing Gazprom
has used for decades, and might set a precedent for other buyers of Russian gas, who might also
want to change their price formulation. In traditional Gazprom contracts, the price of gas
depends on the price of oil, and only up to 15% of the price is a spot gas component. For
decades, this contractual linkage of the price of gas to oil was largely accepted as being open
and fair.
Since 2014, Ukraine has been buying reverse gas from Europe at such European spot hub
prices, and it has so far been more expensive than the traditional Gazprom contract. It is also
worth noting that spot prices are far more volatile, are seasonally demand-affected, and as
winter is a peak consumption season the prices can and do increase dramatically.
Why did Gazprom take their initial large claims to court knowing beforehand that it would be
impossible to get the tens of billions of dollars from Naftogaz or Ukraine without ruining both
through default? The first reason is that a "take or pay" clause was a key and mutually agreed
covenant of the contractual relationship, not a point to be discarded unilaterally by any
single party. The second reason was as a response to Naftogaz multi-billion lawsuit on the
transit of gas from Russia through Ukraine to Europe. The Ukrainian side believes that Gazprom
should pay them extra for not sending 110 billion cubic meters of gas through pipelines
annually across Ukraine. In the transit contract, there is no obligation for any such volumes
to be transited through Ukraine's pipelines.
To sum up this drama, the Stockholm arbitration declared that Naftogaz must honor their
contract, and buy from Gazprom 5 billion cubic meters of gas annually. As it turns out the
"take or pay" clause remains in force, but the volume has been significantly reduced. How this
volume of 5 billion cubic meters was arrived at remains a mystery, but one which will surely
become clear over time. The political spin, however, will be interesting to observe since
Ukraine must now buy (and pay for) this Russian gas. How will Kiev explain now having to buy
Russian gas when since 2014 it stridently proclaimed it shall never buy fuel from "that
aggressor nation."
The irony is that while this is a loss of face for Kiev politically, economically it
benefits the Ukrainian consumer. To date, Ukraine's purchases of "reverse gas" from Europe has
been far more expensive than that which was contracted reliably over the years by Gazprom. Now
Kiev will have to find the funds to pay for Gazprom's gas, settle their debt and ever-growing
fines, plus meet the rest of their energy needs by purchasing expensive reverse gas from
Europe. It will take spin that is a lot more imaginative from Kiev to package this settlement
into a believable political victory, and very creative accounting to get the money to pay for
it.
"... Russiagate and corporate media scapegoating Putin's trolls are information operations to keep the little people misinformed. The Ukraine Putsch and the MH-17 shoot down were handled poorly by Russia. They've come back in Syria. Russian intelligence wouldn't be doing their job if they weren't surveilling the West. ..."
"... What got western oligarchs upset is the disclosure of the truth; the system is rigged. Obama voters in mid-America voted for Donald Trump. Hillary Clinton's loss triggered a witch hunt rather than addressing the root causes of her defeat. A group of oligarchs want the upstart NY casino boss gone. The only question is what will be the collateral damage from the mob war. ..."
"... As former CIA Director William Casey allegedly once said: "We'll know our disinformation program is complete when everything the American public believes is false." His error here was saying Americans were the target and not the global population as well, but at least as far as America goes I think its pretty much a thumbs up. Mission Accomplished. ..."
"... Media and social media tycoons - all could be taken down very fast if they did not toe the CIA line, though for most, it seems their work with CIA is voluntary and enthusiastic. ..."
"... I guess you don't get that rich by having ethics or scruples. ..."
Russiagate and corporate media scapegoating Putin's trolls are information operations to
keep the little people misinformed. The Ukraine Putsch and the MH-17 shoot down were handled
poorly by Russia. They've come back in Syria. Russian intelligence wouldn't be doing their
job if they weren't surveilling the West.
Victoria Nuland's EU rant was released. Vladimir Putin preferred Donald Trump over Hillary
Clinton.
What got western oligarchs upset is the disclosure of the truth; the system is rigged.
Obama voters in mid-America voted for Donald Trump. Hillary Clinton's loss triggered a witch
hunt rather than addressing the root causes of her defeat. A group of oligarchs want the
upstart NY casino boss gone. The only question is what will be the collateral damage from the
mob war.
NemesisCalling , Dec 26, 2017 4:39:00 PM |
36karlof1 , Dec 26, 2017 4:42:57 PM |
37
Name of Me | Dec 26, 2017 12:13:28 PM | 2
The US Government was controlling media well before the CIA's creation. Please take a
little time to learn about George Seldes whose 1929 book You Can't
Print That!: The Truth Behind the News, 1918–1928 is vastly informative with
original copies easy to find under $15, or even online through this link . Indeed,
numerous works of his are digitized. I.F. Stone followed in Seldes's footsteps, and the
website with his collected writings is here . Perhaps one of the least known
episodes of US Government media manipulation was related to the atomic bomb crimes, an event
nearly 100% airbrushed from history books, and of course the ongoing attempt to cover up one
of the biggest crimes of all time.
My mention of media manipulation by the US Government wouldn't be complete without
including the 100% blackout that was to apply to the discussions in Philadelphia that led to
the 1787 Constitution -- the document that elevated the "natural aristocracy" into the
catbird seat ensuring their control of the federal government until it's overthrown via
revolution.
Fortunately, Madison and others kept copious notes that were eventually published long
after the fate of Commoners was sealed, so we know that Aristocracy viewed its contemporary
deplorables no differently than how HRC and today's 1% view them/us.
Americans and much of the rest of the world are the target of an immense psyop . Propaganda
techniques going back to Bernay and WWI have been expanded on and perfected. Infiltration and
control is lot limited to the print media and TV news stations but also , hollywood movies/TV
shows , academia (history, economics, etc) , book publishing, blogs and social media. The
last few bastions of truth will be eliminated with the end of net neutrality.
As former CIA Director William Casey allegedly once said: "We'll know our
disinformation program is complete when everything the American public believes is false."
His error here was saying Americans were the target and not the global population as well,
but at least as far as America goes I think its pretty much a thumbs up. Mission
Accomplished.
"We do not know what the billionaires get for their service. The CIA surely has many ways to
let them gain information on their competition or to influence business regulations in
foreign countries. One hand will wash the other."
Something I have often thought about. Media and social media tycoons - all could be
taken down very fast if they did not toe the CIA line, though for most, it seems their work
with CIA is voluntary and enthusiastic.
I guess you don't get that rich by having ethics or scruples.
A central selling point of the tax bill is that it will encourage investment. But that assumes that high tax rates were the
primary reason why business wasn't investing. Instead, the data says business investment is weak because the U.S. has a ton of
spare capacity.
First, let's look total capacity utilization: It has peaked at lower levels in each of the last three expansions.
Let's break the data down into durable and non-durable CU:
Both categories of production have ample spare capacity, with non-durable production having greater capacity.
Finally, let's look at crude, intermediate and final stages of production: All three have plenty of spare capacity to bring
online if needed.
So, will we see a huge wave of investment as a result of the changed tax bill? The data says no.
adding capacity hasn't been about need for years companies have been adding plant and
equipment that they didn't need for years because of incentives included in the code, such as
the investment tax credit and accelerated depreciation, so it's really hard to say when that
will stop..
spencer , December 22, 2017 1:30 pm
Rather than using the Fed estimate of capacity maybe it would be better to use a trend
line for capacity utilization and compare that to reported capacity utilization. I think that
would give a more realistic measure of economic slack as the trend line shows a long run
trend of slower capacity growth.
Lyle , December 22, 2017 11:46 pm
The main investment might be made to automate things, replacing expensive human workers
with cheaper automatic workers who don't need benefits and an HR department.
"... They have behaved badly with an unstable value of bitcoin (huge unpredictable Bitcoin deflation damages any use of bitcoin as a means of exchange as much as huge inflation would). ..."
"... Now no one is really interested in cryptocurrency except as a way to gamble and take money from fools. But if anyone were, linking the blockchain program to prices on an exchange would make it more nearly possible to use the cryptocurrency as a means of exchange. ..."
"... The system is vulnerable to a tacit agreement to trade only on unofficial exchanges. It is necessary that the problem is also made easier if daily trading volume on the official exchange is zero. The problem is the price could shoot up on unofficial exchanges, but this would not affect the price on the official exchange if there were no transactions on the official exchange. ..."
"... The basis was and remains to remove any and all national gov'ts across he globe from any influences on values of currencies, thus pure laissez-faire in the extreme .. as you say libertarian chaos. ..."
"... There is a much more severe problem with bitcoin. As the number mined asymptotically approaches the pre-determined maximum, the cost of mining approaches infinity. As miners are the ones who validate coins, what will happen to the reliability of bitcoin when it becomes uneconomical for anyone to participate in mining? ..."
I am going to make a fool
of myself by suggesting that a cryptocurrency might actually be useful. Bitcoin et al have
negative social utility. They are pure speculative assets which enable people to gamble. Also
bitcoin miners use as much electricity as Denmark. The problem is exactly the aspect which has
made bitcoin famous and which bitcoin enthusiasts consider a strength -- the enormous increase
in the dollar price of bitcoin. This increase, and the recent sharp decline, make bitcoin
useless as a means of exchange. Most firms don't want to gamble.
So I (semi-seriously this time) propose botcoin which might have a more stable dollar
exchange rate. The idea is to link the blockchain verification program to an official
exchange.
Backing up, there are two very different sorts of web-servers related to bitcoin. One set,
the bitcoin miners, implements the original idea using the Bitcoin shareware. They keep a copy
of the ledger of all bitcoin transactions -- the blockchain, race to create new blocks, and
evaluate new blocks and add valid new blocks to the chain. The other servers are bitcoin
exchanges in which bitcoin is traded for regular currency. They are not part of the original
plan in which bitcoin would be traded for goods and services and function as a means of
exchange. They have behaved badly with an unstable value of bitcoin (huge unpredictable
Bitcoin deflation damages any use of bitcoin as a means of exchange as much as huge inflation
would).
I propose linking the blockchain program to an exchange. So there would be an official
botcoin exchange (this means it isn't entirely free-entry shareware libertarian anarchism). If
anyone were interested in a new cryptocurrency designed so that speculators can't become rich
(and pigs fly) there would be other unofficial exchanges.
The bitcoin program regulates the frequency of creation of new blocks to roughly one every
six minutes. It does this by adjusting the difficulty of the pointless arithmetic problem which
must be solved to make a new valid block. The idea was to limit the total amount of bitcoin
which will ever be created (to 21 million for some reason). This was supposed to make bitcoin
valuable. So far it has succeeded all too well (I am confident that in the end bitcoin will
have price 0).
It is possible to make the supply of botcoin flexible so the dollar price doesn't shoot up.
I would aim at a price of, say, 1 botcoin = $1000. The idea is to make the pointless problem
which must be solved to add a block easier if the dollar price of botcoin exceeds the target,
and harder if it falls below the target. This should stabilize the price.
Now no one is really interested in cryptocurrency except as a way to gamble and take
money from fools. But if anyone were, linking the blockchain program to prices on an exchange
would make it more nearly possible to use the cryptocurrency as a means of exchange.
The system is vulnerable to a tacit agreement to trade only on unofficial exchanges. It
is necessary that the problem is also made easier if daily trading volume on the official
exchange is zero. The problem is the price could shoot up on unofficial exchanges, but this
would not affect the price on the official exchange if there were no transactions on the
official exchange.
Lyle , December 25, 2017 11:22 pm
Of course Goldman Sachs and its competitors are doing just this building an options and
futures exchange. (it is not really that much different than any other futures and options
business)
Longtooth , December 26, 2017 5:01 am
But Robert,
then the entire foundation for Bitcoin's purpose disappears entirely, so what advantage
remains?
The basis was and remains to remove any and all national gov'ts across he globe from any
influences on values of currencies, thus pure laissez-faire in the extreme .. as you say
libertarian chaos.
By making crypto-currency values subject to national currency exchange rates they cease to
have any reason to exist at all.
We / globally in fact already use crypto exchange via electronic transactions .. adding
block chain to it would be a benefit but a separate cryptocurrency is a worthless redundancy
if it is subject to valuation by exchange rates of national currencies.
What am I missing?.
likbez , December 26, 2017 5:27 am
Great Article !!! I wish I can write about this topic on the same level. Thank you very much. P.S. Happy New Year for everybody !
rick shapiro , December 26, 2017 10:26 am
There is a much more severe problem with bitcoin. As the number mined asymptotically
approaches the pre-determined maximum, the cost of mining approaches infinity. As miners are
the ones who validate coins, what will happen to the reliability of bitcoin when it becomes
uneconomical for anyone to participate in mining?
"... The tone deafness of Debbie Wasserman Schultz and, much of the time, Hillary Clinton, meant that ordinary people didn't understand that Trump is merely a blowhard capitalist who doesn't care if he cheats or lies or exploits other people so long as he gets notoriety and money, while the Democrats have been the party working for a decent sustainable economy, environmental protection and preservation, protection from pollution and diseases, and working wages for ordinary folk. ..."
Indeed, having an able, sympathetic messenger who can translate the issues that truly
matter into terms that make sense to ordinary people is something the Democratic Party lacked
in the last election. The tone deafness of Debbie Wasserman Schultz and, much of the time,
Hillary Clinton, meant that ordinary people didn't understand that Trump is merely a blowhard
capitalist who doesn't care if he cheats or lies or exploits other people so long as he gets
notoriety and money, while the Democrats have been the party working for a decent sustainable
economy, environmental protection and preservation, protection from pollution and diseases,
and working wages for ordinary folk.
Dems have done us a disservice in not being able to communicate in terms many people could
understand, relate to, and embrace.
Lyle , December 24, 2017 6:28 pm
Yet the Gilded age was one where the average person was better off in 1900 than in 1870.
It was the period of the great deflation https://en.wikipedia.org/wiki/The_Great_Deflation
which meant the cost of everything was in general dropping 2% per year in the us.
A large
part of this at least for folks in larger cities was the integration of the US into
essentially 1 market from several markets as most larger cities had at least 2 railroad
groups serving them. I recall reading that in general estate inventories in 1900 show more
goods than those in 1870. Just a bit outside this time frame My grandparents bought a farm in
1910 and build a new house.
The house on the property was a 2 room house that was turned into
a coal shed and wash house. The new house had 6 rooms plus a root cellar. (Still off grid of
course because this was in the country)
this period was one of both rapid adoption of technologies developed in the first 1/2 of the
19th century, (railroad, telegraph, steamship) and the development and implementation of new
technologies (auto, telephone, electricity, etc) See Creating the 20th century by Smil for
details.
Of course some folks lost because they could no longer compete with imported goods, One
example I have read is that up to 1869 a lot of furniture was built in Utah because it was so
hard to get stuff there, The Union Pacific solved the problem and the local furniture makers
found a new line of work.
So in general life was better in the US in 1900 than 1870 and things did at least then
trickle down.
So it appears that if you look at unbiased statistics of the time a rising tide back then
did lift all boats, even as a few got extremely rich, and as a result inequality
increased.
likbez , December 26, 2017 5:55 am
Neoliberalism actually means restoration of Gilded Age on a new level. So the return to
Gilded Age commenced not now, but with the election of Reagan, or slightly earlier. Trump
actually professed "bastard neoliberalism" (neoliberalism without neoliberal
globalizations).
Election of Trump IMHO signified the deep crisis of neoliberalism and loss of legitimacy
of neoliberal elite in the USA. That's why Trump was elected and Hillary was not.
The fact that Trump quickly betrayed all his election promises does not change this. We
saw such tricks before. He just proved that he is Republican Obama. Much less slick in that,
but still belonging to the same brand of "change we can believe in" snake oil salesmen.
The key problem here is that as the neoliberal elite feels less and less secure at home it
tries to suppress dissent with rampant jingoism (look at Trumps National security strategy)
and Russophobia:
== quote ==
"China and Russia challenge American power, influence, and interests, attempting to erode
American security and prosperity. They are determined to make economies less free and less
fair, to grow their militaries, and to control information and data to repress their
societies and expand their influence. At the same time, the dictatorships of the Democratic
People's Republic of Korea and the Islamic Republic of Iran are determined to destabilize
regions, threaten Americans and our allies, and brutalize their own people."
=== end of quote ===
That's why we have the current neo-McCarthyism campaign. The goal is to both to rally the
nation around the flag rather than turning against the government, and to suppress the
growing dissent by conflating it with pro-Russian sentiments. Turing the majority of US
public and public opinion against Russian government. Along with the attempt to swipe Hillary
Clinton fiasco and the corruption of DNC (and now the corruption of FBI which suppressed
"emailgate") which pushed Sanders under the bus by illegal means. .
My impression is that while there is no clear alternative to neoliberalism as a social
system, the growth and success of far-right movement both in Europe and the USA means that
people badly want an alternative, whatever it can be. Even if this is far right
nationalism.
"Hillary Clinton, following a long tradition of mainstream Democrats, had a grab bag of proposals that, if enacted, would collectively
make a huge difference in the lives of working people. "
I think you are wrong here.
Hillary was/is a neoliberal, and as such is hostile to the interests of working people and middle class in general. Like most
neoliberals she is a Machiavellian elitist. Her election promises are pure demagogy, much like Trump or Obama election promised
(immortalized in the slogan "change we can believe in" which now became the synonym of election fraud)
Also she was/is hell-bent of preserving/expanding the US neoliberal empire and the wars for neoliberal dominance (in ME mainly
for the benefit of Israel and Saudis). War are pretty costly ventures and they are financed at the expense of working class and
lower middle class, never at the expense of "fat cats" from Wall Street.
All-in-all I think the role of POTUS is greatly "misunderestimated" in your line of thinking. As we can see differences between
Trump and Hillary in foreign policy are marginal. Why are you assuming that the differences in domestic economic policies would
be greater ?
In reality there are other powerful factors in play that diminish the importance of POTUS:
The US Presidential Elections are no longer an instrument for change. They are completely corrupted and are mostly of "bread
and circuses" type of events, where two gladiators preselected by financial elite fight for the coveted position, using all kind
of dirty tricks for US public entertainment.
While the appearance of democracy remains, in reality the current system represents that rule of "deep state". In the classic
form of "National security state". In the National Security State, the US people no longer have the any chances to change the
policies.
Political emasculation of US voters has led to frustration, depression and rage. It feeds radical right movement including
neo-fascists, which embrace more extreme remedies to the current problems because they correctly feel that the traditional parties
no longer represent the will of the people.
Insulated and partially degenerated US elite have grown more obtuse and is essentially a hostage for neocons. They chose
to ignore the seething anger that lies just below the surface of brainwashed Us electorate.
The "American Dream" is officially dead. People at a and below lower middle class level see little hope for themselves,
their children or the country. The chasm between top 1% (or let's say top 20%) and the rest continues to fuel populist anger.
While Trump proved to be "yet another turncoat" like Barak Obama (who just got his first silver coin in the form of the
$400K one hour speech) Trump's election signify a broad rejection of the country's neoliberal elite, including neoliberal MSM,
neocon foreign policy as well as neoliberal economic system (and first of all neoliberal globalization).
The country foreign policy remains hijacked by neocons (this time in the form of fiends of Paul Wolfowitz among the military
brass appointed by Trump to top positions in his administration) and that might spell major conflict or even WWIII.
8. We can now talk about the USA as "neocon occupied country" (NOC), because the neocons policies contradict the USA national
interests and put heavy burden of taxpayers, especially in lower income categories. Due to neglect in maintaining infrastructure,
in some areas the USA already looks like third word country. Still we finance Israel and several other countries to the tune of
$40 billion dollars in military aid alone (that that's in case of Israel just the tip of the iceberg; real figure is probably
double of that) https://fas.org/sgp/crs/mideast/RL33222.pdf
Since Bill Clinton POTUS is more or less a marionette of financial oligarchy (which Obama -- as a person without the past (or
with a very fuzzy past) - symbolizes all too well).
"Hillary Clinton, following a long tradition of mainstream Democrats, had a grab bag of proposals that, if enacted, would collectively
make a huge difference in the lives of working people. "
I think you are wrong here.
Hillary was/is a neoliberal, and as such is hostile to the interests of working people and middle class in general. Like most
neoliberals she is a Machiavellian elitist. Her election promises are pure demagogy, much like Trump or Obama election promised
(immortalized in the slogan "change we can believe in" which now became the synonym of election fraud)
Also she was/is hell-bent of preserving/expanding the US neoliberal empire and the wars for neoliberal dominance (in ME mainly
for the benefit of Israel and Saudis). War are pretty costly ventures and they are financed at the expense of working class and
lower middle class, never at the expense of "fat cats" from Wall Street.
All-in-all I think the role of POTUS is greatly "misunderestimated" in your line of thinking. As we can see differences between
Trump and Hillary in foreign policy are marginal. Why are you assuming that the differences in domestic economic policies would
be greater ?
In reality there are other powerful factors in play that diminish the importance of POTUS:
The US Presidential Elections are no longer an instrument for change. They are completely corrupted and are mostly of "bread
and circuses" type of events, where two gladiators preselected by financial elite fight for the coveted position, using all kind
of dirty tricks for US public entertainment.
While the appearance of democracy remains, in reality the current system represents that rule of "deep state". In the classic
form of "National security state". In the National Security State, the US people no longer have the any chances to change the
policies.
Political emasculation of US voters has led to frustration, depression and rage. It feeds radical right movement including
neo-fascists, which embrace more extreme remedies to the current problems because they correctly feel that the traditional parties
no longer represent the will of the people.
Insulated and partially degenerated US elite have grown more obtuse and is essentially a hostage for neocons. They chose
to ignore the seething anger that lies just below the surface of brainwashed Us electorate.
The "American Dream" is officially dead. People at a and below lower middle class level see little hope for themselves,
their children or the country. The chasm between top 1% (or let's say top 20%) and the rest continues to fuel populist anger.
While Trump proved to be "yet another turncoat" like Barak Obama (who just got his first silver coin in the form of the
$400K one hour speech) Trump's election signify a broad rejection of the country's neoliberal elite, including neoliberal MSM,
neocon foreign policy as well as neoliberal economic system (and first of all neoliberal globalization).
The country foreign policy remains hijacked by neocons (this time in the form of fiends of Paul Wolfowitz among the military
brass appointed by Trump to top positions in his administration) and that might spell major conflict or even WWIII.
8. We can now talk about the USA as "neocon occupied country" (NOC), because the neocons policies contradict the USA national
interests and put heavy burden of taxpayers, especially in lower income categories. Due to neglect in maintaining infrastructure,
in some areas the USA already looks like third word country. Still we finance Israel and several other countries to the tune of
$40 billion dollars in military aid alone (that that's in case of Israel just the tip of the iceberg; real figure is probably
double of that) https://fas.org/sgp/crs/mideast/RL33222.pdf
Since Bill Clinton POTUS is more or less a marionette of financial oligarchy (which Obama -- as a person without the past (or
with a very fuzzy past) - symbolizes all too well).
"... It tells me that the bottom line is that Christmas has become a harder season for White families. We are worse off because of BOTH social and economic liberalism which has only benefited an elite few. The bottom half of the White population is now in total disarray – drug addiction, demoralization, divorce, suicide, abortion, atomization, stagnant wages, declining household income and investments – and this dysfunction is creeping up the social ladder. The worst thing we can do is step on the accelerator. ..."
As we move into 2018, I am swinging away from the Republicans. I don't support the Paul Ryan
"Better Way" agenda. I don't support neoliberal economics. I think we have been going in the
wrong direction since the 1970s and don't want to continue going down this road.
Opioid Deaths: As we all know, the opioid epidemic has become a national crisis and the White working class
has been hit the hardest by it. It is a "sea of despair" out there.
White Mortality: As the family crumbles, religion recedes in his life, and his job prospects dwindle, the
middle aged White working class man is turning to drugs, alcohol and suicide: The White suicide
rate has soared since 2000:
Median Household Income: The average household in the United States is poorer in 2017 than it was in 1997:
Real GDP: Since the late 1990s, real GDP and real median household income have parted
ways:
Productivity and Real Wages: Since the 1970s, the minimum wage has parted ways with
productivity gains in the US economy:
Stock Market: Since 2000, the stock market has soared, but 10% of Americans own 80% of
stocks. The top 1% owns 38% of stocks. In 2007, 3/4th of middle class households were invested
in the stock market, but now only 50% are investors. Overall, 52% of Americans now own stocks,
which is down from 65%. The average American has less than $1,000 in their combined checking
and savings accounts.
Do you know what this tells me?
It tells me that the bottom line is that Christmas has become a harder season for White
families. We are worse off because of BOTH social and economic liberalism which has only
benefited an elite few. The bottom half of the White population is now in total disarray
– drug addiction, demoralization, divorce, suicide, abortion, atomization, stagnant
wages, declining household income and investments – and this dysfunction is creeping up
the social ladder. The worst thing we can do is step on the accelerator.
Paul Ryan and his fellow conservatives look at this and conclude we need MORE freedom. We
need lower taxes, more free trade, more deregulation, weaker unions, more immigration and less
social safety net spending. He wants to follow up tax reform with entitlement reform in 2018. I
can't but see how this is going to make an already bad situation for the White working class
even worse.
I'm not rightwing in the sense that these people are. I think their policies are harmful to
the nation. I don't think they feel any sense of duty and obligation to the working class like
we do. They believe in liberal abstractions and make an Ayn Rand fetish out of freedom whereas
we feel a sense of solidarity with them grounded in race, ethnicity and culture which tempers
class division. We recoil at the evisceration of the social fabric whereas conservatives
celebrate this blind march toward plutocracy.
Do the wealthy need to own a greater share of the stock market? Do they need to own a
greater share of our national wealth? Do we need to loosen up morals and the labor market? Do
we need more White children growing up in financially stressed, broken homes on Christmas? Is
the greatest problem facing the nation spending on anti-poverty programs? Paul Ryan and the
True Cons think so.
Yeah, I don't think so. I also think it is a good thing right now that we aren't associated
with the mainstream Right. In the long run, I bet this will pay off for us. I predict this
platform they have been standing on for decades now, which they call the conservative base, is
going to implode on them. Donald Trump was only the first sign that Atlas is about to
shrug.
(Republished from Occidental Dissent by permission of author or representative)
"... By contrast the reduction in the gas price Naftogaz refers to from $485/tcm to $352 tcm which Naftogaz makes much of in its statement appears to apply only to gas supplied to Ukraine by Gazprom in the second quarter of 2014 and still sets the price of gas supplied to Ukraine by Gazprom higher than was demanded by Ukraine during this period. ..."
"... Ukraine recently borrowed $3 billion on the international financial markets at very high interest almost certainly in order to pay the $3 billion the High Court in London has ordered it to pay Russia. Whilst the $2 billion is technically a debt owed by Naftogaz not Ukraine and its non-payment would does not place Ukraine in a state of sovereign default, Gazprom is in a position to enforce the debt against Naftogaz's assets (including gas it buys) in the European Economic Area. It is difficult to see how Naftogaz and Ukraine can avoid payment of this debt. ..."
"... Has Ukraine actually gained anything from its long running gas dispute with Russia? ..."
On Friday 21st December 2017 the Stockholm Arbitration Court made a ruling in the legal
dispute between Ukraine's state owned gas monopoly Naftogaz and Russia's largely state owned
gas monopoly Gazprom.
In the hours after the decision – which like all decisions of the Stockholm
Arbitration Court – is not published, Naftogaz claimed victory in a short statement.
However over the course of the hours which followed Gazprom provided details of the decision
which suggests that the truth is the diametric opposite.
Here is how the Financial Times reports
the competing claims
Both Ukraine's Naftogaz and Russia's Gazprom both on Friday claimed victory as a Stockholm
arbitration tribunal issued the final award ruling in the first of two cases in a three-year
legal battle between the state-controlled energy companies, where total claims stand at some
$80bn.
An emailed statement from the Ukrainian company was titled:
"Naftogaz wins the gas sales arbitration case against Gazprom on all issues in
dispute."
The Stockholm arbitration tribunal -- in its final award ruling in a dispute over gas
supplies from prior years -- had, according to Naftogaz, struck down Gazprom's claim to
receive $56bn for gas contracted but not supplied through controversial "take-or-pay"
clauses. They were included in a supply contract Ukraine signed in 2009 after Gazprom dented
supplies to the EU by cutting all flow amid a price dispute -- including transit through the
country's vast pipeline systems. In a tweet Ukraine's foreign minister
Pavlo Klimkin wrote: "The victory of Naftogaz in the Stockholm arbitration: It's not a
knockout, but three knockdowns with obvious advantage."
But later Gazprom countered that arbitors "acknowledged the main points of the contract
were in effect and upheld the majority of Gazprom's demands for payment for gas supplies",
worth over $2bn. A Naftogaz official responded that the company never refused to pay for gas
supplied, but challenged price and conditions.
Given the tribunal does not make its decisions public, doubt loomed over which side was
the ultimate winner. Anticipation also grew over the second and final tribunal award expected
early next year over disputes both have concerning past gas transit obligations.
Friday's final Stockholm arbitration ruling follows a preliminary decision from last May
after which both sides were given time to settle monetary claims outside of the tribunal but
failed to reach agreement.
Here is the full Naftogaz statement:
"Today, the Tribunal at the Arbitration Institute of the Stockholm Chamber of Commerce has
completely rejected Gazprom take-or-pay claims to Naftogaz amounting to USD 56 billion for
2009-2017.
– Naftogaz succeeded at reducing future contract volume obligations by more than 10
times and made them relevant to its actual import needs.
– Price for gas off-taken by Naftogaz in 2Q 2014 reduced 27% from USD 485/tcm to USD
352/tcm. – Naftogaz saved USD 1.8 billion on gas purchased in 2014-2015 due to revision
of the contract price.
– Destination clause and other discriminatory provisions were declared invalid to
bring the contract in line with current European market standards.
– Naftogaz estimates the total positive financial effect of the arbitration over the
lifetime of the supply contract at over USD 75 billion.
– Naftogaz claims up to USD 16 billion in transit contract arbitration against
Gazprom; decision expected on 28 February 2018."
Gazprom said that in a separate decision on May 31 of this year, the tribunal denied
Naftogaz's application to review prices from May 2011 to April 2014, ordered it to pay $14bn
for gas supplies during that period, and said that the take-or-pay conditions applied for the
duration of the contract. Gazprom claimed that Naftogaz would have to pay it $2.18bn plus
interest of 0.03 per cent for every day the payments were late, and then pay for 5bn cm of
gas annually starting next year.
When the different sides give opposite accounts of the same decision it obviously becomes
difficult to say what the real decision actually is. However Gazprom says that the court upheld
(1) the main provisions of the contract; (2) the contract's take-or-pay provisions, these being
a particularly contentious issue in the contract; and (3) that Naftogaz has been ordered to pay
Gazprom $2 billion, presumably immediately, with interest for every day the amount is
unpaid.
By contrast the reduction in the gas price Naftogaz refers to from $485/tcm to $352 tcm
which Naftogaz makes much of in its statement appears to apply only to gas supplied to Ukraine
by Gazprom in the second quarter of 2014 and still sets the price of gas supplied to Ukraine by
Gazprom higher than was demanded by Ukraine during this period.
The key point here is that Russia agreed to reduce the price of gas supplied to Ukraine by
an agreement Russia's President Putin reached with Ukraine's President Yanukovich in December
2013. After the Maidan coup the new Ukrainian government went back on the agreement causing the
Russians to demand payment of the original price. However over the course of 2014, as energy
prices began first to slide and then crashed, and as it became clear that Ukraine was simply
not paying for its gas, Russia again reduced the price of the gas Ukraine had to pay.
What seems to have happened is that the Stockholm Arbitration Court decided to smooth out
the price of gas payable by Ukraine throughout 2014, which is the sort of thing arbitration
tribunals are regularly known to do, whilst leaving the essentials of the contract
unchanged.
If so then this is not a victory by Ukraine but a clearcut defeat, which Naftogaz and the
Ukrainian government have tried to spin into a victory by citing the reduction in the gas price
in the second quarter of 2014 and the reduction in future gas import volumes, neither of which
were contentious issues. By contrast it is clear that Ukraine and Naftogaz must pay the full
contractual price and abide by the contract's take-or-pay provisions for the whole of the
period of the contract prior to the second quarter of 2014.
What this means in terms of hard cash is that Ukraine must now pay Russia a further $2
billion on top of the $3 billion it was recently ordered to pay by the High Court in London.
Just as it is holding back on paying the $3 billion it was ordered to pay by the High Court
until the appeal process in London is finished, so it will try to hold off paying the $2
billion it has just been ordered to pay to Gazprom until the final decision of the Stockholm
Arbitration Court (thus the brave talk of Naftogaz's claims of "up to $16 billion transit
contract arbitration against Gazprom") but thereafter payment of the $2 billion will fall due.
I say this because the claim Gazprom owes Naftogaz "up to" $16 billion in transit fees looks
like it has been plucked out of the air.
What this means is that over the course of 2018 Ukraine will have to pay Russia $5 billion
($3 billion awarded by the High Court in London and $2 billion awarded by the Stockholm
Arbitration Court). Since the $2 billion awarded by the Stockholm Arbitration Court is
technically an arbitration award, Gazprom will need to convert it into a court Judgment before
it can enforce it, but that is merely a formality. At that point this debt will become not
merely due but legally enforceable as well.
Ukraine recently borrowed $3 billion on the international financial markets at very high
interest almost certainly in order to pay the $3 billion the High Court in London has ordered
it to pay Russia. Whilst the $2 billion is technically a debt owed by Naftogaz not Ukraine and
its non-payment would does not place Ukraine in a state of sovereign default, Gazprom is in a
position to enforce the debt against Naftogaz's assets (including gas it buys) in the European
Economic Area. It is difficult to see how Naftogaz and Ukraine can avoid payment of this
debt.
Has Ukraine actually gained anything from its long running gas dispute with Russia?
Naftogaz brags that Ukraine has saved up to $75 billion because it is no longer buying gas
from Russia. However this begs the question of whether the gas Ukraine is now importing from
Europe really is significantly cheaper than the gas Ukraine was buying from Russia? This is
debatable and with energy prices rising it is likely to become even less likely over time.
"Hillary Clinton, following a long tradition of mainstream Democrats, had a grab bag of proposals that, if enacted, would collectively
make a huge difference in the lives of working people. "
I think you are wrong here.
Hillary was/is a neoliberal, and as such is hostile to the interests of working people and middle class in general. Like most
neoliberals she is a Machiavellian elitist. Her election promises are pure demagogy, much like Trump or Obama election promised
(immortalized in the slogan "change we can believe in" which now became the synonym of election fraud)
Also she was/is hell-bent of preserving/expanding the US neoliberal empire and the wars for neoliberal dominance (in ME mainly
for the benefit of Israel and Saudis). War are pretty costly ventures and they are financed at the expense of working class and
lower middle class, never at the expense of "fat cats" from Wall Street.
All-in-all I think the role of POTUS is greatly "misunderestimated" in your line of thinking. As we can see differences between
Trump and Hillary in foreign policy are marginal. Why are you assuming that the differences in domestic economic policies would
be greater ?
In reality there are other powerful factors in play that diminish the importance of POTUS:
The US Presidential Elections are no longer an instrument for change. They are completely corrupted and are mostly of "bread
and circuses" type of events, where two gladiators preselected by financial elite fight for the coveted position, using all kind
of dirty tricks for US public entertainment.
While the appearance of democracy remains, in reality the current system represents that rule of "deep state". In the classic
form of "National security state". In the National Security State, the US people no longer have the any chances to change the
policies.
Political emasculation of US voters has led to frustration, depression and rage. It feeds radical right movement including
neo-fascists, which embrace more extreme remedies to the current problems because they correctly feel that the traditional parties
no longer represent the will of the people.
Insulated and partially degenerated US elite have grown more obtuse and is essentially a hostage for neocons. They chose
to ignore the seething anger that lies just below the surface of brainwashed Us electorate.
The "American Dream" is officially dead. People at a and below lower middle class level see little hope for themselves,
their children or the country. The chasm between top 1% (or let's say top 20%) and the rest continues to fuel populist anger.
While Trump proved to be "yet another turncoat" like Barak Obama (who just got his first silver coin in the form of the
$400K one hour speech) Trump's election signify a broad rejection of the country's neoliberal elite, including neoliberal MSM,
neocon foreign policy as well as neoliberal economic system (and first of all neoliberal globalization).
The country foreign policy remains hijacked by neocons (this time in the form of fiends of Paul Wolfowitz among the military
brass appointed by Trump to top positions in his administration) and that might spell major conflict or even WWIII.
8. We can now talk about the USA as "neocon occupied country" (NOC), because the neocons policies contradict the USA national
interests and put heavy burden of taxpayers, especially in lower income categories. Due to neglect in maintaining infrastructure,
in some areas the USA already looks like third word country. Still we finance Israel and several other countries to the tune of
$40 billion dollars in military aid alone (that that's in case of Israel just the tip of the iceberg; real figure is probably
double of that) https://fas.org/sgp/crs/mideast/RL33222.pdf
Since Bill Clinton POTUS is more or less a marionette of financial oligarchy (which Obama -- as a person without the past (or
with a very fuzzy past) - symbolizes all too well).
"... My predecessor Benedict XVI likewise proposed "eliminating the structural causes of the dysfunctions of the world economy and correcting models of growth which have proved incapable of ensuring respect for the environment". [10] He observed that the world cannot be analyzed by isolating only one of its aspects, since "the book of nature is one and indivisible", and includes the environment, life, sexuality, the family, social relations, and so forth. It follows that "the deterioration of nature is closely connected to the culture which shapes human coexistence" ..."
"... Patriarch Bartholomew has spoken in particular of the need for each of us to repent of the ways we have harmed the planet, for "inasmuch as we all generate small ecological damage", we are called to acknowledge "our contribution, smaller or greater, to the disfigurement and destruction of creation". [14] He has repeatedly stated this firmly and persuasively, challenging us to acknowledge our sins against creation: "For human beings to destroy the biological diversity of God's creation; for human beings to degrade the integrity of the earth by causing changes in its climate, by stripping the earth of its natural forests or destroying its wetlands; for human beings to contaminate the earth's waters, its land, its air, and its life – these are sins". [15] For "to commit a crime against the natural world is a sin against ourselves and a sin against God". [16] ..."
"... He asks us to replace consumption with sacrifice, greed with generosity, wastefulness with a spirit of sharing, an asceticism which "entails learning to give, and not simply to give up. It is a way of loving, of moving gradually away from what I want to what God's world needs. It is liberation from fear, greed and compulsion". ..."
"... It is possible that we do not grasp the gravity of the challenges now before us. "The risk is growing day by day that man will not use his power as he should"; in effect, "power is never considered in terms of the responsibility of choice which is inherent in freedom" since its "only norms are taken from alleged necessity, from either utility or security". [85] But human beings are not completely autonomous. Our freedom fades when it is handed over to the blind forces of the unconscious, of immediate needs, of self-interest, and of violence. In this sense, we stand naked and exposed in the face of our ever-increasing power, lacking the wherewithal to control it. We have certain superficial mechanisms, but we cannot claim to have a sound ethics, a culture and spirituality genuinely capable of setting limits and teaching clear-minded self-restraint. ..."
"... Human beings and material objects no longer extend a friendly hand to one another; the relationship has become confrontational. This has made it easy to accept the idea of infinite or unlimited growth, which proves so attractive to economists, financiers and experts in technology. It is based on the lie that there is an infinite supply of the earth's goods, and this leads to the planet being squeezed dry beyond every limit. It is the false notion that "an infinite quantity of energy and resources are available, that it is possible to renew them quickly, and that the negative effects of the exploitation of the natural order can be easily absorbed". ..."
"... We have to accept that technological products are not neutral, for they create a framework which ends up conditioning lifestyles and shaping social possibilities along the lines dictated by the interests of certain powerful groups. Decisions which may seem purely instrumental are in reality decisions about the kind of society we want to build. ..."
"... Technology tends to absorb everything into its ironclad logic, and those who are surrounded with technology "know full well that it moves forward in the final analysis neither for profit nor for the well-being of the human race", that "in the most radical sense of the term power is its motive – a lordship over all". [87] As a result, "man seizes hold of the naked elements of both nature and human nature". [88] Our capacity to make decisions, a more genuine freedom and the space for each one's alternative creativity are diminished. ..."
"... At the same time, we have "a sort of 'superdevelopment' of a wasteful and consumerist kind which forms an unacceptable contrast with the ongoing situations of dehumanizing deprivation", [90] while we are all too slow in developing economic institutions and social initiatives which can give the poor regular access to basic resources. We fail to see the deepest roots of our present failures, which have to do with the direction, goals, meaning and social implications of technological and economic growth. ..."
"... The specialization which belongs to technology makes it difficult to see the larger picture. The fragmentation of knowledge proves helpful for concrete applications, and yet it often leads to a loss of appreciation for the whole, for the relationships between things, and for the broader horizon, which then becomes irrelevant. ..."
"... It becomes difficult to pause and recover depth in life. If architecture reflects the spirit of an age, our megastructures and drab apartment blocks express the spirit of globalized technology, where a constant flood of new products coexists with a tedious monotony. Let us refuse to resign ourselves to this, and continue to wonder about the purpose and meaning of everything. Otherwise we would simply legitimate the present situation and need new forms of escapism to help us endure the emptiness. ..."
"... All of this shows the urgent need for us to move forward in a bold cultural revolution. Science and technology are not neutral; from the beginning to the end of a process, various intentions and possibilities are in play and can take on distinct shapes. Nobody is suggesting a return to the Stone Age, but we do need to slow down and look at reality in a different way, to appropriate the positive and sustainable progress which has been made, but also to recover the values and the great goals swept away by our unrestrained delusions of grandeur. ..."
"... Modern anthropocentrism has paradoxically ended up prizing technical thought over reality, since "the technological mind sees nature as an insensate order, as a cold body of facts, as a mere 'given', as an object of utility, as raw material to be hammered into useful shape; it views the cosmos similarly as a mere 'space' into which objects can be thrown with complete indifference" ..."
"... Once the human being declares independence from reality and behaves with absolute dominion, the very foundations of our life begin to crumble ..."
"... This situation has led to a constant schizophrenia, wherein a technocracy which sees no intrinsic value in lesser beings coexists with the other extreme, which sees no special value in human beings. But one cannot prescind from humanity ..."
"... Nor must the critique of a misguided anthropocentrism underestimate the importance of interpersonal relations. If the present ecological crisis is one small sign of the ethical, cultural and spiritual crisis of modernity, we cannot presume to heal our relationship with nature and the environment without healing all fundamental human relationships. ..."
"... The culture of relativism is the same disorder which drives one person to take advantage of another, to treat others as mere objects, imposing forced labour on them or enslaving them to pay their debts. The same kind of thinking leads to the sexual exploitation of children and abandonment of the elderly who no longer serve our interests. ..."
"... We are convinced that "man is the source, the focus and the aim of all economic and social life". [100] Nonetheless, once our human capacity for contemplation and reverence is impaired, it becomes easy for the meaning of work to be misunderstood. [101] We need to remember that men and women have "the capacity to improve their lot, to further their moral growth and to develop their spiritual endowments". [102] Work should be the setting for this rich personal growth, where many aspects of life enter into play: creativity, planning for the future, developing our talents, living out our values, relating to others ..."
"... it is essential that "we continue to prioritize the goal of access to steady employment for everyone", [103] no matter the limited interests of business and dubious economic reasoning. ..."
"... We were created with a vocation to work. The goal should not be that technological progress increasingly replace human work, for this would be detrimental to humanity. Work is a necessity, part of the meaning of life on this earth, a path to growth, human development and personal fulfilment. Helping the poor financially must always be a provisional solution in the face of pressing needs. The broader objective should always be to allow them a dignified life through work. ..."
"... The loss of jobs also has a negative impact on the economy "through the progressive erosion of social capital: the network of relationships of trust, dependability, and respect for rules, all of which are indispensable for any form of civil coexistence". [104] In other words, "human costs always include economic costs, and economic dysfunctions always involve human costs". [105] To stop investing in people, in order to gain greater short-term financial gain, is bad business for society. ..."
"... In order to continue providing employment, it is imperative to promote an economy which favours productive diversity and business creativity. For example, there is a great variety of small-scale food production systems which feed the greater part of the world's peoples, using a modest amount of land and producing less waste, be it in small agricultural parcels, in orchards and gardens, hunting and wild harvesting or local fishing. Economies of scale, especially in the agricultural sector, end up forcing smallholders to sell their land or to abandon their traditional crops. ..."
"... To ensure economic freedom from which all can effectively benefit, restraints occasionally have to be imposed on those possessing greater resources and financial power. To claim economic freedom while real conditions bar many people from actual access to it, and while possibilities for employment continue to shrink, is to practise a doublespeak which brings politics into disrepute. Business is a noble vocation, directed to producing wealth and improving our world. It can be a fruitful source of prosperity for the areas in which it operates, especially if it sees the creation of jobs as an essential part of its service to the common good. ..."
6. My predecessor Benedict XVI likewise proposed
"eliminating the structural causes of the dysfunctions of the world economy and correcting models of growth which have proved incapable
of ensuring respect for the environment".[10]
He observed that the world cannot be analyzed by isolating only one of its aspects, since "the book of nature is one and indivisible",
and includes the environment, life, sexuality, the family, social relations, and so forth. It follows that "the deterioration of
nature is closely connected to the culture which shapes human coexistence".[11]
Pope Benedict asked us to recognize that the natural environment has been gravely damaged by our irresponsible behaviour. The social
environment has also suffered damage. Both are ultimately due to the same evil: the notion that there are no indisputable truths
to guide our lives, and hence human freedom is limitless. We have forgotten that "man is not only a freedom which he creates for
himself. Man does not create himself. He is spirit and will, but also nature".[12]
With paternal concern, Benedict urged us to realize that creation is harmed "where we ourselves have the final word, where everything
is simply our property and we use it for ourselves alone. The misuse of creation begins when we no longer recognize any higher instance
than ourselves, when we see nothing else but ourselves".[13]
United by the same concern
7. These statements of the Popes echo the reflections of numerous scientists, philosophers, theologians and civic groups, all
of which have enriched the Church's thinking on these questions. Outside the Catholic Church, other Churches and Christian communities
– and other religions as well – have expressed deep concern and offered valuable reflections on issues which all of us find disturbing.
To give just one striking example, I would mention the statements made by the beloved Ecumenical Patriarch Bartholomew, with whom
we share the hope of full ecclesial communion.
8. Patriarch Bartholomew has spoken in particular of the need for each of us to repent of the ways we have harmed the planet,
for "inasmuch as we all generate small ecological damage", we are called to acknowledge "our contribution, smaller or greater, to
the disfigurement and destruction of creation".[14]
He has repeatedly stated this firmly and persuasively, challenging us to acknowledge our sins against creation: "For human beings
to destroy the biological diversity of God's creation; for human beings to degrade the integrity of the earth by causing changes
in its climate, by stripping the earth of its natural forests or destroying its wetlands; for human beings to contaminate the earth's
waters, its land, its air, and its life – these are sins".[15]
For "to commit a crime against the natural world is a sin against ourselves and a sin against God".[16]
9. At the same time, Bartholomew has drawn attention to the ethical and spiritual roots of environmental problems, which require
that we look for solutions not only in technology but in a change of humanity; otherwise we would be dealing merely with symptoms.
He asks us to replace consumption with sacrifice, greed with generosity, wastefulness with a spirit of sharing, an asceticism
which "entails learning to give, and not simply to give up. It is a way of loving, of moving gradually away from what I want to what
God's world needs. It is liberation from fear, greed and compulsion".[17]
As Christians, we are also called "to accept the world as a sacrament of communion, as a way of sharing with God and our neighbours
on a global scale. It is our humble conviction that the divine and the human meet in the slightest detail in the seamless garment
of God's creation, in the last speck of dust of our planet".[18]
... ... ...
I. TECHNOLOGY: CREATIVITY AND POWER
... ... ...
105. There is a tendency to believe that every increase in power means "an increase of 'progress' itself", an advance in "security,
usefulness, welfare and vigour; an assimilation of new values into the stream of culture",[83]
as if reality, goodness and truth automatically flow from technological and economic power as such. The fact is that "contemporary
man has not been trained to use power well",[84]
because our immense technological development has not been accompanied by a development in human responsibility, values and conscience.
Each age tends to have only a meagre awareness of its own limitations. It is possible that we do not grasp the gravity of the
challenges now before us. "The risk is growing day by day that man will not use his power as he should"; in effect, "power is never
considered in terms of the responsibility of choice which is inherent in freedom" since its "only norms are taken from alleged necessity,
from either utility or security".[85]
But human beings are not completely autonomous. Our freedom fades when it is handed over to the blind forces of the unconscious,
of immediate needs, of self-interest, and of violence. In this sense, we stand naked and exposed in the face of our ever-increasing
power, lacking the wherewithal to control it. We have certain superficial mechanisms, but we cannot claim to have a sound ethics,
a culture and spirituality genuinely capable of setting limits and teaching clear-minded self-restraint.
II. THE GLOBALIZATION OF THE TECHNOCRATIC PARADIGM
106. The basic problem goes even deeper: it is the way that humanity has taken up technology and its development according
to an undifferentiated and one-dimensional paradigm. This paradigm exalts the concept of a subject who, using logical and rational
procedures, progressively approaches and gains control over an external object. This subject makes every effort to establish the
scientific and experimental method, which in itself is already a technique of possession, mastery and transformation. It is as if
the subject were to find itself in the presence of something formless, completely open to manipulation. Men and women have constantly
intervened in nature, but for a long time this meant being in tune with and respecting the possibilities offered by the things themselves.
It was a matter of receiving what nature itself allowed, as if from its own hand. Now, by contrast, we are the ones to lay our hands
on things, attempting to extract everything possible from them while frequently ignoring or forgetting the reality in front of us.
Human beings and material objects no longer extend a friendly hand to one another; the relationship has become confrontational. This
has made it easy to accept the idea of infinite or unlimited growth, which proves so attractive to economists, financiers and experts
in technology. It is based on the lie that there is an infinite supply of the earth's goods, and this leads to the planet being squeezed
dry beyond every limit. It is the false notion that "an infinite quantity of energy and resources are available, that it is possible
to renew them quickly, and that the negative effects of the exploitation of the natural order can be easily absorbed".[86]
107. It can be said that many problems of today's world stem from the tendency, at times unconscious, to make the method and aims
of science and technology an epistemological paradigm which shapes the lives of individuals and the workings of society. The effects
of imposing this model on reality as a whole, human and social, are seen in the deterioration of the environment, but this is just
one sign of a reductionism which affects every aspect of human and social life. We have to accept that technological products
are not neutral, for they create a framework which ends up conditioning lifestyles and shaping social possibilities along the lines
dictated by the interests of certain powerful groups. Decisions which may seem purely instrumental are in reality decisions about
the kind of society we want to build.
108. The idea of promoting a different cultural paradigm and employing technology as a mere instrument is nowadays inconceivable.
The technological paradigm has become so dominant that it would be difficult to do without its resources and even more difficult
to utilize them without being dominated by their internal logic. It has become countercultural to choose a lifestyle whose goals
are even partly independent of technology, of its costs and its power to globalize and make us all the same. Technology tends
to absorb everything into its ironclad logic, and those who are surrounded with technology "know full well that it moves forward
in the final analysis neither for profit nor for the well-being of the human race", that "in the most radical sense of the term power
is its motive – a lordship over all".[87]
As a result, "man seizes hold of the naked elements of both nature and human nature".[88]
Our capacity to make decisions, a more genuine freedom and the space for each one's alternative creativity are diminished.
109. The technocratic paradigm also tends to dominate economic and political life. The economy accepts every advance in technology
with a view to profit, without concern for its potentially negative impact on human beings. Finance overwhelms the real economy.
The lessons of the global financial crisis have not been assimilated, and we are learning all too slowly the lessons of environmental
deterioration. Some circles maintain that current economics and technology will solve all environmental problems, and argue, in popular
and non-technical terms, that the problems of global hunger and poverty will be resolved simply by market growth. They are less concerned
with certain economic theories which today scarcely anybody dares defend, than with their actual operation in the functioning of
the economy. They may not affirm such theories with words, but nonetheless support them with their deeds by showing no interest in
more balanced levels of production, a better distribution of wealth, concern for the environment and the rights of future generations.
Their behaviour shows that for them maximizing profits is enough. Yet by itself the market cannot guarantee integral human development
and social inclusion.[89]At the same time, we have "a sort of 'superdevelopment' of a wasteful and consumerist kind which forms an unacceptable contrast
with the ongoing situations of dehumanizing deprivation",[90]
while we are all too slow in developing economic institutions and social initiatives which can give the poor regular access to basic
resources. We fail to see the deepest roots of our present failures, which have to do with the direction, goals, meaning and social
implications of technological and economic growth.
110. The specialization which belongs to technology makes it difficult to see the larger picture. The fragmentation of knowledge
proves helpful for concrete applications, and yet it often leads to a loss of appreciation for the whole, for the relationships between
things, and for the broader horizon, which then becomes irrelevant. This very fact makes it hard to find adequate ways of solving
the more complex problems of today's world, particularly those regarding the environment and the poor; these problems cannot be dealt
with from a single perspective or from a single set of interests. A science which would offer solutions to the great issues would
necessarily have to take into account the data generated by other fields of knowledge, including philosophy and social ethics; but
this is a difficult habit to acquire today. Nor are there genuine ethical horizons to which one can appeal. Life gradually becomes
a surrender to situations conditioned by technology, itself viewed as the principal key to the meaning of existence. In the concrete
situation confronting us, there are a number of symptoms which point to what is wrong, such as environmental degradation, anxiety,
a loss of the purpose of life and of community living. Once more we see that "realities are more important than ideas".[91]
111. Ecological culture cannot be reduced to a series of urgent and partial responses to the immediate problems of pollution,
environmental decay and the depletion of natural resources. There needs to be a distinctive way of looking at things, a way of thinking,
policies, an educational programme, a lifestyle and a spirituality which together generate resistance to the assault of the technocratic
paradigm. Otherwise, even the best ecological initiatives can find themselves caught up in the same globalized logic. To seek only
a technical remedy to each environmental problem which comes up is to separate what is in reality interconnected and to mask the
true and deepest problems of the global system.
112. Yet we can once more broaden our vision. We have the freedom needed to limit and direct technology; we can put it at the
service of another type of progress, one which is healthier, more human, more social, more integral. Liberation from the dominant
technocratic paradigm does in fact happen sometimes, for example, when cooperatives of small producers adopt less polluting means
of production, and opt for a non-consumerist model of life, recreation and community. Or when technology is directed primarily to
resolving people's concrete problems, truly helping them live with more dignity and less suffering. Or indeed when the desire to
create and contemplate beauty manages to overcome reductionism through a kind of salvation which occurs in beauty and in those who
behold it. An authentic humanity, calling for a new synthesis, seems to dwell in the midst of our technological culture, almost unnoticed,
like a mist seeping gently beneath a closed door. Will the promise last, in spite of everything, with all that is authentic rising
up in stubborn resistance?
113. There is also the fact that people no longer seem to believe in a happy future; they no longer have blind trust in a better
tomorrow based on the present state of the world and our technical abilities. There is a growing awareness that scientific and technological
progress cannot be equated with the progress of humanity and history, a growing sense that the way to a better future lies elsewhere.
This is not to reject the possibilities which technology continues to offer us. But humanity has changed profoundly, and the accumulation
of constant novelties exalts a superficiality which pulls us in one direction. It becomes difficult to pause and recover depth
in life. If architecture reflects the spirit of an age, our megastructures and drab apartment blocks express the spirit of globalized
technology, where a constant flood of new products coexists with a tedious monotony. Let us refuse to resign ourselves to this, and
continue to wonder about the purpose and meaning of everything. Otherwise we would simply legitimate the present situation and need
new forms of escapism to help us endure the emptiness.
114. All of this shows the urgent need for us to move forward in a bold cultural revolution. Science and technology are not
neutral; from the beginning to the end of a process, various intentions and possibilities are in play and can take on distinct shapes.
Nobody is suggesting a return to the Stone Age, but we do need to slow down and look at reality in a different way, to appropriate
the positive and sustainable progress which has been made, but also to recover the values and the great goals swept away by our unrestrained
delusions of grandeur.
III. THE CRISIS AND EFFECTS OF MODERN ANTHROPOCENTRISM
115. Modern anthropocentrism has paradoxically ended up prizing technical thought over reality, since "the technological mind
sees nature as an insensate order, as a cold body of facts, as a mere 'given', as an object of utility, as raw material to be hammered
into useful shape; it views the cosmos similarly as a mere 'space' into which objects can be thrown with complete indifference".[92]
The intrinsic dignity of the world is thus compromised. When human beings fail to find their true place in this world, they misunderstand
themselves and end up acting against themselves: "Not only has God given the earth to man, who must use it with respect for the original
good purpose for which it was given, but, man too is God's gift to man. He must therefore respect the natural and moral structure
with which he has been endowed".[93]
116. Modernity has been marked by an excessive anthropocentrism which today, under another guise, continues to stand in the way
of shared understanding and of any effort to strengthen social bonds. The time has come to pay renewed attention to reality and the
limits it imposes; this in turn is the condition for a more sound and fruitful development of individuals and society. An inadequate
presentation of Christian anthropology gave rise to a wrong understanding of the relationship between human beings and the world.
Often, what was handed on was a Promethean vision of mastery over the world, which gave the impression that the protection of nature
was something that only the faint-hearted cared about. Instead, our "dominion" over the universe should be understood more properly
in the sense of responsible stewardship.[94]
117. Neglecting to monitor the harm done to nature and the environmental impact of our decisions is only the most striking sign
of a disregard for the message contained in the structures of nature itself. When we fail to acknowledge as part of reality the worth
of a poor person, a human embryo, a person with disabilities – to offer just a few examples – it becomes difficult to hear the cry
of nature itself; everything is connected. Once the human being declares independence from reality and behaves with absolute
dominion, the very foundations of our life begin to crumble, for "instead of carrying out his role as a cooperator with God
in the work of creation, man sets himself up in place of God and thus ends up provoking a rebellion on the part of nature".[95]
118. This situation has led to a constant schizophrenia, wherein a technocracy which sees no intrinsic value in lesser beings
coexists with the other extreme, which sees no special value in human beings. But one cannot prescind from humanity. There can
be no renewal of our relationship with nature without a renewal of humanity itself. There can be no ecology without an adequate anthropology.
When the human person is considered as simply one being among others, the product of chance or physical determinism, then "our overall
sense of responsibility wanes".[96]
A misguided anthropocentrism need not necessarily yield to "biocentrism", for that would entail adding yet another imbalance, failing
to solve present problems and adding new ones. Human beings cannot be expected to feel responsibility for the world unless, at the
same time, their unique capacities of knowledge, will, freedom and responsibility are recognized and valued.
119. Nor must the critique of a misguided anthropocentrism underestimate the importance of interpersonal relations. If the
present ecological crisis is one small sign of the ethical, cultural and spiritual crisis of modernity, we cannot presume to heal
our relationship with nature and the environment without healing all fundamental human relationships. Christian thought sees
human beings as possessing a particular dignity above other creatures; it thus inculcates esteem for each person and respect for
others. Our openness to others, each of whom is a "thou" capable of knowing, loving and entering into dialogue, remains the source
of our nobility as human persons. A correct relationship with the created world demands that we not weaken this social dimension
of openness to others, much less the transcendent dimension of our openness to the "Thou" of God. Our relationship with the environment
can never be isolated from our relationship with others and with God. Otherwise, it would be nothing more than romantic individualism
dressed up in ecological garb, locking us into a stifling immanence.
120. Since everything is interrelated, concern for the protection of nature is also incompatible with the justification of abortion.
How can we genuinely teach the importance of concern for other vulnerable beings, however troublesome or inconvenient they may be,
if we fail to protect a human embryo, even when its presence is uncomfortable and creates difficulties? "If personal and social sensitivity
towards the acceptance of the new life is lost, then other forms of acceptance that are valuable for society also wither away".[97]
121. We need to develop a new synthesis capable of overcoming the false arguments of recent centuries. Christianity, in fidelity
to its own identity and the rich deposit of truth which it has received from Jesus Christ, continues to reflect on these issues in
fruitful dialogue with changing historical situations. In doing so, it reveals its eternal newness.[98]
Practical relativism
122. A misguided anthropocentrism leads to a misguided lifestyle. In the Apostolic Exhortation
Evangelii Gaudium, I noted that the practical relativism typical of our age is "even more dangerous than doctrinal relativism".[99]
When human beings place themselves at the centre, they give absolute priority to immediate convenience and all else becomes relative.
Hence we should not be surprised to find, in conjunction with the omnipresent technocratic paradigm and the cult of unlimited human
power, the rise of a relativism which sees everything as irrelevant unless it serves one's own immediate interests. There is a logic
in all this whereby different attitudes can feed on one another, leading to environmental degradation and social decay.
123. The culture of relativism is the same disorder which drives one person to take advantage of another, to treat others
as mere objects, imposing forced labour on them or enslaving them to pay their debts. The same kind of thinking leads to the sexual
exploitation of children and abandonment of the elderly who no longer serve our interests. It is also the mindset of those who
say: Let us allow the invisible forces of the market to regulate the economy, and consider their impact on society and nature as
collateral damage. In the absence of objective truths or sound principles other than the satisfaction of our own desires and immediate
needs, what limits can be placed on human trafficking, organized crime, the drug trade, commerce in blood diamonds and the fur of
endangered species? Is it not the same relativistic logic which justifies buying the organs of the poor for resale or use in experimentation,
or eliminating children because they are not what their parents wanted? This same "use and throw away" logic generates so much waste,
because of the disordered desire to consume more than what is really necessary. We should not think that political efforts or the
force of law will be sufficient to prevent actions which affect the environment because, when the culture itself is corrupt and objective
truth and universally valid principles are no longer upheld, then laws can only be seen as arbitrary impositions or obstacles to
be avoided.
The need to protect employment
124. Any approach to an integral ecology, which by definition does not exclude human beings, needs to take account of the value
of labour, as Saint John Paul II wisely noted in his Encyclical
Laborem Exercens. According to the biblical account of creation, God placed man and woman in the garden he had created (cf.
Gen 2:15) not only to preserve it ("keep") but also to make it fruitful ("till"). Labourers and craftsmen thus "maintain the
fabric of the world" (Sir 38:34). Developing the created world in a prudent way is the best way of caring for it, as this
means that we ourselves become the instrument used by God to bring out the potential which he himself inscribed in things: "The Lord
created medicines out of the earth, and a sensible man will not despise them" (Sir 38:4).
125. If we reflect on the proper relationship between human beings and the world around us, we see the need for a correct understanding
of work; if we talk about the relationship between human beings and things, the question arises as to the meaning and purpose of
all human activity. This has to do not only with manual or agricultural labour but with any activity involving a modification of
existing reality, from producing a social report to the design of a technological development. Underlying every form of work is a
concept of the relationship which we can and must have with what is other than ourselves. Together with the awe-filled contemplation
of creation which we find in Saint Francis of Assisi, the Christian spiritual tradition has also developed a rich and balanced understanding
of the meaning of work, as, for example, in the life of Blessed Charles de Foucauld and his followers.
126. We can also look to the great tradition of monasticism. Originally, it was a kind of flight from the world, an escape from
the decadence of the cities. The monks sought the desert, convinced that it was the best place for encountering the presence of God.
Later, Saint Benedict of Norcia proposed that his monks live in community, combining prayer and spiritual reading with manual labour
(ora et labora). Seeing manual labour as spiritually meaningful proved revolutionary. Personal growth and sanctification came
to be sought in the interplay of recollection and work. This way of experiencing work makes us more protective and respectful of
the environment; it imbues our relationship to the world with a healthy sobriety.
127. We are convinced that "man is the source, the focus and the aim of all economic and social life".[100]
Nonetheless, once our human capacity for contemplation and reverence is impaired, it becomes easy for the meaning of work to be misunderstood.[101]
We need to remember that men and women have "the capacity to improve their lot, to further their moral growth and to develop their
spiritual endowments".[102]
Work should be the setting for this rich personal growth, where many aspects of life enter into play: creativity, planning for the
future, developing our talents, living out our values, relating to others, giving glory to God. It follows that, in the reality
of today's global society, it is essential that "we continue to prioritize the goal of access to steady employment for everyone",[103]
no matter the limited interests of business and dubious economic reasoning.
128. We were created with a vocation to work. The goal should not be that technological progress increasingly replace human
work, for this would be detrimental to humanity. Work is a necessity, part of the meaning of life on this earth, a path to growth,
human development and personal fulfilment. Helping the poor financially must always be a provisional solution in the face of pressing
needs. The broader objective should always be to allow them a dignified life through work. Yet the orientation of the economy
has favoured a kind of technological progress in which the costs of production are reduced by laying off workers and replacing them
with machines. This is yet another way in which we can end up working against ourselves. The loss of jobs also has a negative
impact on the economy "through the progressive erosion of social capital: the network of relationships of trust, dependability, and
respect for rules, all of which are indispensable for any form of civil coexistence".[104]
In other words, "human costs always include economic costs, and economic dysfunctions always involve human costs".[105]
To stop investing in people, in order to gain greater short-term financial gain, is bad business for society.
129. In order to continue providing employment, it is imperative to promote an economy which favours productive diversity
and business creativity. For example, there is a great variety of small-scale food production systems which feed the greater part
of the world's peoples, using a modest amount of land and producing less waste, be it in small agricultural parcels, in orchards
and gardens, hunting and wild harvesting or local fishing. Economies of scale, especially in the agricultural sector, end up forcing
smallholders to sell their land or to abandon their traditional crops. Their attempts to move to other, more diversified, means
of production prove fruitless because of the difficulty of linkage with regional and global markets, or because the infrastructure
for sales and transport is geared to larger businesses. Civil authorities have the right and duty to adopt clear and firm measures
in support of small producers and differentiated production. To ensure economic freedom from which all can effectively benefit,
restraints occasionally have to be imposed on those possessing greater resources and financial power. To claim economic freedom while
realconditions bar many people from actual access to it, and while possibilities for employment continue to shrink, is to
practise a doublespeak which brings politics into disrepute. Business is a noble vocation, directed to producing wealth and improving
our world. It can be a fruitful source of prosperity for the areas in which it operates, especially if it sees the creation of jobs
as an essential part of its service to the common good.
New biological technologies
130. In the philosophical and theological vision of the human being and of creation which I have presented, it is clear that the
human person, endowed with reason and knowledge, is not an external factor to be excluded. While human intervention on plants and
animals is permissible when it pertains to the necessities of human life, the Catechism of the Catholic Church teaches that
experimentation on animals is morally acceptable only "if it remains within reasonable limits [and] contributes to caring for or
saving human lives".[106]
The Catechism firmly states that human power has limits and that "it is contrary to human dignity to cause animals to suffer
or die needlessly".[107]
All such use and experimentation "requires a religious respect for the integrity of creation".[108]
"... By Servaas Storm, Senior Lecturer at Delft University of Technology, who works on macroeconomics, technological progress, income distribution & economic growth, finance, development and structural change, and climate change. Originally published at the Institute for New Economic Thinking website ..."
"... Forget the myth of a savings glut causing near-zero interest rates. We have a shortage of aggregate demand, and only public spending and raising wages will change that. ..."
"... ceteris paribus ..."
"... simultaneously ..."
"... private households ..."
"... See original post for references ..."
"... This is the night of the expanding man I take one last drag as I approach the stand I cried when I wrote this song Sue me if I play too long This brother is free I'll be what I want to be ..."
by Yves Smith Yves here. This is a terrific takedown
of the loanable funds theory, on which a ton of bad policy rests.
By Servaas Storm, Senior Lecturer at Delft University of Technology, who works on macroeconomics, technological progress,
income distribution & economic growth, finance, development and structural change, and climate change. Originally published at the
Institute for New Economic Thinking website
Forget the myth of a savings glut causing near-zero interest rates. We have a shortage of aggregate demand, and only public
spending and raising wages will change that.
Introduction
Nine years after the Great Financial Crisis, U.S. output growth has not returned to its pre-recession trend, even after interest
rates hit the 'zero lower bound' (ZLB) and the unconventional monetary policy arsenal of the Federal Reserve has been all but exhausted.
It is widely feared that this insipid recovery reflects a 'new normal', characterized by "secular stagnation" which set in already
well before the global banking crisis of 2008 (Summers 2013, 2015).
This 'new normal' is characterized not just by this slowdown of aggregate economic growth, but also by greater income and wealth
inequalities and a growing polarization of employment and earnings into high-skill, high-wage and low-skill, low-wage jobs -- at
the expense of middle-class jobs (Temin 2017; Storm 2017). The slow recovery, heightened job insecurity and economic anxiety have
fueled a groundswell of popular discontent with the political establishment and made voters captive to Donald Trump's siren song
promising jobs and growth (
Ferguson and Page 2017 ).
What are the causes of secular stagnation? What are the solutions to revive growth and get the U.S. economy out of the doldrums?
If we go by four of the papers
commissioned by the Institute for New Economic Thinking (INET) at its recent symposium to explore these questions, one headline
conclusion stands out: the secular stagnation is caused by a heavy overdose of savings (relative to investment), which is caused
by higher retirement savings due to declining population growth and an ageing labour force (Eggertson, Mehotra & Robbins 2017; Lu
& Teulings 2017; Eggertson, Lancastre and Summers 2017), higher income inequality (Rachel & Smith 2017), and an inflow of precautionary
Asian savings (Rachel & Smith 2017). All these savings end up as deposits, or 'loanable funds' (LF), in commercial banks. In earlier
times, so the argument goes, banks would successfully channel these 'loanable funds' into productive firm investment -- by lowering
the nominal interest rate and thus inducing additional demand for investment loans.
But this time is different: the glut in savings supply is so large that banks cannot get rid of all the loanable funds even when
they offer firms free loans -- that is, even after they reduce the interest rate to zero, firms are not willing to borrow more in
order to invest. The result is inadequate investment and a shortage of aggregate demand in the short run, which lead to long-term
stagnation as long as the savings-investment imbalance persists. Summers (2015) regards a "chronic excess of saving over investment"
as "the essence of secular stagnation". Monetary policymakers at the Federal Reserve are in a fix, because they cannot lower the
interest rate further as it is stuck at the ZLB. Hence, forces of demography and ageing, higher inequality and thrifty Chinese savers
are putting the U.S. economy on a slow-moving turtle -- and not much can be done, it seems, to halt the resulting secular stagnation.
This is clearly a depressing conclusion, but it is also wrong.
To see this, we have to understand why there is a misplaced focus on the market for loanable funds that ignores the role of fiscal
policy that is plainly in front of us. In other words, we need to step back from the trees of dated models and see the whole forest
of our economy.
The Market for Loanable Funds
In the papers mentioned, commercial banks must first mobilise savings in order to have the loanable funds (LF) to originate new
(investment) loans or credit. Banks are therefore intermediaries between "savers" (those who provide the LF-supply) and "investors"
(firms which demand the LF). Banks, in this narrative, do not create money themselves and hence cannot pre -finance investment
by new money. They only move it between savers and investors.
We apparently live in a non-monetary (corn) economy -- one that just exchanges a real good that everybody uses, like corn. Savings
(or LF-supply) are assumed to rise when the interest rate R goes up, whereas investment (or LF-demand) must decline when R increases.
This is the stuff of textbooks, as is illustrated by Greg Mankiw's (1997, p. 63) explanation:
In fact, saving and investment can be interpreted in terms of supply an demand. In this case, the 'good' is loanable funds,
and its 'price' is the interest rate. Saving is the supply of loans -- individuals lend their savings to investors, or they deposit
their saving in a bank that makes the loan for them. Investment is the demand for loanable funds -- investors borrow from the
public directly by selling bonds or indirectly by borrowing from banks. [ .] At the equilibrium interest rate, saving equals investment
and the supply of loans equals the demand.
But the loanable funds market also forms the heart of complicated dynamic stochastic general equilibrium (DSGE) models, beloved
by 'freshwater' and 'saltwater' economists alike (Woodford 2010), as should be clear from the commissioned INET papers as well. Figure
1 illustrates the loanable funds market in this scheme. The upward-sloping curve tells us that savings (or LF-supply) goes up as
the interest rate R increases. The downward-sloping curve shows us that investment (or LF-demand) declines if the cost of capital
(R) goes up. In the initial situation, the LF-market clears at a positive interest rate R0 > 0. Savings equal investment, which implies
that LF-supply matches LF-demand, and in this -- happy -- equilibrium outcome, the economy can grow along some steady-state path.
To see how we can get secular stagnation in such a loanable-funds world, we introduce a shock, say, an ageing population (a demographic
imbalance), a rise in (extreme) inequality, or an Asian savings glut, due to which the savings schedule shifts down. Equilibrium
in the new situation should occur at R1 which is negative. But this can't happen because of the ZLB: the nominal interest cannot
decline below zero. Hence R is stuck at the ZLB and savings exceed investment, or LF-supply > LF-demand. This is a disequilibrium
outcome which involves an over-supply of savings (relative to investment), in turn leading to depressed growth.
Ever since Knut Wicksell's (1898) restatement of the doctrine, the loanable funds approach has exerted a surprisingly strong influence
upon some of the best minds in the profession. Its appeal lies in the fact that it can be presented in digestible form in a simple
diagram (as Figure 1), while its micro-economic logic matches the neoclassical belief in the 'virtue of thrift' and Max Weber's Protestant
Ethic, which emphasize austerity, savings (before spending!) and delayed gratification as the path to bliss.
The problem with this model is that it is wrong (see Lindner 2015;
Taylor 2016
). Wrong in its conceptualisation of banks (which are not just intermediaries pushing around existing money, but which can create
new money ex nihilo ), wrong in thinking that savings or LF-supply have anything to do with "loans" or "credit," wrong because
the empirical evidence in support of a "chronic excess of savings over investment" is weak or lacking, wrong in its utter neglect
of finance, financialization and financial markets, wrong in its assumption that the interest rate is some "market-clearing" price
(the interest rate, as all central bankers will acknowledge, is the principal instrument of monetary policy), and wrong in the assumption
that the two schedules -- the LF-supply curve and the LF-demand curve -- are independent of one another (they are not, as Keynes
already pointed out).
Figure 1: The Loanable Funds Market: A Savings Glut Causing Secular Stagnation
I wish to briefly elaborate these six points. I understand that each of these criticisms is known and I entertain little hope
that that any of this will make people reconsider their approach, analysis, diagnosis and conclusions. Nevertheless, it is important
that these criticisms are raised and not shoveled under the carpet. The problem of secular stagnation is simply too important to
be left mis-diagnosed.
First Problem: Loanable Funds Supply and Demand Are Not Independent Functions
Let me start with the point that the LF-supply and LF-demand curve are not two independent schedules. Figure 1 presents savings
and investment as functions of only the interest rate R, while keeping all other variables unchanged. The problem is that the
ceteris paribus assumption does not hold in this case. The reason is that savings and investment are both affected by, and at
the same time determined by, changes in income and (changes in) income distribution. To see how this works, let us assume that the
average propensity to save rises in response to the demographic imbalance and ageing. As a result, consumption and aggregate demand
go down. Rational firms, expecting future income to decline, will postpone or cancel planned investment projects and investment declines
(due to the negative income effect and for a given interest rate R0). This means that LF-demand curve in Figure 1 must shift downward
in response to the increased savings. The exact point was made by Keynes (1936, p. 179):
The classical theory of the rate of interest [the loanable funds theory] seems to suppose that, if the demand curve for capital
shifts or if the curve relating the rate of interest to the amounts saved out of a given income shifts or if both these curves
shift, the new rate of interest will be given by the point of intersection of the new positions of the two curves. But this is
a nonsense theory. For the assumption that income is constant is inconsistent with the assumption that these two curves can shift
independently of one another. If either of them shift, then, in general, income will change; with the result that the whole schematism
based on the assumption of a given income breaks down In truth, the classical theory has not been alive to the relevance of changes
in the level of income or to the possibility of the level of income being actually a function of the rate of the investment.
Let me try to illustrate this using Figure 2. Suppose there is an exogenous (unexplained) rise in the average propensity to save.
In reponse, the LF-supply curve shifts down, but because (expected) income declines, the LF-demand schedule shifts downward as well.
The outcome could well be that there is no change in equilibrium savings and equilibrium investment. The only change is that the
'natural' interest is now R1 and equal to the ZLB. Figure 2 is, in fact, consistent with the empirical analysis (and their Figure
of global savings and investment) of Rachel & Smith. Let me be clear: Figure 2 is not intended to suggest that the loanable funds
market is useful and theoretically correct. The point I am trying to make is that income changes and autonomous demand changes are
much bigger drivers of both investment and saving decisions than the interest rate. Market clearing happens here -- as Keynes was
arguing -- because the level of economic activity and income adjust, not because of interest-rate adjustment.
Figure 2: The Loanable Funds Market: Shifts in Both Schedules
Second Problem: Savings Do Not Fund Investment, Credit Does
The loanable funds doctrine wrongly assumes that commercial bank lending is constrained by the prior availability of loanable
funds or savings. The simple point in response is that, in real life, modern banks are not just intermediaries between 'savers' and
'investors', pushing around already-existing money, but are money creating institutions. Banks create new money ex nihilo
, i.e. without prior mobilisation of savings. This is illustrated by Werner's (2014) case study of the money creation process
by one individual commercial bank. What this means is that banks do pre-finance investment, as was noted by Schumpeter early
on and later by Keynes (1939), Kaldor (1989), Kalecki, and numerous other economists. It is for this reason that Joseph Schumpeter
(1934, p. 74) called the money-creating banker 'the ephor of the exchange economy' -- someone who by creating credit ( ex nihilo
) is pre-financing new investments and innovation and enables "the carrying out of new combinations, authorizes people, in the
name of society as it were, to form them." Nicholas Kaldor (1989, p. 179) hit the nail on its head when he wrote that "[C]redit money
has no 'supply function' in the production sense (since its costs of production are insignificant if not actually zero); it comes
into existence as a result of bank lending and is extinguished through the repayment of bank loans. At any one time the volume of
bank lending or its rate of expansion is limited only by the availability of credit-worthy borrowers." Kaldor had earlier expressed
his views on the endogeneity of money in his evidence to the Radcliffe Committee on the Workings of the Monetary System, whose report
(1959) was strongly influenced by Kaldor's argumentation. Or take Lord Adair Turner (2016, pp. 57) to whom the loanable-funds approach
is 98% fictional, as he writes:
Read an undergraduate textbook of economics, or advanced academic papers on financial intermediation, and if they describe
banks at all, it is usually as follows: "banks take deposits from households and lend money to businesses, allocating capital
between alternative capital investment possibilities." But as a description of what modern banks do, this account is largely fictional,
and it fails to capture their essential role and implications. [ ] Banks create credit, money, and thus purchasing power. [ ]
The vast majority of what we count as "money' in modern economies is created in this fashion: in the United Kingdom 98% of money
takes this form .
We therefore don't need savings to make possible investment -- or, in contrast to the Protestant Ethic, banks allow us to have
'gratification' even if we have not been 'thrifty' and austere, as long as there are slack resources in the economy.
It is by no means a secret that commercial banks create new money. As the Bank of England (2007) writes, "When bank make loans
they create additional deposits for those that have borrowed" (Berry et al. 2007, p. 377). Or consider the following statement
from the Deutsche Bundesbank (2009): "The commercial banks can create money themselves ." Across the board, central bank economists,
including economists working at the Bank for International Settlements (Borio and Disyatat 2011), have rejected the loanable funds
model as a wrong description of how the financial system actually works (see McLeay et al . 2014a, 2014b; Jakab and Kumhof
2015). And the Deutsche Bundesbank (2017) leaves no doubt as to how the banking system works and money is created in actually-existing
capitalism, stating that the ability of banks to originate loans does not depend on the prior availability of saving deposits. Bank
of England economists Zoltan Jakab and Michael Kumhoff (2015) reject the loanable-funds approach in favour of a model with money-creating
banks. In their model (as in reality), banks pre-finance investment; investment creates incomes; people save out of their incomes;
and at the end of the day, ex-post savings equal investment. This is what Jakab and Kumhoff (2015) conclude:
" . if the loan is for physical investment purposes, this new lending and money is what triggers investment and therefore,
by the national accounts identity of saving and investment (for closed economies), saving. Saving is therefore a consequence,
not a cause, of such lending. Saving does not finance investment, financing does. To argue otherwise confuses the respective macroeconomic
roles of resources (saving) and debt-based money (financing)."
Savings are a consequence of credit-financed investment (rather than a prior condition) -- and we cannot draw
a savings-investment cross as in Figure 1, as if the two curves are independent. They are not. There exists therefore no
'loanable funds market' in which scarce savings constrain (through interest rate adjustments) the demand for investment loans. Highlighting
the loanable funds fallacy, Keynes wrote in "The Process of Capital Formation" (1939):
"Increased investment will always be accompanied by increased saving, but it can never be preceded by it. Dishoarding and credit
expansion provides not an alternative to increased saving, but a necessary preparation for it. It is the parent, not the twin,
of increased saving."
This makes it all the more remarkable that some of the authors of the commissioned conference papers continue to frame their analysis
in terms of the discredited loanable funds market which wrongly assumes that savings have an existence of their own -- separate from
investment, the level of economic activity and the distribution of incomes.
Third Problem: The Interest Rate Is a Monetary Policy Instrument, Not a Market-Clearing Price
In loanable funds theory, the interest rate is a market price, determined by LF-supply and LF-demand (as in Figure 1). In reality,
central bankers use the interest rate as their principal policy instrument (Storm and Naastepad 2012). It takes effort and a considerable
amount of sophistry to match the loanable funds theory and the usage of the interest rate as a policy instrument. However, once one
acknowledges the empirical fact that commercial banks create money ex nihilo , which means money supply is endogenous, the
model of an interest-rate clearing loanable funds market becomes untenable. Or as Bank of England economists Jakab and Kumhof (2015)
argue:
modern central banks target interest rates, and are committed to supplying as many reserves (and cash) as banks demand at that
rate, in order to safeguard financial stability. The quantity of reserves is therefore a consequence, not a cause, of lending
and money creation. This view concerning central bank reserves [ ] has been repeatedly described in publications of the world's
leading central banks.
What this means is that the interest rate may well be at the ZLB, but this is not caused by a savings glut in the loanable funds
market, but the result of a deliberate policy decision by the Federal Reserve -- in an attempt to revive sluggish demand in a context
of stagnation, subdued wage growth, weak or no inflation, substantial hidden un- and underemployment, and actual recorded unemployment
being (much) higher than the NAIRU (see Storm and Naastepad 2012). Seen this way, the savings glut is the symptom (or
consequence ) of an aggregate demand shortage which has its roots in the permanent suppression of wage growth (relative
to labour productivity growth), the falling share of wages in income, the rising inequalities of income and wealth (Taylor 2017)
as well as the financialization of corporations (Lazonick 2017) and the economy as a whole (Storm 2018). It is not the cause of the
secular stagnation -- unlike in the loanable funds models.
Fourth Problem: The Manifest Absence of Finance and Financial Markets
What the various commissioned conference papers do not acknowledge is that the increase in savings (mostly due to heightened inequality
and financialization) is not channeled into higher real-economy investment, but is actually channeled into more lucrative financial
(derivative) markets. Big corporations like Alphabet, Facebook and Microsoft are holding enormous amounts of liquidity and IMF economists
have documented the growth of global institutional cash pools, now worth $5 to 6 trillion and managed by asset or money managers
in the shadow banking system (Pozsar 2011; Pozsar and Singh 2011; Pozsar 2015). Today's global economy is suffering from an unprecedented
"liquidity preference" -- with the cash safely "parked" in short-term (over-collateralized lending deals in the repo-market. The
liquidity is used to earn a quick buck in all kinds of OTC derivatives trading, including forex swaps, options and interest rate
swaps. The global savings glut is the same thing as the global overabundance of liquidity (partying around in financial markets)
and also the same thing as the global demand shortage -- that is: the lack of investment in real economic activity, R&D and innovation.
The low interest rate is important in this context, because it has dramatically lowered the opportunity cost of holding cash --
thus encouraging (financial) firms, the rentiers and the super-rich to hold on to their liquidity and make (quick and relatively
safe and high) returns in financial markets and exotic financial instruments. Added to this, we have to acknowledge the fact that
highly-leveraged firms are paying out most of their profits to shareholders as dividends or using it to buy back shares (Lazonick
2017). This has turned out to be damaging to real investment and innovation, and it has added further fuel to financialization (Epstein
2018; Storm 2018). If anything, firms have stopped using their savings (or retained profits) to finance their investments which are
now financed by bank loans and higher leverage. If we acknowledge these roles of finance and financial markets, then we can begin
to understand why investment is depressed and why there is an aggregate demand shortage. More than two decades of financial deregulation
have created a rentiers' delight, a capitalism without 'compulsions' on financial investors, banks, and the property-owning class
which in practice has led to 'capitalism for the 99%' and 'socialism for the 1%' (Palma 2009; Epstein 2018) For authentic Keynesians,
this financialized system is the exact opposite of Keynes' advice to go for the euthanasia of the rentiers ( i.e. design
policies to reduce the excess liquidity).
Fifth Problem: Confusing Savings with "Loans," or Stocks with Flows
"I have found out what economics is,' Michał Kalecki once told Joan Robinson, "it is the science of confusing stocks with flows."
If anything, Kalecki's comment applies to the loanable funds model. In the loanable fund universe, as Mankiw writes and as most commissioned
conference papers argue, saving equals investment and the supply of loans equals the demand at some equilibrium interest rate. But
savings and investment are flow variables, whereas the supply of loans and the demand for loans are stock variables.
Simply equating these flows to the corresponding stocks is not considered good practice in stock-flow-consistent macro-economic modelling.
It is incongruous, because even if we assume that the interest rate does clear "the stock of loan supply" and "the stock of loan
demand", there is no reason why the same interest rate would simultaneously balance savings ( i.e. the increase
in loan supply) and investment ( i.e. the increase in loan demand). So what is the theoretical rationale of assuming that
some interest rate is clearing the loanable funds market (which is defined in terms of flows )?
To illustrate the difference between stocks and flows: the stock of U.S. loans equals around 350% of U.S. GDP (if one includes
debts of financial firms), while gross savings amount to 17% of U.S. GDP. Lance Taylor (2016) presents the basic macroeconomic flows
and stocks for the U.S. economy to show how and why loanable funds macro models do not fit the data -- by a big margin. No interest
rate adjustment mechanism is strong enough to bring about this (ex-post) balance in terms of flows , because the interest
rate determination is overwhelmed by changes in loan supply and demand stocks . What is more, and as stated before, we don't
actually use 'savings' to fund 'investment'. Firms do not use retained profits (or corporate savings) to finance their investment,
but in actual fact disgorge the cash to shareholders (Lazonick 2017). They finance their investment by bank loans (which is newly
minted money). Households use their (accumulated) savings to buy bonds in the secondary market or any other existing asset. In that
case, the savings do not go to funding new investment -- but are merely used to re-arrange the composition of the financial portfolio
of the savers.
Final Problem: The Evidence of a Chronic Excess of Savings Over Investment is Missing
If Summers claims that there is a "chronic excess of savings over investment," what he means is that ex-ante savings are larger
than ex-ante investment. This is a difficult proposition to empirically falsify, because we only have ex-post (national accounting)
data on savings and investment which presume the two variables are equal. However, what we can do is consider data on (global) gross
and net savings rates (as a proportion of GDP) to see if the propensity to save has increased. This is what Bofinger and Ries (2017)
did and they find that global saving rates of private households have declined dramatically since the 1980s. This means,
they write, that one can rule out 'excess savings' due to demographic factors (as per Eggertson, Mehotra & Robbins 2017;
Eggertsson, Lancastre & Summers 2017; Rachel & Smith 2017; and Lu & Teulings 2017). While the average saving propensity of household
has declined, the aggregate propensity to save has basically stayed the same during the period 1985-2014. This is shown in Figure
3 (reproduced from Bofinger and Reis 2017) which plots the ratio of global gross savings (or global gross investment) to GDP against
the world real interest rate during 1985-2014. A similar figure can be found in the paper by Rachel and Smith (2017). What can be
seen is that while there has been no secular rise in the average global propensity to save, there has been a secular decline in interest
rates. This drop in interest rates to the ZLB is not caused by a savings glut, nor by a financing glut, but is the outcome of the
deliberate decisions of central banks to lower the policy rate in the face of stagnating economies, put on a 'slow-moving turtle'
by a structural lack of aggregate demand which -- as argued by Storm and Naastepad (2012) and Storm (2017) -- is largely due to misconceived
macro and labour-market policies centered on suppressing wage growth, fiscal austerity, and labour market deregulation.
Saving/Investment Equilibria and World Real Interest Rate, 1985-2014 Source: Bofinger and Reis (2017), Figure
1(a).
To understand the mechanisms underlying Figure 3, let us consider Figure 4 which plots investment demand as a negative function
of the interest rate. In the 'old situation', investment demand is high at a (relatively) high rate of interest (R0); this corresponds
to the data points for the period 1985-1995 in Figure 3. But then misconceived macro and labour-market policies centered on suppressing
wage growth, fiscal austerity, and labour market deregulation began to depress aggregate demand and investment -- and as a result,
the investment demand schedule starts to shift down and to become more steeply downward-sloping at the same time. In response to
the growth slowdown (and weakening inflationary pressure), central banks reduce R -- but without any success in raising the gross
investment rate. This process continues until the interest rate hits the ZLB while investment has become practically interest-rate
insensitive, as investment is now overwhelmingly determined by pessimistic profit expectations; this is indicated by the new investment
schedule (in red). That the economy is now stuck at the ZLB is not caused by a "chronic excess of savings" but rather by a chronic
shortage of aggregate demand -- a shortage created by decades of wage growth moderation, labour market flexibilization, and heightened
job insecurity as well as the financialization of corporations and the economy at large (Storm 2018).
Figure 4: Secular Stagnation As a Crisis of Weak Investment Demand
Conclusions
The consensus in the literature and in the commissioned conference papers that the global decline in real interest rates is caused
by a higher propensity to save, above all due to demographic reasons, is wrong in terms of underlying theory and evidence base. The
decline in interest rates is the monetary policy response to stalling investment and growth, both caused by a shortage of global
demand. However, the low interest rates are unable to revive growth and halt the secular stagnation, because there is little reason
for firms to expand productive capacity in the face of the persistent aggregate demand shortage. Unless we revive demand, for example
through debt-financed fiscal stimulus or a drastic and permanent progressive redistribution of income and wealth in favour of lower-income
groups (Taylor 2017), there is no escape from secular stagnation. The narrow focus on the ZLB and powerless monetary policy within
the framing of a loanable-funds financial system blocks out serious macroeconomic policy debate on how to revive aggregate demand
in a sustainable manner. It will keep the U.S. economy on the slow-moving turtle -- not because policymakers cannot do anything about
it, but we choose to do so. The economic, social and political damage, fully self-inflicted, is going to be of historic proportions.
It is not a secret that the loanable funds approach is fallacious (Lindner 2015; Taylor 2016; Jakab and Kumhof 2015). While academic
economists continue to refine their Ptolemaic model of a loanable-funds market, central bank economists have moved on -- and are
now exploring the scope of and limitations to monetary policymaking in a monetary economy. Keynes famously wrote that "Practical
men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.
Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back." In
2017, things seem to happen the other way around: academic economists who believe themselves to be free thinkers are caught in the
stale theorizing of a century past. The puzzle is, as Lance Taylor (2016, p. 15) concludes "why [New Keynesian economists] revert
to Wicksell on loanable funds and the natural rate while ignoring Keynes's innovations. Maybe, as [Keynes] said in the preface to
the General Theory, "'The difficulty lies not in the new ideas, but in escaping from the old ones ..' (p. viii)"
Due to our inability to free ourselves from the discredited loanable funds doctrine, we have lost the forest for the trees. We
cannot see that the solution to the real problem underlying secular stagnation (a structural shortage of aggregate demand) is by
no means difficult: use fiscal policy -- a package of spending on infrastructure, green energy systems, public transportation and
public services, and progressive income taxation -- and raise (median) wages. The stagnation will soon be over, relegating all the
scholastic talk about the ZLB to the dustbin of a Christmas past.
"Forget the myth of a savings glut causing near-zero interest rates. We have a shortage of aggregate demand, and only public
spending and raising wages will change that."
But isn't "a savings glut" just the same as "a shortage of aggregate demand"? Or is Keynes so out of favor that this is outre
thinking?
The point is that the "saving glut" is caused bi unequal distribution of income, so it's a good thing that the "shortage of
aggregate demand" is stressed, but still it's just two names for the same thing.
In the end the "money creation" is needed because there is not a "money circulation", IMO.
Putting money into the broadest possible distribution and circulation is the key. It could be done with existing money through
taxation or with new money through the federal fiscal lever.
Given the "Tax Reform" just passed, odds on the first option look vanishingly long. The second option is what the elites do
whenever they want something, normally a war or tax cut. If they want a robust economy, eventually they will pull the fiscal lever.
Feudalism, however, may look better to our depraved current elite crop than any kind of broadly robust economy.
There was a link to an article yesterday called "I write because I hate" that described how incorrect and even dangerous metaphors
can be when it comes to understanding the world. Yours is a case in point.
But isn't "a savings glut" just the same as "a shortage of aggregate demand"
I'm not sure I entirely understand your complaint, but at a first glance a savings glut is one kind of demand shortage, but
not every kind of demand shortage can reasonably be called a savings glut. In one situation you have plenty of resource but no
use for it other than possible future use (savings glut -- you have everything you need so cease purchasing) and in another situation
you have insufficient resource (demand shortage -- you cease purchasing because you can't afford to purchase) but no savings glut.
You don't even have the resources you need for today, never mind saving for tomorrow.
Aye, that's exactly how I understand it, so it is not exactly a chicken-or-the-egg conflation to try to distinguish a savings
glut from a lack of demand.
You seem to have missed the point. The problem is wealth distribution. Mainstream economists don't distinguish who has the
savings in their simplistic models. When the rich already have a widget in every room of their mansion, they are not going to
buy more widgets no matter how low the price of widgets sink. And when the poor have no money, they will not be able to buy the
widgets no matter how much they want them. Demand is not just a function of price. To increase demand, we need a more equitable
form of wealth distribution.
One major difference, according to the author, is that the lack of aggregate demand exists, while the savings glut does not.
The fact of companies sitting on liquidity, is detached from investment, for which they borrow. That investment is lacking because
they do not see good investments, because of a lack of aggregate demand. if they did invest, it would not be constrained
by their 'savings'.
"But this time is different: the glut in savings supply is so large that banks cannot get rid of all the loanable funds even
when they offer firms free loans -- that is, even after they reduce the interest rate to zero, firms are not willing to borrow
more in order to invest."
That needs some explanation. Banks are not offering US businesses free money (excerpt briefly during the Crash). BBB bonds
yields are aprox 4.3% -- and most businesses cannot borrow at that rate (excerpt when posting collateral).
For comparison over long time horizons, the real (ex-CPI) BBB corporate bond rate is 2.5% to 3% -- in the middle of its range
from 1952-1980.
We have considered the political reasons for the opposition to the policy of creating employment by government spending.
But even if this opposition were overcome -- as it may well be under the pressure of the masses -- the maintenance of full
employment would cause social and political changes which would give a new impetus to the opposition of the business leaders.
Indeed, under a regime of permanent full employment, the 'sack' would cease to play its role as a 'disciplinary measure. The
social position of the boss would be undermined, and the self-assurance and class-consciousness of the working class would
grow. Strikes for wage increases and improvements in conditions of work would create political tension. It is true that profits
would be higher under a regime of full employment than they are on the average under laissez-faire, and even the rise in wage
rates resulting from the stronger bargaining power of the workers is less likely to reduce profits than to increase prices,
and thus adversely affects only the rentier interests. But 'discipline in the factories' and 'political stability' are more
appreciated than profits by business leaders. Their class instinct tells them that lasting full employment is unsound from
their point of view, and that unemployment is an integral part of the 'normal' capitalist system.
In other words, one potential reason for business to oppose any efforts at addressing the problem is that the people would
have more bargaining power. The elite are not after absolute wealth or power, but relative power over the rest of us.
Imagine for example if the alternative was passed say some form of social democracy with full employment and MMT policy.
This would undermine in their view their ability to dominate over the rest of us. Now they may arguably be richer (ex: we might
see more money for productive parts of society like say, disease research), but they are willing to give that up for dominating
us. That is what we are up against.
If what you say is true (re social democracy + MMT policies), how then to consider for even one second the further existence
of a business cadre dedicated to upending such an agreement? We always theorize as if an actual resistance to "our" policies will
melt away with the displacement of elite political control. I remember Chile and the "strikes" called to bring down Allende.
The innocence of our imaginations is not only disturbing, but dangerous. Once power is gained and capital has been put in its
place, the fight begins right there, anew. Unless we wish to fall into Stalinist methods of "resolution", consideration for alternate
methods of economic control, and an anticipation of backlash, are in demand if the "people" are to prevail.
In my experience as a union organizer and negotiator the opposition by many employers to unions is not particularily because
of money, but because of power and the erosion of the employer's grip of it by the collective action of workers. Many times in
my experience employers have spent a boatload more money on fighting workers and hiring union-busting attorneys than whatever
wage and benefit increase is being proposed. These employers are acting from their political self-interest rather than the narrow
economic self-interest that is commonly assumed.
Great comments -- the motivation behind the ideas is a need for power and control.
You can look at the first 20 years of the Cold War as a domestic experiment in social control: incomes were allowed to rise
for most people, and inequality was moderated in the interest of politically consolidating the country to support arming and fighting
the war.
By the early 70s our handlers -- as shown in the Powell Memo, say -- had tired of the experiment. With more income, free time,
and education, women, students, non-white people, and the newly prosperous working class were entering into contention on every
terrain imaginable -- and that had to reduced to a manageable level. So they "leaned-out the mix", reduced income for most people,
and bumped up the level of indebtedness and indoctrination.
Now the fuel-air mix is so lean that the engine is starting to miss (for example, the Trump election and the Sanders challenge
to the Dem elite). But it looks like they have no other idea but to double-down on austerity. I guess they assume they can maintain
global financial and military hegemony on the backs of a sick, unfit, indebted, and politically fractious population -- an iffy
proposition. No wonder they seem desperate.
The Trump/Republican tax law tells us (if we needed another message) that the link between economic policy and economic theory
is so weak as the bring into question the point of theorizing in the first place, apart, of course, from convincing (semi)-smart
but fearful people to remain timid in the face of powerful lunacy. Government spending to replace worn out capital, to satisfy
basic material needs of the population, and to underwrite investment in an environmental and educational future worth creating
is, OBVIOUSLY, a no-no to Wall Street, war profiteers, and the large population of yes-men and women who promote fear among the
middle class. We should spend less time contesting economic thinking that is nonsense. Instead why not spend time proposing and
explaining fairly obvious fiscal strategies that will promote a better society, as well as the time that will be needed to defend
these life-affirming proposals against the scholastic nonsense that our saltwater and freshwater scaredy-cat friends will put
out every day to explain why what we propose will wreck Civilization. Let's go on the offense for a change.
precisely, but for the forementioned scholastic nonsense of our salty and fresh feline friends, one would need a salient and
orchestrated defense, as to why such meddling with traditional economic trajectories, will mean that: by foregoing my 'short sided
2018 increase in my personal deduction', will I actually allow myself to feel benign about the sagging state of civilization,
that those 'cats of all breeds', have so eloquently perpetuated upon a 'generation of our peers'.
calling 'message central', the 'greater good awaits'. Yes
I still can't get my head around the fact that these models can persist in the economics literature whilst everyone knows they
are based on flawed assumptions. In science these would quickly end up as part of some distant history. Someone would publish
another model, and slowly everyone would start working with it if it had strong explanatory power. Imagine the grief that climate
modellers would get if theirs models were so poorly grounded.
Thank you for this post. It was as good as Michael Hudson and all the clear thinkers you post for us. Since we got rid of Greenspan
(who admitted that interest rates had no effect on the economy but still freaked out about inflaltion), Bernanke and then Yellen
have had better instincts – not straightforward, but better. If central banks know the loanable funds theory to be nonsense, the
battle is mostly won. MMT will be the logical next step. Public spending/infrastructure is just good grassroots policy that serve
everyone. Even dithering goofballs like Larry Summers. And, as implied above, public spending takes care of the always ignored
problem of private debt levels which suck productive spending and investment out of the economy, because unemployment. It's hard
to believe that academics have been so wrong-headed for so long without any evidence for their claims. Steve Keen's premise, that
these academics ignore both the existence of private debt and the importance of dwindling energy sources is also addressed above.
Storm's point – also made by both old hands and new MMT – that there is not a problem with inflation (too much) if there are slack
resources seems to have morphed into an ossified rule whereby some inflexible academics see slack resources as scarce resources.
What is slack is always a political definition. What is slack today is a filthy environment; there is a great surplus of it. Enormously
slack. That's the good news.
Globalization is a disaster wherever you care to look.
Big corporations like Alphabet, Facebook and Microsoft are holding enormous amounts of liquidity . . .
A better example is Apple, with it's roughly 1/4 trillion dollar cash hoard, beaten out of their Chinese work force in collusion
of the Chinese elite. With wages crushed here and there, because they don't want to pay anyone anything anywhere, where will demand
come from? The Chinese peasant slaving away on an Apple farm has a few square feet of living space, like a broiler chicken in
a Tyson cage so where is she going to put the new furniture she can't afford?
Banks create credit, money, and thus purchasing power. [ ] The vast majority of what we count as "money' in modern economies
is created in this fashion: in the United Kingdom 98% of money takes this form .
The banks are the MMT practicing intermediary between the federal government and the peasants.
So much goodness, don't know where to start. It's a long post. It's my day (singular) off. I'm going long. Deacon Blues* applies.
This:
Ever since Knut Wicksell's (1898) restatement of the doctrine, the loanable funds approach has exerted a surprisingly strong
influence upon some of the best minds in the profession. Its appeal lies in the fact that it can be presented in digestible
form in a simple diagram (as Figure 1), while its micro-economic logic matches the neoclassical belief in the 'virtue of thrift'
and Max Weber's Protestant Ethic, which emphasize austerity, savings (before spending!) and delayed gratification as the path
to bliss.
Now we're talking. This puts the doctrine in the context of its parent beliefs.
The way I see it, beliefs:economics as operating system:application as mythology:religion. So shorter Storm: The LFF is a BS
application for a BS OS.
Been dawning on me lately how neoliberalism is the spawn of a degenerate parent belief system, too. I was even thinking of
Weber just the other day.
By speaking in apparently objective, pragmatic, "realistic" terms, public figures are notorious for "dog-whistling" their occult
beliefs in terms their congregations hear loud and clear. When Her Royal Clinton's even more notoriously damned to hell half the
population as "deplorables," she tipped her hand. The obscure term, ephors, is very instructive here.
To refesh the readers memory, "Schumpeter (1934, p. 74) called the money-creating banker 'the ephor of the exchange economy'
-- someone who by creating credit (ex nihilo) is pre-financing new investments and innovation and enables "the carrying out of
new combinations, authorizes people, in the name of society as it were, to form them."
Not so fast, though. Who were the original ephors?
Herodotus claimed that the institution was created by Lycurgus, while Plutarch considers it a later institution. It may
have arisen from the need for governors while the kings were leading armies in battle. The ephors were elected by the popular
assembly, and all citizens were eligible for election. They were forbidden to be reelected. They provided a balance for the
two kings, who rarely cooperated with each other. Plato called them tyrants who ran Sparta as despots, while the kings were
little more than generals. Up to two ephors would accompany a king on extended military campaigns as a sign of control, and
they held the authority to declare war during some periods in Spartan history.[2]
According to Plutarch,[3] every autumn, at the crypteia, the ephors would pro forma declare war on the helot population
so that any Spartan citizen could kill a helot without fear of blood guilt.[4] This was done to keep the large helot population
in check.
The ephors did not have to kneel down before the Kings of Sparta and were held in high esteem by the citizens, because of
the importance of their powers and because of the holy role they earned throughout their functions.
Ain't that something. We don't call it "class war" for nothing. More on the crypteia:
The Crypteia or Krypteia (Greek: κρυπτεία krupteía from κρυπτός kruptós, "hidden, secret things") was an ancient Spartan
state institution involving young Spartan men. Its goal and nature are still a matter of discussion and debate among historians,
but some scholars (Wallon) consider the Krypteia to be a kind of secret police and state security force organized by the ruling
classes of Sparta, whose purpose was to terrorize the servile helot population. Others (Köchly, Wachsmuth) believe it to be
a form of military training, similar to the Athenian ephebia.
So Schumpeter's metaphor is way too apt for comfort. Gets right under my skin.
For a modern equivalent of the pro forma declaration of civil war, I'm thinking "election cycle." Hippie-punching and
all that goes a long way back, eh?
Let's cut to the chase: what's all this talk of econ as religion telling us? ISTM arguing with neoliberals as they frame the
debate is like arguing with theologians in their terms. My learning psych professor, Robert Bolles, regarding the dismantling
of ascendant BS models, always said, you don't take down an enormous tree leaf by leaf, you go where it meets the ground. Where
does neoliberalism meet the ground? And its parent belief system?
Neoliberalism is so poorly grounded, it's shorting out all over the place. This could be easier than it looks. Storm's argument
is compelling (at least to this newbie). What are its other weakest links? (Not being rhetorical here. I really don't know. A
little help?)
Speaking of Weber, one of the major factors in the Reformation was the utter failure of the Catholic church to be able to produce
a valid calendar
. The trouble is of course, in their mythos, you have to perform the proper rituals at the proper time and often in the proper
place, or you will fry in hell forever and ever amen.
Obviously, then, the calculation of the equinox assumed considerable and understandable importance. If the equinox was wrong,
then Easter was celebrated on the wrong day and the placement of most of the other observances -- such as the starts of Lent
and Pentecost -- would also be in error.
As the Julian calendar was far from perfect, errors did indeed begin to creep into the keeping of time. Because of the inherent
imprecision of the calendar, the calculated year was too long by 11 minutes and 14 seconds. The problem only grew worse with
each passing year as the equinox slipped backwards one full day on the calendar every 130 years. For example, at the time of
its introduction, the Julian calendar placed the equinox on March 25. By the time of the Council of Nicea in 325, the equinox
had fallen back to March 21. By 1500, the equinox had shifted by 10 days.
The 10 days were of increasing importance also to navigation and agriculture, causing severe problems for sailors, merchants,
and farmers whose livelihood depended upon precise measurements of time and the seasons. At the same time, throughout the Middle
Ages, the use of the Julian calendar brought with it many local variations and peculiarities that are the constant source of
frustration to historians. For example, many medieval ecclesiastical records, financial transactions, and the counting of dates
from the feast days of saints did not adhere to the standard Julian calendar but reflected local adjustments. Not surprisingly,
confusion was the result.
The Church Saves Time
[Doncha just love that succinct bit of myth-making? smh]
The Church was aware of the inaccuracy, and by the end of the 15th century there was widespread agreement among Church leaders
that not celebrating Easter on the right day -- the most important and most solemn event on the calendar -- was a scandal.
A functioning mythology tells one how to be human right now. The Catholic church couldn't even tell people what date it was,
putting not just ephemeral souls in peril should one die, even more of a daily dread in those days, but lives and property were
increasingly at risk.
ISTM we're in an analogous situation. Our two high holies, Wall Street and Washington, DC, are increasingly irrelevant to us
helots. They're of no use to us in ordering our daily lives. In fact, they've becoming openly hostile, dropping any pretense of
governing for the common good, and I'm not referring only to Trump, eg, whatever happened to habeas corpus ? "If you like
your health plan, you can keep it." The betrayals come fast and furious, too fast to keep up.
Others are rejecting science. A schism here, a schism there, pretty soon it all cracks up one day "outta nowhere." And I do
mean "one day."
Moving right along, let's look at "the virtue of thrift."
In the formative years of United States history, prominent thinkers such as Ben Franklin promoted a "thrift ethic" that
encouraged hard work, frugal spending on self and generous giving to charity, he asserted, maintaining "thrift" was simply
the secular term for the religious stewardship principle . And institutions developed to support that ethic, he noted.
That's what I'm saying: secular institutions are the operationalizations, the applications, of belief systems, and further,
we can study them instead of just saying "religion = bad = no further analysis required" and then dismissing it all out of hand.
As with LF-supply and LF-demand, secular and sectarian are not the independent variables they're made out to be, as argued
so well by Cook & Ferguson right here on NC in The
Real Economic Consequences of Martin Luther , eg, "[Henry VIII] did not abolish the papacy so much as take the pope's place."
Same goes for today, IMNSHO: Our "secular" leaders are sectarian high priests in mufti.
The Baptist article also goes on to say what the flock people should do: ignore Wall St. and DC. Unsuprisingly, it's also chock
full of punching downwards and victim-blaming. Payday lending and lotteries are to blame, they say. People just need to be more
thrifty , which apparently means, impoverish yourself for the betterment of your betters. Or else.
When HRC damned half of us to Hell, she was dog-whistling loud and clear in a tradition going at least as far back as the wars
of the ephors on the helots. When the high priests of our high holy temples of finance tell us we need more austerity, although
they speak in terms apparently objective and especially dispassionate, it's nothing but the failed preachings of the failed priests
of a failed church.
Looked at as comparative mythology, and speaking empirically as well (much obliged to the present author and our hosts, sincerely)
neoliberalism is no way of being human.
Sure, us nerds get that. But wonky discussions don't move people. The execrable Mario Cuomo is credited with saying, "You campaign
in poetry, you govern in prose," and I think it's profoundly true. Telling my friends we've debunked the Loanable Funds Fallacy
will get me nowhere.
Oy vey. The immense satisfaction I had been feeling, of seeing through neoliberalism all the way to its core, sure was short
lived. Now I need to know what MMT says about being human. This is what happens when you start thinking in words, you know. It
never ends!
I've heard Steve Keen's writing won't be much help in popularizing MMT in time. Who's a witty MMTer? Who can express its way
of being human in one-liners? Who's punchy?
(Administrivia: "Suppose there is an exogenous (unexplained) *rise* in the average propensity to save. In reponse, the LF-supply
curve shifts down ." Shouldn't that be "drop"?)
* This is the night of the expanding man
I take one last drag as I approach the stand
I cried when I wrote this song
Sue me if I play too long
This brother is free
I'll be what I want to be
Very interesting rant, Knowbuddhau. Imo all we have to do is get over gold. It made sense before the days of sovereign fiat
that you saved your coins before you spent them. How else? But fiat is the essential spirit of money while gold was/is a craze.
And the Neoliberals are unenlightened just like the Neocons against whom they pretend to react. But they are reactionaries regardless.
That's their problem. All reaction, no action. When Storm refers to Kalecki above saying the original sin of economics was confusing
stocks with flows, I take it to mean confusing fiat with gold in a sense. Once upon a time a store of value (a pouch full of gold
coins) was the same thing as a medium of exchange. Not any more. Fiat is the only mechanism, spent in advance to promote social
well being, that can create an "economy" in this world of zillions of people.
Isn't a bit of an irony that the academic papers being debunked here were commissioned by the Institute for *New* Economic
Thinking ? Sad to see its also been corrupted by the neoliberal virus (political Ebola).
The author writes about the fuctional LF paradigm: "Banks, in this narrative, do not create money themselves and hence cannot
pre -finance investment by new money. They only move it between savers and investors." -- Note that that narrative doesn't
even make sense *within* the loanable-funds model, because with fractional reserve banking, even if banks were required to loan
against pre-existing deposits, they could amplify each dollar of same into multiple units of newly-created credit money. The fact
that what really happens goes even further and entirely omits the need for pre-existing funds from the banks' monetary legerdemain
is the reason for my pet term for the "loans create deposits" reality: "fictional reserve banking."
Aggregate demand increases investment only to the extant that it increases profitable opportunities. If costs remain constant,
then obviously an increase in demand increases profitability. But an increase in wages doesn't merely increase aggregate demand,
it also increases aggregate costs because that's what a wage is to a firm. If aggregate wages were boosted by $1 trillion, consumption
will be boosted by less than 100% of that (workers will save some of their increased income) while firms will have to pay the
full $1 trillion in increased wages if they are to employ the workers. So how is increasing wages supposed to increase profitability
and investment? It seems like it would do the opposite.
We really need to look more at profit. The aggregate profit rate is determined by the cost of the total capital employed in
relation to the output. If the costs rise faster than productivity growth, then profitability falls. How do aggregate costs rise?
By capital accumulation, by an increase in savings and investment. Thus, it would seem that stagnation can only be reached if
too much capital has been accumulated without a corresponding increase in productivity. This hypothesis doesn't rely on the loanable
funds theory (it doesn't matter whether the money exists before it is spent), but it is more similar to the savings glut explanation
because it is the accumulation of capital that leads to the fall in profitability. The suppression of wages is an effect, an attempt
to create profitable opportunities when there are none.
Your model is correct when you limit yourself to the variables in your model. Real life economies are complex, dynamic interactions
of many variables. At different times some variable become more important than others.
I think your variable, capital accumulation, is itself a complicated mix of many variables. Sometimes the cost of "capital
accumulation" may be controlling, and sometimes not. It also depends on which variables within capital accumulation are having
the most impact.
I think one of the major problems of the theory of supply and demand is that it may be true as a static model (all other things
being equal), but the economy (and life) are not static. Unless you can take dynamic effects into account, then this static or
even quasi-static model will just not represent what actually happens. This is just another way of saying what this article says.
Over time, the supply curve and the demand curve interact. There is hardly, if any, point in time when all other things aren't
changing.
In my world of simulating the behavior of integrated circuits, the problem involves non-linear differential equations, not
just non-linear algebraic equations.
Here is another problem. " by the national accounts[,] identity of saving and investment (for closed economies),"
Accounting is also a static snapshot of a dynamic system. A bank creates a loan payable in let's say 30 years. The spending
occurs immediately. In accounting terms these two items balance. However, on impact on the economy, they do not balance. Why else
would capitalism have noticed the value of buy now, pay later?
This is no longer a chicken and egg problem of which came first, the chicken or the egg. In real life, there are lots of chickens
and lots of eggs. Which came first is irrelevant. Chickens create eggs and eggs create chickens.
Models are a simplification of reality. They apply best when the things that were simplified away don't matter much. They fail
when the things that were simplified away become important. So, when does the loanable funds model apply?
IMHO, the loanable funds model applies when there is a run on the bank. When the fractional reserve banking system is running
smoothly, the loanable funds model is irrelevant. That's why banks have reserves and monetary systems have central reserve banks.
These reserve systems let us ignore loanable funds models.
As reported by the permanent representative of the International Monetary Fund in the
Ukraine, Jost Longman, the Kiev authorities should increase Ukrainian gas tariffs to the level
of import parity. Longman argues that an increase in gas prices will have a positive effect on
the development of the free market and will teach the Ukrainians to use natural gas
economically. "In the end, the final goal is the implementation of a free gas market. On the
way to this, it is important to continue to adjust the price of gas in accordance with the
price of imports", said Longman. "One price for all types of consumer also eliminates the space
for corruptio," he added.
On 20 Dec., a court in Slovakia stopped gas supplies to "Naftogaz of Ukraine". The
decision was made pursuant to the decision of the Stockholm arbitration over a claim made by
the Italian company IUGas that its Ukrainian consumer owed it money.
The total amount of the claim, including interest and penalties, is approximately $21
million. An arbitration ruling was accepted on 19 December 2012 and relates to unpaid 2007
transactions .
Under international law, if the defendant has not fulfilled the resolution of the
arbitration, the plaintiff may apply to the courts of other states with a request that the
ruling be executed.
"Naftogaz of Ukraine" is analyzing the situation to determine its next steps, according
to the Ukrainian edition "Mirror of the Week".
For 11 months of 2017, "Naftogaz of Ukraine" had bought in Eastern Europe 20.9 billion
cubic metres of gas. Most of the supplies -- more than 8 billion cubic metres -- are in
Slovakia.
As written in iz.ru, arbitration is under consideration in Stockholm as regards the
lawsuit made by "Gazprom" against "Naftogaz", the decision on which will be issued by the court
no later than February next year. The adjusted amount of the claims made by the Russian company
was more than $ 37 billion.
All this is the Aggressor State's doing!
For the sake of freedom and democracy, the Ukraine must be supported!
Gazprom has responded to Naftogaz's statements about victory in court
The Stockholm arbitration has satisfied most of Gazprom's claims made against Naftogaz
Ukraine regarding payment for supplied gas, the company has said in a statement. In Moscow.
They stressed that the main demands of the Ukrainian side by the court had been
rejected.
The court did not recognize the right of Naftogaz to review the price of gas, the
deliveries of which were carried out from May 2011 to April 2014. Also, the Ukrainian side
was denied recovery of overpayment. Gazprom noted that the court found it necessary to apply
the "take or pay" principle (annual payment of a minimum amount of gas) before the expiry of
the contract.
"Naftogaz" has to pay back $2 billion in arrears and interest for late payment to
Gazprom. The Ukrainian side is also obliged from next year to take 5 billion cubic metres
from Russia annually.
Earlier on Friday, Naftogaz said that the court had awarded the victory to the
Ukrainian side. In Kiev, they stressed that Gazprom's "take-or-pay" requirements had been
"completely" rejected by the court, and the gas price for the second quarter of 2014 had been
lowered to $ 352 per thousand cubic metres.
The court considered contracts for the supply of gas from Russia to the Ukraine, as
well as gas transit through the Ukraine. They were signed back in 2009. The Ukraine, insisted
"Gazprom", did not get any gas 2012-2014, and also in individual quarters of 2015 and 2016.
"Naftogaz" asked the court to review the gas prices, and that overpayment be reimbursed and
that the ban on further resale of gas be cancelled.
Kremlin propaganda from a "Kremlin controlled" newspaper?
"Naftogaz won the gas sales arbitration case against Gazprom on all issues in dispute,"
Naftogaz said in an emailed statement.
It said the ruling was worth around $75 billion to Naftogaz in the long term, but
did not give a breakdown on how it reached the estimate. [My stress -- ME]
Meanwhile Gazprom said the court had satisfied most of Gazprom's claims and ruled that
the main terms of the contract between Naftogaz and Gazprom were valid.
Gazprom said the Stockholm court had ordered Naftogaz to pay more than $2 billion to
Gazprom for gas supply arrears and that it had also ordered Naftogaz to buy 5 bcm of gas from
Gazprom annually from 2018.
Estimated $75 billion in the "long term"?
Have to pay $2 billion to Gazprom in arrears now (not mention interest).
From 2018 (i.e. in just over a week's time) have to buy annually 5 bcm of gas off the
"aggressor state".
Of course; that's what Klimkin told them. Why should they check? Klimkin is always reliable,
and I'm sure he tweeted a press statement directly to them. Let them hold a Naftogaz victory
party if that's what they feel like doing. Just don't spend Russia's money on it. Because I
notice Ukraine has to pay Russia. I did not see anything in there about Russia having to pay
Ukraine. And so Ukraine can have all of that kind of victories it wants.
Ultimately, the court greatly reduced the amount of gas that Ukraine is contractually
obligated to buy from Russia. From 2018, "Naftogaz" should annually take and pay for up to 5
billion cubic metres instead of the original 52 billion cubic metres in any case it means the
resumption of gas purchases in Russia, which stopped in 2015, since when "Naftogaz" has been
buying all its fuel through reverse flow from Europe.
Investors should "think twice" about putting money into Nord Stream 2 due to
"uncertainties" around the Russian pipeline, the EU energy commissioner told
EUobserver.
"I would really think twice, or many more times, simply because there are a lot of
uncertainties," Maros Sefcovic said in an interview.
"It's the decision of the project promoters if they want to proceed in this atmosphere
which might lead to legal disputes down the line," he said
"Nord Stream 2 is supported by five major western European energy companies that have
each committed up to almost €1 billion to the implementation of the pipeline," the
consortium's Sebastian Sass said.
"It shows that there is both market demand and great confidence in Nord Stream 2," he
added.
Stefan Meister, an expert at the German Council on Foreign Relations, a think tank in
Berlin, also said Russia had little to worry about from the EU.
"In Germany the overall impression is, that the project will come Merkel is not against
it. That means she supports it," he said.
Meister said the fact Gazprom was prepared to dig into its own pockets meant "the
investment risks are limited". He added that energy companies were used to working "in an
even more risky environment" in other parts of the world.
"Except the US sanctions, there are no real risks to stop the project," he said
####
Plenty more of Sefcovic blowing hot air out of every orifice at the link. Did someone slip
him some cocaine instead of sugar in his coffee before the interview? All mouth and no
trousers.
"... I'd like to believe either the Repubs or Dems were the answer, except both are near unanimous in their support for the military industrial complex and its expanding wars. Note the 98-2 vote to make Russia a permanent enemy. I believe the resistors were bipartisan, lonely as they are in either party, in reality separate branches of an imperial War Party. ..."
"... Let me be the dink who reminds you: Peak Oil ..."
"... As a clever newspaper writer said about Jesse Ventura: Jesse is a lot smarter than most folks think he is, but not nearly as smart as he thinks he is. Like Jesse, Trump is smart enough to avoid unnecessary war. However, war may just become "necessary" when the heat of his Russia investigation becomes unbearable, and Trump needs the ultimate distraction. When (not if) that happens, either North Korea or Iran will be in trouble -- perhaps both. Millions will most likely die, billions of dollars will be spent, and the US will create an entirely new generation of terrorists. This will not end well. ..."
"... EngineerScotty wrote: "The foreign policy of a President Hillary Clinton wouldn't be the amateur hour that we've gotten so far with Trump" No, it would be the ruthlessly effective professionalism of the reset with Russia and the ouster of Qaddafi. /sarc She wanted and wants Assad deposed. How well would that have gone? ..."
"... "In the meantime, Frack Baby Frack! The less oil we have to import from there, Venezuela, or anyplace crazy the better." That would be sane. But the elites have decided to export it at a cut rate, to undermine Russia as the supplier in Europe, in order to foment regime change by crashing the Russian economy. Why did you think we had such low fuel prices all of a sudden? ..."
"... No, the fuel extracted from American soil does not accrue to the benefit of the American people, but to the profits and plans of elites ..."
"... That would be sane. But the elites have decided to export it at a cut rate, to undermine Russia as the supplier in Europe, in order to foment regime change by crashing the Russian economy. Why did you think we had such low fuel prices all of a sudden? ..."
"... No, the fuel extracted from American soil does not accrue to the benefit of the American people, but to the profits and plans of elites. ..."
"... Oil obtained by fracking is far more expensive to produce than oil obtained by simply drilling a well in the Arabian Desert and quickly finding a gusher. The US can meet its domestic needs, but isn't that great of a net exporter -- prices have to be sufficiently high before high-volume production becomes cost-effective. ..."
"... Noah and Engineer Scotty -- There is a reasonable compromise. Both of you are right. Trump is a disaster and we know Clinton was terrible. There is no point in arguing about whether she would be worse. I happen to think In some ways she wouldn't be as bad. She wouldn't be engaged in stupid twitter fights with dictators. But she might be better at leading us into some stupid war in Syria. Trump will stumble into some war with no support. Clinton would have had lots of support for whatever mindlessly stupid bloodbath she wanted to start. ..."
"... One of my biggest concerns about Trump's foreign policy–and a major difference from how Hillary would have governed–is his utter disdain for diplomacy. As noted, he (and Tillerson) have been busy setting the State Department ablaze, and many, many, many seasoned diplomats (career civil servants, not political appointees) have left Foggy Bottom, some of their own accord, some not. Some Trump defenders claim this is part of "draining the swamp", and many critics claim this is a purge of anyone not loyal to Trump personally–and these two claims may be opposite sides of the same coin. ..."
Trump won't get dragged into war, although his conniving nature may try to make it look like
that if it serves some ulterior motive of his. Trump will race on his own volition (not get
dragged by others) to war because he's already been chomping at the bit for war as evident in
how he's been baiting Iran and N. Korea alike, just as Bush baited Saddam Huessein, then bait
and switched Osama Bin Laden for Saddam. So if not war with one (Iran), then with the other
(N. Korea), or with both.
Why? Because like all Republican politicians, Trump's a businessman and proud of it,
(Pride goeth before destruction and a haughty spirit before a fall.) And because war is good
for American business, a lesson that was learned from WWII from which was created the
military-industrial-complex and the Permanent War Economy under which we've lived ever
since.
That bit's key to understanding the whole unwavering GOP attack on social services and
desire to deregulate and privatize everything, not because of evil "socialism" as the
Republican constituency is hypnotized with propaganda into believing, but because there's no
money to be made in government expenditures otherwise. The whole GOP agenda has been and is
about public expense for private gain. All the blather about shrinking the government is
smokescreen. The real agenda is about directing all government spending towards private
contractors with none wasted on things like social services, medicare, or Social
Security.
Economic aspects of politics can't be ignored and separated from social aspects of
politics which is how conservatism in America has helped create the current political mess,
by turning a blind eye and dittohead to economic matters in order to push the chosen,
preferred social agenda.
As Coolidge said, "The business of America is business." So since the US is ruled by money
of markets, there can be no getting one's moral back up and all Jesus over social immorality,
only to ignore the immorality of the marketplace and thereby fail to push for a moral economy
along with a moral society. Such misidentification of the problem will only result in missing
the mark, in inappropriate rather than on the mark effective solutions to problems.
Trump is simply a braggart who likes to exaggerate by talking in superlatives, so it's
fitting that Trump ran on the GOP ticket, because he's but another child of the Father of
Lies, who superlatively lies about his wealth being billions instead of millions to swell his
pride in being a mammon worshipper, and going to war is and will be as it certainly has been
part and parcel of such hubris.
To be fair, the Saudi dictators have always been best friends with America's elites –
think Bandar Bush, the grounding of all air traffic in the United States after 9/11, except
the Saudi evacuation planes spiriting Saudi royals out of the country so they could not be
questioned. And there is the locus of the Likud Israeli party friendship with the Saudis, and
Trump is certainly nothing if not onside with his good friend, the Israeli PM.
I'd like to believe either the Repubs or Dems were the answer, except both are near unanimous
in their support for the military industrial complex and its expanding wars. Note the 98-2
vote to make Russia a permanent enemy. I believe the resistors were bipartisan, lonely as
they are in either party, in reality separate branches of an imperial War Party.
Make no mistake: if there is going to be an attack on Iran by Americans, it is not because
MbS wants it, it is because the Americans love war.
I am convinced that most (some 90%) Americans are open or closeted
Neo-cons/liberal-interventionists/war-hawks. Some are shamelessly and openly so (John
Bolton), but many are so without showing it or even being aware of it. The hawk in them is
restlessly waiting for an opening, an excuse, to come out and proclaim what they have ever
been
Bush 41 dragged us into a coalition war over Kuwait. Clinton dragged us into a coalition war
in the Balkans. Bush 43 dragged us into a war in Iraq. Obama dragged us into a secret war
when he destabilized Syria and Lybia, which unleashed ISIS. All for the right reasons, of
course (sarcasm).
You might be right, but I fail to see how that would be different than the last 30
years.
BTW, Politico has a story about how the Obama Administration shot down DEA drug trafficking
investigations of Hezbollah to support the Iran nuclear deal. I would like to read your
comments about it, particularly in light of the comments you made above about Trump.
Parents always tell kids to choose their friends carefully. With pals like Netanyahu and the
Saudi bogus "crown prince", Trump clearly didn't follow that advice.
That video looks like a Nazi's wet dream, I mean the undiluted fascistic element is
overwhelming, it's like getting a peek at an alternate dimension, not even a society, of pure
militaristic "hathos" festooned by a limitless cloud of lies.
The worst of humanity is engrafted in that video, by which, I mean the unalloyed lying
stupidity of war: imperialist expansionism, nationalist revanchism, and plutocratic
supremacism, haloed by the grey mist–the dehumanzing pixelated mist–of the most
dehumanizing endeavor man can undertake, for the most dehumanizing of modern causes:
fascistic capitalism, the kind that fueled WWII (In this latter case, under the guise of
religious supremacism or religious survivalism, but, in any case, only an obvious guise as
far as the grotesque House of Saud is characteristically concerned).
Echoing Noah above, this doesn't appear to be a production of the Saudi government, but
having a contingent of the Saudi population gung-ho for a Sunni/Shi'a Ragnarok is concerning
in itself. Both KSA and Iran will fight each other to the last Yemeni before any direct
conflict arises.
This is the scenario that should be keeping us all up at night:
Fran Macadam: To be fair, the Saudi dictators have always been best friends with America's
elites – think Bandar Bush, the grounding of all air traffic in the United States after
9/11, except the Saudi evacuation planes spiriting Saudi royals out of the country so they
could not be questioned.
It wasn't the royals -- it was the bin Laden family itself. The people who knew Osama
best. I never understood why we didn't insists that, with all airplanes grounded, they had to
have a US Air Force pilot -- who then would have flown them to Gitmo for a sit-down on their
newly famous relative. Instead the highest levels of government -- how high did you have to
go to get permission to fly? -- broke into their busy schedules to be briefed and let them
go.
The whole thing still stinks. We really need to have an investigation into the role of
Saudi Arabia in American foreign policy; especially the Iraq Wars.
In the meantime, Frack Baby Frack! The less oil we have to import from there, Venezuela,
or anyplace crazy the better.
President Trump's new best friend, MBS, is going to get us dragged into a new war in the
region. Watch.
But her E-mails Good Thing the witch from Chappaqua isn't in the White House
ROTFLMAO!!!
If the Saudis are foolish enough to try that they will get their ass so thoroughly kicked
that "who were the Al Saud?" will a trivial pursuit question on par with "Who were the
Romanov's?" 10 years from now, and if the US is foolish enough to let them do that, watch the
Global Economy collapse as the Strait of Hormuz gets closed for a few years.
Dr Talon,
The best military in the Middle East is Hezbollah (Trained & equipped by the Iranian,
blooded and forged by the Israelis) the only thing they don't have is an air force. Let them
have a half way decent air wing, and they would be on par or better than the USMC.
Duke Leto,
All that beautiful hardware has to be put to good use, after all if you don't use it you
can't replace it. Think of all that beautiful money to be made in hardware replacement
Noah,
Trump also declined to support Kurdish independence, which the Israeli right supports
and would have undermined Iran (which has a restive Kurdish minority) and Iran ally
Iraq.
Supporting the Kurds would have pissed off his best buddy Erdogan, in that Turkey has the
largest Kurdish minority population of all the Middle Eastern countries (about 20% of
population) and the largest military in the Middle East. Not a good idea, especially if you
don't want them to become buddy buddy with their eastern neighbor.
Oh, did I mention that Saudi Arabia has a substantial Shiite minority (10 to 15% of the
population) who isn't exactly thrilled to live under Wahhabi rule.
Watching the Saudis (a country that has to import plumbers from South Asia because it's
below the dignity of the locals to be plumbers) getting their asses handed to them, watching
the Dumpster's poll rating jump up to the 80% mark before cratering down to 15%, watching the
Trump recession that would follow would almost be worth it if I didn't have to suffer the
consequences of "Real American's(TM)" idiocy. It would be almost as much fun as watching
Brexit.
And President Ted Cruz or Clinton would be different how?
It's a pretty safe assumption that a President Clinton would work to uphold the treaty her
predecessor signed with Iran. Cruz, like the rest of the GOP hawks, would probably (like
Trump) be actively working to undermine it and provoke Iran. She'd want more money for social
and infrastrucure spending, less for military.
Pavlos has it right. The GOP (and a lot of Democrats) think war is good for business and
are happy to funnel obscene amounts of money to the military-industrial complex under the
guise of "national security."
It depends on what you imply when saying that it has lit up Arab social media, Rod. "Damn
those Saudis are strong!" type of reaction means that social media are lit up. "LOL, what
sorry comedian a-holes those Saudis are!" type of reaction also means that social media are
lit up.
I can't decide if this truly 'government' backed or some Saudia wackos let their freak loose.
At least the wackos are going after Iran and not the US. It is probably really nothing than
an expensive Youtube comment but it does indicate that Saudia Arabia population really
desires War somewhere and somehow.
Although this is probably forgotten in 1 month, the Middle East appears to be following
similar paths as Europe in the 1900 – 1914. We have lots of secret Allies and treaties
with enormous tensions that is hungry for a battle.
The foreign policy of a President Hillary Clinton would probably be too hawkish for my
tastes–and certainly she wouldn't enjoy strong relations with Russia (given evidence,
in this hypothetical, that Putin was actively interfering in the election to support her
opponent)–but it wouldn't be the amateur hour that we've gotten so far with Trump.
Clinton would still have a functioning diplomatic corps, instead of sacking half the State
Department. She wouldn't be trading insults with foreign heads of state on Twitter. She'd
likely be not trying to undermine the Iran deal. And she'd not be performing fellatio on the
likes of Netanyaho, Ergodan, and MbS, as Trump has been eagerly doing.
Really. At what point does the "as bad as Trump's foreign policy has been, Clinton wudda
been worse" refrain stop? Trump is already the worst foreign policy president since
LBJ–he only needs a Vietnam War to his name to blow past him. And he has none of
Johnson's domestic achievements.
The last time an Arab dictator tried to attack the Iranians he could only get a draw that
bankrupted him and lead, by a series of second-order consequences, to his downfall.
The Iranians had just, when they were attacked by Iraq, had thier revolution and had
liquidated thier officer corps. Think about that. Iranians as polity may, for the most part,
dislike the rule of the clerics, but they are intensely patriotic and will fight to the last
man/woman to defend the Persian homeland. Underestimate them at your peril.
When Iran's proxies in Yemen -- the Houthis -- are launching missiles at airports and the
Royal Palace, I don't think this type video is very surprising and as propaganda goes really
a big deal. It is pretty low level saber rattling if it is a Saudi Government produc, or what
you would see a million times over among Americans if it is the work of just a bunch of young
Saudi yahoos. Oh, and MSAGA -- Make Saudi Arabia Great Again!
Israel has never fought side-by-side with the US in any of the wars it has sent the us to
fight [and die for and pay for] at the instigation of the settlers/occupiers.
Since the U.S. has never fought any wars for Israel, that makes the score 0:0 then.
But her E-mails Good Thing the witch from Chappaqua isn't in the White House
What ignorant drivel. Clinton is plenty hawkish (she cheered on Trump's April missile
strike on Assad, and urged him to go much further). Moreover, as I wrote above, this video
seems to be youthful fan fiction, not carrying any Saudi government imprimatur (let alone
endorsement from Trump). Rod is speculating that the US will eventually join Saudi Arabia in
a war against Iran, but Rod is no seer, whatever his other attributes.
Supporting the Kurds would have pissed off his best buddy Erdogan
Poppycock. Trump is hardly Erdogan's poodle. Trump gave heavy armaments to the Syrian
Kurds (O had limited their support to small arms) and wants to move our embassy to Jerusalem,
both decisions angering Erdogan. Erdogan would also liked to have seen Assad deposed.
I'm not going to offer an opinion on the efficacy of Saudi Arabia's army, and neither should
you. Remember how everyone warned us about Iraq's Republican Guard?) Few of us know what
we're talking about.
On the larger point: are you all taking drugs? Some video "lights up" Arab social media
and therefore Trump is taking us to war against Iran?? What?!
(especially the Straits of Hormuz aspect. The Iranians just have to mine it so that one or
more cargo ships get holed and got to the bottom at strategic bends and nobody ain't shipping
no Saudi Oil nowhere. Have fun with $300/bbl oil economies, guys China will make out like a bandit, considering
it's now the world leader in solar power.
As a clever newspaper writer said about Jesse Ventura: Jesse is a lot smarter than most folks
think he is, but not nearly as smart as he thinks he is. Like Jesse, Trump is smart enough to
avoid unnecessary war. However, war may just become "necessary" when the heat of his Russia
investigation becomes unbearable, and Trump needs the ultimate distraction. When (not if)
that happens, either North Korea or Iran will be in trouble -- perhaps both. Millions will
most likely die, billions of dollars will be spent, and the US will create an entirely new
generation of terrorists. This will not end well.
EngineerScotty wrote: "The foreign policy of a President Hillary Clinton wouldn't be the amateur hour that
we've gotten so far with Trump" No, it would be the ruthlessly effective professionalism of the reset with Russia and the
ouster of Qaddafi. /sarc She wanted and wants Assad deposed. How well would that have gone?
She wouldn't be trading insults with foreign heads of state on Twitter
Clinton has insulted Putin any number of times on social media and in interviews. On the
Colbert program just last September, she claimed that he worked against her election because
of sexism, and claimed that he "manspread" during a meeting with her.
And she'd not be performing fellatio on the likes of Netanyaho, Ergodan, and
MbS
Netanyahu and Erdogan do not get along, so it's pretty hard to please both of them
simultaneously. Like muad'dib, Scotty has it in his head that Trump is a poodle of Erdogan,
but the latter would disagree. Heavy weapons to Syrian Kurds, Jerusalem -- Erdogan is not
fully pleased with Trump.
If Scotty thinks the Clintons are hostile to Saudi Arabia, he hasn't been paying attention
(does he ever?).
Trump is already the worst foreign policy president since LBJ -- he only needs a
Vietnam War to his name to blow past him
"In the meantime, Frack Baby Frack! The less oil we have to import from there, Venezuela, or
anyplace crazy the better." That would be sane. But the elites have decided to export it at a cut rate, to undermine
Russia as the supplier in Europe, in order to foment regime change by crashing the Russian
economy. Why did you think we had such low fuel prices all of a sudden?
No, the fuel extracted from American soil does not accrue to the benefit of the American
people, but to the profits and plans of elites.
As a clever newspaper writer said about Jesse Ventura: Jesse is a lot smarter than most
folks think he is, but not nearly as smart as he thinks he is. Like Jesse, Trump is smart
enough to avoid unnecessary war. However, war may just become "necessary" when the heat of
his Russia investigation becomes unbearable, and Trump needs the ultimate distraction. When
(not if) that happens, either North Korea or Iran will be in trouble -- perhaps both.
Millions will most likely die, billions of dollars will be spent, and the US will create an
entirely new generation of terrorists. This will not end well.
Except that "heat" of his investigation is almost extinguished already.
Noah and Engineer Scotty -- There is a reasonable compromise. Both of you are right. Trump is
a disaster and we know Clinton was terrible. There is no point in arguing about whether she
would be worse. I happen to think In some ways she wouldn't be as bad. She wouldn't be
engaged in stupid twitter fights with dictators. But she might be better at leading us into
some stupid war in Syria. Trump will stumble into some war with no support. Clinton would
have had lots of support for whatever mindlessly stupid bloodbath she wanted to start.
That would be sane. But the elites have decided to export it at a cut rate, to undermine
Russia as the supplier in Europe, in order to foment regime change by crashing the Russian
economy. Why did you think we had such low fuel prices all of a sudden?
No, the fuel extracted from American soil does not accrue to the benefit of the
American people, but to the profits and plans of elites.
Unless the "elites" you are talking about are the Saudis–who are well-known for
flooding the market with cheap crude periodically to undercut the competition (they can still
produce oil for far less than anywhere else), and have many reasons to be suspicious of
Russia–this makes no sense.
Oil obtained by fracking is far more expensive to produce than oil obtained by simply
drilling a well in the Arabian Desert and quickly finding a gusher. The US can meet its
domestic needs, but isn't that great of a net exporter -- prices have to be sufficiently high
before high-volume production becomes cost-effective.
And if you don't think that either the Saudis or the American oil industry have the ear of
Trump, you're smokin' something.
The "elites" that oppose Trump have rather little political power at the present moment.
Don't confuse cultural elites (who don't like the Donald one bit) with the gazillionaires who
actual control the petroleum industry, and are more than happy to do business with whoever is
in charge in Washington.
Trump–ignorant and fatuous and unworldly as he may be–is an "elite" by virtue
of the office he holds. Do not forget that.
Noah and Engineer Scotty -- There is a reasonable compromise. Both of you are right.
Trump is a disaster and we know Clinton was terrible. There is no point in arguing about
whether she would be worse. I happen to think In some ways she wouldn't be as bad. She
wouldn't be engaged in stupid twitter fights with dictators. But she might be better at
leading us into some stupid war in Syria. Trump will stumble into some war with no support.
Clinton would have had lots of support for whatever mindlessly stupid bloodbath she wanted
to start.
Fair enough–though I think that Hillary's foreign policy would likely be similar to
that of her husband. Far from ideal, but not disastrous. Of course, Bill got to hold office
in a time when the Soviet Union (and its constituent parts) was in shambles, China was still
a third-world country, North Korea was no threat to anyone but South Korea, Islamic extremism
was far less of a problem, and even the Israelis and Palestinians were talking, and on
roughly equal terms. Now is a much more dangerous time.
One of my biggest concerns about Trump's foreign policy–and a major difference
from how Hillary would have governed–is his utter disdain for diplomacy. As noted, he
(and Tillerson) have been busy setting the State Department ablaze, and many, many, many
seasoned diplomats (career civil servants, not political appointees) have left Foggy Bottom,
some of their own accord, some not. Some Trump defenders claim this is part of "draining the
swamp", and many critics claim this is a purge of anyone not loyal to Trump
personally–and these two claims may be opposite sides of the same coin.
But there is something else. Trump seems to think that international diplomacy ought to be
conducted like real-estate deals: Two high-rollers (CEOs or heads of state) meet on the golf
course, hash out a deal, and the lawyers work out the details; and that having a large staff
of people trained in understanding a potentially-hostile foreign country is simply
unnecessary. In short, he acts as though he believes the entire system of international
diplomatic protocol, is a racket. Perhaps he has a point here; and perhaps he does
not–as the old saying goes, don't knock down a wall unless you know what loads it is
bearing.
But you'll notice that neither Russia, nor China, nor Israel, nor Iran, or Germany, nor
any other player on the world stage, have been engaging in similar purges of their diplomatic
services.
"... Interview with Michael Hudson, a research professor of Economics at University of Missouri, Kansas City, and a research associate at the Levy Economics Institute of Bard College. His latest book is J is for Junk Economics . Cross-posted from Hudson's site . ..."
"... And Forgive them their Debts: Credit and Redemption ..."
"... And Forgive them their Debts: Credit and Redemption ..."
"... the Dems are now doing the age-old distraction of diverting the discussion to sex rather than economics. I thought just the political right does that ..."
"... I am highly skeptical of the tune Amazing Grace ..."
December 23, 2017 Interview with Michael Hudson, a research professor of Economics at
University of Missouri, Kansas City, and a research associate at the Levy Economics Institute
of Bard College. His latest book is J is
for Junk Economics . Cross-posted from
Hudson's site .
As many people turn towards their Christian and Jewish faiths this Christmas and Hanukkah in
an attempt to make sense of the year that was, at least one economist says we have been reading
the bible in an anachronistic way.
In fact he has written an entire book on the topic. In And Forgive them their Debts:
Credit and Redemption (available this spring on Amazon), Professor Michael Hudson makes
the argument that far from being about sex, the bible is actually about economics, and debt in
particular.
The Ten Commandments Were About Debt
People tend to think of the Commandment 'do not covet your neighbour's wife' in purely
sexual terms but actually, the economist says it refers specifically to creditors who would
force the wives and daughters of debtors into sex slavery as collateral for unpaid debt.
"This goes all the way back to Sumer in the third millennium," he said.
Similarly, the Commandment 'thou shalt not steal' refers to usury and exploitation by threat
for debts owing.
But the rulers of classical antiquity who cancelled their subjects' debts tended to be
overthrown with disturbing frequency – from the Greek 'tyrants' of the 7th century BC who
overthrew the aristocracies of Sparta and Corinth, to Sparta's Kings Agis and Cleomenes in the
3rd century BC who sought to cancel Spartan debts, to Roman politicians advocating debt relief
and land redistribution, Julius Caesar among them.
Jesus Died for Our Debt
Professor Hudson says Jesus Christ paid the ultimate price for his activism.
What Would Jesus Do?
To understand how to fix today's economy, Hudson says that the Bible's answers were
practical for their time.
And
Forgive them their Debts: Credit and Redemption will be available for purchase just in
time for Easter on Amazon.
Reckless lending is a valid concept and has been put into law by Judges and almost
unbelievably, lawmakers as well, in some jurisdictions.
The debt is void.
Tricking a borrower into overcommittment is worse and that is what happened in Ireland
during the 80s onwards. The Prime ministers of different parties over that time had unlimited
overdrafts with several banks, most notably the AIB. A conspiracy that meant only a very few
were fully aware of the final result: bondholders would be reimbursed, with the scam being
paid for by those who made money and also those who lost money in the asset Ponzi that was
always the end.
Emigration was also the intended end, which worked quite well.
With you right up to that last sentence. Why couldn't the simple banker theft, the 'free
lunch', have been "the intended end"? Critics of the status quo IMHO often attribute way too
much intelligence and foresight to the powers that be. There is such a thing as intelligent
self-interest (greed). Germany's Bismark and Hudson's ancient rulers understood it. The
West's ruling class apparently doesn't.
an aside: It's important to distinguish sentences of opinion from sentences of claimed
fact, imo. ;) Opinion is just that, and can't be called out for malice or falsity. Incorrect
statements of fact can be so called out. This is an important distinction in written
comments. It's important for the reputation of the publication itself, and why LTEs insist on
this distinction being made in the letters.
Uriah Heep's "umbleness" was a mask covering his scheming; a very different thing from
making a simple written distinction between opinion and fact.
> "Reckless lending is a valid concept and has been put into law by Judges and almost
unbelievably, lawmakers as well, in some jurisdictions.
The debt is void.
Tricking a borrower into overcommittment . . ."
Take your average 21 year-old today or 40 years ago! Put him in the US and . . .
1) Expose him through the MSM to relentless advertising and propaganda that he should
spend, spend, spend!
2) Don't teach him in school about personal finance and debt.
3) Give him a credit card.
What do you expect will happen? Through trickery the bankers have rigged a very profitable
system for themselves. It is not a good system where a young person has to have
way-above-knowledge-and-discipline in order to protect themselves from credit racketeers.
That's why there is the ancient wisdom of the "Debt Jubilee"
if only, all the LENDERS and the Banks (Banksters!) had followed the the cardinal rules(of
Finance) of FIDUCIARY DUTY & DUE DILIGENCE, we wouldn't have 2008 crisis.
Banksters were bailed out and the 'DEBT' became the new money, world wise!
Now we have 2008 x10 (Mother of all Bubbles!) crisis at our door step!
When Citi takes too much debt they get Jubilee, when John Q. Public does, they get
bankruptcy.
So let's not say "we should bring back Jubliee", we already have it, to the tune of tens
of trillions of dollars. Jubliee for billionaires and bankers, just not for you and me.
It's similar to the debate over "Socialism", Bernie gets trashed for even daring to
mention the word. But if "socialism" is loosely defined as direct transfers of assets from
the State, we have massive socialism in this country already. For Big Wall St, Big Pharma,
Big Oil, Big Military, Big Incarceration, Big Surveillance. But propose it for Big Citizen
and you will get shouted down and shamed as some kind of pinko.
At a major bank in the late 80s, I heard the Controller describe the ideal credit card
customer: the one with account just below the credit limit who makes the minimum monthly
payment a few days late.
I agree with all that Michael Hudson has to say -- only problem is that the bankers have
been so effective in dividing and conquering the genernal public that they can't see who the
real enemy is. We have middle class people hating those that have been set up and abused by a
corrupt banking establishment that many in this country actually blame the victims. Question
is how is this all going to end? and what can we do to stop the world take over by a corrupt
banking elite?
I have come to believe (from my reading) that the bankers have successfully used
algorithms to speed up computing in order to make a profit no matter what the markets are
doing. The AI of their machines does not have an ethical basis or empathy for those who lose
money. The financialization of the economy is part of the role that AI performs in the
profiteering of the bankers and other financial institutions. That I suppose is the first
step to using AI algorithms to achieve the goal of the banker: to always and forever make a
profit. Watch AI move into other areas for the same profitable purpose.
How is this all going to end? Well, it's going to end because of people like us. We're
questioning the current way of the world, and that's the first step in changing it.
It's best to be cautious when making any kind of assertion about "the Bible says " or
"Jesus believed ." The Hebrew bible is an amalgam of many different, often conflicting
theological and moral points of view. The Gospels reflect that diversity of thought with some
non-Semitic strains added as well.
The Ten Commandments provide a good example of this. The reason given for honoring the
Sabbath in Exodus 20:
for in six days the Lord made heaven and earth, the sea, and all that is in them, and
rested the seventh day
but in Deuteronomy (i.e. the "Second Law" in Deuteronomy 5), it's
You shall remember that you were a servant in the land of Egypt, and the Lord your God
brought you out thence with a mighty hand and an outstretched arm
.
The Exodus version's rationale is drawn completely from awe for YHWH and his creation, but
the Deuteronomist asks the Sabbath observers to think empathetically by remembering their
ancestors' (mythical) enslavement.
Another example is the Deuteronomist's amendment of the law of debt slavery. The Exodus
version did limit debt slavery to 7 years (Exodus 21:2), but D goes further:
And when you send a male slave[b] out from you a free person, you shall not send him out
empty-handed. Provide liberally out of your flock, your threshing floor, and your wine
press, thus giving to him some of the bounty with which the Lord your God has blessed you.
Remember that you were a slave in the land of Egypt, and the Lord your God redeemed you;
for this reason I lay this command upon you today.
Prophets like Micah and Amos took the D point of view even further, issuing prophecies of
condemnation for the rich and compassion for the poor, but the compiler of Proverbs, while
extolling moderation, offers a perspective respectful toward the rich and powerful as long as
they behave decently.
These differences persist into the time when the Gospels were written. Luke-Acts clearly
reflects the D/Prophetic strain. While Matthew's Sermon on the Mount (Matthew 5) contains
only blessings, Luke 6 includes curses:
But woe to you that are rich, for you have received your consolation.
25 "Woe to you that are full now, for you shall hunger.
"Woe to you that laugh now, for you shall mourn and weep.
26 "Woe to you, when all men speak well of you, for so their fathers did to the false
prophets.
Where did the historical Jesus line up in this millennia-old debate? There's not that much
firm evidence either way. Dominic Crossan, relying on gospels outside the canon, tries to
make a case for a revolutionary Jesus, but a strong argument can also be made that Jesus
didn't care much about earthly politics and socio-economic issues because he believed the end
of the world was near.
After the next recession (which I have penciled in for 2019-2020), US fiscal deficits will
rise to the $1.5 to 2 trillion level and stay there. Should Trump serve two terms, federal
debt will reach $30 trillion, and by then will constitute 130 to 150% of GDP.
At this point Amerisclerosis sets in, growth being impossible as debt service
paralyzes any former dynamism in the corrupt and petrified imperial empire.
The Washington DC regime has two ways of defaulting: outright (hard) default, or soft
default via inflating away the principal. Naturally politicians will prefer the latter, as it
may permit milking a few more years out of their hollowed-out Potemkin economy.
WWJD -- what would Jesus do? Long gold, short bitcoin ought to be a pretty good
"set and forget" trade whilst awaiting the Second Coming, though it may be a bit early
yet.
What would Jesus do? We know exactly what Jesus would do! Remember him clearing out the
money-lenders from the temple? There is your answer right there. Today he would go into the
central banks, kick a** and take names after clearing them out. The big banks would then find
themselves under the gun without federal backup which mean that they could be shrunk small
enough to drown in a bath tub.
I seem to recall in one of the mainstream Protestant churches I went to as a child, when
we recited the Lord's prayer we DID say " and forgive us our debts as we forgive our
debtors".
In another, we said, "forgive us our trespasses, as we forgive those who trespassed
against us". That might've been the Winnetka Congregational Church–oh, that property
owning legacy of our founding fathers!
Not really up on my biblical exegesis this morning (it's B.C. here: Before Coffee), but
don't we "sin" against God? As opposed to our fellow mortals, I mean.
Yes, I remember it was said that way also, not in the catholic church I went to but
Protestant ones.
I just googled it and there are versions that speak about debt.
I find this article very interesting.
Being non religious now I could get behind a Socialist religious figure
I like Hudson and agree with much of his philosophy, but I don't think his book will
change many minds because religion has nothing to do with logic.
.
If you want to make a moral or economic case for debt forgiveness, fine, but if you start
talking about what Jesus really believed then you're wading into religion and most religious
people's minds are already made up on that subject, so I don't think this tactic is a useful
approach.
.
As one of my right wing friends said in response to Hudson's article, "liberation theology
has already been debunked." Well, in my friend's mind it has been debunked so that's all that
matters.
.
In my mind all religion is bunk so I am not going to defend Hudson's theology.
.
Ditto with the recent debate over Steve Keen's "theses." Just leave religion out of
economics, OK?
We are all born in ignorance, religion is what we call earlier concatenations of human
perception and memory that sustained societies across generations. The current religion, the
one we call science, has exploded the human population to a mass the ecosphere cannot long
support. Science, for all its knowledge has failed to provide anything remotely approaching a
sustainable society or the politics that might create one. Science provides no wisdom, only
knowledge.
It's a long game: minds that are are made up; minds yet to be will form around the ideas
presented them.
An argument can be made we no longer have enough time.
Interesting points. Yet if science provides knowledge how can it be possible that it does
not lead to wisdom. Philosophy, wisdom, religion and science are all bundled or linked,
science being the latest iteration. Is it possible that there is such a clear, distinct
division between wisdom and knowledge? Wisdom must be a product of knowledge as it is hard to
imagine wisdom that does not conform to knowledge.
It is a long game but our individual lives are played out on a different time reference.
Keynes of course famously acknowledged this, regarding the useless task of economists if they
do not recognize the human time frame in their theories and calculations.
Civilization's tragic but expedient go-to-move is the ever prevalent dismissive shrug of
complicity elite consensus employs to excuse the generational destruction visited by poverty
and war because the march of history must proceed at a desultory stroll in relation to the
span of a human life.
It does appear we no longer have time and probably never have.
For some time I've wondered if life itself isn't just an exhilarating acceleration of
entropy with consciousness being a kind of waste heat.
It denies us free will, but when you look at how we treat one another at scale and the curves for population
and energy use it's hard to avoid the comparison to bacteria in a petri dish.
But I still cling to free will understanding it might be an illusion!
Who is the "we" you refer to? Religion is simply codified superstition. It is a parasitic
excrescence of stable societies, not the cause of their stability. Without the science you
deplore you would not be able to criticize science for not achieving the sustainability you
claim to value. Sustainability was not a thing until the science of ecology made it so. If
you think you can make an argument that we don't have enough time to be rational, go ahead
and make it. But "hurry up and abandon science because we only have time for superstition
before the world ends" does not sound like a promising argument to me. By the way, if you
attempt the argument I suggest you start by distinguishing science from technology and the
ability and knowledge to do something from the political decisions to do (or not do) what
science tells us is in our power. The same science that gave us the green revolution and the
ability to support a huge global population has also given us birth control and the ability
to adjust the size of our population to any value we choose. It is not science's fault if we
make poor choices.
What did you know when you were born? There are embedded assumptions about me in almost
every line you wrote.
I don't deplore science, I'm just humble about what it can achieve. It has no agency, only
people do. People made science so science can hardly be better than people, which gets us
back to the problem of how to get people to sustain the ecology necessary for the
species.
Why are you proposing to abandon science? I didn't. I simply said that it will not cause
us to change our collective agency, it can't, it only has agency through us.
Additionally, there is decent science on cognitive bias that suggests, as the reader I was
responding to did, that rational arguments don't change minds. I accept that science. Ipso
facto, as you finished "It's not science's fault we make poor choices", with which I
completely agree. It won't be science's success on the outside chance we make some good ones.
That is my point: it is a political issue not a scientific one.
The religions you call superstition, while incorporating a great deal about the material
world that science has proven (within a certain tolerance) false, also include a great deal
about human psychology integrated into time scales significantly longer than any individual
human life.
I chose a poor metaphor in "the current religion, the one we call science" that
sidetracked my intent, but science can no more solve our problems for us than god.
The religions you call superstition, while incorporating a great deal about the material
world that science has proven (within a certain tolerance) false, also include a great deal
about human psychology integrated into time scales and societies significantly larger than
any individual human life that are both true and wise.
Perhaps scientific hypothesis is codified superstition. An indefatigable and self
perfecting method for discerning the universe, here on earth employed by a cognitively
limited and imperfect biological organism.
As an atheist of sorts, the definition that religion, "is a parasitic excrescence of
stable societies" strikes me more a definition of economics, particularly the capitalist
incantation and that science operating without parameters of elements of religion and
philosophy, would be useless, impossible or possibly fatally employed, without the admittedly
meager ethical constraints applied currently.
It has for a long time seemed to me that only "true believers" could have the confidence
to throw out the entire body of something as ancient, vast and polyvalent as "religion".
Maybe socialism really truly was the best shot at an belief system for how humans should
live in the modern world.
While science is part of our knowledge of the world and it is necessary for this level of
biosphere destruction, and certainly it's technologies are part of our life, I don't think it
really informs the current VALUE system that much. I think the current value system is
informed almost entirely by brutal capitalism, the ideology of mammon and wealth makes right
period.
Science and religion are not equivalent, and I have yet to come across a scientist who
claimed it to be so.
Religion is a belief system and has been useful system of inquiry to many people in
present and past history. There may be some scientists who promote some sort of technophilia
future but they are in the company with many non-scientists.
Many people often conflate those who hype Technological fixes for all social ills with
strictly scientific enquiry. Technological fantasies and science are not equivalent.
Science is, at its basis, a method of inquiry based upon continual observations,
collection of data and the experimental method. Scientific inquiry does not rest upon
predicated truths but rather that ultimate truths are not known. Every law or theory, after
rigorous testing, becomes the basic dogma for future hypotheses and new experimental
endeavours. The scientific method is itself tested by using laws and theories to predict
future events; Newtonian physics being a case in point. When theories lose their ability to
predict future events with accuracy they are either modified or discarded. Sometimes, we just
have to live with seeming contradictory conditions as between differences in Newtonian and
quantum physics; yet Newtonian physics theories and practices are still valid at the scales
in which we Homo sapiens operate. They are not based upon belief but upon
practice.
Nor does science try and engineer social structures – such as controlling
populations. That is not the role of science or scientists. Science merely records the data
and tries to predict the consequences of changing weather patterns, farming practices or
population dynamics. However, these models are very complex. The job of scientist is to try
and convey the information but scientists, like all the rest of us, operate in a political
world.
And for those who are believers in a religion, I wish you a most happy holiday and success
in your spiritual endeavours.
"And for those who are believers in a religion " Thank you for this statement, it's
representative of true humility at work. While you do not state your religious belief system
(or if indeed you have any), you're not dismissive of beliefs that others might hold as
"codified superstition" (as one commentor does above). Deriding those who may believe that
there's some intelligent consciousness that underpins life in the universe as superstitious
is to suffer from a type of hubris. Live and let live, and this applies as well to religious
fundamentalists of all stripes who've made it their mission in life to "save" others. In
matters of faith (or lack thereof), one must always keep their own counsel in my view.
I don't know if it's going to convince anyone, but it's not just a religious question but
a historical one, only people spend their whole lives studying this stuff (how to interpret
the Bible based on the culture and language of the time etc.), so while I like Hudson I think
he may be out of his depth here.
What is the nature of Political Power? In order to rule society, public sentiment must be
controlled and directed in a certain trajectory. Political and Spiritual power are dependent
and cannot be separated. When they are, failure ensues.
The contemporary world is in the midst of a spiritual/religious crisis. The human mind and
soul need an anchor in order to deal with the chaos inherent in the universe. What is human
history other than one long chain of events illustrating humanities efforts to deal with this
predicament.
Belief in a righteous cause, rooted in actual experience of daily life is what all
religions are based on. Humanity is characterized by being builders and myth makers. When the
myths fail to provide plausible explanations for life's struggles, societal collapse or new
possibilities- new myths- must be undertaken. At the very least, a reinterpretation. Building
cannot occur without a viable supporting myth.
It seems to me that humanity needs to reexamine spirituality more than ever- not abandon
it. The world cannot be left to fools and charlatans.
I credit the Catholic church with developing my social conscience–back in the 1970s,
when most pastors were old white men. It was a message delivered clearly and repeatedly.
Despite all of the other disappointments and hypocrisies we have seen in the years since,
I do think that the church leaders I knew were sincere in this regard. In fact, I have always
viewed this as the important contrast vis a vis Protestantism.
Though I am no theologian, so probably don't know what I'm talking about
My mother attends a United Methodist church whose minister is an ex-Catholic nun, who
decided she wanted to deliver sermons rather than receive them. While not real big on
organized religion myself, I have been impressed by how much work they put into actually
helping people. They built a whole facility in their basement for homeless people to come in
a couple times a week, take a shower, shave, and get re-upped on toothpaste and whatnot. They
definitely seem to take the "whatsoever you do unto the least of these, you do to me" line
much more seriously than the congregations and leadership of other United Methodist churches
Mom's attended, so maybe there is something to your thoughts on Catholic/Protestant
differences in this area although, I have a feeling that things might be way different in,
for instance, AME churches down South.
. . . the attempt of society to cope with the fact that debts grow faster than the
ability to pay ," . . .
Debt is the ultimate self licking ice cream cone. To pay off a debt and the interest
implies that society as a whole is required to take on ever greater debt. From the ephor's
(thank you knowbuddhau) perspective a perfect system.
ISTM a SLICC is a perpetual motion machine. Creditors can turn people into them with debt
+ interest. It's like some kind of special purpose vessel you can get in, but can't
disembark, and it never gets you to the yonder shore like they promised. All you can do is
row yourself to death.
I kinda think Jesus was working on more than one level. I think he had an insight that
threatened the PTB of his time with disintermediation from between people and the divine.
The way I see it, the Gospel as I've understood it never got out. The most threatening
idea was safely encapsulated in the personage and later cult of Jesus the Superfreak. I've
always understood it to be the breaking of this taboo that made him such a threat to the
PTB.
If we're all related to divinity as offspring to parent, then we all share in divinity. No
one is any more divine than anyone else. A lot hinges on the article in a specific
phrase.
Did he say, "I am *a* son of god," or did he say "I am THE son of god?" According to Alan
Watts, the Greek article is indefinite. The whole idea of a special lineage exceptionally
favored by the cosmic PTB (and of course innocently promulgated by its beneficiaries)
obviously comes straight outta our primate past. As applied to modern human affairs, it's
absurd.
No, I think he said, we're all worthy.
Before this, the only way I thought of Jesus in relation to money was, of course,
overturning the tables in the temples. I am in all ya'll's virtual debt. ;-)
End games, potential outcomes, so many possibilities.
Questions many would like to see answered:
What do the accumulators do with all that wealth?
When they acquire more than they can possibly spend, why acquire?
How much acquisition is to seek power over others?
What has happened in the past to acquirors and other power-seekers?
Will this current phantasm end in a Jubilee?
I believe at a certain point wealth acquisition is all about power over others, if only
more people clearly saw it that way.
One wants money to meet: basic needs, then a few consumer toys and a tiny bit of security,
a little more security (get a 401k), then leisure and autonomy (win the lottery and quit your
job!). Normal non-rich people can relate to these impulses, as they are basic human drives
from survival to self-actualization. Though normal non-rich people's best collective shot at
them would be socialism where there would be more economic security, and more autonomy, and
more leisure FOR ALL.
But beyond a certain point money is ultimately about a sadistic drive for power over
others. People need to see rich people for the sadistic f's they are and their hoarding of
money proves it. They won't give it up because they have a sadistic drive to rule over
others.
Great stuff. We lapsed Baptists remember one Biblical precept–apparently not
mistranslated–from our Sunday school lessons: "money is the root of all evil." Per
Hudson it might be interesting to speculate how many other of the world's historic sins boil
down to money–slavery, racism (competition between underclass groups), antisemitism. In
A Distant Mirror Barbara Tuchman wrote that the French medieval kings would declare a
personal debt jubilee from war debts by encouraging the masses to launch a pogrom. No more
creditors meant no more debt. During the pre WW 2 Nazi period Hitler said that the Jews were
free to leave as long as they left their possessions behind.
Of course in current times autocrats no longer have to reconcile their behavior with
traditional religion since it is widely in decline. Instead they invent new religious
beliefs, based on failed economic theories.
Yes, I know. In fact that's the standard comebacker for defenders of the Prosperity Gospel
.they don't love money. Rather they, like Lucy in Peanuts, just want what's coming
to them.
I'd say the short form versus the long form is a distinction without a difference. See
Michael Hudson above.
Never much enjoyed going to church as a kid but I did have to go frequently and absorbed a
lot whether I liked it or not. Every so often we would go to a service out of town and they
would recite the lord's prayer with 'forgive us our trespasses as we forgive those who
trespass against us'. It always sounded off to me and didn't exactly roll of the tongue. Our
church used 'debt' and 'debtors' which in retrospect I'm quite grateful for.
We always used the "trespass" version, growing up, so I thought for a long time that this
was all to do with how to handle people in your front yard, or hunting on your acreage
without permission.
If the (older) European cultures confounded "debt" with some notion of "sin" as with the
German word "Schuld," then the newer American version is to confound "debt" with "real
estate."
Hudson also has plenty of insights regarding the reciprocity between banks and land
ownership.
So here's another question, the upshot of these 2 thoughts: could it be that Americans
know, subliminally, that owning land is sinful?
perhaps it is, or perhaps merely owning land more than meets one's own needs is sinful
(being a landlord – ie a rentier), but certainly humans lived most of their time on
earth without land ownership at all.
To file in the category of "the more things change ":
Last year's prez primaries were very much about the current neoliberal economic system
enriching the .01% and the growing indebtedness and despair of the 99%, imo. And now we see
the Dem estab pushing, imo, a sex hysteria as the greatest destructive force that needs to be
addressed, while ignoring the destructive force of neoliberal economics and debt and deaths
from despair. The notion of sin is again transferred from economics to sex.
> @flora "And now we see the Dem estab pushing, imo, a sex hysteria as the greatest
destructive force that needs to be addressed, while ignoring the destructive force of
neoliberal economics . . . "
Amazing the Dems are now doing the age-old distraction of diverting the discussion to sex
rather than economics. I thought just the political right does that! Ancient creditors
changed the discussion from "economic unfairness" to "sexual sins." Modern US Republicans
changed it from "economic unfairness" to social issues like abortion, and sexuality. So why
are the Dems doing the same? Yves Smith has talked about the #METOO hysteria being a rich
women's movement. The news is about movie star women being wronged. Maybe it's just a "Maslow
hierarchy" sort of thing. When you are a millionaire movie star–or an affluent
pundit–then you can worry about being sexually harassed in your past. If you're a
waitress, your economic survival is foremost in your thinking. Economic class determines
taste and worry.
I don't think the rich has any objection to debt forgiveness. They already own almost
everything anyway. Heck, once debt forgiveness happens, they'll take more debt and then ask
for another round of forgiveness. A couple of rounds like that and they'll really own
everything. Hurrah!!!
Foreclosure though for everyone will I think wipe out the rich as well since they sure
have debts up the wazoo.
BTW what is the reading in the oldest greek gospels, and for comparison if avaiable the
Syriac gospels of the Nestorian churches (Syriac was a much closer language to Aramaic than
greek)
Likewise the reading in the Hebrew language version versus the Septuigant? I maintain that
even if you belive god inspired the original texts sinful humans translated it and in the old
days copied it. So the version we have today may or may not be close to the original.
I realize that this is an excerpt from the book, but the idea that sin and debt are
equated in the Bible is off. There is no mention here of hamartia, a Greek term that was used
for sin.
To quote Wikipedia:
"Hamartia is also used in Christian theology because of its use in the Septuagint and New
Testament. The Hebrew (chatá) and its Greek equivalent
(àµaρtίa/hamartia) both mean "missing the mark" or "off the
mark".[9][10][11]"
So rather than sin as a kind of status, the Bible defines sin as not hitting standards of
good behavior. This is a long way from debt, and the word hamartia isn't uncommon in the
Bible.
Also, the article brushes up against the idea of poverty in Catholicism, which leads
inevitably to il Poverello, Saint Francis, the "Poor Guy" from Assisi. In Catholicism,
poverty doesn't ennoble. Poverty clarifies, because it removes possessions as a distraction.
There is a famous legend of the "conversion" of Saint Francis, which was a long time coming.
He took off his clothes in church and gave them away. That isn't nobility. It's a
clarification. In return for being un-distracted, Saint Francis claimed a whole enchanted /
sacred cosmos, Brother Sun, Sister Moon, the famous birds, Brother Wolf of Gubbio.
The central issue that Hudson mentions here (and likely much more so in his book) is the
deterioriation of religion in the U S of A into "American Religion," which brays about being
saved, is uncharitable, doesn't know the bible or church history, has no environmental ethic
(unlike the Franciscans), and is now being degraded further by U.S. free-market
fundamentalism. As a bad Catholic and a bad Buddhist, I am highly skeptical of the tune
Amazing Grace and its many claims on the godhead.
But are you aware that the song's author, John Newton (1725-1807), was originally a slave
ship captain, then experienced spiritual conversion and eventually renounced the trade,
finally becoming an abolitionist and an Anglican priest? Earlier, he'd been press-ganged in
the Royal Navy, during which time he received eight dozen lashes and then later was marooned
in Sierra Leone, and was himself made a slave of a slaving tribe there.
"banning absentee ownership" – this would be a great idea for intellectual property.
The creator gets protection for some set period (like patents), but it is non-transferrable.
Creators get compensated, and society benefits after the set period expires.
I've always read the Bible in economic terms too so there's stuff to chew on here. But
I've interpreted the Jesus story more narrowly. It is about the Tyrian shekel (the temple
tax). Not legal tender at the time for anything but the temple tax – so the Sadducees
basically had monopoly ownership. Distributed out to people to pay their temple tax via a
raucous appearance of showy but fake competition (the moneychangers) – but the terms
(exchange rate basically) are really controlled by the monopolists behind the curtain. And
like any Monopoly101, they presumably screw people over time (but need to know more about
prices of stuff then – were currencies being debased?). All justified/rationalized
intellectually by the Pharisees then.
The problem is – the Tyrian shekel has the image of Baal on it. When Jesus overturns
the money tables and then gets shown a coin – the coin he is actually
commenting on is the shekel (render unto Baal what is Baals and unto God what is Gods) not
the denarius (render unto Caesar what is Caesars and unto God what is Gods)
Read it that way – and he is cleverly accusing the entire establishment of serious
blasphemy and exploitation of the Jewish people and directly threatening their business
model. Easy to understand why it later gets written down as 'denarius' after the temple is
destroyed and the message is no longer in Judaea (or even within Jewish community in
diaspora) – but the real message also gets lost with that
Not true unless you discount the text and archeological facts completely, which I guess
you do. The common coinage of the time would be of the empire, which was of Rome.
I love Michael Hudson, but he is not quite correct here about Jesus, at least as far as
this article presents his argument. We know Jesus best through the writings of his followers,
mainly the four evangelists, Matthew, Mark, Luke John.
The two who give us an explanation of what we call the Lord's prayer are Matthew and Luke,
and the earliest texts are written in koine greek, not hebrew. Indeed, Matthew first uses
"debt" but follows his account of the prayer immediately with an explanation that doesn't use
that term, thusly:
" for if you forgive men the tresspasses (paraptomata) of them, your heavenly father will
also forgive you, but if you do not forgive men, neither will your father forgive your
trespasses ( paraptomata) "
My big dictionary translates the above greek word as "false step" or "falling from the
right way."
Professor Hudson has an economist's point of view, as does this forum, and that's
perfectly fine – Matthew was a tax collector after all. But Jesus was not. The term
"debt" in this instance can be likened to the use of the word "seed" in the parables. The
prayer uses a narrow focus that ought to be understood in a larger sense.
Luke's version of the prayer makes this expanded meaning very clear, and that is why I
prefer the word "trespasses". ( Also it sounds better and can be dwelled upon longer when one
prays or sings it.)
I appreciate Dr. Hudson referencing the Christian Old and New Testament about money and
debt. Christianity has become so perverted in our modern times that it now represents the
opposite of its original principles. And Dr. Hudson is in good company as an economist
alluding to the New Testament about economic issues.
In the second chapter, sixth paragraph, of Capital Vol. I , Karl Marx's very
first introduction of the concept of money is followed by a quote from the New Testament book
of Revelations.
The social action therefore of all other commodities, sets apart the particular
commodity in which they all represent their values. Thereby the bodily form of this
commodity becomes the form of the socially recognised universal equivalent. To be the
universal equivalent, becomes, by this social process, the specific function of the
commodity thus excluded by the rest. Thus it becomes –money. ―Illi unum
consilium habent et virtutem et potestatem suam bestiae tradunt. Et ne quis possit emere
aut vendere, nisi qui habet characterem aut nomen bestiae aut numerum nominis ejus.‖
[―These have one mind, and shall give their power and strength unto the beast.‖
Revelations, 17:13; And that no man might buy or sell, save he that had the mark, or the
name of the beast, or the number of his name.‖ Revelations, 13:17.](Apocalypse.)
Marx is suggesting that money is analogous to the Christian belief in Revelation's "Mark
of the Beast." Of all the criticisms of Marx, one would never believe that he would sometimes
point to the New Testament while discussing economics. This is because hardly anyone reads
Marx, or the Bible for that matter. Ironically, modern American Right-wing Christianity is
corrupted by the "Prosperity Gospel" cult and views money as the ultimate good, or at least
its possession a sign of godliness, when everything in its own dogma says something else.
Could a Christian today proclaim with conviction, "Money is the Mark of the Beast!"?
I refer to the "eye of the needle" and "rich men" quote in the Gospels."
Quoting Revelations to prove any point about Christ's teachings is specious at best. The
Revelations of St John the Device appear as the stick of the Church to be used when the
Carrot of Christ's teaching is unsuccessful.
"If you don't do what we tell you you will burn in Hell!!!"
I'd also point out that Christianity as practiced appears mostly as a peasant suppression
system:
Priest: (beholden to the local Lord) "You will get you reward after you die"
A powerful statement by Marx. He recognizes the importance of a 'money of account' to give
'value' to items but at the same time questions the validity of this value.
We have definitely gotten to the point of too much monetization and lost the social values
of collaboration and compassion.
"... With the election of 2016, symptoms of the long emergency seeped into the political system. Disinformation rules. There is no coherent consensus about what is happening and no coherent proposals to do anything about it. The two parties are mired in paralysis and dysfunction and the public's trust in them is at epic lows. Donald Trump is viewed as a sort of pirate president, a freebooting freak elected by accident, "a disrupter" of the status quo at best and at worst a dangerous incompetent playing with nuclear fire. A state of war exists between the White House, the permanent D.C. bureaucracy, and the traditional news media. Authentic leadership is otherwise AWOL. Institutions falter. The FBI and the CIA behave like enemies of the people. ..."
"... They chatter about electric driverless car fleets, home delivery drone services, and as-yet-undeveloped modes of energy production to replace problematic fossil fuels, while ignoring the self-evident resource and capital constraints now upon us and even the laws of physics -- especially entropy , the second law of thermodynamics. Their main mental block is their belief in infinite industrial growth on a finite planet, an idea so powerfully foolish that it obviates their standing as technocrats. ..."
"... The universities beget a class of what Nassim Taleb prankishly called "intellectuals-yet-idiots," hierophants trafficking in fads and falsehoods, conveyed in esoteric jargon larded with psychobabble in support of a therapeutic crypto-gnostic crusade bent on transforming human nature to fit the wished-for utopian template of a world where anything goes. In fact, they have only produced a new intellectual despotism worthy of Stalin, Mao Zedong, and Pol Pot. ..."
"... Until fairly recently, the Democratic Party did not roll that way. It was right-wing Republicans who tried to ban books, censor pop music, and stifle free expression. If anything, Democrats strenuously defended the First Amendment, including the principle that unpopular and discomforting ideas had to be tolerated in order to protect all speech. Back in in 1977 the ACLU defended the right of neo-Nazis to march for their cause (National Socialist Party of America v. Village of Skokie, 432 U.S. 43). ..."
"... This is the recipe for what we call identity politics, the main thrust of which these days, the quest for "social justice," is to present a suit against white male privilege and, shall we say, the horse it rode in on: western civ. A peculiar feature of the social justice agenda is the wish to erect strict boundaries around racial identities while erasing behavioral boundaries, sexual boundaries, and ethical boundaries. Since so much of this thought-monster is actually promulgated by white college professors and administrators, and white political activists, against people like themselves, the motives in this concerted campaign might appear puzzling to the casual observer. ..."
"... The evolving matrix of rackets that prompted the 2008 debacle has only grown more elaborate and craven as the old economy of stuff dies and is replaced by a financialized economy of swindles and frauds . Almost nothing in America's financial life is on the level anymore, from the mendacious "guidance" statements of the Federal Reserve, to the official economic statistics of the federal agencies, to the manipulation of all markets, to the shenanigans on the fiscal side, to the pervasive accounting fraud that underlies it all. Ironically, the systematic chiseling of the foundering middle class is most visible in the rackets that medicine and education have become -- two activities that were formerly dedicated to doing no harm and seeking the truth ! ..."
"... Um, forgotten by Kunstler is the fact that 1965 was also the year when the USA reopened its doors to low-skilled immigrants from the Third World – who very quickly became competitors with black Americans. And then the Boom ended, and corporate American, influenced by thinking such as that displayed in Lewis Powell's (in)famous 1971 memorandum, decided to claw back the gains made by the working and middle classes in the previous 3 decades. ..."
"... "Wow – is there ever negative!" ..."
"... You also misrepresent reality to your readers. No, the black underclass is not larger, more dysfunctional, and more alienated now than in the 1960's, when cities across the country burned and machine guns were stationed on the Capitol steps. The "racial divide" is not "starker now than ever"; that's just preposterous to anyone who was alive then. And nobody I've ever known felt "shame" over the "outcome of the civil rights campaign". I know nobody who seeks to "punish and humiliate" the 'privileged'. ..."
"... My impression is that what Kunstler is doing here is diagnosing the long crisis of a decadent liberal post-modernity, and his stance is not that of either of the warring sides within our divorced-from-reality political establishment, neither that of the 'right' or 'left.' Which is why, logically, he published it here. National Review would never have accepted this piece ..."
"... "Globalization has acted, meanwhile, as a great leveler. It destroyed what was left of the working class -- the lower-middle class -- which included a great many white Americans who used to be able to support a family with simple labor." ..."
"... Young black people are told by their elders how lucky they are to grow up today because things are much better than when grandpa was our age and we all know this history.\ ..."
"... It's clear that this part of the article was written from absolute ignorance of the actual black experience with no interest in even looking up some facts. Hell, Obama even gave a speech at Howard telling graduates how lucky they were to be young and black Today compared to even when he was their age in the 80's! ..."
"... E.g. Germany. Germany is anything but perfect and its recent government has screwed up with its immigration policies. But Germany has a high standard of living, an educated work force (including unions and skilled crafts-people), a more rational distribution of wealth and high quality universal health care that costs 47% less per capita than in the U.S. and with no intrinsic need to maraud around the planet wasting gobs of taxpayer money playing Global Cop. ..."
"... The larger subtext is that the U.S. house of cards was planned out and constructed as deliberately as the German model was. Only the objective was not to maximize the health and happiness of the citizenry, but to line the pockets of the parasitic Elites. (E.g., note that Mitch McConnell has been a government employee for 50 years but somehow acquired a net worth of over $10 Million.) ..."
On America's 'long emergency' of recession, globalization, and identity politics.
Can a people recover from an excursion into unreality? The USA's sojourn into an alternative universe of the mind accelerated
sharply after Wall Street nearly detonated the global financial system in 2008. That debacle was only one manifestation of an array
of accumulating threats to the postmodern order, which include the burdens of empire, onerous debt, population overshoot, fracturing
globalism, worries about energy, disruptive technologies, ecological havoc, and the specter of climate change.
A sense of gathering crisis, which I call the long emergency , persists. It is systemic and existential. It calls into
question our ability to carry on "normal" life much farther into this century, and all the anxiety that attends it is hard for the
public to process. It manifested itself first in finance because that was the most abstract and fragile of all the major activities
we depend on for daily life, and therefore the one most easily tampered with and shoved into criticality by a cadre of irresponsible
opportunists on Wall Street. Indeed, a lot of households were permanently wrecked after the so-called Great Financial Crisis of 2008,
despite official trumpet blasts heralding "recovery" and the dishonestly engineered pump-up of capital markets since then.
With the election of 2016, symptoms of the long emergency seeped into the political system. Disinformation rules. There is
no coherent consensus about what is happening and no coherent proposals to do anything about it. The two parties are mired in paralysis
and dysfunction and the public's trust in them is at epic lows. Donald Trump is viewed as a sort of pirate president, a freebooting
freak elected by accident, "a disrupter" of the status quo at best and at worst a dangerous incompetent playing with nuclear fire.
A state of war exists between the White House, the permanent D.C. bureaucracy, and the traditional news media. Authentic leadership
is otherwise AWOL. Institutions falter. The FBI and the CIA behave like enemies of the people.
Bad ideas flourish in this nutrient medium of unresolved crisis. Lately, they actually dominate the scene on every side. A species
of wishful thinking that resembles a primitive cargo cult grips the technocratic class, awaiting magical rescue remedies that promise
to extend the regime of Happy Motoring, consumerism, and suburbia that makes up the armature of "normal" life in the USA.
They chatter
about electric driverless car fleets, home delivery drone services, and as-yet-undeveloped modes of energy production to replace
problematic fossil fuels, while ignoring the self-evident resource and capital constraints now upon us and even the laws of physics
-- especially entropy , the second law of thermodynamics. Their main mental block is their belief in infinite industrial growth
on a finite planet, an idea so powerfully foolish that it obviates their standing as technocrats.
The non-technocratic cohort of the thinking class squanders its waking hours on a quixotic campaign to destroy the remnant of
an American common culture and, by extension, a reviled Western civilization they blame for the failure in our time to establish
a utopia on earth. By the logic of the day, "inclusion" and "diversity" are achieved by forbidding the transmission of ideas, shutting
down debate, and creating new racially segregated college dorms. Sexuality is declared to not be biologically determined, yet so-called
cis-gendered persons (whose gender identity corresponds with their sex as detected at birth) are vilified by dint of
not being "other-gendered" -- thereby thwarting the pursuit of happiness of persons self-identified as other-gendered. Casuistry
anyone?
The universities beget a class of what Nassim Taleb prankishly called "intellectuals-yet-idiots," hierophants trafficking in fads
and falsehoods, conveyed in esoteric jargon larded with psychobabble in support of a therapeutic crypto-gnostic crusade bent on transforming
human nature to fit the wished-for utopian template of a world where anything goes. In fact, they have only produced a new intellectual
despotism worthy of Stalin, Mao Zedong, and Pol Pot.
In case you haven't been paying attention to the hijinks on campus -- the attacks on reason, fairness, and common decency, the
kangaroo courts, diversity tribunals, assaults on public speech and speakers themselves -- here is the key take-away: it's not about
ideas or ideologies anymore; it's purely about the pleasures of coercion, of pushing other people around. Coercion is fun and exciting!
In fact, it's intoxicating, and rewarded with brownie points and career advancement. It's rather perverse that this passion for tyranny
is suddenly so popular on the liberal left.
Until fairly recently, the Democratic Party did not roll that way. It was right-wing Republicans who tried to ban books, censor
pop music, and stifle free expression. If anything, Democrats strenuously defended the First Amendment, including the principle that
unpopular and discomforting ideas had to be tolerated in order to protect all speech. Back in in 1977 the ACLU defended the right
of neo-Nazis to march for their cause (National Socialist Party of America v. Village of Skokie, 432 U.S. 43).
The new and false idea that something labeled "hate speech" -- labeled by whom? -- is equivalent to violence floated out of the
graduate schools on a toxic cloud of intellectual hysteria concocted in the laboratory of so-called "post-structuralist" philosophy,
where sundry body parts of Michel Foucault, Jacques Derrida, Judith Butler, and Gilles Deleuze were sewn onto a brain comprised of
one-third each Thomas Hobbes, Saul Alinsky, and Tupac Shakur to create a perfect Frankenstein monster of thought. It all boiled down
to the proposition that the will to power negated all other human drives and values, in particular the search for truth. Under this
scheme, all human relations were reduced to a dramatis personae of the oppressed and their oppressors, the former generally
"people of color" and women, all subjugated by whites, mostly males. Tactical moves in politics among these self-described "oppressed"
and "marginalized" are based on the credo that the ends justify the means (the Alinsky model).
This is the recipe for what we call identity politics, the main thrust of which these days, the quest for "social justice," is
to present a suit against white male privilege and, shall we say, the horse it rode in on: western civ. A peculiar feature of the
social justice agenda is the wish to erect strict boundaries around racial identities while erasing behavioral boundaries, sexual
boundaries, and ethical boundaries. Since so much of this thought-monster is actually promulgated by white college professors and
administrators, and white political activists, against people like themselves, the motives in this concerted campaign might appear
puzzling to the casual observer.
I would account for it as the psychological displacement among this political cohort of their shame, disappointment, and despair
over the outcome of the civil rights campaign that started in the 1960s and formed the core of progressive ideology. It did not bring
about the hoped-for utopia. The racial divide in America is starker now than ever, even after two terms of a black president. Today,
there is more grievance and resentment, and less hope for a better future, than when Martin Luther King made the case for progress
on the steps of the Lincoln Memorial in 1963. The recent flash points of racial conflict -- Ferguson, the Dallas police ambush, the
Charleston church massacre, et cetera -- don't have to be rehearsed in detail here to make the point that there is a great deal of
ill feeling throughout the land, and quite a bit of acting out on both sides.
The black underclass is larger, more dysfunctional, and more alienated than it was in the 1960s. My theory, for what it's worth,
is that the civil rights legislation of 1964 and '65, which removed legal barriers to full participation in national life, induced
considerable anxiety among black citizens over the new disposition of things, for one reason or another. And that is exactly why
a black separatism movement arose as an alternative at the time, led initially by such charismatic figures as Malcolm X and Stokely
Carmichael. Some of that was arguably a product of the same youthful energy that drove the rest of the Sixties counterculture: adolescent
rebellion. But the residue of the "Black Power" movement is still present in the widespread ambivalence about making covenant with
a common culture, and it has only been exacerbated by a now long-running "multiculturalism and diversity" crusade that effectively
nullifies the concept of a national common culture.
What follows from these dynamics is the deflection of all ideas that don't feed a narrative of power relations between oppressors
and victims, with the self-identified victims ever more eager to exercise their power to coerce, punish, and humiliate their self-identified
oppressors, the "privileged," who condescend to be abused to a shockingly masochistic degree. Nobody stands up to this organized
ceremonial nonsense. The punishments are too severe, including the loss of livelihood, status, and reputation, especially in the
university. Once branded a "racist," you're done. And venturing to join the oft-called-for "honest conversation about race" is certain
to invite that fate.
Globalization has acted, meanwhile, as a great leveler. It destroyed what was left of the working class -- the lower-middle class
-- which included a great many white Americans who used to be able to support a family with simple labor. Hung out to dry economically,
this class of whites fell into many of the same behaviors as the poor blacks before them: absent fathers, out-of-wedlock births,
drug abuse. Then the Great Financial Crisis of 2008 wiped up the floor with the middle-middle class above them, foreclosing on their
homes and futures, and in their desperation many of these people became Trump voters -- though I doubt that Trump himself truly understood
how this all worked exactly. However, he did see that the white middle class had come to identify as yet another victim group, allowing
him to pose as their champion.
The evolving matrix of rackets that prompted the 2008 debacle has only grown more elaborate and craven as the old economy of
stuff dies and is replaced by a financialized economy of swindles and frauds . Almost nothing in America's financial life
is on the level anymore, from the mendacious "guidance" statements of the Federal Reserve, to the official economic statistics of
the federal agencies, to the manipulation of all markets, to the shenanigans on the fiscal side, to the pervasive accounting fraud
that underlies it all. Ironically, the systematic chiseling of the foundering middle class is most visible in the rackets that medicine
and education have become -- two activities that were formerly dedicated to doing no harm and seeking the truth !
Life in this milieu of immersive dishonesty drives citizens beyond cynicism to an even more desperate state of mind. The suffering
public ends up having no idea what is really going on, what is actually happening. The toolkit of the Enlightenment -- reason, empiricism
-- doesn't work very well in this socioeconomic hall of mirrors, so all that baggage is discarded for the idea that reality is just
a social construct, just whatever story you feel like telling about it. On the right, Karl Rove expressed this point of view some
years ago when he bragged, of the Bush II White House, that "we make our own reality." The left says nearly the same thing in the
post-structuralist malarkey of academia: "you make your own reality." In the end, both sides are left with a lot of bad feelings
and the belief that only raw power has meaning.
Erasing psychological boundaries is a dangerous thing. When the rackets finally come to grief -- as they must because their operations
don't add up -- and the reckoning with true price discovery commences at the macro scale, the American people will find themselves
in even more distress than they've endured so far. This will be the moment when either nobody has any money, or there is plenty of
worthless money for everyone. Either way, the functional bankruptcy of the nation will be complete, and nothing will work anymore,
including getting enough to eat. That is exactly the moment when Americans on all sides will beg someone to step up and push them
around to get their world working again. And even that may not avail.
James Howard Kunstler's many books include The Geography of Nowhere, The Long Emergency, Too Much Magic: Wishful Thinking,
Technology, and the Fate of the Nation , and the World Made by Hand novel series. He blogs on Mondays and Fridays at
Kunstler.com .
I think I need to go listen to an old-fashioned Christmas song now.
The ability to be financially, or at least resource, sustaining is the goal of many I know since we share a lack of confidence
in any of our institutions. We can only hope that God might look down with compassion on us, but He's not in the practical plan
of how to feed and sustain ourselves when things play out to their inevitable end. Having come from a better time, we joke about
our dystopian preparations, self-conscious about our "overreaction," but preparing all the same.
Look at it this way: Germany had to be leveled and its citizens reduced to abject penury, before Volkswagen could become the world's
biggest car company, and autobahns built throughout the world. It will be darkest before the dawn, and hopefully, that light that
comes after, won't be the miniature sunrise of a nuclear conflagration.
An excellent summary and bleak reminder of what our so-called civilization has become. How do we extricate ourselves from this
strange death spiral?
I have long suspected that we humans are creatures of our own personal/group/tribal/national/global fables and mythologies. We
are compelled by our genes, marrow, and blood to tell ourselves stories of our purpose and who we are. It is time for new mythologies
and stories of "who we are". This bizarre hyper-techno all-for-profit world needs a new story.
"The black underclass is larger, more dysfunctional, and more alienated than it was in the 1960s. My theory, for what it's worth,
is that the civil rights legislation of 1964 and '65, which removed legal barriers to full participation in national life, induced
considerable anxiety among black citizens over the new disposition of things, for one reason or another."
Um, forgotten by Kunstler is the fact that 1965 was also the year when the USA reopened its doors to low-skilled immigrants
from the Third World – who very quickly became competitors with black Americans. And then the Boom ended, and corporate American,
influenced by thinking such as that displayed in Lewis Powell's (in)famous 1971 memorandum, decided to claw back the gains made
by the working and middle classes in the previous 3 decades.
Hey Jim, I know you love to blame Wall Street and the Republicans for the GFC. I remember back in '08 you were urging Democrats
to blame it all on Republicans to help Obama win. But I have news for you. It wasn't Wall Street that caused the GFC. The crisis
actually had its roots in the Clinton Administration's use of the Community Reinvestment Act to pressure banks to relax mortgage
underwriting standards. This was done at the behest of left wing activists who claimed (without evidence, of course) that the
standards discriminated against minorities. The result was an effective repeal of all underwriting standards and an explosion
of real estate speculation with borrowed money. Speculation with borrowed money never ends well.
I have to laugh, too, when you say that it's perverse that the passion for tyranny is popular on the left. Have you ever heard
of the French Revolution? How about the USSR? Communist China? North Korea? Et cetera.
Leftism is leftism. Call it Marxism, Communism, socialism, liberalism, progressivism, or what have you. The ideology is the
same. Only the tactics and methods change. Destroy the evil institutions of marriage, family, and religion, and Man's innate goodness
will shine forth, and the glorious Godless utopia will naturally result.
Of course, the father of lies is ultimately behind it all. "He was a liar and a murderer from the beginning."
When man turns his back on God, nothing good happens. That's the most fundamental problem in Western society today. Not to
say that there aren't other issues, but until we return to God, there's not much hope for improvement.
Hmm. I just wandered over here by accident. Being a construction contractor, I don't know enough about globalization, academia,
or finance to evaluate your assertions about those realms. But being in a biracial family, and having lived, worked, and worshiped
equally in white and black communities, I can evaluate your statements about social justice, race, and civil rights.
Long story short, you pick out fringe liberal ideas, misrepresent them as mainstream among liberals, and shoot them down. Casuistry,
anyone?
You also misrepresent reality to your readers. No, the black underclass is not larger, more dysfunctional, and more alienated
now than in the 1960's, when cities across the country burned and machine guns were stationed on the Capitol steps. The "racial
divide" is not "starker now than ever"; that's just preposterous to anyone who was alive then. And nobody I've ever known felt
"shame" over the "outcome of the civil rights campaign". I know nobody who seeks to "punish and humiliate" the 'privileged'.
I get that this column is a quick toss-off before the holiday, and that your strength is supposed to be in your presentation,
not your ideas. For me, it's a helpful way to rehearse debunking common tropes that I'll encounter elsewhere.
But, really, your readers deserve better, and so do the people you misrepresent. We need bad liberal ideas to be critiqued
while they're still on the fringe. But by calling fringe ideas mainstream, you discredit yourself, misinform your readers, and
contribute to stereotypes both of liberals and of conservatives. I'm looking for serious conservative critiques that help me take
a second look at familiar ideas. I won't be back.
I disagree, NoahK, that the whole is incohesive, and I also disagree that these are right-wing talking points.
The theme of this piece is the long crisis in the US, its nature and causes. At no point does this essay, despite it stream
of consciousness style, veer away from that theme. Hence it is cohesive.
As for the right wing charge, though it is true, to be sure, that Kunstler's position is in many respects classically conservative
-- he believes for example that there should be a national consensus on certain fundamentals, such as whether or not there are
two sexes (for the most part), or, instead, an infinite variety of sexes chosen day by day at whim -- you must have noticed that
he condemned both the voluntarism of Karl Rove AND the voluntarism of the post-structuralist crowd.
My impression is that what Kunstler is doing here is diagnosing the long crisis of a decadent liberal post-modernity, and his stance is not that of either
of the warring sides within our divorced-from-reality political establishment, neither that of the 'right' or 'left.' Which is
why, logically, he published it here. National Review would never have accepted this piece. QED.
This malaise is rooted in human consciousness that when reflecting on itself celebrating its capacity for apperception suffers
from the tension that such an inquiry, such an inward glance produces. In a word, the capacity for the human being to be aware
of his or herself as an intelligent being capable of reflecting on aspects of reality through the artful manipulation of symbols
engenders this tension, this angst.
Some will attempt to extinguish this inner tension through intoxication while others through the thrill of war, and it has
been played out since the dawn of man and well documented when the written word emerged.
The malaise which Mr. Kunstler addresses as the problem of our times is rooted in our existence from time immemorial. But the
problem is not only existential but ontological. It is rooted in our being as self-aware creatures. Thus no solution avails itself
as humanity in and of itself is the problem. Each side (both right and left) seeks its own anodyne whether through profligacy
or intolerance, and each side mans the barricades to clash experiencing the adrenaline rush that arises from the perpetual call
to arms.
"Globalization has acted, meanwhile, as a great leveler. It destroyed what was left of the working class -- the lower-middle class
-- which included a great many white Americans who used to be able to support a family with simple labor."
And to whom do we hand
the tab for this? Globalization is a word. It is a concept, a talking point. Globalization is oligarchy by another name. Unfortunately,
under-educated, deplorable, Americans; regardless of party affiliation/ideology have embraced. And the most ironic part?
Russia
and China (the eventual surviving oligarchies) will eventually have to duke it out to decide which superpower gets to make the
USA it's b*tch (excuse prison reference, but that's where we're headed folks).
And one more irony. Only in American, could Christianity,
which was grew from concepts like compassion, generosity, humility, and benevolence; be re-branded and 'weaponized' to further
greed, bigotry, misogyny, intolerance, and violence/war. Americans fiddled (over same sex marriage, abortion, who has to bake
wedding cakes, and who gets to use which public restroom), while the oligarchs burned the last resources (natural, financial,
and even legal).
"Today, there is more grievance and resentment, and less hope for a better future, than when Martin Luther King made the case
for progress on the steps of the Lincoln Memorial in 1963."
Spoken like a white guy who has zero contact with black people. I mean, even a little bit of research and familiarity would
give lie to the idea that blacks are more pessimistic about life today than in the 1960's.
Black millenials are the most optimistic group of Americans about the future. Anyone who has spent any significant time around
older black people will notice that you don't hear the rose colored memories of the past. Black people don't miss the 1980's,
much less the 1950's. Young black people are told by their elders how lucky they are to grow up today because things are much
better than when grandpa was our age and we all know this history.\
It's clear that this part of the article was written from absolute
ignorance of the actual black experience with no interest in even looking up some facts. Hell, Obama even gave a speech at Howard
telling graduates how lucky they were to be young and black Today compared to even when he was their age in the 80's!
Here is the direct quote;
"In my inaugural address, I remarked that just 60 years earlier, my father might not have been served in a D.C. restaurant
-- at least not certain of them. There were no black CEOs of Fortune 500 companies. Very few black judges. Shoot, as Larry Wilmore
pointed out last week, a lot of folks didn't even think blacks had the tools to be a quarterback. Today, former Bull Michael Jordan
isn't just the greatest basketball player of all time -- he owns the team. (Laughter.) When I was graduating, the main black hero
on TV was Mr. T. (Laughter.) Rap and hip hop were counterculture, underground. Now, Shonda Rhimes owns Thursday night, and Beyoncé
runs the world. (Laughter.) We're no longer only entertainers, we're producers, studio executives. No longer small business owners
-- we're CEOs, we're mayors, representatives, Presidents of the United States. (Applause.)
I am not saying gaps do not persist. Obviously, they do. Racism persists. Inequality persists. Don't worry -- I'm going to
get to that. But I wanted to start, Class of 2016, by opening your eyes to the moment that you are in. If you had to choose one
moment in history in which you could be born, and you didn't know ahead of time who you were going to be -- what nationality,
what gender, what race, whether you'd be rich or poor, gay or straight, what faith you'd be born into -- you wouldn't choose 100
years ago. You wouldn't choose the fifties, or the sixties, or the seventies. You'd choose right now. If you had to choose a time
to be, in the words of Lorraine Hansberry, "young, gifted, and black" in America, you would choose right now. (Applause.)"
I love reading about how the Community Reinvestment Act was the catalyst of all that is wrong in the world. As someone in the
industry the issue was actually twofold. The Commodities Futures Modernization Act turned the mortgage securities market into
a casino with the underlying actual debt instruments multiplied through the use of additional debt instruments tied to the performance
but with no actual underlying value. These securities were then sold around the world essentially infecting the entire market.
In order that feed the beast, these NON GOVERNMENT loans had their underwriting standards lowered to rediculous levels. If you
run out of qualified customers, just lower the qualifications. Government loans such as FHA, VA, and USDA were avoided because
it was easier to qualify people with the new stuff. And get paid. The short version is all of the incentives that were in place
at the time, starting with the Futures Act, directly led to the actions that culminated in the Crash. So yes, it was the government,
just a different piece of legislation.
Kunstler itemizing the social and economic pathologies in the United States is not enough. Because there are other models that
demonstrate it didn't have to be this way.
E.g. Germany. Germany is anything but perfect and its recent government has screwed up with its immigration policies. But Germany
has a high standard of living, an educated work force (including unions and skilled crafts-people), a more rational distribution
of wealth and high quality universal health care that costs 47% less per capita than in the U.S. and with no intrinsic need to
maraud around the planet wasting gobs of taxpayer money playing Global Cop.
The larger subtext is that the U.S. house of cards was planned out and constructed as deliberately as the German model was.
Only the objective was not to maximize the health and happiness of the citizenry, but to line the pockets of the parasitic Elites.
(E.g., note that Mitch McConnell has been a government employee for 50 years but somehow acquired a net worth of over $10 Million.)
P.S. About the notionally high U.S. GDP. Factor out the TRILLIONS inexplicably hoovered up by the pathological health care
system, the metastasized and sanctified National Security State (with its Global Cop shenanigans) and the cronied-up Ponzi scheme
of electron-churn financialization ginned up by Goldman Sachs and the rest of the Banksters, and then see how much GDP that reflects
the actual wealth of the middle class is left over.
Right-Wing Dittoheads and Fox Watchers love to blame the Community Reinvestment Act. It allows them to blame both poor black people
AND the government. The truth is that many parties were to blame.
One of the things I love about this rag is that almost all of the comments are included.
You may be sure that similar commenting privilege doesn't exist most anywhere else.
Any disfavor regarding the supposed bleakness with the weak hearted souls aside, Mr K's broadside seems pretty spot on to me.
I think the author overlooks the fact that government over the past 30 to 40 years has been tilting the playing field ever more
towards the uppermost classes and against the middle class. The evisceration of the middle class is plain to see.
If the the common man had more money and security, lots of our current intrasocial conflicts would be far less intense.
Andrew Imlay: You provide a thoughtful corrective to one of Kunstler's more hyperbolic claims. And you should know that his jeremiad
doesn't represent usual fare at TAC. So do come back.
Whether or not every one of Kunstler's assertions can withstand a rigorous fact-check, he is a formidable rhetorician. A generous
serving of Weltschmerz is just what the season calls for.
America is stupefied from propaganda on steroids for, largely from the right wing, 25? years of Limbaugh, Fox, etc etc etc Clinton
hate x 10, "weapons of mass destruction", "they hate us because we are free", birtherism, death panels, Jade Helm, pedophile pizza, and more Clinton hate porn.
Americans have been taught to worship the wealthy regardless of how they got there. Americans have been taught they are "Exceptional" (better, smarter, more godly than every one else) in spite of outward appearances.
Americans are under educated and encouraged to make decisions based on emotion from constant barrage of extra loud advertising
from birth selling illusion.
Americans brain chemistry is most likely as messed up as the rest of their bodies from junk or molested food. Are they even
capable of normal thought?
Donald Trump has convinced at least a third of Americans that only he, Fox, Breitbart and one or two other sources are telling
the Truth, every one else is lying and that he is their friend.
Is it possible we are just plane doomed and there's no way out?
I loathe the cotton candy clown and his Quislings; however, I must admit, his presence as President of the United States has forced
everyone (left, right, religious, non-religious) to look behind the curtain. He has done more to dis-spell the idealism of both
liberal and conservative, Democrat and Republican, rich and poor, than any other elected official in history. The sheer amount
of mind-numbing absurdity resulting from a publicity stunt that got out of control ..I am 70 and I have seen a lot. This is beyond
anything I could ever imagine. America is not going to improve or even remain the same. It is in a 4 year march into worse, three
years to go.
Mr. Kuntzler has an honest and fairly accurate assessment of the situation. And as usual, the liberal audience that TAC is trying
so hard to reach, is tossing out their usual talking points whilst being in denial of the situation.
The Holy Bible teaches us that repentance is the first crucial step on the path towards salvation. Until the progressives,
from their alleged "elite" down the rank and file at Kos, HuffPo, whatever, take a good, long, hard look at the current national
dumpster fire and start claiming some responsibility, America has no chance of solving problems or fixing anything.
Kunstler must have had a good time writing this, and I had a good time reading it. Skewed perspective, wild overstatement, and
obsessive cherry-picking of the rare checkable facts are mixed with a little eye of newt and toe of frog and smothered in a oar
and roll of rhetoric that was thrilling to be immersed in. Good work!
aah, same old Kunstler, slightly retailored for the Trump years.
for those of you familiar with him, remember his "peak oil" mania from the late 00s and early 2010s? every blog post was about
it. every new year was going to be IT: the long emergency would start, people would be Mad Maxing over oil supplies cos prices
at the pump would be $10 a gallon or somesuch.
in this new rant, i did a control-F for "peak oil" and hey, not a mention. I guess even cranks like Kunstler know when to give
a tired horse a rest.
Kunstler once again waxes eloquent on the American body politic. Every word rings true, except when it doesn't. At times poetic,
at other times paranoid, Kunstler does us a great service by pointing a finger at the deepest pain points in America, any one
of which could be the geyser that brings on catastrophic failure.
However, as has been pointed out, he definitely does not hang out with black people. For example, the statement:
But the residue of the "Black Power" movement is still present in the widespread ambivalence about making covenant with a common
culture, and it has only been exacerbated by a now long-running "multiculturalism and diversity" crusade that effectively nullifies
the concept of a national common culture.
The notion of a 'national common culture' is interesting but pretty much a fantasy that never existed, save colonial times.
Yet Kunstler's voice is one that must be heard, even if he is mostly tuning in to the widespread radicalism on both ends of
the spectrum, albeit in relatively small numbers. Let's face it, people are in the streets marching, yelling, and hating and mass
murders keep happening, with the regularity of Old Faithful. And he makes a good point about academia loosing touch with reality
much of the time. He's spot on about the false expectations of what technology can do for the economy, which is inflated with
fiat currency and God knows how many charlatans and hucksters. And yes, the white working class is feeling increasingly like a
'victim group.'
While Kunstler may be more a poet than a lawyer, more songwriter than historian, my gut feeling is that America had better
take notice of him, as The American ship of state is being swept by a ferocious tide and the helmsman is high on Fentanyl (made
in China).
Re: The crisis actually had its roots in the Clinton Administration's use of the Community Reinvestment Act
Here we go again with this rotting zombie which rises from its grave no matter how many times it has been debunked by statisticians
and reputable economists (and no, not just those on the left– the ranks include Bruce Bartlett for example, a solid Reaganist).
To reiterate again : the CRA played no role in the mortgage boom and bust. Among other facts in the way of that hypothesis is
the fact that riskiest loans were being made by non-bank lenders (Countrywide) who were not covered by the CRA which only applied
to actual banks– and the banks did not really get into the game full tilt, lowering their lending standards, until late in the
game, c. 2005, in response to their loss of business to the non-bank lenders. Ditto for the GSEs, which did not lower their standards
until 2005 and even then relied on wall Street to vet the subprime loans they were buying.
To be sure, blaming Wall Street for everything is also wrong-headed, though wall Street certainly did some stupid, greedy and
shady things (No, I am not letting them off the hook!) But the cast of miscreants is numbered in the millions and it stretches
around the planet. Everyone (for example) who got into the get-rich-quick Ponzi scheme of house flipping, especially if they lied
about their income to do so. And everyone who took out a HELOC (Home Equity Line of Credit) and foolishly charged it up on a consumption
binge. And shall we talk about the mortgage brokers who coached people into lying, the loan officers who steered customers into
the riskiest (and highest earning) loans they could, the sellers who asked palace-prices for crackerbox hovels, the appraisers
who rubber-stamped such prices, the regulators who turned a blind eye to all the fraud and malfeasance, the ratings agencies who
handed out AAA ratings to securities full of junk, the politicians who rejoiced over the apparent "Bush Boom" well, I could continue,
but you get the picture.
"The Holy Bible teaches us that repentance is the first crucial step on the path towards salvation. Until the progressives, from
their alleged "elite" down the rank and file at Kos, HuffPo, whatever, take a good, long, hard look at the current national dumpster
fire and start claiming some responsibility, America has no chance of solving problems or fixing anything."
Pretty sure that calling other people to repent of their sin of disagreeing with you is not quite what the Holy Bible intended.
David Stockman estimates that front-loaded tax cuts will produce a federal deficit of
about $1.3 trillion in fiscal year 2019. In effect, fiscal stimulus is being cranked from 3
to 6 percent of GDP.
Gunning the economy could help reduce R party losses in the 2018 midterm elections. But
it's very poor timing for the 2020 presidential election. By then, with rate hikes biting and
stimulus easing, the economy is likely to take a tumble at the worst possible time for
re-electing the incumbent.
But given the regal out-of-touchness of elitist Dems, coupled with their jaw-dropping
incompetence, they should still be able to seize defeat from the jaws of victory.
My biggest complaint with this argument is that it's far from clear the tax bill is
gunning the economy. It looks much more like looting, in terms of where the gains go.
Doubling the standard deduction might have a big effect on a number of cash-constrained
households. It won't do much for the 47%, and of course it expires. I don't know how much
effect it will have in aggregate though.
I agree with you on the looting. What I expect that the Republicans are counting on
is:
1) The base (the people most immediately screwed by this) will still vote with them
because of tribalism and a few symbolic bonuses from a grateful AT&T.
2) The middle-class will be carried through the mid-terms by the immediate cuts and some
measure of gullibility.
3) The stock owners will enjoy the sugar high as buybacks kick off speculation, and thus be
more predisposed to it.
4) The donor cash will cushion the blow of any real blowback and the Dems will fumble the
fight over extending the "temporary" cuts so that the Repubs can look like middle class
saviors.
5) Even if all that fails they get cushy jobs as consultants.
Disagree that it gins the economy because the distribution of the tax cuts looks more like
a QE program than what tax cuts were when they cut taxes for working people.
The tax cuts go to those who hoard money and take it out of circulation – the rich
and corporations. They aren't going to spend more, they will save more or do stock buy
backs.
Thus the velocity of money will decline further.
So where is the gin coming from because I'm not seeing it.
Tax cuts are one part of fiscal stimulus. But so is increased direct spending. Stockman
elaborates:
We expect FY 2019 outlays to rise by upwards of $200 billion from CBO's most recent
baseline projection. That would include $75 billion for defense, $65 billion for disaster
aid, $25 billion for increased of domestic appropriations above the sequester cap, $20
billion for the ObamaCare subsidies and another $15 billion for interest on higher spending
and lower revenues.
Those kinds of spending increases are now virtually certain, and will take total FY 2019
outlays to around $4.575 trillion -- nearly 20% more than the $3.85 trillion spent during
FY 2016 during the run-up to the presidential election.
If such radically ramped-up spending fails to gin the economy, then we will be obliged to
question (as some do) whether fiscal stimulus actually works at all.
I don't really know what to tell you boo boo
I mean I try (you know I try)
I was referring to the tax cut, but you are right about the spending side and wrong too
IMO.
Disagree that this "increase" in spending – which is party a decrease of a decrease
– is even light years close to "radical" as you say.
The Defense spending is the least stimulate type of fiscal spending, Obamacare goes mostly
to rich gigantic corporations, disaster relief is transitory, and the interest goes to
investors.
So spending increases of a small very non radical nature that go largely to rich gigantic
corporations.
Ok I'm seeing some gin. But I'm still not seeing much gin.
Argentina is essentially the case of neoliberalism renaissance after 2008 debacle. So this is
about strange non-death of neoliberalism after 2008. This is not traditional right wing regime
(which usually isolationalist for smaller countries and suspicious of the USA and international
financial capital)
Clearly the pendulum has swung to the right in the past few years. Numerous questions arise.
What kind of right? How far right? How did they gain power? What is their appeal? How
sustainable are the right wing regimes? Who are their international allies and adversaries?
Having taken power, how have the rightist regimes performed and by what criteria is success or
failure measured?
While the left has been in retreat, they still retain power in some states. Numerous
questions arise. What is the nature of the left today? Why have some regimes continued while
others have declined or been vanquished? Can the left recover its influence and under what
conditions and with what programmatic appeal.
We will proceed by discussing the character and policies of the right and left and their
direction. We will conclude by analyzing the dynamics of right and left policies, alignments
and future perspectives.
Right-Radicalism: The Face of Power
The right wing regimes are driven by intent to implement structural changes: they look to
reordering the nature of the state, economic and social relations and international political
and economic alignments.
Radical right regimes rule in Brazil, Argentina, Mexico, Colombia, Peru, Paraguay,
Guatemala, Honduras and Chile.
In several countries extreme right regimes have made abrupt changes, while in others they
build on incremental changes constituted over time.
The changes in Argentina and Brazil represent examples of extreme regressive transformations
directed at reversing income distribution, property relations, international alignments and
military strategies. The goal is to redistribute income upwardly, to re-concentrate wealth,
property-ownership upward and externally and to subscribe to imperial doctrine. These
pluto-populist regimes are run by rulers, who openly speak to and for very powerful domestic
and overseas investors and are generous in their distribution of subsidies and state resources
– a kind of ' populism for the plutocrats' .
The rise and consolidation of extremist right regimes in Argentina and Brazil are based on
several decisive interventions, combining elections and violence, purges and co-optation, mass
media propaganda and deep corruption.
Mauricio Macri was backed by the major media, led by the Clarin conglomerate, as well as by
the international financial press (Financial Times, Wall Street Journal, etc.). Wall Street
speculators and Washington's overseas political apparatus subsidized his electoral
campaign.
Macri, his family, cronies and financial accomplices, transferred public resources to
private accounts. Provincial political bosses and their patronage operations joined forces with
the wealthy financial sectors of Buenos Aires to secure votes in the Capital.
Upon his election, the Mauricio Macri regime transferred five billion dollars to the
notorious Wall Street speculator, Paul Singer, signed off on multi-billion dollar, high
interest loans, increased utility fees six fold, privatized oil, gas and public lands and fired
tens of thousands of public sector employees.
Macri organized a political purge and arrest of opposition political leaders, including
former President Cristina Fernandez Kirchner. Several provincial activists were jailed or even
assassinated.
Macri is a success story from the perspective of Wall Street, Washington and the
Porteño business elite. Wages and salaries have declined for Argentine workers. Utility
companies secured their highest profits ever. Bankers doubled interest rate returns. Importers
became millionaires. Agro-business incomes skyrocketed as their taxes were reduced.
From the perspective of Argentina's small and medium business enterprises President Macri's
regime has been a disaster: Many thousands have gone bankrupt because of high utility costs and
harsh competition from cheap Chinese imports. In addition to the drop in wages and salaries,
unemployment and under employment doubled and the rate of extreme poverty tripled
The economy, as a whole, floundered. Debt financing failed to promote growth, productivity,
innovation and exports. Foreign investment experienced easy entry, big profits and fast
departure. The promise of prosperity was narrowly based around a quarter of the population. To
weaken the expected public discontent – the regime shut down independent media voices,
unleashed thugs against critics and co-opted pliable gangster trade union bosses to break
strikes.
Public protests and strikes multiplied but were ignored and repressed. Popular leaders and
activists are stigmatized by the Macri-financed media hacks.
Barring a major social upheaval or economic collapse, Macri will exploit the fragmentation
of the opposition to secure re-election as a model gangster for Wall Street. Macri is prepared
to sign off on US military bases, EU free trade agreements, and greater police liaison with
Israel's sinister secret police, Mossad.
Brazil has followed Macri's far right policies.
Seizing power through a phony impeachment operation, the mega-swindler Michel Temer
immediately proceeded to dismantle the entire public sector, freeze salaries for twenty years,
and extend retirement age for pensioners by five to ten years. Temer led over a thousand
bribe-taking elected officials in the multi-billion dollar pillage of the state oil company and
every major public infrastructure project.
Coup, corruption and contempt were hidden by a system granting Congressional impunity until
independent prosecutors investigated, charged and jailed several dozen politicians, but not
Temer. Despite 95% public disapproval, President Temer remains in power with the total backing
of Wall Street, the Pentagon and Sao Paolo bankers.
Mexico, the long-standing narco-assassin state, continues elect one thieving PRI-PAN
political regime after another. Billions in illicit profits flows to the overseas tax havens of
money laundering bankers, US and Canadian mine owners. Mexican and international manufacturers
extracted double digit profits sent, to overseas accounts and tax havens. Mexico broke its own
miserable record in elite tax avoidance, while extending low wage-tax 'free trade zones'.
Millions of Mexicans have fled across the border to escape predatory gangster capitalism. The
flow of hundreds of millions of dollars of profits by US and Canadian multi-nationals were a
result of the 'unequal exchange' between US capital and Mexican labor, held in place by
Mexico's fraudulent electoral system.
In at least two well-known presidential elections in 1988 and 2006, left of center
candidates, Cuahtemoc Cardenas and Manuel Lopez Obrador, won with healthy margins of victory,
only to have their victories stolen by fraudulent vote counts.
Peru's rightist mining regimes, alternated between the overtly bloody Fujimori dictatorship
and corrupt electoral regimes. What is consistent in Peruvian politics is the handover of
mineral resources to foreign capital, pervasive corruption and the brutal exploitation of
natural resources by US and Canadian mining and drilling corporations in regions inhabited by
Indian communities.
The extreme right ousted elected left-of-center governments, including President Fernando
Lugo in Paraguay (2008-2012) and Manuel Zelaya in Honduras (2006-2009), with the active support
and approval of the US State Department. Narco-presidents now wield power by means of
repression, including violence against popular movements and the killing of scores of peasant
and urban activists. This year, a grossly rigged election in Honduras ensured the continuity of
narco-regimes and US military bases.
The spread of the extreme right from Central America and Mexico to the Southern Cone
provides the groundwork for the re-assertion of US centered military alliances and regional
trade pacts.
The rise of the extreme right ensures the most lucrative privatizations and the highest
rates of return on overseas bank loans. The far right is quick to crack down on popular dissent
and electoral challenges with violence. At most the far right allows a few rotating elites with
nationalist pretensions to provide a façade of electoral democracy.
The Shift from the Center-Left to the Center-Right
The political swings to the far right have had profound ripple effects – as nominal
center-left regimes have swung to the center-right.
Two regimes have moved decisively from the center-left to the center-right: Uruguay under
Tabare Vazquez of the 'Broad Front' and Ecuador with the recent election of Lenin Moreno of
PAIS Alliance. In both cases the groundwork was established via accommodations with oligarchs
of the traditional right parties. The previous center-left regimes of Ecuadorean President
Rafael Correa and Uruguayan President Jose Mujica succeeded in pushing for public investments
and social reforms. They combined their leftist rhetoric while capitalizing on the global high
prices and high demand for agro-mineral exports to finance their reforms. With the decline in
world prices and the public exposure of corruption, the newly elected center-left parties
nominated and elected center –right candidates who turned anti-corruption campaigns into
vehicles for embracing neoliberal economic policies. The center-right presidents rejected
economic nationalism, encouraged large scale foreign investment and implemented fiscal
austerity programs appealing to the upper middle class and ruling class.
The center-right regimes marginalized the leftist sectors of their parties. In the case of
Ecuador, they split the party, with the newly elected president realigning international
policies away from the left (Bolivia, Venezuela) and toward the US and the far right–
while shedding the legacy of their predecessor in terms of popular social programs.
With the decline in export prices the center-right regimes offered generous subsidies to
foreign investors in agriculture and forestry in Uruguay, and mine owners and exporters in
Ecuador.
The newly converted center-right regimes joined with their established counterparts in Chile
and joined the Trans Pacific Partnership with Asian nations, the EU and the US.
The center-right sought to manipulate the social rhetoric of the previous center-left
regimes in order to retain popular voters while securing support from the business elite.
The Left Moves to the Center Left
Bolivia, under Evo Morales, has demonstrated an exceptional capacity for sustaining growth,
securing re-election and neutralizing the opposition by combining a radical left foreign policy
with a moderate, mixed public-private export economy. While Bolivia condemns US imperialism,
major oil, gas, metals and lithium multi-nationals have invested heavily in Bolivia. Evo
Morales has moderated his ideological posture shifting from revolutionary socialism to a local
version of liberal democratic cultural politics.
Evo Morales' embrace of a mixed economy has neutralized any overt hostility from the US and
the new far-right regimes in the region
Though remaining politically independent, Bolivia has integrated its exports with the far
right neoliberal regimes in the region. President Evo Morales's moderate economic policies,
diversity of mineral exports, fiscal responsibility, incremental social reforms, and support
from well-organized social movements has led to political stability and social continuity
despite the volatility of commodity prices.
Venezuela's left regimes under President Hugo Chavez and Maduro have followed a divergent
course with harsh consequences. Totally dependent on extraordinary global oil prices, Venezuela
proceeded to finance generous welfare programs at home and abroad. Under President Chavez
leadership, Venezuela adopted a consequential anti-imperialist policy successfully opposing a
US centered free trade agreement (LAFTA) and launching an anti-imperialist alternative, the
Bolivarian Alliance for the Americas (ALBA).
Advancing social welfare and financing overseas allies without diversifying the economy and
markets and increasing production was predicated on continuous high returns on a single
volatile export – oil.
Unlike Bolivia under President Evo Morales, who built his power with the support of an
organized, class conscious and disciplined mass base, Venezuela counted on an amorphous
electoral alliance, which included slum dwellers, defectors from the corrupt traditional
parties (across the spectrum) and opportunists intent on grabbing office and perks. Political
education was reduced to mouthing slogans, cheering the President and distributing consumer
goods.
Venezuelan technocrats and political loyalists occupied highly lucrative positions,
especially in the petroleum sector and were not held to account by workers' councils or
competent state auditors. Corruption was rampant and billions of dollars of oil wealth was
stolen. This pillage was tolerated because of the huge influx of petro-dollars due to historic
high prices and high demand. This led to a bizarre situation where the regime spoke of
socialism and funded massive social programs, while the major banks, food distributers,
importers and transportation operators were controlled by hostile private oligarchs who
pocketed enormous profits while manufacturing shortages and promoting inflation. Despite the
problems, the Venezuelan voters gave the regime a series of electoral victories over the US
proxies and oligarch politicians. This tended to create overconfidence in the regime that the
Bolivarian socialist model was irrevocable.
The precipitous drop of oil prices, global demand, and export earnings led to the decline of
imports and consumption. Unlike Bolivia, foreign reserves declined, the rampant theft of
billions was belatedly uncovered and the US-backed rightwing opposition returned to violent
'direct action' and sabotage while hoarding essential food, consumer goods and medicine.
Shortages led to widespread black marketeering. Public sector corruption and hostile opposition
control of the private banking, retail and industrial sectors, backed by the US, paralyzed the
economy. The economy has been in a free-fall and electoral support has eroded. Despite the
regime's severe problems, the majority of low income voters correctly understood that their
chances of surviving under the US-backed oligarchic opposition would be worse and the embattled
left continued to win gubernatorial and municipal elections up through 2017.
Venezuela's economic vulnerability and negative growth rate led to increased indebtedness.
The opposition of the extreme right regimes in Latin America and Washington's economic
sanctions has intensified food shortages and increased unemployment.
In contrast, Bolivia effectively defeated US-elite coup plots between 2008-10. The Santa
Cruz-based oligarchs faced the clear choice of either sharing profits and social stability by
signing off on social pacts (workers/peasants, capital and state) with the Morales government
or facing an alliance of the government and the militant labor movement prepared to expropriate
their holdings. The elites chose economic collaboration while pursuing low intensity electoral
opposition.
Conclusion
Left opposition is in retreat from state power. Opposition to the extreme right is likely to
grow, given the harsh, uncompromising assault on income, pensions, the rise in the cost of
living, severe reductions in social programs and attacks on private and public sector
employment. The extreme right has several options, none of which offer any concessions to the
left. They have chosen to heighten police state measures (the Macri solution); they attempt to
fragment the opposition by negotiating with the opportunist trade union and political party
bosses; and they reshuffle degraded rulers with new faces to continue policies (the Brazilian
solution).
The formerly revolutionary left parties, movements and leaders have evolved toward electoral
politics, protests and job action. So far they do not represent an effective political option
at the national level
The center-left, especially in Brazil and Ecuador, is in a strong position with dynamic
political leaders (Lula DaSilva and Correa) but face trumped up charges by right-wing
prosecutors who intend to exclude them from running for office. Unless the center-left
reformers engage in prolonged large-scale mass activity, the far right will effectively
undermine their political recovery.
The US imperial state has temporarily regained proxy regimes, military allies and economic
resources and markets. China and the European Union profit from optimal economic conditions
offered by the far right regimes. The US military program has effectively neutralized the
radical opposition in Colombia, and the Trump regime has intensified and imposed new sanctions
on Venezuela and Cuba.
The Trump regimes 'triumphalist' celebration is premature – no decisive strategic
victory has taken place, despite important short term advances in Mexico, Brazil and Argentina.
However large outflows of profits, major transfers of ownership to foreign investors, favorable
tax rates, low tariff and trade policies have yet to generate new productive facilities,
sustainable growth and to ensure economic fundamentals. Maximizing profits and ignoring
investments in productivity and innovation to promote domestic markets and demand has
bankrupted tens of thousands of medium and small local commercial and manufacturing firms. This
has led to rising chronic unemployment and underemployment. Marginalization and social
polarization without political leadership is growing. Such conditions led to 'spontaneous'
uprisings in Argentina 2001, Ecuador 2000 and Bolivia 2005.
The far right in power may not evoke a rebellion of the far left but its policies can
certainly undermine the stability and continuity of the current regimes. At a minimum, it can
lead to some version of the center left and restoration of the welfare and employment regimes
now in tatters.
In the meantime the far right will press ahead with their perverse agenda combining deep
reversals of social welfare, the degradation of national sovereignty and economic stagnation
with a formidable profit maximizing performance.
I think this author is on the wrong site. None of those countries have "radical right"
governments. Right wing radicals believe in social hierarchy regardless of wealth
distribution.
In contrast, Bolivia effectively defeated US-elite coup plots between 2008-10. The Santa
Cruz-based oligarchs faced the clear choice of either sharing profits and social stability
by signing off on social pacts (workers/peasants, capital and state) with the Morales
government or facing an alliance of the government and the militant labor movement prepared
to expropriate their holdings. The elites chose economic collaboration while pursuing low
intensity electoral opposition.
This is an intelligent form of Bolivia First, looking for good relations with
International Capital, but putting the wellbeing of all Bolivians first.
And interestingly
it works.
According to a report by the Centre for Economic and Policy Research (CEPR) in
Washington, "Bolivia has grown much faster over the last eight years than in any period
over the past three and a half decades." The benefits of such growth have been felt by the
Bolivian people: under Morales, poverty has declined by 25% and extreme poverty has
declined by 43%; social spending has increased by more than 45%; the real minimum wage has
increased by 87.7%; and, perhaps unsurprisingly, the Economic Commission on Latin America
and the Caribbean has praised Bolivia for being "one of the few countries that has reduced
inequality". In this respect, the re-election of Morales is really very simple: people like
to be economically secure – so if you reduce poverty, they'll probably vote for
you.
Turns out the difference between Bolivia and Venezuela has nothing to do with abstract
ideological labels, and everything to do with fiscal prudence.
I know, I know, fiscal prudence sounds deadly dull, but it makes an enormous difference in
real people's lives. While Venezuela's reckless socialists were impoverishing the country's
once thriving middle class, Bolivia's socialists were creating an entirely new indigenous
middle class, even spawning a whole new style of architecture along with it. Why? Because
newly affluent Bolivians can afford it: Per capita GDP more than tripled from just $1,000 a
year to over $3,200 over a decade. At the same time, new government social programs
designed to help older people, mothers and other at-risk groups saw to major improvements
in social indicators. To take just one, consider this: Thirty-two percent of Bolivians were
chronically malnourished in 2003. By 2012, just 18 percent were.
"... By Bill Black, the author of The Best Way to Rob a Bank is to Own One, an associate professor of economics and law at the University of Missouri-Kansas City, and co-founder of Bank Whistleblowers United. Originally published at New Economic Perspectives ..."
"... A dilettante is a person who cultivates an area of interest, such as the arts, without real commitment or knowledge. The Dilettante Doctrine takes modern macro's arrogance to a new pinnacle. Only their model is legitimate, and it is illegitimate to criticize their DSGE models, even though they repeatedly fail. Instead, we must all "like" their models. We cannot make any statements about macroeconomics unless we "like [DSGE] models." The Dilettante Doctrine is a sure-fire means of winning academic disputes. You demand that your critics endorse your views, or you dismiss them as dilettantes unworthy of respect. ..."
"... Readers may recall that the scientific method works in the opposite direction of the Dilettante Doctrine. Modern macro proposes a theory (DSGE) and tests its predictive ability. The DSGE models fail recurrently, on the most important macro events, and the failures are massive. The scientific method requires the theorist of the failed model to declare it falsified. Economists who "like" repeatedly falsified DSGE models are, as Paul Romer famously declared, engaged in "pseudoscience." ..."
"... BTW, one of the best takes of macroeconomics I've encountered is Steve Keen's work, which I gratefully acknowledge I first read here on NC. Keen's critique of DSGE models is utterly spot-on and mathematically sophisticated. Part of the problem with economics is that it has been afflicted with 'math envy' since its earliest days, and the ADM results were proved with Banach Space methods, so they just *had* to be right. Google the phrase "spherical cow" for more on this mindset, not to mention one of the few really funny math jokes I know. ..."
By Bill Black, the author of The Best Way to Rob a Bank is to Own One, an associate
professor of economics and law at the University of Missouri-Kansas City, and co-founder of
Bank Whistleblowers United. Originally published at New
Economic Perspectives
The truly exceptional thing about 'modern macroeconomics' devotees is not that they are so
consistently and horrifically wrong or that they persist in their errors – but their
exceptional combination of arrogance and disdain for those who have dramatically better records
and broader and more relevant expertise. Kartik Athreya, the Richmond Fed's Research Director,
led the modern macro parade on June 17, 2010 with his blog
(which he later withdrew in embarrassment) when he announced the Athreya Axiom of Absolute
Arrogance.
So far, I've claimed something a bit obnoxious-sounding: that writers who have not taken a
year of PhD coursework in a decent economics department (and passed their PhD qualifying
exams), cannot meaningfully advance the discussion on economic policy. Taken literally, I am
almost certainly wrong. Some of them have great ideas, for sure. But this is irrelevant. The
real issue is that there is extremely low likelihood that the speculations of the untrained,
on a topic almost pathologically riddled by dynamic considerations and feedback effects, will
offer anything new. Moreover, there is a substantial likelihood that it will instead offer
something incoherent or misleading.
Modern macro devotees suffered far worse substantive embarrassment than Athreya's personal
embarrassment. After Athreya (briefly) published his Axiom, a flurry of the world's top
economists issued devastating critiques of modern macro's foundational myths in their dynamic
stochastic general equilibrium (DSGE) models. The takedowns enraged and humiliated modern macro
devotees, and because they are incapable of staying embarrassed, they doubled-down on Athreya's
Axiom by announcing the Dilettante
Doctrine .
People who don't like dynamic stochastic general equilibrium (DSGE) models are
dilettantes. By this we mean they aren't serious about policy analysis.
Lawrence J. Christiano, Martin S. Eichenbaum, and Mathias Trabandt, authored "On DSGE Models
on November 9, 2017. Christiano and Eichenbaum are freshwater modern macro devotees trained
largely at the University of Minnesota, and now holding prominent positions at Northwestern.
Trabandt is a German modern macro devotee.
A dilettante is a person who cultivates an area of interest, such as the arts, without
real commitment or knowledge. The Dilettante Doctrine takes modern macro's arrogance to a new
pinnacle. Only their model is legitimate, and it is illegitimate to criticize their DSGE
models, even though they repeatedly fail. Instead, we must all "like" their models. We cannot
make any statements about macroeconomics unless we "like [DSGE] models." The Dilettante
Doctrine is a sure-fire means of winning academic disputes. You demand that your critics
endorse your views, or you dismiss them as dilettantes unworthy of respect.
Readers may recall that the scientific method works in the opposite direction of the
Dilettante Doctrine. Modern macro proposes a theory (DSGE) and tests its predictive ability.
The DSGE models fail recurrently, on the most important macro events, and the failures are
massive. The scientific method requires the theorist of the failed model to declare it
falsified. Economists who "like" repeatedly falsified DSGE models are, as Paul Romer famously
declared, engaged in "pseudoscience."
Athreya then inadvertently compounded modern macro's failures by putting in writing a bit
too many of modern macro's darker secrets in his 2013
book about macroeconomics. Athreya confirmed many of the most fundamental criticisms of
modern macro devotees, revealed additional failures that were even more devastating, and
illustrated perfectly the blindness of modern macro's devotees to their dogmas and logic.
Athreya did recognize clearly one dogma that made modern macro devotees unable to spot even the
world's largest bubble – but treated that failure as if it were a virtue. Modern macro
devotees train macroeconomists to be unable to identify warn against, or take action to end
even the most destructive bubbles. This is like training surgeons to believe that shock cannot
occur and they should ignore shock in treating patients.
I will return to these errors in subsequent columns, but in this initial column, I introduce
Athreya's most embarrassing and devastating admission. Athreya goes on for over 100 pages on
how wondrous his fellow modern macro devotees are. They are brilliant specialists who are the
world's top practitioners of ultra-rigorous logic and ultra-sophisticated mathematics skills
that make it impossible for them to be anything other than transparent and scrupulously honest.
In particular, Athreya tells the reader that the paramount problem in macro and microeconomics
is recognizing, understanding, and countering deceit, the defining element at law of fraud.
(Actually, he does that only in an exceptionally opaque manner.) On p.103, however, Athreya
admits that modern macro devotees know that their vaunted DSGE models rest on a fatal premise
that is so preposterous and embarrassing that they dare not state it. "A silent assumption of
the ADM model" is that "the ADM God" perfectly prevents all crimes, predation, and deceit
– at no cost. Note that this means that modern macro devotees (silently) designed their
DSGE models to be incapable of recognizing, understanding, measuring, or countering deceit,
which they admit is their paramount and fatal failure.
It is never good to be arrogant. It is always dangerous and limiting to be (proudly)
ignorant of fields that are likely to have superior understanding of issues such as deceit,
fraud, and predation. Athreya's book displays his pride in both of these faults.
The authors of the Dilettante Doctrine inadvertently revealed another embarrassing modern
macro failure of great importance. It is the combination of repeated, devastating failure and
unfailing arrogance that defines (and dooms) modern macro as pseudoscientists. In fairness to
the authors, they announced their Dilettante Doctrine in the context of an article admitting
catastrophic errors in modern macro. They also unintentionally admit the non-scientific nature
of their enterprise. Consider this passage:
For [IMF's leader] to take DSGE model-based recommendations seriously, the economic
intuition underlying those recommendations has to be made in compelling and intuitive
ways.
Yes, they actually wrote that for anyone to take DSGE models "seriously" their "economic
intuition" must "be made intuitive." Wow, who knew science could be so 'intuitive?' Not
satisfied with announcing their new "intuitive method" as a substitute for the scientific
method, the authors double-down on the concept that 'intuition' is the secret sauce of
economics declaring that the super-secret is to keep that 'intuition' "simple."
To be convincing, it is critical for a DSGE modeler to understand and convey the economic
intuition behind the model's implications in simple and intuitive terms.
Notice that the authors are not stating the conditions required to make the DSGE models
'correct.' They are only interested in what practices will make the models' results
"convincing" to the bosses.
The bosses decide "actual policymaking." The Dilettante Doctrine authors declare
policymaking to be even less scientific than relying on 'simple' 'intuition' to convey DSGE
model results. It turns out that DSGE models are the 'canvas' on which modern macro devotees
"see the combined effect of the different colors" of their "art."
Inevitably, actual policymaking will always be to some extent an art. But even an artist
needs a canvas to see the combined effect of the different colors. A DSGE model is that
canvas.
These passages are not simply embarrassing, they are revealing. DSGE is a substantive farce
that repeatedly fails because modern macro devotees shaped their models from the beginning to
embrace laissez faire dogmas. The 'simple' 'intuitions' underlying DSGE models are the
most destructive laissez faire dogmas.
Narayana Kocherlakota's sly use of the word "almost" reveals his agreement with this
point.
[A]lmost coincidentally -- in these [early DSGE] models, all government interventions
(including all forms of stabilization policy) are undesirable.
The authors of the Dilettante Doctrine agree with Kocherlakota's observation about the
original DSGE models.
The associated policy implications are clear: there was no need for any form of government
intervention. In fact, government policies aimed at stabilizing the business cycle are
welfare-reducing.
Modern macro is proud that its 'freshwater' and 'saltwater' factions have achieved a grand
fusion. The saltwater types agreed to use DSGE models and the freshwater types agreed that the
freshwater types could add 'frictions' to the DSGE models that would allow the models to at
least purport to address some of the actual macroeconomic problems. There is a misleading view
that because the 'saltwater' types often call themselves "New Keynesians" they must have views
sympathetic to Keynesian thought. The Dilettante Doctrine authors make the useful point that
"New Keynesian" dogma is actually Milton Friedman's core laissez faire dogmas.
Prototypical pre-crisis DSGE models built upon the chassis of the RBC model to allow for
nominal frictions, both in labor and goods markets. These models are often referred to as New
Keynesian (NK) DSGE models. But, it would be just as appropriate to refer to them as
Friedmanite DSGE models. The reason is that they embody the fundamental world view
articulated in Friedman's seminal Presidential Address .
The Dilettante Doctrine authors admit that DSGE models failed at the most fundamental level
– they could not even spot that the economy was becoming progressively more dangerous and
harmful.
Pre-crisis DSGE models didn't predict the increasing vulnerability of the US economy to a
financial crisis.
The authors go badly wrong in multiple ways when they attempt to explain the DSGE models
failures and their implications for economic theory and policy.
There is still an ongoing debate about the causes of the financial crisis. Our view,
shared by Bernanke (2009) and many others, is that the financial crisis was precipitated by a
rollover crisis in a very large and highly levered shadow-banking sector that relied on
short-term debt to fund long-term assets.19
The trigger for the rollover crisis was developments in the housing sector. U.S. housing
prices had risen rapidly in the 1990's with the S&P/Case-Shiller U.S. National Home Price
Index rising by a factor of roughly 2.5 between 1991 and 2006. The precise role played by
expectations, the subprime market, declining lending standards in mortgage markets, and
overly-loose monetary policy is not critical for our purposes. What is critical is that
housing prices began to decline in mid-2006, causing a fall in the value of the assets of
shadow banks that had heavily invested in mortgage-backed securities. The Fed's willingness
to provide a safety net for the shadow banking system was at best implicit, creating the
conditions under which a roll-over crisis was possible. In fact a rollover crisis did occur
and shadow banks had to sell their asset-backed securities at fire-sale prices, precipitating
the Great Recession.
In sum, the pre-crisis mainstream DSGE models failed to forecast the financial crisis
because they did not integrate the shadow banking system into their analysis.
I begin with the most fundamental failure – the failure to ask the right questions.
Two prominent examples are why didn't the DSGE models warn us decades ago that the economy was
systematically misallocating assets and creating the largest bubble in world history and what
should we do to change the perverse incentives harming the economy and economic stability?
Kocherlakota, in the same article from which I quoted above, emphasized that modern macro
failed to warn about the coming financial crisis and the Great Recession and failed to provide
effective policies to respond to them.
The dilettante article only uses the word 'bubble' once – to describe the tech bubble.
It never labels the vastly larger housing bubble a 'bubble.' The dilettante article's authors
claim it is not relevant for their purposes to know how the bubble arose, why it continued to
inflate for over a decade, why it burst, or why it triggered the global financial crisis and
the Great Recession. Only a dilettante could make or believe that claim.
Recall that Athreya emphasizes that deceit is the key factor that screws up economies
– and that DSGE models "silently" assume "the ADM God" makes deceit impossible. I have
explained in scores of columns why deceit, fraud, and predation were the central causes of the
housing bubble hyper-inflating, the financial crisis, and the creation of the Great Recession.
The dilettante authors refusal to call the housing bubble a bubble does not change the fact
that they claim that the dramatic fall in housing values after 2005 was the paramount "trigger"
of the financial crisis and the Great Recession.
The dilettante authors create a fiction about what "precipitat[ed] the Great Recession.
In fact a rollover crisis did occur and shadow banks had to sell their asset-backed
securities at fire-sale prices, precipitating the Great Recession.
The dilettante authors then make their twin ' mea culpa ' on behalf of modern
macro.
Against this background, we turn to the first of the two criticisms of DSGE models
mentioned above, namely their failure to signal the increasing vulnerability of the U.S.
economy to a financial crisis. This criticism is correct. The failure reflected a broader
failure of the economics community.
The failure was to allow a small shadow-banking system to metastasize into a massive,
poorly-regulated wild west-like sector that was not protected by deposit insurance or
lender-of-last-resort backstops.
We now turn to the second criticism of DSGE models, namely that they did not sufficiently
emphasize financial frictions. One reason why modelers did not emphasize financial frictions
in DSGE models is that until the recent crisis, post-war recessions in the U.S. and Western
Europe did not seem closely tied to disturbances in financial markets. The Savings and Loans
crisis in the US was a localized affair that did not grow into anything like the Great
Recession. Similarly, the stock market meltdown in the late 1980's and the bursting of the
tech-bubble in 2001 only had minor effects on aggregate economic activity.
At the same time, the financial frictions that were included in DSGE models did not seem
to have very big effects.
The dilettante authors have no idea how important their concessions are. Their premise is
that it was government regulation, deposit insurance, and the central bank's 'lender of last
resort' function that prevented prior epidemics of accounting control fraud from causing
anything worse than "minor effects on aggregate economic activity." The obvious problem is that
since its inception 30 years ago modern macro ideologues have claimed the opposite is true
– that governmental action is unnecessary and harmful. They constructed their DSGE models
to valorize their Friedmanite dogmas.
The less obvious problem is that freshwater modern macro has claimed that the lesson of the
financial crisis is the opposite. Athreya and the Richmond Fed have
preached for years that the federal safety net caused the housing problem, the financial
crisis, and the Great Recession. The Richmond Fed claims that the key policy response to future
financial crises is allowing the shadow sector to collapse in an orgy of "rollover
cris[e]s."
The broader problem is why the dilettante authors are so wedded to their failed models,
which at their core assume out of existence the institutions and events they say are most
critical to explaining the catastrophic failures of their models. Why, for example, start with
a general equilibrium model based on absurdly utopian assumptions (stated and unstated) that
invariably produces equilibrium when the things we most need to study involve the failure of
markets to function? It is nonsensical to make contradictory assumptions in different parts of
your model about human behavior. Modern macro models keep failing and their devotees' response
is to add (over time) dozens of fudges that posit that humans typically act in a manner that
contradicts to the explicit and unstated assumptions of the DSGE model about human behavior.
DSGE models increasingly resemble Borg constructs. The Borg also claim that there is no
alternative to assimilation into their collective.
Excellent points. Helps to explain how you get a supposedly serious site covering real
estate falling for ridiculous tripe about the root cause of the housing crisis (aka Great
Recession). Take a careful look at the bombshell "working paper" and the new "narrative"
cited, and you can see the groupstink of the Fed written all over it
https://betterdwelling.com/forget-subprime-canadian-real-estate-buyers-investors-crashed-the-us-market/
Modern mainstream macro is like a police detective whose model of the world states that
people are nice and the body heals itself, and that therefore we will all live happily ever
after. When confronted by a murder victim lying in a pool of their own blood, and that fact's
apparent incompatibility with their model of the world, they respond, "My model is correct
only, you see, it failed to account for sudden massive blood loss. How that loss of blood
happened is beyond the scope of my investigation, the important thing is that I've now
incorporated that knowledge in my new improved model, which proves that we will all live
happily ever after -- except in cases of a sudden, massive loss of blood ."
There has not been a big mea-culpa from neoliberal economists after the 2008 Financial
Crisis. I don't think there will be. Many are essentially the equal of religious
fundamentalists.
However, we should also remember that the very wealthy have backed the neoliberal
economists against the general public. Neolibe3ralism provides a pseudoscientific economic
excuse for what amounts to turning society into a plutocracy, which is precisely what the
rich want.
The GFC worked out very well for the neoliberal agenda. What you can't predict, you don't
need to prevent or protect against. If the result happens to be a massive transfer of funds
from states to speculators that eases the path to austerity and asset stripping, what's to
apologize for?
Lack of higher math skills precludes citizen involvement in economics.
Blame it on the math card in PCs that makes doing it by hand and thus learning and
understanding how numbers work.
Most economists lack higher math skills too, but that doesn't seem to be obstacle for
them. It's spherical chickens in a vacuum, models that are supposedly related to real world
but are simplified beyond recognition because most economists are ignorant of even
rudimentary statistics.
and you don't need math to discover that the holy Models rely on downright silly
assumptions about Human Beings.
"rational actors with perfect information".
lol.
Most of the economic actors I know do not even remotely resemble that.
and whomever said that modern econ is akin to fundamentalist religion is right on.
I can't read "Money" or watch CNBC without thinking about Pat Robertson or Billy Graham.
It's just a different god they worship.
With this in mind, I think it's hilarious that the current hyperventilation about
"cryptocurrency" could possibly be the bubble that, in popping, brings the whole mess
down.
"Masters of the Universe", indeed.
Personally I believe economic as practiced is an example of telling the boss (the King)
what they want to hear.
Economist appear descended form a long line of Court Magicians, telling the futures from
the entrails of an animal, consulting the spirits for guidance, or using a Chrystal ball.
Of more pointedly Bullshit, baffles brains.
Prof Black make the point that he DSGE models assume away fraud. They also assume people
are "rational actors, driven only by logic," that is: we are all Vulcans from Star Trek.
A simple view of women's fashions (high heels) with regard to comfort or safety would
demolish any theory of people as "rational actors." Or men's behavior over their "sports
teams."
To assume away human behavior and emotion, and thus chaos or catastrophe theory, would put
economists at odds with their masters, and cut their income, by the nearly always fatal, or
career limiting "telling truth to power."
It's interesting to speculate what would be the scope or size of common ground in a dialog
between anthropologists and economists. Null set perhaps?
Just a quick note for those who were initially confused by Bill Black's use of "modern
macroeconomic theory" and thought "modern monetary theory". (I know I did, and was initially
really confused by his take, and had to re-read the first three paragraphs a few times to
re-set my mental pointers). As far as I know (and I did a year of Ph.D economics at Stanford,
so I pass Arthreya's first test) I haven't heard of "modern" applied to DSGE macro but that
probably reflects my choice of reading material more than anything else. In short, "modern
macro" is bad, "modern monetary" is good.
BTW, one of the best takes of macroeconomics I've encountered is Steve Keen's work,
which I gratefully acknowledge I first read here on NC. Keen's critique of DSGE models is
utterly spot-on and mathematically sophisticated. Part of the problem with economics is that
it has been afflicted with 'math envy' since its earliest days, and the ADM results were
proved with Banach Space methods, so they just *had* to be right. Google the phrase
"spherical cow" for more on this mindset, not to mention one of the few really funny math
jokes I know.
We accompanied that with a prank in which we posed as Potanin calling the Washington Wizards
for courtside seats, Harvard University business school to purchase a degree, and the Augusta
National Golf Club -- brandishing Hiatt's article for access:
eXile : I am Russian banker, so-called robber baron capitalist, am interested in
purchasing your degree.
Harvard : ( pause ) Uh, sir, you can't buy the degree, but you can enroll in our
program. It's an intensive 9 week program, and you receive a certificate, not a degree.
eXile : No, this is no good. Do you realize who I am? Fred Hiatt wrote about me in today
Washington Post, that I am not typical robber baron. I am ze baby billionaire.
Harvard : We read a lot about Russia and it sounds very exciting.
eXile : Of course it exciting. Now I vant Harvard degree.
Harvard : You can't buy a degree.
eXile : Maybe instead I build nice cafe for you on campus. Or I can donate small nightclub
for Harvard degree.
Harvard : Sir, Harvard is a 350-year-old institution. It's not all just about money. We've
turned down princes.
Nice illustration of ideologically based ostrakism as practiced in Academia: "Larry [Summers] leaned back in his chair and offered me some advice. I had a choice. I could be an insider or I could
be an outsider. Outsiders can say whatever they want. But people on the inside don't listen to them. Insiders, however, get lots of access and a chance to push their ideas. People
- powerful people - listen to what they have to say. But insiders also understand one unbreakable rule: they don't criticize
other insiders."
Notable quotes:
"... A more probable school of thought is that this game was created as a con and a cover for the status quo capitalist establishment to indulge themselves in their hard money and liquidity fetishes, consequences be damned. ..."
"... The arguments over internal and external consistency of models is just a convenient misdirection from what policy makers are willing to risk and whose interests they are willing to risk policy decisions for ..."
"... Mathematical masturbations are just a smoke screen used to conceal a simple fact that those "economists" are simply banking oligarchy stooges. Hired for the specific purpose to provide a theoretical foundation for revanschism of financial oligarchy after New Deal run into problems. Revanschism that occurred in a form of installing neoliberal ideology in the USA in exactly the same role which Marxism was installed in the USSR. With "iron hand in velvet gloves" type of repressive apparatus to enforce it on each and every university student and thus to ensure the continues, recurrent brainwashing much like with Marxism on the USSR universities. ..."
"... To ensure continuation of power of "nomenklatura" in the first case and banking oligarchy in the second. Connections with reality be damned. Money does not smell. ..."
"... Economic departments fifth column of neoliberal stooges is paid very good money for their service of promoting and sustaining this edifice of neoliberal propaganda. Just look at Greg Mankiw and Rubin's boys. ..."
"... "Larry [Summers] leaned back in his chair and offered me some advice. I had a choice. I could be an insider or I could be an outsider. Outsiders can say whatever they want. But people on the inside don't listen to them. Insiders, however, get lots of access and a chance to push their ideas. People - powerful people - listen to what they have to say. But insiders also understand one unbreakable rule: they don't criticize other insiders." ..."
At the risk of oversimplifying might it not be as simple as stronger leanings towards IS-LM and kind are indicative of a bias
towards full employment and stronger leanings towards DSGE, microfoundations, and kind are indicative of a bias towards low inflation?
IN general I consider over-simplification a fault, if and only if, it is a rigidly adhered to final position. This is to say
that over-simplification is always a good starting point and never a good ending point. If in the end your problem was simple
to begin with, then the simplified answer would not be OVER-simplified anyway. It is just as bad to over-complicate a simple problem
as it is to over-simplify a complex problem. It is easier to build complexity on top of a simple foundation than it is to extract
simplicity from a complex foundation.
A lot of the Chicago School initiative into microfoundations and DSGE may have been motivated by a desire to bind Keynes in
a NAIRU straight-jacket. Even though economic policy making is largely done just one step at a time then that is still one step
too much if it might violate rentier interests.
Darryl FKA Ron -> Barry...
There are two possible (but unlikely) schools of (generously attributed to as) thought for which internal consistency might
take precedence over external consistency. One such school wants to consider what would be best in a perfect world full of perfect
people and then just assume that is best for the real world just to let the chips fall where they may according to the faults
and imperfections of the real world. The second such school is the one whose eyes just glaze over mesmerized by how over their
heads they are and remain affraid to ask any question lest they appear stupid.
A more probable school of thought is that this game was created as a con and a cover for the status quo capitalist establishment
to indulge themselves in their hard money and liquidity fetishes, consequences be damned.
Richard H. Serlin
Consistency sounds so good, Oh, of course we want consistency, who wouldn't?! But consistent in what way? What exactly do you
mean? Consistent with reality, or consistent with people all being superhumans? Which concept is usually more useful, or more
useful for the task at hand?
Essentially, they want models that are consistent with only certain things, and often because this
makes their preferred ideology look far better. They want models, typically, that are consistent with everyone in the world having
perfect expertise in every subject there is, from finance to medicine to engineering, perfect public information, and perfect
self-discipline, and usually on top, frictionless and perfectly complete markets, often perfectly competitive too.
But a big thing to note is that perfectly consistent people means a level of perfection in expertise, public information, self-discipline,
and "rationality", that's extremely at odds with how people actually are. And as a result, this can make the model extremely misleading
if it's interpreted very literally (as so often it is, especially by freshwater economists), or taken as The Truth, as Paul Krugman
puts it.
You get things like the equity premium "puzzle", which involves why people don't invest more in stocks when the risk-adjusted
return appears to usually be so abnormally good, and this "puzzle" can only be answered with "consistency", that people are all
perfectly expert in finance, with perfect information, so they must have some mysterious hidden good reason. It can't be at all
that it's because 65% of people answered incorrectly when asked how many reindeer would remain if Santa had to lay off 25% of
his eight reindeer ( http://richardhserlin.blogspot.com/2013/12/surveys-showing-massive-ignorance-and.html ).
Yes, these perfect optimizer consistency models can give useful insights, and help to see what is best, what we can do better,
and they can, in some cases, be good as approximations. But to say they should be used only, and interpreted literally, is, well,
inconsistent with optimal, rational behavior -- of the economist using them.
Richard H. Serlin -> Richard H. Serlin...
Of course, unless the economist using them is doing so to mislead people into supporting his libertarian/plutocratic ideology.
dilbert dogbert
As an old broken down mech engineer, I wonder why all the pissing and moaning about micro foundations vs aggregation. In strength
of materials equations that aggregate properties work quite well within the boundaries of the questions to be answered. We all
know that at the level of crystals, materials have much complexity. Even within crystals there is deeper complexities down to
the molecular levels. However, the addition of quantum mechanics adds no usable information about what materials to build a bridge
with.
But, when working at the scale of the most advanced computer chips quantum mechanics is required. WTF! I guess in economics
there is no quantum mechanics theories or even reliable aggregation theories.
Poor economists, doomed to argue, forever, over how many micro foundations can dance on the head of a pin.
RGC -> dilbert dogbert...
Endless discussions about how quantum effects aggregate to produce a material suitable for bridge building crowd out discussions
about where and when to build bridges. And if plutocrats fund the endless discussions, we get the prominent economists we have
today.
Darryl FKA Ron -> dilbert dogbert...
"...I guess in economics there is no quantum mechanics theories or even reliable aggregation theories..."
[I guess it depends upon what your acceptable confidence interval on reliability is. Most important difference that controls
all the domain differences between physical science and economics is that underlying physical sciences there is a deterministic
methodology for which probable error is merely a function of the inaccuracy in input metrics WHEREAS economics models are incomplete
probabilistic estimating models with no ability to provide a complete system model in a full range of circumstances.
YOu can design and build a bridge to your load and span requirements with alternative models for various designs with confidence
and highly effective accuracy repeatedly. No ecomomic theory, model, or combination of models and theories was ever intended to
be used as the blueprint for building an economy from the foundation up.
With all the formal trappings of economics the only effective usage is to decide what should be done in a given set of predetermined
circumstance to reach some modest desired effect. Even that modest goal is exposed to all kinds of risks inherent in assumptions,
incomplete information, externalities, and so on that can produce errors of uncertain potential bounds.
Nonetheless, well done economics can greatly reduce the risks encountered in the random walk of economics policy making. So
much so is this true, that the bigger questions in macro-economics policy making is what one is willing to risk and for whom.
The arguments over internal and external consistency of models is just a convenient misdirection from what policy makers
are willing to risk and whose interests they are willing to risk policy decisions for.]
Darryl FKA Ron -> Peter K....
unless you have a model which maps the real world fairly closely like quantum mechanics.
[You set a bar too high. Macro models at best will tell you what to do to move the economy in the direction that you seek to
go. They do not even ocme close to the notion of a theory of everything that you have in physics, even the theory of every little
thing that is provided by quantum mechanics. Physics is an empty metaphor for economics. Step one is to forgo physics envy in
pursuit of understanding suitable applications and domain constraints for economics models.
THe point is to reach a decision and to understand cause and effect directions. All precision is in the past and present. The
future is both imprecise and all that there is that is available to change.
For the most part an ounce of common sense and some simple narrative models are all that are essential for making those policy
decisions in and of themselves. HOWEVER, nation states are not ruled by economist philosopher kings and in the process of concensus
decision making by (little r)republican governments then human language is a very imprecise vehicle for communicating logic and
reason with respect to the management of complex systems. OTOH, mathematics has given us a universal language for communicating
logic and reason that is understood the same by everyone that really understands that language at all. Hence mathematical models
were born for the economists to write down their own thinking in clear precise terms and check their own work first and then share
it with others so equipped to understand the language of mathematics. Krugman has said as much many times and so has any and every
economist worth their salt.]
likbez -> Syaloch...
I agree with Pgl and PeterK. Certain commenters like Darryl seem convinced that the Chicago School (if not all of econ) is driven
by sinister, class-based motives to come up justifications for favoring the power elite over the masses. But based on what I've
read, it seems pretty obvious that the microfoundation guys just got caught up in their fancy math and their desire to produce
more elegant, internally consistent models and lost sight of the fact that their models didn't track reality.
That's completely wrong line of thinking, IMHO.
Mathematical masturbations are just a smoke screen used to conceal a simple fact that those "economists" are simply banking
oligarchy stooges. Hired for the specific purpose to provide a theoretical foundation for revanschism of financial oligarchy after
New Deal run into problems. Revanschism that occurred in a form of installing neoliberal ideology in the USA in exactly the same
role which Marxism was installed in the USSR.
With "iron hand in velvet gloves" type of repressive apparatus to enforce it on each and every university student and thus to
ensure the continues, recurrent brainwashing much like with Marxism on the USSR universities.
To ensure continuation of power of "nomenklatura" in the first case and banking oligarchy in the second. Connections with reality
be damned. Money does not smell.
Economic departments fifth column of neoliberal stooges is paid very good money for their service of promoting and sustaining
this edifice of neoliberal propaganda. Just look at Greg Mankiw and Rubin's boys.
But the key problem with neoliberalism is that the cure is worse then disease. And here mathematical masturbations are very
handy as a smoke screen to hide this simple fact.
likbez -> likbez...
Here is how Rubin's neoliberal boy Larry explained the situation to Elizabeth Warren:
"Larry [Summers] leaned back in his chair and offered me some advice. I had a choice. I could be an insider or I could
be an outsider. Outsiders can say whatever they want. But people on the inside don't listen to them. Insiders, however, get lots of access and a chance to push their ideas. People
- powerful people - listen to what they have to say. But insiders also understand one unbreakable rule: they don't criticize
other insiders."
The demise of the North Sea doesn't necessarily mean the end of Norway's petroleum era -- far from it.
Still, despite significant reserves in the Barents Sea, Norway is about to embark upon a long period of
structural decline as its benchmark fields inch closer to depletion and its reserves taper before our
very eyes.
... ... ...
There's ample evidence to conclude that all the sweet spots of Norway's continental shelf have been
found. The latest shelf licensing round (24) elicited a weak response, with only 11 companies applying
for production licenses. There was plenty to bid for -- 102 blocks were up for grabs (never before did the
Norwegian Petroleum Directorate offer so much, with an overwhelming majority of them in the Barents Sea),
but due to their remoteness from formations deemed to be the most hydrocarbon-rich, bidders were only
half as numerous as they were during the previous licensing round in 2015.
After 2001, Norwegian oil output recorded 12 consecutive years of falling production. The current phase might best be
described as a lull before the (presumably) last long-term production increase in its history, expected to happen in the early
2020s. Much will depend on the two "Johans" Norway will bring online in the early 2020s: Johan Sverdrup (recoverable reserves
worth 2-3 BBbl) and Johan Castberg (0.5 BBbl).
Much has been done to render Johan Castberg profitable at current price levels -- from an initial level of 80 USD/bbl, Statoil
and the other shareholders have brought it to an
alleged 35 USD/bbl
. Against the background of falling oil services costs, this has entailed several cost-cutting measures,
most notably scrapping any sort of semi-submersible vessel variant coupled with pipeline construction from the oilfield to the
mainland (an option preferred by the government, as this would allow to provide smaller fields in the Barents Sea with a sure
transport route) in favor of a FPSO.
"... Recently, the CIA lost control of the majority of its hacking arsenal including malware, viruses, trojans, weaponized "zero day" exploits, malware remote control systems and associated documentation. ..."
"... Donald Trump is deep in the world of spooks now, the world of spies, agents and operatives. He and his inner circle have a nest of friends, but an even larger, more varied nest of enemies. As John Sevigny writes below, his enemies include not only the intel and counter-intel people, but also "Republican lawmakers, journalists, the Clintons, the Bush family, Barack Obama, the ACLU, every living Democrat and even Rand Paul." ..."
"... A total of 8,761 documents have been published as part of 'Year Zero', the first in a series of leaks the whistleblower organization has dubbed 'Vault 7.' WikiLeaks said that 'Year Zero' revealed details of the CIA's "global covert hacking program," including "weaponized exploits" used against company products including " Apple's iPhone , Google's Android and Microsoft's Windows and even Samsung TVs , which are turned into covert microphones." ..."
"... According to the statement from WikiLeaks, government hackers can penetrate Android phones and collect "audio and message traffic before encryption is applied." ..."
"... "CIA turned every Microsoft Windows PC in the world into spyware. Can activate backdoors on demand, including via Windows update "[.] ..."
"... Do you still trust Windows Update? ..."
"... As of October 2014 the CIA was also looking at infecting the vehicle control systems used by modern cars and trucks. ..."
"... "Richard Clarke, the counterterrorism chief under both Bill Clinton and George W. Bush, told the Huffington Post that Hastings's crash looked consistent with a car cyber attack.'" Full and fascinating article here . ..."
"... Recently, the CIA lost control of the majority of its hacking arsenal including malware, viruses, trojans, weaponized "zero day" exploits, malware remote control systems and associated documentation. This extraordinary collection, which amounts to more than several hundred million lines of code, gives its possessor the entire hacking capacity of the CIA The archive appears to have been circulated among former U.S. government hackers and contractors in an unauthorized manner, one of whom has provided WikiLeaks with portions of the archive. ..."
"... Since 2001 the CIA has gained political and budgetary preeminence over the U.S. National Security Agency (NSA). The CIA found itself building not just its now infamous drone fleet, but a very different type of covert, globe-spanning force - its own substantial fleet of hackers. The agency's hacking division freed it from having to disclose its often controversial operations to the NSA (its primary bureaucratic rival) in order to draw on the NSA's hacking capacities. ..."
"... By the end of 2016, the CIA's hacking division, which formally falls under the agency's Center for Cyber Intelligence (CCI), had over 5000 registered users and had produced more than a thousand hacking systems, trojans, viruses, and other "weaponized" malware. Such is the scale of the CIA's undertaking that by 2016, its hackers had utilized more code than that used to run Facebook. The CIA had created, in effect, its "own NSA" with even less accountability and without publicly answering the question as to whether such a massive budgetary spend on duplicating the capacities of a rival agency could be justified. ..."
"... I learned this when I was in my 20s. The Catholic Church was funding my early critique of American foreign aid as being imperialist. I asked whether they thought I should go into politics. They said, "No, you'd never make it". And I said, "Why?" and they said, "Well, nobody has a police record or any other dirt on you." I asked what they meant. They said, "Unless they have something over you to blackmail you with, you're not going to be able to get campaign funding. Because they believe that you might do something surprising," in other words, something they haven't asked you to do. So basically throughout politics, on both sides of the spectrum, voters have candidates who are funded by backers who have enough over them that they can always blackmail. ..."
"... The campaign to frame up and discredit Trump and his associates is characteristic of how a police state routinely operates. A national security apparatus that vacuums up all our communications and stores them for later retrieval has been utilized by political operatives to go after their enemies – and not even the President of the United States is immune. This is something that one might expect to occur in, say, Turkey, or China: that it is happening here, to the cheers of much of the media and the Democratic party, is beyond frightening. ..."
"... 4th impressions – I went looking for the "juicy bits" of interest to me – SOHO routers, small routers – sadly its just a table documenting routers sold around the world, and whether these guys have put the firmware in their Stash Repository. Original firmware, not hacked one. But the repository isn't in the vault dump, AFAIK. ..."
"... The WikiLeaks docs show that CIA has developed means to use all personal digital device microphones and cameras even when they are "off," and to send all of your files and personal data to themselves, and to send your private messages to themselves before they are encrypted. They have installed these spyware in the released version of Windows 10, and can easily install them on all common systems and devices. ..."
"... So we have a zillion ways to spy and hack and deceive and assassinate, but no control. I think this is what the military refers to as "being overtaken by events." ..."
"... My godfather was in the CIA in the late sixties and early seventies, and he said that outside of the President's pet projects there was no way to sift through and bring important information to decision makers before it made the Washington Post (he is aware of the irony) and hit the President's breakfast table. ..."
"... To what extent do these hacks represent the CIA operating within the US? To what extent is that illegal? With the democrats worshipping the IC, will anyone in an official position dare to speak out? ..."
"... Schumer said that as he understands, intelligence officials are "very upset with how [Trump] has treated them and talked about them ..."
"... The CIA's internal security is crap, too. Really a lot of people should be fired over that, as well as over Snowden's release. We didn't hear of it happening in the NSA, though I'm not sure we would have. Given Gaius's description of Trump's situation, it seems unlikely it will happen this time, either. One of my hopes for a Trump administration, as long as we're stuck with it, was a thorough cleanout of the upper echelons in the IC. It's obviously long overdue, and Obama wasn't up to it. But I used the past tense because I don't think it's going to happen. Trump seems more interested in sucking up to them, presumably so they won't kill him or his family. That being one of their options. ..."
"... "The CIA had created, in effect, its "own NSA" with even less accountability ." [My emphasis]. It seems to characterize an organization that operates outside of any control and oversight – and one that is intentionally structuring itself that way. That worries me. ..."
"... It's a dangerous world out there and only our brave IC can protect us from it. Come on. Stop blaming the victim and place the blame where it belongs–our IC and MIC. I say stop feeding the beast with your loyalty to a government that has ceased to be yours. ..."
"... "These CIA revelations in conjunction with those of the NSA paints a pretty dark future for privacy and freedom. Edward Snowden made us aware of the NSA's program XKEYSCORE and PRISM which are utilized to monitor and bulk collect information from virtually any electronic device on the planet and put it into a searchable database. Now Wikileaks has published what appears to be additional Big Brother techniques used by a competing agency. Say what you want about the method of discovery, but Pandora's box has been opened." ..."
Yves here. The first
release of the Wikileaks Vault 7 trove has curiously gone from being a MSM lead story yesterday to a handwave today. On the one hand,
anyone who was half awake during the Edward Snowden revelations knows that the NSA is in full spectrum surveillance and data storage
mode, and members of the Five Eyes back-scratch each other to evade pesky domestic curbs on snooping. So the idea that the CIA (and
presumably the NSA) found a way to circumvent encryption tools on smartphones, or are trying to figure out how to control cars remotely,
should hardly come as a surprise.
However, at a minimum, reminding the generally complacent public that they are being spied on any time they use the Web, and increasingly
the times in between, makes the officialdom Not Happy.
And if this Wikileaks claim is even halfway true, its Vault 7 publication is a big deal:
Recently, the CIA lost control of the majority of its hacking arsenal including malware, viruses, trojans, weaponized "zero
day" exploits, malware remote control systems and associated documentation. This extraordinary collection, which amounts to more
than several hundred million lines of code, gives its possessor the entire hacking capacity of the CIA The archive appears to
have been circulated among former U.S. government hackers and contractors in an unauthorized manner, one of whom has provided
WikiLeaks with portions of the archive.
This is an indictment of the model of having the intelligence services rely heavily on outside contractors. It is far more difficult
to control information when you have multiple organizations involved. In addition, neolibearlism posits that workers are free agents
who have no loyalties save to their own bottom lines (or for oddballs, their own sense of ethics). Let us not forget that
Snowden planned his career job moves
, which included a stint at NSA contractor Dell, before executing his information haul at a Booz Allen site that he had targeted.
Admittedly, there are no doubt many individuals who are very dedicated to the agencies for which they work and aspire to spend
most it not all of their working lives there. But I would assume that they are a minority.
The reason outsiders can attempt to pooh-pooh the Wikileaks release is that the organization redacted sensitive information like
the names of targets and attack machines. The CIA staffers who have access to the full versions of these documents as well as other
major components in the hacking toolkit will be the ones who can judge how large and serious the breach really is. 1 And
their incentives are to minimize it no matter what.
By Gaius Publius , a professional writer living
on the West Coast of the United States and frequent contributor to DownWithTyranny, digby, Truthout, and Naked Capitalism. Follow
him on Twitter @Gaius_Publius ,
Tumblr and
Facebook . GP article archive
here . Originally published at
DownWithTyranny
CIA org chart from the WikiLeaks cache (click to enlarge). "The organizational chart corresponds to the material published
by WikiLeaks so far. Since the organizational structure of the CIA below the level of Directorates is not public, the placement
of the EDG [Engineering Development Group] and its branches is reconstructed from information contained in the documents released
so far. It is intended to be used as a rough outline of the internal organization; please be aware that the reconstructed org
chart is incomplete and that internal reorganizations occur frequently."
* * *
"O brave new world, that has such people in it."
Bottom line first. As you read what's below, consider:
That the CIA is capable of doing all of the things described, and has been for years, is not in doubt.
That unnameable many others have stolen ("exfiltrated") these tools and capabilities is, according to the Wikileaks leaker, also
certain. Consider this an especially dangerous form of proliferation, with cyber warfare tools in the hands of anyone with money
and intent. As WikiLeaks notes, "Once a single cyber 'weapon' is 'loose' it can spread around the world in seconds, to be used
by peer states, cyber mafia and teenage hackers alike."
That the CIA is itself using these tools, and if so, to what degree, are the only unknowns. But can anyone doubt, in this aggressively
militarized environment, that only the degree of use is in question?
Now the story.
WikiLeaks just dropped a huge cache of documents (the first of several promised releases), leaked from a person or people
associated with the CIA in one or more capacities (examples, employee, contractor), which shows an agency out-of-control in its spying
and hacking overreach. Read through to the end. If you're like me, you'll be stunned, not just about what they can do, but that they
would want to do it, in some cases in direct violation of President Obama's orders. This story is bigger than anything you can imagine.
Consider this piece just an introduction, to make sure the story stays on your radar as it unfolds - and to help you identify
those media figures who will try to minimize or bury it. (Unless I missed it, on MSNBC last night, for example, the first mention
of this story was not Chris Hayes, not Maddow, but the Lawrence O'Donnell show, and then only to support his guest's "Russia gave
us Trump" narrative. If anything, this leak suggests a much muddier picture, which I'll explore in a later piece.)
So I'll start with just a taste, a few of its many revelations, to give you, without too much time spent, the scope of the problem.
Then I'll add some longer bullet-point detail, to indicate just how much of American life this revelation touches.
While the cache of documents has been vetted and redacted
, it hasn't been fully explored for implications. I'll follow this story as bits and piece are added from the crowd sourced research
done on the cache of information. If you wish to play along at home, the WikiLeaks
torrent file is here . The torrent's
passphrase is here . WikiLeaks
press release is here (also reproduced below). Their FAQ
is here .
Note that this release covers the years 2013–2016. As WikiLeaks says in its FAQ, "The series is the largest intelligence publication
in history."
Preface - Trump and Our "Brave New World"
But first, this preface, consisting of one idea only. Donald Trump is deep in the world of spooks now, the world of spies,
agents and operatives. He and his inner circle have a nest of friends, but an even larger, more varied nest of enemies. As John Sevigny
writes below, his enemies include not only the intel and counter-intel people, but also "Republican lawmakers, journalists, the Clintons,
the Bush family, Barack Obama, the ACLU, every living Democrat and even Rand Paul." Plus Vladimir Putin, whose relationship
with Trump is just "business," an alliance of convenience, if you will.
I have zero sympathy for Donald Trump. But his world is now our world, and with both of his feet firmly planted in spook world,
ours are too. He's in it to his neck, in fact, and what happens in that world will affect every one of us. He's so impossibly erratic,
so impossibly unfit for his office, that everyone on the list above wants to remove him. Many of them are allied, but if they are,
it's also only for convenience.
How do spooks remove the inconvenient and unfit? I leave that to your imagination;they have their ways. Whatever method they choose,
however, it must be one without fingerprints - or more accurately, without their fingerprints - on it.
Which suggests two more questions. One, who will help them do it, take him down? Clearly, anyone and everyone on the list. Second,
how do you bring down the president, using extra-electoral, extra-constitutional means, without bringing down the Republic? I have
no answer for that.
Here's a brief look at "spook world" (my phrase, not the author's) from "
The Fox Hunt " by John
Sevigny:
Several times in my life – as a journalist and rambling, independent photographer - I've ended up rubbing shoulders with
spooks. Long before that was a racist term, it was a catch-all to describe intelligence community people, counter intel types,
and everyone working for or against them. I don't have any special insight into the current situation with Donald Trump and his
battle with the IC as the intelligence community calls itself, but I can offer a few first hand observations about the labyrinth
of shadows, light, reflections, paranoia, perceptions and misperceptions through which he finds himself wandering, blindly. More
baffling and scary is the thought he may have no idea his ankles are already bound together in a cluster of quadruple gordian
knots, the likes of which very few people ever escape.
Criminal underworlds, of which the Trump administration is just one, are terrifying and confusing places. They become
far more complicated once they've been penetrated by authorities and faux-authorities who often represent competing interests,
but are nearly always in it for themselves.
One big complication - and I've written
about this before - is that you never know who's working for whom . Another problem is that the hierarchy of handlers,
informants, assets and sources is never defined. People who believe, for example, they are CIA assets are really just being used
by people who are perhaps not in the CIA at all but depend on controlling the dupe in question. It is very simple - and I have
seen this happen - for the subject of an international investigation to claim that he is part of that operation. [emphasis added]
Which leads Sevigny to this observation about Trump, which I partially quoted above: "Donald Trump may be crazy, stupid, evil
or all three but he knows the knives are being sharpened and there are now too many blades for him to count. The intel people are
against him, as are the counter intel people. His phone conversations were almost certainly recorded by one organization or another,
legal or quasi legal. His enemies include Republican lawmakers, journalists, the Clintons, the Bush family, Barack Obama, the ACLU,
every living Democrat and even Rand Paul. Putin is not on his side - that's a business matter and not an alliance."
Again, this is not to defend Trump, or even to generate sympathy for him - I personally have none. It's to characterize where
he is, and we are, at in this pivotal moment. Pivotal not for what they're doing, the broad intelligence community. But pivotal for
what we're finding out, the extent and blatancy of the violations.
All of this creates an incredibly complex story, with only a tenth or less being covered by anything like the mainstream press.
For example, the Trump-Putin tale is much more likely to be part of a much broader "international mobster" story, whose participants
include not only Trump and Putin, but Wall Street (think HSBC) and major international banks, sovereign wealth funds, major hedge
funds, venture capital (vulture capital) firms, international drug and other trafficking cartels, corrupt dictators and presidents
around the world and much of the highest reaches of the "Davos crowd."
Much of the highest reaches of the .01 percent, in other words, all served, supported and "curated" by the various, often competing
elements of the first-world military and intelligence communities. What a stew of competing and aligned interests, of marriages and
divorces of convenience, all for the common currencies of money and power, all of them
dealing in
death .
What this new WikiLeaks revelation shows us is what just one arm of that community, the CIA, has been up to. Again, the breadth
of the spying and hacking capability is beyond imagination. This is where we've come to as a nation.
What the CIA Is Up To - A Brief Sample
Now about those CIA spooks and their surprising capabilities. A number of
other outlets have written up the story, but
this
from Zero Hedge has managed to capture the essence as well as the breadth in not too many words (emphasis mine throughout):
WikiLeaks has published what it claims is the largest ever release
of confidential documents on the CIA It includes more than 8,000 documents as part of 'Vault 7', a series of leaks on the agency,
which have allegedly emerged from the CIA's Center
For Cyber Intelligence in Langley , and which can be seen on the org
chart below, which Wikileaks also released : [org
chart reproduced above]
A total of 8,761 documents have been published
as part of 'Year Zero', the first in a series of leaks the whistleblower organization has dubbed 'Vault 7.' WikiLeaks said
that 'Year Zero' revealed details of the CIA's "global covert hacking program," including "weaponized exploits" used against company
products including " Apple's iPhone , Google's Android and Microsoft's Windows and even Samsung TVs
, which are turned into covert microphones."
WikiLeaks tweeted the leak, which it claims came from a network inside the CIA's Center for Cyber Intelligence in Langley,
Virginia.
Among the more notable disclosures which, if confirmed, "
would rock the technology world ", the CIA had managed to bypass encryption on popular phone and messaging services
such as Signal, WhatsApp and Telegram. According to the statement from WikiLeaks, government hackers can penetrate
Android phones and collect "audio and message traffic before encryption is applied."
With respect to hacked devices like you smart phone, smart TV and computer, consider the concept of putting these devices in "fake-off"
mode:
Among the various techniques profiled by WikiLeaks is "Weeping Angel", developed by the CIA's Embedded Devices Branch (EDB),
which infests smart TVs , transforming them into covert microphones. After infestation, Weeping Angel places the target
TV in a 'Fake-Off' mode , so that the owner falsely believes the TV is off when it is on. In 'Fake-Off' mode the TV operates
as a bug, recording conversations in the room and sending them over the Internet to a covert CIA server.
As Kim Dotcom chimed in on Twitter, "CIA turns Smart TVs, iPhones, gaming consoles and many other consumer gadgets into open
microphones" and added "CIA turned every Microsoft Windows PC in the world into spyware. Can activate backdoors on demand,
including via Windows update "[.]
Do you still trust Windows Update?
About "Russia did it"
Adding to the "Russia did it" story, note this:
Another profound revelation is that the CIA can engage in "false flag" cyberattacks which portray Russia as the assailant
. Discussing the CIA's Remote Devices Branch's UMBRAGE group, Wikileaks' source notes that it "collects and maintains a substantial
library of attack techniques 'stolen' from malware produced in other states including the Russian Federation.["]
As Kim Dotcom summarizes this finding, " CIA uses techniques to make cyber attacks look like they originated from enemy
state ."
This doesn't prove that Russia didn't do it ("it" meaning actually hacking the presidency for Trump, as opposed to providing
much influence in that direction), but again, we're in spook world, with all the phrase implies. The CIA can clearly put anyone's
fingerprints on any weapon they wish, and I can't imagine they're alone in that capability.
Hacking Presidential Devices?
If I were a president, I'd be concerned about this, from the WikiLeaks "
Analysis " portion of the Press Release (emphasis added):
"Year Zero" documents show that the CIA breached the Obama administration's commitments [that the intelligence community would
reveal to device manufacturers whatever vulnerabilities it discovered]. Many of the vulnerabilities used in the CIA's cyber arsenal
are pervasive [across devices and device types] and some may already have been found by rival intelligence agencies or cyber criminals.
As an example, specific CIA malware revealed in "Year Zero" [that it] is able to penetrate, infest and control both the
Android phone and iPhone software that runs or has run presidential Twitter accounts . The CIA attacks this software by using
undisclosed security vulnerabilities ("zero days") possessed by the CIA[,] but if the CIA can hack these phones then so can everyone
else who has obtained or discovered the vulnerability. As long as the CIA keeps these vulnerabilities concealed from Apple and
Google (who make the phones) they will not be fixed, and the phones will remain hackable.
Does or did the CIA do this (hack presidential devices), or is it just capable of it? The second paragraph implies the latter.
That's a discussion for another day, but I can say now that both Lawrence Wilkerson, aide to Colin Powell and a non-partisan (though
an admitted Republican) expert in these matters, and
William Binney,
one of the triumvirate of major pre-Snowden leakers, think emphatically yes. (See
Wilkerson's
comments here . See
Binney's comments here .)
Whether or not you believe Wilkerson and Binney, do you doubt that if our intelligence people can do something, they would
balk at the deed itself, in this
world of "collect it all
"? If nothing else, imagine the power this kind of bugging would confer on those who do it.
The Breadth of the CIA Cyber-Hacking Scheme
But there is so much more in this Wikileaks release than suggested by the brief summary above. Here's a bullet-point overview
of what we've learned so far, again via Zero Hedge:
Key Highlights from the Vault 7 release so far:
"Year Zero" introduces the scope and direction of the CIA's global covert hacking program, its malware arsenal and dozens of
"zero day" weaponized exploits against a wide range of U.S. and European company products , include Apple's iPhone,
Google's Android and Microsoft's Windows and even Samsung TVs, which are turned into covert microphones.
Wikileaks claims that the CIA lost control of the majority of its hacking arsenal including malware, viruses, trojans, weaponized
"zero day" exploits, malware remote control systems and associated documentation . This extraordinary collection, which
amounts to more than several hundred million lines of code, gives its possessor the entire hacking capacity of the CIA The
archive appears to have been circulated among former U.S. government hackers and contractors in an unauthorized manner, one
of whom has provided WikiLeaks with portions of the archive.
By the end of 2016, the CIA's hacking division, which formally falls under the agency's Center for Cyber Intelligence (CCI),
had over 5000 registered users and had produced more than a thousand hacking systems, trojans, viruses, and other
"weaponized" malware . Such is the scale of the CIA's undertaking that by 2016, its hackers had utilized more code than
that used to run Facebook.
The CIA had created, in effect, its "own NSA" with even less accountability and without publicly answering the question
as to whether such a massive budgetary spend on duplicating the capacities of a rival agency could be justified.
Once a single cyber 'weapon' is 'loose' it can spread around the world in seconds , to be used by rival states, cyber
mafia and teenage hackers alike.
Also this scary possibility:
As of October 2014 the CIA was also looking at infecting the vehicle control systems used by modern cars and trucks.
The purpose of such control is not specified, but it would permit the CIA to engage in nearly undetectable assassinations
.
Journalist Michael Hastings, who in 2010
destroyed the career of General
Stanley McChrystal and was hated by the military for it, was killed in 2013 in an inexplicably out-of-control car. This isn't
to suggest the CIA, specifically, caused his death. It's to ask that, if these capabilities existed in 2013, what would prevent their
use by elements of the military, which is, after all a death-delivery organization?
And lest you consider this last speculation just crazy talk, Richard Clarke (that
Richard Clarke ) agrees: "Richard Clarke, the counterterrorism
chief under both Bill Clinton and George W. Bush,
told the Huffington
Post that Hastings's crash looked consistent with a car cyber attack.'" Full and fascinating
article here .
WiliLeaks Press Release
Here's what WikiLeaks itself says about this first document cache (again, emphasis mine):
Press Release
Today, Tuesday 7 March 2017, WikiLeaks begins its new series of leaks on the U.S. Central Intelligence Agency. Code-named "Vault
7" by WikiLeaks, it is the largest ever publication of confidential documents on the agency.
Recently, the CIA lost control of the majority of its hacking arsenal including malware, viruses, trojans, weaponized "zero
day" exploits, malware remote control systems and associated documentation. This extraordinary collection, which amounts to more
than several hundred million lines of code, gives its possessor the entire hacking capacity of the CIA The archive appears to
have been circulated among former U.S. government hackers and contractors in an unauthorized manner, one of whom has provided
WikiLeaks with portions of the archive.
"Year Zero" introduces the scope and direction of the CIA's global covert hacking program, its malware arsenal and dozens of
"zero day" weaponized exploits against a wide range of U.S. and European company products, include Apple's iPhone, Google's Android
and Microsoft's Windows and even Samsung TVs, which are turned into covert microphones.
Since 2001 the CIA has gained political and budgetary preeminence over the U.S. National Security Agency (NSA). The CIA
found itself building not just its now infamous drone fleet, but a very different type of covert, globe-spanning force - its own
substantial fleet of hackers. The agency's hacking division freed it from having to disclose its often controversial operations
to the NSA (its primary bureaucratic rival) in order to draw on the NSA's hacking capacities.
By the end of 2016, the CIA's hacking division, which formally falls under the agency's
Center for Cyber Intelligence (CCI), had over
5000 registered users and had produced more than a thousand hacking systems, trojans, viruses, and other "weaponized" malware.
Such is the scale of the CIA's undertaking that by 2016, its hackers had utilized more code than that used to run Facebook. The
CIA had created, in effect, its "own NSA" with even less accountability and without publicly answering the question as to whether
such a massive budgetary spend on duplicating the capacities of a rival agency could be justified.
In a statement to WikiLeaks the source details policy questions that they say urgently need to be debated in public
, including whether the CIA's hacking capabilities exceed its mandated powers and the problem of public oversight of the agency.
The source wishes to initiate a public debate about the security, creation, use, proliferation and democratic control of cyberweapons.
Once a single cyber 'weapon' is 'loose' it can spread around the world in seconds, to be used by rival states, cyber mafia
and teenage hackers alike.
Julian Assange, WikiLeaks editor stated that "There is an extreme proliferation risk in the development of cyber 'weapons'.
Comparisons can be drawn between the uncontrolled proliferation of such 'weapons', which results from the inability to contain
them combined with their high market value, and the global arms trade. But the significance of "Year Zero" goes well beyond the
choice between cyberwar and cyberpeace. The disclosure is also exceptional from a political, legal and forensic perspective."
Wikileaks has carefully reviewed the "Year Zero" disclosure and published substantive CIA documentation while avoiding the
distribution of 'armed' cyberweapons until a consensus emerges on the technical and political nature of the CIA's program and
how such 'weapons' should analyzed, disarmed and published.
Wikileaks has also decided to redact and anonymise some
identifying information in "Year Zero" for in depth analysis. These redactions include ten of thousands of CIA targets and attack
machines throughout Latin America, Europe and the United States. While we are aware of the imperfect results of any approach chosen,
we remain committed to our publishing model and note that the quantity of published pages in "Vault 7" part one ("Year Zero")
already eclipses the total number of pages published over the first three years of the Edward Snowden NSA leaks.
Be sure to click through for the Analysis, Examples and FAQ sections
as well.
"O brave new world," someone once wrote . Indeed.
Brave new world, that only the brave can live in.
____
1 Mind you, the leakers may have had a comprehensive enough view to be making an accurate call. But the real point
is there are no actors who will be allowed to make an independent assessment.
Senator John McCain passed documents to the FBI director, James Comey, last month alleging secret contacts between the Trump
campaign and Moscow and that Russian intelligence had personally compromising material on the president-elect himself.
The material, which has been seen by the Guardian, is a series of reports on Trump's relationship with Moscow. They were
drawn up by a former western counter-intelligence official, now working as a private consultant. BuzzFeed on Tuesday published
the documents, which it said were "unverified and potentially unverifiable".
The Guardian has not been able to confirm the veracity of the documents' contents,
Emphases mine. I had been sitting on this link trying to make sense of this part. Clearly, the Trump Whitehouse has some major
leaks, which the MSM is exploiting. But the start of this article suggests that para-intelligence (is that a word? Eh, it is now)
was the source of the allegedly damaging info.
This is no longer about the deep-state, but a rouge state, possibly guns for higher, each having fealty to specific political
interests. The CIA arsenal wasn't leaked. It was delivered.
hmm.. as far as I can see, noone seems to care here in Germany anymore about being spied on by our US friends, apart from a
few alternative sources which are being accused of spreading fake news, of being anti-american, russian trolls, the matter is
widely ignored
I have read a few articles about the Vault 7 leak that typically raise a few alarms I would like to comment on.
1) The fact that the
CIA had managed to bypass encryption on popular phone and messaging services
does not mean that it has broken encryption, just that it has a way to install a program at a lower level, close to the operating
system, that will read messages before they are encrypted and sent by the messaging app, or just after they
have been decrypted by it.
As a side note: banks have now largely introduced two-factor authentication when accessing online services. One enters username
(or account number) and password; the bank site returns a code; the user must then enter this code into a smartphone app or a
tiny specialized device, which computes and returns a value out of it; the user enters this last value into the entry form as
a throw-away additional password, and gains access to the bank website.
I have always refused to use such methods on a smartphone and insist on getting the specialized "single-use password computer",
precisely because the smartphone platform can be subverted.
2) The fact that
"Weeping Angel", developed by the CIA's Embedded Devices Branch (EDB), [ ] infests smart TVs, transforming them into covert
microphones.
is possible largely because smart TVs are designed by their manufacturers to serve as spying devices. "Weeping Angel" is not
some kind of virus that turns normal devices into zombies, but a tool to take control of existing zombie devices.
The fact that smart TVs from
Vizio ,
Samsung or
LG constitute an outrageous intrusion into the privacy of their owners has been a known topic for years already.
3) The
CIA [ ] also looking at infecting the vehicle control systems used by modern cars and trucks
is not a "scary possibility" either; various demonstrations of such feats on
Tesla ,
Nissan , or
Chrysler vehicles have been demonstrated in the past few years.
And the consequences have already been suggested (killing people by disabling their car controls on the highway for instance).
My take on this is that we should seriously look askance not just at the shenanigans of the CIA, but at the entire "innovative
technology" that is imposed upon (computerized cars) or joyfully adopted by (smartphones) consumers. Of course, most NC readers
are aware of the pitfalls already, but alas not the majority of the population.
4) Finally this:
He's so impossibly erratic, so impossibly unfit for his office,
Trump is arguably unfit for office, does not have a clue about many things (such as foreign relations), but by taxing him of
being "erratic" Gaius Publius shows that he still does not "get" the Donald.
Trump has a completely different modus operandi than career politicians, formed by his experience as a real-estate mogul and
media star. His world has been one where one makes outrageous offers to try anchoring the negotiation before reducing one's claims
- even significantly, or abruptly exiting just before an agreement to strike a deal with another party that has been lured to
concessions through negotiations with the first one. NC once included a video of Trump doing an interactive A/B testing of his
slogans during a campaign meeting; while changing one's slogans on the spot might seem "erratic", it is actually a very systematic
market probing technique.
So stop asserting that Trump is "unpredictable" or "irrational"; this is underestimating him (a dangerous fault), as he is
very consistent, though in an uncommon fashion amongst political pundits.
While I agree that it's worth pointing out that the CIA has not broken any of the major encryption tools, even Snowden regards
being able to circumvent them as worse, since people using encryption are presumably those who feel particularly at risk and will
get a false sense of security and say things or keep data on their devices that they never never would if they thought they were
insecure.
Re Gaius on Trump, I agree the lady doth protest too much. But I said repeatedly that Trump would not want to be President
if he understood the job. It is not like being the CEO of a private company. Trump has vastly more control over his smaller terrain
in his past life than he does as President.
And Trump is no longer campaigning. No more a/b testing.
The fact is that he still does not have effective control of the Executive branch. He has lots of open positions in the political
appointee slots (largely due to not having even submitted candidates!) plus has rebellion in some organizations (like folks in
the EPA storing data outside the agency to prevent its destruction).
You cannot pretend that Trump's former MO is working at all well for him. And he isn't showing an ability to adapt or learn
(not surprising at his age). For instance, he should have figured out by now that DC is run by lawyers, yet his team has hardly
any on it. This is continuing to be a source of major self inflicted wounds.
His erraticness may be keeping his opponents off base, but it is also keeping him from advancing any of his goals.
Yes, not breaking encryption is devious, as it gives a false sense of security - this is precisely why I refuse to use those
supposedly secure e-banking login apps on smartphones whose system software can be subverted, and prefer those non-connected,
non-reprogrammable, special-purpose password generating devices.
As for Trump being incompetent for his job, and his skills in wheeling-dealing do not carrying over usefully to conducting
high political offices, that much is clear. But he is not "erratic", rather he is out of place and out of his depth.
I am writing this in the shower with a paper bag over my head and my iPhone in the microwave.
I have for years had a password-protected document on computer with all my important numbers and passwords. I have today deleted
that document and reverted to a paper record.
I think he means a machine dedicated to high-security operations like anything financial or bill-pay. Something that is not
exposed to email or web-browsing operations that happen on a casual-use computer that can easily compromise. That's not a bad
way to go; it's cheaper in terms of time than the labor-intensive approaches I use, but those are a hobby more than anything else.
It depends on how much you have at stake if they get your bank account or brokerage service password.
I take a few basic security measures, which would not impress the IT crowd I hang out with elsewhere, but at least would not
make me a laughingstock. I run Linux and use only open-source software; run ad-blockers and script blockers; confine risky operations,
which means any non-corporate or non-mainstream website to a virtual machine that is reset after each use; use separate browsers
with different cookie storage policies and different accounts for different purposes. I keep a well-maintained pfSense router
with a proxy server and an intrusion detection system, allowing me to segregate my secure network, home servers, guest networks,
audiovisual streaming and entertainment devices, and IoT devices each on their own VLANs with appropriate ACLs between them. No
device on the more-secured network is allowed out to any port without permission, and similar rules are there for the IoT devices,
and the VoIP tools.
The hardware to do all of that costs at least $700, but the real expense is in the time to learn the systems properly. Of course
if you use Linux, you could save that on software in a year if you are too cheap to send a contribution to the developers.
It's not perfect, because I still have computers turned on :) , but I feel a bit safer this way.
That said, absolutely nothing that I have here would last 30 milliseconds against anything the "hats" could use, if they wanted
in. It would be over before it began. If I had anything to hide, really, I would have something to fear; so guess I'm OK.
They're key fobs handed to you by your IT dept. The code displayed changes every couple of minutes. The plus is there's nothing
sent over the air. The minus is the fobs are subject to theft, and are only good for connecting to 'home'. And since they have
a cost, and need to be physically handed to you, they're not good fit for most two factor login applications (ie logging into
your bank account).
I watched (fast forwarded through, really) Morning Joe yesterday to see what they would have to say about Wikileaks. The show
mostly revolved around the health care bill and Trump's lying and tweeting about Obama wiretapping him. They gave Tim Kaine plenty
of time to discuss his recent trip to London talking to "some of our allies there" saying that they are concerned that "all the
intelligence agencies" say the Rooskies "cyber hacked" our election, and since it looks like we aren't doing anything when we
are attacked, they KNOW we won't do anything when they are attacked. (more red baiting)
The only two mentions I saw was about Wikileaks were, first, a question asked of David Cohen, ex Deputy Director of the CIA,
who refused to confirm the Wikileaks were authentic, saying whatever tools and techniques the CIA had were used against foreign
persons overseas, so there is no reason to worry that your TV is looking at you. And second, Senator Tom Cotton, who didn't want
to comment on the contents of Wikileaks, only saying that the CIA is a foreign intelligence service, collecting evidence on foreign
targets to keep our country safe, and it does not do intelligence work domestically.
So that appears to be their story, the CIA doesn't spy on us, and they are sticking with it, probably hoping the whole Wikileaks
thing just cycles out of the news.
The unwillingness of the main stream media (so far) to really cover the Wikileaks reveal is perhaps the bigger story. This
should be ongoing front page stuff .. but it is not.
As for using ZeroHedge as a source for anything, can we give that a rest. That site has become a cesspool of insanity. It used
to have some good stuff. Now it is just unreadable. SAD
And yes I know the hypocrisy of slamming ZH and the MSM at the same time we live in interesting times.
Your remarks on ZH are an ad hominem attack and therefore a violation of site policies. The onus is on you to say what ZH got
wrong and not engage in an ungrounded smear. The mainstream media often cites ZH.
NC more than just about any other finance site is loath to link to ZH precisely because it is off base or hyperventilating
a not acceptably high percent of the time, and is generally wrong about the Fed (as in governance and how money works). We don't
want to encourage readers to see it as reliable. However, it is good on trader gossip and mining Bloomberg data.
And I read through its summary of the Wikileaks material as used by Gaius and there was nothing wrong with it. It was careful
about attributing certain claims to Wikileaks as opposed to depicting them as true.
My rules for reading ZH:
1- Skip every article with no picture
2- Skip every article where the picture is a graph
3- Skip every article where the picture is of a single person's face
4- Skip every afticle where the picture is a cartoon
5- Skip every article about gold, BitCoin, or high-frequency trading
6- Skip all the "Guest Posts"
7- ALWAYS click through to the source
8- NEVER read the comments
It is in my opinion a very high noise-to-signal source, but there is some there there.
Discerning a 'news from noise' is NEVER that easy b/c it is an art, developed by years of shifting through ever increasing
'DATA information' load. This again has to be filtered and tested against one's own 'critical' thinking or reasoning! You have
to give ZH, deserved credit, when they are right!
There is no longer a Black or white there, even at ZH! But it is one of the few, willing to challenge the main stream narrative
'kool aid'
In addition to the "para-intelligence" community (hat tip Code named D) there are multiple enterprises with unique areas of
expertise that interface closely with the CIA The long-exposed operations, which include entrapment and blackmailing of key actors
to guarantee complicity, "loyalty" and/or sealed lips, infect businesses, NGOs, law enforcement agencies, judges, politicians,
and other government agencies. Equal opportunity employment for those with strong stomachs and a weak moral compass.
Yes I can't remember where I read it but it was a tale passed around supposedly by an FBI guy that had, along with his colleagues,
the job of vetting candidates for political office. They'd do their background research and pass on either a thick or thin folder
full of all the compromising dirt on each potential appointee. Over time he said he was perturbed to notice a persistent pattern
where the thickest folders were always the ones who got in.
I learned this when I was in my 20s. The Catholic Church was funding my early critique of American foreign aid as being
imperialist. I asked whether they thought I should go into politics. They said, "No, you'd never make it". And I said, "Why?"
and they said, "Well, nobody has a police record or any other dirt on you." I asked what they meant. They said, "Unless they
have something over you to blackmail you with, you're not going to be able to get campaign funding. Because they believe that
you might do something surprising," in other words, something they haven't asked you to do. So basically throughout politics,
on both sides of the spectrum, voters have candidates who are funded by backers who have enough over them that they can always
blackmail.
I find the notion that my consumer electronics may be CIA microphones somewhat irritating, but my imagination quickly runs
off to far worse scenarios. (although the popular phase, "You're tax dollars at work." keeps running thru my head like a earworm.
And whenever I hear "conservatives" speak of their desire for "small government", usually when topics of health care, Medicare
and social security come up, I can only manage a snort of incredulousness anymore)
One being malware penetrating our nuke power plants and shutting down the cooling system. Then the reactor slowly overheats
over the next 3 days, goes critical, and blows the surrounding area to high heaven. We have plants all around the coast of the
country and also around the Great Lakes Region – our largest fresh water store in a drought threatened future.
Then the same happening in our offensive nuke missile systems.
Some other inconvenient truths – the stuxnet virus has been redesigned. Kaspersky – premier anti malware software maker – had
a variant on their corporate network for months before finally discovering it. What chance have we?
In China, hacking is becoming a consumer service industry. There are companies building high power data centers with a host
of hacking tools. Anyone, including high school script kiddies, can rent time to use the sophisticated hacking tools, web search
bots, and whatever, all hosted on powerful servers with high speed internet bandwidth.
Being a bit "spooked" by all this, I began to worry about my humble home computer and decided to research whatever products
I could get to at least ward off annoying vandalism. Among other things, I did sign up for a VPN service. I'm looking at the control
app for my VPN connection here and I see that with a simple checkbox mouse click I can make my IP address appear to be located
in my choice of 40 some countries around the world. Romania is on the list!
Actually, I very much doubt that does work. The mic "pickup" would feed its analog output to a DAC (digital to analog converter)
which would convert the signal to digital. This then goes to something similar to a virtual com port in the operating system.
Here is where a malware program would pick it up and either create a audio file to be sent to an internet address, or stream it
directly there.
The article is just plugging in a microphone at the output jack. The malware got the data long before it goes thru another
DAC and analog amp to get to the speakers or output jack.
It depends on how it is hooked up internally. Old fashioned amateur radio headphones would disable the speakers when plugged
in because the physical insertion of the plug pushed open the connection to the speakers. The jack that you plug the ear buds
into might do the same, disconnecting the path between the built-in microphone and the ADC (actually it is an ADC not a DAC).
The only way to know is to take it apart and see how it is connected.
The CIA is not allowed to operate in the US is also the panacea for the public. And some are buying it. Along with everyone
knows they can do this is fueling the NOTHING to see here keep walking weak practically non existent coverage.
At what point do people quit negotiating in terrorism and errorism? For this is what the police, the very State itself has
long been. Far beyond being illegitimate, illegal, immoral, this is a clear and ever present danger to not just it's own people,
but the rule of law itself. Blanket statements like we all know this just makes the dangerously absurd normal I'll never understand
that part of human nature. But hey, the TSA literally just keeps probing further each and every year. Bend over!
Trump may not be the one for the task but we the people desperately need people 'unfit', for it is the many fit who brought
us to this point. His unfit nature is as refreshing on these matters in its chaotic honest disbelief as Snowden and Wiki revelations.
Refreshing because it's all we've got. One doesn't have to like Trump to still see missed opportunity so many should be telling
him he could be the greatest pres ever if (for two examples) he fought tirelessly for single payer and to bring down this police
state rather than the EPA or public education.
This cannot stand on so many levels. Not only is the fourth amendment rendered utterly void, but even if it weren't it falls
far short of the protections we deserve.
No enemy could possibly be as bad as who we are and what we allow/do among ourselves. If an election can be hacked (not saying
it was by Russia).. as these and other files prove anything can and will be hacked then our system is to blame, not someone else.
What amazes me is that the spooks haven't manufactured proof needed to take Trump out of office Bonfire of The Vanities style.
I'd like to think the people have moved beyond the point they would believe manufactured evidence but the Russia thing proves
otherwise.
These people foment world war while probing our every move and we do nothing!
If we wait for someone fit nothing will ever change because we wait for the police/media/oligarch state to tell us who is fit.
But being fit by the standards of our ruling class, the "real owners" as Carlin called them is, in my book, an automatic proof
that they are up to no good. Trump is not my cup of tea as a president but no one we have had in a while wasn't clearly compromised
by those who fund them. Did you ever wonder why we have never had a president or even a powerful member of congress that was not
totally in the tank for that little country on the Eastern Mediterranean? Or the Gulf Monarchies? Do you think that is by accident?
Do you think money isn't involved? Talk about hacked elections! We should be so lucky as to have ONLY Russians attempting to affect
our elections. Money is what hacks US elections and never forget that. To me it is laughable to discuss hacking the elections
without discussing the real way our "democracy" is subverted–money not document leaks or voting machine hacks. It's money.
Why isn't Saudi Arabia on Trump's list? Iran that has never been involved in a terrorist act on US soil is but not Saudi Arabia?
How many 911 hijackers came from Iran? If anything saves Trump from destruction by the real owners of our democracy it is his
devotion to the aforementioned countries.
The point again is not to remove him from office but to control him. With Trump's past you better believe the surveillance
state has more than enough to remove him from office. Notice the change in his rhetoric since inauguration? More and more he is
towing the establishment Republican line. Of course this depends on whether you believe Trump is a break with the past or just
the best liar out there. A very unpopular establishment would be clever in promoting their agent by pretending to be against him.
Anyone who still believes that the US is a democratic republic and not a mafia state needs to stick their heads deeper into
the sands. When will the low information voters and police forces on whom a real revolution depends realize this is anyone's guess.
The day is getting closer especially for the younger generation. The meme among the masses is that government has always been
corrupt and that this is nothing new. I do believe the level of immorality among the credentialed classes is indeed very new and
has become the new normal. Generations of every man for himself capitalist philosophy undermining any sense of morality or community
has finally done its work.
Go take a jaunt over to huffpo, at the time of this post there was not a single mention of vault 7 on the front page. Just
a long series of anti trump administration articles.
Glad to know for sure who the true warmongers were all along.
No.. The Church commission was a sweep it under the rug operation. It got us FISA courts. More carte blanche secrecy, not less.
The commission nor the rest of the system didn't even hold violators of the time accountable.
We have files like Vault 7. Commissions rarely get in secret what we have right here before our eyes.
River: Interesting historic parallel? I believe that the Ottomans got rid of the Janissaries that way, after the Janissaries
had become a state within a state, by using cannons on their HQ
From Wiki entry, Janissaries:
The corps was abolished by Sultan Mahmud II in 1826 in the Auspicious Incident in which 6,000 or more were executed.[8]
Took less than a minute to download the 513.33MB file. The passphrase is what JFK said he'd like to do to CIA: SplinterItIntoAThousandPiecesAndScatterItIntoTheWinds.
"The illegal we do immediately; the unconstitutional takes a little longer." Henry Kissinger, 1975.
The campaign to frame up and discredit Trump and his associates is characteristic of how a police state routinely operates.
A national security apparatus that vacuums up all our communications and stores them for later retrieval has been utilized
by political operatives to go after their enemies – and not even the President of the United States is immune. This is something
that one might expect to occur in, say, Turkey, or China: that it is happening here, to the cheers of much of the media and
the Democratic party, is beyond frightening.
The irony is that the existence of this dangerous apparatus – which civil libertarians have warned could and probably would
be used for political purposes – has been hailed by Trump and his team as a necessary and proper function of government. Indeed,
Trump has called for the execution of the person who revealed the existence of this sinister engine of oppression – Edward
Snowden. Absent Snowden's revelations, we would still be in the dark as to the existence and vast scope of the NSA's surveillance.
And now the monster Trump embraced in the name of "national security" has come back to bite him.
We hear all the time that what's needed is an open and impartial "investigation" of Trump's alleged "ties" to Russia. This
is dangerous nonsense: does every wild-eyed accusation from embittered losers deserve a congressional committee armed with
subpoena power bent on conducting an inquisition? Certainly not.
What must be investigated is the incubation of a clandestine political police force inside the national security apparatus,
one that has been unleashed against Trump – and could be deployed against anyone.
This isn't about Donald Trump. It's about preserving what's left of our old republic.
Yeah I downloaded it the day it came out and spent an hour or so looking at it last night. First impressions – "heyyy this
is like a Hackers Guide – the sort I used in the 80s, or DerEngel's Cable Modem Hacking" of the 00s.
2nd impressions – wow it really gives foundational stuff – like "Enable Debug on PolarSSL".
3rd impressions – "I could spend hours going thru this happily ".
4th impressions – I went looking for the "juicy bits" of interest to me – SOHO routers, small routers – sadly its just
a table documenting routers sold around the world, and whether these guys have put the firmware in their Stash Repository. Original
firmware, not hacked one. But the repository isn't in the vault dump, AFAIK.
Its quite fascinating. But trying to find the "juicy stuff" is going to be tedious. One can spend hours and hours going thru
it. To speed up going thru it, I'm going to need some tech sites to say "where to go".
It seems clear that Wikileaks has not and will not release actual ongoing method "how-to" info or hacking scripts. They are
releasing the "whats", not the tech level detailed "hows". This seems like a sane approach to releasing the data. The release
appears to be for political discussion, not for spreading the hacking tools. So I wouldn't look for "juicy bits" about detailed
methodology. Just my guess.
That said, love what you're doing digging into this stuff. I look forward to a more detailed report in future. Thanks.
Yves, I think that you much underestimate the extremity of these exposed violations of the security of freedom of expression,
and of the security of private records. The WikiLeaks docs show that CIA has developed means to use all personal digital device
microphones and cameras even when they are "off," and to send all of your files and personal data to themselves, and to send your
private messages to themselves before they are encrypted. They have installed these spyware in the released version of Windows
10, and can easily install them on all common systems and devices.
This goes far beyond the kind of snooping that required specialized devices installed near the target, which could be controlled
by warrant process. There is no control over this extreme spying. It is totalitarianism now.
This is probably the most extreme violation of the rights of citizens by a government in all of history. It is far worse than
the "turnkey tyranny" against which Snowden warned, on the interception of private messages. It is tyranny itself, the death of
democracy.
Your first sentence is a bit difficult to understand. If you read Yves' remarks introducing the post, she says that the revelations
are "a big deal" "if the Wikileaks claim is even halfway true," while coming down hard on the MSM and others for "pooh-pooh[ing]"
the story. Did you want her to add more exclamation points?
So we have a zillion ways to spy and hack and deceive and assassinate, but no control. I think this is what the military
refers to as "being overtaken by events."
It's easy to gather information; not so easy to analyze it, and somehow impossible to act on it in good faith. With all this
ability to know stuff and surveil people the big question is, Why does everything seem so beyond our ability to control it?
We should know well in advance that banks will fail catastrophically; that we will indeed have sea level rise; that resources
will run out; that water will be undrinkable; that people will be impossible to manipulate when panic hits – but what do we do?
We play dirty tricks, spy on each other like voyeurs, and ignore the inevitable. Like the Stasi, we clearly know what happened,
what is happening and what is going to happen. But we have no control.
My godfather was in the CIA in the late sixties and early seventies, and he said that outside of the President's pet projects
there was no way to sift through and bring important information to decision makers before it made the Washington Post (he is
aware of the irony) and hit the President's breakfast table.
AS, I would interpret it as saying that there was so much coming in it was like trying to classify snowflakes in a snowstorm.
They could pick a few subject areas to look at closely but the rest just went into the files.
Leaking like a sieve is also likely, but perhaps not the main point.
The archive appears to have been circulated among government hackers and contractors in a authorized manner
There, that looks the more likely framing considering CIA & DNI on behalf of the whole US IC seemingly fostered wide dissimilation
of these tools, information. Demonstration of media control an added plus.
Todd Pierce , on the other hand, nails it. (From his Facebook page.)
The East German Stasi could only dream of the sort of surveillance the NSA and CIA do now, with just as nefarious of purposes.
Perhaps the scare quotes around "international mobster" aren't really necessary.
In all this talk about the various factions aligned with and against Trump, that's one I haven't heard brought up by anybody.
With all the cement poured in Trump's name over the years, it would be naive to think his businesses had not brushed up against
organized crime at some point. Question is, whose side are they on?
Like all the other players, the "side" they are on is them-effing-selves. And isn't that the whole problem with our misbegotten
species, writ large?
Then there's this: https://www.youtube.com/watch?v=s1Hzds9aGdA
Maybe these people will be around and still eating after us urban insects and rodents are long gone? Or will our rulers decide
no one should survive if they don't?
To what extent do these hacks represent the CIA operating within the US? To what extent is that illegal? With the democrats
worshipping the IC, will anyone in an official position dare to speak out?
I've long thought that the reason Snowden was pursued so passionately was that he exposed the biggest, most embarrassing secret:
that the National "Security" Agency's INTERNAL security was crap.
And here it is: "Wikileaks claims that the CIA lost control of the majority of its hacking arsenal "
The CIA's internal security is crap, too. Really a lot of people should be fired over that, as well as over Snowden's release.
We didn't hear of it happening in the NSA, though I'm not sure we would have. Given Gaius's description of Trump's situation,
it seems unlikely it will happen this time, either. One of my hopes for a Trump administration, as long as we're stuck with it,
was a thorough cleanout of the upper echelons in the IC. It's obviously long overdue, and Obama wasn't up to it. But I used the
past tense because I don't think it's going to happen. Trump seems more interested in sucking up to them, presumably so they won't
kill him or his family. That being one of their options.
Ah, that's the beauty of contracting it out. No one gets fired. Did anyone get fired because of Snowden? It was officially
a contractor problem and since there are only a small number of contractors capable of doing the work, well you know. We can't
get new ones.
What I find by far the most distressing is this: "The CIA had created, in effect, its "own NSA" with even less accountability
." [My emphasis]. It seems to characterize an organization that operates outside of any control and oversight – and one that is
intentionally structuring itself that way. That worries me.
It is becoming increasingly clear that the Republic is lost because we didn't stand guard for it. Blaming others don't cut
it either – we let it happen. And like the Germans about the Nazi atrocities, we will say that we didn't know about it.
Hey, I didn't let it happen. Stuff that spooks and sh!tes do behind the Lycra ™ curtain happens because it is, what is the
big word again, "ineluctable." Is my neighbor to blame for having his house half eaten by both kinds of termites, where the construction
is such that the infestation and damage are invisible until the vast damage is done?
And just how were we supposed to stand guard against a secret and unaccountable organization that protected itself with a shield
of lies? And every time some poor misfit complained about it they were told that they just didn't know the facts. If they only
knew what our IC knows they would not complain.
It's a dangerous world out there and only our brave IC can protect us from it. Come on. Stop blaming the victim and place
the blame where it belongs–our IC and MIC. I say stop feeding the beast with your loyalty to a government that has ceased to be
yours.
Studiously avoid any military celebrations. Worship of the military is part of the problem. Remember, the people you thank
for "their service" are as much victims as you are. Sadly they don't realize that their service is to a rotten empire that is
not worthy of their sacrifice but every time we perform the obligatory ritual of thankfulness we participate in the lie that the
service is to a democratic country instead of an undemocratic empire.
It's clearly a case of Wilfred Owen's classic "Dulce et Decorum Est". Read the poem, google it and read it. It is instructive:
" you would not tell with such high zest To children ardent for some desperate glory, The old Lie: Dulce et decorum est Pro patria
mori." Make no mistake. It is a lie and it can only be undone if we all cease to tell it.
"These CIA revelations in conjunction with those of the NSA paints a pretty dark future for privacy and freedom. Edward
Snowden made us aware of the NSA's program XKEYSCORE and PRISM which are utilized to monitor and bulk collect information from
virtually any electronic device on the planet and put it into a searchable database. Now Wikileaks has published what appears
to be additional Big Brother techniques used by a competing agency. Say what you want about the method of discovery, but Pandora's
box has been opened."
"... Recently, the CIA lost control of the majority of its hacking arsenal including malware, viruses, trojans, weaponized "zero day" exploits, malware remote control systems and associated documentation. ..."
"... Donald Trump is deep in the world of spooks now, the world of spies, agents and operatives. He and his inner circle have a nest of friends, but an even larger, more varied nest of enemies. As John Sevigny writes below, his enemies include not only the intel and counter-intel people, but also "Republican lawmakers, journalists, the Clintons, the Bush family, Barack Obama, the ACLU, every living Democrat and even Rand Paul." ..."
"... A total of 8,761 documents have been published as part of 'Year Zero', the first in a series of leaks the whistleblower organization has dubbed 'Vault 7.' WikiLeaks said that 'Year Zero' revealed details of the CIA's "global covert hacking program," including "weaponized exploits" used against company products including " Apple's iPhone , Google's Android and Microsoft's Windows and even Samsung TVs , which are turned into covert microphones." ..."
"... According to the statement from WikiLeaks, government hackers can penetrate Android phones and collect "audio and message traffic before encryption is applied." ..."
"... "CIA turned every Microsoft Windows PC in the world into spyware. Can activate backdoors on demand, including via Windows update "[.] ..."
"... Do you still trust Windows Update? ..."
"... As of October 2014 the CIA was also looking at infecting the vehicle control systems used by modern cars and trucks. ..."
"... "Richard Clarke, the counterterrorism chief under both Bill Clinton and George W. Bush, told the Huffington Post that Hastings's crash looked consistent with a car cyber attack.'" Full and fascinating article here . ..."
"... Recently, the CIA lost control of the majority of its hacking arsenal including malware, viruses, trojans, weaponized "zero day" exploits, malware remote control systems and associated documentation. This extraordinary collection, which amounts to more than several hundred million lines of code, gives its possessor the entire hacking capacity of the CIA The archive appears to have been circulated among former U.S. government hackers and contractors in an unauthorized manner, one of whom has provided WikiLeaks with portions of the archive. ..."
"... Since 2001 the CIA has gained political and budgetary preeminence over the U.S. National Security Agency (NSA). The CIA found itself building not just its now infamous drone fleet, but a very different type of covert, globe-spanning force - its own substantial fleet of hackers. The agency's hacking division freed it from having to disclose its often controversial operations to the NSA (its primary bureaucratic rival) in order to draw on the NSA's hacking capacities. ..."
"... By the end of 2016, the CIA's hacking division, which formally falls under the agency's Center for Cyber Intelligence (CCI), had over 5000 registered users and had produced more than a thousand hacking systems, trojans, viruses, and other "weaponized" malware. Such is the scale of the CIA's undertaking that by 2016, its hackers had utilized more code than that used to run Facebook. The CIA had created, in effect, its "own NSA" with even less accountability and without publicly answering the question as to whether such a massive budgetary spend on duplicating the capacities of a rival agency could be justified. ..."
"... I learned this when I was in my 20s. The Catholic Church was funding my early critique of American foreign aid as being imperialist. I asked whether they thought I should go into politics. They said, "No, you'd never make it". And I said, "Why?" and they said, "Well, nobody has a police record or any other dirt on you." I asked what they meant. They said, "Unless they have something over you to blackmail you with, you're not going to be able to get campaign funding. Because they believe that you might do something surprising," in other words, something they haven't asked you to do. So basically throughout politics, on both sides of the spectrum, voters have candidates who are funded by backers who have enough over them that they can always blackmail. ..."
"... The campaign to frame up and discredit Trump and his associates is characteristic of how a police state routinely operates. A national security apparatus that vacuums up all our communications and stores them for later retrieval has been utilized by political operatives to go after their enemies – and not even the President of the United States is immune. This is something that one might expect to occur in, say, Turkey, or China: that it is happening here, to the cheers of much of the media and the Democratic party, is beyond frightening. ..."
"... 4th impressions – I went looking for the "juicy bits" of interest to me – SOHO routers, small routers – sadly its just a table documenting routers sold around the world, and whether these guys have put the firmware in their Stash Repository. Original firmware, not hacked one. But the repository isn't in the vault dump, AFAIK. ..."
"... The WikiLeaks docs show that CIA has developed means to use all personal digital device microphones and cameras even when they are "off," and to send all of your files and personal data to themselves, and to send your private messages to themselves before they are encrypted. They have installed these spyware in the released version of Windows 10, and can easily install them on all common systems and devices. ..."
"... So we have a zillion ways to spy and hack and deceive and assassinate, but no control. I think this is what the military refers to as "being overtaken by events." ..."
"... My godfather was in the CIA in the late sixties and early seventies, and he said that outside of the President's pet projects there was no way to sift through and bring important information to decision makers before it made the Washington Post (he is aware of the irony) and hit the President's breakfast table. ..."
"... To what extent do these hacks represent the CIA operating within the US? To what extent is that illegal? With the democrats worshipping the IC, will anyone in an official position dare to speak out? ..."
"... Schumer said that as he understands, intelligence officials are "very upset with how [Trump] has treated them and talked about them ..."
"... The CIA's internal security is crap, too. Really a lot of people should be fired over that, as well as over Snowden's release. We didn't hear of it happening in the NSA, though I'm not sure we would have. Given Gaius's description of Trump's situation, it seems unlikely it will happen this time, either. One of my hopes for a Trump administration, as long as we're stuck with it, was a thorough cleanout of the upper echelons in the IC. It's obviously long overdue, and Obama wasn't up to it. But I used the past tense because I don't think it's going to happen. Trump seems more interested in sucking up to them, presumably so they won't kill him or his family. That being one of their options. ..."
"... "The CIA had created, in effect, its "own NSA" with even less accountability ." [My emphasis]. It seems to characterize an organization that operates outside of any control and oversight – and one that is intentionally structuring itself that way. That worries me. ..."
"... It's a dangerous world out there and only our brave IC can protect us from it. Come on. Stop blaming the victim and place the blame where it belongs–our IC and MIC. I say stop feeding the beast with your loyalty to a government that has ceased to be yours. ..."
"... "These CIA revelations in conjunction with those of the NSA paints a pretty dark future for privacy and freedom. Edward Snowden made us aware of the NSA's program XKEYSCORE and PRISM which are utilized to monitor and bulk collect information from virtually any electronic device on the planet and put it into a searchable database. Now Wikileaks has published what appears to be additional Big Brother techniques used by a competing agency. Say what you want about the method of discovery, but Pandora's box has been opened." ..."
Yves here. The first
release of the Wikileaks Vault 7 trove has curiously gone from being a MSM lead story yesterday to a handwave today. On the one hand,
anyone who was half awake during the Edward Snowden revelations knows that the NSA is in full spectrum surveillance and data storage
mode, and members of the Five Eyes back-scratch each other to evade pesky domestic curbs on snooping. So the idea that the CIA (and
presumably the NSA) found a way to circumvent encryption tools on smartphones, or are trying to figure out how to control cars remotely,
should hardly come as a surprise.
However, at a minimum, reminding the generally complacent public that they are being spied on any time they use the Web, and increasingly
the times in between, makes the officialdom Not Happy.
And if this Wikileaks claim is even halfway true, its Vault 7 publication is a big deal:
Recently, the CIA lost control of the majority of its hacking arsenal including malware, viruses, trojans, weaponized "zero
day" exploits, malware remote control systems and associated documentation. This extraordinary collection, which amounts to more
than several hundred million lines of code, gives its possessor the entire hacking capacity of the CIA The archive appears to
have been circulated among former U.S. government hackers and contractors in an unauthorized manner, one of whom has provided
WikiLeaks with portions of the archive.
This is an indictment of the model of having the intelligence services rely heavily on outside contractors. It is far more difficult
to control information when you have multiple organizations involved. In addition, neolibearlism posits that workers are free agents
who have no loyalties save to their own bottom lines (or for oddballs, their own sense of ethics). Let us not forget that
Snowden planned his career job moves
, which included a stint at NSA contractor Dell, before executing his information haul at a Booz Allen site that he had targeted.
Admittedly, there are no doubt many individuals who are very dedicated to the agencies for which they work and aspire to spend
most it not all of their working lives there. But I would assume that they are a minority.
The reason outsiders can attempt to pooh-pooh the Wikileaks release is that the organization redacted sensitive information like
the names of targets and attack machines. The CIA staffers who have access to the full versions of these documents as well as other
major components in the hacking toolkit will be the ones who can judge how large and serious the breach really is. 1 And
their incentives are to minimize it no matter what.
By Gaius Publius , a professional writer living
on the West Coast of the United States and frequent contributor to DownWithTyranny, digby, Truthout, and Naked Capitalism. Follow
him on Twitter @Gaius_Publius ,
Tumblr and
Facebook . GP article archive
here . Originally published at
DownWithTyranny
CIA org chart from the WikiLeaks cache (click to enlarge). "The organizational chart corresponds to the material published
by WikiLeaks so far. Since the organizational structure of the CIA below the level of Directorates is not public, the placement
of the EDG [Engineering Development Group] and its branches is reconstructed from information contained in the documents released
so far. It is intended to be used as a rough outline of the internal organization; please be aware that the reconstructed org
chart is incomplete and that internal reorganizations occur frequently."
* * *
"O brave new world, that has such people in it."
Bottom line first. As you read what's below, consider:
That the CIA is capable of doing all of the things described, and has been for years, is not in doubt.
That unnameable many others have stolen ("exfiltrated") these tools and capabilities is, according to the Wikileaks leaker, also
certain. Consider this an especially dangerous form of proliferation, with cyber warfare tools in the hands of anyone with money
and intent. As WikiLeaks notes, "Once a single cyber 'weapon' is 'loose' it can spread around the world in seconds, to be used
by peer states, cyber mafia and teenage hackers alike."
That the CIA is itself using these tools, and if so, to what degree, are the only unknowns. But can anyone doubt, in this aggressively
militarized environment, that only the degree of use is in question?
Now the story.
WikiLeaks just dropped a huge cache of documents (the first of several promised releases), leaked from a person or people
associated with the CIA in one or more capacities (examples, employee, contractor), which shows an agency out-of-control in its spying
and hacking overreach. Read through to the end. If you're like me, you'll be stunned, not just about what they can do, but that they
would want to do it, in some cases in direct violation of President Obama's orders. This story is bigger than anything you can imagine.
Consider this piece just an introduction, to make sure the story stays on your radar as it unfolds - and to help you identify
those media figures who will try to minimize or bury it. (Unless I missed it, on MSNBC last night, for example, the first mention
of this story was not Chris Hayes, not Maddow, but the Lawrence O'Donnell show, and then only to support his guest's "Russia gave
us Trump" narrative. If anything, this leak suggests a much muddier picture, which I'll explore in a later piece.)
So I'll start with just a taste, a few of its many revelations, to give you, without too much time spent, the scope of the problem.
Then I'll add some longer bullet-point detail, to indicate just how much of American life this revelation touches.
While the cache of documents has been vetted and redacted
, it hasn't been fully explored for implications. I'll follow this story as bits and piece are added from the crowd sourced research
done on the cache of information. If you wish to play along at home, the WikiLeaks
torrent file is here . The torrent's
passphrase is here . WikiLeaks
press release is here (also reproduced below). Their FAQ
is here .
Note that this release covers the years 2013–2016. As WikiLeaks says in its FAQ, "The series is the largest intelligence publication
in history."
Preface - Trump and Our "Brave New World"
But first, this preface, consisting of one idea only. Donald Trump is deep in the world of spooks now, the world of spies,
agents and operatives. He and his inner circle have a nest of friends, but an even larger, more varied nest of enemies. As John Sevigny
writes below, his enemies include not only the intel and counter-intel people, but also "Republican lawmakers, journalists, the Clintons,
the Bush family, Barack Obama, the ACLU, every living Democrat and even Rand Paul." Plus Vladimir Putin, whose relationship
with Trump is just "business," an alliance of convenience, if you will.
I have zero sympathy for Donald Trump. But his world is now our world, and with both of his feet firmly planted in spook world,
ours are too. He's in it to his neck, in fact, and what happens in that world will affect every one of us. He's so impossibly erratic,
so impossibly unfit for his office, that everyone on the list above wants to remove him. Many of them are allied, but if they are,
it's also only for convenience.
How do spooks remove the inconvenient and unfit? I leave that to your imagination;they have their ways. Whatever method they choose,
however, it must be one without fingerprints - or more accurately, without their fingerprints - on it.
Which suggests two more questions. One, who will help them do it, take him down? Clearly, anyone and everyone on the list. Second,
how do you bring down the president, using extra-electoral, extra-constitutional means, without bringing down the Republic? I have
no answer for that.
Here's a brief look at "spook world" (my phrase, not the author's) from "
The Fox Hunt " by John
Sevigny:
Several times in my life – as a journalist and rambling, independent photographer - I've ended up rubbing shoulders with
spooks. Long before that was a racist term, it was a catch-all to describe intelligence community people, counter intel types,
and everyone working for or against them. I don't have any special insight into the current situation with Donald Trump and his
battle with the IC as the intelligence community calls itself, but I can offer a few first hand observations about the labyrinth
of shadows, light, reflections, paranoia, perceptions and misperceptions through which he finds himself wandering, blindly. More
baffling and scary is the thought he may have no idea his ankles are already bound together in a cluster of quadruple gordian
knots, the likes of which very few people ever escape.
Criminal underworlds, of which the Trump administration is just one, are terrifying and confusing places. They become
far more complicated once they've been penetrated by authorities and faux-authorities who often represent competing interests,
but are nearly always in it for themselves.
One big complication - and I've written
about this before - is that you never know who's working for whom . Another problem is that the hierarchy of handlers,
informants, assets and sources is never defined. People who believe, for example, they are CIA assets are really just being used
by people who are perhaps not in the CIA at all but depend on controlling the dupe in question. It is very simple - and I have
seen this happen - for the subject of an international investigation to claim that he is part of that operation. [emphasis added]
Which leads Sevigny to this observation about Trump, which I partially quoted above: "Donald Trump may be crazy, stupid, evil
or all three but he knows the knives are being sharpened and there are now too many blades for him to count. The intel people are
against him, as are the counter intel people. His phone conversations were almost certainly recorded by one organization or another,
legal or quasi legal. His enemies include Republican lawmakers, journalists, the Clintons, the Bush family, Barack Obama, the ACLU,
every living Democrat and even Rand Paul. Putin is not on his side - that's a business matter and not an alliance."
Again, this is not to defend Trump, or even to generate sympathy for him - I personally have none. It's to characterize where
he is, and we are, at in this pivotal moment. Pivotal not for what they're doing, the broad intelligence community. But pivotal for
what we're finding out, the extent and blatancy of the violations.
All of this creates an incredibly complex story, with only a tenth or less being covered by anything like the mainstream press.
For example, the Trump-Putin tale is much more likely to be part of a much broader "international mobster" story, whose participants
include not only Trump and Putin, but Wall Street (think HSBC) and major international banks, sovereign wealth funds, major hedge
funds, venture capital (vulture capital) firms, international drug and other trafficking cartels, corrupt dictators and presidents
around the world and much of the highest reaches of the "Davos crowd."
Much of the highest reaches of the .01 percent, in other words, all served, supported and "curated" by the various, often competing
elements of the first-world military and intelligence communities. What a stew of competing and aligned interests, of marriages and
divorces of convenience, all for the common currencies of money and power, all of them
dealing in
death .
What this new WikiLeaks revelation shows us is what just one arm of that community, the CIA, has been up to. Again, the breadth
of the spying and hacking capability is beyond imagination. This is where we've come to as a nation.
What the CIA Is Up To - A Brief Sample
Now about those CIA spooks and their surprising capabilities. A number of
other outlets have written up the story, but
this
from Zero Hedge has managed to capture the essence as well as the breadth in not too many words (emphasis mine throughout):
WikiLeaks has published what it claims is the largest ever release
of confidential documents on the CIA It includes more than 8,000 documents as part of 'Vault 7', a series of leaks on the agency,
which have allegedly emerged from the CIA's Center
For Cyber Intelligence in Langley , and which can be seen on the org
chart below, which Wikileaks also released : [org
chart reproduced above]
A total of 8,761 documents have been published
as part of 'Year Zero', the first in a series of leaks the whistleblower organization has dubbed 'Vault 7.' WikiLeaks said
that 'Year Zero' revealed details of the CIA's "global covert hacking program," including "weaponized exploits" used against company
products including " Apple's iPhone , Google's Android and Microsoft's Windows and even Samsung TVs
, which are turned into covert microphones."
WikiLeaks tweeted the leak, which it claims came from a network inside the CIA's Center for Cyber Intelligence in Langley,
Virginia.
Among the more notable disclosures which, if confirmed, "
would rock the technology world ", the CIA had managed to bypass encryption on popular phone and messaging services
such as Signal, WhatsApp and Telegram. According to the statement from WikiLeaks, government hackers can penetrate
Android phones and collect "audio and message traffic before encryption is applied."
With respect to hacked devices like you smart phone, smart TV and computer, consider the concept of putting these devices in "fake-off"
mode:
Among the various techniques profiled by WikiLeaks is "Weeping Angel", developed by the CIA's Embedded Devices Branch (EDB),
which infests smart TVs , transforming them into covert microphones. After infestation, Weeping Angel places the target
TV in a 'Fake-Off' mode , so that the owner falsely believes the TV is off when it is on. In 'Fake-Off' mode the TV operates
as a bug, recording conversations in the room and sending them over the Internet to a covert CIA server.
As Kim Dotcom chimed in on Twitter, "CIA turns Smart TVs, iPhones, gaming consoles and many other consumer gadgets into open
microphones" and added "CIA turned every Microsoft Windows PC in the world into spyware. Can activate backdoors on demand,
including via Windows update "[.]
Do you still trust Windows Update?
About "Russia did it"
Adding to the "Russia did it" story, note this:
Another profound revelation is that the CIA can engage in "false flag" cyberattacks which portray Russia as the assailant
. Discussing the CIA's Remote Devices Branch's UMBRAGE group, Wikileaks' source notes that it "collects and maintains a substantial
library of attack techniques 'stolen' from malware produced in other states including the Russian Federation.["]
As Kim Dotcom summarizes this finding, " CIA uses techniques to make cyber attacks look like they originated from enemy
state ."
This doesn't prove that Russia didn't do it ("it" meaning actually hacking the presidency for Trump, as opposed to providing
much influence in that direction), but again, we're in spook world, with all the phrase implies. The CIA can clearly put anyone's
fingerprints on any weapon they wish, and I can't imagine they're alone in that capability.
Hacking Presidential Devices?
If I were a president, I'd be concerned about this, from the WikiLeaks "
Analysis " portion of the Press Release (emphasis added):
"Year Zero" documents show that the CIA breached the Obama administration's commitments [that the intelligence community would
reveal to device manufacturers whatever vulnerabilities it discovered]. Many of the vulnerabilities used in the CIA's cyber arsenal
are pervasive [across devices and device types] and some may already have been found by rival intelligence agencies or cyber criminals.
As an example, specific CIA malware revealed in "Year Zero" [that it] is able to penetrate, infest and control both the
Android phone and iPhone software that runs or has run presidential Twitter accounts . The CIA attacks this software by using
undisclosed security vulnerabilities ("zero days") possessed by the CIA[,] but if the CIA can hack these phones then so can everyone
else who has obtained or discovered the vulnerability. As long as the CIA keeps these vulnerabilities concealed from Apple and
Google (who make the phones) they will not be fixed, and the phones will remain hackable.
Does or did the CIA do this (hack presidential devices), or is it just capable of it? The second paragraph implies the latter.
That's a discussion for another day, but I can say now that both Lawrence Wilkerson, aide to Colin Powell and a non-partisan (though
an admitted Republican) expert in these matters, and
William Binney,
one of the triumvirate of major pre-Snowden leakers, think emphatically yes. (See
Wilkerson's
comments here . See
Binney's comments here .)
Whether or not you believe Wilkerson and Binney, do you doubt that if our intelligence people can do something, they would
balk at the deed itself, in this
world of "collect it all
"? If nothing else, imagine the power this kind of bugging would confer on those who do it.
The Breadth of the CIA Cyber-Hacking Scheme
But there is so much more in this Wikileaks release than suggested by the brief summary above. Here's a bullet-point overview
of what we've learned so far, again via Zero Hedge:
Key Highlights from the Vault 7 release so far:
"Year Zero" introduces the scope and direction of the CIA's global covert hacking program, its malware arsenal and dozens of
"zero day" weaponized exploits against a wide range of U.S. and European company products , include Apple's iPhone,
Google's Android and Microsoft's Windows and even Samsung TVs, which are turned into covert microphones.
Wikileaks claims that the CIA lost control of the majority of its hacking arsenal including malware, viruses, trojans, weaponized
"zero day" exploits, malware remote control systems and associated documentation . This extraordinary collection, which
amounts to more than several hundred million lines of code, gives its possessor the entire hacking capacity of the CIA The
archive appears to have been circulated among former U.S. government hackers and contractors in an unauthorized manner, one
of whom has provided WikiLeaks with portions of the archive.
By the end of 2016, the CIA's hacking division, which formally falls under the agency's Center for Cyber Intelligence (CCI),
had over 5000 registered users and had produced more than a thousand hacking systems, trojans, viruses, and other
"weaponized" malware . Such is the scale of the CIA's undertaking that by 2016, its hackers had utilized more code than
that used to run Facebook.
The CIA had created, in effect, its "own NSA" with even less accountability and without publicly answering the question
as to whether such a massive budgetary spend on duplicating the capacities of a rival agency could be justified.
Once a single cyber 'weapon' is 'loose' it can spread around the world in seconds , to be used by rival states, cyber
mafia and teenage hackers alike.
Also this scary possibility:
As of October 2014 the CIA was also looking at infecting the vehicle control systems used by modern cars and trucks.
The purpose of such control is not specified, but it would permit the CIA to engage in nearly undetectable assassinations
.
Journalist Michael Hastings, who in 2010
destroyed the career of General
Stanley McChrystal and was hated by the military for it, was killed in 2013 in an inexplicably out-of-control car. This isn't
to suggest the CIA, specifically, caused his death. It's to ask that, if these capabilities existed in 2013, what would prevent their
use by elements of the military, which is, after all a death-delivery organization?
And lest you consider this last speculation just crazy talk, Richard Clarke (that
Richard Clarke ) agrees: "Richard Clarke, the counterterrorism
chief under both Bill Clinton and George W. Bush,
told the Huffington
Post that Hastings's crash looked consistent with a car cyber attack.'" Full and fascinating
article here .
WiliLeaks Press Release
Here's what WikiLeaks itself says about this first document cache (again, emphasis mine):
Press Release
Today, Tuesday 7 March 2017, WikiLeaks begins its new series of leaks on the U.S. Central Intelligence Agency. Code-named "Vault
7" by WikiLeaks, it is the largest ever publication of confidential documents on the agency.
Recently, the CIA lost control of the majority of its hacking arsenal including malware, viruses, trojans, weaponized "zero
day" exploits, malware remote control systems and associated documentation. This extraordinary collection, which amounts to more
than several hundred million lines of code, gives its possessor the entire hacking capacity of the CIA The archive appears to
have been circulated among former U.S. government hackers and contractors in an unauthorized manner, one of whom has provided
WikiLeaks with portions of the archive.
"Year Zero" introduces the scope and direction of the CIA's global covert hacking program, its malware arsenal and dozens of
"zero day" weaponized exploits against a wide range of U.S. and European company products, include Apple's iPhone, Google's Android
and Microsoft's Windows and even Samsung TVs, which are turned into covert microphones.
Since 2001 the CIA has gained political and budgetary preeminence over the U.S. National Security Agency (NSA). The CIA
found itself building not just its now infamous drone fleet, but a very different type of covert, globe-spanning force - its own
substantial fleet of hackers. The agency's hacking division freed it from having to disclose its often controversial operations
to the NSA (its primary bureaucratic rival) in order to draw on the NSA's hacking capacities.
By the end of 2016, the CIA's hacking division, which formally falls under the agency's
Center for Cyber Intelligence (CCI), had over
5000 registered users and had produced more than a thousand hacking systems, trojans, viruses, and other "weaponized" malware.
Such is the scale of the CIA's undertaking that by 2016, its hackers had utilized more code than that used to run Facebook. The
CIA had created, in effect, its "own NSA" with even less accountability and without publicly answering the question as to whether
such a massive budgetary spend on duplicating the capacities of a rival agency could be justified.
In a statement to WikiLeaks the source details policy questions that they say urgently need to be debated in public
, including whether the CIA's hacking capabilities exceed its mandated powers and the problem of public oversight of the agency.
The source wishes to initiate a public debate about the security, creation, use, proliferation and democratic control of cyberweapons.
Once a single cyber 'weapon' is 'loose' it can spread around the world in seconds, to be used by rival states, cyber mafia
and teenage hackers alike.
Julian Assange, WikiLeaks editor stated that "There is an extreme proliferation risk in the development of cyber 'weapons'.
Comparisons can be drawn between the uncontrolled proliferation of such 'weapons', which results from the inability to contain
them combined with their high market value, and the global arms trade. But the significance of "Year Zero" goes well beyond the
choice between cyberwar and cyberpeace. The disclosure is also exceptional from a political, legal and forensic perspective."
Wikileaks has carefully reviewed the "Year Zero" disclosure and published substantive CIA documentation while avoiding the
distribution of 'armed' cyberweapons until a consensus emerges on the technical and political nature of the CIA's program and
how such 'weapons' should analyzed, disarmed and published.
Wikileaks has also decided to redact and anonymise some
identifying information in "Year Zero" for in depth analysis. These redactions include ten of thousands of CIA targets and attack
machines throughout Latin America, Europe and the United States. While we are aware of the imperfect results of any approach chosen,
we remain committed to our publishing model and note that the quantity of published pages in "Vault 7" part one ("Year Zero")
already eclipses the total number of pages published over the first three years of the Edward Snowden NSA leaks.
Be sure to click through for the Analysis, Examples and FAQ sections
as well.
"O brave new world," someone once wrote . Indeed.
Brave new world, that only the brave can live in.
____
1 Mind you, the leakers may have had a comprehensive enough view to be making an accurate call. But the real point
is there are no actors who will be allowed to make an independent assessment.
Senator John McCain passed documents to the FBI director, James Comey, last month alleging secret contacts between the Trump
campaign and Moscow and that Russian intelligence had personally compromising material on the president-elect himself.
The material, which has been seen by the Guardian, is a series of reports on Trump's relationship with Moscow. They were
drawn up by a former western counter-intelligence official, now working as a private consultant. BuzzFeed on Tuesday published
the documents, which it said were "unverified and potentially unverifiable".
The Guardian has not been able to confirm the veracity of the documents' contents,
Emphases mine. I had been sitting on this link trying to make sense of this part. Clearly, the Trump Whitehouse has some major
leaks, which the MSM is exploiting. But the start of this article suggests that para-intelligence (is that a word? Eh, it is now)
was the source of the allegedly damaging info.
This is no longer about the deep-state, but a rouge state, possibly guns for higher, each having fealty to specific political
interests. The CIA arsenal wasn't leaked. It was delivered.
hmm.. as far as I can see, noone seems to care here in Germany anymore about being spied on by our US friends, apart from a
few alternative sources which are being accused of spreading fake news, of being anti-american, russian trolls, the matter is
widely ignored
I have read a few articles about the Vault 7 leak that typically raise a few alarms I would like to comment on.
1) The fact that the
CIA had managed to bypass encryption on popular phone and messaging services
does not mean that it has broken encryption, just that it has a way to install a program at a lower level, close to the operating
system, that will read messages before they are encrypted and sent by the messaging app, or just after they
have been decrypted by it.
As a side note: banks have now largely introduced two-factor authentication when accessing online services. One enters username
(or account number) and password; the bank site returns a code; the user must then enter this code into a smartphone app or a
tiny specialized device, which computes and returns a value out of it; the user enters this last value into the entry form as
a throw-away additional password, and gains access to the bank website.
I have always refused to use such methods on a smartphone and insist on getting the specialized "single-use password computer",
precisely because the smartphone platform can be subverted.
2) The fact that
"Weeping Angel", developed by the CIA's Embedded Devices Branch (EDB), [ ] infests smart TVs, transforming them into covert
microphones.
is possible largely because smart TVs are designed by their manufacturers to serve as spying devices. "Weeping Angel" is not
some kind of virus that turns normal devices into zombies, but a tool to take control of existing zombie devices.
The fact that smart TVs from
Vizio ,
Samsung or
LG constitute an outrageous intrusion into the privacy of their owners has been a known topic for years already.
3) The
CIA [ ] also looking at infecting the vehicle control systems used by modern cars and trucks
is not a "scary possibility" either; various demonstrations of such feats on
Tesla ,
Nissan , or
Chrysler vehicles have been demonstrated in the past few years.
And the consequences have already been suggested (killing people by disabling their car controls on the highway for instance).
My take on this is that we should seriously look askance not just at the shenanigans of the CIA, but at the entire "innovative
technology" that is imposed upon (computerized cars) or joyfully adopted by (smartphones) consumers. Of course, most NC readers
are aware of the pitfalls already, but alas not the majority of the population.
4) Finally this:
He's so impossibly erratic, so impossibly unfit for his office,
Trump is arguably unfit for office, does not have a clue about many things (such as foreign relations), but by taxing him of
being "erratic" Gaius Publius shows that he still does not "get" the Donald.
Trump has a completely different modus operandi than career politicians, formed by his experience as a real-estate mogul and
media star. His world has been one where one makes outrageous offers to try anchoring the negotiation before reducing one's claims
- even significantly, or abruptly exiting just before an agreement to strike a deal with another party that has been lured to
concessions through negotiations with the first one. NC once included a video of Trump doing an interactive A/B testing of his
slogans during a campaign meeting; while changing one's slogans on the spot might seem "erratic", it is actually a very systematic
market probing technique.
So stop asserting that Trump is "unpredictable" or "irrational"; this is underestimating him (a dangerous fault), as he is
very consistent, though in an uncommon fashion amongst political pundits.
While I agree that it's worth pointing out that the CIA has not broken any of the major encryption tools, even Snowden regards
being able to circumvent them as worse, since people using encryption are presumably those who feel particularly at risk and will
get a false sense of security and say things or keep data on their devices that they never never would if they thought they were
insecure.
Re Gaius on Trump, I agree the lady doth protest too much. But I said repeatedly that Trump would not want to be President
if he understood the job. It is not like being the CEO of a private company. Trump has vastly more control over his smaller terrain
in his past life than he does as President.
And Trump is no longer campaigning. No more a/b testing.
The fact is that he still does not have effective control of the Executive branch. He has lots of open positions in the political
appointee slots (largely due to not having even submitted candidates!) plus has rebellion in some organizations (like folks in
the EPA storing data outside the agency to prevent its destruction).
You cannot pretend that Trump's former MO is working at all well for him. And he isn't showing an ability to adapt or learn
(not surprising at his age). For instance, he should have figured out by now that DC is run by lawyers, yet his team has hardly
any on it. This is continuing to be a source of major self inflicted wounds.
His erraticness may be keeping his opponents off base, but it is also keeping him from advancing any of his goals.
Yes, not breaking encryption is devious, as it gives a false sense of security - this is precisely why I refuse to use those
supposedly secure e-banking login apps on smartphones whose system software can be subverted, and prefer those non-connected,
non-reprogrammable, special-purpose password generating devices.
As for Trump being incompetent for his job, and his skills in wheeling-dealing do not carrying over usefully to conducting
high political offices, that much is clear. But he is not "erratic", rather he is out of place and out of his depth.
I am writing this in the shower with a paper bag over my head and my iPhone in the microwave.
I have for years had a password-protected document on computer with all my important numbers and passwords. I have today deleted
that document and reverted to a paper record.
I think he means a machine dedicated to high-security operations like anything financial or bill-pay. Something that is not
exposed to email or web-browsing operations that happen on a casual-use computer that can easily compromise. That's not a bad
way to go; it's cheaper in terms of time than the labor-intensive approaches I use, but those are a hobby more than anything else.
It depends on how much you have at stake if they get your bank account or brokerage service password.
I take a few basic security measures, which would not impress the IT crowd I hang out with elsewhere, but at least would not
make me a laughingstock. I run Linux and use only open-source software; run ad-blockers and script blockers; confine risky operations,
which means any non-corporate or non-mainstream website to a virtual machine that is reset after each use; use separate browsers
with different cookie storage policies and different accounts for different purposes. I keep a well-maintained pfSense router
with a proxy server and an intrusion detection system, allowing me to segregate my secure network, home servers, guest networks,
audiovisual streaming and entertainment devices, and IoT devices each on their own VLANs with appropriate ACLs between them. No
device on the more-secured network is allowed out to any port without permission, and similar rules are there for the IoT devices,
and the VoIP tools.
The hardware to do all of that costs at least $700, but the real expense is in the time to learn the systems properly. Of course
if you use Linux, you could save that on software in a year if you are too cheap to send a contribution to the developers.
It's not perfect, because I still have computers turned on :) , but I feel a bit safer this way.
That said, absolutely nothing that I have here would last 30 milliseconds against anything the "hats" could use, if they wanted
in. It would be over before it began. If I had anything to hide, really, I would have something to fear; so guess I'm OK.
They're key fobs handed to you by your IT dept. The code displayed changes every couple of minutes. The plus is there's nothing
sent over the air. The minus is the fobs are subject to theft, and are only good for connecting to 'home'. And since they have
a cost, and need to be physically handed to you, they're not good fit for most two factor login applications (ie logging into
your bank account).
I watched (fast forwarded through, really) Morning Joe yesterday to see what they would have to say about Wikileaks. The show
mostly revolved around the health care bill and Trump's lying and tweeting about Obama wiretapping him. They gave Tim Kaine plenty
of time to discuss his recent trip to London talking to "some of our allies there" saying that they are concerned that "all the
intelligence agencies" say the Rooskies "cyber hacked" our election, and since it looks like we aren't doing anything when we
are attacked, they KNOW we won't do anything when they are attacked. (more red baiting)
The only two mentions I saw was about Wikileaks were, first, a question asked of David Cohen, ex Deputy Director of the CIA,
who refused to confirm the Wikileaks were authentic, saying whatever tools and techniques the CIA had were used against foreign
persons overseas, so there is no reason to worry that your TV is looking at you. And second, Senator Tom Cotton, who didn't want
to comment on the contents of Wikileaks, only saying that the CIA is a foreign intelligence service, collecting evidence on foreign
targets to keep our country safe, and it does not do intelligence work domestically.
So that appears to be their story, the CIA doesn't spy on us, and they are sticking with it, probably hoping the whole Wikileaks
thing just cycles out of the news.
The unwillingness of the main stream media (so far) to really cover the Wikileaks reveal is perhaps the bigger story. This
should be ongoing front page stuff .. but it is not.
As for using ZeroHedge as a source for anything, can we give that a rest. That site has become a cesspool of insanity. It used
to have some good stuff. Now it is just unreadable. SAD
And yes I know the hypocrisy of slamming ZH and the MSM at the same time we live in interesting times.
Your remarks on ZH are an ad hominem attack and therefore a violation of site policies. The onus is on you to say what ZH got
wrong and not engage in an ungrounded smear. The mainstream media often cites ZH.
NC more than just about any other finance site is loath to link to ZH precisely because it is off base or hyperventilating
a not acceptably high percent of the time, and is generally wrong about the Fed (as in governance and how money works). We don't
want to encourage readers to see it as reliable. However, it is good on trader gossip and mining Bloomberg data.
And I read through its summary of the Wikileaks material as used by Gaius and there was nothing wrong with it. It was careful
about attributing certain claims to Wikileaks as opposed to depicting them as true.
My rules for reading ZH:
1- Skip every article with no picture
2- Skip every article where the picture is a graph
3- Skip every article where the picture is of a single person's face
4- Skip every afticle where the picture is a cartoon
5- Skip every article about gold, BitCoin, or high-frequency trading
6- Skip all the "Guest Posts"
7- ALWAYS click through to the source
8- NEVER read the comments
It is in my opinion a very high noise-to-signal source, but there is some there there.
Discerning a 'news from noise' is NEVER that easy b/c it is an art, developed by years of shifting through ever increasing
'DATA information' load. This again has to be filtered and tested against one's own 'critical' thinking or reasoning! You have
to give ZH, deserved credit, when they are right!
There is no longer a Black or white there, even at ZH! But it is one of the few, willing to challenge the main stream narrative
'kool aid'
In addition to the "para-intelligence" community (hat tip Code named D) there are multiple enterprises with unique areas of
expertise that interface closely with the CIA The long-exposed operations, which include entrapment and blackmailing of key actors
to guarantee complicity, "loyalty" and/or sealed lips, infect businesses, NGOs, law enforcement agencies, judges, politicians,
and other government agencies. Equal opportunity employment for those with strong stomachs and a weak moral compass.
Yes I can't remember where I read it but it was a tale passed around supposedly by an FBI guy that had, along with his colleagues,
the job of vetting candidates for political office. They'd do their background research and pass on either a thick or thin folder
full of all the compromising dirt on each potential appointee. Over time he said he was perturbed to notice a persistent pattern
where the thickest folders were always the ones who got in.
I learned this when I was in my 20s. The Catholic Church was funding my early critique of American foreign aid as being
imperialist. I asked whether they thought I should go into politics. They said, "No, you'd never make it". And I said, "Why?"
and they said, "Well, nobody has a police record or any other dirt on you." I asked what they meant. They said, "Unless they
have something over you to blackmail you with, you're not going to be able to get campaign funding. Because they believe that
you might do something surprising," in other words, something they haven't asked you to do. So basically throughout politics,
on both sides of the spectrum, voters have candidates who are funded by backers who have enough over them that they can always
blackmail.
I find the notion that my consumer electronics may be CIA microphones somewhat irritating, but my imagination quickly runs
off to far worse scenarios. (although the popular phase, "You're tax dollars at work." keeps running thru my head like a earworm.
And whenever I hear "conservatives" speak of their desire for "small government", usually when topics of health care, Medicare
and social security come up, I can only manage a snort of incredulousness anymore)
One being malware penetrating our nuke power plants and shutting down the cooling system. Then the reactor slowly overheats
over the next 3 days, goes critical, and blows the surrounding area to high heaven. We have plants all around the coast of the
country and also around the Great Lakes Region – our largest fresh water store in a drought threatened future.
Then the same happening in our offensive nuke missile systems.
Some other inconvenient truths – the stuxnet virus has been redesigned. Kaspersky – premier anti malware software maker – had
a variant on their corporate network for months before finally discovering it. What chance have we?
In China, hacking is becoming a consumer service industry. There are companies building high power data centers with a host
of hacking tools. Anyone, including high school script kiddies, can rent time to use the sophisticated hacking tools, web search
bots, and whatever, all hosted on powerful servers with high speed internet bandwidth.
Being a bit "spooked" by all this, I began to worry about my humble home computer and decided to research whatever products
I could get to at least ward off annoying vandalism. Among other things, I did sign up for a VPN service. I'm looking at the control
app for my VPN connection here and I see that with a simple checkbox mouse click I can make my IP address appear to be located
in my choice of 40 some countries around the world. Romania is on the list!
Actually, I very much doubt that does work. The mic "pickup" would feed its analog output to a DAC (digital to analog converter)
which would convert the signal to digital. This then goes to something similar to a virtual com port in the operating system.
Here is where a malware program would pick it up and either create a audio file to be sent to an internet address, or stream it
directly there.
The article is just plugging in a microphone at the output jack. The malware got the data long before it goes thru another
DAC and analog amp to get to the speakers or output jack.
It depends on how it is hooked up internally. Old fashioned amateur radio headphones would disable the speakers when plugged
in because the physical insertion of the plug pushed open the connection to the speakers. The jack that you plug the ear buds
into might do the same, disconnecting the path between the built-in microphone and the ADC (actually it is an ADC not a DAC).
The only way to know is to take it apart and see how it is connected.
The CIA is not allowed to operate in the US is also the panacea for the public. And some are buying it. Along with everyone
knows they can do this is fueling the NOTHING to see here keep walking weak practically non existent coverage.
At what point do people quit negotiating in terrorism and errorism? For this is what the police, the very State itself has
long been. Far beyond being illegitimate, illegal, immoral, this is a clear and ever present danger to not just it's own people,
but the rule of law itself. Blanket statements like we all know this just makes the dangerously absurd normal I'll never understand
that part of human nature. But hey, the TSA literally just keeps probing further each and every year. Bend over!
Trump may not be the one for the task but we the people desperately need people 'unfit', for it is the many fit who brought
us to this point. His unfit nature is as refreshing on these matters in its chaotic honest disbelief as Snowden and Wiki revelations.
Refreshing because it's all we've got. One doesn't have to like Trump to still see missed opportunity so many should be telling
him he could be the greatest pres ever if (for two examples) he fought tirelessly for single payer and to bring down this police
state rather than the EPA or public education.
This cannot stand on so many levels. Not only is the fourth amendment rendered utterly void, but even if it weren't it falls
far short of the protections we deserve.
No enemy could possibly be as bad as who we are and what we allow/do among ourselves. If an election can be hacked (not saying
it was by Russia).. as these and other files prove anything can and will be hacked then our system is to blame, not someone else.
What amazes me is that the spooks haven't manufactured proof needed to take Trump out of office Bonfire of The Vanities style.
I'd like to think the people have moved beyond the point they would believe manufactured evidence but the Russia thing proves
otherwise.
These people foment world war while probing our every move and we do nothing!
If we wait for someone fit nothing will ever change because we wait for the police/media/oligarch state to tell us who is fit.
But being fit by the standards of our ruling class, the "real owners" as Carlin called them is, in my book, an automatic proof
that they are up to no good. Trump is not my cup of tea as a president but no one we have had in a while wasn't clearly compromised
by those who fund them. Did you ever wonder why we have never had a president or even a powerful member of congress that was not
totally in the tank for that little country on the Eastern Mediterranean? Or the Gulf Monarchies? Do you think that is by accident?
Do you think money isn't involved? Talk about hacked elections! We should be so lucky as to have ONLY Russians attempting to affect
our elections. Money is what hacks US elections and never forget that. To me it is laughable to discuss hacking the elections
without discussing the real way our "democracy" is subverted–money not document leaks or voting machine hacks. It's money.
Why isn't Saudi Arabia on Trump's list? Iran that has never been involved in a terrorist act on US soil is but not Saudi Arabia?
How many 911 hijackers came from Iran? If anything saves Trump from destruction by the real owners of our democracy it is his
devotion to the aforementioned countries.
The point again is not to remove him from office but to control him. With Trump's past you better believe the surveillance
state has more than enough to remove him from office. Notice the change in his rhetoric since inauguration? More and more he is
towing the establishment Republican line. Of course this depends on whether you believe Trump is a break with the past or just
the best liar out there. A very unpopular establishment would be clever in promoting their agent by pretending to be against him.
Anyone who still believes that the US is a democratic republic and not a mafia state needs to stick their heads deeper into
the sands. When will the low information voters and police forces on whom a real revolution depends realize this is anyone's guess.
The day is getting closer especially for the younger generation. The meme among the masses is that government has always been
corrupt and that this is nothing new. I do believe the level of immorality among the credentialed classes is indeed very new and
has become the new normal. Generations of every man for himself capitalist philosophy undermining any sense of morality or community
has finally done its work.
Go take a jaunt over to huffpo, at the time of this post there was not a single mention of vault 7 on the front page. Just
a long series of anti trump administration articles.
Glad to know for sure who the true warmongers were all along.
No.. The Church commission was a sweep it under the rug operation. It got us FISA courts. More carte blanche secrecy, not less.
The commission nor the rest of the system didn't even hold violators of the time accountable.
We have files like Vault 7. Commissions rarely get in secret what we have right here before our eyes.
River: Interesting historic parallel? I believe that the Ottomans got rid of the Janissaries that way, after the Janissaries
had become a state within a state, by using cannons on their HQ
From Wiki entry, Janissaries:
The corps was abolished by Sultan Mahmud II in 1826 in the Auspicious Incident in which 6,000 or more were executed.[8]
Took less than a minute to download the 513.33MB file. The passphrase is what JFK said he'd like to do to CIA: SplinterItIntoAThousandPiecesAndScatterItIntoTheWinds.
"The illegal we do immediately; the unconstitutional takes a little longer." Henry Kissinger, 1975.
The campaign to frame up and discredit Trump and his associates is characteristic of how a police state routinely operates.
A national security apparatus that vacuums up all our communications and stores them for later retrieval has been utilized
by political operatives to go after their enemies – and not even the President of the United States is immune. This is something
that one might expect to occur in, say, Turkey, or China: that it is happening here, to the cheers of much of the media and
the Democratic party, is beyond frightening.
The irony is that the existence of this dangerous apparatus – which civil libertarians have warned could and probably would
be used for political purposes – has been hailed by Trump and his team as a necessary and proper function of government. Indeed,
Trump has called for the execution of the person who revealed the existence of this sinister engine of oppression – Edward
Snowden. Absent Snowden's revelations, we would still be in the dark as to the existence and vast scope of the NSA's surveillance.
And now the monster Trump embraced in the name of "national security" has come back to bite him.
We hear all the time that what's needed is an open and impartial "investigation" of Trump's alleged "ties" to Russia. This
is dangerous nonsense: does every wild-eyed accusation from embittered losers deserve a congressional committee armed with
subpoena power bent on conducting an inquisition? Certainly not.
What must be investigated is the incubation of a clandestine political police force inside the national security apparatus,
one that has been unleashed against Trump – and could be deployed against anyone.
This isn't about Donald Trump. It's about preserving what's left of our old republic.
Yeah I downloaded it the day it came out and spent an hour or so looking at it last night. First impressions – "heyyy this
is like a Hackers Guide – the sort I used in the 80s, or DerEngel's Cable Modem Hacking" of the 00s.
2nd impressions – wow it really gives foundational stuff – like "Enable Debug on PolarSSL".
3rd impressions – "I could spend hours going thru this happily ".
4th impressions – I went looking for the "juicy bits" of interest to me – SOHO routers, small routers – sadly its just
a table documenting routers sold around the world, and whether these guys have put the firmware in their Stash Repository. Original
firmware, not hacked one. But the repository isn't in the vault dump, AFAIK.
Its quite fascinating. But trying to find the "juicy stuff" is going to be tedious. One can spend hours and hours going thru
it. To speed up going thru it, I'm going to need some tech sites to say "where to go".
It seems clear that Wikileaks has not and will not release actual ongoing method "how-to" info or hacking scripts. They are
releasing the "whats", not the tech level detailed "hows". This seems like a sane approach to releasing the data. The release
appears to be for political discussion, not for spreading the hacking tools. So I wouldn't look for "juicy bits" about detailed
methodology. Just my guess.
That said, love what you're doing digging into this stuff. I look forward to a more detailed report in future. Thanks.
Yves, I think that you much underestimate the extremity of these exposed violations of the security of freedom of expression,
and of the security of private records. The WikiLeaks docs show that CIA has developed means to use all personal digital device
microphones and cameras even when they are "off," and to send all of your files and personal data to themselves, and to send your
private messages to themselves before they are encrypted. They have installed these spyware in the released version of Windows
10, and can easily install them on all common systems and devices.
This goes far beyond the kind of snooping that required specialized devices installed near the target, which could be controlled
by warrant process. There is no control over this extreme spying. It is totalitarianism now.
This is probably the most extreme violation of the rights of citizens by a government in all of history. It is far worse than
the "turnkey tyranny" against which Snowden warned, on the interception of private messages. It is tyranny itself, the death of
democracy.
Your first sentence is a bit difficult to understand. If you read Yves' remarks introducing the post, she says that the revelations
are "a big deal" "if the Wikileaks claim is even halfway true," while coming down hard on the MSM and others for "pooh-pooh[ing]"
the story. Did you want her to add more exclamation points?
So we have a zillion ways to spy and hack and deceive and assassinate, but no control. I think this is what the military
refers to as "being overtaken by events."
It's easy to gather information; not so easy to analyze it, and somehow impossible to act on it in good faith. With all this
ability to know stuff and surveil people the big question is, Why does everything seem so beyond our ability to control it?
We should know well in advance that banks will fail catastrophically; that we will indeed have sea level rise; that resources
will run out; that water will be undrinkable; that people will be impossible to manipulate when panic hits – but what do we do?
We play dirty tricks, spy on each other like voyeurs, and ignore the inevitable. Like the Stasi, we clearly know what happened,
what is happening and what is going to happen. But we have no control.
My godfather was in the CIA in the late sixties and early seventies, and he said that outside of the President's pet projects
there was no way to sift through and bring important information to decision makers before it made the Washington Post (he is
aware of the irony) and hit the President's breakfast table.
AS, I would interpret it as saying that there was so much coming in it was like trying to classify snowflakes in a snowstorm.
They could pick a few subject areas to look at closely but the rest just went into the files.
Leaking like a sieve is also likely, but perhaps not the main point.
The archive appears to have been circulated among government hackers and contractors in a authorized manner
There, that looks the more likely framing considering CIA & DNI on behalf of the whole US IC seemingly fostered wide dissimilation
of these tools, information. Demonstration of media control an added plus.
Todd Pierce , on the other hand, nails it. (From his Facebook page.)
The East German Stasi could only dream of the sort of surveillance the NSA and CIA do now, with just as nefarious of purposes.
Perhaps the scare quotes around "international mobster" aren't really necessary.
In all this talk about the various factions aligned with and against Trump, that's one I haven't heard brought up by anybody.
With all the cement poured in Trump's name over the years, it would be naive to think his businesses had not brushed up against
organized crime at some point. Question is, whose side are they on?
Like all the other players, the "side" they are on is them-effing-selves. And isn't that the whole problem with our misbegotten
species, writ large?
Then there's this: https://www.youtube.com/watch?v=s1Hzds9aGdA
Maybe these people will be around and still eating after us urban insects and rodents are long gone? Or will our rulers decide
no one should survive if they don't?
To what extent do these hacks represent the CIA operating within the US? To what extent is that illegal? With the democrats
worshipping the IC, will anyone in an official position dare to speak out?
I've long thought that the reason Snowden was pursued so passionately was that he exposed the biggest, most embarrassing secret:
that the National "Security" Agency's INTERNAL security was crap.
And here it is: "Wikileaks claims that the CIA lost control of the majority of its hacking arsenal "
The CIA's internal security is crap, too. Really a lot of people should be fired over that, as well as over Snowden's release.
We didn't hear of it happening in the NSA, though I'm not sure we would have. Given Gaius's description of Trump's situation,
it seems unlikely it will happen this time, either. One of my hopes for a Trump administration, as long as we're stuck with it,
was a thorough cleanout of the upper echelons in the IC. It's obviously long overdue, and Obama wasn't up to it. But I used the
past tense because I don't think it's going to happen. Trump seems more interested in sucking up to them, presumably so they won't
kill him or his family. That being one of their options.
Ah, that's the beauty of contracting it out. No one gets fired. Did anyone get fired because of Snowden? It was officially
a contractor problem and since there are only a small number of contractors capable of doing the work, well you know. We can't
get new ones.
What I find by far the most distressing is this: "The CIA had created, in effect, its "own NSA" with even less accountability
." [My emphasis]. It seems to characterize an organization that operates outside of any control and oversight – and one that is
intentionally structuring itself that way. That worries me.
It is becoming increasingly clear that the Republic is lost because we didn't stand guard for it. Blaming others don't cut
it either – we let it happen. And like the Germans about the Nazi atrocities, we will say that we didn't know about it.
Hey, I didn't let it happen. Stuff that spooks and sh!tes do behind the Lycra ™ curtain happens because it is, what is the
big word again, "ineluctable." Is my neighbor to blame for having his house half eaten by both kinds of termites, where the construction
is such that the infestation and damage are invisible until the vast damage is done?
And just how were we supposed to stand guard against a secret and unaccountable organization that protected itself with a shield
of lies? And every time some poor misfit complained about it they were told that they just didn't know the facts. If they only
knew what our IC knows they would not complain.
It's a dangerous world out there and only our brave IC can protect us from it. Come on. Stop blaming the victim and place
the blame where it belongs–our IC and MIC. I say stop feeding the beast with your loyalty to a government that has ceased to be
yours.
Studiously avoid any military celebrations. Worship of the military is part of the problem. Remember, the people you thank
for "their service" are as much victims as you are. Sadly they don't realize that their service is to a rotten empire that is
not worthy of their sacrifice but every time we perform the obligatory ritual of thankfulness we participate in the lie that the
service is to a democratic country instead of an undemocratic empire.
It's clearly a case of Wilfred Owen's classic "Dulce et Decorum Est". Read the poem, google it and read it. It is instructive:
" you would not tell with such high zest To children ardent for some desperate glory, The old Lie: Dulce et decorum est Pro patria
mori." Make no mistake. It is a lie and it can only be undone if we all cease to tell it.
"These CIA revelations in conjunction with those of the NSA paints a pretty dark future for privacy and freedom. Edward
Snowden made us aware of the NSA's program XKEYSCORE and PRISM which are utilized to monitor and bulk collect information from
virtually any electronic device on the planet and put it into a searchable database. Now Wikileaks has published what appears
to be additional Big Brother techniques used by a competing agency. Say what you want about the method of discovery, but Pandora's
box has been opened."
Here's something about the GOP House and the GOP Senate: they each passed tax bills (supposed to come out in a "conference"
agreement sometime today) that diss the United States' working class taxpayers. White or black, Christian or Jew or other,
citizen by birth or naturalized citizen–workers are treated as an inferior "taker" class and owners are treated as a superior "maker"
class–the same old GOP class warfare that has been evidenced in Republican-driven tax legislation for decades. That shows in
the provisions that have been discussed quite a bit already, even though there is no official distributional analysis and even though
the Treasury Department put out a one-pager claiming to provide an analysis showing huge economic growth would eliminate any deficits
(based on both the tax "reform" legislation and promised cost-cutting "reforms" to Medicare and Social Security):
the significant reduction in impact of the estate tax,
the huge reduction in the statutory corporate tax rate of most benefit to officers/shareholders (it was 35%, it will be 21%
under the conference agreement, apparently, even though the "effective" corporate tax rate ranged from negative to around 24-25%–essentially
more favorable than many of our fellow advanced economies' corporate tax rates);
the territoriality of the corporate tax (generally, zero tax on foreign earnings of U.S. companies);
immediate expensing of company investments (a five year provision that allows companies huge tax benefits for those five years);
the elimination of the corporate alternative minimum tax (AMT), at a cost of about $250 billion in revenues.
the reduction in the top rate for wealthy individuals (from 39.6% to 37%),
the substantial reduction in the State and Local Tax Deduction for workers (thus changing entirely the economics of
paying for a house already purchased, while allowing sole proprietors, partnerships and other "owners" of equity in businesses
the ability to deduct such State and Local Taxes in full);
a larger standard deduction but the elimination of personal exemptions;
a larger child tax credit that only becomes refundable over time (limiting how much it helps the poor) but is available to
wealthy households (starting to phase out at half-a-million of income!);
the only slight reduction in the ability of wealthy individuals to take advantage of the mortgage interest deduction (reducing
the debt limit to $750,000 instead of $1,100,000)
the elimination of the corporate AMT (which cuts taxes for wealthy shareholders/owners/managers) but the retention of the
individual AMT (which primarily affects the upper middle class and not the wealthiest taxpayers under the current rate bracket
system);
the elimination of the
Affordable Care Act mandate and penalty (which reduces the amount of Medicaid and insurance subsidy funds for poor and middle-income
taxpayers, as well as guaranteeing the deconstruction of the health care system for 13 million or more Americans by 2027 and
increasing insurance premiums for upper-middle-class taxpayers); and
the opening of the Arctic National Wildlife Refuge to rape by fossil fuel oligarchies (a piddling amount of revenue, but sufficient
to buy off the principle-less Sen. Lisa Murkowski from Alaska );
making the corporate tax changes permanent (and effective without any transition period) while making the individual tax cuts
other than benefits for the wealthy like the estate tax changes temporary.
(just to name a few).
When the health care mandate removal is combined with the other provisions, "On net, the poor would actually lose out in all years
once this effect is taken into account." Dylan Matthews,
The Republican tax bill that could actually become law, explained , Vox.com (Dec. 14, 2017). The following
Tax Policy Center graph from the Vox article (using
the Urban-Brookings Microsimulation Model) shows that by 2027 the top 0.1% end up doing much better (average tax cut for the top
0.1 percent is $221,550 a year). The bottom 20% do worse while the middle–the second and third quintiles–have a very insignificant
plus (average tax cut of the third quintile is $490). Within the third or middle quintile, more than 62% of taxpayers that earn between
$54,700 and $93,200 would see their taxes go up, "[b]ut only about 0.1% of the very richest one-thousandth of Americans would see
a tax hike." Id.
Early gains–though small, intended perhaps to benefit the GOP in earlier votes -- don't last because the individual
cuts aren't permanent. A change to chained CPI for indexing brackets amounts to a tax increase on individuals, while the permanent
corporate tax cuts mean rich and very rich do well while middle and upper-middle lose out.
Lyle, December 17, 2017 6:10 pm
Note that ending the mandate just means more folks will wager on their health. All that wished to sign up could have. (and
still can where medicaid was expanded).
And the rest of us will pay their emergency room bills, as well.
Since it is now voluntary
to count the lower amount of subsidies as a cut seems a strange way of counting, but of course figures don't lie but liars do figure.
"... Recently, the CIA lost control of the majority of its hacking arsenal including malware, viruses, trojans, weaponized "zero day" exploits, malware remote control systems and associated documentation. ..."
"... Donald Trump is deep in the world of spooks now, the world of spies, agents and operatives. He and his inner circle have a nest of friends, but an even larger, more varied nest of enemies. As John Sevigny writes below, his enemies include not only the intel and counter-intel people, but also "Republican lawmakers, journalists, the Clintons, the Bush family, Barack Obama, the ACLU, every living Democrat and even Rand Paul." ..."
"... A total of 8,761 documents have been published as part of 'Year Zero', the first in a series of leaks the whistleblower organization has dubbed 'Vault 7.' WikiLeaks said that 'Year Zero' revealed details of the CIA's "global covert hacking program," including "weaponized exploits" used against company products including " Apple's iPhone , Google's Android and Microsoft's Windows and even Samsung TVs , which are turned into covert microphones." ..."
"... According to the statement from WikiLeaks, government hackers can penetrate Android phones and collect "audio and message traffic before encryption is applied." ..."
"... "CIA turned every Microsoft Windows PC in the world into spyware. Can activate backdoors on demand, including via Windows update "[.] ..."
"... Do you still trust Windows Update? ..."
"... As of October 2014 the CIA was also looking at infecting the vehicle control systems used by modern cars and trucks. ..."
"... "Richard Clarke, the counterterrorism chief under both Bill Clinton and George W. Bush, told the Huffington Post that Hastings's crash looked consistent with a car cyber attack.'" Full and fascinating article here . ..."
"... Recently, the CIA lost control of the majority of its hacking arsenal including malware, viruses, trojans, weaponized "zero day" exploits, malware remote control systems and associated documentation. This extraordinary collection, which amounts to more than several hundred million lines of code, gives its possessor the entire hacking capacity of the CIA The archive appears to have been circulated among former U.S. government hackers and contractors in an unauthorized manner, one of whom has provided WikiLeaks with portions of the archive. ..."
"... Since 2001 the CIA has gained political and budgetary preeminence over the U.S. National Security Agency (NSA). The CIA found itself building not just its now infamous drone fleet, but a very different type of covert, globe-spanning force - its own substantial fleet of hackers. The agency's hacking division freed it from having to disclose its often controversial operations to the NSA (its primary bureaucratic rival) in order to draw on the NSA's hacking capacities. ..."
"... By the end of 2016, the CIA's hacking division, which formally falls under the agency's Center for Cyber Intelligence (CCI), had over 5000 registered users and had produced more than a thousand hacking systems, trojans, viruses, and other "weaponized" malware. Such is the scale of the CIA's undertaking that by 2016, its hackers had utilized more code than that used to run Facebook. The CIA had created, in effect, its "own NSA" with even less accountability and without publicly answering the question as to whether such a massive budgetary spend on duplicating the capacities of a rival agency could be justified. ..."
"... I learned this when I was in my 20s. The Catholic Church was funding my early critique of American foreign aid as being imperialist. I asked whether they thought I should go into politics. They said, "No, you'd never make it". And I said, "Why?" and they said, "Well, nobody has a police record or any other dirt on you." I asked what they meant. They said, "Unless they have something over you to blackmail you with, you're not going to be able to get campaign funding. Because they believe that you might do something surprising," in other words, something they haven't asked you to do. So basically throughout politics, on both sides of the spectrum, voters have candidates who are funded by backers who have enough over them that they can always blackmail. ..."
"... The campaign to frame up and discredit Trump and his associates is characteristic of how a police state routinely operates. A national security apparatus that vacuums up all our communications and stores them for later retrieval has been utilized by political operatives to go after their enemies – and not even the President of the United States is immune. This is something that one might expect to occur in, say, Turkey, or China: that it is happening here, to the cheers of much of the media and the Democratic party, is beyond frightening. ..."
"... 4th impressions – I went looking for the "juicy bits" of interest to me – SOHO routers, small routers – sadly its just a table documenting routers sold around the world, and whether these guys have put the firmware in their Stash Repository. Original firmware, not hacked one. But the repository isn't in the vault dump, AFAIK. ..."
"... The WikiLeaks docs show that CIA has developed means to use all personal digital device microphones and cameras even when they are "off," and to send all of your files and personal data to themselves, and to send your private messages to themselves before they are encrypted. They have installed these spyware in the released version of Windows 10, and can easily install them on all common systems and devices. ..."
"... So we have a zillion ways to spy and hack and deceive and assassinate, but no control. I think this is what the military refers to as "being overtaken by events." ..."
"... My godfather was in the CIA in the late sixties and early seventies, and he said that outside of the President's pet projects there was no way to sift through and bring important information to decision makers before it made the Washington Post (he is aware of the irony) and hit the President's breakfast table. ..."
"... To what extent do these hacks represent the CIA operating within the US? To what extent is that illegal? With the democrats worshipping the IC, will anyone in an official position dare to speak out? ..."
"... Schumer said that as he understands, intelligence officials are "very upset with how [Trump] has treated them and talked about them ..."
"... The CIA's internal security is crap, too. Really a lot of people should be fired over that, as well as over Snowden's release. We didn't hear of it happening in the NSA, though I'm not sure we would have. Given Gaius's description of Trump's situation, it seems unlikely it will happen this time, either. One of my hopes for a Trump administration, as long as we're stuck with it, was a thorough cleanout of the upper echelons in the IC. It's obviously long overdue, and Obama wasn't up to it. But I used the past tense because I don't think it's going to happen. Trump seems more interested in sucking up to them, presumably so they won't kill him or his family. That being one of their options. ..."
"... "The CIA had created, in effect, its "own NSA" with even less accountability ." [My emphasis]. It seems to characterize an organization that operates outside of any control and oversight – and one that is intentionally structuring itself that way. That worries me. ..."
"... It's a dangerous world out there and only our brave IC can protect us from it. Come on. Stop blaming the victim and place the blame where it belongs–our IC and MIC. I say stop feeding the beast with your loyalty to a government that has ceased to be yours. ..."
"... "These CIA revelations in conjunction with those of the NSA paints a pretty dark future for privacy and freedom. Edward Snowden made us aware of the NSA's program XKEYSCORE and PRISM which are utilized to monitor and bulk collect information from virtually any electronic device on the planet and put it into a searchable database. Now Wikileaks has published what appears to be additional Big Brother techniques used by a competing agency. Say what you want about the method of discovery, but Pandora's box has been opened." ..."
Yves here. The first
release of the Wikileaks Vault 7 trove has curiously gone from being a MSM lead story yesterday to a handwave today. On the one hand,
anyone who was half awake during the Edward Snowden revelations knows that the NSA is in full spectrum surveillance and data storage
mode, and members of the Five Eyes back-scratch each other to evade pesky domestic curbs on snooping. So the idea that the CIA (and
presumably the NSA) found a way to circumvent encryption tools on smartphones, or are trying to figure out how to control cars remotely,
should hardly come as a surprise.
However, at a minimum, reminding the generally complacent public that they are being spied on any time they use the Web, and increasingly
the times in between, makes the officialdom Not Happy.
And if this Wikileaks claim is even halfway true, its Vault 7 publication is a big deal:
Recently, the CIA lost control of the majority of its hacking arsenal including malware, viruses, trojans, weaponized "zero
day" exploits, malware remote control systems and associated documentation. This extraordinary collection, which amounts to more
than several hundred million lines of code, gives its possessor the entire hacking capacity of the CIA The archive appears to
have been circulated among former U.S. government hackers and contractors in an unauthorized manner, one of whom has provided
WikiLeaks with portions of the archive.
This is an indictment of the model of having the intelligence services rely heavily on outside contractors. It is far more difficult
to control information when you have multiple organizations involved. In addition, neolibearlism posits that workers are free agents
who have no loyalties save to their own bottom lines (or for oddballs, their own sense of ethics). Let us not forget that
Snowden planned his career job moves
, which included a stint at NSA contractor Dell, before executing his information haul at a Booz Allen site that he had targeted.
Admittedly, there are no doubt many individuals who are very dedicated to the agencies for which they work and aspire to spend
most it not all of their working lives there. But I would assume that they are a minority.
The reason outsiders can attempt to pooh-pooh the Wikileaks release is that the organization redacted sensitive information like
the names of targets and attack machines. The CIA staffers who have access to the full versions of these documents as well as other
major components in the hacking toolkit will be the ones who can judge how large and serious the breach really is. 1 And
their incentives are to minimize it no matter what.
By Gaius Publius , a professional writer living
on the West Coast of the United States and frequent contributor to DownWithTyranny, digby, Truthout, and Naked Capitalism. Follow
him on Twitter @Gaius_Publius ,
Tumblr and
Facebook . GP article archive
here . Originally published at
DownWithTyranny
CIA org chart from the WikiLeaks cache (click to enlarge). "The organizational chart corresponds to the material published
by WikiLeaks so far. Since the organizational structure of the CIA below the level of Directorates is not public, the placement
of the EDG [Engineering Development Group] and its branches is reconstructed from information contained in the documents released
so far. It is intended to be used as a rough outline of the internal organization; please be aware that the reconstructed org
chart is incomplete and that internal reorganizations occur frequently."
* * *
"O brave new world, that has such people in it."
Bottom line first. As you read what's below, consider:
That the CIA is capable of doing all of the things described, and has been for years, is not in doubt.
That unnameable many others have stolen ("exfiltrated") these tools and capabilities is, according to the Wikileaks leaker, also
certain. Consider this an especially dangerous form of proliferation, with cyber warfare tools in the hands of anyone with money
and intent. As WikiLeaks notes, "Once a single cyber 'weapon' is 'loose' it can spread around the world in seconds, to be used
by peer states, cyber mafia and teenage hackers alike."
That the CIA is itself using these tools, and if so, to what degree, are the only unknowns. But can anyone doubt, in this aggressively
militarized environment, that only the degree of use is in question?
Now the story.
WikiLeaks just dropped a huge cache of documents (the first of several promised releases), leaked from a person or people
associated with the CIA in one or more capacities (examples, employee, contractor), which shows an agency out-of-control in its spying
and hacking overreach. Read through to the end. If you're like me, you'll be stunned, not just about what they can do, but that they
would want to do it, in some cases in direct violation of President Obama's orders. This story is bigger than anything you can imagine.
Consider this piece just an introduction, to make sure the story stays on your radar as it unfolds - and to help you identify
those media figures who will try to minimize or bury it. (Unless I missed it, on MSNBC last night, for example, the first mention
of this story was not Chris Hayes, not Maddow, but the Lawrence O'Donnell show, and then only to support his guest's "Russia gave
us Trump" narrative. If anything, this leak suggests a much muddier picture, which I'll explore in a later piece.)
So I'll start with just a taste, a few of its many revelations, to give you, without too much time spent, the scope of the problem.
Then I'll add some longer bullet-point detail, to indicate just how much of American life this revelation touches.
While the cache of documents has been vetted and redacted
, it hasn't been fully explored for implications. I'll follow this story as bits and piece are added from the crowd sourced research
done on the cache of information. If you wish to play along at home, the WikiLeaks
torrent file is here . The torrent's
passphrase is here . WikiLeaks
press release is here (also reproduced below). Their FAQ
is here .
Note that this release covers the years 2013–2016. As WikiLeaks says in its FAQ, "The series is the largest intelligence publication
in history."
Preface - Trump and Our "Brave New World"
But first, this preface, consisting of one idea only. Donald Trump is deep in the world of spooks now, the world of spies,
agents and operatives. He and his inner circle have a nest of friends, but an even larger, more varied nest of enemies. As John Sevigny
writes below, his enemies include not only the intel and counter-intel people, but also "Republican lawmakers, journalists, the Clintons,
the Bush family, Barack Obama, the ACLU, every living Democrat and even Rand Paul." Plus Vladimir Putin, whose relationship
with Trump is just "business," an alliance of convenience, if you will.
I have zero sympathy for Donald Trump. But his world is now our world, and with both of his feet firmly planted in spook world,
ours are too. He's in it to his neck, in fact, and what happens in that world will affect every one of us. He's so impossibly erratic,
so impossibly unfit for his office, that everyone on the list above wants to remove him. Many of them are allied, but if they are,
it's also only for convenience.
How do spooks remove the inconvenient and unfit? I leave that to your imagination;they have their ways. Whatever method they choose,
however, it must be one without fingerprints - or more accurately, without their fingerprints - on it.
Which suggests two more questions. One, who will help them do it, take him down? Clearly, anyone and everyone on the list. Second,
how do you bring down the president, using extra-electoral, extra-constitutional means, without bringing down the Republic? I have
no answer for that.
Here's a brief look at "spook world" (my phrase, not the author's) from "
The Fox Hunt " by John
Sevigny:
Several times in my life – as a journalist and rambling, independent photographer - I've ended up rubbing shoulders with
spooks. Long before that was a racist term, it was a catch-all to describe intelligence community people, counter intel types,
and everyone working for or against them. I don't have any special insight into the current situation with Donald Trump and his
battle with the IC as the intelligence community calls itself, but I can offer a few first hand observations about the labyrinth
of shadows, light, reflections, paranoia, perceptions and misperceptions through which he finds himself wandering, blindly. More
baffling and scary is the thought he may have no idea his ankles are already bound together in a cluster of quadruple gordian
knots, the likes of which very few people ever escape.
Criminal underworlds, of which the Trump administration is just one, are terrifying and confusing places. They become
far more complicated once they've been penetrated by authorities and faux-authorities who often represent competing interests,
but are nearly always in it for themselves.
One big complication - and I've written
about this before - is that you never know who's working for whom . Another problem is that the hierarchy of handlers,
informants, assets and sources is never defined. People who believe, for example, they are CIA assets are really just being used
by people who are perhaps not in the CIA at all but depend on controlling the dupe in question. It is very simple - and I have
seen this happen - for the subject of an international investigation to claim that he is part of that operation. [emphasis added]
Which leads Sevigny to this observation about Trump, which I partially quoted above: "Donald Trump may be crazy, stupid, evil
or all three but he knows the knives are being sharpened and there are now too many blades for him to count. The intel people are
against him, as are the counter intel people. His phone conversations were almost certainly recorded by one organization or another,
legal or quasi legal. His enemies include Republican lawmakers, journalists, the Clintons, the Bush family, Barack Obama, the ACLU,
every living Democrat and even Rand Paul. Putin is not on his side - that's a business matter and not an alliance."
Again, this is not to defend Trump, or even to generate sympathy for him - I personally have none. It's to characterize where
he is, and we are, at in this pivotal moment. Pivotal not for what they're doing, the broad intelligence community. But pivotal for
what we're finding out, the extent and blatancy of the violations.
All of this creates an incredibly complex story, with only a tenth or less being covered by anything like the mainstream press.
For example, the Trump-Putin tale is much more likely to be part of a much broader "international mobster" story, whose participants
include not only Trump and Putin, but Wall Street (think HSBC) and major international banks, sovereign wealth funds, major hedge
funds, venture capital (vulture capital) firms, international drug and other trafficking cartels, corrupt dictators and presidents
around the world and much of the highest reaches of the "Davos crowd."
Much of the highest reaches of the .01 percent, in other words, all served, supported and "curated" by the various, often competing
elements of the first-world military and intelligence communities. What a stew of competing and aligned interests, of marriages and
divorces of convenience, all for the common currencies of money and power, all of them
dealing in
death .
What this new WikiLeaks revelation shows us is what just one arm of that community, the CIA, has been up to. Again, the breadth
of the spying and hacking capability is beyond imagination. This is where we've come to as a nation.
What the CIA Is Up To - A Brief Sample
Now about those CIA spooks and their surprising capabilities. A number of
other outlets have written up the story, but
this
from Zero Hedge has managed to capture the essence as well as the breadth in not too many words (emphasis mine throughout):
WikiLeaks has published what it claims is the largest ever release
of confidential documents on the CIA It includes more than 8,000 documents as part of 'Vault 7', a series of leaks on the agency,
which have allegedly emerged from the CIA's Center
For Cyber Intelligence in Langley , and which can be seen on the org
chart below, which Wikileaks also released : [org
chart reproduced above]
A total of 8,761 documents have been published
as part of 'Year Zero', the first in a series of leaks the whistleblower organization has dubbed 'Vault 7.' WikiLeaks said
that 'Year Zero' revealed details of the CIA's "global covert hacking program," including "weaponized exploits" used against company
products including " Apple's iPhone , Google's Android and Microsoft's Windows and even Samsung TVs
, which are turned into covert microphones."
WikiLeaks tweeted the leak, which it claims came from a network inside the CIA's Center for Cyber Intelligence in Langley,
Virginia.
Among the more notable disclosures which, if confirmed, "
would rock the technology world ", the CIA had managed to bypass encryption on popular phone and messaging services
such as Signal, WhatsApp and Telegram. According to the statement from WikiLeaks, government hackers can penetrate
Android phones and collect "audio and message traffic before encryption is applied."
With respect to hacked devices like you smart phone, smart TV and computer, consider the concept of putting these devices in "fake-off"
mode:
Among the various techniques profiled by WikiLeaks is "Weeping Angel", developed by the CIA's Embedded Devices Branch (EDB),
which infests smart TVs , transforming them into covert microphones. After infestation, Weeping Angel places the target
TV in a 'Fake-Off' mode , so that the owner falsely believes the TV is off when it is on. In 'Fake-Off' mode the TV operates
as a bug, recording conversations in the room and sending them over the Internet to a covert CIA server.
As Kim Dotcom chimed in on Twitter, "CIA turns Smart TVs, iPhones, gaming consoles and many other consumer gadgets into open
microphones" and added "CIA turned every Microsoft Windows PC in the world into spyware. Can activate backdoors on demand,
including via Windows update "[.]
Do you still trust Windows Update?
About "Russia did it"
Adding to the "Russia did it" story, note this:
Another profound revelation is that the CIA can engage in "false flag" cyberattacks which portray Russia as the assailant
. Discussing the CIA's Remote Devices Branch's UMBRAGE group, Wikileaks' source notes that it "collects and maintains a substantial
library of attack techniques 'stolen' from malware produced in other states including the Russian Federation.["]
As Kim Dotcom summarizes this finding, " CIA uses techniques to make cyber attacks look like they originated from enemy
state ."
This doesn't prove that Russia didn't do it ("it" meaning actually hacking the presidency for Trump, as opposed to providing
much influence in that direction), but again, we're in spook world, with all the phrase implies. The CIA can clearly put anyone's
fingerprints on any weapon they wish, and I can't imagine they're alone in that capability.
Hacking Presidential Devices?
If I were a president, I'd be concerned about this, from the WikiLeaks "
Analysis " portion of the Press Release (emphasis added):
"Year Zero" documents show that the CIA breached the Obama administration's commitments [that the intelligence community would
reveal to device manufacturers whatever vulnerabilities it discovered]. Many of the vulnerabilities used in the CIA's cyber arsenal
are pervasive [across devices and device types] and some may already have been found by rival intelligence agencies or cyber criminals.
As an example, specific CIA malware revealed in "Year Zero" [that it] is able to penetrate, infest and control both the
Android phone and iPhone software that runs or has run presidential Twitter accounts . The CIA attacks this software by using
undisclosed security vulnerabilities ("zero days") possessed by the CIA[,] but if the CIA can hack these phones then so can everyone
else who has obtained or discovered the vulnerability. As long as the CIA keeps these vulnerabilities concealed from Apple and
Google (who make the phones) they will not be fixed, and the phones will remain hackable.
Does or did the CIA do this (hack presidential devices), or is it just capable of it? The second paragraph implies the latter.
That's a discussion for another day, but I can say now that both Lawrence Wilkerson, aide to Colin Powell and a non-partisan (though
an admitted Republican) expert in these matters, and
William Binney,
one of the triumvirate of major pre-Snowden leakers, think emphatically yes. (See
Wilkerson's
comments here . See
Binney's comments here .)
Whether or not you believe Wilkerson and Binney, do you doubt that if our intelligence people can do something, they would
balk at the deed itself, in this
world of "collect it all
"? If nothing else, imagine the power this kind of bugging would confer on those who do it.
The Breadth of the CIA Cyber-Hacking Scheme
But there is so much more in this Wikileaks release than suggested by the brief summary above. Here's a bullet-point overview
of what we've learned so far, again via Zero Hedge:
Key Highlights from the Vault 7 release so far:
"Year Zero" introduces the scope and direction of the CIA's global covert hacking program, its malware arsenal and dozens of
"zero day" weaponized exploits against a wide range of U.S. and European company products , include Apple's iPhone,
Google's Android and Microsoft's Windows and even Samsung TVs, which are turned into covert microphones.
Wikileaks claims that the CIA lost control of the majority of its hacking arsenal including malware, viruses, trojans, weaponized
"zero day" exploits, malware remote control systems and associated documentation . This extraordinary collection, which
amounts to more than several hundred million lines of code, gives its possessor the entire hacking capacity of the CIA The
archive appears to have been circulated among former U.S. government hackers and contractors in an unauthorized manner, one
of whom has provided WikiLeaks with portions of the archive.
By the end of 2016, the CIA's hacking division, which formally falls under the agency's Center for Cyber Intelligence (CCI),
had over 5000 registered users and had produced more than a thousand hacking systems, trojans, viruses, and other
"weaponized" malware . Such is the scale of the CIA's undertaking that by 2016, its hackers had utilized more code than
that used to run Facebook.
The CIA had created, in effect, its "own NSA" with even less accountability and without publicly answering the question
as to whether such a massive budgetary spend on duplicating the capacities of a rival agency could be justified.
Once a single cyber 'weapon' is 'loose' it can spread around the world in seconds , to be used by rival states, cyber
mafia and teenage hackers alike.
Also this scary possibility:
As of October 2014 the CIA was also looking at infecting the vehicle control systems used by modern cars and trucks.
The purpose of such control is not specified, but it would permit the CIA to engage in nearly undetectable assassinations
.
Journalist Michael Hastings, who in 2010
destroyed the career of General
Stanley McChrystal and was hated by the military for it, was killed in 2013 in an inexplicably out-of-control car. This isn't
to suggest the CIA, specifically, caused his death. It's to ask that, if these capabilities existed in 2013, what would prevent their
use by elements of the military, which is, after all a death-delivery organization?
And lest you consider this last speculation just crazy talk, Richard Clarke (that
Richard Clarke ) agrees: "Richard Clarke, the counterterrorism
chief under both Bill Clinton and George W. Bush,
told the Huffington
Post that Hastings's crash looked consistent with a car cyber attack.'" Full and fascinating
article here .
WiliLeaks Press Release
Here's what WikiLeaks itself says about this first document cache (again, emphasis mine):
Press Release
Today, Tuesday 7 March 2017, WikiLeaks begins its new series of leaks on the U.S. Central Intelligence Agency. Code-named "Vault
7" by WikiLeaks, it is the largest ever publication of confidential documents on the agency.
Recently, the CIA lost control of the majority of its hacking arsenal including malware, viruses, trojans, weaponized "zero
day" exploits, malware remote control systems and associated documentation. This extraordinary collection, which amounts to more
than several hundred million lines of code, gives its possessor the entire hacking capacity of the CIA The archive appears to
have been circulated among former U.S. government hackers and contractors in an unauthorized manner, one of whom has provided
WikiLeaks with portions of the archive.
"Year Zero" introduces the scope and direction of the CIA's global covert hacking program, its malware arsenal and dozens of
"zero day" weaponized exploits against a wide range of U.S. and European company products, include Apple's iPhone, Google's Android
and Microsoft's Windows and even Samsung TVs, which are turned into covert microphones.
Since 2001 the CIA has gained political and budgetary preeminence over the U.S. National Security Agency (NSA). The CIA
found itself building not just its now infamous drone fleet, but a very different type of covert, globe-spanning force - its own
substantial fleet of hackers. The agency's hacking division freed it from having to disclose its often controversial operations
to the NSA (its primary bureaucratic rival) in order to draw on the NSA's hacking capacities.
By the end of 2016, the CIA's hacking division, which formally falls under the agency's
Center for Cyber Intelligence (CCI), had over
5000 registered users and had produced more than a thousand hacking systems, trojans, viruses, and other "weaponized" malware.
Such is the scale of the CIA's undertaking that by 2016, its hackers had utilized more code than that used to run Facebook. The
CIA had created, in effect, its "own NSA" with even less accountability and without publicly answering the question as to whether
such a massive budgetary spend on duplicating the capacities of a rival agency could be justified.
In a statement to WikiLeaks the source details policy questions that they say urgently need to be debated in public
, including whether the CIA's hacking capabilities exceed its mandated powers and the problem of public oversight of the agency.
The source wishes to initiate a public debate about the security, creation, use, proliferation and democratic control of cyberweapons.
Once a single cyber 'weapon' is 'loose' it can spread around the world in seconds, to be used by rival states, cyber mafia
and teenage hackers alike.
Julian Assange, WikiLeaks editor stated that "There is an extreme proliferation risk in the development of cyber 'weapons'.
Comparisons can be drawn between the uncontrolled proliferation of such 'weapons', which results from the inability to contain
them combined with their high market value, and the global arms trade. But the significance of "Year Zero" goes well beyond the
choice between cyberwar and cyberpeace. The disclosure is also exceptional from a political, legal and forensic perspective."
Wikileaks has carefully reviewed the "Year Zero" disclosure and published substantive CIA documentation while avoiding the
distribution of 'armed' cyberweapons until a consensus emerges on the technical and political nature of the CIA's program and
how such 'weapons' should analyzed, disarmed and published.
Wikileaks has also decided to redact and anonymise some
identifying information in "Year Zero" for in depth analysis. These redactions include ten of thousands of CIA targets and attack
machines throughout Latin America, Europe and the United States. While we are aware of the imperfect results of any approach chosen,
we remain committed to our publishing model and note that the quantity of published pages in "Vault 7" part one ("Year Zero")
already eclipses the total number of pages published over the first three years of the Edward Snowden NSA leaks.
Be sure to click through for the Analysis, Examples and FAQ sections
as well.
"O brave new world," someone once wrote . Indeed.
Brave new world, that only the brave can live in.
____
1 Mind you, the leakers may have had a comprehensive enough view to be making an accurate call. But the real point
is there are no actors who will be allowed to make an independent assessment.
Senator John McCain passed documents to the FBI director, James Comey, last month alleging secret contacts between the Trump
campaign and Moscow and that Russian intelligence had personally compromising material on the president-elect himself.
The material, which has been seen by the Guardian, is a series of reports on Trump's relationship with Moscow. They were
drawn up by a former western counter-intelligence official, now working as a private consultant. BuzzFeed on Tuesday published
the documents, which it said were "unverified and potentially unverifiable".
The Guardian has not been able to confirm the veracity of the documents' contents,
Emphases mine. I had been sitting on this link trying to make sense of this part. Clearly, the Trump Whitehouse has some major
leaks, which the MSM is exploiting. But the start of this article suggests that para-intelligence (is that a word? Eh, it is now)
was the source of the allegedly damaging info.
This is no longer about the deep-state, but a rouge state, possibly guns for higher, each having fealty to specific political
interests. The CIA arsenal wasn't leaked. It was delivered.
hmm.. as far as I can see, noone seems to care here in Germany anymore about being spied on by our US friends, apart from a
few alternative sources which are being accused of spreading fake news, of being anti-american, russian trolls, the matter is
widely ignored
I have read a few articles about the Vault 7 leak that typically raise a few alarms I would like to comment on.
1) The fact that the
CIA had managed to bypass encryption on popular phone and messaging services
does not mean that it has broken encryption, just that it has a way to install a program at a lower level, close to the operating
system, that will read messages before they are encrypted and sent by the messaging app, or just after they
have been decrypted by it.
As a side note: banks have now largely introduced two-factor authentication when accessing online services. One enters username
(or account number) and password; the bank site returns a code; the user must then enter this code into a smartphone app or a
tiny specialized device, which computes and returns a value out of it; the user enters this last value into the entry form as
a throw-away additional password, and gains access to the bank website.
I have always refused to use such methods on a smartphone and insist on getting the specialized "single-use password computer",
precisely because the smartphone platform can be subverted.
2) The fact that
"Weeping Angel", developed by the CIA's Embedded Devices Branch (EDB), [ ] infests smart TVs, transforming them into covert
microphones.
is possible largely because smart TVs are designed by their manufacturers to serve as spying devices. "Weeping Angel" is not
some kind of virus that turns normal devices into zombies, but a tool to take control of existing zombie devices.
The fact that smart TVs from
Vizio ,
Samsung or
LG constitute an outrageous intrusion into the privacy of their owners has been a known topic for years already.
3) The
CIA [ ] also looking at infecting the vehicle control systems used by modern cars and trucks
is not a "scary possibility" either; various demonstrations of such feats on
Tesla ,
Nissan , or
Chrysler vehicles have been demonstrated in the past few years.
And the consequences have already been suggested (killing people by disabling their car controls on the highway for instance).
My take on this is that we should seriously look askance not just at the shenanigans of the CIA, but at the entire "innovative
technology" that is imposed upon (computerized cars) or joyfully adopted by (smartphones) consumers. Of course, most NC readers
are aware of the pitfalls already, but alas not the majority of the population.
4) Finally this:
He's so impossibly erratic, so impossibly unfit for his office,
Trump is arguably unfit for office, does not have a clue about many things (such as foreign relations), but by taxing him of
being "erratic" Gaius Publius shows that he still does not "get" the Donald.
Trump has a completely different modus operandi than career politicians, formed by his experience as a real-estate mogul and
media star. His world has been one where one makes outrageous offers to try anchoring the negotiation before reducing one's claims
- even significantly, or abruptly exiting just before an agreement to strike a deal with another party that has been lured to
concessions through negotiations with the first one. NC once included a video of Trump doing an interactive A/B testing of his
slogans during a campaign meeting; while changing one's slogans on the spot might seem "erratic", it is actually a very systematic
market probing technique.
So stop asserting that Trump is "unpredictable" or "irrational"; this is underestimating him (a dangerous fault), as he is
very consistent, though in an uncommon fashion amongst political pundits.
While I agree that it's worth pointing out that the CIA has not broken any of the major encryption tools, even Snowden regards
being able to circumvent them as worse, since people using encryption are presumably those who feel particularly at risk and will
get a false sense of security and say things or keep data on their devices that they never never would if they thought they were
insecure.
Re Gaius on Trump, I agree the lady doth protest too much. But I said repeatedly that Trump would not want to be President
if he understood the job. It is not like being the CEO of a private company. Trump has vastly more control over his smaller terrain
in his past life than he does as President.
And Trump is no longer campaigning. No more a/b testing.
The fact is that he still does not have effective control of the Executive branch. He has lots of open positions in the political
appointee slots (largely due to not having even submitted candidates!) plus has rebellion in some organizations (like folks in
the EPA storing data outside the agency to prevent its destruction).
You cannot pretend that Trump's former MO is working at all well for him. And he isn't showing an ability to adapt or learn
(not surprising at his age). For instance, he should have figured out by now that DC is run by lawyers, yet his team has hardly
any on it. This is continuing to be a source of major self inflicted wounds.
His erraticness may be keeping his opponents off base, but it is also keeping him from advancing any of his goals.
Yes, not breaking encryption is devious, as it gives a false sense of security - this is precisely why I refuse to use those
supposedly secure e-banking login apps on smartphones whose system software can be subverted, and prefer those non-connected,
non-reprogrammable, special-purpose password generating devices.
As for Trump being incompetent for his job, and his skills in wheeling-dealing do not carrying over usefully to conducting
high political offices, that much is clear. But he is not "erratic", rather he is out of place and out of his depth.
I am writing this in the shower with a paper bag over my head and my iPhone in the microwave.
I have for years had a password-protected document on computer with all my important numbers and passwords. I have today deleted
that document and reverted to a paper record.
I think he means a machine dedicated to high-security operations like anything financial or bill-pay. Something that is not
exposed to email or web-browsing operations that happen on a casual-use computer that can easily compromise. That's not a bad
way to go; it's cheaper in terms of time than the labor-intensive approaches I use, but those are a hobby more than anything else.
It depends on how much you have at stake if they get your bank account or brokerage service password.
I take a few basic security measures, which would not impress the IT crowd I hang out with elsewhere, but at least would not
make me a laughingstock. I run Linux and use only open-source software; run ad-blockers and script blockers; confine risky operations,
which means any non-corporate or non-mainstream website to a virtual machine that is reset after each use; use separate browsers
with different cookie storage policies and different accounts for different purposes. I keep a well-maintained pfSense router
with a proxy server and an intrusion detection system, allowing me to segregate my secure network, home servers, guest networks,
audiovisual streaming and entertainment devices, and IoT devices each on their own VLANs with appropriate ACLs between them. No
device on the more-secured network is allowed out to any port without permission, and similar rules are there for the IoT devices,
and the VoIP tools.
The hardware to do all of that costs at least $700, but the real expense is in the time to learn the systems properly. Of course
if you use Linux, you could save that on software in a year if you are too cheap to send a contribution to the developers.
It's not perfect, because I still have computers turned on :) , but I feel a bit safer this way.
That said, absolutely nothing that I have here would last 30 milliseconds against anything the "hats" could use, if they wanted
in. It would be over before it began. If I had anything to hide, really, I would have something to fear; so guess I'm OK.
They're key fobs handed to you by your IT dept. The code displayed changes every couple of minutes. The plus is there's nothing
sent over the air. The minus is the fobs are subject to theft, and are only good for connecting to 'home'. And since they have
a cost, and need to be physically handed to you, they're not good fit for most two factor login applications (ie logging into
your bank account).
I watched (fast forwarded through, really) Morning Joe yesterday to see what they would have to say about Wikileaks. The show
mostly revolved around the health care bill and Trump's lying and tweeting about Obama wiretapping him. They gave Tim Kaine plenty
of time to discuss his recent trip to London talking to "some of our allies there" saying that they are concerned that "all the
intelligence agencies" say the Rooskies "cyber hacked" our election, and since it looks like we aren't doing anything when we
are attacked, they KNOW we won't do anything when they are attacked. (more red baiting)
The only two mentions I saw was about Wikileaks were, first, a question asked of David Cohen, ex Deputy Director of the CIA,
who refused to confirm the Wikileaks were authentic, saying whatever tools and techniques the CIA had were used against foreign
persons overseas, so there is no reason to worry that your TV is looking at you. And second, Senator Tom Cotton, who didn't want
to comment on the contents of Wikileaks, only saying that the CIA is a foreign intelligence service, collecting evidence on foreign
targets to keep our country safe, and it does not do intelligence work domestically.
So that appears to be their story, the CIA doesn't spy on us, and they are sticking with it, probably hoping the whole Wikileaks
thing just cycles out of the news.
The unwillingness of the main stream media (so far) to really cover the Wikileaks reveal is perhaps the bigger story. This
should be ongoing front page stuff .. but it is not.
As for using ZeroHedge as a source for anything, can we give that a rest. That site has become a cesspool of insanity. It used
to have some good stuff. Now it is just unreadable. SAD
And yes I know the hypocrisy of slamming ZH and the MSM at the same time we live in interesting times.
Your remarks on ZH are an ad hominem attack and therefore a violation of site policies. The onus is on you to say what ZH got
wrong and not engage in an ungrounded smear. The mainstream media often cites ZH.
NC more than just about any other finance site is loath to link to ZH precisely because it is off base or hyperventilating
a not acceptably high percent of the time, and is generally wrong about the Fed (as in governance and how money works). We don't
want to encourage readers to see it as reliable. However, it is good on trader gossip and mining Bloomberg data.
And I read through its summary of the Wikileaks material as used by Gaius and there was nothing wrong with it. It was careful
about attributing certain claims to Wikileaks as opposed to depicting them as true.
My rules for reading ZH:
1- Skip every article with no picture
2- Skip every article where the picture is a graph
3- Skip every article where the picture is of a single person's face
4- Skip every afticle where the picture is a cartoon
5- Skip every article about gold, BitCoin, or high-frequency trading
6- Skip all the "Guest Posts"
7- ALWAYS click through to the source
8- NEVER read the comments
It is in my opinion a very high noise-to-signal source, but there is some there there.
Discerning a 'news from noise' is NEVER that easy b/c it is an art, developed by years of shifting through ever increasing
'DATA information' load. This again has to be filtered and tested against one's own 'critical' thinking or reasoning! You have
to give ZH, deserved credit, when they are right!
There is no longer a Black or white there, even at ZH! But it is one of the few, willing to challenge the main stream narrative
'kool aid'
In addition to the "para-intelligence" community (hat tip Code named D) there are multiple enterprises with unique areas of
expertise that interface closely with the CIA The long-exposed operations, which include entrapment and blackmailing of key actors
to guarantee complicity, "loyalty" and/or sealed lips, infect businesses, NGOs, law enforcement agencies, judges, politicians,
and other government agencies. Equal opportunity employment for those with strong stomachs and a weak moral compass.
Yes I can't remember where I read it but it was a tale passed around supposedly by an FBI guy that had, along with his colleagues,
the job of vetting candidates for political office. They'd do their background research and pass on either a thick or thin folder
full of all the compromising dirt on each potential appointee. Over time he said he was perturbed to notice a persistent pattern
where the thickest folders were always the ones who got in.
I learned this when I was in my 20s. The Catholic Church was funding my early critique of American foreign aid as being
imperialist. I asked whether they thought I should go into politics. They said, "No, you'd never make it". And I said, "Why?"
and they said, "Well, nobody has a police record or any other dirt on you." I asked what they meant. They said, "Unless they
have something over you to blackmail you with, you're not going to be able to get campaign funding. Because they believe that
you might do something surprising," in other words, something they haven't asked you to do. So basically throughout politics,
on both sides of the spectrum, voters have candidates who are funded by backers who have enough over them that they can always
blackmail.
I find the notion that my consumer electronics may be CIA microphones somewhat irritating, but my imagination quickly runs
off to far worse scenarios. (although the popular phase, "You're tax dollars at work." keeps running thru my head like a earworm.
And whenever I hear "conservatives" speak of their desire for "small government", usually when topics of health care, Medicare
and social security come up, I can only manage a snort of incredulousness anymore)
One being malware penetrating our nuke power plants and shutting down the cooling system. Then the reactor slowly overheats
over the next 3 days, goes critical, and blows the surrounding area to high heaven. We have plants all around the coast of the
country and also around the Great Lakes Region – our largest fresh water store in a drought threatened future.
Then the same happening in our offensive nuke missile systems.
Some other inconvenient truths – the stuxnet virus has been redesigned. Kaspersky – premier anti malware software maker – had
a variant on their corporate network for months before finally discovering it. What chance have we?
In China, hacking is becoming a consumer service industry. There are companies building high power data centers with a host
of hacking tools. Anyone, including high school script kiddies, can rent time to use the sophisticated hacking tools, web search
bots, and whatever, all hosted on powerful servers with high speed internet bandwidth.
Being a bit "spooked" by all this, I began to worry about my humble home computer and decided to research whatever products
I could get to at least ward off annoying vandalism. Among other things, I did sign up for a VPN service. I'm looking at the control
app for my VPN connection here and I see that with a simple checkbox mouse click I can make my IP address appear to be located
in my choice of 40 some countries around the world. Romania is on the list!
Actually, I very much doubt that does work. The mic "pickup" would feed its analog output to a DAC (digital to analog converter)
which would convert the signal to digital. This then goes to something similar to a virtual com port in the operating system.
Here is where a malware program would pick it up and either create a audio file to be sent to an internet address, or stream it
directly there.
The article is just plugging in a microphone at the output jack. The malware got the data long before it goes thru another
DAC and analog amp to get to the speakers or output jack.
It depends on how it is hooked up internally. Old fashioned amateur radio headphones would disable the speakers when plugged
in because the physical insertion of the plug pushed open the connection to the speakers. The jack that you plug the ear buds
into might do the same, disconnecting the path between the built-in microphone and the ADC (actually it is an ADC not a DAC).
The only way to know is to take it apart and see how it is connected.
The CIA is not allowed to operate in the US is also the panacea for the public. And some are buying it. Along with everyone
knows they can do this is fueling the NOTHING to see here keep walking weak practically non existent coverage.
At what point do people quit negotiating in terrorism and errorism? For this is what the police, the very State itself has
long been. Far beyond being illegitimate, illegal, immoral, this is a clear and ever present danger to not just it's own people,
but the rule of law itself. Blanket statements like we all know this just makes the dangerously absurd normal I'll never understand
that part of human nature. But hey, the TSA literally just keeps probing further each and every year. Bend over!
Trump may not be the one for the task but we the people desperately need people 'unfit', for it is the many fit who brought
us to this point. His unfit nature is as refreshing on these matters in its chaotic honest disbelief as Snowden and Wiki revelations.
Refreshing because it's all we've got. One doesn't have to like Trump to still see missed opportunity so many should be telling
him he could be the greatest pres ever if (for two examples) he fought tirelessly for single payer and to bring down this police
state rather than the EPA or public education.
This cannot stand on so many levels. Not only is the fourth amendment rendered utterly void, but even if it weren't it falls
far short of the protections we deserve.
No enemy could possibly be as bad as who we are and what we allow/do among ourselves. If an election can be hacked (not saying
it was by Russia).. as these and other files prove anything can and will be hacked then our system is to blame, not someone else.
What amazes me is that the spooks haven't manufactured proof needed to take Trump out of office Bonfire of The Vanities style.
I'd like to think the people have moved beyond the point they would believe manufactured evidence but the Russia thing proves
otherwise.
These people foment world war while probing our every move and we do nothing!
If we wait for someone fit nothing will ever change because we wait for the police/media/oligarch state to tell us who is fit.
But being fit by the standards of our ruling class, the "real owners" as Carlin called them is, in my book, an automatic proof
that they are up to no good. Trump is not my cup of tea as a president but no one we have had in a while wasn't clearly compromised
by those who fund them. Did you ever wonder why we have never had a president or even a powerful member of congress that was not
totally in the tank for that little country on the Eastern Mediterranean? Or the Gulf Monarchies? Do you think that is by accident?
Do you think money isn't involved? Talk about hacked elections! We should be so lucky as to have ONLY Russians attempting to affect
our elections. Money is what hacks US elections and never forget that. To me it is laughable to discuss hacking the elections
without discussing the real way our "democracy" is subverted–money not document leaks or voting machine hacks. It's money.
Why isn't Saudi Arabia on Trump's list? Iran that has never been involved in a terrorist act on US soil is but not Saudi Arabia?
How many 911 hijackers came from Iran? If anything saves Trump from destruction by the real owners of our democracy it is his
devotion to the aforementioned countries.
The point again is not to remove him from office but to control him. With Trump's past you better believe the surveillance
state has more than enough to remove him from office. Notice the change in his rhetoric since inauguration? More and more he is
towing the establishment Republican line. Of course this depends on whether you believe Trump is a break with the past or just
the best liar out there. A very unpopular establishment would be clever in promoting their agent by pretending to be against him.
Anyone who still believes that the US is a democratic republic and not a mafia state needs to stick their heads deeper into
the sands. When will the low information voters and police forces on whom a real revolution depends realize this is anyone's guess.
The day is getting closer especially for the younger generation. The meme among the masses is that government has always been
corrupt and that this is nothing new. I do believe the level of immorality among the credentialed classes is indeed very new and
has become the new normal. Generations of every man for himself capitalist philosophy undermining any sense of morality or community
has finally done its work.
Go take a jaunt over to huffpo, at the time of this post there was not a single mention of vault 7 on the front page. Just
a long series of anti trump administration articles.
Glad to know for sure who the true warmongers were all along.
No.. The Church commission was a sweep it under the rug operation. It got us FISA courts. More carte blanche secrecy, not less.
The commission nor the rest of the system didn't even hold violators of the time accountable.
We have files like Vault 7. Commissions rarely get in secret what we have right here before our eyes.
River: Interesting historic parallel? I believe that the Ottomans got rid of the Janissaries that way, after the Janissaries
had become a state within a state, by using cannons on their HQ
From Wiki entry, Janissaries:
The corps was abolished by Sultan Mahmud II in 1826 in the Auspicious Incident in which 6,000 or more were executed.[8]
Took less than a minute to download the 513.33MB file. The passphrase is what JFK said he'd like to do to CIA: SplinterItIntoAThousandPiecesAndScatterItIntoTheWinds.
"The illegal we do immediately; the unconstitutional takes a little longer." Henry Kissinger, 1975.
The campaign to frame up and discredit Trump and his associates is characteristic of how a police state routinely operates.
A national security apparatus that vacuums up all our communications and stores them for later retrieval has been utilized
by political operatives to go after their enemies – and not even the President of the United States is immune. This is something
that one might expect to occur in, say, Turkey, or China: that it is happening here, to the cheers of much of the media and
the Democratic party, is beyond frightening.
The irony is that the existence of this dangerous apparatus – which civil libertarians have warned could and probably would
be used for political purposes – has been hailed by Trump and his team as a necessary and proper function of government. Indeed,
Trump has called for the execution of the person who revealed the existence of this sinister engine of oppression – Edward
Snowden. Absent Snowden's revelations, we would still be in the dark as to the existence and vast scope of the NSA's surveillance.
And now the monster Trump embraced in the name of "national security" has come back to bite him.
We hear all the time that what's needed is an open and impartial "investigation" of Trump's alleged "ties" to Russia. This
is dangerous nonsense: does every wild-eyed accusation from embittered losers deserve a congressional committee armed with
subpoena power bent on conducting an inquisition? Certainly not.
What must be investigated is the incubation of a clandestine political police force inside the national security apparatus,
one that has been unleashed against Trump – and could be deployed against anyone.
This isn't about Donald Trump. It's about preserving what's left of our old republic.
Yeah I downloaded it the day it came out and spent an hour or so looking at it last night. First impressions – "heyyy this
is like a Hackers Guide – the sort I used in the 80s, or DerEngel's Cable Modem Hacking" of the 00s.
2nd impressions – wow it really gives foundational stuff – like "Enable Debug on PolarSSL".
3rd impressions – "I could spend hours going thru this happily ".
4th impressions – I went looking for the "juicy bits" of interest to me – SOHO routers, small routers – sadly its just
a table documenting routers sold around the world, and whether these guys have put the firmware in their Stash Repository. Original
firmware, not hacked one. But the repository isn't in the vault dump, AFAIK.
Its quite fascinating. But trying to find the "juicy stuff" is going to be tedious. One can spend hours and hours going thru
it. To speed up going thru it, I'm going to need some tech sites to say "where to go".
It seems clear that Wikileaks has not and will not release actual ongoing method "how-to" info or hacking scripts. They are
releasing the "whats", not the tech level detailed "hows". This seems like a sane approach to releasing the data. The release
appears to be for political discussion, not for spreading the hacking tools. So I wouldn't look for "juicy bits" about detailed
methodology. Just my guess.
That said, love what you're doing digging into this stuff. I look forward to a more detailed report in future. Thanks.
Yves, I think that you much underestimate the extremity of these exposed violations of the security of freedom of expression,
and of the security of private records. The WikiLeaks docs show that CIA has developed means to use all personal digital device
microphones and cameras even when they are "off," and to send all of your files and personal data to themselves, and to send your
private messages to themselves before they are encrypted. They have installed these spyware in the released version of Windows
10, and can easily install them on all common systems and devices.
This goes far beyond the kind of snooping that required specialized devices installed near the target, which could be controlled
by warrant process. There is no control over this extreme spying. It is totalitarianism now.
This is probably the most extreme violation of the rights of citizens by a government in all of history. It is far worse than
the "turnkey tyranny" against which Snowden warned, on the interception of private messages. It is tyranny itself, the death of
democracy.
Your first sentence is a bit difficult to understand. If you read Yves' remarks introducing the post, she says that the revelations
are "a big deal" "if the Wikileaks claim is even halfway true," while coming down hard on the MSM and others for "pooh-pooh[ing]"
the story. Did you want her to add more exclamation points?
So we have a zillion ways to spy and hack and deceive and assassinate, but no control. I think this is what the military
refers to as "being overtaken by events."
It's easy to gather information; not so easy to analyze it, and somehow impossible to act on it in good faith. With all this
ability to know stuff and surveil people the big question is, Why does everything seem so beyond our ability to control it?
We should know well in advance that banks will fail catastrophically; that we will indeed have sea level rise; that resources
will run out; that water will be undrinkable; that people will be impossible to manipulate when panic hits – but what do we do?
We play dirty tricks, spy on each other like voyeurs, and ignore the inevitable. Like the Stasi, we clearly know what happened,
what is happening and what is going to happen. But we have no control.
My godfather was in the CIA in the late sixties and early seventies, and he said that outside of the President's pet projects
there was no way to sift through and bring important information to decision makers before it made the Washington Post (he is
aware of the irony) and hit the President's breakfast table.
AS, I would interpret it as saying that there was so much coming in it was like trying to classify snowflakes in a snowstorm.
They could pick a few subject areas to look at closely but the rest just went into the files.
Leaking like a sieve is also likely, but perhaps not the main point.
The archive appears to have been circulated among government hackers and contractors in a authorized manner
There, that looks the more likely framing considering CIA & DNI on behalf of the whole US IC seemingly fostered wide dissimilation
of these tools, information. Demonstration of media control an added plus.
Todd Pierce , on the other hand, nails it. (From his Facebook page.)
The East German Stasi could only dream of the sort of surveillance the NSA and CIA do now, with just as nefarious of purposes.
Perhaps the scare quotes around "international mobster" aren't really necessary.
In all this talk about the various factions aligned with and against Trump, that's one I haven't heard brought up by anybody.
With all the cement poured in Trump's name over the years, it would be naive to think his businesses had not brushed up against
organized crime at some point. Question is, whose side are they on?
Like all the other players, the "side" they are on is them-effing-selves. And isn't that the whole problem with our misbegotten
species, writ large?
Then there's this: https://www.youtube.com/watch?v=s1Hzds9aGdA
Maybe these people will be around and still eating after us urban insects and rodents are long gone? Or will our rulers decide
no one should survive if they don't?
To what extent do these hacks represent the CIA operating within the US? To what extent is that illegal? With the democrats
worshipping the IC, will anyone in an official position dare to speak out?
I've long thought that the reason Snowden was pursued so passionately was that he exposed the biggest, most embarrassing secret:
that the National "Security" Agency's INTERNAL security was crap.
And here it is: "Wikileaks claims that the CIA lost control of the majority of its hacking arsenal "
The CIA's internal security is crap, too. Really a lot of people should be fired over that, as well as over Snowden's release.
We didn't hear of it happening in the NSA, though I'm not sure we would have. Given Gaius's description of Trump's situation,
it seems unlikely it will happen this time, either. One of my hopes for a Trump administration, as long as we're stuck with it,
was a thorough cleanout of the upper echelons in the IC. It's obviously long overdue, and Obama wasn't up to it. But I used the
past tense because I don't think it's going to happen. Trump seems more interested in sucking up to them, presumably so they won't
kill him or his family. That being one of their options.
Ah, that's the beauty of contracting it out. No one gets fired. Did anyone get fired because of Snowden? It was officially
a contractor problem and since there are only a small number of contractors capable of doing the work, well you know. We can't
get new ones.
What I find by far the most distressing is this: "The CIA had created, in effect, its "own NSA" with even less accountability
." [My emphasis]. It seems to characterize an organization that operates outside of any control and oversight – and one that is
intentionally structuring itself that way. That worries me.
It is becoming increasingly clear that the Republic is lost because we didn't stand guard for it. Blaming others don't cut
it either – we let it happen. And like the Germans about the Nazi atrocities, we will say that we didn't know about it.
Hey, I didn't let it happen. Stuff that spooks and sh!tes do behind the Lycra ™ curtain happens because it is, what is the
big word again, "ineluctable." Is my neighbor to blame for having his house half eaten by both kinds of termites, where the construction
is such that the infestation and damage are invisible until the vast damage is done?
And just how were we supposed to stand guard against a secret and unaccountable organization that protected itself with a shield
of lies? And every time some poor misfit complained about it they were told that they just didn't know the facts. If they only
knew what our IC knows they would not complain.
It's a dangerous world out there and only our brave IC can protect us from it. Come on. Stop blaming the victim and place
the blame where it belongs–our IC and MIC. I say stop feeding the beast with your loyalty to a government that has ceased to be
yours.
Studiously avoid any military celebrations. Worship of the military is part of the problem. Remember, the people you thank
for "their service" are as much victims as you are. Sadly they don't realize that their service is to a rotten empire that is
not worthy of their sacrifice but every time we perform the obligatory ritual of thankfulness we participate in the lie that the
service is to a democratic country instead of an undemocratic empire.
It's clearly a case of Wilfred Owen's classic "Dulce et Decorum Est". Read the poem, google it and read it. It is instructive:
" you would not tell with such high zest To children ardent for some desperate glory, The old Lie: Dulce et decorum est Pro patria
mori." Make no mistake. It is a lie and it can only be undone if we all cease to tell it.
"These CIA revelations in conjunction with those of the NSA paints a pretty dark future for privacy and freedom. Edward
Snowden made us aware of the NSA's program XKEYSCORE and PRISM which are utilized to monitor and bulk collect information from
virtually any electronic device on the planet and put it into a searchable database. Now Wikileaks has published what appears
to be additional Big Brother techniques used by a competing agency. Say what you want about the method of discovery, but Pandora's
box has been opened."
"... Cohen, who has been quite vocal against the Russophobic witch hunt gripping the nation , believes that this falsified 35 page report is part of an "endgame" to mortally wound Trump before he even sets foot in the White House, by grasping at straws to paint him as a puppet of the Kremlin. The purpose of these overt attempts to cripple Trump, which have relied on ham-handed intelligence reports that, according to Cohen "even the New York Times referred to as lacking any evidence whatsoever," is to stop any kind of détente or cooperation with Russia. ..."
With eyebrows suspiciously furrowed, Tucker Carlson sat down tonight with NYU Professor of Russian Studies and contributor to
The Nation , Stephen Cohen, to discuss the 35 page #FakeNews dossier which has gripped the nation with nightmares of golden showers
and other perverted conduct which was to be used by Russia to keep Trump on a leash.
The left leaning Cohen, who holds a Ph.D. in government and Russian studies from Columbia, taught at Princeton for 30 years before
moving to NYU. He has spent a lifetime deeply immersed in US-Russian relations, having been both a long standing friend of Mikhail
Gorbachev and an advisor to President George H.W. Bush. His wife is also the editor of uber liberal " The Nation," so it's safe to
assume he's not shilling for Trump - and Tucker was right to go in with eyebrows guarded against such a heavyweight.
Cohen, who has been quite vocal against the Russophobic witch hunt
gripping the nation , believes that this
falsified 35 page report is part of an "endgame" to mortally wound Trump before he even sets foot in the White House, by grasping
at straws to paint him as a puppet of the Kremlin. The purpose of these overt attempts to cripple Trump, which have relied on ham-handed
intelligence reports that, according to Cohen "even the New York Times referred to as lacking any evidence whatsoever," is to stop
any kind of détente or cooperation with Russia.
Cohen believes that these dangerous accusations attempting to brand a US President as a puppet of a foreign government constitute
a "grave American national security threat."
"... Cohen, who has been quite vocal against the Russophobic witch hunt gripping the nation , believes that this falsified 35 page report is part of an "endgame" to mortally wound Trump before he even sets foot in the White House, by grasping at straws to paint him as a puppet of the Kremlin. The purpose of these overt attempts to cripple Trump, which have relied on ham-handed intelligence reports that, according to Cohen "even the New York Times referred to as lacking any evidence whatsoever," is to stop any kind of détente or cooperation with Russia. ..."
With eyebrows suspiciously furrowed, Tucker Carlson sat down tonight with NYU Professor of Russian Studies and contributor to
The Nation , Stephen Cohen, to discuss the 35 page #FakeNews dossier which has gripped the nation with nightmares of golden showers
and other perverted conduct which was to be used by Russia to keep Trump on a leash.
The left leaning Cohen, who holds a Ph.D. in government and Russian studies from Columbia, taught at Princeton for 30 years before
moving to NYU. He has spent a lifetime deeply immersed in US-Russian relations, having been both a long standing friend of Mikhail
Gorbachev and an advisor to President George H.W. Bush. His wife is also the editor of uber liberal " The Nation," so it's safe to
assume he's not shilling for Trump - and Tucker was right to go in with eyebrows guarded against such a heavyweight.
Cohen, who has been quite vocal against the Russophobic witch hunt
gripping the nation , believes that this
falsified 35 page report is part of an "endgame" to mortally wound Trump before he even sets foot in the White House, by grasping
at straws to paint him as a puppet of the Kremlin. The purpose of these overt attempts to cripple Trump, which have relied on ham-handed
intelligence reports that, according to Cohen "even the New York Times referred to as lacking any evidence whatsoever," is to stop
any kind of détente or cooperation with Russia.
Cohen believes that these dangerous accusations attempting to brand a US President as a puppet of a foreign government constitute
a "grave American national security threat."
"... In 2008 poorly regulated financial markets yielded a world-historic financial collapse. One generation, weaned on reveries of home ownership as the coveted badge of economic independence and old-fashioned American striving, has been plunged into foreclosure, bankruptcy, and worse. ..."
By any reasonable measure, the neoliberal dream lies in tatters. In 2008 poorly regulated financial markets yielded a world-historic
financial collapse. One generation, weaned on reveries of home ownership as the coveted badge of economic independence and old-fashioned
American striving, has been plunged into foreclosure, bankruptcy, and worse. And a successor generation of aspiring college students
is now discovering that their equally toxic student-loan dossiers are condemning them to lifetimes of debt. Both before and after
2008, ours has been an economic order that, largely designed to reward paper speculation and penalize work, produces neither significant
job growth nor wages that keep pace with productivity. Meanwhile, the only feints at resurrecting our nation's crumbling civic life
that have gained any traction are putatively market-based reforms in education, transportation, health care, and environmental policy,
which have been, reliably as ever, riddled with corruption, fraud, incompetence, and (at best) inefficiency. The Grand Guignol of
deregulation continues apace.
In one dismal week this past spring, for example, a virtually unregulated fertilizer facility immolated several blocks of West,
Texas, claiming at least fourteen lives (a number that would have been much higher had the junior high school adjoining the site
been in session at the time of the explosion), while a shoddily constructed and militantly unregulated complex of textile factories
collapsed in Savar, Bangladesh, with a death toll of more than 1,100 workers.
In the face of all this catastrophism, the placid certainties of neoliberal ideology rattle on as though nothing has happened.
Remarkably, our governing elites have decided to greet a moment of existential reckoning for most of their guiding dogmas by incanting
with redoubled force the basic catechism of the neoliberal faith: reduced government spending, full privatization of social goods
formerly administered by the public sphere, and a socialization of risk for the upper class. When the jobs economy ground to a functional
halt, our leadership class first adopted an anemic stimulus plan, and then embarked on a death spiral of austerity-minded bids to
decommission government spending at the very moment it was most urgently required -- measures seemingly designed to undo whatever
prospective gains the stimulus might have yielded. It's a bit as though the board of directors of the Fukushima nuclear facility
in the tsunami-ravaged Japanese interior decided to go on a reactor-building spree on a floodplain, or on the lip of an active volcano.
So now, five years into a crippling economic downturn without even the conceptual framework for a genuine, broad-based, jobs-driven
recovery shored up by boosts in federal spending and public services, the public legacy of these times appears to be a long series
of metaphoric euphemisms for brain-locked policy inertia: the debt ceiling, the fiscal cliff, the sequestration, the shutdown, the
grand bargain. Laid side by side, all these coinages bring to mind the claustrophobic imagery of a kidnapping montage from a noir
gangster film -- and it is, indeed, no great exaggeration to say that the imaginative heart of our public life is now hostage to
a grinding, miniaturizing agenda of neoliberal market idolatry. As our pundit class has tirelessly flogged the non-dramas surrounding
the official government's non-confrontations over the degree and depth of the inevitable brokered deal to bring yet more austerity
to the flailing American economy, we civilian observers can be forgiven for suspecting that there is, in fact, no "there" there.
For all their sound and fury, these set-tos proceed from the same basic premises on both sides, and produce the same outcome: studied
retreat from any sense of official economic accountability for, well, anything.
But the neoliberal flight from public responsibility is actually a tangled, and curiously instructive, tale of strikingly other-than-intended
consequences -- something akin to the fables of perverse incentives that neoliberal theorists themselves love to cook up in their
never-ending campaign against the prerogatives of the public sphere. The world of neoliberal market consensus that we now inhabit
would likely strike many of the movement's founders as a grotesque parody of their own aims and intentions. But because it is a fable
of intellectual overreach, as opposed to narrow economic self-interest, the neoliberal saga also bears an oddly hopeful moral. The
seemingly impermeable armature of terrible social and economic thought that has bequeathed to us our present state of ruin is really
a flimsy and jury-rigged set of market superstitions, and could readily be discarded for sturdier wares.
Open and Shut
To be sure, policy consensus is one of the premier breeding grounds of irony in our time, but the mid-twentieth-century movement
that became known to us as the neoliberal rebellion is steeped in the stuff. For starters, the original cohort of neoliberal apostles
conceived of themselves as an insulated, elite group of critics who were able to approach the great machinery of government and popular
political discourse only at a fastidious remove. They began the project of combining their intellectual labors, oddly enough, out
of their shared embrace of The Good Society (1937),
a treatise on the limits of state planning by New Republic columnist Walter Lippmann, who, like many of his successors at
that "contrarian" journal, advertised his growing disenchantment with New Deal liberalism and the whole endeavor of economic policy-making
in the public interest. But Lippmann soon fell afoul of the more doctrinaire members of his new fraternity of mostly European fellow
travelers -- notably German economist Wilhelm Röpke and French publisher Louis Rougier, who would later come into bad odor as a fascist
collaborator. The group's early association with both Lippmann and Rougier underlined the perils of overexuberant detours into the
political arena, and when they made a fresh stab at affiliating as transatlantic defenders of market liberty once the interregnum
of the Second World War had passed, their formal alliance, now called the Mont Pelerin Society after a resort in the Swiss Alps,
began life as something of a standoffish debating society. The first major irony in the annals of neoliberalism is that a clutch
of publicity-averse intellectuals would, within three decades of the group's founding in 1947, end up running a very big chunk of
the Anglophone capitalist world.
The neoliberal flight from public responsibility is actually a curiously instructive tale of strikingly other-than-intended
consequences.
The Mont Pelerin faithful congregated around the Austrian anti-Keynesian economist F. A. Hayek, an Old World polymath who was
eager to integrate his (strictly theoretical) vindication of individual liberty not merely into the heart of the economics discipline,
but also into the full sweep of public life, from moral philosophy to scientific research. With the zeal of the ardent émigré, Hayek
embraced the skeptical empiricism of conservative British thinkers such as Edmund Burke and David Hume -- and also seconded the broader
British reverence for political custom and cultural tradition, which he saw as the outcome of adaptation across the generations.
As economic historian Angus Burgin writes, Hayek maintained that "traditions were products of extended processes of competition,
and had persisted because in some sense -- which their beneficiaries did not always rationally comprehend -- they worked." The focus
here remained, as it did throughout Hayek's career, squarely on the radical limitations on knowledge available to individual human
agents. In The Constitution of Liberty , the work
he regarded, far more than the bestselling polemic The Road
to Serfdom , as the summation of his thought, Hayek wrote that "civilization enables us constantly to profit from knowledge
which we individually do not possess" -- and thereby the "freedom and unpredictability of human action" were to be tempered by "rules
which experience has shown to serve best on the whole." It speaks volumes about Hayek's own sense of intellectual tradition that
he initially proposed the group be called the Acton-Tocqueville Society -- a suggestion overruled on the grounds that these particular
avatars of noble European tradition were both too Catholic and too aristocratic for modern tastes.
Like many European intellectuals of the time, Hayek was also haunted by the recent terrors of totalitarianism; both he and his
harder-line Austrian colleague, Ludwig von Mises, were exiles from the Nazi regime, and the group of like-minded intellectuals they
recruited to form the Mont Pelerin Society shared their sense that market-based liberalism remained the only sure refuge from communism
and fascism. It was an obvious corollary of this faith that the philosophic values associated with such liberalism -- skepticism,
open inquiry, and historical contingency -- were the most reliable antidotes to totalitarianism. Hayek, for example, argued that
the halting and contingent nature of all human knowledge laid bare the conceits of state economic planning and demand management
as so much bitter and destructive farce. In a 1936 lecture called "Economics and Knowledge," he sounded an early note of epistemological
skepticism in public affairs that was virtually postmodern: "How," he demanded to know, "can the combination of fragments of knowledge
existing in different minds bring about results which, if they were to be brought about deliberately, would require a knowledge on
the part of the directing mind which no single person can possess?"
Clearly, nothing about such radical skepticism entailed an ironclad commitment to free-market fundamentalism. Any brand of liberalism
that forced humans into free market relations would be self-contradictory, as liberal theorists from Adam Smith and John Stuart Mill
to John Dewey, all of whom shared Hayek's epistemological stance, understood. Indeed, Karl Popper -- the thinker who inspired Hayek
and many other Mont Pelerin founders -- was himself a social democratic defender of the welfare state with decidedly socialist leanings.
As Popper explained in a 1994 interview not long before his death, his conception of individual liberty was not antithetical to principles
of economic democracy:
In a way one has to have a free market, but I also believe that to make a godhead out of the principle of the free market is
nonsense. . . . Traditionally, one of the main tasks of economics was to think of the problem of full employment. Since approximately
1965 economists have given up on that; I find it very wrong.
Clearly, too, the "open society" that Popper famously envisioned permitted ample room for the adoption of egalitarian, even redistributionist,
policies. Even as Hayek himself inveighed against the "collectivist" ideology of New Deal economic reforms, he also took pains to
distance himself from a devil-take-the-hindmost model of unregulated market competition. The challenge, as Hayek saw it, was not
merely to mobilize the resources of the economic policy elite and its intellectual fellow travelers to ratify a complacent, status
quo vision of business civilization, but to collaborate on a far more ambitious project. In a 1949 paper called "The Intellectuals
and Socialism," Hayek sketched out a visionary, classically liberal mandate that became the animating mission of the Mont Pelerin
Society:
We must be able to offer a new liberal program which appeals to the imagination. We must make the building of a free society
once more an intellectual adventure, a deed of courage. What we lack is a liberal Utopia, a program which seems neither a mere
defense of things as they are nor a diluted kind of socialism, but a truly liberal radicalism which does not spare the susceptibilities
of the mighty (including the trade unions), which is not too severely practical, and which does not confine itself to what appears
today as politically possible. We need intellectual leaders who are willing to work for an ideal, however small may be the prospects
of its early realisation. They must be men who are willing to stick to principles and to fight for their realisation, however
remote. The practical compromises they must leave to the politicians.
There is, of course, a contradiction at the heart of Hayek's vision: How is a utopian free society supposed to pursue its own
ambitious battery of universalized mandates while remaining ostensibly founded on the radically unknowable nature of all human experience?
But the real irony of Hayek's utopian longings is that they were fully realized -- albeit, of course, in nothing like the form he
envisioned. As Daniel Stedman Jones argues in his incisive study of the neoliberal rise to power, Masters of the Universe , "it is hard to think of another
'utopia' to have been as fully realized" as Hayek's came to be in the powerful neoliberal regimes taking shape in Reagan's America
and Thatcher's Britain: "The free market became the organizing principle for microeconomic reform, especially through the privatization
of state assets, nationalized industries, and public services. Trade unions were vanquished and the power of labor was diluted. Exchange
controls were abolished. The financial markets were progressively deregulated. Market mechanisms became the models for the operation
of health care." While it's true, Stedman Jones notes, that "the purity that Hayek advocated was meant as an optimistic and ideological
and intellectual tactic rather than a blueprint," it was to become that and much, much more: neoliberals went on to erect a permanent
edifice of postideological assumptions about the natural predominance of markets and the just as rigid limitations of government.
"The results," as Stedman Jones sums things up, "have been extraordinary."
Interesting Wishes
In retrospect, Mont Pelerin's guiding spirits probably should have put a lot less stock in Adam Smith's comforting policy-fable
of the Invisible Hand and heeded instead the counsel of the old Chinese curse "May all your wishes be granted." That aphorism is
also rendered in English as "May you live in interesting times," and both renderings hold with equal force in the neoliberal case.
For as the (fairly recondite and academic) proceedings of the Mont Pelerin set were gaining wider traction in the policy world, multiple
crackups of the Keynesian model of coordinated economic planning helped to create an opening for the figure who would be the new
economic order's zeitgeist on horseback: the diminutive University of Chicago monetarist-for-all-seasons, Milton Friedman.
The robustly entrepreneurial Friedman embraced a masscult platform.
When Paul Volcker -- Jimmy Carter's appointee to chair the Federal Reserve -- adopted a modified version of Friedman's theology
of the money supply to tame the two-digit inflation of the late 1970s, Friedman was suddenly the policy visionary who could do no
wrong. He soon served as an informal adviser to both the Reagan and Thatcher governments (and, less prestigiously, to the dictatorship
of Chilean general Augusto Pinochet). He reached a popular audience via a column in Newsweek , a hit series on PBS, and
several bestselling tracts of unalloyed free-market sloganeering. While demure Europeans such as Hayek distrusted the allure of popular
renown as a temptation to oversimplify their ideas and pander to the public, the robustly entrepreneurial Friedman embraced a masscult
platform -- and for the most part on the very grounds that aroused Hayek's suspicion. When he succeeded Hayek as chairman of the
Mont Pelerin group, Friedman brought it, and the broader project of neoliberal thought, into its high propaganda phase. As he cultivated
a high media profile, Friedman positioned himself at the nexus of an influential new group of transatlantic conservative think tanks
that would go on to supply much of the concrete policy agendas for the Reagan and Thatcher revolutions: the Institute of Economic
Affairs in London; the Hoover Institution at Stanford (where he would spend the balance of his career after retiring from the University
of Chicago); and the Cato Institute, the Heritage Foundation, and the American Enterprise Institute in Washington.
And as the institutional platforms for Milton Friedman's free-market gospel multiplied, the vaunted intellectual range of neoliberal
inquiry vanished into a stagnant pool of confident and absolute assertions of the market's unchallenged sovereignty as the arbiter
of all life outcomes. Friedman converted Adam Smith's classical doctrine of the invisible hand -- whereby all self-interested actions
mystically possess a benign or munificent social payoff -- into an inverted demonology of the public sphere. There is, he said in
an address honoring the two-hundredth anniversary of The
Wealth of Nations , "an invisible hand in politics that is the precise reverse of the invisible hand in the market":
In politics, men who intend only to promote the public interest, as they conceive it, are 'led by an invisible hand to promote
an end which was no part of their intention.' They become the front-men for special interests they would never knowingly serve.
They end up sacrificing the public interest to the special interest, the interest of the consumers to that of producers, of the
masses who never go to college to that of those who attend college, of the poor working-class saddled with employment taxes to
the middle class who get disproportionate benefits from social security, and so down the line.
It's hard to imagine a purer statement of the founding principles of neoliberalism as we have come wearily to know it in this
advanced stage of market collapse. It is pitched, first of all, in a counterintuitive rhetoric of worldly cleverness, a spirit of
seminar-room one-upmanship. Not only is Adam Smith right about the hidden virtues of business interests, but the same paradox operates,
by a virtually metaphysical law, to transform every action of every individual putatively serving the public interest into a parody
of his or her stated intent. Here is a hermeneutics of suspicion that far outstrips the wildest excesses of the death-of-the-author
acolytes of high postmodern critical theory. Not only is it the case that public servants will fail to advance the public's interest
out of some depressingly common shortcoming of character -- susceptibility to bribery, say, or short-sighted ideological delusion.
No, the central idea here is far more radical than that: government, by its very nature, can't serve the public interest,
because of the innately condescending and imperious character of the act of governing.
Friedman's claim owed its origins in large part to the work of George Stigler, a colleague at the University of Chicago. Stigler
helped pioneer the famous neoliberal doctrine of regulatory capture, which in turn is its own ultra-cynical academic appropriation
of what seems, at first glance, like a muckraking Marxist's indictment of the bourgeois state. Stigler and other advocates of the
so-called public choice school of economic theory maintained that regulatory agencies inevitably became hostage to the interests
of the industries they oversaw. In a 1971 journal article bearing the deceptively wan title "The Theory of Economic Regulation,"
Stigler airily dismissed reformist complaints about regulatory corruption as "exactly as appropriate as a criticism of the Great
Atlantic and Pacific Tea Company for selling groceries, or as a criticism of a politician for currying popular support." Stigler's
disdain for pandering political leaders did not, however, prevent him from summarizing his theory in a policy paper for then-president
Richard Nixon. And, like most of the leading lights of neoliberal theory, Stigler went on to win a Nobel Prize in Economics.
To be sure, the problem of industry-captive oversight is a common failing of the modern regulatory state, as any cursory glance
at the recent track records of, say, the Securities and Exchange Commission or the National Oceanic and Atmospheric Administration
will sadly demonstrate. But in promoting regulatory capture as a bedrock law of public-sector enterprise, the neoliberals performed
a neat trick; they posited corruption as a permanent condition of the regulatory state. And in so doing, they casually relegated
a fistful of traditional Progressive and New Deal reforms -- the cause of good government, upgrades in civil service appointments
and public-sector unionizing, the punishment of graft and fraud, and (not least by a long shot) the tighter regulation of corruption
in the private sector -- to the dustbin of history. Such measures, they preached, could breed only perverse and self-defeating outcomes,
and would indeed grievously multiply double-dealing in the public sector. Only by harnessing the superior explanatory power of "profit-maximizing"
in public life, Stigler argued, could the sad pieties of reformism be laid aside in favor of the sterner and more confident guidance
of the true masters of realpolitik -- the lords of the economic profession. Because "reformers will be ill-equipped to use the state
for their reforms, and victims of the pervasive use of the state's support of special groups will be helpless to protect themselves,"
Stigler reasoned, "economists should quickly establish the license to practice on the rational theory of political behavior." Thus
was born still another pet piety of the neoliberal counter-reformation: the notion that economics is "the imperial science," duly
licensed to dispense its market-pleasing wisdom in every sphere of life, from crime prevention and education policy to dating and
food preparation.
The notion that the public and private sectors both bear "defects" is elevated to a metaphysical affront to the market's sovereignty.
In the brewing theology of the modern conservative backlash, the moral hazards of the captive regulatory state were entirely the
creation of the bad actors in the public sector. The bagmen for the industries seeking to purchase regulatory favors from the agents
of the state were, after all, only acting in accord with the sainted Smithian dictates of self-interest. What fault could it be of
theirs if the state had provided them with an open market in graft, kickbacks, and influence-peddling? Indeed, Friedman, ever alert
to opportunities for rhetorical one-upmanship, floated the proposition that critics of free-market policies were foisting a bad-faith
"double standard" on the rightful workings of market self-interest. "A market 'defect,'" Friedman explained in a tribute to Smith's
Wealth of Nations , "whether through an absence of competition or external effects (equivalent, as recent literature has
made clear, to transaction costs) has been regarded as immediate justification for government intervention. But the political mechanism
has its 'defects' too. It is fallacious to compare the actual market with the ideal political structure. One should either compare
the real with the real, or the ideal with the ideal."
Got that? The notion that the public and private sectors both bear "defects" -- a completely banal supposition conceded by any
Galbraithian on the economic left -- is here elevated to a metaphysical affront to the market's sovereignty. In fact, the double
standard that Friedman calls out is nothing of the sort. No progressive-minded supporter of government intervention had staked out
the absurd position that the state is morally immaculate, or itself unsusceptible to any constructive outside intervention when its
practices are out of line with the public interest. Friedman writes as though Congress had never appointed an inspector general,
passed legislation to reform the civil service, and improved regulatory safeguards -- or as though the various federal employees'
unions had never pushed for improved hiring practices or better working conditions to upgrade their work product. And that's because,
for critics in the neoliberal camp, such external controls on the state's behavior simply cannot exist; the regulatory-capture school
of neoliberal theory already ruled out, on principle, the possibility that such interventions could yield anything other than market-distorting
outcomes. In other words, Friedman's lament about the mismatched moral standards of state and market is the phony protest of a card
cheat seeking mainly to stoke up the theatrical appeal of an already rigged game.
Who'll Stop the Rana?
You'd think that our recent bruising encounters with the devastating fallout from the deregulators' handiwork in the housing market
of the early aughts should, by rights, render Friedman's complaints about the public sector's assaults on market virtue the deadest
of dead letters. But, if anything, the ritual defense of the market's sovereign prerogative has dug in that much more intractably
as its basic coordinates have been discredited. As critics such as Dean Baker routinely point out, the stalled recovery out of the
Great Recession is almost exclusively a function of the failure of our neoliberal economic establishment to speak honestly about
a collapsed housing bubble that created a yawning shortfall in demand -- a shortfall that, amid the paralysis of credit markets in
the same recession, could be jumpstarted only by government stimulus.
All sorts of absurdities have flowed from this magisterial breakdown in comprehension. Since the neoliberal catechism holds that
stimulative government spending can never be justified in the long run, much of our debate over the recovery's prospective course
has been given over to speculative nonsense. Chief among these talismanic invocations of free-market faith is the great question
of how to placate the jittery job creators. At virtually every turn in the course of debate over how steeply to cut government spending
in this recession, our sachems of neoliberal orthodoxy have insisted that any revenue-enhancing move the government so much as contemplated
would spook business leaders into mothballing plans to expand operations and add jobs. It became the all-purpose worst-case scenario
of first resort. If health care reform passed, if federal deficits expanded, or if marginal tax rates were permitted to rise for
the vapors-prone investor class, why, then the whole prospect of a broad-based economic recovery was as good as shot.
[*]
And since neoliberalism is most notably a global -- or properly speaking, the globalizing -- ideology, such pat distortions of
economic reality are no longer confined to the Anglo-American political economy. Nor are they confined to strictly cognitive errors
in policymaking. The collapse of the Rana Plaza garment factory in Bangladesh has yielded commentary from neoliberals that might
well merit entry into the psychiatric profession's DSM-5 as textbook illustrations of moral aphasia. Here, after all, was a tragedy
that would appall even the darkest Victorian imaginings of a Charles Dickens or a Karl Marx: factory workers earning a monthly wage
of $38 crowded into a structurally unsound multistory facility built on a foundation of sand above a drained pond. Three stories
of the factory had been hastily erected on top of an already unsound existing structure just to house the fresh battalions of underpaid
workers demanded by bottom-feeding international textile contractors.
Government inspectors repeatedly demanded that the facility be shuttered on safety grounds, but the plant's proprietors ignored
their citations, reckoning that the short-term gains of maintaining peak production outweighed the negligible threat of a fine or
safety citation. Nor was there likely to be any pressure from Western bastions of enlightenment and human rights. The ceremonial
stream of Astroturf labor-and-safety-inspecting delegations from Western nations made zero note of the cracked and teetering foundations
of the Rana Plaza structure. Lorenz Berzau, the managing director of one such industry consortium (the Business Social Compliance
Initiative), primly told the Wall Street Journal that the group isn't an engineering concern -- and what's more, "it's very
important not to expect too much from the social audit" that his group and other Western overseers conduct on production facilities.
And, as Dave Jamieson and Emran Hossain reported in the Huffington Post , labor organizers have long since learned that
the auditing groups serve largely as pro forma conduits of impression management for consumer markets in the West. The auditing of
manufacturing facilities in the developing world "ends up catering more to the brands involved than the workers toiling on the line,"
Jamieson and Hossain write.
Yes, factory owners and managers well understand the permissible bounds of discourse in such Potemkin-style inquiries -- and instruct
their workforce accordingly. "What to say to the auditors always comes from the owners," a Bangladeshi line worker named Suruj Miah
told the two reporters. "The owners in most cases would warn workers not to say negative things about the factories. Workers are
left without a choice." Sumi Abedin, one of the survivors of an earlier disaster -- a factory fire in the nearby Tazreen plant that
claimed the lives of 112 workers in November 2012 -- told the Huffington Post that on the day of an international audit
team's visit, management compelled workers to wear T-shirts designating them as members of a nonexistent fire safety committee, and
had them brandishing prop fire-extinguishing equipment that plant managers had procured only for the duration of the audit.
What this disaster ought to have driven through the neoliberal consensus's collective solar plexus is something close to the polar
opposite of its cherished, evidence-proof theory of the captive regulator: a largely cosmetic global watchdog effort funded overwhelmingly
by private-sector concerns, far from delivering oversight and accountability, has incentivized fraud and negligence. And conveniently
enough, it's the race-to-the-bottom competitive forces unleashed by the global workplace that ritually sanctify all of this routine
dishonesty. In their malignant neglect of worker safety measures, local factory managers are able to cite the same market pressures
to maximize production and profit that have prevented the ornamental Western groups conducting audits of workplace safety practices
from releasing their findings to the workers at risk of being killed by the neoliberal regime of global manufacturing.
Barking Dogmas
Still, the dogmas of neoliberal market prerogative are far sturdier than a collapsing factory or a raging fire on the production
line. If the dogmatists have thrown overboard Hayek-era intellectual values like experimentation and skepticism, at least they can
stave off their inevitable extinction by shoring up Friedman-era platitudes and, from the mantles of the nation's most prestigious
universities and op-ed shops, try to pass them off as the nation's highest common sense. So former University of Chicago law professor
Richard Epstein, who helped found the influential law and economics movement that essentially transposed the shibboleths of public
choice theory into legal doctrine, has patiently explained that the just and measured response to the collapse of Rana Plaza is to
seek enforcement of preexisting building codes across the Bangladeshi private sector. Writing on the heels of the disaster, in the
Hoover Institution's web journal, Defining Ideas , Epstein takes pains to rule out the passage of any "new laws" to improve
worker-safety standards or international monitoring efforts.
In other words: Bangladeshi workers can either be more safe or starve more rapidly.
But lest even this minimal recourse to regulation sound like too heady a plunge into statist remedies, Professor Epstein also
cautions that the aggrieved and grieving workers in the Bangladeshi garment trade must not veer recklessly into unionism or other
non-market-approved modes of worker self-determination. After all, he reasons, "in order to stave a shutdown off by improving factory
safety, the savvy firm will have to raise its asking price from foreign purchasers . . . and may have to lower wages to remain competitive."
(This is another classic myth of the neoliberal faith -- the rational "trade-off" between personal safety and wages that the independent
broker makes when he or she contracts with an employer to freely exchange time and skills for wages. Only, of course, the notion
of such rational choice has been reduced to a bitter farce in workplaces such as Rana Plaza, where the basic human rights of workers
are only acknowledged theatrically, for the purposes of Potemkin auditing tours.) A more activist approach to the crisis in global
worker safety would create intolerable distress to Epstein's utopian vision of the carefully calibrated relations of global market
production. Sure, the EU might ban exports of clothes bearing the taint of labor exploitation -- but such a measure would just perversely
create "undeserved economic protection" for EU economies that are net clothing exporters (and by implication, would deprive consumers
of the sacred right to the cheapest possible attire that bullied and undercompensated labor can provide).
And do not get Epstein started on the mischief wrought by unions, which are all but certain to multiply calamities like
the Rana Plaza disaster:
It is not as though the only thing that a union does once it gains its dominant position is to advocate for the safety
of its workers, even if that item is at the top of its agenda. Unions also bargain over wages, work rules, seniority, pensions,
benefits, and other conditions of employment. In dealing with these issues, they exert a monopoly clout that can easily raise
wages and reduce productivity. In a market with many firms, they can exert that force only if they are prepared to take retaliatory
action against the firms that refuse to bow to their conditions. And they can only do so if they induce the government to take
measures to restrict the entry of non-union firms that could underbid them.
In other words: Bangladeshi workers can either be more safe or starve more rapidly. But according to Epstein, they assuredly aren't
entitled to earn a living wage without the threat of being crushed or burned to death at any given moment. The pertinent market trade-offs
simply won't permit it. Indeed, if you want to know the truth, Epstein claims, "labor agitation was . . . one of the contributing
causes to the collapse at Rana Plaza." Even the threat of union-related disruptions to established work discipline can be Kryptonite
to the beleaguered clothes barons of Bangladesh. We find ourselves confronted yet again by the torments of the heroic job creator.
Prospective labor agitation, Epstein contends, "places enormous strains on the firms that have to deliver goods to foreign purchasers
in order to remain in business. The threat of a repeat protest has led many firm bosses to step up the pace of work in the factories,
which in turn means longer shifts, more workers, more extensive use of heavy equipment in order to make up for lost production, and
stockpiling goods. That maneuver turned into a fatal insurance policy against future labor disruptions."
You see? One minute you're protesting for a wage increase or a work regime less likely to injure you, and before you know it,
you've frightened your employer into stockpiling inventory at such a frenetic pace that he kills you. Could the tonic discipline
of market preferences really be any clearer? One can only hope that future no-goodnik labor agitators will heed this tragic lesson
and recognize "foreign purchasers" as the remote, punitive, and awesome deities that the market meant them to be.
Trapped in the Moneybox
It is not all that surprising, in light of the trajectory of neoliberal ascendancy, to see rigidly orthodox market apologists
like Professor Epstein driven to such extremities to tease out a neoliberal moral from the bloody, smoldering squalor of the Rana
Plaza disaster. But the neoliberal consensus has long since transcended conventional divisions of party and ideology; the axiomatic
assertion of market dominance is a conditioned reflex among nearly all established pundits.
In a now-infamous April 24 write-up of the Bangladeshi catastrophe, Slate 's Moneybox columnist Matt Yglesias -- an eager
Democratic partisan brandishing pious Washington credentials from The American Prospect and the Center for American Progress
-- tried his own hand at an Epstein-style vindication of the market's undeviating wisdom. In a post bearing the reassuring free-to-be-you-and-me
headline "Different Places Have Different Safety Rules and That's OK," Yglesias framed his defense of the status quo regime of erratic
standards for worker safety in the hoary rhetoric of the public choice "trade-off." "While having a safe job is good," Yglesias chirped,
"money is also good."
OK, then! But note again the pinched moral universe in which employees are permitted only to have a safe job or a (barely) sustenance
income, and never both at the same time. It seems a modest social goal to demand that the exchange of labor value for a paycheck
in non-mortal conditions be accepted as an incontrovertible human right. If a rapidly globalizing market order is unable to secure
that baseline personal and financial security, its support for wildly varying models of job safety should be regarded precisely as
the problem -- and not as the taken-for-granted standard for phony assertions about what individual workers (let alone "the Bangladeshis,"
tout court) are purported to be choosing.
"While having a safe job is good," Yglesias chirped, "money is also good."
But Matt Yglesias, like many of Washington's market-besotted, faux-contrarian pundits on the notional left side of the partisan
aisle, will not be rushed into stating the morally obvious. Yes, he concedes, there could well be an abstract case here for collective
action aimed at upgrading the safety conditions of Bangladeshi workplaces -- but like Epstein, he frets that the collective-action
models of richer, Western workplaces create prohibitive costs of doing business and therefore may not fall within the ambit of choices
that workers in Bangladesh should reasonably be permitted to make. "Bangladesh is a lot poorer than the United States, and there
are very good reasons for Bangladeshi people to make different choices in this regard than Americans," Yglesias writes. "Safety rules
that are appropriate for the United States would be unnecessarily immiserating in much poorer Bangladesh."
So, not to worry, Mr. Moneybox confidently asserts. The trade-offs have yielded optimal gains in each diverse market setting,
in this, the best of all possible neoliberal worlds: "American jobs have gotten much safer over the past 20 years, and Bangladesh
has gotten a lot richer." As an authority for this sweeping claim -- which, by the way, is untrue in what Yglesias sees as the argument-clinching
"safer" U.S. end of the spectrum; Bureau of Labor Statistics data on workplace fatalities show steady increases over the past five
years, with right-to-work states such as Texas leading the grisly toll -- Yglesias cites the work of Robert Frank, a public-choice
enthusiast who, in his recent book The Darwin Economy
, seeks to lay the groundwork for a terrifying entity he calls the "libertarian welfare state."
Social media scourges wasted little time in calling out Yglesias's smug, fatuous, and opportunistic effort to advertise his market
contrarianism on the ruins of the Rana Plaza collapse. Eventually the scribe was hounded into publishing a passive-aggressive follow-up
post averring that he'd been misread and unfairly castigated by his critics. The stalwart wonk remained unbowed, however; Yglesias
wrote that he still "absolutely" stood by the conclusion that, in matters of workplace safety, it's "appropriate for rich countries
to have more stringent standards than poor ones."
Now, Matt Yglesias is not a doctrinaire neoliberal thinker -- certainly not in the sense that a disciplined propagandist like
Milton Friedman was (even though he longs, absurdly, for a revival of "Friedman-style pragmatism" to bring the economic right to
its senses). [**] But
that's precisely the point. Neoliberal orthodoxy has leached so deeply into the intellectual groundwater of the nation's political
class that it's no longer a meaningful descriptor of ideological difference. That's why Yglesias's erstwhile American Prospect
colleague Ezra Klein, over at his prestigious post atop the Washington Post 's economic blog shop, can marvel at the tough-minded
budget "seriousness" of serial Randian liar Paul Ryan -- or why the Obama White House can confidently slot offshore billionaire Penny
Pritzker as its second-term commerce secretary while it continues to mouth empty platitudes about saving the nation's middle class.
All Friedmans Now
It was Milton Friedman himself who famously announced, during his tour as an informal adviser to Richard Nixon, that "we're all
Keynesians now" -- but that oft-quoted maxim has been badly truncated from its full context. What Friedman actually said, in a 1968
interview with Time magazine, was "in one sense, we are all Keynesians now; in another, no one is a Keynesian any longer."
He went on to spell out the paradox more fully: "We all use the Keynesian language and apparatus; none of us any longer accepts the
initial Keynesian conclusions."
Now, more than four decades on, Friedman's savvy rhetorical dodge is the watchword of all mainstream macroeconomic thought. Even
putative liberals who pay lip service to the efficacy of government intervention dig in behind their own pet postulates about the
market's transcendent wisdom and beneficence -- about the need to temper the alleged excesses of the social-democratic usages of
social wealth with sterner, more austere pieties about the real-world trade-offs mandated by the lords of neoliberal market liberation.
It is an undeniable species of gibberish, one that would have likely appalled even as firm a market stoic as Hayek, who, whatever
his other intellectual handicaps, well understood the mischief wrought by a glib and self-seeking centrism. During the Mont Pelerin
group's tenth anniversary gathering in 1957, Hayek delivered a controversial speech called "Why I Am Not a Conservative." It was
designed, among other things, to distance the group from the steady accretion of self-insulated and untested right-wing bromides
that would later be the hallmark of Friedman's successor reign. Today, however, Hayek's oration sounds a much more sobering note
of prophecy for our political culture at large. "Advocates of the Middle Way with no goal of their own, conservatives have been guided
by the belief that the truth must lie somewhere between the extremes -- with the result that they have shifted position every time
a more extreme movement appeared on either wing," Hayek announced.
The one true road to intellectual serfdom, in other words, was the one that Hayek correctly saw lurking within the heart of the
neoliberal revolution.
[*] Meanwhile, the
actual state of the labor economy told a different story -- that corporate profits had spiked to record highs and that, instead of
scaling back entirely on job expenditures, employers were in fact adding hours to the average employee workweek, rightly calculating
that they could continue getting more value out of the existing workforce in an artificially slack job market with anemic, and declining,
union representation. (Once again, Dean Baker was virtually alone among economic commentators in noting this important shift.) Never
mind, as well, that when significant provisions of the allegedly business-killing health care law finally began to kick in, health
care spending in the private sector started to slow and stabilize on what looked to be a permanent and structural basis, with a projected
decline of $770 billion over the next decade. In other words, government intervention in the economy -- even via a mechanism as compromised
and graft-riddled as the 2010 Affordable Care Act -- was showing a striking capacity to even out and stabilize one of the most stubborn
and devastating inequalities in the American economy, access to affordable health care. And far from producing a steeper drag on
broader conditions for recovery, the stabilization of health care spending occurred amid a pronounced spike in health care hiring,
and indeed a long overdue (if still altogether too weak) rebound in the labor economy generally.
[**] Yglesias has
offered qualified support for the Obama stimulus plan and health care overhaul, and on this past May Day, even ventured a classically
coy Slate post where he pretended to flirt with Marxism. (Hipster-trolling headline: "Capitalism is looking pretty shabby.")
Chris Lehmann is editor in chief ofThe Bafflerand author ofRich People Things. His latest book,The Money Cult, is out now from Melville
House.
Big Finance not shying away from shale . Hedge funds and private equity are pouring
money into the shale patch despite a growing chorus of investors demanding higher returns from
shale companies, according to
Reuters . The pressure from investors raised questions about Wall Street's commitment to
the shale industry, but Reuters says that the flow of money has continued to flood in
unabated.
"... Old "classic" land-based oil fields deteriorate to the tune of 5% per year, while deep sea deteriorate more and subprime wells much more. You can probably double the figure for each, although much depends on particular geology. Infill drilling accelerates depletion, allowing to maintain high production for sometimes so changes can be abrupt. ..."
"... Moreover, with each year, "subprime wells" (multi-stage shale well) costs more and now are at a range of n 6-10 million depending on the number and the length of horizontals and number of fracking stages and other factors. Only few area (sweet spots) can recover this capital investment during the life of the shale well at current prices). More at around $80 and almost all around $100 per barrel. The later is also the price that KSA needs to remain solvent (rumored to be in low 90th). ..."
"... The shale oil produced in the USA is really "subprime" because large part of it has lower energy content (by 20% or more) and different mix of various hydrocarbons that "classic" oil. Especially condensate from gas wells. Which optimally can be used only as diluter for heavy oil. EIA does not differentiate between different types oil and use wrong metric (volume instead of weight). May be intentionally. ..."
"... Another factor is that world consumption continue to grow and will do so because population in large part of Asia and Africa is still growing and number of cars on the road increase each year requiring on average 1-1.4 MB/d additionally. ..."
"... By continuing its' easy money policies well past any recession or growth scare, the Fed has created a monster. Most shale companies aren't profitable and are in fact losing money using any kind of GAAP. However, cheap financing allows them to survive and "drill baby drill." The unintended consequences may include destabilizing Saudi Arabia to the point of an economic and political collapse. One can always hope ..."
"... Economic collapse in Venezuela due to low oil prices – good! Economic collapse in Saudi Arabia due to low oil prices – bad! Solution – extend cheap financing to Saudi Arabia via Aramco IPO! ..."
"... The 36″ North Sea Forties pipeline is currently shut down for repairs. Short and medium term prices will carry the effect of that supply loss. In the long term, unexpected developments are common. Considering how completely wrong so many oil analysts have been over the past ten years, including the IEA, there is not a lot of credibility in oil market predictions. ..."
My impression is that this a gap (could be intentional) between IEA statistics and predictions and the reality. This is propaganda
agency after all, with the explicit agenda of keeping the oil price for Us consumers low. So typically that produce too "rosy"
forecasts that later are quietly corrected. Their short-term forecasts are based on oil futures and as such has nothing to do
with the reality on the ground. Which is quite disturbing.
It is undeniable that shale boom which played such a beneficial role for the USA allowing to squeeze oil price (with generous
help from KSA) for two and half years is dead.
Now is kept artificially alive by junk bonds and directs loans that will never be repaid. In other words, the USA now enjoys
a period of "subprime oil. Unless there is a new technological breakthrough there will be an only minor improvement in efficiency
of drilling and oil extraction in the next couple of years, but the lion share of those was already implemented, and on the current
technological level we are close to the "peak efficiency" in drilling and services.
Those minor efficiencies will be negated by rising prices of service industries, which can't take the current pricing any longer
and need to raise prices for their services.
Old "classic" land-based oil fields deteriorate to the tune of 5% per year, while deep sea deteriorate more and subprime
wells much more. You can probably double the figure for each, although much depends on particular geology. Infill drilling accelerates
depletion, allowing to maintain high production for sometimes so changes can be abrupt.
In any case each year you need somehow to find 5 MB/d of oil, finance new wells in those areas and infrastructure required.
All Us shale production is around 6 MD/day. So you get the idea.
Moreover, with each year, "subprime wells" (multi-stage shale well) costs more and now are at a range of n 6-10 million
depending on the number and the length of horizontals and number of fracking stages and other factors. Only few area (sweet spots)
can recover this capital investment during the life of the shale well at current prices). More at around $80 and almost all around
$100 per barrel. The later is also the price that KSA needs to remain solvent (rumored to be in low 90th).
The shale oil produced in the USA is really "subprime" because large part of it has lower energy content (by 20% or more)
and different mix of various hydrocarbons that "classic" oil. Especially condensate from gas wells. Which optimally can be used
only as diluter for heavy oil. EIA does not differentiate between different types oil and use wrong metric (volume instead of
weight). May be intentionally.
So the future remains unpredictable but general trend for oil prices might be up with some spikes, not down. Although many
people, including myself, thought so in early 2015 ;-)
Another factor is that world consumption continue to grow and will do so because population in large part of Asia and Africa
is still growing and number of cars on the road increase each year requiring on average 1-1.4 MB/d additionally.
So it looks like the situation gradually deteriorate despite all efforts and related technological breakthrough which allow
to extract more from the old wells and more efficiently extract shale oil.
The problem is that new large deposits are very hard to find now and several previously oil-exporting countries gradually became
oil-importers. Mexico is one, which will be huge hit.
Obama administration screw the opportunity to move US consumers to hybrid cars so the situation in the USA deteriorates too
despite rise of percentage of more economical vehicle in the personal car fleet each year. Rumors were that they pursue vendetta
against Russia and that was primary consideration - to crash Russian economy and install a new "Yeltsin".
The USA generally is in better position then many other countries as the switch to natural gas and hybrid electric cars for
personal transportation is still possible. It already happened in several European countries for selected types of cars, buses
and trucks (taxi, in-city buses and "daily round trip or short trips trucks).
But there is no money for infrastructure anymore and for example many miles of US rail remain non-electrified. Burning diesel
instead.
As maintenance was neglected for two and half year disruption of existing supply might became more frequent. also mid Eastern
war is also a possibility with Trump saber-rattling against Iran. Recently the leak in undersea pipeline removed 0.5 MB/d from
the market and caused a price spike to $65 for Brent (WTI remains cheaper and never crosses $60 this time).
Also with a young prince in charge and the revolution against "old guard" KSA became more and more unstable so the next "oil
shock" might come from them. They also have problem of depletion which until now they compensated pitting more and more heavy
high sulfur oil deposits online. At some point they will be exhausted too. They also pitch for war with Iran, but they would prefer
somebody else to do heavy lifting.
The only one or countries still can significantly increase oil production now – Libya (were we have problem because of the
civil war after US-sponsored Kaddafi removal and killing), and Iraq where there are still untapped areas that might contain some
oil; nothing big, but still substantial in the range of 1 MB/d. Looks like Iran now exports all it could. Same is true for KSA
and Russia. In this sense OPEN oil production cuts might an attempt to preserve impression that they are untapped reserved. I
doubt that there are much and those cuts are just a reasonable insurance policy against quick depletion of existing wells as higher
price gives some space for innovation.
There is also such thing as EBITRA which gradually deteriorates everywhere and can become negative for certain types of oil
(for oil sands it depends on the price of natural gas and they are primary candidate if the price doubles or triples from the
current level).
By continuing its' easy money policies well past any recession or growth scare, the Fed has created a monster. Most shale companies
aren't profitable and are in fact losing money using any kind of GAAP. However, cheap financing allows them to survive and "drill
baby drill." The unintended consequences may include destabilizing Saudi Arabia to the point of an economic and political collapse. One
can always hope
Economic collapse in Venezuela due to low oil prices – good!
Economic collapse in Saudi Arabia due to low oil prices – bad!
Solution – extend cheap financing to Saudi Arabia via Aramco IPO!
Meanwhile, China says it will be moving to all-electric cars and trucks to help solve its horrible urban air pollution problem.
. . Meaning global demand has nowhere to go but down.
Why do I feel that this will not end well for the American hegemon? Particularly with Trump in office working overtime with
boy genius Rick Perry to promote coal and sabotage renewable energy. . .
The 36″ North Sea Forties pipeline is currently shut down for repairs. Short and medium term prices will carry the effect of
that supply loss. In the long term, unexpected developments are common. Considering how completely wrong so many oil analysts
have been over the past ten years, including the IEA, there is not a lot of credibility in oil market predictions.
Also the concept of "Neoliberal jihad is valid, but it is better to call it Neoliberal World revolution as it was borrowed
from Trotskyism
Notable quotes:
"... Jihad vs. McWorld ..."
"... In the two decades since Barber's book, this conflict has seemed to play out along overtly cultural lines: with Islamic extremism representing jihad, in opposition to Western neoliberalism representing McWorld. ..."
"... Linking Brexit and Trump to global right-wing tribal nationalisms doesn't mean conflating them all, of course. ..."
"... Yet at the same time, we can't understand our 21st century world without a recognition of this widespread phenomenon of global, tribal nationalism. ..."
In his ground-breaking
1995 book Jihad vs. McWorld , political scientist Benjamin Barber posits that the
global conflicts of the early 21st century would be driven by two opposing but equally
undemocratic forces: neoliberal corporate globalization (which he dubbed "McWorld") and
reactionary tribal nationalisms (which he dubbed "Jihad"). Although distinct in many ways, both
of these forces, Barber persuasively argues, succeed by denying the possibilities for
democratic consensus and action, and so both must be opposed by civic engagement and activism
on a broad scale.
In the two decades since Barber's book, this conflict has seemed to play out along overtly
cultural lines: with Islamic extremism representing jihad, in opposition to Western
neoliberalism representing McWorld. Case in pitch-perfect point: the Al Qaeda terrorist attacks
on the World Trade Center. Yet despite his use of the Arabic word Jihad, Barber is clear that
reactionary tribalism is a worldwide phenomenon -- and in 2016 we're seeing particularly
striking examples of that tribalism in Western nations such as Great Britain and the United
States.
Britain's vote this week in favor of leaving the European Union was driven entirely by such
reactionary tribal nationalism. The far-right United Kingdom Independence Party (UKIP) and its
leader Nigel Farage
led the charge in favor of Leave , as exemplified by a recent UKIP poster featuring a photo
of Syrian refugees with the caption " Breaking point: the EU has failed
us ." Farage and his allies like to point to demographic statistics about how much the UK
has changed in the last few decades , and more
exactly how the nation's white majority has been somewhat shifted over that time by the
arrival
of sizeable African and Asian immigrant communities.
It's impossible not to link the UKIP's emphases on such issues of immigration and demography
to the presidential campaign of the one prominent U.S. politician who is
cheering for the Brexit vote : presumptive GOP nominee Donald Trump. From his
campaign-launching speech about Mexican immigrant "criminals and rapists" to his proposal to
ban Muslim immigration and his "Make American Great Again" slogan, Trump has relied on
reactionary tribal nationalism at every stage of his campaign, and has received the
enthusiastic endorsement
of white supremacist and far-right organizations as a result. For such American tribal
nationalists, the 1965 Immigration Act is the chief bogeyman, the origin point of continuing
demographic shifts that have placed white America in a precarious position.
The only problem with that narrative is that it's entirely inaccurate. What the 1965 Act did
was reverse a
recent, exclusionary trend in American immigration law and policy, returning the nation to
the more inclusive and welcoming stance it had taken throughout the rest of its history.
Moreover, while the numbers of Americans from Latin American, Asian, and Muslim cultures have
increased in recent decades, all of those
communities have been part of o
ur national community from its origin points . Which is to say, this right-wing tribal
nationalism isn't just opposed to fundamental realities of 21st century American identity -- it
also depends on historical and national narratives that are as mythic as they are
exclusionary.
Linking Brexit and Trump to global right-wing tribal nationalisms doesn't mean conflating
them all, of course. Although Trump rallies have featured troubling instances of violence, and
although the
murderer of British politican Jo Cox was an avowed white supremacist and Leave supporter,
the right-wing Islamic extremism of groups such as Al Qaeda, ISIS, and Boko Haram rely far more
consistently and centrally on violence and terrorism in support of their worldview and goals.
Such specific contexts and nuances are important and shouldn't be elided.
Yet at the same time, we can't understand our 21st century world without a recognition of
this widespread phenomenon of global, tribal nationalism. From ISIS to UKIP, Trump to France's
Jean-Marie Le Pen, such reactionary forces have become and remain dominant players across the
world, influencing local and international politics, economics, and culture. Benjamin Barber
called this trend two decades ago, and we would do well to read and remember his analyses -- as
well as his call for civic engagement and activism to resist these forces and fight for
democracy.
"... In 2008 poorly regulated financial markets yielded a world-historic financial collapse. One generation, weaned on reveries of home ownership as the coveted badge of economic independence and old-fashioned American striving, has been plunged into foreclosure, bankruptcy, and worse. ..."
By any reasonable measure, the neoliberal dream lies in tatters. In 2008 poorly regulated financial markets yielded a world-historic
financial collapse. One generation, weaned on reveries of home ownership as the coveted badge of economic independence and old-fashioned
American striving, has been plunged into foreclosure, bankruptcy, and worse. And a successor generation of aspiring college students
is now discovering that their equally toxic student-loan dossiers are condemning them to lifetimes of debt. Both before and after
2008, ours has been an economic order that, largely designed to reward paper speculation and penalize work, produces neither significant
job growth nor wages that keep pace with productivity. Meanwhile, the only feints at resurrecting our nation's crumbling civic life
that have gained any traction are putatively market-based reforms in education, transportation, health care, and environmental policy,
which have been, reliably as ever, riddled with corruption, fraud, incompetence, and (at best) inefficiency. The Grand Guignol of
deregulation continues apace.
In one dismal week this past spring, for example, a virtually unregulated fertilizer facility immolated several blocks of West,
Texas, claiming at least fourteen lives (a number that would have been much higher had the junior high school adjoining the site
been in session at the time of the explosion), while a shoddily constructed and militantly unregulated complex of textile factories
collapsed in Savar, Bangladesh, with a death toll of more than 1,100 workers.
In the face of all this catastrophism, the placid certainties of neoliberal ideology rattle on as though nothing has happened.
Remarkably, our governing elites have decided to greet a moment of existential reckoning for most of their guiding dogmas by incanting
with redoubled force the basic catechism of the neoliberal faith: reduced government spending, full privatization of social goods
formerly administered by the public sphere, and a socialization of risk for the upper class. When the jobs economy ground to a functional
halt, our leadership class first adopted an anemic stimulus plan, and then embarked on a death spiral of austerity-minded bids to
decommission government spending at the very moment it was most urgently required -- measures seemingly designed to undo whatever
prospective gains the stimulus might have yielded. It's a bit as though the board of directors of the Fukushima nuclear facility
in the tsunami-ravaged Japanese interior decided to go on a reactor-building spree on a floodplain, or on the lip of an active volcano.
So now, five years into a crippling economic downturn without even the conceptual framework for a genuine, broad-based, jobs-driven
recovery shored up by boosts in federal spending and public services, the public legacy of these times appears to be a long series
of metaphoric euphemisms for brain-locked policy inertia: the debt ceiling, the fiscal cliff, the sequestration, the shutdown, the
grand bargain. Laid side by side, all these coinages bring to mind the claustrophobic imagery of a kidnapping montage from a noir
gangster film -- and it is, indeed, no great exaggeration to say that the imaginative heart of our public life is now hostage to
a grinding, miniaturizing agenda of neoliberal market idolatry. As our pundit class has tirelessly flogged the non-dramas surrounding
the official government's non-confrontations over the degree and depth of the inevitable brokered deal to bring yet more austerity
to the flailing American economy, we civilian observers can be forgiven for suspecting that there is, in fact, no "there" there.
For all their sound and fury, these set-tos proceed from the same basic premises on both sides, and produce the same outcome: studied
retreat from any sense of official economic accountability for, well, anything.
But the neoliberal flight from public responsibility is actually a tangled, and curiously instructive, tale of strikingly other-than-intended
consequences -- something akin to the fables of perverse incentives that neoliberal theorists themselves love to cook up in their
never-ending campaign against the prerogatives of the public sphere. The world of neoliberal market consensus that we now inhabit
would likely strike many of the movement's founders as a grotesque parody of their own aims and intentions. But because it is a fable
of intellectual overreach, as opposed to narrow economic self-interest, the neoliberal saga also bears an oddly hopeful moral. The
seemingly impermeable armature of terrible social and economic thought that has bequeathed to us our present state of ruin is really
a flimsy and jury-rigged set of market superstitions, and could readily be discarded for sturdier wares.
Open and Shut
To be sure, policy consensus is one of the premier breeding grounds of irony in our time, but the mid-twentieth-century movement
that became known to us as the neoliberal rebellion is steeped in the stuff. For starters, the original cohort of neoliberal apostles
conceived of themselves as an insulated, elite group of critics who were able to approach the great machinery of government and popular
political discourse only at a fastidious remove. They began the project of combining their intellectual labors, oddly enough, out
of their shared embrace of The Good Society (1937),
a treatise on the limits of state planning by New Republic columnist Walter Lippmann, who, like many of his successors at
that "contrarian" journal, advertised his growing disenchantment with New Deal liberalism and the whole endeavor of economic policy-making
in the public interest. But Lippmann soon fell afoul of the more doctrinaire members of his new fraternity of mostly European fellow
travelers -- notably German economist Wilhelm Röpke and French publisher Louis Rougier, who would later come into bad odor as a fascist
collaborator. The group's early association with both Lippmann and Rougier underlined the perils of overexuberant detours into the
political arena, and when they made a fresh stab at affiliating as transatlantic defenders of market liberty once the interregnum
of the Second World War had passed, their formal alliance, now called the Mont Pelerin Society after a resort in the Swiss Alps,
began life as something of a standoffish debating society. The first major irony in the annals of neoliberalism is that a clutch
of publicity-averse intellectuals would, within three decades of the group's founding in 1947, end up running a very big chunk of
the Anglophone capitalist world.
The neoliberal flight from public responsibility is actually a curiously instructive tale of strikingly other-than-intended
consequences.
The Mont Pelerin faithful congregated around the Austrian anti-Keynesian economist F. A. Hayek, an Old World polymath who was
eager to integrate his (strictly theoretical) vindication of individual liberty not merely into the heart of the economics discipline,
but also into the full sweep of public life, from moral philosophy to scientific research. With the zeal of the ardent émigré, Hayek
embraced the skeptical empiricism of conservative British thinkers such as Edmund Burke and David Hume -- and also seconded the broader
British reverence for political custom and cultural tradition, which he saw as the outcome of adaptation across the generations.
As economic historian Angus Burgin writes, Hayek maintained that "traditions were products of extended processes of competition,
and had persisted because in some sense -- which their beneficiaries did not always rationally comprehend -- they worked." The focus
here remained, as it did throughout Hayek's career, squarely on the radical limitations on knowledge available to individual human
agents. In The Constitution of Liberty , the work
he regarded, far more than the bestselling polemic The Road
to Serfdom , as the summation of his thought, Hayek wrote that "civilization enables us constantly to profit from knowledge
which we individually do not possess" -- and thereby the "freedom and unpredictability of human action" were to be tempered by "rules
which experience has shown to serve best on the whole." It speaks volumes about Hayek's own sense of intellectual tradition that
he initially proposed the group be called the Acton-Tocqueville Society -- a suggestion overruled on the grounds that these particular
avatars of noble European tradition were both too Catholic and too aristocratic for modern tastes.
Like many European intellectuals of the time, Hayek was also haunted by the recent terrors of totalitarianism; both he and his
harder-line Austrian colleague, Ludwig von Mises, were exiles from the Nazi regime, and the group of like-minded intellectuals they
recruited to form the Mont Pelerin Society shared their sense that market-based liberalism remained the only sure refuge from communism
and fascism. It was an obvious corollary of this faith that the philosophic values associated with such liberalism -- skepticism,
open inquiry, and historical contingency -- were the most reliable antidotes to totalitarianism. Hayek, for example, argued that
the halting and contingent nature of all human knowledge laid bare the conceits of state economic planning and demand management
as so much bitter and destructive farce. In a 1936 lecture called "Economics and Knowledge," he sounded an early note of epistemological
skepticism in public affairs that was virtually postmodern: "How," he demanded to know, "can the combination of fragments of knowledge
existing in different minds bring about results which, if they were to be brought about deliberately, would require a knowledge on
the part of the directing mind which no single person can possess?"
Clearly, nothing about such radical skepticism entailed an ironclad commitment to free-market fundamentalism. Any brand of liberalism
that forced humans into free market relations would be self-contradictory, as liberal theorists from Adam Smith and John Stuart Mill
to John Dewey, all of whom shared Hayek's epistemological stance, understood. Indeed, Karl Popper -- the thinker who inspired Hayek
and many other Mont Pelerin founders -- was himself a social democratic defender of the welfare state with decidedly socialist leanings.
As Popper explained in a 1994 interview not long before his death, his conception of individual liberty was not antithetical to principles
of economic democracy:
In a way one has to have a free market, but I also believe that to make a godhead out of the principle of the free market is
nonsense. . . . Traditionally, one of the main tasks of economics was to think of the problem of full employment. Since approximately
1965 economists have given up on that; I find it very wrong.
Clearly, too, the "open society" that Popper famously envisioned permitted ample room for the adoption of egalitarian, even redistributionist,
policies. Even as Hayek himself inveighed against the "collectivist" ideology of New Deal economic reforms, he also took pains to
distance himself from a devil-take-the-hindmost model of unregulated market competition. The challenge, as Hayek saw it, was not
merely to mobilize the resources of the economic policy elite and its intellectual fellow travelers to ratify a complacent, status
quo vision of business civilization, but to collaborate on a far more ambitious project. In a 1949 paper called "The Intellectuals
and Socialism," Hayek sketched out a visionary, classically liberal mandate that became the animating mission of the Mont Pelerin
Society:
We must be able to offer a new liberal program which appeals to the imagination. We must make the building of a free society
once more an intellectual adventure, a deed of courage. What we lack is a liberal Utopia, a program which seems neither a mere
defense of things as they are nor a diluted kind of socialism, but a truly liberal radicalism which does not spare the susceptibilities
of the mighty (including the trade unions), which is not too severely practical, and which does not confine itself to what appears
today as politically possible. We need intellectual leaders who are willing to work for an ideal, however small may be the prospects
of its early realisation. They must be men who are willing to stick to principles and to fight for their realisation, however
remote. The practical compromises they must leave to the politicians.
There is, of course, a contradiction at the heart of Hayek's vision: How is a utopian free society supposed to pursue its own
ambitious battery of universalized mandates while remaining ostensibly founded on the radically unknowable nature of all human experience?
But the real irony of Hayek's utopian longings is that they were fully realized -- albeit, of course, in nothing like the form he
envisioned. As Daniel Stedman Jones argues in his incisive study of the neoliberal rise to power, Masters of the Universe , "it is hard to think of another
'utopia' to have been as fully realized" as Hayek's came to be in the powerful neoliberal regimes taking shape in Reagan's America
and Thatcher's Britain: "The free market became the organizing principle for microeconomic reform, especially through the privatization
of state assets, nationalized industries, and public services. Trade unions were vanquished and the power of labor was diluted. Exchange
controls were abolished. The financial markets were progressively deregulated. Market mechanisms became the models for the operation
of health care." While it's true, Stedman Jones notes, that "the purity that Hayek advocated was meant as an optimistic and ideological
and intellectual tactic rather than a blueprint," it was to become that and much, much more: neoliberals went on to erect a permanent
edifice of postideological assumptions about the natural predominance of markets and the just as rigid limitations of government.
"The results," as Stedman Jones sums things up, "have been extraordinary."
Interesting Wishes
In retrospect, Mont Pelerin's guiding spirits probably should have put a lot less stock in Adam Smith's comforting policy-fable
of the Invisible Hand and heeded instead the counsel of the old Chinese curse "May all your wishes be granted." That aphorism is
also rendered in English as "May you live in interesting times," and both renderings hold with equal force in the neoliberal case.
For as the (fairly recondite and academic) proceedings of the Mont Pelerin set were gaining wider traction in the policy world, multiple
crackups of the Keynesian model of coordinated economic planning helped to create an opening for the figure who would be the new
economic order's zeitgeist on horseback: the diminutive University of Chicago monetarist-for-all-seasons, Milton Friedman.
The robustly entrepreneurial Friedman embraced a masscult platform.
When Paul Volcker -- Jimmy Carter's appointee to chair the Federal Reserve -- adopted a modified version of Friedman's theology
of the money supply to tame the two-digit inflation of the late 1970s, Friedman was suddenly the policy visionary who could do no
wrong. He soon served as an informal adviser to both the Reagan and Thatcher governments (and, less prestigiously, to the dictatorship
of Chilean general Augusto Pinochet). He reached a popular audience via a column in Newsweek , a hit series on PBS, and
several bestselling tracts of unalloyed free-market sloganeering. While demure Europeans such as Hayek distrusted the allure of popular
renown as a temptation to oversimplify their ideas and pander to the public, the robustly entrepreneurial Friedman embraced a masscult
platform -- and for the most part on the very grounds that aroused Hayek's suspicion. When he succeeded Hayek as chairman of the
Mont Pelerin group, Friedman brought it, and the broader project of neoliberal thought, into its high propaganda phase. As he cultivated
a high media profile, Friedman positioned himself at the nexus of an influential new group of transatlantic conservative think tanks
that would go on to supply much of the concrete policy agendas for the Reagan and Thatcher revolutions: the Institute of Economic
Affairs in London; the Hoover Institution at Stanford (where he would spend the balance of his career after retiring from the University
of Chicago); and the Cato Institute, the Heritage Foundation, and the American Enterprise Institute in Washington.
And as the institutional platforms for Milton Friedman's free-market gospel multiplied, the vaunted intellectual range of neoliberal
inquiry vanished into a stagnant pool of confident and absolute assertions of the market's unchallenged sovereignty as the arbiter
of all life outcomes. Friedman converted Adam Smith's classical doctrine of the invisible hand -- whereby all self-interested actions
mystically possess a benign or munificent social payoff -- into an inverted demonology of the public sphere. There is, he said in
an address honoring the two-hundredth anniversary of The
Wealth of Nations , "an invisible hand in politics that is the precise reverse of the invisible hand in the market":
In politics, men who intend only to promote the public interest, as they conceive it, are 'led by an invisible hand to promote
an end which was no part of their intention.' They become the front-men for special interests they would never knowingly serve.
They end up sacrificing the public interest to the special interest, the interest of the consumers to that of producers, of the
masses who never go to college to that of those who attend college, of the poor working-class saddled with employment taxes to
the middle class who get disproportionate benefits from social security, and so down the line.
It's hard to imagine a purer statement of the founding principles of neoliberalism as we have come wearily to know it in this
advanced stage of market collapse. It is pitched, first of all, in a counterintuitive rhetoric of worldly cleverness, a spirit of
seminar-room one-upmanship. Not only is Adam Smith right about the hidden virtues of business interests, but the same paradox operates,
by a virtually metaphysical law, to transform every action of every individual putatively serving the public interest into a parody
of his or her stated intent. Here is a hermeneutics of suspicion that far outstrips the wildest excesses of the death-of-the-author
acolytes of high postmodern critical theory. Not only is it the case that public servants will fail to advance the public's interest
out of some depressingly common shortcoming of character -- susceptibility to bribery, say, or short-sighted ideological delusion.
No, the central idea here is far more radical than that: government, by its very nature, can't serve the public interest,
because of the innately condescending and imperious character of the act of governing.
Friedman's claim owed its origins in large part to the work of George Stigler, a colleague at the University of Chicago. Stigler
helped pioneer the famous neoliberal doctrine of regulatory capture, which in turn is its own ultra-cynical academic appropriation
of what seems, at first glance, like a muckraking Marxist's indictment of the bourgeois state. Stigler and other advocates of the
so-called public choice school of economic theory maintained that regulatory agencies inevitably became hostage to the interests
of the industries they oversaw. In a 1971 journal article bearing the deceptively wan title "The Theory of Economic Regulation,"
Stigler airily dismissed reformist complaints about regulatory corruption as "exactly as appropriate as a criticism of the Great
Atlantic and Pacific Tea Company for selling groceries, or as a criticism of a politician for currying popular support." Stigler's
disdain for pandering political leaders did not, however, prevent him from summarizing his theory in a policy paper for then-president
Richard Nixon. And, like most of the leading lights of neoliberal theory, Stigler went on to win a Nobel Prize in Economics.
To be sure, the problem of industry-captive oversight is a common failing of the modern regulatory state, as any cursory glance
at the recent track records of, say, the Securities and Exchange Commission or the National Oceanic and Atmospheric Administration
will sadly demonstrate. But in promoting regulatory capture as a bedrock law of public-sector enterprise, the neoliberals performed
a neat trick; they posited corruption as a permanent condition of the regulatory state. And in so doing, they casually relegated
a fistful of traditional Progressive and New Deal reforms -- the cause of good government, upgrades in civil service appointments
and public-sector unionizing, the punishment of graft and fraud, and (not least by a long shot) the tighter regulation of corruption
in the private sector -- to the dustbin of history. Such measures, they preached, could breed only perverse and self-defeating outcomes,
and would indeed grievously multiply double-dealing in the public sector. Only by harnessing the superior explanatory power of "profit-maximizing"
in public life, Stigler argued, could the sad pieties of reformism be laid aside in favor of the sterner and more confident guidance
of the true masters of realpolitik -- the lords of the economic profession. Because "reformers will be ill-equipped to use the state
for their reforms, and victims of the pervasive use of the state's support of special groups will be helpless to protect themselves,"
Stigler reasoned, "economists should quickly establish the license to practice on the rational theory of political behavior." Thus
was born still another pet piety of the neoliberal counter-reformation: the notion that economics is "the imperial science," duly
licensed to dispense its market-pleasing wisdom in every sphere of life, from crime prevention and education policy to dating and
food preparation.
The notion that the public and private sectors both bear "defects" is elevated to a metaphysical affront to the market's sovereignty.
In the brewing theology of the modern conservative backlash, the moral hazards of the captive regulatory state were entirely the
creation of the bad actors in the public sector. The bagmen for the industries seeking to purchase regulatory favors from the agents
of the state were, after all, only acting in accord with the sainted Smithian dictates of self-interest. What fault could it be of
theirs if the state had provided them with an open market in graft, kickbacks, and influence-peddling? Indeed, Friedman, ever alert
to opportunities for rhetorical one-upmanship, floated the proposition that critics of free-market policies were foisting a bad-faith
"double standard" on the rightful workings of market self-interest. "A market 'defect,'" Friedman explained in a tribute to Smith's
Wealth of Nations , "whether through an absence of competition or external effects (equivalent, as recent literature has
made clear, to transaction costs) has been regarded as immediate justification for government intervention. But the political mechanism
has its 'defects' too. It is fallacious to compare the actual market with the ideal political structure. One should either compare
the real with the real, or the ideal with the ideal."
Got that? The notion that the public and private sectors both bear "defects" -- a completely banal supposition conceded by any
Galbraithian on the economic left -- is here elevated to a metaphysical affront to the market's sovereignty. In fact, the double
standard that Friedman calls out is nothing of the sort. No progressive-minded supporter of government intervention had staked out
the absurd position that the state is morally immaculate, or itself unsusceptible to any constructive outside intervention when its
practices are out of line with the public interest. Friedman writes as though Congress had never appointed an inspector general,
passed legislation to reform the civil service, and improved regulatory safeguards -- or as though the various federal employees'
unions had never pushed for improved hiring practices or better working conditions to upgrade their work product. And that's because,
for critics in the neoliberal camp, such external controls on the state's behavior simply cannot exist; the regulatory-capture school
of neoliberal theory already ruled out, on principle, the possibility that such interventions could yield anything other than market-distorting
outcomes. In other words, Friedman's lament about the mismatched moral standards of state and market is the phony protest of a card
cheat seeking mainly to stoke up the theatrical appeal of an already rigged game.
Who'll Stop the Rana?
You'd think that our recent bruising encounters with the devastating fallout from the deregulators' handiwork in the housing market
of the early aughts should, by rights, render Friedman's complaints about the public sector's assaults on market virtue the deadest
of dead letters. But, if anything, the ritual defense of the market's sovereign prerogative has dug in that much more intractably
as its basic coordinates have been discredited. As critics such as Dean Baker routinely point out, the stalled recovery out of the
Great Recession is almost exclusively a function of the failure of our neoliberal economic establishment to speak honestly about
a collapsed housing bubble that created a yawning shortfall in demand -- a shortfall that, amid the paralysis of credit markets in
the same recession, could be jumpstarted only by government stimulus.
All sorts of absurdities have flowed from this magisterial breakdown in comprehension. Since the neoliberal catechism holds that
stimulative government spending can never be justified in the long run, much of our debate over the recovery's prospective course
has been given over to speculative nonsense. Chief among these talismanic invocations of free-market faith is the great question
of how to placate the jittery job creators. At virtually every turn in the course of debate over how steeply to cut government spending
in this recession, our sachems of neoliberal orthodoxy have insisted that any revenue-enhancing move the government so much as contemplated
would spook business leaders into mothballing plans to expand operations and add jobs. It became the all-purpose worst-case scenario
of first resort. If health care reform passed, if federal deficits expanded, or if marginal tax rates were permitted to rise for
the vapors-prone investor class, why, then the whole prospect of a broad-based economic recovery was as good as shot.
[*]
And since neoliberalism is most notably a global -- or properly speaking, the globalizing -- ideology, such pat distortions of
economic reality are no longer confined to the Anglo-American political economy. Nor are they confined to strictly cognitive errors
in policymaking. The collapse of the Rana Plaza garment factory in Bangladesh has yielded commentary from neoliberals that might
well merit entry into the psychiatric profession's DSM-5 as textbook illustrations of moral aphasia. Here, after all, was a tragedy
that would appall even the darkest Victorian imaginings of a Charles Dickens or a Karl Marx: factory workers earning a monthly wage
of $38 crowded into a structurally unsound multistory facility built on a foundation of sand above a drained pond. Three stories
of the factory had been hastily erected on top of an already unsound existing structure just to house the fresh battalions of underpaid
workers demanded by bottom-feeding international textile contractors.
Government inspectors repeatedly demanded that the facility be shuttered on safety grounds, but the plant's proprietors ignored
their citations, reckoning that the short-term gains of maintaining peak production outweighed the negligible threat of a fine or
safety citation. Nor was there likely to be any pressure from Western bastions of enlightenment and human rights. The ceremonial
stream of Astroturf labor-and-safety-inspecting delegations from Western nations made zero note of the cracked and teetering foundations
of the Rana Plaza structure. Lorenz Berzau, the managing director of one such industry consortium (the Business Social Compliance
Initiative), primly told the Wall Street Journal that the group isn't an engineering concern -- and what's more, "it's very
important not to expect too much from the social audit" that his group and other Western overseers conduct on production facilities.
And, as Dave Jamieson and Emran Hossain reported in the Huffington Post , labor organizers have long since learned that
the auditing groups serve largely as pro forma conduits of impression management for consumer markets in the West. The auditing of
manufacturing facilities in the developing world "ends up catering more to the brands involved than the workers toiling on the line,"
Jamieson and Hossain write.
Yes, factory owners and managers well understand the permissible bounds of discourse in such Potemkin-style inquiries -- and instruct
their workforce accordingly. "What to say to the auditors always comes from the owners," a Bangladeshi line worker named Suruj Miah
told the two reporters. "The owners in most cases would warn workers not to say negative things about the factories. Workers are
left without a choice." Sumi Abedin, one of the survivors of an earlier disaster -- a factory fire in the nearby Tazreen plant that
claimed the lives of 112 workers in November 2012 -- told the Huffington Post that on the day of an international audit
team's visit, management compelled workers to wear T-shirts designating them as members of a nonexistent fire safety committee, and
had them brandishing prop fire-extinguishing equipment that plant managers had procured only for the duration of the audit.
What this disaster ought to have driven through the neoliberal consensus's collective solar plexus is something close to the polar
opposite of its cherished, evidence-proof theory of the captive regulator: a largely cosmetic global watchdog effort funded overwhelmingly
by private-sector concerns, far from delivering oversight and accountability, has incentivized fraud and negligence. And conveniently
enough, it's the race-to-the-bottom competitive forces unleashed by the global workplace that ritually sanctify all of this routine
dishonesty. In their malignant neglect of worker safety measures, local factory managers are able to cite the same market pressures
to maximize production and profit that have prevented the ornamental Western groups conducting audits of workplace safety practices
from releasing their findings to the workers at risk of being killed by the neoliberal regime of global manufacturing.
Barking Dogmas
Still, the dogmas of neoliberal market prerogative are far sturdier than a collapsing factory or a raging fire on the production
line. If the dogmatists have thrown overboard Hayek-era intellectual values like experimentation and skepticism, at least they can
stave off their inevitable extinction by shoring up Friedman-era platitudes and, from the mantles of the nation's most prestigious
universities and op-ed shops, try to pass them off as the nation's highest common sense. So former University of Chicago law professor
Richard Epstein, who helped found the influential law and economics movement that essentially transposed the shibboleths of public
choice theory into legal doctrine, has patiently explained that the just and measured response to the collapse of Rana Plaza is to
seek enforcement of preexisting building codes across the Bangladeshi private sector. Writing on the heels of the disaster, in the
Hoover Institution's web journal, Defining Ideas , Epstein takes pains to rule out the passage of any "new laws" to improve
worker-safety standards or international monitoring efforts.
In other words: Bangladeshi workers can either be more safe or starve more rapidly.
But lest even this minimal recourse to regulation sound like too heady a plunge into statist remedies, Professor Epstein also
cautions that the aggrieved and grieving workers in the Bangladeshi garment trade must not veer recklessly into unionism or other
non-market-approved modes of worker self-determination. After all, he reasons, "in order to stave a shutdown off by improving factory
safety, the savvy firm will have to raise its asking price from foreign purchasers . . . and may have to lower wages to remain competitive."
(This is another classic myth of the neoliberal faith -- the rational "trade-off" between personal safety and wages that the independent
broker makes when he or she contracts with an employer to freely exchange time and skills for wages. Only, of course, the notion
of such rational choice has been reduced to a bitter farce in workplaces such as Rana Plaza, where the basic human rights of workers
are only acknowledged theatrically, for the purposes of Potemkin auditing tours.) A more activist approach to the crisis in global
worker safety would create intolerable distress to Epstein's utopian vision of the carefully calibrated relations of global market
production. Sure, the EU might ban exports of clothes bearing the taint of labor exploitation -- but such a measure would just perversely
create "undeserved economic protection" for EU economies that are net clothing exporters (and by implication, would deprive consumers
of the sacred right to the cheapest possible attire that bullied and undercompensated labor can provide).
And do not get Epstein started on the mischief wrought by unions, which are all but certain to multiply calamities like
the Rana Plaza disaster:
It is not as though the only thing that a union does once it gains its dominant position is to advocate for the safety
of its workers, even if that item is at the top of its agenda. Unions also bargain over wages, work rules, seniority, pensions,
benefits, and other conditions of employment. In dealing with these issues, they exert a monopoly clout that can easily raise
wages and reduce productivity. In a market with many firms, they can exert that force only if they are prepared to take retaliatory
action against the firms that refuse to bow to their conditions. And they can only do so if they induce the government to take
measures to restrict the entry of non-union firms that could underbid them.
In other words: Bangladeshi workers can either be more safe or starve more rapidly. But according to Epstein, they assuredly aren't
entitled to earn a living wage without the threat of being crushed or burned to death at any given moment. The pertinent market trade-offs
simply won't permit it. Indeed, if you want to know the truth, Epstein claims, "labor agitation was . . . one of the contributing
causes to the collapse at Rana Plaza." Even the threat of union-related disruptions to established work discipline can be Kryptonite
to the beleaguered clothes barons of Bangladesh. We find ourselves confronted yet again by the torments of the heroic job creator.
Prospective labor agitation, Epstein contends, "places enormous strains on the firms that have to deliver goods to foreign purchasers
in order to remain in business. The threat of a repeat protest has led many firm bosses to step up the pace of work in the factories,
which in turn means longer shifts, more workers, more extensive use of heavy equipment in order to make up for lost production, and
stockpiling goods. That maneuver turned into a fatal insurance policy against future labor disruptions."
You see? One minute you're protesting for a wage increase or a work regime less likely to injure you, and before you know it,
you've frightened your employer into stockpiling inventory at such a frenetic pace that he kills you. Could the tonic discipline
of market preferences really be any clearer? One can only hope that future no-goodnik labor agitators will heed this tragic lesson
and recognize "foreign purchasers" as the remote, punitive, and awesome deities that the market meant them to be.
Trapped in the Moneybox
It is not all that surprising, in light of the trajectory of neoliberal ascendancy, to see rigidly orthodox market apologists
like Professor Epstein driven to such extremities to tease out a neoliberal moral from the bloody, smoldering squalor of the Rana
Plaza disaster. But the neoliberal consensus has long since transcended conventional divisions of party and ideology; the axiomatic
assertion of market dominance is a conditioned reflex among nearly all established pundits.
In a now-infamous April 24 write-up of the Bangladeshi catastrophe, Slate 's Moneybox columnist Matt Yglesias -- an eager
Democratic partisan brandishing pious Washington credentials from The American Prospect and the Center for American Progress
-- tried his own hand at an Epstein-style vindication of the market's undeviating wisdom. In a post bearing the reassuring free-to-be-you-and-me
headline "Different Places Have Different Safety Rules and That's OK," Yglesias framed his defense of the status quo regime of erratic
standards for worker safety in the hoary rhetoric of the public choice "trade-off." "While having a safe job is good," Yglesias chirped,
"money is also good."
OK, then! But note again the pinched moral universe in which employees are permitted only to have a safe job or a (barely) sustenance
income, and never both at the same time. It seems a modest social goal to demand that the exchange of labor value for a paycheck
in non-mortal conditions be accepted as an incontrovertible human right. If a rapidly globalizing market order is unable to secure
that baseline personal and financial security, its support for wildly varying models of job safety should be regarded precisely as
the problem -- and not as the taken-for-granted standard for phony assertions about what individual workers (let alone "the Bangladeshis,"
tout court) are purported to be choosing.
"While having a safe job is good," Yglesias chirped, "money is also good."
But Matt Yglesias, like many of Washington's market-besotted, faux-contrarian pundits on the notional left side of the partisan
aisle, will not be rushed into stating the morally obvious. Yes, he concedes, there could well be an abstract case here for collective
action aimed at upgrading the safety conditions of Bangladeshi workplaces -- but like Epstein, he frets that the collective-action
models of richer, Western workplaces create prohibitive costs of doing business and therefore may not fall within the ambit of choices
that workers in Bangladesh should reasonably be permitted to make. "Bangladesh is a lot poorer than the United States, and there
are very good reasons for Bangladeshi people to make different choices in this regard than Americans," Yglesias writes. "Safety rules
that are appropriate for the United States would be unnecessarily immiserating in much poorer Bangladesh."
So, not to worry, Mr. Moneybox confidently asserts. The trade-offs have yielded optimal gains in each diverse market setting,
in this, the best of all possible neoliberal worlds: "American jobs have gotten much safer over the past 20 years, and Bangladesh
has gotten a lot richer." As an authority for this sweeping claim -- which, by the way, is untrue in what Yglesias sees as the argument-clinching
"safer" U.S. end of the spectrum; Bureau of Labor Statistics data on workplace fatalities show steady increases over the past five
years, with right-to-work states such as Texas leading the grisly toll -- Yglesias cites the work of Robert Frank, a public-choice
enthusiast who, in his recent book The Darwin Economy
, seeks to lay the groundwork for a terrifying entity he calls the "libertarian welfare state."
Social media scourges wasted little time in calling out Yglesias's smug, fatuous, and opportunistic effort to advertise his market
contrarianism on the ruins of the Rana Plaza collapse. Eventually the scribe was hounded into publishing a passive-aggressive follow-up
post averring that he'd been misread and unfairly castigated by his critics. The stalwart wonk remained unbowed, however; Yglesias
wrote that he still "absolutely" stood by the conclusion that, in matters of workplace safety, it's "appropriate for rich countries
to have more stringent standards than poor ones."
Now, Matt Yglesias is not a doctrinaire neoliberal thinker -- certainly not in the sense that a disciplined propagandist like
Milton Friedman was (even though he longs, absurdly, for a revival of "Friedman-style pragmatism" to bring the economic right to
its senses). [**] But
that's precisely the point. Neoliberal orthodoxy has leached so deeply into the intellectual groundwater of the nation's political
class that it's no longer a meaningful descriptor of ideological difference. That's why Yglesias's erstwhile American Prospect
colleague Ezra Klein, over at his prestigious post atop the Washington Post 's economic blog shop, can marvel at the tough-minded
budget "seriousness" of serial Randian liar Paul Ryan -- or why the Obama White House can confidently slot offshore billionaire Penny
Pritzker as its second-term commerce secretary while it continues to mouth empty platitudes about saving the nation's middle class.
All Friedmans Now
It was Milton Friedman himself who famously announced, during his tour as an informal adviser to Richard Nixon, that "we're all
Keynesians now" -- but that oft-quoted maxim has been badly truncated from its full context. What Friedman actually said, in a 1968
interview with Time magazine, was "in one sense, we are all Keynesians now; in another, no one is a Keynesian any longer."
He went on to spell out the paradox more fully: "We all use the Keynesian language and apparatus; none of us any longer accepts the
initial Keynesian conclusions."
Now, more than four decades on, Friedman's savvy rhetorical dodge is the watchword of all mainstream macroeconomic thought. Even
putative liberals who pay lip service to the efficacy of government intervention dig in behind their own pet postulates about the
market's transcendent wisdom and beneficence -- about the need to temper the alleged excesses of the social-democratic usages of
social wealth with sterner, more austere pieties about the real-world trade-offs mandated by the lords of neoliberal market liberation.
It is an undeniable species of gibberish, one that would have likely appalled even as firm a market stoic as Hayek, who, whatever
his other intellectual handicaps, well understood the mischief wrought by a glib and self-seeking centrism. During the Mont Pelerin
group's tenth anniversary gathering in 1957, Hayek delivered a controversial speech called "Why I Am Not a Conservative." It was
designed, among other things, to distance the group from the steady accretion of self-insulated and untested right-wing bromides
that would later be the hallmark of Friedman's successor reign. Today, however, Hayek's oration sounds a much more sobering note
of prophecy for our political culture at large. "Advocates of the Middle Way with no goal of their own, conservatives have been guided
by the belief that the truth must lie somewhere between the extremes -- with the result that they have shifted position every time
a more extreme movement appeared on either wing," Hayek announced.
The one true road to intellectual serfdom, in other words, was the one that Hayek correctly saw lurking within the heart of the
neoliberal revolution.
[*] Meanwhile, the
actual state of the labor economy told a different story -- that corporate profits had spiked to record highs and that, instead of
scaling back entirely on job expenditures, employers were in fact adding hours to the average employee workweek, rightly calculating
that they could continue getting more value out of the existing workforce in an artificially slack job market with anemic, and declining,
union representation. (Once again, Dean Baker was virtually alone among economic commentators in noting this important shift.) Never
mind, as well, that when significant provisions of the allegedly business-killing health care law finally began to kick in, health
care spending in the private sector started to slow and stabilize on what looked to be a permanent and structural basis, with a projected
decline of $770 billion over the next decade. In other words, government intervention in the economy -- even via a mechanism as compromised
and graft-riddled as the 2010 Affordable Care Act -- was showing a striking capacity to even out and stabilize one of the most stubborn
and devastating inequalities in the American economy, access to affordable health care. And far from producing a steeper drag on
broader conditions for recovery, the stabilization of health care spending occurred amid a pronounced spike in health care hiring,
and indeed a long overdue (if still altogether too weak) rebound in the labor economy generally.
[**] Yglesias has
offered qualified support for the Obama stimulus plan and health care overhaul, and on this past May Day, even ventured a classically
coy Slate post where he pretended to flirt with Marxism. (Hipster-trolling headline: "Capitalism is looking pretty shabby.")
Chris Lehmann is editor in chief ofThe Bafflerand author ofRich People Things. His latest book,The Money Cult, is out now from Melville
House.
"... The U.S. has a retirement crisis on its hands, and with the far right controlling the executive branch and both houses of Congress, as well as dozens of state governments, things promise to grow immeasurably worse. ..."
"... It wasn't supposed to be this way. Past progressive presidents, notably Franklin D. Roosevelt and Lyndon B. Johnson, took important steps to make life more comfortable for aging Americans. FDR signed the Social Security Act of 1935 into law as part of his New Deal, and when LBJ passed Medicare in 1965, he established a universal health care program for those 65 and older. But the country has embraced a neoliberal economic model since the election of Ronald Reagan, and all too often, older Americans have been quick to vote for far-right Republicans antagonistic to the social safety net. ..."
"... Since then, Ryan has doubled down on his delusion that the banking sector can manage Social Security and Medicare more effectively than the federal government. Republican attacks on Medicare have become a growing concern: according to EBRI, only 38 percent of workers are confident the program will continue to provide the level of benefits it currently does. ..."
"... As 2017 winds down, Americans with health problems are still in the GOP's crosshairs -- this time because of so-called tax reform. The Tax Cuts and Jobs Act (both the House and Senate versions) includes provisions that would undermine Obamacare and cause higher health insurance premiums for older Americans. According to AARP, "Older adults ages 50-64 would be at particularly high risk under the proposal, facing average premium increases of up to $1,500 in 2019 as a result of the bill." ..."
"... Countless Americans who are unable to afford those steep premiums would lose their insurance. The CBO estimates that the Tax Cuts and Jobs Act would cause the number of uninsured under 65 to increase 4 million by 2019 and 13 million by 2027. The bill would also imperil Americans 65 and over by cutting $25 billion from Medicare . ..."
"... Analyzing W2 tax records in 2012, U.S. Census Bureau researchers Michael Gideon and Joshua Mitchell found that only 14 percent of private-sector employers in the U.S. were offering a 401(k) or similar retirement packages to their workers. That figure was thought to be closer to 40 percent, but Gideon and Mitchell discovered the actual number was considerably lower when smaller businesses were carefully analyzed, and that larger companies were more likely to offer 401(k) plans than smaller ones. ..."
"... Today, millions of Americans work in the gig economy who don't have full-time jobs or receive W2s, but instead receive 1099s for freelance work. ..."
"... The combination of stagnant wages and an increasingly high cost of living have been especially hellish for Americans who are trying to save for retirement. The United States' national minimum wage, a mere $7.25 per hour, doesn't begin to cover the cost of housing at a time when rents have soared nationwide. Never mind the astronomical prices in New York City, San Francisco or Washington, D.C. Median rents for one-bedroom apartments are as high as $1,010 per month in Atlanta, $960 per month in Baltimore, $860 per month in Jacksonville and $750 per month in Omaha, according to ApartmentList.com. ..."
"... yeah, Canada has a neoliberal infestation that is somewhere between the US and the UK. France has got one too, but it is less advanced. I'll enjoy my great healthcare, public transportation, and generous paid time off while I can. ..."
"... Europeans may scratch their heads, but they should recall their own histories and the long struggle to the universal benefits now enjoyed. Americans are far too complacent. This mildness is viewed by predators as weakness and the attacks will continue. ..."
"... Not sure if many of the readers here watch non-cable national broadcast news, but Pete Peterson and his foundation are as everpresent an advertiser as the pharma industry. Peterson is the strongest, best organized advocate for gutting social services, social security, and sending every last penny out of the tax-mule consumer's pocket toward wall street. The guy needs an equivalent counterpoint enemy. ..."
"... The social advantages that we still enjoy were fought in the streets, and on the "bricks" flowing with the participants blood. 8 hr. day; women's right to vote; ability and right for groups of laborers to organize; worker safety laws ..and so many others. There is no historical memory on how those rights were achieved. We are slowly slipping into an oligarchy greased by the idea that the physical possession of material things is all that matters. Sheeple, yes. ..."
"... Mmm, I think American voters get what they want in the end. They want their politicians because they believe the lies. 19% of Americans believe they are in the top 1% of wealth. A huge percentage of poor people believe they or their kids will (not can, but will) become wealthy. Most Americans can't find France on a map. ..."
"... I may have been gone for about thirty years, but that has only sharpened my insights into America. It's very hard to see just how flawed America is from the inside but when you step outside and have some perspective, it's frightening. ..."
"... Our government, beginning with Reagan, turned its back on promoting the general welfare. The wealthy soon learned that their best return on investment was the "purchase" of politicians willing to pass the legislation they put in their hands. Much of their investment included creating the right wing media apparatus. ..."
"... The Class War is real. It has been going on for 40 years, with the Conservative army facing virtually no resistance. Conservatives welcome Russia's help. Conservatives welcome barriers to people voting. Conservatives welcome a populace that believes lies that benefit them. Conservatives welcome the social and financial decline of the entire middle class and poor as long as it profits the rich financially, and by extension enhances their power politically. ..."
"... "Single acts of tyranny may be ascribed to the accidental opinion of the day, but a series of oppressions, begun at a distinguished period and pursued unalterably through every change of ministers, too plainly prove a deliberate, systematic plan of reducing [a people] to slavery" Thomas Jefferson. Rights of British America, 1774 ME 1:193, Papers 1:125 ..."
"... yes, my problem with the post as well, completely ignores democrat complicity the part where someone with a 26k salary will pay 16k in insurance? No they won't, the system would collapse in that case which will be fine with me. ..."
"... As your quote appears to imply, it's not a problem that can be solved by voting which, let's not forget, is nothing more than expressing an opinion. I am not sticking around just to find out if economically-crushed, opiod-, entertainment-, social media-addled Americans are actually capable of rolling out tumbrils for trips to the guillotines in the city squares. I strongly suspect not. ..."
"... This is the country where, after the banks crushed the economy in 2008, caused tens of thousands to lose their jobs, and then got huge bailouts, the people couldn't even be bothered to take their money out of the big banks and put it elsewhere. Because, you know, convenience! Expressing an opinion, or mobilizing others to express an opinion, or educating or proselytizing others about what opinion to have, is about the limit of what they are willing, or know how to do. ..."
Yves here. I imagine many readers are acutely aware of the problems outlined in this article, if not beset by them already. By
any rational standard, I should move now to a much cheaper country that will have me. I know individuals who live most of the year
in third-world and near-third world countries, but they have very cheap ways of still having a toehold in the US and not (yet or
maybe ever) getting a long-term residence visa. Ecuador is very accommodating regarding retirement visas, and a Social Security level
income goes far there, but yours truly isn't retiring any time soon. And another barrier to an international move (which recall I
did once, so I have some appreciation for what it takes), is that one ought to check out possible destinations but if you are already
time and money and energy stressed, how do you muster the resources to do that at all, let alone properly?
Aside from the potential to greatly reduce fixed costs, a second impetus for me is Medicare. I know for most people, getting on
Medicare is a big plus. I have a very rare good, very old insurance policy. When you include the cost of drug plans, Medicare is
no cheaper than what I have now, and considerably narrows my network. Moreover, I expect it to be thoroughly crapified by ten years
from now (when I am 70), which argues for getting out of Dodge sooner rather than later.
And that's before you get to another wee problem Lambert points out that I would probably not be happy in a third world or high
end second world country. But the only bargain "world city" I know of is Montreal. I'm not sure it would represent enough of an all-in
cost saving to justify the hassle of an international move and the attendant tax compliance burdens .and that charitably assumes
I could even find a way to get permanent residence. Ugh.
By Alex Henderson, who has written for the L.A. Weekly, Billboard, Spin, Creem, the Pasadena Weekly and many other publications.
Follow him on Twitter @alexvhenderson. Originally published at
Alternet
Millions can no longer afford to retire, and may never be able when the GOP passes its tax bill.
The news is not good for millions of aging Baby Boomers and Gen Xers in the United States who are moving closer to retirement
age. According to the Employee Benefit Research Institute's annual report on retirement preparedness for 2017, only 18 percent of
U.S.-based workers feel "very confident" about their
ability to retire comfortably ; Craig Copeland,
senior research associate for EBRI and the report's co-author, cited "debt, lack of a retirement plan at work, and low savings" as
"key factors" in workers' retirement-related anxiety. The Insured Retirement Institute finds a mere 23 percent of Baby Boomers and
24 percent of Gen Xers are confident that their savings will last in retirement. To make matters worse, more than 40 percent of Boomers
and over 30 percent of Gen Xers report having
no retirement savings whatsoever .
The U.S. has a
retirement crisis on its hands, and with the far right controlling the executive branch and both houses of Congress, as well
as dozens of state governments, things promise to grow immeasurably worse.
It wasn't supposed to be this way. Past progressive presidents, notably Franklin D. Roosevelt and Lyndon B. Johnson, took
important steps to make life more comfortable for aging Americans. FDR signed the Social Security Act of 1935 into law as part of
his New Deal, and when LBJ passed Medicare in 1965, he established a universal health care program for those 65 and older. But the
country has embraced a neoliberal economic model since the election of Ronald Reagan, and all too often, older Americans have been
quick to vote for far-right Republicans antagonistic to the social safety net.
In the 2016 presidential election, 55 percent of voters 50 and older
cast their ballots for Donald Trump
against just 44 percent for Hillary Clinton. (This was especially true of older white voters; 90 percent of black voters 45 and older,
as well as 67 percent of Latino voters in the same age range voted Democratic.)
Sen. Bernie Sanders' (I-VT) economic proposals may have been wildly popular with millennials, but no demographic has a greater
incentive to vote progressive than Americans facing retirement. According to research conducted by the American Association of Retired
Persons, the three greatest concerns of Americans 50 and older are Social Security, health care costs and caregiving for loved ones
-- all areas that have been targeted by Republicans.
House of Representatives Speaker Paul Ryan, a
devotee of social Darwinist Ayn Rand , has made no secret of his desire to
privatize
Social Security and replace traditional Medicare with a voucher program. Had George W. Bush had his way and turned Social Security
over to Wall Street, the economic crash of September 2008 might have left millions of senior citizens homeless.
Since then, Ryan has doubled down on his delusion that the banking sector can manage Social Security and Medicare more effectively
than the federal government. Republican attacks on Medicare have become a growing concern: according to EBRI, only 38 percent of
workers are confident the program will continue to provide the level of benefits it currently does.
The GOP's obsession with abolishing the Affordable Care Act is the most glaring example of its disdain for aging Americans. Yet
Obamacare has been a blessing for Boomers and Gen Xers who have preexisting conditions. The ACA's guaranteed issue plans make no
distinction between a 52-year-old American with diabetes, heart disease or asthma and a 52-year-old who has never had any of those
illnesses. And AARP notes that under the ACA, the uninsured rate for Americans 50 and older decreased from 15 percent in 2013 to
9 percent in 2016.
According to the Congressional Budget Office, the replacement bills Donald Trump hoped to ram through Congress this year would
have resulted in staggering
premium hikes for Americans over 50. The CBO's analysis of the American Health Care Act, one of the earlier versions of Trumpcare,
showed that a 64-year-old American making $26,500 per year could have gone from paying $1,700 annually in premiums to just over $16,000.
The CBO also estimated that the GOP's American Health Care Act would have deprived
23 million Americans of health insurance by 2026.
As 2017 winds down, Americans with health problems are still in the GOP's crosshairs -- this time because of so-called tax
reform. The Tax Cuts and Jobs Act (both the House and Senate versions) includes provisions that would undermine Obamacare and cause
higher health insurance premiums for older Americans. According to AARP, "Older adults ages 50-64 would be at
particularly high risk under the proposal, facing average premium increases of up to $1,500 in 2019 as a result of the bill."
The CBO estimates that the bill will cause premiums to spike an average of 10 percent overall, with average premiums increasing
$890 per year for a 50-year-old, $1,100 per year for a 55-year-old, $1,350 per year for a 60-year-old and $1,490 per year for a 64-year-old.
Premium increases, according to the CBO, would vary from state to state; in Maine, average premiums for a 64-year-old would rise
as much as $1,750 per year.
Countless Americans who are unable to afford those steep premiums would lose their insurance. The CBO estimates that the Tax
Cuts and Jobs Act would cause the number of uninsured under 65 to increase 4 million by 2019 and 13 million by 2027. The bill would
also imperil Americans 65 and over by
cutting $25 billion from
Medicare .
As morally reprehensible as the GOP's tax legislation may be, it is merely an acceleration of the redistribution of wealth from
the bottom to the top that America has undergone since the mid-1970s. (President Richard Nixon may have been a paranoid right-winger
with authoritarian tendencies, but he expanded Medicare and supported universal health care.) Between the decline of labor unions,
age discrimination, stagnant wages, an ever-rising cost of living, low interest rates, and a shortage of retirement accounts, millions
of Gen Xers and Baby Boomers may never be able to retire.
Traditional
defined-benefit
pensions were once a mainstay of American labor, especially among unionized workers. But according to Pew Charitable Trusts,
only
13 percent of Baby Boomers still have them (among millennials, the number falls to 6 percent). In recent decades, 401(k) plans
have become much more prominent, yet a majority of American workers don't have them either.
Analyzing W2 tax records in 2012, U.S. Census Bureau researchers Michael Gideon and Joshua Mitchell found that only 14 percent
of private-sector employers in the U.S. were offering a 401(k) or similar retirement packages to their workers. That figure was thought
to be closer to 40 percent, but Gideon and Mitchell discovered the actual number was considerably lower when smaller businesses were
carefully analyzed, and that larger companies were more likely to offer 401(k) plans than smaller ones.
Today, millions of Americans work in the gig economy who don't have full-time jobs or receive W2s, but instead receive 1099s
for freelance work. Tax-deferred SEP-IRAs were once a great, low-risk way for freelancers to save for retirement without relying
exclusively on Social Security, but times have changed since the 1980s and '90s when interest rates were considerably higher for
certificates of deposit and savings accounts. According to Bankrate.com,
average rates for one-year
CDs dropped from 11.27 percent in 1984 to 8.1 percent in 1990 to 5.22 percent in 1995 to under 1 percent in 2010, where it currently
remains.
The combination of stagnant wages and an increasingly high cost of living have been especially hellish for Americans who are
trying to save for retirement. The United States' national minimum wage, a mere $7.25 per hour, doesn't begin to cover the cost of
housing at a time when rents have soared nationwide. Never mind the astronomical prices in New York City, San Francisco or Washington,
D.C. Median rents for one-bedroom apartments
are as high as $1,010 per month in Atlanta, $960 per month in Baltimore, $860 per month in Jacksonville and $750 per month in Omaha,
according to ApartmentList.com.
That so many older Americans are renting at all is ominous in its own right. FDR made home ownership a primary goal of the New
Deal, considering it a key component of a thriving middle class. But last year, the Urban Institute found that 19 million Americans
who previously owned a home are now renting, 31 percent between the ages of 36 and 45. Laurie Goodman, one of the study's authors,
contends the Great Recession has "permanently raised the number of renters," and that the explosion of foreclosures has hit Gen Xers
especially hard.
The severity of the U.S. retirement crisis is further addressed in journalist
Jessica Bruder's new book
"Nomadland: Surviving America in the 21st Century," which follows Americans in their 50s, 60s and even 70s
living in RVs or vans , barely eking out a living doing
physically demanding, seasonal temp work from harvesting sugar beets to cleaning toilets at campgrounds. Several had high-paying
jobs before their lives were blown apart by the layoffs, foreclosures and corporate downsizing of the Great Recession. Bruder speaks
with former college professors and software professionals who now find themselves destitute, teetering on the brink of homelessness
and forced to do backbreaking work for next to nothing. Unlike the big banks, they never received a bailout.
These neo-nomads recall the transients of the 1930s, themselves victims of Wall Street's recklessness. But whereas FDR won in
a landslide in 1932 and aggressively pursued a program of progressive economic reforms, Republicans in Congress have set out to shred
what little remains of the social safety net, giving
huge tax breaks
to millionaires and billionaires . The older voters who swept Trump into office may have signed their own death warrants.
If aging Americans are going to be saved from this dystopian future, the U.S. will have to forge a new Great Society. Programs
like Social Security, Medicare and Medicaid will need to be strengthened, universal health care must become a reality and age discrimination
in the workplace will have to be punished as a civil rights violation like racial and gender-based discrimination. If not, millions
of Gen Xers and Boomers will spend their golden years scraping for pennies.
I certainly will never go back to the States for these and other reasons. I have a friend, also an American citizen, who travels
frequently back to California to visit his son. He is truly worried about getting sick or having an accident when he is there
since he knows it might bankrupt him. As he jokes, he would be happy to have another heart attack here in France since it's free!
For those of you who have traveled the world and talked to people, you probably know that most foreigners are perplexed by
America's attitude to health care and social services. The richest nation in the world thinks that health and social security
(in the larger sense of not being forced into the street) are not rights at all. Europeans scratch their heads at this.
The only solution is education and information, but they are appalling in America. America remains the most ignorant and worst
educated of the developed nations and is probably beaten by many developing nations. It is this ignorance and stupidity that gets
Americans to vote for the likes of Trump or any of the other rapacious millionaires they send to office every year.
A first step would be for Americans to insist that Congress eliminate its incredibly generous and life-long healthcare plans
for elected officials. They should have to do what the rest of Americans do. Of course, since about 95% of Congress are millionaires,
it might not be effective. But it's a start.
France has its share of problems, but boy do they pale next to the problems in America or even Canada. Life here is overall
quite pleasant and I have no desire to go back to N.A.
yeah, Canada has a neoliberal infestation that is somewhere between the US and the UK. France has got one too, but it is
less advanced. I'll enjoy my great healthcare, public transportation, and generous paid time off while I can.
The newest neoliberal effort in Canada was put forward by our
Minister of Finance (a millionaire) who is touting a bill that will get rid of defined benefit pension plans given to public
employees for so-called target benefit pension plans. The risk for target plans is taken by the recipient. Morneau's former firm
promotes target benefit pension plans and the change could benefit Morneau himself as he did not put his assets from his firm
in a blind trust. At the very least, he has a conflict of interest and should probably resign.
There is always an insidious group of wealthy people here who would like to re-make the world in their own image. I fear for
the future.
Europeans may scratch their heads, but they should recall their own histories and the long struggle to the universal benefits
now enjoyed. Americans are far too complacent. This mildness is viewed by predators as weakness and the attacks will continue.
We really should be able to turn this around, and have an obligation to ourselves and our 'nation state' , IF there were a
group of folks running on a fairness, one-for-all, all-for-one platform. That sure isn't the present two-sides-of-the-same-coin
Democraps and Republicrunts.
Not sure if many of the readers here watch non-cable national broadcast news, but Pete Peterson and his foundation are
as everpresent an advertiser as the pharma industry. Peterson is the strongest, best organized advocate for gutting social services,
social security, and sending every last penny out of the tax-mule consumer's pocket toward wall street. The guy needs an equivalent
counterpoint enemy.
Check it out, and be vigilant in dispelling his message and mission. Thanks for running this article.
Running away: the almost-haves run to another nation state, the uber-wealthy want to leave the earth, or live in their private
Idaho in the Rockies or on the Ocean. What's left for the least among us? Whatever we create? https://www.pgpf.org/
I think pathologically optimistic is a better term than complacent. Every time someone dumps on them, their response is usually
along the lines of "Don't worry, it'll get better," "Everything works itself out in the end," "maybe we'll win the lottery," my
personal favorite "things will get better, just give it time" (honestly it's been 40 years of this neoliberal bullcrap, how much
more time are we supposed to give it?), "this is just a phase" or "we can always bring it back later and better than ever." The
last one is most troubling because after 20 years of witnessing things in the public sphere disappearing, I've yet to see a single
thing return in any form at all.
I'm not sure where this annoying optimism came from but I sure wish it would go away.
The "optimism" comes from having a lack of historical memory. So many social protections that we have/had is seen as somehow
coming out of the ether benevolently given without any social struggles. The lack of historical education on this subject in particular
is appalling. Now, most would probably look for an "APP" on their "dumbphones" to solve the problem.
The social advantages that we still enjoy were fought in the streets, and on the "bricks" flowing with the participants
blood. 8 hr. day; women's right to vote; ability and right for groups of laborers to organize; worker safety laws ..and so many
others. There is no historical memory on how those rights were achieved. We are slowly slipping into an oligarchy greased by the
idea that the physical possession of material things is all that matters. Sheeple, yes.
WOW! You must have been outside the U.S. for a long time. Your comment seems to suggest we still have some kind of democracy
here. We don't get to pick which rapacious millionaires we get to vote for and it doesn't matter any way since whichever one we
pick from the sad offerings ends up with policies dictated from elsewhere.
Mmm, I think American voters get what they want in the end. They want their politicians because they believe the lies.
19% of Americans believe they are in the top 1% of wealth. A huge percentage of poor people believe they or their kids will (not
can, but will) become wealthy. Most Americans can't find France on a map.
So, yes, you DO get to pick your rapacious millionaire. You send the same scumbags back to Washington every year because it's
not him, it the other guys who are the problem. One third of Americans support Trump! Really, really support him. They think he
is Jesus, MacArthur and Adam Smith all rolled up into one.
I may have been gone for about thirty years, but that has only sharpened my insights into America. It's very hard to see
just how flawed America is from the inside but when you step outside and have some perspective, it's frightening.
The Democrat party isn't a reform party. Thinking it is so, is because of the "No Other Choice" meme. Not saying that the Republican
party works in my favor. They don't. Political reform goes deeper than reforming either main party. It means going to a European
plurality system (with its own downside). That way growing Third parties will be viable, if they have popular, as opposed to millionaire,
support. I don't see this happening, because of Citizens United, but if all you have is hope, then you have to go with that.
Had George W. Bush had his way and turned Social Security over to Wall Street, the economic crash of September 2008 might
have left millions of senior citizens homeless.
Substitute Bill Clinton for George Bush in that sentence and it works just as well. Neoliberalism is a bipartisan project.
And many of the potential and actual horrors described above arise from the price distortions of the US medical system with
Democratic acquiescence in said system making things worse. The above article reads like a DNC press release.
And finally while Washington politicians of both parties have been threatening Social Security for years that doesn't mean
its third rail status has been repealed. The populist tremors of the last election -- which have caused our elites to lose their
collective mind -- could be a mere prelude to what will happen in the event of a full scale assault on the safety net.
Substitute Obama's quest for a Grand Bargain as well.
Our government, beginning with Reagan, turned its back on promoting the general welfare. The wealthy soon learned that
their best return on investment was the "purchase" of politicians willing to pass the legislation they put in their hands. Much
of their investment included creating the right wing media apparatus.
The Class War is real. It has been going on for 40 years, with the Conservative army facing virtually no resistance. Conservatives
welcome Russia's help. Conservatives welcome barriers to people voting. Conservatives welcome a populace that believes lies that
benefit them. Conservatives welcome the social and financial decline of the entire middle class and poor as long as it profits
the rich financially, and by extension enhances their power politically.
If retirees flee our country that will certainly please the Conservatives as that will be fewer critics (enemies). Also less
need or demand for social programs.
"Single acts of tyranny may be ascribed to the accidental opinion of the day, but a series of oppressions, begun at a distinguished
period and pursued unalterably through every change of ministers, too plainly prove a deliberate, systematic plan of reducing
[a people] to slavery" Thomas Jefferson. Rights of British America, 1774 ME 1:193, Papers 1:125
yes, my problem with the post as well, completely ignores democrat complicity the part where someone with a 26k salary
will pay 16k in insurance? No they won't, the system would collapse in that case which will be fine with me.
"President Richard Nixon may have been a paranoid right-winger with authoritarian tendencies, but he expanded Medicare and
supported universal health care."
"Gimme that old time Republican!"
One of the reasons I love NC is that most political economic analysis is often more harsh on the Democrats than the Repubs
so I am a bit dismayed how this article is way too easy on Team D. How many little (and not so little) knives in the back from
Clinton and Obama? Is a knife in the chest that much worse?
This entire thread is simply heartbreaking, Americans have had their money, their freedom, their privacy, their health, and
sometimes their very lives taken away from them by the State. But the heartbreaking part is that they feel they are powerless
to do anything at all about it so are just trying to leave.
But "People should not fear the government; the government should fear the people"
As your quote appears to imply, it's not a problem that can be solved by voting which, let's not forget, is nothing more
than expressing an opinion. I am not sticking around just to find out if economically-crushed, opiod-, entertainment-, social
media-addled Americans are actually capable of rolling out tumbrils for trips to the guillotines in the city squares. I strongly
suspect not.
This is the country where, after the banks crushed the economy in 2008, caused tens of thousands to lose their jobs, and
then got huge bailouts, the people couldn't even be bothered to take their money out of the big banks and put it elsewhere. Because,
you know, convenience! Expressing an opinion, or mobilizing others to express an opinion, or educating or proselytizing others
about what opinion to have, is about the limit of what they are willing, or know how to do.
Petras did not mention that it was Carter who started neoliberalization of the USA. The subsequent election of Reagan signified
the victory of neoliberalism in this country or "quite coup". The death of New Deal from this point was just a matter
of time. Labor relations drastically changes and war on union and atomization of workforce are a norm.
Welfare state still exists but only for corporation and MIC. Otherwise the New Deal society is almost completely dismanted.
It is true that "The ' New Deal' was, at best, a de facto ' historical compromise' between the capitalist class
and the labor unions, mediated by the Democratic Party elite. It was a temporary pact in which the unions secured legal recognition
while the capitalists retained their executive prerogatives." But the key factor in this compromise was the existence of the USSR as
a threat to the power of capitalists in the USA. when the USSR disappeared cannibalistic instincts of the US elite prevailed over caution.
Notable quotes:
"... The earlier welfare 'reforms' and the current anti-welfare legislation and austerity practices have been accompanied by a series of endless imperial wars, especially in the Middle East. ..."
"... In the 1940's through the 1960's, world and regional wars (Korea and Indo-China) were combined with significant welfare program – a form of ' social imperialism' , which 'buy off' the working class while expanding the empire. However, recent decades are characterized by multiple regional wars and the reduction or elimination of welfare programs – and a massive growth in poverty, domestic insecurity and poor health. ..."
"... modern welfare state' ..."
"... Labor unions were organized as working class strikes and progressive legislation facilitated trade union organization, elections, collective bargaining rights and a steady increase in union membership. Improved work conditions, rising wages, pension plans and benefits, employer or union-provided health care and protective legislation improved the standard of living for the working class and provided for 2 generations of upward mobility. ..."
"... Social Security legislation was approved along with workers' compensation and the forty-hour workweek. Jobs were created through federal programs (WPA, CCC, etc.). Protectionist legislation facilitated the growth of domestic markets for US manufacturers. Workplace shop steward councils organized 'on the spot' job action to protect safe working conditions. ..."
"... World War II led to full employment and increases in union membership, as well as legislation restricting workers' collective bargaining rights and enforcing wage freezes. Hundreds of thousands of Americans found jobs in the war economy but a huge number were also killed or wounded in the war. ..."
"... So-called ' right to work' ..."
"... Trade union officials signed pacts with capital: higher pay for the workers and greater control of the workplace for the bosses. Trade union officials joined management in repressing rank and file movements seeking to control technological changes by reducing hours (" thirty hours work for forty hours pay ..."
"... Trade union activists, community organizers for rent control and other grassroots movements lost both the capacity and the will to advance toward large-scale structural changes of US capitalism. Living standards improved for a few decades but the capitalist class consolidated strategic control over labor relations. While unionized workers' incomes, increased, inequalities, especially in the non-union sectors began to grow. With the end of the GI bill, veterans' access to high-quality subsidized education declined ..."
"... With the election of President Carter, social welfare in the US began its long decline. The next series of regional wars were accompanied by even greater attacks on welfare via the " Volker Plan " – freezing workers' wages as a means to combat inflation. ..."
"... Guns without butter' became the legislative policy of the Carter and Reagan Administrations. The welfare programs were based on politically fragile foundations. ..."
"... The anti-labor offensive from the ' Oval Office' intensified under President Reagan with his direct intervention firing tens of thousands of striking air controllers and arresting union leaders. Under Presidents Carter, Reagan, George H.W. Bush and William Clinton cost of living adjustments failed to keep up with prices of vital goods and services. Health care inflation was astronomical. Financial deregulation led to the subordination of American industry to finance and the Wall Street banks. De-industrialization, capital flight and massive tax evasion reduced labor's share of national income. ..."
"... The capitalist class followed a trajectory of decline, recovery and ascendance. Moreover, during the earlier world depression, at the height of labor mobilization and organization, the capitalist class never faced any significant political threat over its control of the commanding heights of the economy ..."
"... Hand in bloody glove' with the US Empire, the American trade unions planted the seeds of their own destruction at home. The local capitalists in newly emerging independent nations established industries and supply chains in cooperation with US manufacturers. Attracted to these sources of low-wage, violently repressed workers, US capitalists subsequently relocated their factories overseas and turned their backs on labor at home. ..."
"... President 'Bill' Clinton ravaged Russia, Yugoslavia, Iraq and Somalia and liberated Wall Street. His regime gave birth to the prototype billionaire swindlers: Michael Milken and Bernard 'Bernie' Madoff. ..."
"... Clinton converted welfare into cheap labor 'workfare', exploiting the poorest and most vulnerable and condemning the next generations to grinding poverty. Under Clinton the prison population of mostly African Americans expanded and the breakup of families ravaged the urban communities. ..."
"... President Obama transferred 2 trillion dollars to the ten biggest bankers and swindlers on Wall Street, and another trillion to the Pentagon to pursue the Democrats version of foreign policy: from Bush's two overseas wars to Obama's seven. ..."
"... Obama was elected to two terms. His liberal Democratic Party supporters swooned over his peace and justice rhetoric while swallowing his militarist escalation into seven overseas wars as well as the foreclosure of two million American householders. Obama completely failed to honor his campaign promise to reduce wage inequality between black and white wage earners while he continued to moralize to black families about ' values' . ..."
"... Obama's war against Libya led to the killing and displacement of millions of black Libyans and workers from Sub-Saharan Africa. The smiling Nobel Peace Prize President created more desperate refugees than any previous US head of state – including millions of Africans flooding Europe. ..."
"... Forty-years of anti welfare legislation and pro-business regimes paved the golden road for the election of Donald Trump ..."
"... Trump and the Republicans are focusing on the tattered remnants of the social welfare system: Medicare, Medicaid, Social Security. The remains of FDR's New Deal and LBJ's Great Society -- are on the chopping block. ..."
"... The moribund (but well-paid) labor leadership has been notable by its absence in the ensuing collapse of the social welfare state. The liberal left Democrats embraced the platitudinous Obama/Clinton team as the 'Great Society's' gravediggers, while wailing at Trump's allies for shoving the corpse of welfare state into its grave. ..."
"... Over the past forty years the working class and the rump of what was once referred to as the ' labor movement' has contributed to the dismantling of the social welfare state, voting for ' strike-breaker' Reagan, ' workfare' Clinton, ' Wall Street crash' Bush, ' Wall Street savior' Obama and ' Trickle-down' Trump. ..."
"... Gone are the days when social welfare and profitable wars raised US living standards and transformed American trade unions into an appendage of the Democratic Party and a handmaiden of Empire. The Democratic Party rescued capitalism from its collapse in the Great Depression, incorporated labor into the war economy and the post- colonial global empire, and resurrected Wall Street from the 'Great Financial Meltdown' of the 21 st century. ..."
"... The war economy no longer fuels social welfare. The military-industrial complex has found new partners on Wall Street and among the globalized multi-national corporations. Profits rise while wages fall. Low paying compulsive labor (workfare) lopped off state transfers to the poor. Technology – IT, robotics, artificial intelligence and electronic gadgets – has created the most class polarized social system in history ..."
"... "The collaboration of liberals and unions in promoting endless wars opened the door to Trump's mirage of a stateless, tax-less, ruling class." ..."
"... Corporations [now] are welfare recipients and the bigger they are, the more handouts they suck up ..."
"... Corporations not only continuously seek monopolies (with the aid and sanction of the state) but they steadily fine tune the welfare state for their benefit. In fact, in reality, welfare for prols and peasants wouldn't exist if it didn't act as a money conduit and ultimate profit center for the big money grubbers. ..."
"... The article is dismal reading, and evidence of the failings of the "unregulated" society, where the anything goes as long as you are wealthy. ..."
"... Like the Pentagon. Americans still don't readily call this welfare, but they will eventually. Defense profiteers are unions in a sense, you're either in their club Or you're in the service industry that surrounds it. ..."
The American welfare state was created in 1935 and continued to develop through 1973. Since then, over a prolonged period, the
capitalist class has been steadily dismantling the entire welfare state.
Between the mid 1970's to the present (2017) labor laws, welfare rights and benefits and the construction of and subsidies for
affordable housing have been gutted. ' Workfare' (under President 'Bill' Clinton) ended welfare for the poor and displaced
workers. Meanwhile the shift to regressive taxation and the steadily declining real wages have increased corporate profits to an
astronomical degree.
What started as incremental reversals during the 1990's under Clinton has snowballed over the last two decades decimating welfare
legislation and institutions.
The earlier welfare 'reforms' and the current anti-welfare legislation and austerity practices have been accompanied by a
series of endless imperial wars, especially in the Middle East.
In the 1940's through the 1960's, world and regional wars (Korea and Indo-China) were combined with significant welfare program
– a form of ' social imperialism' , which 'buy off' the working class while expanding the empire. However, recent decades are characterized
by multiple regional wars and the reduction or elimination of welfare programs – and a massive growth in poverty, domestic insecurity
and poor health.
New Deals and Big Wars
The 1930's witnessed the advent of social legislation and action, which laid the foundations of what is called the ' modern
welfare state' .
Labor unions were organized as working class strikes and progressive legislation facilitated trade union organization, elections,
collective bargaining rights and a steady increase in union membership. Improved work conditions, rising wages, pension plans and
benefits, employer or union-provided health care and protective legislation improved the standard of living for the working class
and provided for 2 generations of upward mobility.
Social Security legislation was approved along with workers' compensation and the forty-hour workweek. Jobs were created through
federal programs (WPA, CCC, etc.). Protectionist legislation facilitated the growth of domestic markets for US manufacturers. Workplace
shop steward councils organized 'on the spot' job action to protect safe working conditions.
World War II led to full employment and increases in union membership, as well as legislation restricting workers' collective
bargaining rights and enforcing wage freezes. Hundreds of thousands of Americans found jobs in the war economy but a huge number
were also killed or wounded in the war.
The post-war period witnessed a contradictory process: wages and salaries increased while legislation curtailed union rights via
the Taft Hartley Act and the McCarthyist purge of leftwing trade union activists. So-called ' right to work' laws effectively
outlawed unionization mostly in southern states, which drove industries to relocate to the anti-union states.
Welfare reforms, in the form of the GI bill, provided educational opportunities for working class and rural veterans, while federal-subsidized
low interest mortgages encourage home-ownership, especially for veterans.
The New Deal created concrete improvements but did not consolidate labor influence at any level. Capitalists and management still
retained control over capital, the workplace and plant location of production.
Trade union officials signed pacts with capital: higher pay for the workers and greater control of the workplace for the bosses.
Trade union officials joined management in repressing rank and file movements seeking to control technological changes by reducing
hours (" thirty hours work for forty hours pay "). Dissident local unions were seized and gutted by the trade union bosses
– sometimes through violence.
Trade union activists, community organizers for rent control and other grassroots movements lost both the capacity and the
will to advance toward large-scale structural changes of US capitalism. Living standards improved for a few decades but the capitalist
class consolidated strategic control over labor relations. While unionized workers' incomes, increased, inequalities, especially
in the non-union sectors began to grow. With the end of the GI bill, veterans' access to high-quality subsidized education declined.
While a new wave of social welfare legislation and programs began in the 1960's and early 1970's it was no longer a result of
a mass trade union or workers' "class struggle". Moreover, trade union collaboration with the capitalist regional war policies led
to the killing and maiming of hundreds of thousands of workers in two wars – the Korean and Vietnamese wars.
Much of social legislation resulted from the civil and welfare rights movements. While specific programs were helpful, none of
them addressed structural racism and poverty.
The Last Wave of Social Welfarism
The 1960'a witnessed the greatest racial war in modern US history: Mass movements in the South and North rocked state and federal
governments, while advancing the cause of civil, social and political rights. Millions of black citizens, joined by white activists
and, in many cases, led by African American Viet Nam War veterans, confronted the state. At the same time, millions of students and
young workers, threatened by military conscription, challenged the military and social order.
Energized by mass movements, a new wave of social welfare legislation was launched by the federal government to pacify mass opposition
among blacks, students, community organizers and middle class Americans. Despite this mass popular movement, the union bosses at
the AFL-CIO openly supported the war, police repression and the military, or at best, were passive impotent spectators of the drama
unfolding in the nation's streets. Dissident union members and activists were the exception, as many had multiple identities to represent:
African American, Hispanic, draft resisters, etc.
Under Presidents Lyndon Johnson and Richard Nixon, Medicare, Medicaid, OSHA, the EPA and multiple poverty programs were implemented.
A national health program, expanding Medicare for all Americans, was introduced by President Nixon and sabotaged by the Kennedy Democrats
and the AFL-CIO. Overall, social and economic inequalities diminished during this period.
The Vietnam War ended in defeat for the American militarist empire. This coincided with the beginning of the end of social welfare
as we knew it – as the bill for militarism placed even greater demands on the public treasury.
With the election of President Carter, social welfare in the US began its long decline. The next series of regional wars were
accompanied by even greater attacks on welfare via the " Volker Plan " – freezing workers' wages as a means to combat inflation.
Guns without butter' became the legislative policy of the Carter and Reagan Administrations. The welfare programs were based
on politically fragile foundations.
The Debacle of Welfarism
Private sector trade union membership declined from a post-world war peak of 30% falling to 12% in the 1990's. Today it has sunk
to 7%. Capitalists embarked on a massive program of closing thousands of factories in the unionized North which were then relocated
to the non-unionized low wage southern states and then overseas to Mexico and Asia. Millions of stable jobs disappeared.
Following the election of 'Jimmy Carter', neither Democratic nor Republican Presidents felt any need to support labor organizations.
On the contrary, they facilitated contracts dictated by management, which reduced wages, job security, benefits and social welfare.
The anti-labor offensive from the ' Oval Office' intensified under President Reagan with his direct intervention
firing tens of thousands of striking air controllers and arresting union leaders. Under Presidents Carter, Reagan, George H.W. Bush
and William Clinton cost of living adjustments failed to keep up with prices of vital goods and services. Health care inflation was
astronomical. Financial deregulation led to the subordination of American industry to finance and the Wall Street banks. De-industrialization,
capital flight and massive tax evasion reduced labor's share of national income.
The capitalist class followed a trajectory of decline, recovery and ascendance. Moreover, during the earlier world depression,
at the height of labor mobilization and organization, the capitalist class never faced any significant political threat over its
control of the commanding heights of the economy.
The ' New Deal' was, at best, a de facto ' historical compromise' between the capitalist class and the labor
unions, mediated by the Democratic Party elite. It was a temporary pact in which the unions secured legal recognition while the capitalists
retained their executive prerogatives.
The Second World War secured the economic recovery for capital and subordinated labor through a federally mandated no strike
production agreement. There were a few notable exceptions: The coal miners' union organized strikes in strategic sectors and some
leftist leaders and organizers encouraged slow-downs, work to rule and other in-plant actions when employers ran roughshod with special
brutality over the workers. The recovery of capital was the prelude to a post-war offensive against independent labor-based political
organizations. The quality of labor organization declined even as the quantity of trade union membership increased.
Labor union officials consolidated internal control in collaboration with the capitalist elite. Capitalist class-labor official
collaboration was extended overseas with strategic consequences.
The post-war corporate alliance between the state and capital led to a global offensive – the replacement of European-Japanese
colonial control and exploitation by US business and bankers. Imperialism was later 're-branded' as ' globalization' . It
pried open markets, secured cheap docile labor and pillaged resources for US manufacturers and importers.
US labor unions played a major role by sabotaging militant unions abroad in cooperation with the US security apparatus: They worked
to coopt and bribe nationalist and leftist labor leaders and supported police-state regime repression and assassination of recalcitrant
militants.
' Hand in bloody glove' with the US Empire, the American trade unions planted the seeds of their own destruction at home.
The local capitalists in newly emerging independent nations established industries and supply chains in cooperation with US manufacturers.
Attracted to these sources of low-wage, violently repressed workers, US capitalists subsequently relocated their factories overseas
and turned their backs on labor at home.
Labor union officials had laid the groundwork for the demise of stable jobs and social benefits for American workers. Their collaboration
increased the rate of capitalist profit and overall power in the political system. Their complicity in the brutal purges of militants,
activists and leftist union members and leaders at home and abroad put an end to labor's capacity to sustain and expand the welfare
state.
Trade unions in the US did not use their collaboration with empire in its bloody regional wars to win social benefits for the
rank and file workers. The time of social-imperialism, where workers within the empire benefited from imperialism's pillage, was
over. Gains in social welfare henceforth could result only from mass struggles led by the urban poor, especially Afro-Americans,
community-based working poor and militant youth organizers.
The last significant social welfare reforms were implemented in the early 1970's – coinciding with the end of the Vietnam War
(and victory for the Vietnamese people) and ended with the absorption of the urban and anti-war movements into the Democratic Party.
Henceforward the US corporate state advanced through the overseas expansion of the multi-national corporations and via large-scale,
non-unionized production at home.
The technological changes of this period did not benefit labor. The belief, common in the 1950's, that science and technology
would increase leisure, decrease work and improve living standards for the working class, was shattered. Instead technological changes
displaced well-paid industrial labor while increasing the number of mind-numbing, poorly paid, and politically impotent jobs in the
so-called 'service sector' – a rapidly growing section of unorganized and vulnerable workers – especially including women and minorities.
Labor union membership declined precipitously. The demise of the USSR and China's turn to capitalism had a dual effect: It eliminated
collectivist (socialist) pressure for social welfare and opened their labor markets with cheap, disciplined workers for foreign manufacturers.
Labor as a political force disappeared on every count. The US Federal Reserve and President 'Bill' Clinton deregulated financial
capital leading to a frenzy of speculation. Congress wrote laws, which permitted overseas tax evasion – especially in Caribbean tax
havens. Regional free-trade agreements, like NAFTA, spurred the relocation of jobs abroad. De-industrialization accompanied the decline
of wages, living standards and social benefits for millions of American workers.
The New Abolitionists: Trillionaires
The New Deal, the Great Society, trade unions, and the anti-war and urban movements were in retreat and primed for abolition.
Wars without welfare (or guns without butter) replaced earlier 'social imperialism' with a huge growth of poverty and homelessness.
Domestic labor was now exploited to finance overseas wars not vice versa. The fruits of imperial plunder were not shared.
As the working and middle classes drifted downward, they were used up, abandoned and deceived on all sides – especially by the
Democratic Party. They elected militarists and demagogues as their new presidents.
President 'Bill' Clinton ravaged Russia, Yugoslavia, Iraq and Somalia and liberated Wall Street. His regime gave birth to the
prototype billionaire swindlers: Michael Milken and Bernard 'Bernie' Madoff.
Clinton converted welfare into cheap labor 'workfare', exploiting the poorest and most vulnerable and condemning the next
generations to grinding poverty. Under Clinton the prison population of mostly African Americans expanded and the breakup of families
ravaged the urban communities.
Provoked by an act of terrorism (9/11) President G.W. Bush Jr. launched the 'endless' wars in Afghanistan and Iraq and deepened
the police state (Patriot Act). Wages for American workers and profits for American capitalist moved in opposite directions.
The Great Financial Crash of 2008-2011 shook the paper economy to its roots and led to the greatest shakedown of any national
treasury in history directed by the First Black American President. Trillions of public wealth were funneled into the criminal banks
on Wall Street – which were ' just too big to fail .' Millions of American workers and homeowners, however, were '
just
too small to matter' .
The Age of Demagogues
President Obama transferred 2 trillion dollars to the ten biggest bankers and swindlers on Wall Street, and another trillion
to the Pentagon to pursue the Democrats version of foreign policy: from Bush's two overseas wars to Obama's seven.
Obama's electoral 'donor-owners' stashed away two trillion dollars in overseas tax havens and looked forward to global free trade
pacts – pushed by the eloquent African American President.
Obama was elected to two terms. His liberal Democratic Party supporters swooned over his peace and justice rhetoric while
swallowing his militarist escalation into seven overseas wars as well as the foreclosure of two million American householders. Obama
completely failed to honor his campaign promise to reduce wage inequality between black and white wage earners while he continued
to moralize to black families about ' values' .
Obama's war against Libya led to the killing and displacement of millions of black Libyans and workers from Sub-Saharan Africa.
The smiling Nobel Peace Prize President created more desperate refugees than any previous US head of state – including millions of
Africans flooding Europe.
'Obamacare' , his imitation of an earlier Republican governor's health plan, was formulated by the private corporate
health industry (private insurance, Big Pharma and the for-profit hospitals), to mandate enrollment and ensure triple digit profits
with double digit increases in premiums. By the 2016 Presidential elections, ' Obama-care' was opposed by a 45%-43% margin
of the American people. Obama's propagandists could not show any improvement of life expectancy or decrease in infant and maternal
mortality as a result of his 'health care reform'. Indeed the opposite occurred among the marginalized working class in the old 'rust
belt' and in the rural areas. This failure to show any significant health improvement for the masses of Americans is in stark contrast
to LBJ's Medicare program of the 1960's, which continues to receive massive popular support.
Forty-years of anti welfare legislation and pro-business regimes paved the golden road for the election of Donald Trump
Trump and the Republicans are focusing on the tattered remnants of the social welfare system: Medicare, Medicaid, Social Security.
The remains of FDR's New Deal and LBJ's Great Society -- are on the chopping block.
The moribund (but well-paid) labor leadership has been notable by its absence in the ensuing collapse of the social welfare
state. The liberal left Democrats embraced the platitudinous Obama/Clinton team as the 'Great Society's' gravediggers, while wailing
at Trump's allies for shoving the corpse of welfare state into its grave.
Conclusion
Over the past forty years the working class and the rump of what was once referred to as the ' labor movement' has contributed
to the dismantling of the social welfare state, voting for ' strike-breaker' Reagan, ' workfare' Clinton, ' Wall Street crash' Bush,
' Wall Street savior' Obama and ' Trickle-down' Trump.
Gone are the days when social welfare and profitable wars raised US living standards and transformed American trade unions
into an appendage of the Democratic Party and a handmaiden of Empire. The Democratic Party rescued capitalism from its collapse in
the Great Depression, incorporated labor into the war economy and the post- colonial global empire, and resurrected Wall Street from
the 'Great Financial Meltdown' of the 21 st century.
The war economy no longer fuels social welfare. The military-industrial complex has found new partners on Wall Street and
among the globalized multi-national corporations. Profits rise while wages fall. Low paying compulsive labor (workfare) lopped off
state transfers to the poor. Technology – IT, robotics, artificial intelligence and electronic gadgets – has created the most class
polarized social system in history. The first trillionaire and multi-billionaire tax evaders rose on the backs of a miserable
standing army of tens of millions of low-wage workers, stripped of rights and representation. State subsidies eliminate virtually
all risk to capital. The end of social welfare coerced labor (including young mother with children) to seek insecure low-income employment
while slashing education and health – cementing the feet of generations into poverty. Regional wars abroad have depleted the Treasury
and robbed the country of productive investment. Economic imperialism exports profits, reversing the historic relation of the past.
Labor is left without compass or direction; it flails in all directions and falls deeper in the web of deception and demagogy.
To escape from Reagan and the strike breakers, labor embraced the cheap-labor predator Clinton; black and white workers united to
elect Obama who expelled millions of immigrant workers, pursued 7 wars, abandoned black workers and enriched the already filthy rich.
Deception and demagogy of the labor-
If the welfare state in America was abolished, major American cities would burn to the ground. Anarchy would ensue, it would be
magnitudes bigger than anything that happened in Ferguson or Baltimore. It would likely be simultaneous.
I think that's one of the only situations where preppers would actually live out what they've been prepping for (except for
a natural disaster).
I've been thinking about this a little over the past few years after seeing the race riots. What exactly is the line between
our society being civilized and breaking out into chaos. It's probably a lot thinner than most people think.
I don't know who said it but someone long ago said something along the lines of, "Democracy can only work until the people
figure out they can vote for themselves generous benefits from the public treasury." We are definitely in this situation today.
I wonder how long it can last.
While I agree with Petras's intent (notwithstanding several exaggerations and unnecessary conflations with, for example, racism),
I don't agree so much with the method he proposes. I don't mind welfare and unions to a certain extent, but they are not going
to save us unless there is full employment and large corporations that can afford to pay an all-union workforce. That happened
during WW2, as only wartime demand and those pesky wage freezes solved the Depression, regardless of all the public works programs;
while the postwar era benefited from the US becoming the world's creditor, meaning that capital could expand while labor participation
did as well.
From then on, it is quite hard to achieve the same success after outsourcing and mechanization have happened all over the world.
Both of these phenomena not only create displaced workers, but also displaced industries, meaning that it makes more sense to
develop individual workfare (and even then, do it well, not the shoddy way it is done now) rather than giving away checks that
probably will not be cashed for entrepreneurial purposes, and rather than giving away money to corrupt unions who depend on trusts
to be able to pay for their benefits, while raising the cost of hiring that only encourages more outsourcing.
The amount of welfare given is not necessarily the main problem, the problem is doing it right for the people who truly need
it, and efficiently – that is, with the least amount of waste lost between the chain of distribution, which should reach intended
targets and not moochers.
Which inevitably means a sound tax system that targets unearned wealth and (to a lesser degree) foreign competition instead
of national production, coupled with strict, yet devolved and simple government processes that benefit both business and individuals
tired of bureaucracy, while keeping budgets balanced. Best of both worlds, and no military-industrial complex needed to drive
up demand.
The American welfare state was created in 1935 and continued to develop through 1973. Since then, over a prolonged period,
the capitalist class has been steadily dismantling the entire welfare state.
Wrong wrong wrong.
Corporations [now] are welfare recipients and the bigger they are, the more handouts they suck up, and welfare for
them started before 1935. In fact, it started in America before there was a USA. I do not have time to elaborate, but what were
the various companies such as the British East India Company and the Dutch West India Companies but state pampered, welfare based
entities? ~200 years ago, Herbert Spencer, if memory serves, pointed out that the British East India Company couldn't make a profit
even with all the special, government granted favors showered upon it.
Corporations not only continuously seek monopolies (with the aid and sanction of the state) but they steadily fine tune
the welfare state for their benefit. In fact, in reality, welfare for prols and peasants wouldn't exist if it didn't act as a
money conduit and ultimate profit center for the big money grubbers.
Well, the author kind of nails it. I remember from my childhood in the 50-60 ties in Scandinavia that the US was the ultimate
goal in welfare. The country where you could make a good living with your two hands, get you kids to UNI, have a house, a telly
ECT. It was not consumerism, it was the American dream, a chicken in every pot; we chewed imported American gum and dreamed.
In the 70-80 ties Scandinavia had a tremendous social and economic growth, EQUALLY distributed, an immense leap forward. In the
middle of the 80 ties we were equal to the US in standards of living.
Since we have not looked at the US, unless in pity, as we have seen the decline of the general income, social wealth fall way
behind our own.
The average US workers income has not increased since 90 figures adjusted for inflation. The Scandinavian workers income in the
same period has almost quadrupled. And so has our societies.
The article is dismal reading, and evidence of the failings of the "unregulated" society, where the anything goes as long
as you are wealthy.
Between the mid 1970's to the present (2017) labor laws, welfare rights and benefits and the construction of and subsidies
for affordable housing have been gutted. 'Workfare' (under President 'Bill' Clinton) ended welfare for the poor and displaced
workers. Meanwhile the shift to regressive taxation and the steadily declining real wages have increased corporate profits
to an astronomical degree.
What does Hollywood "elite" JAP and wannabe hack-stand-up-comic Sarah Silverman think about the class struggle and problems
facing destitute Americans? "Qu'ils mangent de la bagels!", source:
https://en.wikipedia.org/wiki/Let_them_eat_cake
Like the Pentagon. Americans still don't readily call this welfare, but they will eventually. Defense profiteers are unions
in a sense, you're either in their club Or you're in the service industry that surrounds it.
As other commenters have pointed out, it's Petras curious choice of words that sometimes don't make too much sense. We can probably
blame the maleable English language for that, but here it's too obvious. If you don't define a union, people might assume you're
only talking about a bunch of meat cutters at Safeway.
The welfare state is alive and well for corporate America. Unions are still here – but they are defined by access and secrecy,
you're either in the club or not.
The war on unions was successful first by co-option but mostly by the media. But what kind of analysis leaves out the role
of the media in the American transformation? The success is mind blowing.
America has barely literate (white) middle aged males trained to spout incoherent Calvinistic weirdness: unabased hatred for
the poor (or whoever they're told to hate) and a glorification of hedge fund managers as they get laid off, fired and foreclosed
on, with a side of opiates.
There is hardly anything more tragic then seeing a web filled with progressives (management consultants) dedicated to disempowering,
disabling and deligitimizing victims by claiming they are victims of biology, disease or a lack of an education rather than a
system that issues violence while portending (with the best media money can buy) that they claim the higher ground.
""Democracy can only work until the people figure out they can vote for themselves generous benefits from the public
treasury." We are definitely in this situation today."
Quite right: the 0.01% have worked it out & US democracy is a Theatre for the masses.
I don't know who said it but someone long ago said something along the lines of, "Democracy can only work until the people
figure out they can vote for themselves generous benefits from the public treasury."
Some French aristocrat put it as, once the gates to the treasury have been breached, they can only be closed again with gunpowder.
Anyone recognize the author?
The author doesn't get it. What we have now IS the welfare state in an intensely diverse society. We have more transfer spending
than ever before and Obamacare represents another huge entitlement.
Intellectuals continue to fantasize about the US becoming a Big Sweden, but Sweden has only been successful insofar as it has
been a modest nation-state populated by ethnic Swedes. Intense diversity in a huge country with only the remnants of federalism
results in massive non-consensual decision-making, fragmentation, increased inequality, and corruption.
The welfare state is alive and well for corporate America. Unions are still here – but they are defined by access and
secrecy, you're either in the club or not.
They are largely defined as Doctors, Lawyers, and University Professors who teach the first two. Of course they are not called
unions. Access is via credentialing and licensing. Good Day
Bernie Sanders, speaking on behalf of the MIC's welfare bird: "It is the airplane of the United States Air Force, Navy, and
of NATO."
Elizabeth Warren, referring to Mossad's Estes Rockets: "The Israeli military has the right to attack Palestinian hospitals
and schools in self defense"
Barack Obama, yukking it up with pop stars: "Two words for you: predator drones. You will never see it coming."
It's not the agitprop that confuses the sheep, it's whose blowhole it's coming out of (labled D or R for convenience) that
gets them to bare their teeth and speak of poo.
What came first, the credentialing or the idea that it is a necessary part of education? It certainly isn't an accurate indication
of what people know or their general intelligence – although that myth has flourished. Good afternoon.
For an interesting projection of what might happen in total civilizational collapse, I recommend the Dies the Fire series of
novels by SM Stirling.
It has a science-fictiony setup in that all high-energy system (gunpowder, electricity, explosives, internal combustion, even
high-energy steam engines) suddenly stop working. But I think it does a good job of extrapolating what would happen if suddenly
the cities did not have food, water, power, etc.
Spoiler alert: It ain't pretty. Those who dream of a world without guns have not really thought it through.
It has been pointed out repeatedly that Sweden does very well relative to the USA. It has also been noted that people of Swedish
ancestry in the USA do pretty well also. In fact considerably better than Swedes in Sweden
Neoliberalism as "Die-now economics." "Embodiment into lower class" or "the representation as a member the lower
class" if often fatal and upper mobility mobility is artificially limited (despite all MSM hype it is lower then in Europe). So just
being a member of lower class noticeably and negatively affects your life expectancy and other social metrics. Job insecurity
is the hazard reserved for lower and lower middle classes destructivly effect both physical and mental health. Too much stress
is not good for humans. Neoliberalism with its manta of competition uber alles and atomization of the workforce is a real killer.
also the fact that such article was published and the comments below is a clear sign that the days of neoliberalism are numbered.
It should go.
Notable quotes:
"... In our new book , we draw on an extensive body of scientific literature to assess the health effects of three decades of neoliberal policies. Focusing on the social determinants of health -- the conditions of life and work that make it relatively easy for some people to lead long and healthy lives, while it is all but impossible for others -- we show that there are four interconnected neoliberal epidemics: austerity, obesity, stress, and inequality. They are neoliberal because they are associated with or worsened by neoliberal policies. ..."
"... Neoliberalism operates through labor markets to undermine health not only by way of the financial consequences of unemployment, inadequate employment, or low wages, as important as these are, but also through chronic exposure to stress that 'gets under your skin' by way of multiple mechanisms. Quite simply, the effects of chronic insecurity wear people out over the life course in biologically measurable ways . ..."
"... Oh, and "beyond class" because for social beings embodiment involves "social production; social consumption; and social reproduction." In the most reductive definition of class -- the one I used in my crude 1% + 10% + 90% formulation -- class is determined by wage work (or not), hence is a part of production (of capital), not social consumption (eating, etc.) or social reproduction (children, families, household work ). So, even if class in our political economy is the driver, it's not everything. ..."
"... "Neoliberalism sees competition as the defining characteristic of human relations. It redefines citizens as consumers, whose democratic choices are best exercised by buying and selling, a process that rewards merit and punishes inefficiency. It maintains that "the market" delivers benefits that could never be achieved by planning. ..."
"... Attempts to limit competition are treated as inimical to liberty. Tax and regulation should be minimised, public services should be privatised. The organisation of labour and collective bargaining by trade unions are portrayed as market distortions that impede the formation of a natural hierarchy of winners and losers. Inequality is recast as virtuous: a reward for utility and a generator of wealth, which trickles down to enrich everyone. Efforts to create a more equal society are both counterproductive and morally corrosive. The market ensures that everyone gets what they deserve." ..."
"... As opposed to being champions of "self-actualization/identity" and "absolute relativism", I always got the impression that they were both offering stark warnings about diving too deeply into the self, vis-a-vis, identity. As if, they both understood the terrifying world that it could/would create, devoid of common cause, community, and ultimately empathy. A world where "we" are not possible because we have all become "I". ..."
"... Wonks like Yglesias love to mock working class concerns as "economic anxiety," which is at once belittling (it's all about f-e-e-e-lings ..."
"... "we have measurable health outcomes from political choices" So True!!! ..."
In our new book
, we draw on an extensive body of scientific literature to assess the health effects of three decades of neoliberal policies.
Focusing on the social determinants
of health -- the conditions of life and work that make it relatively easy for some people to lead long and healthy lives,
while it is all but impossible for others -- we show that there are four interconnected neoliberal epidemics: austerity, obesity,
stress, and inequality. They are neoliberal because they are associated with or worsened by neoliberal policies. They are
epidemics because they are observable on such an international scale and have been transmitted so quickly across time and space
that if they were biological contagions they would be seen as of epidemic proportions.
(The Case-Deaton study provides an obvious fifth: Deaths of despair. There are doubtless others.)
Case in point for
one of the unluckier members of the 90%:
On the morning of 25 August 2014 a young New Jersey woman, Maria Fernandes, died from inhaling gasoline fumes as she slept
in her 13-year-old car. She often slept in the car while shuttling between her three, low-wage jobs in food service; she kept
a can of gasoline in the car because she often slept with the engine running, and was worried about running out of gasoline. Apparently,
the can accidentally tipped over and the vapours from spilled gasoline cost her life. Ms Fernandes was one of the more obvious
casualties of the zero-hours culture of stress and insecurity that pervades the contemporary labour market under neoliberalism.
And Schrecker and Bambra conclude:
Neoliberalism operates through labor markets to undermine health not only by way of the financial consequences of unemployment,
inadequate employment, or low wages, as important as these are, but also through chronic exposure to stress that 'gets under your
skin' by way of multiple mechanisms. Quite simply, the effects of chronic insecurity wear people out over the life course in
biologically measurable ways .
... ... ...
Oh, and "beyond class" because for social beings embodiment involves "social production; social consumption; and social reproduction."
In the most reductive definition of class -- the one I used in my crude 1% + 10% + 90% formulation -- class is determined by wage
work (or not), hence is a part of production (of capital), not social consumption (eating, etc.) or social reproduction (children,
families, household work ). So, even if class in our political economy is the driver, it's not everything.
L.S. reminiscent of Ernst Becker's, "The Structure of Evil" – "Escape from Evil"? (..not to indicate good vs. evil dichotomy)
A great amount of perspective must be agreed upon to achieve "change" intoned. Divide and conquer are complicit, as noted .otherwise
(and as indicated by U.S. economic history) change arrives only when all have lost all and can therefore agree begin again.
There is however, Naomi Klein perspective, "Shock Doctrine", whereby influence contributes to destabilization, plan in hand
leading to agenda driven ("neoliberal"=market fundamentalism) outcome, not at all spontaneous in nature:
"Neoliberalism sees competition as the defining characteristic of human relations. It redefines citizens as consumers,
whose democratic choices are best exercised by buying and selling, a process that rewards merit and punishes inefficiency. It
maintains that "the market" delivers benefits that could never be achieved by planning.
Attempts to limit competition are treated as inimical to liberty. Tax and regulation should be minimised, public services
should be privatised. The organisation of labour and collective bargaining by trade unions are portrayed as market distortions
that impede the formation of a natural hierarchy of winners and losers. Inequality is recast as virtuous: a reward for utility
and a generator of wealth, which trickles down to enrich everyone. Efforts to create a more equal society are both counterproductive
and morally corrosive. The market ensures that everyone gets what they deserve."
On Case-Deason: Sounds like home. I keep the scanner on(local news) ems and fire only since 2006(sheriff got a homeland security
grant). The incidence of suicide, overdose and "intoxication psychosis" are markedly increased in the last 10+ years out here
in the wilderness(5K folks in whole county, last I looked). Our local economy went into near depression after the late 90's farm
bill killed the peanut program then 911 meant no hunting season that year(and it's been noticeably less busy ever since) then
drought and the real estate crash(we had 30 some realtors at peak..old family land being sold off, mostly). So the local Bourgeoisie
have had less money to spend, which "trickles down" onto the rest of us.:less construction, less eating out even at the cheap
places, less buying of gas, and on and on means fewer employees are needed, thus fewer jobs. To boot, there is a habit among many
employers out here of not paying attention to labor laws(it is Texas ) the last minwage rise took 2 years to filter out here,
and one must scrutinize one's pay stub to ensure that the boss isn't getting squirrelly with overtime and witholding.
Geography plays into all this, too 100 miles to any largish city.
I'm not well versed in Foucault or Lacan but I've read some of both and in reading between the lines of their writing (the
phantom philosophy?) I saw a very different message than that often delivered by post-modern theorists.
As opposed to being champions of "self-actualization/identity" and "absolute relativism", I always got the impression that
they were both offering stark warnings about diving too deeply into the self, vis-a-vis, identity. As if, they both understood
the terrifying world that it could/would create, devoid of common cause, community, and ultimately empathy. A world where "we"
are not possible because we have all become "I".
Considering what both their philosophies claimed, if identity is a lie, and the subject is always generated relative to the
other, then how the hell can there be any security or well being in self-actualization? It is like trying to hit a target that
does not exist.
All potentially oppressive cultural categorizations are examples of this (black, latino, gay, trans, etc.). If the identity
is a moving target, both to the oppressor and the oppressed, then how can it ever be a singular source of political action? You
can't hit what isn't there. This is not to say that these groups (in whatever determined category) are not oppressed, just that
formulating political action based strictly on the identity (often as an essential category) is impossible because it does not
actually exist materially. It is an amalgamation of subjects who's subjectivity is always relative to some other whether ally
or oppressor. Only the manifestations of oppression on bodies (as brought up in Lambert's post) can be utilized as metrics for
political action.
I thought of a couple of other advantages of the "embodiment" paradigm:
Better Framing. Wonks like Yglesias love to mock working class concerns as "economic anxiety," which is
at once belittling (it's all about f-e-e-e-lings *) and disempowering (solutions are individual, like therapy or drugs).
Embodiment by contrast insists that neoliberalism (the neoliberal labor market (class warfare)) has real, material, physiological
effects that can be measured and tracked, as with any epidemic.
I acknowledge what you are saying. However, I have learned that when one is in the midst of a pessimistic scenario, one tends
to develop tunnel vision and assume that the future will be like the present, only worse. Though I despise psychology as a science,
this is a very psychological phenomenon. Granting what you say about Trump and the false optimism he generated, I voted for him
not because I hated Trump less, but that I hated Hillary more.
Nevertheless, notwithstanding, in spite of all this, I do have a certain optimism about the American people, as a rayon de
lumière in a gloomy prospect.
keep the blinders on, even better yet wear the virtual reality goggles of MAGA while the country is living off a never ending
fraud.
Every part of the us government is a fraud, the money is a fraud, wall street is a fraud, 99% of the food you eat is kosher
fraud and you pension is fraud as the money is not there to allow you to collect your pension yet most people are paying dearly
for their pension and the money goes to either israel or the profiteers of the war machine.
They are toast. The leaks are not going to stop. Once the baby boom generation dies off completely the next generations will
clean up their mess. The baby boom can't see past their own prosperity. But everyone else is ready for reform.
(trying to throw a little optimism into the mix)
Think about it.. when you look at the electoral map by county HRC was thoroughly crushed. Is DJT a SomaSalesMan aka Mega Psyop..
who the fuck knows. The awakening is happen Chinese water torture style.
This is a lot like being a Gold perma Bull. We want to come into the forums every day and write about how hopeless the situation
is (a lot like what I do here everyday).
Just remember this.. Even Mao's wife had to stand trial for crimes against the populace. In 20 years the babyboomers will be
out of the way and we can get onto bigger and better things.
the biggest problems come from the millennial who grew up with bullshit, baby boomers lived threw a lot of american bullshit
and they are the ones like PCR are warning the youngs that america's days are numbered . even Deagel.com predict that the us population
in 2025 will dwindle from 325 million to only 55 millions, where do you think the 275 million will go? nuclear war will take care
of them.
the corruption is so great that every single new weapon does not work and all these weapons are built at a great cost. The
bulk of the left activists are millennials , the same with the super left, yet on the right the millennials are busy filing their
nails, surfing and buying bitcoin for a quick profit.
I am Canadian, I am an outsider and see clearly as I am not part of the system, I see a country where the leaders convinced
the population that they are exceptional but the people took it as a compliment, it was meant to fool them into a sense of being
above the rest of the world, yet most americans do not know the capital of florida, california, mississippi, alabama yet they
are in their own country.
This exceptionalism is preventing them from understanding the danger they are in.
For the first time I see a consensus on zerohedge that PCR is 100% right and the posters are worried what will become of america
if israel is left with a huge hold on all us presidents and on the political infrastructure of the us and they agree with PCR
on the list of propaganda the us have been telling the citizens to keep them distracted from knowing that their days are numbered
when the Russians might attack thinking america wants to annihilate them.
We are in the late stages of Pax Judaica. They, through their money magic,usury,fiat printing,and the bought/paid for/bribed/blackmailed
sycophants,rule almost the whole world.The West entirely.
They have push so much,on all aspects of the society,that the recoil is going to be devastating.We started seeing this with
the Jerusalem f*ck up.
US can not be saved at this point. It is at the Event Horizon already. I don't know what will be left of it: a few 4th world
small countries ,where warlords kill each other? Americans love violence.
I absolutely sure IS...RA...EL is NOT going to survive. Neither Saudi Barbaria. Especially after this last blunder.
Will they go into the dustbin of history gracefully,without destroying the whole world in the process?
I don't think so,they are psychopaths.They do not like to lose or to be exposed for what they really are.
PCR makes a valid point. The Russians are patient ,balanced, intelligent people,but if they sense they are dealing with irrational
ones ,they will not take a chance. The Russians have already said that US is not agreement capable, a great insult in their view.
In America everybody has their labels (businessman, Libertarian, Democrat, Republican) so they can all fight with each other
better. The country is so Balkanized that cannot function as a whole any more. I guess that was the plan all along.
Peace and truth are not welcome at the Whitehouse which should be painted BLOOD RED. Politicians are a greedy bloodthirsty
criminals, That includes Trump. If you want to save the world from WW3 which we are watching incubate. ALL current crop of politicians
have to be thrown out of government. YOU NEED A BLOODY REVOLUTION and throw these criminals into maximum security with the killers
and molestors to do as they wish with them.
Without public revolt we'll just keep seeing, hearing and swallowing fake news after fake news brain wash and send our children
to kill the innocent in WAR after WAR.
Don't forget the biggest lie. Even bigger than 9/11. That in the mid 2000s millions of deadbeats all decided to buy houses
that they could not afford. What a joke of a country. Land of the fee. Home of the Slave.
"What Mueller is doing is so corrupt that he really should be arrested and renditioned to Egypt." Best line of the whole piece.
Love it. We are not, however, "Walking Into Armageddon" Rather, we are "Slouching into the Apocolypse"
Trump handing Jerusalem to israel is just the first step in setting up the rise of Israel and the fall of America. It is a
symbolic transfer of power. All is left is world war 3 and the financial system collapse.
PCR is way off this time. Flynn is acting as bait, and the swamp critters went for it. Trump and Bannon are playing the ol'
rope-a-dope rather well. After the Dems and Deep Staters wear themselves out throwing all of these ineffective punches they will
take them out.
You might be on to something...as the Dems and Deep State reveal themselves for what they really are, it makes it easier for
Trump to go in for the kill....! They are getting more and more careless and their corruption and stupidity revealed more and
more each day. I hope Trump be able to pave the way to cleaning up America and getting it back on its feet....we will see...!
"THE" controllers of the puppet politicans, bankers and world leaders "WANT YOU TO LIVE IN FEAR." All the reasons stated by
PCR are valid but not one of them is a reason to go out and get drunk tomorrow. Either you believe in your own fate and the actions
which control the fate which you harvest "OR YOU DON'T."
Why would I worry about things I have zero control over, especially when I "KNOW" "THEY" live off of that fear? I will live
every moment of my life in the joy and happiness which is this blessing to be alive "AND" will live in fear of no one. If you
live your life this way they lose and you get to appreciate a gift which is greater then any material object on the planet.
The worse which they can do when you decide to refuse to live in fear of "THEM" is to take your life which they have no power
to do either.. Put up your middle finger to all of them, smile and move on and enjoy what time you have here to make it the best
you can do.
Choose not to live in fear of them..
We all fear death and question our place in the universe. The artist's job is not to succumb to despair, but to find an antidote
for the emptiness of existence. ... Ernest Hemingway
Two interesting pieces of news out of moonofalabama.org
First b says the real buyer of the fake $450M fake DaVinci is MbS, the KSA crown prince. Second, MbS just fired his Zino-friendly,
Jared-friendly foreign minister.
The rumors early on were that Flynn knew who all the pedophiles were in Washington, wanted to go after them "AND" would not
back down. Trump's VP was included on that list and played a part in the decision to move him out of the public eye and into the
position he currently occupies behind the scenes.
Interestingly enough it was supposedly this stupid explanation of him not telling Pence about his meeting with the Russian
Ambassador which was the excuse as to why he had to be removed. On face value, think about how ridiculous this is. A decorated
General who answers to the President withheld information on a meeting which is fairly typical military procedure.
"IT'S CALLED THE NEED TO KNOW." HELLO....
Trump could have simply stated that Flynn was not under orders from Pence and was acting under a protocol common to members
within the Military but not common to politicians. If Pence wanted to know anything about what people within my Administration
are doing he is always welcome to discuss it with me. PERIOD...
THE ENTIRE EXCUSE IS TOTAL BS AND THE WEAKNESS OF THAT EXCUSE GIVES ME SUSPICION TO BELIEVE THAT THE ORIGIONAL RUMORS WERE
ACCURATE.
The Fascist Tom Cotton with his hair on fire leading the charge. Metaphorically leading the charge to our own destruction.
He would never get himself involved in any genuine battle charge. Russia is not my enemy or adversary.
Has Iraq, Libya, Syria, Iran, Russia, China, North Korea ever done any physical harm to the USA ? No ... How about the reverse
? Mmm, it appears the only ones that have attacked the USA are Saudi Arabia and Israel. But America does not attack them, instead
it only attacks the countries that have never attacked the USA.
Is that wierd or what ?, it's almost as if there is another agenda at play.
You mean the Islam that allows grandads to marry and abuse 10 year olds. Husbands to beat up their wives, hang gay teenage
boys off cranes in public squares. Whip 12 year old girls in public for wearing western tight jeans ( underneath their hijab may
I add). Satan would approve of this sadistic protocol.
it's amazing to see so much naivety here. People seems to believe that America/Russia are bad/good. But people it's not just
imperialism anymore it's globalism. Therefore it's not about interests of countries but rather the ones of oligarchs. And oligarchs
interests are international, so why would they be interested in Armageddon? Earth belong to them, why would they want to damage
their wealth so much? i think we'll see busyness as usual - small wars, removing obstacles for transnationals, concentration of
wealth and power and social engineering on global scale.
Naive, ha ha! Take a look at Libya, the War Crimes & Genocide, overseen by the US & Vassals and talk about Good/Bad, NO SON,
we're talking Class A EVIL here, and in the other Regime Change Neocon Playbook. How many Foreign Bases/Entanglements are Russia
involved in, outside of Russia? In their Only ME base/port in Syria the US tried to fuck them over. Now Russia has half a dozen
strategic Bases ( including a meeting of minds with Egypt, Qatar, Libya, Turkey, Sudan ) to eliminate DAESH/al-CIAd'uh (US Constructs).
Lastly, Only through Threat and Intimidation can the US keep these Vassals on board. Have you not noticed how the Geopolitical
Landmark is changing with Sovereigns flocking far and wide to Moscow, for an ALTERNATIVE to the Vassal Prisoner Status offered
up by Vichy DC.
Naive Son? Z/Hedgers will call out Russia if they deviate from the Path of Righteousness.
No Russia didn't displace, maim, murder, tens of millions of citizens in the ME, VICHY DC did.
I read somewhere that the Ukrainian Army has changed its rule book to allow soldiers to wear beards. The inference from this
is that those ISIS members rescued by the Americans are being shipped to Ukraine to fight with the Nazis against those in the
East who object to Kiev's desire to genocide ethnic Russians. It would appear that, not content with arming Nazis and putting
them in Ukraine's Government, the US is now putting an armed ISIS into Eastern Europe. Does anybody have more detail?
Airlifting them from Der el Zor ( and inevitable destruction at the hands of Syrian/Hezbollah Bravehearts ) onto the demarcation
line in the Donbass? Good luck with that Chestnut! What are the Jihadi's wearing, 3 SETS OF THERMALS? Let's put it this way, no
matter how many Jihadi proxy scum/Advisers they airlift into Donbass there will be 10 times more FOREIGN FREEDOM-FIGHTERS (ok
mainly Russian, but from Everywhere ) ready to join that gig, me included.
How convenient that Trump gets to play the Good Guy, supposedly fingers tied at every turn by Deep State, preventing him from
reaching out.
There's not a shred of evidence that he's intervened to mend relations with Russia and if there is can someone shed light on
this?
First up he has a filthy Neocon POS in Nikki Haley in the UN, the Only one on the Security Council who's a War Hawk (including
the Palestinian fiasco ).
Did he intervene in the ILLEGAL eviction of Russian Diplomatic Quarters? Has he worked diligently with China & Russia to resolve
DPRK or contributed to the Neocon war-drum beat with more bluster? Has he increased or defused tension in the ME by withdrawing
US Troops or has he added to Obama's clandestine proxy jihadi recruitment programme by sending moar ADVISERS?
They say Tillerson's on his way out, to be replaced by a Neocon war-hawk in Mike Pompeo who's current charge of al-CIAd'uh
covert operations is a continuation of the Obama failings.
Unlike Obama ( one of his few credits in 8 years ) Trump's Encouraging Netanyahu's Deviancy?
I've read over at the Saker/Other that behind the scenes Vichy DC could step up the supply of WMD's/Advisers to Kiev.
The US Coalition Forces in Syria (minus the US, lol), like their Iraqi counterparts (the Kurds in the main ) are at least talking
with Russia/Government to thwart, long-term US Military Bases on Syrian soil. Obviously the US is unhappy about this with their
Partition ambitions.
Pope John Paul II, Gorbachev, and Reagan, together, ended the Cold War. HW Bush is the architect on how the USA kept its military
industrial complex intact. The USA no longer had an existential threat, and no longer a reason to maintain a multiple tens of
billions annual defense budget. So HW Bush picked an enemy and started a global war, that continues to this day. The British military
map makers, redrew much of the middle east, after WWI.
The state of Israel was already in the works, long before the story of the holocaust, some 20 years later. Anyway, Sadaam Hussein,
leader of Iraq, and US ally, spoke to the Bush administration about Kuwait; and taking back for Iraq, what Sadaam believed the
British map makers took away in 1917. Saddam was fooled, and the Bush administration had a reason to keep the military industrial
complex intact. The globalism/new world order, that US and EU government officials speak of, is simply another way of saying that
no one has any civil liberties and everyone is being monitored.
This dangerous game was effective and working for quite a while. A great deal of wealth and power transferred to a select few.
The strategy went sideways when Mr Putin said enough is enough, in roughly 2011.
Now, freedom fighters have joined Mr Putin, such as Edward Snowden, Julian Assange, Barrett Brown, Manning, Glenn Greenwald,
Sarah Carter,and many other, to restore freedom and honor back to the people of the world by shining light on all of the corruption.
It will take Trump and Sessions some time to restore trust and to root out the corruption.
The bottom line is that there are good people out there, who will never let this criminal behavior and corruption to be hidden
from the unwashed masses.
America is just looking for an excuse to send their young kids to war to get shot to pieces and get mentally fucked up so the
drug industry can profit, the war industry can profit, the banks can profit...
"... The U.S. has a retirement crisis on its hands, and with the far right controlling the executive branch and both houses of Congress, as well as dozens of state governments, things promise to grow immeasurably worse. ..."
"... It wasn't supposed to be this way. Past progressive presidents, notably Franklin D. Roosevelt and Lyndon B. Johnson, took important steps to make life more comfortable for aging Americans. FDR signed the Social Security Act of 1935 into law as part of his New Deal, and when LBJ passed Medicare in 1965, he established a universal health care program for those 65 and older. But the country has embraced a neoliberal economic model since the election of Ronald Reagan, and all too often, older Americans have been quick to vote for far-right Republicans antagonistic to the social safety net. ..."
"... Since then, Ryan has doubled down on his delusion that the banking sector can manage Social Security and Medicare more effectively than the federal government. Republican attacks on Medicare have become a growing concern: according to EBRI, only 38 percent of workers are confident the program will continue to provide the level of benefits it currently does. ..."
"... As 2017 winds down, Americans with health problems are still in the GOP's crosshairs -- this time because of so-called tax reform. The Tax Cuts and Jobs Act (both the House and Senate versions) includes provisions that would undermine Obamacare and cause higher health insurance premiums for older Americans. According to AARP, "Older adults ages 50-64 would be at particularly high risk under the proposal, facing average premium increases of up to $1,500 in 2019 as a result of the bill." ..."
"... Countless Americans who are unable to afford those steep premiums would lose their insurance. The CBO estimates that the Tax Cuts and Jobs Act would cause the number of uninsured under 65 to increase 4 million by 2019 and 13 million by 2027. The bill would also imperil Americans 65 and over by cutting $25 billion from Medicare . ..."
"... Analyzing W2 tax records in 2012, U.S. Census Bureau researchers Michael Gideon and Joshua Mitchell found that only 14 percent of private-sector employers in the U.S. were offering a 401(k) or similar retirement packages to their workers. That figure was thought to be closer to 40 percent, but Gideon and Mitchell discovered the actual number was considerably lower when smaller businesses were carefully analyzed, and that larger companies were more likely to offer 401(k) plans than smaller ones. ..."
"... Today, millions of Americans work in the gig economy who don't have full-time jobs or receive W2s, but instead receive 1099s for freelance work. ..."
"... The combination of stagnant wages and an increasingly high cost of living have been especially hellish for Americans who are trying to save for retirement. The United States' national minimum wage, a mere $7.25 per hour, doesn't begin to cover the cost of housing at a time when rents have soared nationwide. Never mind the astronomical prices in New York City, San Francisco or Washington, D.C. Median rents for one-bedroom apartments are as high as $1,010 per month in Atlanta, $960 per month in Baltimore, $860 per month in Jacksonville and $750 per month in Omaha, according to ApartmentList.com. ..."
"... yeah, Canada has a neoliberal infestation that is somewhere between the US and the UK. France has got one too, but it is less advanced. I'll enjoy my great healthcare, public transportation, and generous paid time off while I can. ..."
"... Europeans may scratch their heads, but they should recall their own histories and the long struggle to the universal benefits now enjoyed. Americans are far too complacent. This mildness is viewed by predators as weakness and the attacks will continue. ..."
"... Not sure if many of the readers here watch non-cable national broadcast news, but Pete Peterson and his foundation are as everpresent an advertiser as the pharma industry. Peterson is the strongest, best organized advocate for gutting social services, social security, and sending every last penny out of the tax-mule consumer's pocket toward wall street. The guy needs an equivalent counterpoint enemy. ..."
"... The social advantages that we still enjoy were fought in the streets, and on the "bricks" flowing with the participants blood. 8 hr. day; women's right to vote; ability and right for groups of laborers to organize; worker safety laws ..and so many others. There is no historical memory on how those rights were achieved. We are slowly slipping into an oligarchy greased by the idea that the physical possession of material things is all that matters. Sheeple, yes. ..."
"... Mmm, I think American voters get what they want in the end. They want their politicians because they believe the lies. 19% of Americans believe they are in the top 1% of wealth. A huge percentage of poor people believe they or their kids will (not can, but will) become wealthy. Most Americans can't find France on a map. ..."
"... I may have been gone for about thirty years, but that has only sharpened my insights into America. It's very hard to see just how flawed America is from the inside but when you step outside and have some perspective, it's frightening. ..."
"... Our government, beginning with Reagan, turned its back on promoting the general welfare. The wealthy soon learned that their best return on investment was the "purchase" of politicians willing to pass the legislation they put in their hands. Much of their investment included creating the right wing media apparatus. ..."
"... The Class War is real. It has been going on for 40 years, with the Conservative army facing virtually no resistance. Conservatives welcome Russia's help. Conservatives welcome barriers to people voting. Conservatives welcome a populace that believes lies that benefit them. Conservatives welcome the social and financial decline of the entire middle class and poor as long as it profits the rich financially, and by extension enhances their power politically. ..."
"... "Single acts of tyranny may be ascribed to the accidental opinion of the day, but a series of oppressions, begun at a distinguished period and pursued unalterably through every change of ministers, too plainly prove a deliberate, systematic plan of reducing [a people] to slavery" Thomas Jefferson. Rights of British America, 1774 ME 1:193, Papers 1:125 ..."
"... yes, my problem with the post as well, completely ignores democrat complicity the part where someone with a 26k salary will pay 16k in insurance? No they won't, the system would collapse in that case which will be fine with me. ..."
"... As your quote appears to imply, it's not a problem that can be solved by voting which, let's not forget, is nothing more than expressing an opinion. I am not sticking around just to find out if economically-crushed, opiod-, entertainment-, social media-addled Americans are actually capable of rolling out tumbrils for trips to the guillotines in the city squares. I strongly suspect not. ..."
"... This is the country where, after the banks crushed the economy in 2008, caused tens of thousands to lose their jobs, and then got huge bailouts, the people couldn't even be bothered to take their money out of the big banks and put it elsewhere. Because, you know, convenience! Expressing an opinion, or mobilizing others to express an opinion, or educating or proselytizing others about what opinion to have, is about the limit of what they are willing, or know how to do. ..."
Yves here. I imagine many readers are acutely aware of the problems outlined in this article, if not beset by them already. By
any rational standard, I should move now to a much cheaper country that will have me. I know individuals who live most of the year
in third-world and near-third world countries, but they have very cheap ways of still having a toehold in the US and not (yet or
maybe ever) getting a long-term residence visa. Ecuador is very accommodating regarding retirement visas, and a Social Security level
income goes far there, but yours truly isn't retiring any time soon. And another barrier to an international move (which recall I
did once, so I have some appreciation for what it takes), is that one ought to check out possible destinations but if you are already
time and money and energy stressed, how do you muster the resources to do that at all, let alone properly?
Aside from the potential to greatly reduce fixed costs, a second impetus for me is Medicare. I know for most people, getting on
Medicare is a big plus. I have a very rare good, very old insurance policy. When you include the cost of drug plans, Medicare is
no cheaper than what I have now, and considerably narrows my network. Moreover, I expect it to be thoroughly crapified by ten years
from now (when I am 70), which argues for getting out of Dodge sooner rather than later.
And that's before you get to another wee problem Lambert points out that I would probably not be happy in a third world or high
end second world country. But the only bargain "world city" I know of is Montreal. I'm not sure it would represent enough of an all-in
cost saving to justify the hassle of an international move and the attendant tax compliance burdens .and that charitably assumes
I could even find a way to get permanent residence. Ugh.
By Alex Henderson, who has written for the L.A. Weekly, Billboard, Spin, Creem, the Pasadena Weekly and many other publications.
Follow him on Twitter @alexvhenderson. Originally published at
Alternet
Millions can no longer afford to retire, and may never be able when the GOP passes its tax bill.
The news is not good for millions of aging Baby Boomers and Gen Xers in the United States who are moving closer to retirement
age. According to the Employee Benefit Research Institute's annual report on retirement preparedness for 2017, only 18 percent of
U.S.-based workers feel "very confident" about their
ability to retire comfortably ; Craig Copeland,
senior research associate for EBRI and the report's co-author, cited "debt, lack of a retirement plan at work, and low savings" as
"key factors" in workers' retirement-related anxiety. The Insured Retirement Institute finds a mere 23 percent of Baby Boomers and
24 percent of Gen Xers are confident that their savings will last in retirement. To make matters worse, more than 40 percent of Boomers
and over 30 percent of Gen Xers report having
no retirement savings whatsoever .
The U.S. has a
retirement crisis on its hands, and with the far right controlling the executive branch and both houses of Congress, as well
as dozens of state governments, things promise to grow immeasurably worse.
It wasn't supposed to be this way. Past progressive presidents, notably Franklin D. Roosevelt and Lyndon B. Johnson, took
important steps to make life more comfortable for aging Americans. FDR signed the Social Security Act of 1935 into law as part of
his New Deal, and when LBJ passed Medicare in 1965, he established a universal health care program for those 65 and older. But the
country has embraced a neoliberal economic model since the election of Ronald Reagan, and all too often, older Americans have been
quick to vote for far-right Republicans antagonistic to the social safety net.
In the 2016 presidential election, 55 percent of voters 50 and older
cast their ballots for Donald Trump
against just 44 percent for Hillary Clinton. (This was especially true of older white voters; 90 percent of black voters 45 and older,
as well as 67 percent of Latino voters in the same age range voted Democratic.)
Sen. Bernie Sanders' (I-VT) economic proposals may have been wildly popular with millennials, but no demographic has a greater
incentive to vote progressive than Americans facing retirement. According to research conducted by the American Association of Retired
Persons, the three greatest concerns of Americans 50 and older are Social Security, health care costs and caregiving for loved ones
-- all areas that have been targeted by Republicans.
House of Representatives Speaker Paul Ryan, a
devotee of social Darwinist Ayn Rand , has made no secret of his desire to
privatize
Social Security and replace traditional Medicare with a voucher program. Had George W. Bush had his way and turned Social Security
over to Wall Street, the economic crash of September 2008 might have left millions of senior citizens homeless.
Since then, Ryan has doubled down on his delusion that the banking sector can manage Social Security and Medicare more effectively
than the federal government. Republican attacks on Medicare have become a growing concern: according to EBRI, only 38 percent of
workers are confident the program will continue to provide the level of benefits it currently does.
The GOP's obsession with abolishing the Affordable Care Act is the most glaring example of its disdain for aging Americans. Yet
Obamacare has been a blessing for Boomers and Gen Xers who have preexisting conditions. The ACA's guaranteed issue plans make no
distinction between a 52-year-old American with diabetes, heart disease or asthma and a 52-year-old who has never had any of those
illnesses. And AARP notes that under the ACA, the uninsured rate for Americans 50 and older decreased from 15 percent in 2013 to
9 percent in 2016.
According to the Congressional Budget Office, the replacement bills Donald Trump hoped to ram through Congress this year would
have resulted in staggering
premium hikes for Americans over 50. The CBO's analysis of the American Health Care Act, one of the earlier versions of Trumpcare,
showed that a 64-year-old American making $26,500 per year could have gone from paying $1,700 annually in premiums to just over $16,000.
The CBO also estimated that the GOP's American Health Care Act would have deprived
23 million Americans of health insurance by 2026.
As 2017 winds down, Americans with health problems are still in the GOP's crosshairs -- this time because of so-called tax
reform. The Tax Cuts and Jobs Act (both the House and Senate versions) includes provisions that would undermine Obamacare and cause
higher health insurance premiums for older Americans. According to AARP, "Older adults ages 50-64 would be at
particularly high risk under the proposal, facing average premium increases of up to $1,500 in 2019 as a result of the bill."
The CBO estimates that the bill will cause premiums to spike an average of 10 percent overall, with average premiums increasing
$890 per year for a 50-year-old, $1,100 per year for a 55-year-old, $1,350 per year for a 60-year-old and $1,490 per year for a 64-year-old.
Premium increases, according to the CBO, would vary from state to state; in Maine, average premiums for a 64-year-old would rise
as much as $1,750 per year.
Countless Americans who are unable to afford those steep premiums would lose their insurance. The CBO estimates that the Tax
Cuts and Jobs Act would cause the number of uninsured under 65 to increase 4 million by 2019 and 13 million by 2027. The bill would
also imperil Americans 65 and over by
cutting $25 billion from
Medicare .
As morally reprehensible as the GOP's tax legislation may be, it is merely an acceleration of the redistribution of wealth from
the bottom to the top that America has undergone since the mid-1970s. (President Richard Nixon may have been a paranoid right-winger
with authoritarian tendencies, but he expanded Medicare and supported universal health care.) Between the decline of labor unions,
age discrimination, stagnant wages, an ever-rising cost of living, low interest rates, and a shortage of retirement accounts, millions
of Gen Xers and Baby Boomers may never be able to retire.
Traditional
defined-benefit
pensions were once a mainstay of American labor, especially among unionized workers. But according to Pew Charitable Trusts,
only
13 percent of Baby Boomers still have them (among millennials, the number falls to 6 percent). In recent decades, 401(k) plans
have become much more prominent, yet a majority of American workers don't have them either.
Analyzing W2 tax records in 2012, U.S. Census Bureau researchers Michael Gideon and Joshua Mitchell found that only 14 percent
of private-sector employers in the U.S. were offering a 401(k) or similar retirement packages to their workers. That figure was thought
to be closer to 40 percent, but Gideon and Mitchell discovered the actual number was considerably lower when smaller businesses were
carefully analyzed, and that larger companies were more likely to offer 401(k) plans than smaller ones.
Today, millions of Americans work in the gig economy who don't have full-time jobs or receive W2s, but instead receive 1099s
for freelance work. Tax-deferred SEP-IRAs were once a great, low-risk way for freelancers to save for retirement without relying
exclusively on Social Security, but times have changed since the 1980s and '90s when interest rates were considerably higher for
certificates of deposit and savings accounts. According to Bankrate.com,
average rates for one-year
CDs dropped from 11.27 percent in 1984 to 8.1 percent in 1990 to 5.22 percent in 1995 to under 1 percent in 2010, where it currently
remains.
The combination of stagnant wages and an increasingly high cost of living have been especially hellish for Americans who are
trying to save for retirement. The United States' national minimum wage, a mere $7.25 per hour, doesn't begin to cover the cost of
housing at a time when rents have soared nationwide. Never mind the astronomical prices in New York City, San Francisco or Washington,
D.C. Median rents for one-bedroom apartments
are as high as $1,010 per month in Atlanta, $960 per month in Baltimore, $860 per month in Jacksonville and $750 per month in Omaha,
according to ApartmentList.com.
That so many older Americans are renting at all is ominous in its own right. FDR made home ownership a primary goal of the New
Deal, considering it a key component of a thriving middle class. But last year, the Urban Institute found that 19 million Americans
who previously owned a home are now renting, 31 percent between the ages of 36 and 45. Laurie Goodman, one of the study's authors,
contends the Great Recession has "permanently raised the number of renters," and that the explosion of foreclosures has hit Gen Xers
especially hard.
The severity of the U.S. retirement crisis is further addressed in journalist
Jessica Bruder's new book
"Nomadland: Surviving America in the 21st Century," which follows Americans in their 50s, 60s and even 70s
living in RVs or vans , barely eking out a living doing
physically demanding, seasonal temp work from harvesting sugar beets to cleaning toilets at campgrounds. Several had high-paying
jobs before their lives were blown apart by the layoffs, foreclosures and corporate downsizing of the Great Recession. Bruder speaks
with former college professors and software professionals who now find themselves destitute, teetering on the brink of homelessness
and forced to do backbreaking work for next to nothing. Unlike the big banks, they never received a bailout.
These neo-nomads recall the transients of the 1930s, themselves victims of Wall Street's recklessness. But whereas FDR won in
a landslide in 1932 and aggressively pursued a program of progressive economic reforms, Republicans in Congress have set out to shred
what little remains of the social safety net, giving
huge tax breaks
to millionaires and billionaires . The older voters who swept Trump into office may have signed their own death warrants.
If aging Americans are going to be saved from this dystopian future, the U.S. will have to forge a new Great Society. Programs
like Social Security, Medicare and Medicaid will need to be strengthened, universal health care must become a reality and age discrimination
in the workplace will have to be punished as a civil rights violation like racial and gender-based discrimination. If not, millions
of Gen Xers and Boomers will spend their golden years scraping for pennies.
I certainly will never go back to the States for these and other reasons. I have a friend, also an American citizen, who travels
frequently back to California to visit his son. He is truly worried about getting sick or having an accident when he is there
since he knows it might bankrupt him. As he jokes, he would be happy to have another heart attack here in France since it's free!
For those of you who have traveled the world and talked to people, you probably know that most foreigners are perplexed by
America's attitude to health care and social services. The richest nation in the world thinks that health and social security
(in the larger sense of not being forced into the street) are not rights at all. Europeans scratch their heads at this.
The only solution is education and information, but they are appalling in America. America remains the most ignorant and worst
educated of the developed nations and is probably beaten by many developing nations. It is this ignorance and stupidity that gets
Americans to vote for the likes of Trump or any of the other rapacious millionaires they send to office every year.
A first step would be for Americans to insist that Congress eliminate its incredibly generous and life-long healthcare plans
for elected officials. They should have to do what the rest of Americans do. Of course, since about 95% of Congress are millionaires,
it might not be effective. But it's a start.
France has its share of problems, but boy do they pale next to the problems in America or even Canada. Life here is overall
quite pleasant and I have no desire to go back to N.A.
yeah, Canada has a neoliberal infestation that is somewhere between the US and the UK. France has got one too, but it is
less advanced. I'll enjoy my great healthcare, public transportation, and generous paid time off while I can.
The newest neoliberal effort in Canada was put forward by our
Minister of Finance (a millionaire) who is touting a bill that will get rid of defined benefit pension plans given to public
employees for so-called target benefit pension plans. The risk for target plans is taken by the recipient. Morneau's former firm
promotes target benefit pension plans and the change could benefit Morneau himself as he did not put his assets from his firm
in a blind trust. At the very least, he has a conflict of interest and should probably resign.
There is always an insidious group of wealthy people here who would like to re-make the world in their own image. I fear for
the future.
Europeans may scratch their heads, but they should recall their own histories and the long struggle to the universal benefits
now enjoyed. Americans are far too complacent. This mildness is viewed by predators as weakness and the attacks will continue.
We really should be able to turn this around, and have an obligation to ourselves and our 'nation state' , IF there were a
group of folks running on a fairness, one-for-all, all-for-one platform. That sure isn't the present two-sides-of-the-same-coin
Democraps and Republicrunts.
Not sure if many of the readers here watch non-cable national broadcast news, but Pete Peterson and his foundation are
as everpresent an advertiser as the pharma industry. Peterson is the strongest, best organized advocate for gutting social services,
social security, and sending every last penny out of the tax-mule consumer's pocket toward wall street. The guy needs an equivalent
counterpoint enemy.
Check it out, and be vigilant in dispelling his message and mission. Thanks for running this article.
Running away: the almost-haves run to another nation state, the uber-wealthy want to leave the earth, or live in their private
Idaho in the Rockies or on the Ocean. What's left for the least among us? Whatever we create? https://www.pgpf.org/
I think pathologically optimistic is a better term than complacent. Every time someone dumps on them, their response is usually
along the lines of "Don't worry, it'll get better," "Everything works itself out in the end," "maybe we'll win the lottery," my
personal favorite "things will get better, just give it time" (honestly it's been 40 years of this neoliberal bullcrap, how much
more time are we supposed to give it?), "this is just a phase" or "we can always bring it back later and better than ever." The
last one is most troubling because after 20 years of witnessing things in the public sphere disappearing, I've yet to see a single
thing return in any form at all.
I'm not sure where this annoying optimism came from but I sure wish it would go away.
The "optimism" comes from having a lack of historical memory. So many social protections that we have/had is seen as somehow
coming out of the ether benevolently given without any social struggles. The lack of historical education on this subject in particular
is appalling. Now, most would probably look for an "APP" on their "dumbphones" to solve the problem.
The social advantages that we still enjoy were fought in the streets, and on the "bricks" flowing with the participants
blood. 8 hr. day; women's right to vote; ability and right for groups of laborers to organize; worker safety laws ..and so many
others. There is no historical memory on how those rights were achieved. We are slowly slipping into an oligarchy greased by the
idea that the physical possession of material things is all that matters. Sheeple, yes.
WOW! You must have been outside the U.S. for a long time. Your comment seems to suggest we still have some kind of democracy
here. We don't get to pick which rapacious millionaires we get to vote for and it doesn't matter any way since whichever one we
pick from the sad offerings ends up with policies dictated from elsewhere.
Mmm, I think American voters get what they want in the end. They want their politicians because they believe the lies.
19% of Americans believe they are in the top 1% of wealth. A huge percentage of poor people believe they or their kids will (not
can, but will) become wealthy. Most Americans can't find France on a map.
So, yes, you DO get to pick your rapacious millionaire. You send the same scumbags back to Washington every year because it's
not him, it the other guys who are the problem. One third of Americans support Trump! Really, really support him. They think he
is Jesus, MacArthur and Adam Smith all rolled up into one.
I may have been gone for about thirty years, but that has only sharpened my insights into America. It's very hard to see
just how flawed America is from the inside but when you step outside and have some perspective, it's frightening.
The Democrat party isn't a reform party. Thinking it is so, is because of the "No Other Choice" meme. Not saying that the Republican
party works in my favor. They don't. Political reform goes deeper than reforming either main party. It means going to a European
plurality system (with its own downside). That way growing Third parties will be viable, if they have popular, as opposed to millionaire,
support. I don't see this happening, because of Citizens United, but if all you have is hope, then you have to go with that.
Had George W. Bush had his way and turned Social Security over to Wall Street, the economic crash of September 2008 might
have left millions of senior citizens homeless.
Substitute Bill Clinton for George Bush in that sentence and it works just as well. Neoliberalism is a bipartisan project.
And many of the potential and actual horrors described above arise from the price distortions of the US medical system with
Democratic acquiescence in said system making things worse. The above article reads like a DNC press release.
And finally while Washington politicians of both parties have been threatening Social Security for years that doesn't mean
its third rail status has been repealed. The populist tremors of the last election -- which have caused our elites to lose their
collective mind -- could be a mere prelude to what will happen in the event of a full scale assault on the safety net.
Substitute Obama's quest for a Grand Bargain as well.
Our government, beginning with Reagan, turned its back on promoting the general welfare. The wealthy soon learned that
their best return on investment was the "purchase" of politicians willing to pass the legislation they put in their hands. Much
of their investment included creating the right wing media apparatus.
The Class War is real. It has been going on for 40 years, with the Conservative army facing virtually no resistance. Conservatives
welcome Russia's help. Conservatives welcome barriers to people voting. Conservatives welcome a populace that believes lies that
benefit them. Conservatives welcome the social and financial decline of the entire middle class and poor as long as it profits
the rich financially, and by extension enhances their power politically.
If retirees flee our country that will certainly please the Conservatives as that will be fewer critics (enemies). Also less
need or demand for social programs.
"Single acts of tyranny may be ascribed to the accidental opinion of the day, but a series of oppressions, begun at a distinguished
period and pursued unalterably through every change of ministers, too plainly prove a deliberate, systematic plan of reducing
[a people] to slavery" Thomas Jefferson. Rights of British America, 1774 ME 1:193, Papers 1:125
yes, my problem with the post as well, completely ignores democrat complicity the part where someone with a 26k salary
will pay 16k in insurance? No they won't, the system would collapse in that case which will be fine with me.
"President Richard Nixon may have been a paranoid right-winger with authoritarian tendencies, but he expanded Medicare and
supported universal health care."
"Gimme that old time Republican!"
One of the reasons I love NC is that most political economic analysis is often more harsh on the Democrats than the Repubs
so I am a bit dismayed how this article is way too easy on Team D. How many little (and not so little) knives in the back from
Clinton and Obama? Is a knife in the chest that much worse?
This entire thread is simply heartbreaking, Americans have had their money, their freedom, their privacy, their health, and
sometimes their very lives taken away from them by the State. But the heartbreaking part is that they feel they are powerless
to do anything at all about it so are just trying to leave.
But "People should not fear the government; the government should fear the people"
As your quote appears to imply, it's not a problem that can be solved by voting which, let's not forget, is nothing more
than expressing an opinion. I am not sticking around just to find out if economically-crushed, opiod-, entertainment-, social
media-addled Americans are actually capable of rolling out tumbrils for trips to the guillotines in the city squares. I strongly
suspect not.
This is the country where, after the banks crushed the economy in 2008, caused tens of thousands to lose their jobs, and
then got huge bailouts, the people couldn't even be bothered to take their money out of the big banks and put it elsewhere. Because,
you know, convenience! Expressing an opinion, or mobilizing others to express an opinion, or educating or proselytizing others
about what opinion to have, is about the limit of what they are willing, or know how to do.
"... What I also remember well however, is how little support PATCO was able to garnish from other unionized workers (and in many cases from union leadership as well). It seemed to me at the time that some of the strongest hostility came from rank and file of trade and utilities unions. ..."
"... I recall too that it was in the 1970's that the threat of "relocation", at that time mainly from the more heavily unionized north and northeastern states to the union-hostile south began to play a major role in the destruction of the power of labor. ..."
"... And I remember the beginning of the financialization of the American corporation that I experienced on a "micro" scale, a kid lucky enough to have a summer job while in university at a large resource-extraction corporation's HQ in NYC. I recall white-collar conversations about compensation and about how salaries had steadily risen over the past decade (the company was said to be doing "really well"). And I remember how towards the end of my summer stints more and more conversation was about stock prices and Wall Street favor and about the new executive managerial style brought in by "those young MBA"s", and about (for the first time) worries of a "take-over" by "outsiders" (the company, although public, had had family leadership for many years). ..."
"... And most of all I remember how gradually the material-economic components to the identity of the blue-collar and middle class worker were written out of existence. The great narrative, the myth that explains to us what it means to be "an American," no longer included any hint of class solidarity, of the kind of work we did, the pay we earned, the common living conditions in the small towns and urban neighborhoods and "cookie-cutter" suburbs of America. ..."
"... Formerly the struggle of economic and material improvement was seen by most ordinary Americas as a struggle for certain necessary conditions to maintain, strengthen, and perpetuate a way-of-life in which the common core assumptions about the "good life" remained basically stable and unchallenged: family, stable job, residential security, public schools, public places -- neighborhood bars, coffee shops, civic clubs, parks and playgrounds -- where people could meet and interact as social equals. ..."
"... The financialization of the economy, indeed of social life itself to a great extent, meant the drive for the maximization of private profit and the pursuit of interests and 'efficiencies" conceived entirely apart from any impact of the common good of society as a whole, and should have been seen as a grave threat to the very conditions of material and economic security, only recently achieved, that were the foundation of these other civic and social institutions. ..."
"... Instead, through a grand and diabolical deceit cynically promulgated by a mostly Republican capitalist class of privilege, but also aided and abetted by a "new Left" that increasingly postured itself as the enemy of this older and more traditional way of life ..."
The 1970's was in many ways the watershed decade for the radical transformation of the
American economy and society, even more than the 1960's (I lived through both as a young
man). I have yet to read the definitive social-critical analysis of these years to explain
the changes that, looking back, seem to have taken the country of my childhood right out from
under me, gone forever, increasingly difficult to remember through the fog of nostalgia that
tends to distort as much as to reveal.
Some of the things I do remember about this time include the PATCO (air traffic
controllers) strike, very well. What is often not mentioned is that PATCO was attempting to
do something that had not been permitted under federal civil service law, that is, bargain
for wages as well as working conditions. Wage bargaining, PATCO correctly assessed, was the
issue that made or broke unions and had enabled state and local public employees to finally
begin to earn a decent, living wage beginning in the 1960's (think the iconic Mike Quill and
the NYC TWU).
Reagan correctly (from his point of view) saw that to fail to break PATCO on this issue
was to open the floodgates and turn the U.S. civil services into something akin to its
European counterpart, with the possibility of general strikes and the rest. And of course to
encourage private sector unions in their drive to organize and to change federal and state
labor laws to strengthen the right to picket strike and organize.
What I also remember well however, is how little support PATCO was able to garnish
from other unionized workers (and in many cases from union leadership as well). It seemed to
me at the time that some of the strongest hostility came from rank and file of trade and
utilities unions. Of course Reagan, following the Nixon playbook, shrewdly played the
patriot-nationalist card, painting PATCO as a threat to national security as well as composed
of a bunch of ingrates who should have been happy to have jobs. But by then the segmentation
of the American workforce, a tactic that played right into the hands of the
corporate-capitalist class was in full swing. The American worker lucky enough to possess a
decent paying skilled or semi-skilled union job was being taught to see their situation as
morally "deserved" and to see newer aspirants to similar positions, whether recently arrived
immigrants or members of racial-ethnic groups previously suppressed by law, custom and
prejudice as threats/dangers/enemies of their own recently won status.
I recall too that it was in the 1970's that the threat of "relocation", at that time
mainly from the more heavily unionized north and northeastern states to the union-hostile
south began to play a major role in the destruction of the power of labor. This was the
beginning of the "globalization" factor and of the off-shoring of manufacturing jobs that has
been commented on extensively and that took off a decade or so later. What is often not
recalled is that unions and other pro-labor groups attempted to lobby Congress to amend the
NLRA (National Labor Relations Act) and to appoint labor-friendly members to the NLRB to
ensure that plant relocation would be a mandatory subject of bargaining and thus prevent
unilateral (by capital ownership) relocation or the threat of relocation as a means to
destroy the power of labor. They were, of course, not successful, and factories and business
continued to move away from traditional centers of labor power and worker-protections, first
to so-called "right-to-work" states and eventually to Asia.
And I remember the beginning of the financialization of the American corporation that
I experienced on a "micro" scale, a kid lucky enough to have a summer job while in university
at a large resource-extraction corporation's HQ in NYC. I recall white-collar conversations
about compensation and about how salaries had steadily risen over the past decade (the
company was said to be doing "really well"). And I remember how towards the end of my summer
stints more and more conversation was about stock prices and Wall Street favor and about the
new executive managerial style brought in by "those young MBA"s", and about (for the first
time) worries of a "take-over" by "outsiders" (the company, although public, had had family
leadership for many years).
And most of all I remember how gradually the material-economic components to the
identity of the blue-collar and middle class worker were written out of existence. The great
narrative, the myth that explains to us what it means to be "an American," no longer included
any hint of class solidarity, of the kind of work we did, the pay we earned, the common
living conditions in the small towns and urban neighborhoods and "cookie-cutter" suburbs of
America.
Formerly the struggle of economic and material improvement was seen by most ordinary
Americas as a struggle for certain necessary conditions to maintain, strengthen, and
perpetuate a way-of-life in which the common core assumptions about the "good life" remained
basically stable and unchallenged: family, stable job, residential security, public schools,
public places -- neighborhood bars, coffee shops, civic clubs, parks and playgrounds -- where
people could meet and interact as social equals.
The financialization of the economy, indeed of social life itself to a great extent,
meant the drive for the maximization of private profit and the pursuit of interests and
'efficiencies" conceived entirely apart from any impact of the common good of society as a
whole, and should have been seen as a grave threat to the very conditions of material and
economic security, only recently achieved, that were the foundation of these other civic and
social institutions.
Instead, through a grand and diabolical deceit cynically promulgated by a mostly
Republican capitalist class of privilege, but also aided and abetted by a "new Left" that
increasingly postured itself as the enemy of this older and more traditional way of life, the
enemy was reconceived as the new "elites", the young, urban, hipster "Leftist" who despised
the old ways and represented a singular assault on everything good about America.
Meanwhile, steadily, relentlessly, the material conditions and hard-won economic
improvements that had gradually made small town, urban-neighborhood, and inner-suburban life
decent and livable were being destroyed by a class that paid lip-service to Capra's Bedford
Falls while at the same time endlessly working to transform it into Pottersville.
"... The initiative described in this article reminds me of how the World Bank pushed hard for emerging economies to develop capital markets, for the greater good of America's investment bankers. ..."
"... By Burcu Kilic, an expert on legal, economic and political issues. Originally published at openDemocracy ..."
"... Today, the big tech race is for data extractivism from those yet to be 'connected' in the world – tech companies will use all their power to achieve a global regime in which small nations cannot regulate either data extraction or localisation. ..."
"... One suspects big money will be thrown at this by the leading tech giants. ..."
"... Out of idle curiosity, how could you accurately deduce my country of origin from my name? ..."
December 14, 2017 by Yves Smith Yves here. Notice that Costa
Rica is served up as an example in this article. Way back in 1997, American Express had
designated Costa Rica as one of the countries it identified as sufficiently high income so as
to be a target for a local currency card offered via a franchise agreement with a domestic
institution (often but not always a bank). 20 years later, the Switzerland of Central America
still has limited Internet connectivity, yet is precisely the sort of place that tech titans
like Google would like to dominate.
The initiative described in this article reminds me of how the World Bank pushed hard
for emerging economies to develop capital markets, for the greater good of America's investment
bankers.
By Burcu Kilic, an expert on legal, economic and political issues. Originally published
at
openDemocracy
Today, the big tech race is for data extractivism from those yet to be 'connected' in
the world – tech companies will use all their power to achieve a global regime in which
small nations cannot regulate either data extraction or localisation.
To avoid a 'failure ministerial," some countries see the solution as pushing governments to
open a mandate to start conversations that might lead to a negotiation on binding rules for
e-commerce and a declaration of the gathering as the "digital ministerial". Argentina's MC11
chair, Susana Malcorra, is actively pushing for member states to embrace e-commerce at the WTO,
claiming that it is necessary to " bridge the gap between the
haves and have-nots ".
It is not very clear what kind of gaps Malcorra is trying to bridge. It surely isn't the
"connectivity gap" or "digital divide" that is growing between developed and developing
countries, seriously impeding digital learning and knowledge in developing countries. In fact,
half of humanity is not even connected to the internet, let alone positioned to develop
competitive markets or bargain at a multilateral level. Negotiating binding e-commerce rules at
the WTO would only widen that gap.
Dangerously, the "South Vision" of digital trade in the global trade arena is being shaped
by a recent alliance of governments and well-known tech-sector lobbyists, in a group called
'Friends of E-Commerce for Development' (FED), including Argentina, Chile, Colombia, Costa
Rica, Kenya, Mexico, Nigeria, Pakistan, Sri Lanka, Uruguay, and, most recently, China. FED
claims that e-commerce is a tool to drive growth, narrow the digital divide, and generate
digital solutions for developing and least developed countries.
However, none of the countries in the group (apart from China) is leading or even remotely
ready to be in a position to negotiate and push for binding rules on digital trade that will be
favorable to them, as their economies are still far away from the technology revolution. For
instance, it is perplexing that one of the most fervent defenders of FED's position is Costa
Rica. The country's economy is based on the export of bananas, coffee, tropical
fruits, and low-tech medical instruments, and almost half of its population
is offline . Most of the countries in FED are far from being powerful enough to shift
negotiations in favor of small players.
U.S.-based tech giants and Chinese Alibaba – so-called GAFA-A – dominate, by
far, the future of the digital playing field, including issues such as identification and
digital payments, connectivity, and the next generation of logistics solutions. In fact, there
is a no-holds-barred ongoing race among these tech giants to consolidate their market share in
developing economies, from the race to grow the advertising market to the race to increase
online payments.
An e-commerce agenda that claims unprecedented development for the Global South is a Trojan
horse move. Beginning negotiations on such topics at this stage – before governments are
prepared to understand what is at stake – could lead to devastating results, accelerating
liberalization and the consolidation of the power of tech giants to the detriment of local
industries, consumers, and citizens. Aware of the increased disparities between North and
South, and the data dominance of a tiny group of GAFA-A companies, a group of African nations
issued a statement opposing the digital ambitions of the host for MC11. But the political
landscape is more complex, with China, the EU, and Russia now supporting the idea of a
"digital" mandate .
Repeating the Same Mistakes?
The relationships of most countries with tech companies are as imbalanced as their
relationships with Big Pharma, and there are many parallels to note. Not so long ago, the
countries of the Global South faced Big Pharma power in pharmaceutical markets in a similar
way. Some developing countries had the same enthusiasm when they negotiated intellectual
property rules for the protection of innovation and research and development costs. In reality,
those countries were nothing more than users and consumers of that innovation, not the owners
or creators. The lessons of negotiating trade issues that lie at the core of public interest
issues – in that case, access to medicines – were costly. Human lives and
fundamental rights of those who use online services should not be forgotten when addressing the
increasingly worrying and unequal relationships with tech power.
The threat before our eyes is similarly complex and equally harmful to the way our societies
will be shaped in the coming years. In the past, the Big Pharma race was for patent
exclusivity, to eliminate local generic production and keep drug prices high. Today, the Big
Tech race is for data extractivism from those who have yet to be connected in the world, and
tech companies will use all the power they hold to achieve a global regime in which small
nations cannot regulate either data extraction or data localization.
Big Tech is one of the most concentrated and resourceful industries of all time. The
bargaining power of developing countries is minimal. Developing countries will basically be
granting the right to cultivate small parcels of a land controlled by data lords -- under their
rules, their mandate, and their will -- with practically no public oversight. The stakes are
high. At the core of it is the race to conquer the markets of digital payments and the battle
to become the platform where data flows, splitting the territory as old empires did in the
past. As
the Economist claimed on May 6, 2017: "Conflicts over control of oil have scarred
the world for decades. No one yet worries that wars will be fought over data. But the data
economy has the same potential for confrontation."
If countries from the Global South want to prepare for data wars, they should start thinking
about how to reduce the control of Big Tech over -- how we communicate, shop, and learn the
news -- , again, over our societies. The solution lies not in making rules for data
liberalization, but in devising ways to use the law to reduce Big Tech's power and protect
consumers and citizens. Finding the balance would take some time and we are going to take that
time to find the right balance, we are not ready to lock the future yet.
One suspects big money will be thrown at this by the leading tech giants. To paraphrase
from a comment I made recently regarding a similar topic : "with markets in the developed
world pretty much sewn up by the tripartite tech overlords (google, fb and amazon), the next
3 billion users for their products/services are going to come from developing world". With
this dynamic in mind, and the "constant growth" mantra humming incessantly in the background,
it's easy to see how high stakes a game this is for the tech giants and how no resources will
be spared to stymie any efforts at establishing a regulatory oversight framework that will
protect the digital rights of citizens in the global south.
Multilateral fora like the WTO are de facto enablers for the marauding frontal attacks of
transnational corporations, and it's disheartening to see that some developing nations have
already nailed the digital futures of their citizens to the mast of the tech giants by
joining this alliance. What's more, this signing away of their liberty will be sold to the
citizenry as the best way to usher them into the brightest of all digital futures.
One suspects big money will be thrown at this by the leading tech giants.
Vast sums of money are already being thrown at bringing Africa online, for better
or worse. Thus, the R&D aimed at providing wireless Internet via giant
drones/balloons/satellites by Google, Facebook, etc.
You're African. Possibly South African by your user name, which may explain why you're a
little behind the curve, because the action is already happening, but more to the north --
and particularly in East Africa.
The big corporations -- and the tech giants are competing with the banking/credit card
giants -- have noted how mobile technology leapt over the dearth of last century's telephony
tech, land lines, and in turn enabled the highest adoption rates of cellphone banking in the
world. (Particularly in East Africa, as I say.) The payoffs for big corporations are massive
-- de facto cashless societies where the corporations control the payment systems
–and the politicians are mostly cheap.
In Nigeria, the government has launched a Mastercard-branded national ID card that's also
a payment card, in one swoop handing Mastercard more than 170 million potential customers,
and their personal and biometric data.
In Kenya, the sums transferred by mobile money operator M-Pesa are more than 25 percent of
that country's GDP.
You can see that bringing Africa online is technically a big, decade-long project. But
also that the potential payoffs are vast. Though I also suspect China may come out ahead --
they're investing far more in Africa and in some areas their technology -- drones, for
instance -- is already superior to what the Europeans and the American companies have.
Hoisted from a comment I made here recently: "Here in South Africa and through its Free
Basics programme, facebook is jumping into bed with unsuspecting ISPs (I say unsuspecting
because fb will soon be muscling in on their territory and becoming an ISP itself by
provisioning bandwidth directly from its floating satellites) and circumventing net
neutrality "
I'm also keenly aware of the developments in Kenya re: safaricom and Mpesa and how that
has led to traditional banking via bank accounts being largely leapfrogged for those moving
from being unbanked to active economic citizens requiring money transfer facilities. Given
the huge succes of Mpesa, I wouldn't be surprised if a multinational tech behemoth (chinese
or american) were to make a play for acquiring safaricom and positioning it as a triple-play
ISP, money transfer/banking services and digital content provider (harvesting data about
users habits on an unprecedented scale across multiple areas of their lives), first in Kenya
then expanded throughout east, central and west africa. I must add that your statement about
Nigeria puts Mark Zuckerberg's visit there a few months back into context somewhat, perhaps a
reconnaissance mission of sorts.
Out of idle curiosity, how could you accurately deduce my country of origin from my
name?
As you also write: "with markets in the developed world pretty much sewn up by the
tripartite tech overlords (google, fb and amazon), the next 3 billion users for their
products/services are going to come from developing world."
Absolutely true. This cannot be stressed enough. The tech giants know this and the race is
on.
Actually Marx's "labor theory of value" should be properly called the "theory of surplus value".
Notable quotes:
"... For Marx, value was socially-necessary labour time: David Harvey is good on this. From this perspective, exploitation and alienation are linked. Workers are exploited because they must work longer than necessary to get their consumption bundle. And they are alienated because this work is unsatisfying and a source of unfreedom. Now, I'll concede that many people hate the labour theory of value. One reason for this is that many discussions of it quickly become obscurantist – as if "value" is some mystical entity embodied in commodities. ..."
"... This, though, certainly was not Marx's intention. Quite the opposite. He intended his theory to be a demystification. He wanted to show how what looked like relations between things – the exchange of money for goods or labour-time – were in fact relations between people. And unequal ones at that. ..."
"... I suspect that some of the animosity to Marx's use of LTV arises because of a resistance to the inference that Marx drew from it – that workers are exploited. This issue, however, is independent of the validity of not of the LTV. For example, Roemer thinks workers are exploited without believing in the LTV, and Smith believed the LTV without arguing that workers were exploited. ..."
"... * He seems to be recovering now. The vet is also expected to make a full recovery eventually. ..."
"... Further understanding, which evolved after Marx, is that the LTV is just special case of the principle that what produces a surplus of usefulness is not labour per se, but the energy used in the transformation of a larger quantity of something into a smaller quantity of something else, and muscle power is just one way, even if it was the main one for a very long time, to obtain energy to transform a large quantity of less useful commodities into a smaller quantity of more useful commodities. ..."
"... And this follows into the impression that I have derived from various authors that our high standards of living depend not on the high "productivity" of labour, but on the high "productivity" of fossil fuels, which are the product of the fertility of land ..."
"... the complex process of differentiation in the economy (aka the division of labor) obscures the relationship between the creation of the surplus (work time above that necessary to reproduce consumption bundle) and its utilization by capitalists via investment. Investment is not possible without exploitation of workers, but that relationship is occluded by the mechanics of employment, markets, and property. ..."
"... My impression is that your bearded friend Karl does not use "alienation" in that sense at all, in an economic sense, but in a humanist sense: that by being separated from the means of production proletarians are alienated from the meaning of their work, from work as a human activity, as distinct from an economic activity ..."
"... Practically every "Dilbert" strip is about "alienation". This is my favourite ..."
"... Placing a high value on the frivolous and "useless" has always been the hallmark of those most able to decide the value of anything, because they have no use for economic use (so to speak), but rather social signaling. Broad social respect is an extremely expensive thing to buy with money alone. ..."
Lucius has been poorly recently, which has required some trips to the vet and therefore a bill of a size that only David Davis
could negotiate*. This has made me wonder: is there more to be said for the labour theory of
value than we like to think?
For a long time, I've not really cared about this theory one way or the other. This is partly because I've not bothered much with
questions of value; partly because, as John Roemer has shown, we don't
need (pdf)
a labour theory of value to suggest workers are exploited; and partly because the main Marxian charges against capitalism – for
example that it entails relationships of
domination – hold
true (or not!) independently of the theory.
As I approach retirement, however, I've begun to change my mind. I think of major expenses in terms of labour-time because they
mean I have to work longer. A trip to the vet is an extra fortnight of work; a good guitar an extra month, a car an extra year, and
so on.
When I consider my spending, I ask: what must I give up in order to get that? And the answer is my time and freedom. My labour-time
is the measure of value.
This is a reasonable basis for the claim that workers are exploited. To buy a bundle of goods and services, we must work a number
of hours a week. But taking all workers together, the hours we work are greater than the hours needed to produce those bundles because
we must also work to provide a profit for the capitalist. As Marx
put it:
We have seen that the labourer, during one portion of the labour-process, produces only the value of his labour-power, that
is, the value of his means of subsistence During the second period of the labour-process, that in which his labour is no longer
necessary labour, the workman, it is true, labours, expends labour-power; but his labour, being no longer necessary labour, he
creates no value for himself. He creates surplus-value which, for the capitalist, has all the charms of a creation out of nothing.
This portion of the working-day, I name surplus labour-time.
For Marx, value was socially-necessary labour time: David Harvey is
good on this. From this
perspective, exploitation and alienation are linked. Workers are exploited because they must work longer than necessary to get their
consumption bundle. And they are alienated because this work is unsatisfying and a source of unfreedom. Now, I'll concede that many
people hate the labour theory of value. One reason for this is that many discussions of it quickly become obscurantist – as if "value"
is some mystical entity embodied in commodities.
This, though, certainly was not Marx's intention. Quite the opposite. He intended his theory to be a demystification. He wanted
to show how what looked like relations between things – the exchange of money for goods or labour-time – were in fact relations between
people. And unequal ones at that.
What's more, the charge of obscurantism against Marx is an especially weak one when it comes from orthodox economics. Much of
this invokes unobservable concepts such as the natural rate of unemployment, marginal productivity, utility, the marginal product
of
capital and natural rate of interest – ideas which,
in the last two cases, might not even be theoretically coherent.
In fact, the LTV is reasonably successful by the standards of conventional economics: we have empirical evidence to suggest that
it does (pdf) a
decent (pdf) job of
explaining (pdf) relative prices – not that this was
how Marx intended it to be used.
You can of course, think of counter-examples to the theory. But so what? in the social sciences, no substantial theory is 100%
true.
I suspect that some of the animosity to Marx's use of LTV arises because of a resistance to the inference that Marx drew from
it – that workers are exploited. This issue, however, is independent of the validity of not of the LTV. For example, Roemer thinks
workers are exploited without believing in the LTV, and Smith believed the LTV without arguing that workers were exploited.
By the (low) standards of economic theories, perhaps the LTV
isn't so bad.
* He seems to be recovering now. The vet is also expected to make a full recovery eventually.
But the LTV says more than the output of the economy is divided between the workers and the (suppliers and) owners of capital
goods, doesn't it? I mean, mainstream econ says that too. And unless ownership of capital inputs to production is distributed
equally across society, then some people consume things that other's labour has produced, which means workers must produce more
than they consume. But again, that's basic mainstream stuff, not LVT. You end by saying you can believe in exploitation but not
LVT, and vice versa, but the main body of this blog seems to be connecting the two. I am confused.
Of course if you have the ability to vary your labour supply, and labour is how you earn your money, then you ask yourself
how much you need to work to purchase whatever. But again that's mainstream not LVT.
"Smith believed the LTV without arguing that workers were exploited."
The Marxian approach was interested in, as other commenters have said, in the specific capitalist case, where "capitalism"
for him means strictly "labour for hire" by workers alienated from the means of production by their ownership by capitalists.
But the labour theory of value, as understood by what Marx called "classicals", applies also to all labour, and he used it
in that sense.
My understanding of the classicals and the LTV is reduced to a minimum this:
By "value" we mean "surplus".
The "physiocrats" correctly identified "land" (mines, farms, the sea) as a producer of physical surplus: once corn seed
produces a whole corn cob. The quantity of physical output appears to be greater than the quantity of physical input, a phenomenon
that used to be called "fertility".
However the "classicals" recognized that there is surplus also when the quantity of output is physically smaller than the
quantity of input: a larger quantity of iron ore and coal gets turned into a much smaller quantity of metal called "spoon",
and that generates surplus too.
Since the surplus is not quantitative they called it a surplus of "ofelimity", of usefulness. A spoon is more useful than
the physically larger quantity of iron ore and coal used to make it, in most contexts.
So the question is what creates a surplus of ofelimity even if quantity shrinks drastically.
The classicals observed that while quantitative surplus may be spontaneous, as in apple trees just produce apples by themselves,
all cases involving a surplus of ofelimity involved the application of labour.
The LTV is simply that observation: that the whole chain of surpluses of ofelimity always goes back to the application
of labour, from the first people who chipped obsidian blocks into blades onwards.
As such the LTV is not really a "theory": it is a generic principle. It would be more properly a theory if there was some
kind of "law" that related the quantity of labour embedded in a commodity to the surplus of usefulness it seems to have. But
any such law cannot be universal, because usefulness is strictly context dependent. Sraffa wrote some preliminary booklet about
that :-).
Further understanding, which evolved after Marx, is that the LTV is just special case of the principle that what produces
a surplus of usefulness is not labour per se, but the energy used in the transformation of a larger quantity of something into
a smaller quantity of something else, and muscle power is just one way, even if it was the main one for a very long time, to obtain
energy to transform a large quantity of less useful commodities into a smaller quantity of more useful commodities.
And this follows into the impression that I have derived from various authors that our high standards of living depend
not on the high "productivity" of labour, but on the high "productivity" of fossil fuels, which are the product of the fertility
of land.
"value, in terms of risk among others, that the employers put in starting a new business?"
If the business produces a surplus, that is value added, than the surplus is the product of the energy/labour expended by all
participants
How it is accounted for is one issue, especially over multiple time periods, and how it is shared out is a social relationship.
As to risk, everybody in the business runs the risk of not getting paid at the end of the month, and the opportunity cost of
not doing something else, whichever labour they put in.
How risk and opportunity cost are accounted for, especially over multiple time periods, is another issue, and how they are
shared is another social relationship.
"the surplus is the product of the energy/labour expended by all participants"
I'll perhaps further diminish the reputation of my "contributions" this way: perhaps all social relationships of production
(at least among males) map closely onto (cursorial) group hunts.
"a very long winded way of saying that making stuff requires labour"
Well, that's obvious, but what the classicals thought of as the LTV was not entirely obvious: that "surplus" (rather than "stuff")
comes from the fertility of land and the transformation achieved with labour, and that nothing else is needed to achieve "surplus".
Because for example capital goods are themselves surplus from fertility or labour, again back to the first blades made from chipping
lumps of obsidian.
That's quite a bit more insightful, never mind also controversial, than "making stuff requires labour".
Love this post. But, being a fellow marxist, I can't help but to disagree with this bit: "And they are alienated because this
work is unsatisfying and a source of unfreedom." This is a colloquial use of alienation, and its not wrong.
But Marx is getting at something else: the complex process of differentiation in the economy (aka the division of labor)
obscures the relationship between the creation of the surplus (work time above that necessary to reproduce consumption bundle)
and its utilization by capitalists via investment. Investment is not possible without exploitation of workers, but that relationship
is occluded by the mechanics of employment, markets, and property.
That's the sense in which workers are alienated under capitalism. Socialism could still have boring work, but, in so far as
the investment function is brought under collective democratic control, workers would not be alienated in the special sense Marx
is using.
"Where else could stuff come from?" Well, assuming by "stuff" we mean objects of value, nowhere. But the reasons for which
we value them are not dependent upon their natural origins or the labor required for their production. I don't value a computer
because it's made of plastic and silicon and so forth, nor because of the labor required to produce it. It's useful because of
what it does, not what it is; it's sort of Kant's definition of art versus the general conception of tools.
As for the relationship between production functions and the LTV, that seems (at least prima facie) pretty straightforward.
If there is a high olefimity ascribed to the surplus provided by the product created by X, Y, then those production functions
will, themselves, be assigned greater value, i.e., be worthy of more labor-time to attain. E.g., even if I'm not very good at
fishing, if I really like the flavor of fish over other protein sources, I'll spend more time increasing my labor efficiency (be
a better fisherman).
"Everything ultimately derives from nature and the labour of humans. Where else could stuff come from? That's all there
is."
Then in theory the cost (not the price) of everything can be measured in terms of physical quantities of primary inputs and
of hours of work.
"What's controversial about it?"
What is controversial is that written like that you sound like a Marxist: the alternative approach is to say that *property*
creates surplus.
In the standard neoclassical approach "property" is the often forgotten "initial endowments" of the single representative agent.
Anyhow the "narrative" is: as Mr. Moneybags owns the iron mine and the coal mine and the smelter and the ingot roller and spoon
press, then he is entitled to the surplus because without his property it is impossible to make spoons. Labour on its own is worthless,
wastes away, while property is "valuable" capital.
"And how one gets from a production function (stuff is made from X, Y and Z) to LTV"
Production functions are just not very elaborate scams to pretend that property is the factor of production, rather then the
fertility of land and the energy of labour, and land does not exist (after JB Clark "disappeared" it) and labour is just an accessory.
Part of the scam is that "X, Y and Z" are denominated in money, not physical quantities.
As I wrote in another answer accounting for the output of land fertility and labour energy and how it is shared are the difficult
bits. Welcome to the institutional approach to the political economy. :-)
"the reasons for which we value them are not dependent upon their natural origins or the labor required for their production"
And here be dragons. Your old bearded acquaintance Karl has something to say about this :-).
"It's useful because of what it does, not what it is"
So cleaning floors which is very useful should have a high value, while Leonardo paintings, that are merely scarce, should
have a low value :-).
I though that most people reckoned that "value" depends on scarcity: so there is a scarcity of even not very good promoters
of torysm, so G Osborne is entitled to £600,000 a year to edit the "Evening Standard", but there is no scarcity of excellent cleaners,
so cleaners gets minimum wage if they are lucky.
counting hours of worked is not a measure of cost, it is a tally of hours worked. In mainstream econ, production functions
describe a physical production process (to make 1 unit of Y, you combine inputs like so) and are not not denominated in money.
e.g. You multiply L by w to get cost.
Economies are zero sum. GDP must be paid for, otherwise it won't be produced. The only source of money comes from labor costs,
the money paid to workers to work producing GDP. As conservatives note, all taxes fall on workers by directly taking their pay,
or by hiking the prices of what workers buy.
Taxes pay workers, e.g. teachers, and doctors with Medicare and Medicaid, weapons makers and warriors, or pay people to pay
workers, Social Security benefits and SNAP.
Capital has value because it is built by paying workers. It gets a cut to repay the payers of workers.
Monopoly rent seeking is unsustainable. If a monoplists takes more from workers than they pay workers, he eventually takes
so much money workers can no longer pay for GDP and it falls to zero as workers produce what they consume without buying from
the monopolist capital.
Tanstaafl
As Keynes put it:
"I feel sure that the demand for capital is strictly limited in the sense that it would not be difficult to increase the stock
of capital up to a point where its marginal efficiency had fallen to a very low figure. This would not mean that the use of capital
instruments would cost almost nothing, but only that the return from them would have to cover little more than their exhaustion
by wastage and obsolescence together with some margin to cover risk and the exercise of skill and judgment. In short, the aggregate
return from durable goods in the course of their life would, as in the case of short-lived goods, just cover their labour costs
of production plus an allowance for risk and the costs of skill and supervision.
"Now, though this state of affairs would be quite compatible with some measure of individualism, yet it would mean the euthanasia
of the rentier, and, consequently, the euthanasia of the cumulative oppressive power of the capitalist to exploit the scarcity-value
of capital. Interest today rewards no genuine sacrifice, any more than does the rent of land. The owner of capital can obtain
interest because capital is scarce, just as the owner of land can obtain rent because land is scarce. But whilst there may be
intrinsic reasons for the scarcity of land, there are no intrinsic reasons for the scarcity of capital. An intrinsic reason for
such scarcity, in the sense of a genuine sacrifice which could only be called forth by the offer of a reward in the shape of interest,
would not exist, in the long run, except in the event of the individual propensity to consume proving to be of such a character
that net saving in conditions of full employment comes to an end before capital has become sufficiently abundant. But even so,
it will still be possible for communal saving through the agency of the State to be maintained at a level which will allow the
growth of capital up to the point where it ceases to be scarce."
Economies are zero sum. The value of goods and services must equal the labor costs in the long run. Tanstaaafl
"Socialism could still have boring work, but, in so far as the investment function is brought under collective democratic
control, workers would not be alienated in the special sense Marx is using."
My impression is that your bearded friend Karl does not use "alienation" in that sense at all, in an economic sense, but
in a humanist sense: that by being separated from the means of production proletarians are alienated from the meaning of their
work, from work as a human activity, as distinct from an economic activity.
Collective ownership does not change at all that kind of alienation: being a cog in the capitalist machinery is no less alienating
than being a cog in the collectivist machinery.
I think that our blogger when he talks about distributing control of the production process to workers is far closer to the
marxian ideal than a collectivist approach.
Practically every "Dilbert" strip is about "alienation". This is my favourite:
"counting hours of worked is not a measure of cost"
For a definition of "cost" that is made-up disregarding P Sraffa's work and in general the classics.
"multiply L by w to get cost."
As J Robinson and others pointed out that "w" depends on the distribution of income, on the interest rate, etc., so is an institutional
matter.
As I was saying, accounting for the surplus and how to share it is not so easily handwavable.
sorry, I meant for a money definition of cost that is not just counting inputs, but which is inputs multiplied by their prices.
nobody is hand waving. I think the mainstream view is that 'value' and 'surplus' are not meaningful terms, only prices and
profits and subjective value. A production function says nothing about prices, you have to explain them with other stuff, and
as you say, institutions and all manner of things could come in the play there.
You can say that that workers produce more in money terms than than they are paid, which is trivial (the wages paid by an employer
are less than its gross profits so long as there are non-zero returns to capital, interest on a loan or dividends or whatever)
and to my mind it's silly to define that as exploitation because it would apply in situations where the 'capitalist' is getting
a small return and workers rewarded handsomely by any standard. Better imo to define exploitation as when capitalists are earning
excess returns (and I'd fudge that by differentiating between workers' wages and salaries of top execs). Otherwise you lay yourself
open to "the only thing worse than being exploited by capitlists is not beingn exploited by capitalists" which is J Robinson too
I believe.
This is a genuine question: what you exposed above is related to or influenced by Steve Keen's ideas, yes? If so, I'd be interested
in reading about that in more detail.
I've always thought that defining value by scarcity was an absurd misdirection, in part because there is no reason that the
two should correlate at all. At any point in socioeconomic development beyond subsistence, value is to some extent socially defined,
not economically defined. Status ends up being the most "useful" resource, as we see among all those who've never had to worry
about their material conditions.
Placing a high value on the frivolous and "useless" has always been the hallmark of those most able to decide the value
of anything, because they have no use for economic use (so to speak), but rather social signaling. Broad social respect is an
extremely expensive thing to buy with money alone.
@Luis Enrique
Ah, but name for me a production process that doesn't take place over time. There's an infinite amount of time for all of us,
but for each of us only so much, and those who fail to value it die full of regret. Surely someone somewhere must have something
to say about this.
I don't know why I wrote the above. Surplus is also a mainstream term. See wages set by bargaing over a surplus. Presume it's
based on prices of outputs compared to inputs or if in model with real quantities not prices, then in subjective values.
Lukas production functions are defined over a period of time.
Ahem, I am trying to explain my understanding of Marx, who wrote both as economist and a philosopher, and a politial theorist.
Alienation, exploitation and inequality are technically distinct concepts, even if in the marxist (view (and that of every
business school, that are faithful to marxist political economy) capitalist control of the means of production leads to alienation
which leads to exploitation which leads to inequality. In the marxian political economy inequality can exist even with exploitation,
for example, and that makes it less objectionable.
"Surplus is also a mainstream term. See wages set by bargaing over a surplus."
Some Economists have not forgotten at least some terminology of political economy and some Departments of Business still have
surviving "history of economic thought" courses that some postgrads may still accidentally occasionally wander into and pick up
some terms from...
"are not meaningful terms, only prices and profits and subjective value."
But the mainstream focus on prices and profits etc. is the purest handwaving, because it begs the question...
"A production function says nothing about prices"
Ha! This is one of the best examples where mainstream theory handwaves furiously: mainstream production functions switch effortlessly
from "capital" as phusical quantities to aggregating "capital" by reckoning it in "numeraire". That is all about prices, and even
about future expected prices and future expected rates of discount. Therefore rational expectations, a grand feat of handwaving.
"defining value by scarcity was an absurd misdirection, in part because there is no reason that the two should correlate at
all."
Ahhhhhhh but this is a very political point and not quite agreeable because:
One of the conceits of "microfoundations" is to show that there are "laws" of Economics that are precise, so everybody get
exactly their just compensation, so for example demand-supply schedules are always presented, cleverly, as lines and static.
The view of political economists is that instead "everything" lies within boundaries of feasibility, which are dynamic, so
for example demand-supply schedules are ribbons that change over time and circumstances, and transactions happens not at uniquely
determined points of intersections, but in regions of feasibility, the precise point dependent on institutional arrangements.
So the LTV determines one boundary for "price" and desirability another boundary.
"exposed above is related to or influenced by Steve Keen's ideas"
Related and independently derived, but also a bit influenced. I had always suspected that the "classicals" used "labour" as
a synonym for "muscle power", but various later readings persuaded me that was indeed the case. Later post will have some hopefully
interesting detail. Then I looked into the literature and found that obviously this had been figured out before (centuries ago
in some cases, like B de Mandeville).
Blissex if you can come up with a better way of trying to describe total quantities of highly heterogeneous things (i.e. capital)
you have a Nobel awaiting. Everybody know that attempts to put a number on the real quantity of capital is always going to be
a rough and ready endeavour.
I don't see how working with prices and profits is 'handwaving'. What question does it beg? Much of economics is about trying
to explain these things. I would not say economics focuses on prices and profits because many economics models work with real
quantities that are high abstract and in theory are made commensurate using subjective value (utility) as the unit of account.
"... And, recent studies have shown, the longer you're out of work - especially if you're older and out of work - the harder it becomes to get a job offer. ..."
I thought this was an interesting article. Apologies if this has been posted on NC
already.
A stunning 33% of job seekers ages 55 and older are long-term unemployed, according to
the AARP Public Policy Institute. The average length of unemployment for the roughly 1.2
million people 55+ who are out of work: seven to nine months. "It's emotionally devastating
for them," said Carl Van Horn, director of Rutgers University's John J. Heldrich Center for
Workforce Development, at a Town Hall his center and the nonprofit WorkingNation held
earlier this year in New Brunswick, N.J.
... ... ...
The fight faced by the long-term unemployed
And, recent studies have shown, the longer you're out of work - especially if you're older and out of work - the harder
it becomes to get a job offer.
The job-finding rate declines by roughly 50% within eight months of unemployment, according to a 2016 paper by economists
Gregor Jarosch of Stanford University and Laura Pilossoph of the Federal Reserve Bank of New York. "Unemployment duration
has a strongly negative effect on the likelihood of subsequent employment," wrote researchers from the University of
Maryland and the U.S. Census Bureau in another 2016 paper.
"Once upon a time, you could take that first job and it would lead to the next job and the job after that," said Town
Hall panelist John Colborn, chief operating officer at the nonprofit JEVS Human Services, of Philadelphia. "The notion of a
career ladder offered some hope of getting back into the labor market. The rungs of the ladder are getting harder and harder
to find and some of them are broken."
In inner cities, said Kimberly McClain, CEO of The Newark Alliance, "there's an extra layer beyond being older and out of
work. There are issues of race and poverty and being defined by your ZIP Code. There's an incredible sense of urgency."
... ... ...
Filling a work gap
If you are over 50, unemployed and have a work gap right now, the Town Hall speakers said, fill it by volunteering,
getting an internship, doing project work, job-shadowing someone in a field you want to be in or taking a class to re-skill.
These kind of things "make a candidate a lot more attractive," said Colborn. Be sure to note them in your cover letter and
résumé.
Town Hall panelist Amanda Mullan, senior vice president and chief human resources officer of the New Jersey Resources
Corp. (a utility company based in Wall, N.J.), said that when her company is interviewing someone who has been out of work
lately, "we will ask: 'What have you done during that time frame?' If we get 'Nuthin,' that shows something about the
individual, from a motivational perspective."
... ... ...
The relief of working again
Finally finding work when you're over 50 and unemployed for a stretch can be a relief for far more than financial
reasons.
"Once I landed my job, the thing I most looked forward to was the weekend," said Konopka. "Not to relax, but because I
didn't have to think about finding a job anymore. That's 24/7 in your head. You're always thinking on a Saturday: 'If I'm
not doing something to find a job, will there be a posting out there?'"
That's what Trump's "bastard neoliberalism" is about. He is not a New Dealer.
Notable quotes:
"... He forgot them on health care. Jettisoning his campaign pledge to "take care of everybody" regardless of income, he proposed cutting federal health subsidies for the hard-pressed blue-collar voters who put him into office. ..."
"... He forgot them on financial regulation. Abandoning talk of cracking down on Wall Street executives who "rigged" the economy to hobble the working class, he seeks to undercut the Consumer Financial Protection Bureau. ..."
"... And he forgot them on taxes. Discarding his vow to reshape taxation for average families at the expense of rich people like himself, he's working with Republican leaders to hand the biggest benefits to corporations and the wealthy ..."
"... The president hasn't forgotten everything. In lieu of big financial benefits, Trump has steadily given "the forgotten people" at least one visceral commodity [: ] affirmation of shared racial grievances. ..."
"... But on economic issues he has behaved exactly like a standard issue country club republican. The requirement that the GOP enact a "replacement" for Obamacare? Gone. Preventing the offshoring of manufacturing jobs? Gone. Enacting at least something like a tariff at the borders? Gone. Actually *doing* something about the opioid crisis, which is strongly correlated with areas of economic distress (as opposed to lip service)? Nothing. ..."
He forgot them on health care. Jettisoning his campaign pledge to "take care of everybody" regardless of income, he proposed
cutting federal health subsidies for the hard-pressed blue-collar voters who put him into office.
He forgot them on financial regulation. Abandoning talk of cracking down on Wall Street executives who "rigged" the economy
to hobble the working class, he seeks to undercut the Consumer Financial Protection Bureau.
And he forgot them on taxes. Discarding his vow to reshape taxation for average families at the expense of rich people like
himself, he's working with Republican leaders to hand the biggest benefits to corporations and the wealthy.
To the contrary, his budget includes big cuts to Social Security disability program. Meanwhile his much-vaunted infrastructure
plan has 'failed to materialize."
But, Harwood points out:
The president hasn't forgotten everything. In lieu of big financial benefits, Trump has steadily given "the forgotten people"
at least one visceral commodity [: ] affirmation of shared racial grievances.
I think this is a good summary of Trump's domestic policies as revealed by the past year. On social issues, he has governed exactly
as he promised during his campaign, issuing a de facto ban on Muslim immigration, unleashing ICE against Latinos, and fulminating
against protesting black NFL players.
But on economic issues he has behaved exactly like a standard issue country club republican. The requirement that the GOP enact
a "replacement" for Obamacare? Gone. Preventing the offshoring of manufacturing jobs? Gone. Enacting at least something like a tariff
at the borders? Gone. Actually *doing* something about the opioid crisis, which is strongly correlated with areas of economic distress
(as opposed to lip service)? Nothing.
Joel , December 7, 2017 9:03 am
Forgotten? LOL! No, Trump didn't forget. He was lying.
little john , December 7, 2017 4:01 pm
I hate doing this because I am not a fan of the President but a "de facto ban on Muslim immigration"? I cannot remember but
I don't think Indonesia, Pakistan, India or Turkey was on the list. Those a pretty big Muslim nations. Maybe you should look it
up. "Unleashing ICE against Latinos"? I have three Latino neighbors on my street, my next door neighbor doesn't even speak English,
but I haven't seen any ICE agents around. Maybe I should just wait they're on their way? "Fulminating against NFL players"? You're
right about that.
As an aside I have recently had to laugh when I see your pseudonym. Here in Dallas we've taken down the statue of Robert E.
Lee from Robert E. Lee Park. (Now named Oak Lawn Park.) At the opening of the park in 1936 there is a great picture of the statue
with FDR, Robert E Lee IV and D.W. Griffith. I am wondering if NewDealDemocrat is a microaggression?
run75441 , December 8, 2017 9:35 am
NDD:
Before you bemoan the loss of the CSR (covered by Section 1402 of the ACA) for those making between 138 and 250% FPL, you do
understand premium subsidies will pick up the difference. If the states apply the premium increase properly to the Silver plans,
the impact is felt across all other levels between 138% and 400% FPL. Indeed, in many cases Bronze plans are free, Gold plans
become less costly, and premiums decrease. A person can go to a lower deductible/copay for the same or less cost than the original
silver plan.
I think as some will tell you here, this does nothing for those greater than 400% FPL who now find themselves being hit with
the full impact of a premium increase due to Trump's action. While a much smaller percentage of the insured, it still numbers
around 9 million.
spencer , December 8, 2017 1:45 pm
Isn't that 8 million being hit out of the under 20 million that had signed up for Obamacare.
So on a percent basis doesn't you quote imply about half of the relevant population is being hit?
"... And, recent studies have shown, the longer you're out of work - especially if you're older and out of work - the harder it becomes to get a job offer. ..."
I thought this was an interesting article. Apologies if this has been posted on NC
already.
A stunning 33% of job seekers ages 55 and older are long-term unemployed, according to
the AARP Public Policy Institute. The average length of unemployment for the roughly 1.2
million people 55+ who are out of work: seven to nine months. "It's emotionally devastating
for them," said Carl Van Horn, director of Rutgers University's John J. Heldrich Center for
Workforce Development, at a Town Hall his center and the nonprofit WorkingNation held
earlier this year in New Brunswick, N.J.
... ... ...
The fight faced by the long-term unemployed
And, recent studies have shown, the longer you're out of work - especially if you're older and out of work - the harder
it becomes to get a job offer.
The job-finding rate declines by roughly 50% within eight months of unemployment, according to a 2016 paper by economists
Gregor Jarosch of Stanford University and Laura Pilossoph of the Federal Reserve Bank of New York. "Unemployment duration
has a strongly negative effect on the likelihood of subsequent employment," wrote researchers from the University of
Maryland and the U.S. Census Bureau in another 2016 paper.
"Once upon a time, you could take that first job and it would lead to the next job and the job after that," said Town
Hall panelist John Colborn, chief operating officer at the nonprofit JEVS Human Services, of Philadelphia. "The notion of a
career ladder offered some hope of getting back into the labor market. The rungs of the ladder are getting harder and harder
to find and some of them are broken."
In inner cities, said Kimberly McClain, CEO of The Newark Alliance, "there's an extra layer beyond being older and out of
work. There are issues of race and poverty and being defined by your ZIP Code. There's an incredible sense of urgency."
... ... ...
Filling a work gap
If you are over 50, unemployed and have a work gap right now, the Town Hall speakers said, fill it by volunteering,
getting an internship, doing project work, job-shadowing someone in a field you want to be in or taking a class to re-skill.
These kind of things "make a candidate a lot more attractive," said Colborn. Be sure to note them in your cover letter and
résumé.
Town Hall panelist Amanda Mullan, senior vice president and chief human resources officer of the New Jersey Resources
Corp. (a utility company based in Wall, N.J.), said that when her company is interviewing someone who has been out of work
lately, "we will ask: 'What have you done during that time frame?' If we get 'Nuthin,' that shows something about the
individual, from a motivational perspective."
... ... ...
The relief of working again
Finally finding work when you're over 50 and unemployed for a stretch can be a relief for far more than financial
reasons.
"Once I landed my job, the thing I most looked forward to was the weekend," said Konopka. "Not to relax, but because I
didn't have to think about finding a job anymore. That's 24/7 in your head. You're always thinking on a Saturday: 'If I'm
not doing something to find a job, will there be a posting out there?'"
At 5:30 every morning, Tony Gwiazdowski rolls out of bed, brews a pot of coffee and carefully arranges his laptop, cell phone
and notepad like silverware across the kitchen table.
And then he waits.
Gwiazdowski, 57, has been waiting for 16 months. Since losing his job as a transportation sales manager in February 2009, he wakes
each morning to the sobering reminder that, yes, he is still unemployed. So he pushes aside the fatigue, throws on some clothes and
sends out another flurry of resumes and cheery cover letters.
But most days go by without a single phone call. And around sundown, when he hears his neighbors returning home from work, Gwiazdowski
-- the former mayor of Hillsborough -- can't help but allow himself one tiny sigh of resignation.
"You sit there and you wonder, 'What am I doing wrong?'" said Gwiazdowski, who finds companionship in his 2-year-old golden retriever,
Charlie, until his wife returns from work.
"The worst moment is at the end of the day when it's 4:30 and you did everything you could, and the phone hasn't rung, the e-mails
haven't come through."
Gwiazdowski is one of a growing number of chronically unemployed workers in New Jersey and across the country who are struggling
to get through what is becoming one long, jobless nightmare -- even as the rest of the economy has begun to show signs of recovery.
Nationwide, 46 percent of the unemployed -- 6.7 million Americans -- have been without work for at least half a year, by far the
highest percentage recorded since the U.S. Labor Department began tracking the data in 1948.
In New Jersey, nearly 40 percent of the 416,000 unemployed workers last year fit that profile, up from about 20 percent in previous
years, according to the department, which provides only annual breakdowns for individual states. Most of them were unemployed for
more than a year.
But the repercussions of chronic unemployment go beyond the loss of a paycheck or the realization that one might never find the
same kind of job again. For many, the sinking feeling of joblessness -- with no end in sight -- can take a psychological toll, experts
say.
Across the state, mental health crisis units saw a 20 percent increase in demand last year as more residents reported suffering
from unemployment-related stress, according to the New Jersey Association of Mental Health Agencies.
"The longer the unemployment continues, the more impact it will have on their personal lives and mental health," said Shauna Moses,
the association's associate executive director. "There's stress in the marriage, with the kids, other family members, with friends."
And while a few continue to cling to optimism, even the toughest admit there are moments of despair: Fear of never finding work,
envy of employed friends and embarassment at having to tell acquaintances that, nope, still no luck.
"When they say, 'Hi Mayor,' I don't tell a lot of people I'm out of work -- I say I'm semi-retired," said Gwiazdowski, who maxed
out on unemployment benefits several months ago.
"They might think, 'Gee, what's wrong with him? Why can't he get a job?' It's a long story and maybe people really don't care
and now they want to get away from you."
SECOND TIME AROUND
Lynn Kafalas has been there before, too. After losing her computer training job in 2000, the East Hanover resident took four agonizing
years to find new work -- by then, she had refashioned herself into a web designer.
That not-too-distant experience is why Kafalas, 52, who was laid off again eight months ago, grows uneasier with each passing
day. Already, some of her old demons have returned, like loneliness, self-doubt and, worst of all, insomnia. At night, her mind races
to dissect the latest interview: What went wrong? What else should she be doing? And why won't even Barnes & Noble hire her?
"It's like putting a stopper on my life -- I can't move on," said Kafalas, who has given up karate lessons, vacations and regular
outings with friends. "Everything is about the interviews."
And while most of her friends have been supportive, a few have hinted to her that she is doing something wrong, or not doing enough.
The remarks always hit Kafalas with a pang.
In a recent study, researchers at Rutgers University found that the chronically unemployed are prone to high levels of stress,
anxiety, depression, loneliness and even substance abuse, which take a toll on their self-esteem and personal relationships.
"They're the forgotten group," said Carl Van Horn, director of the John J. Heldrich Center for Workforce Development at Rutgers,
and a co-author of the report. "And the longer you are unemployed, the less likely you are to get a job."
Of the 900 unemployed workers first interviewed last August for the study, only one in 10 landed full-time work by March of this
year, and only half of those lucky few expressed satisfaction with their new jobs. Another one in 10 simply gave up searching.
Among those who were still unemployed, many struggled to make ends meet by borrowing from friends or family, turning to government
food stamps and forgoing health care, according to the study.
More than half said they avoided all social contact, while slightly less than half said they had lost touch with close friends.
Six in 10 said they had problems sleeping.
Kafalas says she deals with her chronic insomnia by hitting the gym for two hours almost every evening, lifting weights and pounding
the treadmill until she feels tired enough to fall asleep.
"Sometimes I forget what day it is. Is it Tuesday? And then I'll think of what TV show ran the night before," she said. "Waiting
is the toughest part."
AGE A FACTOR
Generally, the likelihood of long-term unemployment increases with age, experts say. A report by the National Employment Law Project
this month found that nearly half of those who were unemployed for six months or longer were at least 45 years old. Those between
16 and 24 made up just 14 percent.
Tell that to Adam Blank, 24, who has been living with his girlfriend and her parents at their Martinsville home since losing his
sales job at Best Buy a year and half ago.
Blank, who graduated from Rutgers with a major in communications, says he feels like a burden sometimes, especially since his
girlfriend, Tracy Rosen, 24, works full-time at a local nonprofit. He shows her family gratitude with small chores, like taking out
the garbage, washing dishes, sweeping floors and doing laundry.
Still, he often feels inadequate.
"All I'm doing on an almost daily basis is sitting around the house trying to keep myself from going stir-crazy," said Blank,
who dreams of starting a social media company.
When he is feeling particularly low, Blank said he turns to a tactic employed by prisoners of war in Vietnam: "They used to build
dream houses in their head to help keep their sanity. It's really just imagining a place I can call my own."
LESSONS LEARNED
Meanwhile, Gwiazdowski, ever the optimist, says unemployment has taught him a few things.
He has learned, for example, how to quickly assess an interviewer's age and play up or down his work experience accordingly --
he doesn't want to appear "threatening" to a potential employer who is younger. He has learned that by occasionally deleting and
reuploading his resume to job sites, his entry appears fresh.
"It's almost like a game," he said, laughing. "You are desperate, but you can't show it."
But there are days when he just can't find any humor in his predicament -- like when he finishes a great interview but receives
no offer, or when he hears a fellow job seeker finally found work and feels a slight twinge of jealousy.
"That's what I'm missing -- putting on that shirt and tie in the morning and going to work," he said.
The memory of getting dressed for work is still so vivid, Gwiazdowski says, that he has to believe another job is just around
the corner.
"You always have to hope that that morning when you get up, it's going to be the day," he said.
"Today is going to be the day that something is going to happen."
I collect from the state of iowa, was on tier I and when the gov't recessed without passing extension, iowa stopped paying
tier I claims that were already open, i was scheduled to be on tier I until july 15th, and its gone now, as a surprise, when i
tried to claim my week this week i was notified. SURPRISE, talk about stress.
This is terrible....just wait until RIF'd teachers hit the unemployment offices....but then, this is what NJ wanted...fired
teachers who are to blame for the worst recession our country has seen in 150 years...thanks GWB.....thanks Donald Rumsfeld......thanks
Dick Cheney....thanks Karl "Miss Piggy" Rove...and thank you Mr. Big Boy himself...Gov Krispy Kreame!
For readers who care about this nation's unemployed- Call your Senators to pass HR 4213, the "Extenders" bill. Unfortunately,
it does not add UI benefits weeks, however it DOES continue the emergency federal tiers of UI. If it does not pass this week many
of us are cut off at 26 wks. No tier 1, 2 -nothing.
The longer you are unemployed, the more you are effected by those factors.
Notable quotes:
"... The good news is that only a relatively small number of people are seriously affected by the stress of unemployment to the extent they need medical assistance. Most people don't get to the serious levels of stress, and much as they loathe being unemployed, they suffer few, and minor, ill effects. ..."
"... Worries about income, domestic problems, whatever, the list is as long as humanity. The result of stress is a strain on the nervous system, and these create the physical effects of the situation over time. The chemistry of stress is complex, but it can be rough on the hormonal system. ..."
"... Not at all surprisingly, people under stress experience strong emotions. It's a perfectly natural response to what can be quite intolerable emotional strains. It's fair to say that even normal situations are felt much more severely by people already under stress. Things that wouldn't normally even be issues become problems, and problems become serious problems. Relationships can suffer badly in these circumstances, and that, inevitably, produces further crises. Unfortunately for those affected, these are by now, at this stage, real crises. ..."
"... Some people are stubborn enough and tough enough mentally to control their emotions ruthlessly, and they do better under these conditions. Even that comes at a cost, and although under control, the stress remains a problem. ..."
"... One of the reasons anger management is now a growth industry is because of the growing need for assistance with severe stress over the last decade. This is a common situation, and help is available. ..."
"... Depression is universally hated by anyone who's ever had it. ..."
"... Very important: Do not, under any circumstances, try to use drugs or alcohol as a quick fix. They make it worse, over time, because they actually add stress. Some drugs can make things a lot worse, instantly, too, particularly the modern made-in-a-bathtub variety. They'll also destroy your liver, which doesn't help much, either. ..."
"... You don't have to live in a gym to get enough exercise for basic fitness. A few laps of the pool, a good walk, some basic aerobic exercises, you're talking about 30-45 minutes a day. It's not hard. ..."
It's almost impossible to describe the various psychological impacts, because there are so many. There are sometimes serious consequences,
including suicide, and, some would say worse, chronic depression.
There's not really a single cause and effect. It's a compound effect, and unemployment, by adding stress, affects people, often
badly.
The world doesn't need any more untrained psychologists, and we're not pretending to give medical advice. That's for professionals.
Everybody is different, and their problems are different. What we can do is give you an outline of the common problems, and what
you can do about them.
The good news is that only a relatively small number of people are seriously affected by the stress of unemployment to the extent
they need medical assistance. Most people don't get to the serious levels of stress, and much as they loathe being unemployed, they
suffer few, and minor, ill effects.
For others, there are a series of issues, and the big three are:
Stress
Anger, and other negative emotions
Depression
Stress
Stress is Stage One. It's a natural result of the situation. Worries about income, domestic problems, whatever, the list is as
long as humanity. The result of stress is a strain on the nervous system, and these create the physical effects of the situation
over time. The chemistry of stress is complex, but it can be rough on the hormonal system.
Over an extended period, the body's natural hormonal balances are affected, and this can lead to problems. These are actually
physical issues, but the effects are mental, and the first obvious effects are, naturally, emotional.
Anger, and other negative emotions
Not at all surprisingly, people under stress experience strong emotions. It's a perfectly natural response to what can be quite
intolerable emotional strains. It's fair to say that even normal situations are felt much more severely by people already under stress.
Things that wouldn't normally even be issues become problems, and problems become serious problems. Relationships can suffer badly in these circumstances, and that, inevitably, produces further crises. Unfortunately for those
affected, these are by now, at this stage, real crises.
If the actual situation was already bad, this mental state makes it a lot worse. Constant aggravation doesn't help people to keep
a sense of perspective. Clear thinking isn't easy when under constant stress.
Some people are stubborn enough and tough enough mentally to control their emotions ruthlessly, and they do better under these
conditions. Even that comes at a cost, and although under control, the stress remains a problem.
One of the reasons anger management is now a growth industry is because of the growing need for assistance with severe stress
over the last decade. This is a common situation, and help is available.
If you have reservations about seeking help, bear in mind it can't possibly be any worse than the problem.
Depression
Depression is universally hated by anyone who's ever had it. This is the next stage, and it's caused by hormonal imbalances which
affect serotonin. It's actually a physical problem, but it has mental effects which are sometimes devastating, and potentially life
threatening.
The common symptoms are:
Difficulty in focusing mentally, thoughts all over the place in no logical order
Fits of crying for no known reason
Illogical, or irrational patterns of thought and behavior
Sadness
Suicidal thinking
It's a disgusting experience. No level of obscenity could possibly describe it. Depression is misery on a level people wouldn't
conceive in a nightmare. At this stage the patient needs help, and getting it is actually relatively easy. It's convincing the person they need to do something about it that's difficult. Again, the mental state is working against the person. Even admitting there's a problem is hard for many people in this condition.
Generally speaking, a person who is trusted is the best person to tell anyone experiencing the onset of depression to seek help. Important: If you're experiencing any of those symptoms:
Get on the phone and make an appointment to see your doctor. It takes half an hour for a diagnosis, and you can be on your
way home with a cure in an hour. You don't have to suffer. The sooner you start to get yourself out of depression, the better.
Avoid any antidepressants with the so-called withdrawal side effects. They're not too popular with patients, and are under
some scrutiny. The normal antidepressants work well enough for most people.
Very important: Do not, under any circumstances, try to use drugs or alcohol as a quick fix. They make it worse, over time, because they actually add stress. Some drugs can make things a lot worse, instantly, too, particularly
the modern made-in-a-bathtub variety. They'll also destroy your liver, which doesn't help much, either.
Alcohol, in particular, makes depression much worse. Alcohol is a depressant, itself, and it's also a nasty chemical mix with
all those stress hormones.
If you've ever had alcohol problems, or seen someone with alcohol wrecking their lives, depression makes things about a million
times worse.
Just don't do it. Steer clear of any so-called stimulants, because they don't mix with antidepressants, either.
Unemployment and staying healthy
The above is what you need to know about the risks of unemployment to your health and mental well being.
These situations are avoidable.
Your best defense against the mental stresses and strains of unemployment, and their related problems is staying healthy.
We can promise you that is nothing less than the truth. The healthier you are, the better your defenses against stress, and the
more strength you have to cope with situations.
Basic health is actually pretty easy to achieve:
Diet
Eat real food, not junk, and make sure you're getting enough food. Your body can't work with resources it doesn't have. Good food
is a real asset, and you'll find you don't get tired as easily. You need the energy reserves.
Give yourself a good selection of food that you like, that's also worth eating.
The good news is that plain food is also reasonably cheap, and you can eat as much as you need. Basic meals are easy enough to
prepare, and as long as you're getting all the protein veg and minerals you need, you're pretty much covered.
You can also use a multivitamin cap, or broad spectrum supplements, to make sure you're getting all your trace elements. Also
make sure you're getting the benefits of your food by taking acidophilus or eating yogurt regularly.
Exercise
You don't have to live in a gym to get enough exercise for basic fitness. A few laps of the pool, a good walk, some basic aerobic
exercises, you're talking about 30-45 minutes a day. It's not hard.
Don't just sit and suffer
If anything's wrong, check it out when it starts, not six months later. Most medical conditions become serious when they're allowed
to get worse.
For unemployed people the added risk is also that they may prevent you getting that job, or going for interviews. If something's
causing you problems, get rid of it.
Nobody who's been through the blender of unemployment thinks it's fun.
Anyone who's really done it tough will tell you one thing:
Don't be a victim. Beat the problem, and you'll really appreciate the feeling.
"... According to Amazon's metrics, I was one of their most productive order pickers -- I was a machine, and my pace would accelerate throughout the course of a shift. What they didn't know was that I stayed fast because if I slowed down for even a minute, I'd collapse from boredom and exhaustion ..."
"... toiling in some remote corner of the warehouse, alone for 10 hours, with my every move being monitored by management on a computer screen. ..."
"... ISS could simply deactivate a worker's badge and they would suddenly be out of work. They treated us like beggars because we needed their jobs. Even worse, more than two years later, all I see is: Jeff Bezos is hiring. ..."
"... I have never felt more alone than when I was working there. I worked in isolation and lived under constant surveillance ..."
"... That was 2012 and Amazon's labor and business practices were only beginning to fall under scrutiny. ..."
"... I received $200 a week for the following six months and I haven't had any source of regular income since those benefits lapsed. I sold everything in my apartment and left Pennsylvania as fast as I could. I didn't know how to ask for help. I didn't even know that I qualified for food stamps. ..."
Nichole Gracely has a master's degree and was one of Amazon's best order pickers. Now, after
protesting the company, she's homeless.
I am homeless. My worst days now are better than my best days working at Amazon.
According to Amazon's metrics, I was one of their most productive order pickers -- I was a machine,
and my pace would accelerate throughout the course of a shift. What they didn't know was that
I stayed fast because if I slowed down for even a minute, I'd collapse from boredom and exhaustion.
During peak season, I trained incoming temps regularly. When that was over, I'd be an ordinary
order picker once again, toiling in some remote corner of the warehouse, alone for 10 hours,
with my every move being monitored by management on a computer screen.
Superb performance did not guarantee job security. ISS is the temp agency that provides warehouse
labor for Amazon and they are at the center of the SCOTUS case Integrity Staffing Solutions
vs. Busk. ISS could simply deactivate a worker's badge and they would suddenly be out of work.
They treated us like beggars because we needed their jobs. Even worse, more than two years later,
all I see is: Jeff Bezos is hiring.
I have never felt more alone than when I was working there. I worked in isolation and lived
under constant surveillance. Amazon could mandate overtime and I would have to comply with any
schedule change they deemed necessary, and if there was not any work, they would send us home
early without pay. I started to fall behind on my bills.
At some point, I lost all fear. I had already been through hell. I protested Amazon. The
gag order was lifted and I was free to speak. I spent my last days in a lovely apartment constructing
arguments on discussion boards, writing articles and talking to reporters. That was 2012 and
Amazon's labor and business practices were only beginning to fall under scrutiny. I walked away
from Amazon's warehouse and didn't have any other source of income lined up.
I cashed in on my excellent credit, took out cards, and used them to pay rent and buy food
because it would be six months before I could receive my first unemployment compensation check.
I received $200 a week for the following six months and I haven't had any source of regular
income since those benefits lapsed. I sold everything in my apartment and left Pennsylvania
as fast as I could. I didn't know how to ask for help. I didn't even know that I qualified for
food stamps.
I furthered my Amazon protest while homeless in Seattle. When the Hachette dispute flared
up I "flew a sign," street parlance for panhandling with a piece of cardboard: "I was an order
picker at amazon.com. Earned degrees. Been published. Now,
I'm homeless, writing and doing this. Anything helps."
I have made more money per word with my signs than I will probably ever earn writing, and
I make more money per hour than I will probably ever be paid for my work. People give me money
and offer well wishes and I walk away with a restored faith in humanity.
I flew my protest sign outside Whole Foods while Amazon corporate employees were on lunch
break, and they gawked. I went to my usual flying spots around Seattle and made more money per
hour protesting Amazon with my sign than I did while I worked with them. And that was in Seattle.
One woman asked, "What are you writing?" I told her about the descent from working poor to homeless,
income inequality, my personal experience. She mentioned Thomas Piketty's book, we chatted a
little, she handed me $10 and wished me luck. Another guy said, "Damn, that's a great story!
I'd read it," and handed me a few bucks.
Three years later Russia is still standing... Still to a neoliberal state and not to be a USA vassal is a pipe dream. The system
is Washington-centric by design. but what is the alternative in unclear. Russia is still a neoliberal state and Putin is not eternal.
Contrary to Putin's vision, a neoliberal state can't be sovereign, it can only be a vassal of Washington. As soon as a neoliberal
state shows some independence it became a "rogue state" and punishment via financial system (and for smaller states via military actions)
will follow. Dominance in finance sphere gives the USA the ability to punish Russia to almost any extent they wish without significant
possibilities of retaliation, unless formal block of Russia and China is created.\
Russia can only retaliate in selected carefully chosen "weak spots". NGOs, media, the USA food companies (Coca-cola, junk food,
chickens, etc), financial and consulting firms (and first of all Big Three, closely connected with the USA government). Not so far nine
got under Russian government knife.
Notable quotes:
"... Yep, how dare the Russkies retaliate, when they ought to come begging on their knees to be allowed to do what the grand master in DC wants them to do ..."
"... Russians are using "trade as a geopolitical tool," warns a Washington think tank. Russia engaging in trade war – How despicable! ..."
"... And next Russans claim that "Fruit shipments from the EU have recently contained Oriental fruit moths " ..."
"... "It's not unusual for Russia to find something wrong when they have a political reason to do so". ..."
"... No word on whether his tongue immediately turned black and started to smoke, then fell out of his mouth. It's not unusual for the United States to apply sanctions when they have a political reason to do so, and fuck-all else. ..."
"... I was wrong about Rosoboronexport. It is EXEMPT from the list of sanctions. No doubt some of the deals (titanium) are critical for the US's own MIC. ..."
"... The baying audience of FOX-friends might be stoked at the idea of economic war with Russia, but the cold-eyed businessmen are likely to be unenthused at best ..."
Found at zerohedge, a US reaction on Russia's reaction to the sanctions:
"Assuming that they take this action, it would be blatant protectionism," Clayton Yeutter, a U.S. Trade Representative
under President Ronald Reagan, said in a phone interview. "There is little or no legitimacy to their complaints."
Russians are using "trade as a geopolitical tool," warns a Washington think tank. Russia engaging in trade war – How despicable!
First Russkies pretend to find antibiotics in McDonalds "cheese" products. But everybody knows the cheese cannot possibly contain
antibiotics, because it's not even real cheese! (it's a kind of edible plastic substance )
And next Russans claim that "Fruit shipments from the EU have recently contained Oriental fruit moths "
That's a lie too.
Everybody knows that if you eat your Polish quinces with a runcible spoon, then they will not contain any measurable amounts
of moth larvae.
"It's not unusual for Russia to find something wrong when they have a political reason to do so".
No word on whether his tongue immediately turned black and started to smoke, then fell out of his mouth. It's not unusual for
the United States to apply sanctions when they have a political reason to do so, and fuck-all else.
I was wrong about Rosoboronexport. It is EXEMPT from the list of sanctions. No doubt some of the deals (titanium) are critical
for the US's own MIC. Put Kadyrov or someone on the board and force Congress to slit Boeing's throat.
Or hire him to the company that produces rolled titanium alloys for Boeing and Airbus. A shot across the bow to say that Western
leaders will have to be standing in front of their populations as they crash their economies. Russia won't do it for them.
Excellent reasoning. The baying audience of FOX-friends might be stoked at the idea of economic war with Russia, but the cold-eyed
businessmen are likely to be unenthused at best. This is a great plan for achieving leverage cheaply and easily, and the
U.S. government would be left 'splaining to Boeing that they had to lay off a couple of thousand workers because a bad man was
appointed to the board of their major supplier.
The west is locked into its lame sanctions groove, and too proud to back down.
This might be
the big shootout from which only one currency will walk away.
"... I got to thinking today about how neocon and neoliberal are becoming interchangeable terms. ..."
"... As neoconservatism developed, that is with Iraq and Afghanistan, the neocons even came to embrace nation building which had always been anathema to traditional conservatism. Neocons sold this primarily by casting nation building in military terms, the creation and training of police and security forces in the target country. ..."
"... 9/11 too was critical. It vastly increased the scope of the neocon project in spawning the Global War on Terror. It increased the stage of neocon operations to the entire planet. ..."
"... Politically, neoconservatism has become the bipartisan foreign policy consensus. Democrats are every bit as neocon in their views as Republicans. Only a few libertarians on the right and progressives on the left reject it. ..."
"... The roots of neoliberalism are the roots of kleptocracy. Both begin under Carter. Neoliberalism also known at various times and places as the Washington Consensus (under Clinton) and the Chicago School is the political expression for public consumption of the kleptocratic economic philosophy, just as libertarian and neoclassical economics (both fresh and salt water varieties) are its academic and governmental face. The central tenets of neoliberalism are deregulation, free markets, and free trade. If neoliberalism had a prophet or a patron saint, it was Milton Friedman. ..."
"... Again just as neoconservatism and kleptocracy or bipartisan so too is neoliberalism. There really is no daylight between Reaganism/supply side economics/trickledown on the Republican side and Clinton's Washington Consensus or Team Obama on the other. ..."
"... The distinctions between neoconservatism and neoliberalism are being increasingly lost, perhaps because most of our political classes are practitioners of both. ..."
"... At the same time, neoliberalism went from domestic to global, and here I am not just thinking about neoliberal experiments, like Pinochet's Chile or post-Soviet Russia, but the financialization of the world economy and the adoption of kleptocracy as the world economic model. ..."
"... I'm now under the opinion that you can't talk about any of the "neo-isms" without talking about the corporate state. ..."
"... With neocons, it manifests itself through the military-industrial complex (Boeing, Raytheon, etc.), and with neolibs it manifests itself through finance and industrial policy. ..."
"... But each leg has two components, a statist component and a corporate component. ..."
"... It also explains why economic/financial interests (neolib) are now considered national security interests (neocon). The viability of the state is now tied to the viability of the corporation. ..."
"... Corporate/statist (not sure "corporate" captures the looting/rentier aspect though). We see it everywhere, for example in the revolving door. ..."
"... I think you could also make the argument that Obama is perhaps the most ideal combination of neolib & neocon. ..."
"... A reading of the classical liberal economists puts some breaks on the markets, corporations, etc. Neoliberalism goes to the illogical extremes of market theory and iirc, has some influence from the Austrian school ... which gives up on any pretense of scientific exposition of economics or rationality at the micro level, assuming that irrationality will magically become rational behavior in aggregate. ..."
"... Therefore, US conservatives post Eisenhower but especially post Reagan are almost certainly economic neoliberals. Since Clinton, liberals/Democrats have been too (at least the elected ones). You nailed neoconservative and both parties are in foreign policy since at least Clinton ... though here lets not forget to go back as far as JFK and his extreme anti-Communism that led to all sorts of covert operations, The Bay of Pigs, Vietnam, and the Cuban Missile Crisis. Remember, the Soviets put the missiles in Cuba because we put missiles in Turkey and they backed down from Cuba because we agreed to remove the missiles from Turkey; Nikita was nice enough not to talk about that so that Kennedy didn't lose face. ..."
"... Perhaps it should be pointed out that the Clintons became fabulously wealthy just after Bill left office, mostly on the strength of his speaking engagements for the financial sector that he'd just deregulated. ..."
"... The unfortunate fact of the matter is that at that level of politics, the levers of money and power work equally well on both party's nomenklatura. They flock to it like moths to porch light. ..."
"... "Don't believe them, don't fear them, don't ask anything of them" - Aleksandr Solzhenitsyn ..."
I got to thinking today about how neocon and neoliberal are becoming interchangeable terms. They did not start out that
way. My understanding is they are ways of rationalizing breaks with traditional conservatism and liberalism. Standard conservatism
was fairly isolationist. Conservatism's embrace of the Cold War put it at odds with this tendency. This was partially resolved by
accepting the Cold War as a military necessity despite its international commitments but limiting civilian programs like foreign
aid outside this context and rejecting the concept of nation building altogether.
With the end of the Cold War conservative internationalism needed a new rationale, and this was supplied by the neoconservatives.
They advocated the adoption of conservatism's Cold War military centered internationalism as the model for America's post-Cold War
international relations. After all, why drop a winning strategy? America had won the Cold War against a much more formidable opponent
than any left on the planet. What could go wrong?
America's ability not simply to project but its willingness to use military power was equated with its power more generally. If
America did not do this, it was weak and in decline. However, the frequent use of military power showed that America was great and
remained the world's hegemon. In particular, the neocons focused on the Middle East. This sales pitch gained them the backing of
both supporters of Israel (because neoconservatism was unabashedly pro-Israel) and the oil companies. The military industrial complex
was also on board because the neocon agenda effectively countered calls to reduce military spending. But neoconservatism was not
just confined to these groups. It appealed to both believers in American exceptionalism and backers of humanitarian interventions
(of which I once was one).
As neoconservatism developed, that is with Iraq and Afghanistan, the neocons even came to embrace nation building which had always
been anathema to traditional conservatism. Neocons sold this primarily by casting nation building in military terms, the creation
and training of police and security forces in the target country.
9/11 too was critical. It vastly increased the scope of the neocon project in spawning the Global War on Terror. It increased
the stage of neocon operations to the entire planet. It effectively erased the distinction between the use of military force against
countries and individuals. Individuals more than countries became targets for military, not police, action. And unlike traditional
wars or the Cold War itself, this one would never be over. Neoconservatism now had a permanent raison d'être.
Politically, neoconservatism has become the bipartisan foreign policy consensus. Democrats are every bit as neocon in their views
as Republicans. Only a few libertarians on the right and progressives on the left reject it.
Neoliberalism, for its part, came about to address the concern of liberals, especially Democrats, that they were too anti-business
and too pro-union, and that this was hurting them at the polls. It was sold to the rubiat as pragmatism.
The roots of neoliberalism are the roots of kleptocracy. Both begin under Carter. Neoliberalism also known at various times and
places as the Washington Consensus (under Clinton) and the Chicago School is the political expression for public consumption of the
kleptocratic economic philosophy, just as libertarian and neoclassical economics (both fresh and salt water varieties) are its academic
and governmental face. The central tenets of neoliberalism are deregulation, free markets, and free trade. If neoliberalism had a
prophet or a patron saint, it was Milton Friedman.
Again just as neoconservatism and kleptocracy or bipartisan so too is neoliberalism. There really is no daylight between Reaganism/supply
side economics/trickledown on the Republican side and Clinton's Washington Consensus or Team Obama on the other.
And just as we saw with neoconservatism, neoliberalism expanded from its core premises and effortlessly transitioned into globalization,
which can also be understood as global kleptocracy.
The distinctions between neoconservatism and neoliberalism are being increasingly lost, perhaps because most of our political
classes are practitioners of both. But initially at least neoconservatism was focused on foreign policy and neoliberalism on
domestic economic policy. As the War on Terror expanded, however, neoconservatism came back home with the creation and expansion
of the surveillance state.
At the same time, neoliberalism went from domestic to global, and here I am not just thinking about neoliberal experiments,
like Pinochet's Chile or post-Soviet Russia, but the financialization of the world economy and the adoption of kleptocracy as the
world economic model.
jest on Mon, 08/20/2012 - 5:55am
I'm now under the opinion that you can't talk about any of the "neo-isms" without talking about the corporate state.
That's really the tie that binds the two things you are speaking of.
With neocons, it manifests itself through the military-industrial complex (Boeing, Raytheon, etc.), and with neolibs it
manifests itself through finance and industrial policy.
For example, you need the US gov't to bomb Iraq (Raytheon) in order to secure oil (Halliburton), which is priced & financed
in US dollars (Goldman Sachs). It's like a 3-legged stool; if you remove one of these legs, the whole thing comes down. But
each leg has two components, a statist component and a corporate component.
The entity that enables all of this is the corporate state.
It also explains why economic/financial interests (neolib) are now considered national security interests (neocon). The viability
of the state is now tied to the viability of the corporation.
lambert on Mon, 08/20/2012 - 9:18am
Corporate/statist (not sure "corporate" captures the looting/rentier aspect though). We see it everywhere, for example in the
revolving door.
I think the stool has more legs and is also more dynamic; more like Ikea furniture. For example, the press is surely critical
in organizing the war.
But the yin/yang of neo-lib/neo-con is nice: It's as if the neo-cons handle the kinetic aspects (guns, torture) and the neo-libs
handle the mental aspects (money, mindfuckery) but both merge (like Negronponte being on the board of Americans Select) over time
as margins fall and decorative aspects like democratic institutions and academic freedom get stripped away. The state and the
corporation have always been tied to each other but now the ties are open and visible (for example, fines are just a cost of doing
business, a rent on open corruption.)
And then there's the concept of "human resource," that abstracts all aspects of humanity away except those that are exploitable.
First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi
jest on Mon, 08/20/2012 - 1:37pm
I like the term much better than Fascist, as it is 1) more accurate, 2) avoids the Godwin's law issue, and 3) makes them sound
totalitarianist.
Yes, I would agree that additional legs make sense. The media aspect is essential, as it neutralizes the freedom of the press,
without changing the constitution. It dovetails pretty well with the notion of Inverted Totalitarianism.
I think you could also make the argument that Obama is perhaps the most ideal combination of neolib & neocon. The
two sides of him flow together so seamlessly, no one seems to notice. But that's in part because he is so corporate.
Lex on Mon, 08/20/2012 - 8:28am
Actually, neoliberalism is an economic term. An economic liberal in the UK and EU is for open markets, capitalism, etc. You're
right that neoliberalism comes heavily from the University of Chicago, but it has little to do with American political liberalism.
A reading of the classical liberal economists puts some breaks on the markets, corporations, etc. Neoliberalism goes to the
illogical extremes of market theory and iirc, has some influence from the Austrian school ... which gives up on any pretense of
scientific exposition of economics or rationality at the micro level, assuming that irrationality will magically become rational
behavior in aggregate.
Therefore, US conservatives post Eisenhower but especially post Reagan are almost certainly economic neoliberals. Since Clinton,
liberals/Democrats have been too (at least the elected ones). You nailed neoconservative and both parties are in foreign policy
since at least Clinton ... though here lets not forget to go back as far as JFK and his extreme anti-Communism that led to all
sorts of covert operations, The Bay of Pigs, Vietnam, and the Cuban Missile Crisis. Remember, the Soviets put the missiles in
Cuba because we put missiles in Turkey and they backed down from Cuba because we agreed to remove the missiles from Turkey; Nikita
was nice enough not to talk about that so that Kennedy didn't lose face.
"Don't believe them, don't fear them, don't ask anything of them" - Aleksandr Solzhenitsyn
Hugh on Mon, 08/20/2012 - 3:57pm
I agree that neoconservatism and neoliberalism are two facets of corporatism/kleptocracy. I like the kinetic vs. white collar
distinction.
The roots of neoliberalism go back to the 1940s and the Austrians, but in the US it really only comes into currency with Clinton
as a deliberate shift of the Democratic/liberal platform away from labor and ordinary Americans to make it more accommodating
to big business and big money. I had never heard of neoliberalism before Bill Clinton but it is easy to see how those tendencies
were at work under Carter, but not under Johnson.
This was a rough and ready sketch. I guess I should also have mentioned PNAC or the Project to Find a New Mission for the MIC.
Hugh on Mon, 08/20/2012 - 10:44pm
I have never understood this love of Clinton that some Democrats have just as I have never understood the attraction of Reagan
for Republicans. There is no Clinton faction. There is no Obama faction. Hillary Clinton is Obama's frigging Secretary of State.
Robert Rubin and Larry Summers, both of whom served as Bill Clinton's Treasury Secretary, were Obama's top financial and economic
advisors. Timothy Geithner was their protégé. Leon Panetta Obama's Director of the CIA and current Secretary of Defense was Clinton's
Director of OMB and then Chief of Staff.
The Democrats as a party are neoconservative and neoliberal as are Obama and the Clintons. As are Republicans.
What does corporations need regulation mean? It is rather like saying that the best way to deal with cancer is to find a cure
for it. Sounds nice but there is no content to it. Worse in the real world, the rich own the corporations, the politicians, and
the regulators. So even if you come up with good ideas for regulation they aren't going to happen.
What you are suggesting looks a whole lot another iteration of lesser evilism meets Einstein's definition of insanity. How
is it any different from any other instance of Democratic tribalism?
Lex on Mon, 08/20/2012 - 11:49pm
Perhaps it should be pointed out that the Clintons became fabulously wealthy just after Bill left office, mostly on the strength
of his speaking engagements for the financial sector that he'd just deregulated. Both he and Hillary hew to a pretty damned neoconservative
foreign policy ... with that dash of "humanitarian interventionism" that makes war palatable to liberals.
But your deeper point is that there isn't enough of a difference between Obama and Bill Clinton to really draw a distinction,
not in terms of ideology. What a theoretical Hillary Clinton presidency would have looked like is irrelevant, because both Bill
and Obama talked a lot different than they walked. Any projection of a Hillary Clinton administration is just that and requires
arguing that it would have been different than Bill's administration and policies.
The unfortunate fact of the matter is that at that level of politics, the levers of money and power work equally well on
both party's nomenklatura. They flock to it like moths to porch light.
That the money chose Obama over Clinton doesn't say all that much, because there's no evidence suggesting that the money didn't
like Clinton or that it would have chosen McCain over Clinton. It's not as if Clinton's campaign was driven into the ground by
lack of funds.
Regardless, that to be a Democrat i would kind of have to chose between two factions that are utterly distasteful to me just
proves that i have no business being a Democrat. And since i wouldn't vote for either of those names, i guess i'll just stick
to third parties and exit the political tribalism loop for good.
"Don't believe them, don't fear them, don't ask anything of them" - Aleksandr Solzhenitsyn
"... Total 2015 gross passenger payments were 200% higher than 2014, but Uber corporate revenue improved 300% because Uber cut the driver share of passenger revenue from 83% to 77%. This was an effective $500 million wealth transfer from drivers to Uber's investors. ..."
"... Uber's P&L gains were wiped out by higher non-EBIDTAR expense. Thus the 300% Uber revenue growth did not result in any improvement in Uber profit margins. ..."
"... In 2016, Uber unilaterally imposed much larger cuts in driver compensation, costing drivers an additional $3 billion. [6] Prior to Uber's market entry, the take home pay of big-city cab drivers in the US was in the $12-17/hour range, and these earnings were possible only if drivers worked 65-75 hours a week. ..."
"... An independent study of the net earnings of Uber drivers (after accounting for the costs of the vehicles they had to provide) in Denver, Houston and Detroit in late 2015 (prior to Uber's big 2016 cuts) found that driver earnings had fallen to the $10-13/hour range. [7] Multiple recent news reports have documented how Uber drivers are increasing unable to support themselves from their reduced share of passenger payments. [8] ..."
"... Since mass driver defections would cause passenger volume growth to collapse completely, Uber was forced to reverse these cuts in 2017 and increased the driver share from 68% to 80%. This meant that Uber's corporate revenue, which had grown over 300% in 2015 and over 200% in 2016 will probably only grow by about 15% in 2017. ..."
"... Socialize the losses, privatize the gains, VC-ize the subsidies. ..."
"... The cold hard truth is that Uber is backed into a corner with severely limited abilities to tweak the numbers on either the supply or the demand side: cut driver compensation and they trigger driver churn (as has already been demonstrated), increase fare prices for riders and riders defect to cheaper alternatives. ..."
"... "Growth and Efficiency" are the sine qua non of Neoliberalism. Kalanick's "hype brilliance" was to con the market with "revenue growth" and signs ..."
Uber lost $2.5 billion in 2015, probably lost $4 billion in 2016, and is on track to lose $5
billion in 2017.
The top line on the table below shows is total passenger payments, which must be split
between Uber corporate and its drivers. Driver gross earnings are substantially higher than
actual take home pay, as gross earning must cover all the expenses drivers bear, including
fuel, vehicle ownership, insurance and maintenance.
Most of the "profit" data released by Uber over time and discussed in the press is not true
GAAP (generally accepted accounting principles) profit comparable to the net income numbers
public companies publish but is EBIDTAR contribution. Companies have significant leeway as to
how they calculate EBIDTAR (although it would exclude interest, taxes, depreciation,
amortization) and the percentage of total costs excluded from EBIDTAR can vary significantly
from quarter to quarter, given the impact of one-time expenses such as legal settlements and
stock compensation. We only have true GAAP net profit results for 2014, 2015 and the 2nd/3rd
quarters of 2017, but have EBIDTAR contribution numbers for all other periods.
[5]
Uber had GAAP net income of negative $2.6 billion in 2015, and a negative profit margin of
132%. This is consistent with the negative $2.0 billion loss and (143%) margin for the year
ending September 2015 presented in part one of the NC Uber series over a year ago.
No GAAP profit results for 2016 have been disclosed, but actual losses likely exceed $4
billion given the EBIDTAR contribution of negative $3.2 billion. Uber's GAAP losses for the 2nd
and 3rd quarters of 2017 were over $2.5 billion, suggesting annual losses of roughly $5
billion.
While many Silicon Valley funded startups suffered large initial losses, none of them lost
anything remotely close to $2.6 billion in their sixth year of operation and then doubled their
losses to $5 billion in year eight. Reversing losses of this magnitude would require the
greatest corporate financial turnaround in history.
No evidence of significant efficiency/scale gains; 2015 and 2016 margin improvements
entirely explained by unilateral cuts in driver compensation, but losses soared when Uber had
to reverse these cuts in 2017.
Total 2015 gross passenger payments were 200% higher than 2014, but Uber corporate
revenue improved 300% because Uber cut the driver share of passenger revenue from 83% to 77%.
This was an effective $500 million wealth transfer from drivers to Uber's investors. These
driver compensation cuts improved Uber's EBIDTAR margin, but Uber's P&L gains were
wiped out by higher non-EBIDTAR expense. Thus the 300% Uber revenue growth did not result in
any improvement in Uber profit margins.
In 2016, Uber unilaterally imposed much larger cuts in driver compensation, costing
drivers an additional $3 billion.
[6] Prior to Uber's market entry, the take home pay of big-city cab drivers in the US was
in the $12-17/hour range, and these earnings were possible only if drivers worked 65-75 hours a
week.
An independent study of the net earnings of Uber drivers (after accounting for the costs
of the vehicles they had to provide) in Denver, Houston and Detroit in late 2015 (prior to
Uber's big 2016 cuts) found that driver earnings had fallen to the $10-13/hour range.
[7] Multiple recent news reports have documented how Uber drivers are increasing unable to
support themselves from their reduced share of passenger payments.
[8]
A business model where profit improvement is hugely dependent on wage cuts is unsustainable,
especially when take home wages fall to (or below) minimum wage levels. Uber's primary focus
has always been the rate of growth in gross passenger revenue, as this has been a major
justification for its $68 billion valuation. This growth rate came under enormous pressure in
2017 given Uber efforts to raise fares, major increases in driver turnover as wages fell,
[9] and the avalanche of adverse publicity it was facing.
Since mass driver defections would cause passenger volume growth to collapse completely,
Uber was forced to reverse these cuts in 2017 and increased the driver share from 68% to 80%.
This meant that Uber's corporate revenue, which had grown over 300% in 2015 and over 200% in
2016 will probably only grow by about 15% in 2017.
"Uber's business model can never produce sustainable profits"
Two words not in my vocabulary are "Never" and "Always", that is a pretty absolute
statement in an non-absolute environment. The same environment that has produced the "Silicon
Valley Growth Model", with 15x earnings companies like NVIDA, FB and Tesla (Average
earnings/stock price ratio in dot com bubble was 10x) will people pay ridiculous amounts of
money for a company with no underlying fundamentals you damn right they will! Please stop
with the I know all no body knows anything, especially the psychology and irrationality of
markets which are made up of irrational people/investors/traders.
My thoughts exactly. Seems the only possible recovery for the investors is a perfectly
engineered legendary pump and dump IPO scheme. Risky, but there's a lot of fools out there
and many who would also like to get on board early in the ride in fear of missing out on all
the money to be hoovered up from the greater fools. Count me out.
The author clearly distinguishes between GAAP profitability and valuations, which is after
all rather the point of the series. And he makes a more nuanced point than the half sentence
you have quoted without context or with an indication that you omitted a portion. Did you
miss the part about how Uber would have a strong incentive to share the evidence of a network
effect or other financial story that pointed the way to eventual profit? Otherwise (my words)
it is the classic sell at a loss, make it up with volume path to liquidation.
apples and oranges comparison, nvidia has lots and lots of patented tech that produces
revenue, facebook has a kajillion admittedly irrational users, but those users drive massive
ad sales (as just one example of how that company capitalizes itself) and tesla makes an
actual car, using technology that inspires it's buyers (the put your money where your mouth
is crowd and it can't be denied that tesla, whatever it's faults are, battery tech is not one
of them and that intellectual property is worth a lot, and tesla's investors are in on that
real business, profitable or otherwise)
Uber is an iphone app. They lose money and have no
path to profitability (unless it's the theory you espouse that people are unintelligent so
even unintelligent ideas work to fleece them). This article touches on one of the great
things about the time we now inhabit, uber drivers could bail en masse, there are two sides
to the low attachment employees who you can get rid of easily. The drivers can delete the
uber app as soon as another iphone app comes along that gets them a better return
For many air travelers, getting to and from the airport has long been part of the whole
miserable experience. Do they drive and park in some distant lot? Take mass transit or a
taxi? Deal with a rental car?
Ride-hailing services like Uber and Lyft are quickly changing those calculations. That
has meant a bit less angst for travelers.
But that's not the case for airports. Travelers' changing habits, in fact, have begun to
shake the airports' financial underpinnings. The money they currently collect from
ride-hailing services do not compensate for the lower revenues from the other sources.
At the same time, some airports have had to add staff to oversee the operations of the
ride-hailing companies, the report said. And with more ride-hailing vehicles on the roads
outside terminals,
there's more congestion.
Socialize the losses, privatize the gains, VC-ize the subsidies.
The cold hard truth is that Uber is backed into a corner with severely limited abilities
to tweak the numbers on either the supply or the demand side: cut driver compensation and
they trigger driver churn (as has already been demonstrated), increase fare prices for riders
and riders defect to cheaper alternatives. The only question is how long can they keep the
show going before the lights go out, slick marketing and propaganda can only take you so far,
and one assumes the dumb money has a finite supply of patience and will at some point begin
asking the tough questions.
The irony is that Uber would have been a perfectly fine, very profitable mid-sized company
if Uber stuck with its initial model -- sticking to dense cities with limited parking,
limiting driver supply, and charging a premium price for door-to-door delivery, whether by
livery or a regular sedan. And then perhaps branching into robo-cars.
But somehow Uber/board/Travis got suckered into the siren call of self-driving cars,
triple-digit user growth, and being in the top 100 US cities and on every continent.
I've shared a similar sentiment in one of the previous posts about Uber. But operating
profitably in decent sized niche doesn't fit well with ambitions of global domination. For
Uber to be "right-sized", an admission of folly would have to be made, its managers and
investors would have to transcend the sunk cost fallacy in their strategic decision making,
and said investors would have to accept massive hits on their invested capital. The cold,
hard reality of being blindsided and kicked to the curb in the smartphone business forced
RIM/Blackberry to right-size, and they may yet have a profitable future as an enterprise
facing software and services company. Uber would benefit from that form of sober mindedness,
but I wouldn't hold my breath.
I know nothing about Softbank or its management, but I do know that the Japanese were the
dumb money rubes in the late '80's, overpaying for trophy real estate they lost billions
on.
Until informed otherwise, that's my default assumption
Softbank possibly looking to buy more Uber shares at a 30% discount is very odd. Uber had
a Series G funding round in June 2016 where a $3.5
billion investment from Saudi Arabia's Public Investment Fund resulted in its current $68
billion valuation. Now apparently Softbank wants to lead a new $6 billion funding round to
buy the shares of Uber employees and early investors at a 30% discount from this last
"valuation". It's odd because Saudi Arabia's Public Investment Fund has pledged
$45 billion to SoftBank's Vision Fund , an amount which was supposed to come from the
proceeds of its pending Aramco IPO. If the Uber bid is linked to SoftBank's Vision Fund, or
KSA money, then its not clear why this investor might be looking to literally 'double down'
from $3.5 billion o $6 billion on a declining investment.
"Growth and Efficiency" are the sine qua non of Neoliberalism. Kalanick's "hype
brilliance" was to con the market with "revenue growth" and signs of efficiency, and
hopes of greater efficiency, and make most people just overlook the essential fact
that Uber is the most unprofitable company of all time!
What comprises "Uber Expenses"? 2014 – $1.06 billion; 2015 $3.33 billion; 2016 $9.65
billion; forecast 2017 $11.418 billion!!!!!! To me this is the big question – what are
they spending $10 billion per year on?
ALso – why did driver share go from 68% in 2016 to 80% in 2017? If you use 68% as in
2016, 2017 Uber revenue is $11.808 billion, which means a bit better than break-even EBITDA,
assuming Uber expenses are as stated $11.428 billion.
Perhaps not so bleak as the article presents, although I would not invest in this
thing.
I have the same question: What comprises over 11 billion dollars in expenses in 2017?
Could it be they are paying out dividends to the early investors? Which would mean they are
cannibalizing their own company for the sake of the VC! How long can this go on before
they'll need a new infusion of cash?
Oh article does answer your 2nd question. Read this paragraph:-
Since mass driver defections would cause passenger volume growth to collapse completely
, Uber was forced to reverse these cuts in 2017 and increased the driver share from 68% to
80%. This meant that Uber's corporate revenue, which had grown over 300% in 2015 and over
200% in 2016 will probably only grow by about 15% in 2017.
As for the 1st, read this line in the article:-
There are undoubtedly a number of things Uber could do to reduce losses at the margin,
but it is difficult to imagine it could suddenly find the $4-5 billion in profit
improvement needed merely to reach breakeven.
in addition to all the points listed in the article/comments, the absolute biggest flaw
with Uber is that Uber HQ conditioned its customers on (a) cheap fares and (b) that a car is
available within minutes (1-5 if in a big city).
Those two are not mutually compatible in the long-term.
Thus (a) "We cost less" and (b) "We're more convenient" -- aren't those also the
advantages that Walmart claims and feeds as a steady diet to its ever hungry consumers? Often
if not always, disruption may repose upon delusion.
When this Uber madness blows up, I wonder if people will finally begin to discuss the
brutal reality of Silicon Valley's so called "disruption".
It is heavily built in around the idea of economic exploitation. Uber drivers are often,
especially when the true costs to operate an Uber including the vehicle depreciation are
factored in, making not very much per hour driven, especially if they don't get the surge
money.
Instacart is another example. They are paying the deliver operators very little.
At a fundamental level, I think that the Silicon Valley "disruption" model only works for
markets (like software) where the marginal cost for production is de minimus and the
products can be protected by IP laws. Volume and market power really work in those cases. But
out here in meat-space, where actual material and labor are big inputs to each item sold, you
can never just sit back on your laurels and rake in the money. Somebody else will always be
able to come and and make an equivalent product. If they can do it more cheaply, you are in
trouble.
There aren't that many areas in goods and services where the marginal costs are very
low.
Software is actually quite unique in that regard, costing merely the bandwidth and
permanent storage space to store.
Let's see:
1. From the article, they cannot go public and have limited ways to raise more money. An
IPO with its more stringent disclosure requirements would expose them.
2. They tried lowering driver compensation and found that model unsustainable.
3. There are no benefits to expanding in terms of economies of scale.
From where I am standing, it looks like a lot of industries gave similar barriers. Silicon
Valley is not going to be able to disrupt those.
Tesla, another Silicon Valley company seems to be struggling to mass produce its Model 3
and deliver an electric car that breaks even, is reliable, while disrupting the industry in
the ways that Elon Musk attempted to hype up.
So that basically leaves services and manufacturing out for Silicon Valley disruption.
UBER has become a "too big to fail" startup because of all the different tentacles of
capital from various Tier 1 VCs and investment bankers.
VCs have admitted openly that UBER is a subsidized business, meaning it's product is sold
below market value, and the losses reflect that subsidization. The whole "2 sided platform"
argument is just marketecture to hustle more investors. It's a form of service "dumping" that
puts legacy businesses into bankruptcy. Back during the dotcom bubble one popular investment
banker (Paul Deninger) characterized this model as "Terrorist Competition", i.e. coffers full
of invested cash to commoditize the market and drive out competition.
UBER is an absolute disaster that has forked the startup model in Silicon Valley in order
to drive total dependence on venture capital by founders. And its current diversification
into "autonomous vehicles", food delivery, et al are simply more evidence that the company
will never be profitable due to its whacky "blitzscaling" approach of layering on new
"businesses" prior to achieving "fit" in its current one.
It's economic model has also metastasized into a form of startup cancer that is killing
Silicon Valley as a "technology" innovator. Now it's all cargo cult marketing BS tied to
"strategic capital".
UBER is the victory of venture capital and user subsidized startups over creativity by
real entrepreneurs.
It's shadow is long and that's why this company should be ..wait for it UNBUNDLED (the new
silicon valley word attached to that other BS religion called "disruption"). Call it a great
unbundling and you can break up this monster corp any way you want.
2. The elevator pitch for Uber: subsidize rides to attract customers, put the competition
out of business, and then enjoy an unregulated monopoly, all while exploiting economically
ignorant drivers–ahem–"partners."
3. But more than one can play that game, and
4. Cab and livery companies are finding ways to survive!
If subsidizing rides is counted as an expense, (not being an accountant, I would guess it
so), then whether the subsidy goes to the driver or the passenger, that would account for the
ballooning expenses, to answer my own question. Otherwise, the overhead for operating what
Uber describes as a tech company should be minimal: A billion should fund a decent
headquarters with staff, plus field offices in, say, 100 U.S. cities. However, their global
pretensions are probably burning cash like crazy. On top of that, I wonder what the exec
compensation is like?
After reading HH's initial series, I made a crude, back-of-the-envelope calculation that
Uber would run out of money sometime in the third fiscal quarter of 2018, but that was based
on assuming losses were stabilizing in the range of 3 billion a year. Not so, according to
the article. I think crunch time is rapidly approaching. If so, then SoftBank's tender offer
may look quite appetizing to VC firms and to any Uber employee able to cash in their options.
I think there is a way to make a re-envisioned Uber profitable, and with a more independent
board, they may be able to restructure the company to show a pathway to profitability before
the IPO. But time is running out.
A not insignificant question is the recruitment and retention of the front line
"partners." It would seem to me that at some point, Uber will run out of economically
ignorant drivers with good manners and nice cars. I would be very interested to know how many
drivers give up Uber and other ride-sharing gigs once the 1099's start flying at the
beginning of the year. One of the harsh realities of owning a business or being an contractor
is the humble fact that you get paid LAST!
We became instant Uber riders while spending holidays with relatives in San Diego. While
their model is indeed unique from a rider perspective, it was the driver pool that fascinates
me. These are not professional livery drivers, but rather freebooters of all stripes driving
for various reasons. The remuneration they receive cannot possibly generate much income after
expenses, never mind the problems associated with IRS filing as independent contractors.
One guy was just cruising listening to music; cooler to get paid for it than just sitting
home! A young lady was babbling and gesticulating non stop about nothing coherent and
appeared to be on some sort of stimulant. A foreign gentleman, very professional, drove for
extra money when not at his regular job. He was the only one who had actually bought a new
Prius for this gig, hoping to pay it off in two years.
This is indeed a brave new world. There was a period in Nicaragua just after the Contra
war ended when citizens emerged from their homes and hit the streets in large numbers,
desperately looking for income. Every car was a taxi and there was a bipedal mini Walmart at
every city intersection as individuals sold everything and anything in a sort of euphoric
optimism towards the future. Reality just hadn't caught up with them yet .
Today, September 26, thousands of activists are protesting in Prague, in the Czech Republic, against the
policies and institutional structures of the International Monetary Fund (IMF) and the World Bank. These protests are the
latest action in a growing movement that is highly critical of the neoliberal economic policies being imposed on people all
over the world, including those in western countries. As Robert McChesney concisely describes it, neoliberalism "refers to
the policies and processes whereby a relative handful of private interests are permitted to control as much as possible of
social life in order to maximize their personal profit." The major beneficiaries of neoliberalism are large trans-national
corporations and wealthy investors. The implementation of neoliberal policies came into full force during the eighties
under Thatcher and Reagan. Today, the principles of neoliberalism are widely held with near-religious fervor by most major
political parties in the US and Britain and are gaining acceptance by those holding power elsewhere.
Although the proponents of neoliberalism extol the virtues of free markets, free trade, private enterprise and consumer
choice, the effects of neoliberal policies is quite the opposite. In fact, these policies typically result in very
protectionist markets dominated by a few trans-national corporations. Many sectors of the economy - ranging from food
processing and distribution to the corporate media to aviation - are oligopolies and can be characterized as highly
centralized command economies that are only a shade more competitive than the economy of the former Soviet Union. A major
theme of neoliberal policies is deregulation and the removal of government interference in the economy. Consistently, such
policies are applied in a one sided way, and always in a manner that benefits large trans-national corporations, the most
influential entities in policy making. Hence, within neoliberalism as it is actually applied, capital is allowed to roam
the world freely with very few restrictions, yet workers are to remain trapped within the borders of their countries. This
serves trans-national corporations well, though for some, not well enough. According to Jack Welsh, CEO of GE, he and GE's
shareholders would be best served if factories were on barges so that when workers demand higher wages and better working
conditions, the barges could easily be moved to a country with more compliant workers. Another component of neoliberalism
is the dismantling of the welfare state. Again, in practice, this policy is applied to the majority of the population, who
have to accept cut backs in unemployment benefits and health care, while large corporations continue to receive massive
subsidies and tax breaks.
The effects of neoliberal policies on people everywhere has been devastating. During the last two to three decades,
wealth disparity has increased many fold within countries as well as between countries. In the US, inflation adjusted
median wages are lower today than they were in 1973 (when median wages reached their peak) while the wealth of the top 1%
of society has soared. One out of every five children in the US lives in a state of poverty characterized by continual
hunger, insecurity and lack of adequate health care. This, after almost ten years of a record breaking economic boom. For
the poorest people in the world, the situation has become even more desperate. John Gershman and Alec Irwin state in "Dying
for growth":
100 countries have undergone grave economic decline over the past three decades. Per capita income in these 100
countries is now lower than it was 10, 15, 20 or in some cases even 30 years ago. In Africa, the average household
consumes 20 percent less today than it did 25 years ago. Worldwide, more than 1 billion people saw their real incomes
fall during the period 1980-1993. Meanwhile, according to the United Nations Development Program's 1998 Human
Development Report, the 15 richest people in the world enjoy combined assets that exceed the total annual gross domestic
product of sub-Saharan Africa. At the end of the 1990's, the wealth of the three richest individuals on earth surpassed
the combined annual GDP of the 48 least developed countries.
The Thistle won't waste ink on how the wealthy have fared since the mainstream corporate press does a very commendable
job in this respect.
Neoliberalism has been a disaster for the environment as well. Despite the growing awareness in the late eighties that
the rate of fossil fuel consumption at that time would cause global warming and many other forms of unpredictable and
dangerous environmental changes, energy consumption has continued to increase at an alarming rate. This has been
facilitated by neoliberal deregulation of environmental protections championed by corporate puppets such as Newt Gingrich
and Tom Delay. In their continued quest for windfall profits, for example, corporations such as Ford and GM aggressively
marketed (and continue to do so) highly polluting sports utility vehicles (SUVs) while ignoring cleaner and more efficient
technologies. This was made possible by loop holes in environmental laws allowing SUVs to be sold that do not meet the
emission standards imposed on passenger cars. Consumer Reports Magazine (Nov. pg. 54) noted in 1997, that "the growing
popularity of SUVs, has helped make the 1997 automotive model year the least fuel-efficient in the last 16 years". Due to
the subservience of government to large corporations, these loop holes are still in place. Today, the qualitative
predictions of a decade ago are starting to manifesting themselves. The average temperature of the world has risen over the
last decade and for the first time, water has been observed on the polar caps.
One industry that has benefited significantly from neoliberal policies is the biotech industry, though not without
potentially catastrophic costs for the majority of the population. While large biotech corporations such as Monsanto and
Dupont are aiming for massive profits, the environment and our food supply is irreversibly being altered in the process,
creating a situation where large portions of the population and all future generations are subjected to potentially severe
and unpredictable health risks. As a way to promote the nascent biotech industry, the Bush administration in the early
nineties adopted a policy which held that regulations should not be created in such a way as to be a burden on the
industry. The Clinton administration has continued this policy, and today approximately 60% of our food is genetically
modified. This transformation of our food supply has occurred with scant public knowledge or oversight. And although genes
from viruses, bacteria or arctic fish with anti-freeze properties are inserted into crops, the federal regulatory agencies,
with heavy industry influence, maintain that genetically modified foods are no different from crops obtained with
traditional breeding techniques and therefore do not need to be approved (unless the transported genes are known to induce
a human allergen). Studies investigating the long term health and environmental effects of genetically modified crops are
not required by any federal agency and are rarely performed. In this atmosphere of deregulation and concentrated corporate
control, it is only a matter of time before a serious biological catastrophe occurs.
What does the IMF and World Bank have to do with this?
The IMF and World Bank were both created at the end of world war II in a political climate the is very different from
that of today. Nevertheless, their roles and modalities have been suitably updated to serve the interests of those that
benefit from neoliberalism. The institutional structures of the IMF and World Bank were framed at an international
conference in Bretton Woods, New Hampshire. Initially, the primary focus of the IMF was to regulate currency exchange rates
to facilitate orderly international trade and to be a lender of last resort when a member country experiences balance of
payments difficulties and is unable to borrow money from other sources. The original purpose of the World Bank was to lend
money to Western European governments to help them rebuild their countries after the war. In later years, the World Bank
shifted its attention towards development loans to third world countries.
Immediately after world war II, most western countries, including the US, had 'New Deal' style social contracts with
sufficient welfare provisions to ensure 'stability' between labor and capital. It was understood that restrictions on
international capital flow were necessary to protect these social contracts. The postwar 'Bretton Woods' economic system
which lasted until the early seventies, was based on the right and obligation of governments to regulate capital flow and
was characterized by rapid economic growth. In the early seventies, the Nixon administration unilaterally abandoned the
Bretton Woods system by dropping the gold standard and lifting restrictions on capital flows. The ensuing period has been
marked by dramatically increased financial speculation and low growth rates.
Although seemingly neutral institutions, in practice, the IMF and World Bank end up serving powerful interests of
western countries. At both institutions, the voting power of a given country is not measured by, for example, population,
but by how much capital that country contributes to the institutions and by other political factors reflecting the power
the country wields in the world. The G7 plays a dominant role in determining policy, with the US, France, Germany, Japan
and Great Britain each having their own director on the institution's executive board while 19 other directors are elected
by the rest of the approximately 150 member countries. The president of the World Bank is traditionally an American citizen
and is chosen with US congressional involvement. The managing director of the IMF is traditionally a European. On the IMF
board of governors, comprised of treasury secretaries, the G7 have a combined voting power of 46%.
The power of the IMF becomes clear when a country gets into financial trouble and needs funds to make payments on
private loans. Before the IMF grants a loan, it imposes conditions on that country, requiring it to make structural changes
in its economy. These conditions are called 'Structural Adjustment Programs' (SAPs) and are designed to increase money flow
into the country by promoting exports so that the country can pay off its debts. Not surprisingly, in view of the dominance
of the G7 in IMF policy making, the SAPs are highly neoliberal. The effective power of the IMF is often larger than that
associated with the size of its loans because private lenders often deem a country credit-worthy based on actions of the
IMF.
The World Bank plays a qualitatively different role than the IMF, but works tightly within the stringent SAP framework
imposed by the IMF. It focuses on development loans for specific projects, such as the building of dams, roads, harbors etc
that are considered necessary for 'economic growth' in a developing country. Since it is a multilateral institution, the
World Bank is less likely than unilateral lending institutions such as the Export Import Bank of the US to offer loans for
the purpose of promoting and subsidizing particular corporations. Nevertheless, the conceptions of growth and economic well
being within the World Bank are very much molded by western corporate values and rarely take account of local cultural
concerns. This is clearly exhibited by the modalities of its projects, such as the 'Green Revolution' in agriculture,
heavily promoted in the third world by the World Bank in the sixties and seventies. The 'Green Revolution' refers to the
massive industrialization of agriculture, involving the replacement of a multitude of indigenous crops with a few
high-yielding varieties that require expensive investments of chemicals, fertilizers and machinery. In the third world, the
'Green Revolution' was often imposed on indigenous populations with reasonably sustainable and self sufficient traditions
of rural agriculture. The mechanization of food production in third world countries, which have a large surplus labor pool,
has led to the marginalization of many people, disconnecting them from the economy and exacerbating wealth disparity in
these countries. Furthermore, excessive chemical agriculture has led to soil desertification and erosion, increasing the
occurrence of famines. While the 'Green Revolution' was a catastrophe for the poor in third world countries, western
chemical corporations such as Monsanto, Dow and Dupont fared very well, cashing in high profits and increasing their
control over food production in third world countries.
Today, the World Bank is at it again. This time it is promoting the use of genetically modified seeds in the third world
and works with governments to solidify patent laws which would grant biotech corporations like Monsanto unprecedented
control over food production. The pattern is clear, whether deliberate or nor, the World Bank serves to set the stage for
large trans-national corporations to enter third world countries, extract large profits and then leave with carnage in
their wake.
While the World Bank publicly emphasizes that it aims to alleviate poverty in the world, imperialistic attitudes
occasionally emerge from its leading figures. In 1991, then chief economist Lawrence Summers (now US Secretary of the
Treasury) wrote in an internal memo that was leaked:
Just between you and me, shouldn't the World Bank be encouraging more migration of the dirty industries to the LDCs
[less developed countries]? ... The economic logic behind dumping a load of toxic waste in the lowest wage country is
impeccable, and we should face up to that ... Under-populated countries in Africa are vastly under-polluted; their air
quality is probably vastly inefficiently low compared to Los Angeles or Mexico City .... The concern over an agent that
causes a one-in-a-million chance in the odds of prostate cancer is obviously going to be much higher in a country where
people survive to get prostate cancer than in a country where under-five mortality is 200 per thousand.
And thistle thought that the World Bank tried to extend lives in developing countries, not take advantage of low life
expectancy.
How do countries get into financial troubles, the Debt Crisis.
The most devastating program imposed by the IMF and the World Bank on third world countries are the Structural
Adjustment Programs. The widespread use of SAPs started in the early eighties after a major debt crisis. The debt crisis
arose from a combination of (i) reckless lending by western commercial banks to third world countries, (ii) mismanagement
within third world countries and (iii) changes in the international economy.
During the seventies, rising oil prices generated enormous profits for petrochemical corporations. These profits ended
up in large commercial banks which then sought to reinvest the capital. Much of this capital was invested in the form of
high risk loans to third world countries, many of which were run by corrupt dictators. Instead of investing the capital in
productive projects that would benefit the general population, dictators often diverted the funds to personal Swiss bank
accounts or used the them to purchase military equipment for domestic repression. This state of affairs persisted for a
while, since commodity prices remained stable and interest rates were relatively low enabling third world countries to
adequately service their debts. In 1979, the situation changed, however, when Paul Volker, the new Federal Reserve
Chairman, raised interest rates. This dramatically increased the cost of debtor countries' loans. At the same time, the US
was heading into a recession and world commodity prices dropped, tightening cash flows necessary for debt payment. The
possibility that many third world countries would default on their debt payments threatened a major financial crisis that
would result in large commercial bank failures. To prevent this, powerful countries from the G7 stepped in and actively
used the IMF and World Bank to bail out third world countries. Yet the bail-out packages were contingent upon the third
world countries introducing major neoliberal policies (i.e. SAPs) to promote exports.
Examples of SAP prescriptions include:
- an increase in 'labor flexibility' which means caps on minimum wages, and policies to weaken trade unions and worker's
bargaining power.
- tax increases combined with cuts in social spending such as education and health care, to free up funds for debt
repayment.
- privatization of public sector enterprises, such as utility companies and public transport
- financial liberalization designed to remove restrictions on the flow of international capital in and out of the
country coupled with the removal of restrictions on what foreign corporations and banks can buy.
Despite almost two decades of Structural Adjustment Programs, many third world countries have not been able to pull
themselves out of massive debt. The SAPs have, however, served corporations superbly, offering them new opportunities to
exploit workers and natural resources.
As Prof. Chomsky often says, the debt crisis is an ideological construct. In a true capitalist society, the third
world debt would be wiped out. The Banks who made the risky loans would have to accept the losses, and the dictators and
their entourage would have to repay the money they embezzled. The power structure in society however, prevents this from
happening. In the west tax payers end up assuming the risk while the large banks run off with the high profits often
derived from high risk loans. In the third world, the people end up paying the costs while their elites retire in the
French Riviera.
It is important to realize that the IMF and World Bank are tools for powerful entities in society such as
trans-national corporations and wealthy investors. The Thistle believes that massive world poverty and environmental
destruction is the result of the appalling concentration of power in the hands of a small minority whose sights are
blinded by dollar signs and whose passions are the aggrandizement of ever more power. The Thistle holds that an
equitable and democratic world centered around cooperation and solidarity would be more able to deal with environmental
and human crises.
"... Moreover, Lofgren needs to say more about a growing culture of cruelty brought about by the death of concessions in politics -- a politics now governed by the ultra-rich and mega corporations that has no allegiance to local politics and produces a culture infused with a self-righteous coldness that takes delight in the suffering of others. Power is now separated from politics and floats, unchecked and uncaring. ..."
"... Neoliberalism is a new form of hybrid global financial authoritarianism. It is connected to the Deep State and marked by its savage willingness in the name of accumulation, privatization, deregulation, dispossession and power to make disposable a wide range of groups extending from low income youth and poor minorities to elements of the middle class that have lost jobs, social protections and hope. ..."
The notion of the "Deep State" as outlined by Mike Lofgren may be useful in pointing to a
new configuration of power in the US in which corporate sovereignty replaces political
sovereignty, but it is not enough to simply expose the hidden institutions and structures of
power.
... ... ...
Moreover, Lofgren needs to say more about a growing culture of cruelty brought about by
the death of concessions in politics -- a politics now governed by the ultra-rich and mega
corporations that has no allegiance to local politics and produces a culture infused with a
self-righteous coldness that takes delight in the suffering of others. Power is now separated
from politics and floats, unchecked and uncaring.
This is a revolution in which the
welfare state is being liquidated, along with the collective provisions that supported it. It
is a revolution in which economics drives politics. Neoliberalism is a new form of hybrid
global financial authoritarianism. It is connected to the Deep State and marked by its savage
willingness in the name of accumulation, privatization, deregulation, dispossession and power
to make disposable a wide range of groups extending from low income youth and poor minorities
to elements of the middle class that have lost jobs, social protections and hope.
Then, there is the central question, how does the Deep State function to encourage
particular types of individualistic, competitive, acquisitive and entrepreneurial behavior in
its citizens?
The biggest problem facing the US may not be its repressive institutions, modes of
governance and the militarization of everyday life, but the interiority of neoliberal nihilism,
the hatred of democratic relations and the embrace of a culture of cruelty. The role of culture
as an educative force, a new and powerful force in politics is central here and is vastly
underplayed in the essay (which of course cannot include everything). For instance, in what
ways does the Deep State use the major cultural apparatuses to convince people that there is no
alternative to existing relations of power, that consumerism is the ultimate mark of
citizenship and that making money is the essence of individual and social responsibility?
In other words, there is no theory of cultural domination here, no understanding of how
identities, subjectivities and values are shaped in the narrow and selfish image of commerce,
how exchange values are the only values. In my estimation, the Deep State is symptomatic of
something more ominous, the rise of a new form of authoritarianism, a counter-revolution in
which society is being restructured and advanced under what might be called the neoliberal
revolution. This is a revolution in which the welfare state is being liquidated, along with the
collective provisions that supported it. It is a revolution in which economics drives
politics.
For 25 years following the end of the Second World War, the global economy experienced an
unprecedented period of sustained growth. In the industrialized world, millions of people
joined the ranks of the middle class, and wealth inequality sunk to historic lows. After
decades of strife, labour and capital reached a relative ceasefire, and a mixed economy of
governmental macroeconomic guidance combined with private microeconomic initiative emerged.
Capital was able to make healthy profits, while much of the rising productivity of labour was
passed on in the form of higher wages. Governments made full employment a priority, and
increasingly accepted the responsibility of providing for the poor and disadvantaged. By the
late 1960s, governments were seriously considering implementing a basic income (also known as a
guaranteed annual income) and many policymakers thought that our biggest problem in another 20
years would be what to do with all our free time once the work week had been significantly
reduced.
This exuberant economic attitude was arguably reflected in the radical social
experimentation and revolution that emanated from universities now accessible to the majority,
and in the various movements for liberty and social justice erupting worldwide. For many, all
this social and economic optimism had one man to thank: the British political economist John
Maynard Keynes, who had emerged from the academic wilderness in the 1930s to play a leading
role in the design of the post-war economy at Bretton Woods, and whose focus on the
counter-cyclical stimulus of aggregate demand became the lynchpin of governmental economic
policy in subsequent decades. "There was a broad body of optimism that the 1950s and 1960s were
the product of Keynesian economic engineering. Indeed, there was no reason why the prosperity
of the international economy should not continue as long as appropriate Keynesian policies were
pursued " In 1971, even the conservative US president Richard Nixon would famously proclaim,
"We are all Keynesians now." The triumph of Keynesianism seemed complete.
Yet shortly after Nixon uttered these words, it all fell apart. That same year, Nixon ended the
era of dollar to gold convertibility, a move that many see as the beginning of the end for the
great post-war compromise between capital and labour.
Three years later, in the face of the
first oil embargo and other pressures, the economy nose-dived into the worst recession since
the Great Depression, never to rebound to earlier levels. Worse still, the theoretical
underpinnings of Keynesianism were called into question by the simultaneous appearance of high
inflation and high unemployment – a new phenomenon dubbed "stagflation". While
Keynesianism floundered for an explanation, new theories stepped into the breach; monetarism
and supply-side economics were the two most popular. While these new theories had distinctive
approaches, both shared the belief that big government – namely Keynesianism – was
the problem, and that the solution to stagflation was to restrict government intervention in
the economy to a strict inflation-fighting monetary policy (in the case of monetarism) or to
cut taxes to stimulate private investment (in the case of the supply-siders). This move away
from government intervention and the welfare state, and towards more emphasis on an unfettered
market, can been summed up by the term "neoliberalism". As the 1970s ran their course,
neoliberalism gradually took over from Keynesianism as the reigning economic orthodoxy, to be
consummated in the Anglo-Saxon world by the elections of Margaret Thatcher in the UK in 1979,
Ronald Reagan in the US in 1980, and Brian Mulroney in Canada in 1984.
The story told by the victors of this ideological battle – the neoliberals – is
that Keynesianism, despite its apparent success for 25 years, was in the end responsible for
the constellation of economic crises that descended on the industrialized countries during the
1970s, and that neoliberalism was the remedy. The shift from Keynesianism to neoliberalism was,
according to this story, the only rational option in the face of stagflation; as Thatcher
crisply remarked at the time, "There is no alternative."
I will call into question this story, by first examining the causes of the 1970s economic
malaise, and then looking at what interests were behind the promotion of neoliberalism as a
solution, how it gained political power, and how it was disseminated around the world. I will
fashion an alternate narrative, one in which Keynesianism was not to blame for stagflation, in
which the economic crises of the 1970s put the compromise between capital and labour under
severe strain and ultimately broke it, in which the capitalist class went on the offensive
partly because it feared for its very survival, and in which this class achieved its ends by
forming an alliance with social conservatives equally fearful in the face of the 1960s
counter-cultural revolution. The protagonist of this story will be the United States; as the
capitalist world's superpower, it was largely responsible for the crisis of the 1970s, it
suffered the worst from it, and it led the way down the new path of neoliberalism.
THE FALL OF KEYNESIANISM
As one of the principle fathers of neoliberalism, the economist Milton Friedman's indictment of
Keynesianism is of special relevance, for it is emblematic of the neoliberal attempt to –
quite successfully – pin the blame for chronic recession squarely on Keynesian shoulders.
Briefly, Friedman theorized that there was a so-called "natural" rate of unemployment, which
persisted in the long-term despite governmental attempts to stimulate demand through spending.
Running a budget deficit to pump money into the economy might bring down the unemployment rate
in the short term, he thought, but in the long run it would only create inflation, while
unemployment would inevitably return to its natural rate – now higher because of the
inflation. He essentially argued that fiscal policy was useless – even damaging –
and that if governments wanted to bring down the natural rate of unemployment, they should
focus on keeping inflation low through monetary policy, while loosening restrictions on markets
so that, for instance, wage levels could find their equilibrium point. This explanation for the
stagflation encountered in the 1970s proved quite convincing to many searching for answers to
the predicament, as well as enormously appealing to those who had always wished for a return to
unfettered markets, and played a key role in justifying the switch from Keynesianism to
neoliberalism, in its guise of monetarism.
How realistic is this account? Certainly, deficit financing played an important role in the
soaring inflation of the 1970s, but was this solely the result of spending on social programs,
such as under president Lyndon Johnson's Great Society initiative, or were there other causes
for deficit spending? The Vietnam War, combined with Johnson's unwillingness to raise taxes in
the face of rising war expenditures, caused the US Federal Reserve to print large amounts of
new dollars. Military spending is often seen as the most inflationary form of government
spending, because it puts new money into the economy without a corresponding increase in
output. The US had some leeway to get away with this rapid increase in the money supply, since
the dollar was the international reserve currency, but there was a limit to this, and the
explosive inflation of the 1970s was the result.
It must be noted that the US proved a dismal failure in its short-lived role as manager of the
world's monetary system. At Bretton Woods, it had been entrusted with the task of maintaining a
sound monetary system, through the gold exchange standard, just as Britain had previously.
Britain, being a trading nation, had had a strong interest in maintaining a sound international
monetary system, and had been effective (some would say too effective) at maintaining it. The
United States, on the other hand, traded much less, and consequentially took its
responsibilities much less seriously. It is easy to speculate about the justification made by
US officials as they printed irresponsible amounts money to pay for their war in Vietnam: they
surely saw themselves as defending the free world against the tyranny of communism, a cause for
which a little monetary instability, shouldered by the "free world" in general, was a small
price to pay.
The first cracks in the system started to show during the series of currency crises that struck
in the late 1960s. By the end of the decade, the dollars held outside the US were worth eight
times as much as the US had in gold reserves. In 1971, rather than saving the system by
devaluing the dollar, and fearing a run on US gold, Nixon ended the gold exchange standard. The
US had abused its power of seigniorage (as monarchs before had), but wouldn't escape without
paying a price.
The result was more inflation, as the dollar, now cut loose from the Bretton Woods standard of
$35 per ounce of gold, shed its inflated value. The lower dollar also raised the cost of
imports to the US consumer, further fueling domestic inflation. (The end of dollar
convertibility also brought with it more far-reaching consequences. The fixed exchange rates of
the 1950s and 60s were incompatible with free flows of capital. Yet taking the dollar off gold
led directly to floating exchange rates, which in turn paved the way for freer flows of capital
between countries. This development would later aid greatly in the furtherance of the
neoliberal agenda.)
As if these developments were not inflationary enough, the Yom Kippur War of October 1973 led
OPEC to restrict oil exports to Israel's allies, quadrupling oil prices virtually overnight.
Yet this was inflation of a different nature than the kind that had been building up in the
1960s; rather than being linked to excess demand and an overheated economy, it was driven by
increases in costs on the supply side and brought with it recessionary pressures. An increase
in the price of oil, being fundamental to so much of the economy, is "similar to the imposition
of a substantial sales tax. The price of the product goes up and consumers have less income
available to spend on other goods and services. The result is a bout of inflation, at least
temporarily, and sluggish economic expansion if not recession." This goes a long way towards
explaining the supposedly impossible coincidence of high inflation with high unemployment.
Yet there were other factors that also contributed to the so-called "misery index" (inflation
rate plus unemployment rate). The most basic of these was that governments tried repeatedly to
beat inflation by attacking perceived excess demand through restrictive monetary and fiscal
policies; when Nixon tried this strategy in 1970, it resulted in recession. His successor,
Gerald Ford, tried the same approach in 1974 – despite the fact that inflation at that
point was not being driven by excess demand, but by high costs on the supple side (namely oil).
Thus, poor governmental reaction to inflation caused recession and rising unemployment, while
failing to master inflation.
Another factor contributing to the slow-down of growth in the US economy was the end of the
privileged position it enjoyed as the only power to emerge from the Second World War relatively
unscathed. As Germany and Japan laboured to reconstruct their war-ravaged economies, the US
faced little competition. Yet by the end of the 1960s, the old Axis powers, now recast as
capitalist democracies but still economic powerhouses, were flexing their economic muscles
again. This, combined with increasing competition from newly industrialized countries in East
Asia and from other developing countries, cut into the robust economic growth the US had
enjoyed for two decades previously.
To sum up, inflation caused by first the Vietnam War and later the oil embargo (itself the
result of war in the Mideast), coupled with increasing competition to US business
internationally, along with the shock of the collapse of the Bretton Woods framework, were the
major factors that combined to create the "perfect storm" known as stagflation:
the stage was set for the deepest recession since the 1930s. The long period of post-war
expansion had at last come to an end; America and world capitalism entered a new phase of
turbulence which, amongst other things, threw economic policy and economics as a theory into a
state of flux.
AND THE RISE OF NEOLIBERALISM
In the previous section, I outlined the confluence of factors that led to the crisis of
stagflation in the 1970s. In the following section, I will describe the reaction to this crisis
– the how and why of neoliberalism's triumph as the new economic orthodoxy.
Different authors ascribe to different points in time when the balance decisively shifted from
Keynesianism to neoliberalism – some place the tipping point as early as the latter half
of the 1960s, others as late as the ascendancy of Thatcher and Reagan – but the midway
year 1974 seems as good as any. It was in this year that Gerald Ford came to the White House
with the slogan, "Whip Inflation Now" (WIN), declaring that inflation was public enemy number
one and that reduction in government spending was the chief means to that end. It was also in
this year that inflation peaked (at 11% – although it would later be surpassed by a
second peak of 13.5% in 1980), and that the "perfect storm" that had been building for years,
catalyzed by the energy crisis, finally unleashed its full fury on the economy. In declaring
war on inflation, Ford broke with the Keynesian bias of giving precedence to full employment;
whereas before inflation had been a tool to control unemployment, now unemployment was to be
used as a tool to control inflation:
The choice seemed to be stark: accept some inflation as the price of expansion and adapt
business and accounting practices accordingly, or pursue a firm deflationary policy even if
that meant accepting a higher level of unemployment than had been customary since the Second
World War.
In choosing the latter, Ford shattered the fragile compromise between labour and capital
and, favouring capital, took America on its first real steps towards neoliberalism.
Yet, as the crisis had gathered steam in the early 1970s, it was by no means clear which way
the winds would blow. It was well remembered that the last major economic crisis, in the 1930s,
had resulted in the socialist policies of the New Deal, and indeed in the 1970s labour again
called for more governmental intervention as the solution to the crisis. Capital, meanwhile, as
it suffered from reduced profits due to increased competition abroad and recession at home,
also saw the crisis as both an opportunity to advance its interests and as a threat to its
interests from an increasingly militant labour. "The upper classes had to move decisively if
they were to protect themselves from political and economic annihilation." The ceasefire
between labour and capital had held when times were good, but as soon as conditions started to
sour, both sides went on the offensive. It was to be one or the other.
Sensing both the opportunity and the threat presented by the crisis, the capitalist class put
aside its differences and united against the common enemy of labour. The 1970s marked the
beginning of the right-wing think tank, with corporate dollars founding such now well-known
beacons of neoliberal thought as the Heritage Foundation, the Hoover Institute, and the
American Enterprise Institute. Lobbying efforts, though such umbrella organizations as the
American Chamber of Commerce, the National Association of Manufacturers, and the Business
Roundtable (a group of CEOs founded in 1972), were massively ramped up; business schools at
Stanford and Harvard, established through corporation benefaction, " became centres of
neoliberal orthodoxy from the very moment they opened" ; and "the supposedly 'progressive'
campaign finance laws of 1971 [that] in effect legalized the financial corruption of politics,"
were followed by a series of Supreme Court decisions that established the right of corporations
to make unlimited donations to political parties. "During the 1970s, the political wing of the
nation's corporate sector staged one of the most remarkable campaigns in the pursuit of power
in recent history."
The ideology adopted by capital during this remarkable drive to win the minds of the political
leadership " had long been lurking in the wings of public policy." It emanated largely from the
writings of the Austrian economist Friedrich von Hayek, around whom a collection of admirers
(including Milton Friedman) called the Mont Pelerin Society had formed in 1947. This group's
ideas became known as neoliberalism because of its adherence to such neoclassical economists of
the latter half of the 19th Century as Alfred Marshall, William Stanley Jevons, and Leon
Walras. Hayek had argued presciently that it might take a generation before they could win the
battle of ideas; by the time he won the Nobel Prize for economics in 1974, followed by Friedman
two years later, victory was indeed close at hand.
Why did capital " [pluck] from the shadows of relative obscurity [this] particular doctrine
that went under the name of 'neoliberalism' "? Was it to save the world from the ravages of
Keynesian stagnation and to free people from the heavy hand of bloated government? This was
certainly part of the rhetoric used to sell neoliberalism to the public, but one need only look
at who benefited from neoliberalism to get a strong sense of whose interests it really served.
It was eventually quite successful in lowering inflation rates, and moderately successful in
lowering unemployment, but failed to revive economic growth to pre-1970s levels; meanwhile, it
resulted in levels of wealth inequality not seen since the 1920s in the US, stagnating real
wages, and a decreased quality of life for those reliant on government services. Alan Budd,
Thatcher's economic advisor, was candid about the real motives behind the neoliberal rhetoric
when he said, "The 1980s policies of attacking inflation by squeezing the economy and public
spending were a cover to bash the workers." Neoliberalism was capital's way of disciplining
labour through unemployment, creating what Marx called an "industrial reserve army" that would
break unions and drag wages down. Reagan facing down the air traffic controller's union, PATCO,
during a bitter strike in 1981, paralleled across the Atlantic by Thatcher's similarly tough
stance with the National Union of Mineworkers' year-long strike in 1984-85, was emblematic of
the new hostile approach to labour reintroduced to state policy by neoliberalism. In short,
neoliberalism was driven by class interests; it was the vehicle best suited " to restor[ing]
the power of economic elites." The true point of neoliberalism is revealed by the fact that
whenever the dictates of neoliberal theory conflicted with the interests of the capitalist
class, such as when it came to running massive budgetary deficits to pay for military spending
during peacetime, neoliberalism was discarded in favour of the interests of capital.
Before neoliberalism came to roost in the White House, however, there were several experiments
conducted in the periphery. It is revealing to note that the first nationwide imposition of
neoliberalism occurred under conditions of tyranny: Augusto Pinochet's Chile; it is likewise
fitting that neoliberalism drove from Chile its antithesis, the communism of Salvador Allende,
and that it was imposed through a US-backed coup. After the coup in 1973, Chile became a field
school for graduates from the economics department of the University of Chicago, where
disciples of Milton Friedman, who taught there, had formed their own monetarist/neoliberal
school of thought. These economists attempted to remake the Chilean economy into the ideal
neoliberal state (in the same way that US neoliberals are currently attempting in Iraq), a
transformation that likely would not have been possible without the Chilean military ensuring a
compliant labour. Despite lackluster economic results (particularly after the 1982 debt crisis
in Latin America), Chile served as a model to neoliberals who wanted the rich countries to
follow the same path.
There was another coup, of sorts – less known and less violent – that occurred in
New York City in 1975. In that year, the city went bankrupt, and the subsequent bailout came
with strict conditions attached, including budgetary rules and other institutional
restructuring. "This amounted to a coup by the financial institutions against the
democratically elected government of New York City, and it was every bit as effective as the
military coup that had occurred in Chile." It was "an early, perhaps decisive battle in a new
war," the purpose of which was "to show others that what is happening to New York could and in
some cases would happen to them." "The management of the New York fiscal crisis pioneered the
way for neoliberal practices both domestically under Reagan and internationally through the IMF
in the 1980s."
While coups, either military or financial, were possible against developing countries and
municipalities, neoliberalism would have to gain dominance in the US federal government through
slightly more democratic means. As noted earlier, the intense drive to power through lobbying,
think tanks, and academia convinced many in the elite of the virtues of neoliberalism, but
ultimately this ideology would have to sway masses of people to actually vote in favour of it.
In order to secure the broad base of support necessary to win elections, neoliberals formed an
alliance in the 1970s with the religious right (a move that has forever since confused the
terms "liberal" and "conservative"). While this significant segment of the American population
had previously been largely apolitical, the counter-cultural revolution of the late 1960s and
early 1970s provoked many of these "neoconservatives" to enter the political arena to oppose
the perceived moral corruption of American society – a movement that came to fruition
with preacher Jerry Fallwell's so-called "moral majority" in 1978. While neoliberals and
neoconservatives may seem like strange bedfellows, the coalition was likely facilitated by
religious fundamentalists' relative indifference towards the material, economic world;
according to their extremist Christian worldview, their material interests in this world would
be well worth sacrificing to secure the spiritual interests of their nation in the next world.
Furthermore, both religious and economic fundamentalists must have found a comforting
familiarity in each other's simplistic extremism (the "invisible hand" of the neoliberals' free
market is eerily similar to the Christians' God in its omnipotence, omnipresence, and
inscrutability).
The Republican Party gathered under its banner these religious reactionaries, as well as those
non-religious (largely white, heterosexual, male, and working-class) who simply feared the
growing liberation of blacks, gays, and women, and who felt threatened by affirmative action,
the emerging welfare state, and the Soviet Union. "Not for the first time, nor, it is to be
feared, for the last time in history had a social group been persuaded to vote against its
material, economic, and class interests for cultural, nationalist, and religious reasons." It
was this alliance of social fear and economic opportunism that swept arch-neoliberal Ronald
Reagan to the White House in 1980 – " a turning point in post-war American economic and
social history." After a decade-long campaign, the neoliberals had come to Washington.
Of course, the crusade to reshape society along neoliberal ideals was far from won; Reagan
faced a Democratic Congress, and was often forced to govern more pragmatically than
ideologically when his supply-side policies failed. As Margaret Thatcher said, "Economics are
the method, but the object is to change the soul," and it takes time to change people's
souls.
There was also still a whole world to convert to the gospel of market liberalization. The
crisis of stagflation that had opened the door to neoliberal ideas in the US had also created
financial incentives for the dissemination of neoliberalism to other countries. With the impact
of the first oil crisis flooding New York investment banks with petrodollars, and a depressed
economy at home offering fewer places to spend them, the banks poured the money into developing
countries. This created pressure on the US government to pry open new markets for investment,
as well as to protect the growing investments overseas – helping to bring US-bred
neoliberalism to foreign shores.
Yet these pressures were only a taste of what was to come; after the Iranian revolution in 1979
caused oil prices to suddenly double, inflation in the US returned with a vengeance. This in
turn led the US Federal Reserve, under its new neoliberal-minded chairman Paul Volcker, to
drastically raise interest rates. This "Volcker shock", resulting in nominal interest rates
close to 20% by 1981, coming on the heels of the profligate lending of petrodollars during the
1970s, played a major part in the debt crisis that descended on the developing world during the
1980s. As countries defaulted on their debts, they were driven into the arms of the
International Monetary Fund (IMF), which, after what economist Joseph Stiglitz described as a
"purge" of Keynesians in 1982, became a center " for the propagation and enforcement of 'free
market fundamentalism' and neoliberal orthodoxy." Mexico, after its debt default of 1982-84,
became one of the first countries to submit to neoliberal reforms in exchange for debt
rescheduling, thus " beginning the long era of structural adjustment."
Many of the IMF economists who designed these Structural Adjustment Programs (SAPs), as well as
those who staffed the World Bank and the finance departments of many developing countries, were
trained at the top US research universities, which by 1990 were dominated by neoliberal ideas
– providing yet another avenue by which neoliberalism spread from the US to other parts
of the world. By the mid-1990s, the process of neoliberal market liberalization (under the
supervision of the World Trade Organization (WTO)) came to be known as the "Washington
Consensus", in recognition of the origins of this ideological revolution.
THE REVOLUTION CONTINUES
Some authors have called neoliberalism the antithesis to Keynesianism , yet its real opposite
is communism; Keynesianism represented a compromise between the two – a middle way. Yet
this fragile balance did not survive the economic crucible of the 1970s. Neoliberalism's
strategic political alliance with neoconservatism can be seen as a natural reaction to the
rapid changes that had unfolded during the 1950s and 60s in both the US economy (with the
growth of the welfare state) and society (with the rise of the counter-cultural revolution); at
the same time, it can also be seen as an opportunist power grab by the capitalist class during
a period of uncertainty about the foundations of the old order. The fear of communism –
captured succinctly in the title of Hayek's famous work, The Road to Serfdom – drove
neoliberals to the opposite extreme: the belief in the superiority of the unfettered
marketplace as the guiding principle to human civilization. Neoliberalism, therefore,
represents an extremist ideology that, if carried through to its end, will likely end up being
as destructive to the societies it touches as extremist socialism was to the former Soviet
bloc.
Although the neoliberal revolution is still winning many political battles, such as the growing
attack on Medicare in Canada or on Social Security in the United States, evidence of an
emerging counter-movement (such as the poorly named "anti-globalization movement" –
anti-neoliberalization would be more apt) is growing. As Karl Polanyi described in his classic,
The Great Transformation, the industrialization and economic liberalization of the 19th Century
resulted in a reaction from society for more governmental intervention to protect people and
communities from the destructive effects of unfettered markets. It is highly likely that we are
now witnessing the first stages of a similar reaction to the latest round of rapid
technological change and market liberalization. Hopefully, this reaction will lead to a society
that better balances capitalism's creative destruction with the needs of humans and their
communities for continuity and security.
Copyright Sean Butler 2006
Written for an Intro to Political Economy class at Carleton University in 2006
It's kind of sad that neoliberal eclectic theories got such a prominence in70th. after all 20th demonstrated that they will
eventually lead to Great Deprettion. And Great Recession started in 2008 was just a replay. looks like people learn nothing,
especially if they are driven by greed. It probably would be prudent to treat financial sector as a kind of organized crime
unit. Otherwise the society is always in danger as those guys have money to buy politicians and dismantle anything that they do not
like. which happened within the US with the New Deal regulations.
Minton Friedman actually was a criminal who probably would be convicted in the court like Nuremberg for his role in Pinochet
putsch. His role as the key political figure within Mont Pelerin Society is also pretty sinister -- he moved it
right.
Notable quotes:
"... Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics , by Daniel Stedman Jones, Princeton University Press, 424 pages, $35 ..."
"... Jones traces the origins of neoliberalism to the mid-1940s, specifically to the nearly simultaneous publication of Hayek's The Road to Serfdom ..."
"... The Open Society and Its Enemies ..."
"... Beginning in the late 1970s, neoliberal ideas began to have a significant impact on policy in the U.S. and Britain. Under President Jimmy Carter there was significant deregulation of transportation, utilities, and banking, and capital gains taxes were reduced. Deregulation continued in the 1980s under President Reagan, who also slashed the top income tax rate from 70 percent to 28 percent. ..."
Socialist ideas were
already floating around the democratic West in the early 1900s, but they gained much greater popularity
after the Great Depression, which was widely seen as a failure of capitalism. One part of this shift
entailed a greater role for the government in regulating or owning business enterprises. The second part
involved a major expansion of social insurance programs.
Beginning in the late 1970s, there was a backlash against excessive government intervention in the
economy. This neoliberal revolution involved privatization, deregulation, and cuts in marginal tax rates,
but it left most social insurance programs in place.
Daniel Stedman Jones, an independent historian (and barrister) in London, has written a balanced and
informative study of neoliberal thinkers such as F.A. Hayek and Milton Friedman, exploring their impact
on policy making, particularly during Margaret Thatcher's administration in the United Kingdom and Ronald
Reagan's in the United States. Jones suggests a policy revolution that began in the 1970s drew on 30
years of neoliberal research and advocacy, partly financed by businessmen hostile to Franklin Roosevelt's
New Deal policies. Although Jones is skeptical of the more radical elements of neoliberalism, he is
mostly respectful of the major neoliberal figures, despite the fact that his own politics are clearly
left of center.
Jones traces the origins of neoliberalism to the mid-1940s, specifically to the nearly simultaneous publication of
Hayek's
The Road to Serfdom
(1944), Ludwig von Mises'
Bureaucracy
(1944), and Karl Popper's
The
Open Society and Its Enemies
(1945). The appearance of these highly influential books was followed by the
formation of the Mont Pelerin Society, a group of American and European neoliberals who met annually starting in
1947. Even within this group there were important ideological differences, with Popper being much more sympathetic to
the democratic left than Mises. Early neoliberals rejected complete laissez faire, which was widely seen as
discredited by the depression; they supported economic interventions such as antitrust laws, the regulation of
natural monopolies, health and safety regulation, and government provision of education and other social services.
Over time the center of the neoliberal movement shifted from Europe to America, especially the economics
departments at the University of Chicago, where Milton Friedman taught, and the University of Virginia, where James
Buchanan and Gordon Tullock developed "public choice" theory, which aims to explain why government policies often end
up serving special interest groups. At the same time, the ideology drew closer to laissez faire. Neoliberal
economists were less likely to endorse interventions such as antitrust and more likely to support a radical program
of deregulation.
Beginning in the late 1970s, neoliberal ideas began to have a significant impact on policy in the U.S. and
Britain. Under President Jimmy Carter there was significant deregulation of transportation, utilities, and banking,
and capital gains taxes were reduced. Deregulation continued in the 1980s under President Reagan, who also slashed
the top income tax rate from 70 percent to 28 percent. In Britain the Labour Party began to move away from
traditional Keynesian stimulus programs, as these policies were widely blamed for the high rates of inflation during
the 1970s. Thatcher sped up that trend after taking office in 1979. Her Tory government privatized state-owned firms
and public housing, deregulated the financial industry, weakened labor unions, and sharply reduced the top income tax
rate.
... ... ..
Consider Jones' description of neoliberalism's evolution from the late 1940s to the '70s: "The early neoliberals
were marked by their desire to move beyond both laissez-faire economics and the New Deal. Later neoliberals, defined
by the Chicago emphasis on unregulated markets, were less ambiguous in their opposition to the welfare state and to
the need for government intervention in the economy."
In political practice, neoliberalism was not about abandoning the welfare state. It was about deregulation,
privatization, freer trade, lower marginal tax rates, and keeping inflation under control. Thatcher's policies were
viewed as a big neoliberal success, despite the fact that government spending remained close to 40 percent of GDP.
There is far less regulation of investment, trade, market access, and prices in developed countries today than in the
1970s. Many state-owned enterprises have been sold to the private sector, and inflation has been brought down to
relatively low levels. Virtually every developed country has sharply cut its top income tax rate from the levels of
the 1970s. Yet the welfare state in those countries is roughly as large as it was four decades ago.
Nor was opposition to the welfare state ever a big part of the academic side of neoliberalism. I studied economics
at the University of Chicago between 1977 and 1980, when the Chicago school had reached its peak of influence. There
was a heavy focus on the failures of Keynesian demand-side macroeconomics as well as the often counterproductive
effects of regulation. But if the welfare state ever came up, it was generally brushed aside with the comment that
the optimal policy would probably be to just give money to the poor.
Milton Friedman proposed a "negative income tax" that would have replaced many welfare programs with direct cash
payments. He also advocated vouchers for education and health care, plus a progressive consumption tax. Jones
suggests that Friedman was opposed to both the welfare state and progressive taxes, but that's a bit misleading. What
Friedman opposed was paternalism and inefficiency. At times Friedman indicated that his ideal society was a minimal
state, but his policy recommendations would have given the government a substantial role in addressing issues such as
health care, education, and income inequality. Hayek too supported a basic safety net.
A study by the libertarian political scientist Charles Murray in the mid-1980s did point to the pernicious effect
of welfare on incentives, but the issue was not significantly addressed until the mid-1990s, when the welfare system
was modified -- under a Democratic president -- to provide smaller benefits to the nonworking poor and more subsidies to
the working poor. This wasn't a conservative plot to cut spending. It was an example of modern liberalism being
transformed by academic research.
All the other major neoliberal initiatives in America were essentially bipartisan, including free trade
agreements, cuts in capital gains taxes, the reduction of the top income tax rate, and the deregulation of
transportation, utilities, and banking. Because big social programs such as Medicare and Social Security in America
and the National Health Service in the U.K. are highly popular, criticism of the welfare state is often directed at
relatively modest efforts aimed at groups not likely to vote for the more conservative party. Even as Mitt Romney
complained about people "who are dependent upon government, who believe that they are victims, who believe the
government has a responsibility to care for them," he campaigned vigorously against President Barack Obama's Medicare
cuts.
The US official religion is neoliberalism not Christianity. Christianity is in sharp decline.
Notable quotes:
"... Where evangelicals emphasize asking God for forgiveness, Trump says, "I am not sure I have. I think if I do something wrong, I think, I just try and make it right. I don't bring God into that picture. I don't." ..."
"... Compare these remarks to the more earnest faith of President George W. Bush, who claimed divine consultation before invading Iraq, or the incessant God-talk of candidates like Ted Cruz, Mike Huckabee, Rick Perry, Rick Santorum, Sarah Palin and Ben Carson ..."
"... Since then, it's hard to see what benefit America's strong leaning toward theocracy has had. Comparing 17 first-world prosperous democracies on a number of societal health measures, social scientist Gregory S. Paul found that the most religious country of them all-the United States -- had by far the worse measures on a number of criteria, including the highest rates of homicides, suicides, incarceration, STDs, teen pregnancies, abortions, divorce, alcohol consumption, corruption, poverty and income inequality. Correlation is not causation, of course. ..."
"... "Seems to me Donald has been doing a lot more God talk since taking office, " I agree 1,000% – which just validates my view that Trump is all bullsh*ter. Elmer Gantry comes to mind ..."
"... And another point – it strikes me that those saying Trump is a liar misses the point – Trump is more like a parrot in that Trump will say (parrot) whatever he believes is necessary to get the cracker (though I didn't intend "cracker" to mean racists, but merely a reward, I note one can interpret that as one wishes .). ..."
"... PAUL JAY: Under the protection of God, America, we'll use the Mother of All Bombs and fight without restraint. That's the message Donald wanted to send, and perhaps that's the message this bomb was meant to deliver in Afghanistan. ..."
"... Pointing out hypocrisy misses the point because it's never been about religious doctrine as much as trying to belong to something and have purpose. Trump can miss every question about angels dancing on heads of pins, and it won't matter. Trump in his own way embraced the evangelicals. In effect, Hillary said she wanted the non-evangelical republicans who are so smart and moderate. ..."
"... In "The Merchant of Venice" (Act 1, Scene 3), Antonio says, "even the devil can cite scripture for his own use." This is all they need because it's not about scripture and never has been. ..."
"... You and Marx: "Religion is the sigh of the oppressed creature, the heart of a heartless world, and the soul of soulless conditions. It is the opium of the people" ..."
This Sunday [Easter], tens of millions of American Christians will celebrate Easter, and thousands of children and their families
will descend on the White House to take part in the annual Easter Egg Roll. As the festivities spill over the grounds of 1600
Penn., I wonder if anyone will stop to note the obvious irony: That President Donald J. Trump is very likely the least religious
president to occupy the White House since Thomas Jefferson.
I'm not saying Trump is a closeted atheist, but he's no evangelical. As a self-proclaimed Protestant, or Presbyterian, or something
he describes as "a wonderful religion," Trump nominally attends the nondenominational Marble Collegiate Church in New York City.
Where evangelicals emphasize asking God for forgiveness, Trump says, "I am not sure I have. I think if I do something wrong,
I think, I just try and make it right. I don't bring God into that picture. I don't."
Compare these remarks to the more earnest
faith of President George W. Bush, who claimed divine consultation before invading Iraq, or the incessant God-talk of candidates
like Ted Cruz, Mike Huckabee, Rick Perry, Rick Santorum, Sarah Palin and Ben Carson.
Since then, it's hard to see what benefit America's strong leaning toward theocracy has had. Comparing 17 first-world prosperous
democracies on a number of societal health measures, social scientist Gregory S. Paul found that the most religious country of
them all-the United States -- had by far the worse measures on a number of criteria, including the highest rates of homicides, suicides,
incarceration, STDs, teen pregnancies, abortions, divorce, alcohol consumption, corruption, poverty and income inequality. Correlation
is not causation, of course. But if religion is suppose to be such a powerful force for societal health, then why is America-the
most religious nation in the Western world-also the unhealthiest on all of these important social measures?***
===================================================
I almost posted this yesterday, but I thought that would be churlish.
I read Trump's "religious" remarks and find them extremely off putting. Than I read the religious remarks of other repubs, and
I find them EVEN MORE off putting .
***Teen pregnancy – so much for the solemn pledges of abstinence made by teenagers .*** ***
*** *** What is it with the US? How can anybody in hypersexualized America really believe American teens are gonna keep it in
their pants?
"Seems to me Donald has been doing a lot more God talk since taking office, "
I agree 1,000% – which just validates my view that Trump is all bullsh*ter. Elmer Gantry comes to mind.
And another point – it strikes me that those saying Trump is a liar misses the point – Trump is more like a parrot in that Trump
will say (parrot) whatever he believes is necessary to get the cracker (though I didn't intend "cracker" to mean racists, but
merely a reward, I note one can interpret that as one wishes .).
PAUL JAY: Under the protection of God, America, we'll use the Mother of All Bombs and fight without restraint. That's the message
Donald wanted to send, and perhaps that's the message this bomb was meant to deliver in Afghanistan.
From my experience with Catholic school and church, I've long since determined "god talk" isn't as relevant as "us v. them"
talk. Hillary's "deplorable" statement was just an affirmation of a view many "Christians" believe is held about them.
Pointing out hypocrisy misses the point because it's never been about religious doctrine as much as trying to belong to something
and have purpose. Trump can miss every question about angels dancing on heads of pins, and it won't matter. Trump in his own way
embraced the evangelicals. In effect, Hillary said she wanted the non-evangelical republicans who are so smart and moderate.
In "The Merchant of Venice" (Act 1, Scene 3), Antonio says, "even the devil can cite scripture for his own use." This is all
they need because it's not about scripture and never has been.
Why were enslaved Africans in the American South so religious?
Actually, they weren't all that religious. The slave owners allowed them time off on Sunday for religious services. The slaves
were savvy enough to make sure that "services" were an all-day affair. Even meals and socialization were woven into the Sunday
religious celebrations. That practice is the genesis of many AME and AME-Z all day (or most of the day) Sunday services today.
(I learned that bit of information in my Black Religion college course many years ago.)
You and Marx: "Religion is the sigh of the oppressed creature, the heart of a heartless world, and the soul of soulless conditions.
It is the opium of the people"
Should probably be "neoliberal religion has de-legitimized itself with its hypocrisy
Notable quotes:
"... Sorry, as a church-attending person, I object. Religion has de-legitimized itself with its hypocrisy. One example: Jerry Falwell, a "battler" against abortion actually supported it before his plutocratic masters told him it was a wedge issue. ..."
"... Michael Hudso says Jesus' first appearance in the Jerusalem temple was to announce just such a Jubilee Boy is that ever ignored! ..."
"... Your correlating the hypocritical actions of the leadership with the ideals of a religion. Corrupt leadership may delegitimize those individuals but does not delegitimize the ideals of the religion. Is the ideal of America totally dependent on the actions of its political leadership? Personally, I think there is far more to America than just the president and congress whether corrupt or not. ..."
"... What is or are the ideal(s) of "America?" Get rich quick, violence on all fronts, anti-intellectualism, imperial project across the planet? "Democracy?" If you trot that out as a "feature", you better explain what you mean, with some specificity. More to America? If youtube is any guide, try searching it for "syria combat" or "redneck" or "full auto," or all the really sick racist and extreme stuff - a pretty sorry place. But we all recite the Pledge so dutifully, don't we? and feel a thrill as the F-22s swoop over the football stadium? ..."
Sorry, as a church-attending person, I object. Religion has de-legitimized itself with its hypocrisy. One example: Jerry
Falwell, a "battler" against abortion actually supported it before his plutocratic masters told him it was a wedge issue.
Positions on the wedge issues (abortion, the gays) are actually difficult to prove with scripture–not that it has the
kind of authority it did before 35,000 variations on old manuscripts were discovered in the 17th century. (Marcus Borg is the
scholar to consult here).
Meanwhile, the big issues - e.g. covetousness, forbidden very explicitly in one of the 10 commandments - is an *industry* in
the U.S.
I'll believe these evangelicals are guided by the bible when I see them picketing Madison Avenue for promoting covetousness,
or when I see them lobbying for a debt jubilee.
Michael Hudso says Jesus' first appearance in the Jerusalem temple was to announce just such a Jubilee Boy is that ever ignored!
Your correlating the hypocritical actions of the leadership with the ideals of a religion. Corrupt leadership may delegitimize
those individuals but does not delegitimize the ideals of the religion. Is the ideal of America totally dependent on the actions
of its political leadership? Personally, I think there is far more to America than just the president and congress whether corrupt
or not.
Ideals only serve in practice to create primordial debts, buttress power differentials, and enable selective malfeasance. I
fail to see the social utility of any of those products and believe humanity would be better off repudiating them and their vectors.
Disease is not a public good.
Well I am using this definition of ideal: "a person or thing conceived as embodying such a conception or conforming to such
a standard, and taken as a model for imitation". I guess you are welcome to your definition.
I think "America" is maybe a shibboleth of some sort, but there is not a dam' thing left of the stuff I was taught and brought
to believe, as a young person, Boy Scout, attendee at the Presbyterian Westminster Fellowship, attentive student of Mrs. Thompson
and Mr. Fleming in Civics, Social Studies and US History classes, and all that. I was well enough steeped in that stuff to let
"patriotism" overcome better sense, strongly enough to enlist in the Army in 1966.
Maybe you think "The Birth of a Nation" captures the essence of our great country?
What is or are the ideal(s) of "America?" Get rich quick, violence on all fronts, anti-intellectualism, imperial project
across the planet? "Democracy?" If you trot that out as a "feature", you better explain what you mean, with some specificity.
More to America? If youtube is any guide, try searching it for "syria combat" or "redneck" or "full auto," or all the really sick
racist and extreme stuff - a pretty sorry place. But we all recite the Pledge so dutifully, don't we? and feel a thrill as the
F-22s swoop over the football stadium?
"It's barbarism. I see it coming masqueraded under lawless alliances and predetermined
enslavements. It may not be about Hitler's furnaces, but about the methodical and
quasi-scientific subjugation of Man. His absolute humiliation. His disgrace"
Odysseas Elytis, Greek poet, in a press conference on the occasion of receiving the Nobel
Prize (1979)
Guardian in Russia coverage acts as MI6 outlet. Magnitsky probably was MI6 operation, anyway.
Notable quotes:
"... The Observer fabricated a direct quote from the Russian president for their propaganda purposes without any regard to basic journalistic standards. They wanted to blame Putin personally for the suspicions of some Russian investigators, so they just invented an imaginary statement from him so they could conveniently do so. ..."
"... What is really going on here is the classic trope of demonisation propaganda in which the demonised leader is conflated with all officials of their government and with the targeted country itself, so as to simplify and personalise the narrative of the subsequent Two Minutes Hate to be unleashed against them. ..."
"... In the same article, the documents from Russian investigators naming Browder as a suspect in certain crimes are first "seen as" a frame-up (by the sympathetic chorus of completely anonymous observers yellow journalism can always call on when an unsupported claim needs a spurious bolstering) and then outright labelled as such (see quote above) as if this alleged frame-up is a proven fact. Which it isn't. ..."
"... No evidence is required down there in the Guardian/Observer journalistic gutter before unsupported claims against Russian officials can be treated as unquestionable pseudo-facts, just as opponents of Putin can commit no crime for the outlet's hate-befuddled hacks. ..."
The decline of the falsely self-described "quality" media outlet The Guardian/Observer into a deranged fake news site pushing
anti-Russian hate propaganda continues apace. Take a look at
this gem :
The Russian president, Vladimir Putin, has accused prominent British businessman Bill Browder of being a "serial killer" –
the latest extraordinary attempt by the Kremlin to frame one of its most high-profile public enemies.
But Putin has not been reported anywhere else as making any recent statement about Browder whatever, and the Observer article
makes no further mention of Putin's supposed utterance or the circumstances in which it was supposedly made.
As the rest of the article makes clear, the suspicions against Browder were actually voiced by Russian police investigators and
not by Putin at all.
The Observer fabricated a direct quote from the Russian president for their propaganda purposes without any regard to basic
journalistic standards. They wanted to blame Putin personally for the suspicions of some Russian investigators, so they just invented
an imaginary statement from him so they could conveniently do so.
What is really going on here is the classic trope of demonisation propaganda in which the demonised leader is conflated with
all officials of their government and with the targeted country itself, so as to simplify and personalise the narrative of the subsequent
Two Minutes Hate to be unleashed against them.
When, as in this case, the required substitution of the demonised leader for their country can't be wrung out of the facts even
through the most vigorous twisting, a disreputable fake news site like The Guardian/Observer is free to simply make up new, alternative
facts that better fit their disinformative agenda. Because facts aren't at all sacred when the official propaganda line demands lies.
In the same article, the documents from Russian investigators naming Browder as a suspect in certain crimes are first "seen as"
a frame-up (by the sympathetic chorus of completely anonymous observers yellow journalism can always call on when an unsupported
claim needs a spurious bolstering) and then outright labelled as such (see quote above) as if this alleged frame-up is a proven fact.
Which it isn't.
No evidence is required down there in the Guardian/Observer journalistic gutter before unsupported claims against Russian officials
can be treated as unquestionable pseudo-facts, just as opponents of Putin can commit no crime for the outlet's hate-befuddled hacks.
The above falsifications were brought to the attention of the Observer's so-called Readers Editor – the official at the Guardian/Observer
responsible for "independently" defending the outlet's misdeeds against outraged readers – who did nothing. By now the article has
rolled off the site's front page, rendering any possible future correction nugatory in any case.
Later in the same article Magnitsky is described as having been Browder's "tax lawyer" a standard trope of the Western propaganda
narrative about the case. Magnitsky
was actually an accountant .
A trifecta of fakery in one article! That makes crystal clear what the Guardian meant in
this article , published at precisely the same moment as the disinformation cited above, when it said:
"We know what you are doing," Theresa May said of Russia. It's not enough to know. We need to do something about it.
By "doing something about it" they mean they're going to tell one hostile lie about Russia after another.
From the 'liberal' Guardian/Observer wing of the rightwing bourgeois press, spot the differences with the article in the Mail
on Sunday by Nick Robinson?
This thing seems to have been cobbled together by a guy called Nick Robinson. The same BBC Nick Robinson that hosts the Today
Programme? I dunno, one feels really rather depressed at how low our media has sunk.
I think huge swathes of the media, in the eyes of many people, have never really recovered from the ghastly debacle that was
their dreadful coverage of the reasons for the illegal attack on Iraq.
The journalists want us to forget and move on, but many, many, people still remember. Nothing happened afterwards. There
was no tribunal to examine the media's role in that massive international crime against humanity and things actually got worse
post Iraq, which the attack on Libya and Syria illustrates.
Exactly: in my opinion there should be life sentences banning scribblers who printed lies and bloodthirsty kill, kill, kill
articles from ever working again in the media.
Better still, make them go fight right now in Yemen. Amazing how quickly truth will spread if journalists know they have
a good chance of dying if they print lies and falsehoods ..
At a time when the ruling elite, across virtually the entire western world, is losing it; it being, political legitimacy and
the breakdown of any semblance of a social contract between the ruled and the rulers the Guardian lurches even further to the
political right . amazing, though not really surprising. The Guardian's role appears to be to 'coral' radical and leftist ideas
and opinions and 'groom' the educated middle class into accepting their own subjugation.
The Guardian's writers get so much, so wrong, so often it's staggering and nobody gets the boot, except for the people who
allude to the incompetence at the heart of the Guardian. They fail dismally on Trump, Brexit and Corbyn and yet carry on as if
everything is fine and dandy. Nothing to complain about here, mover along now.
I suppose it's because they are actually media aristocrats living in a world of privilege, and they, as members of the ruling
elite, look after one another regardless of how poorly they actually perform. This is typical of an elite that's on the ropes
and doomed. They choose to retreat from grubby reality into a parallel world where their own dogmas aren't challenged and they
begin to believe their propaganda is real and not an artificial contruct. This is incredibly dangerous for a ruling elite because
society becomes brittle and weaker by the day as the ruling dogmas become hollow and ritualized, but without traction in reality
and real purpose.
The Guardian is a bit like the Tory government, lost and without any real ideas or ideals. The slow strangulation of the CIF
symbolizes the crisis of confidence at the Guardian. A strong and confident ruling class welcomes criticism and is ready to brush
it all off with a smile and a shrug. When they start running scared and pretending there is no dissent or opposition, well, this
is a sign of decadence and profound weakness. They are losing the battle of ideas and the battle of solutions to our problems.
All that really stands between them and a social revolution is a thin veneer of 'authority' and status, and that's really not
enough anymore.
All our problems are pathetically and conviniently blamed on the Russians and their Demon King and his vast army of evil Trolls.
It's like a political version of the Lord of the Rings.
Don't expect the Guardian to cover the biggest military build-up (NATO) on Russia's borders since Hitler's 1941 invasion.
John Pilger has described the "respectable" liberal press (Guardian, NYT etc) as the most effective component of the propaganda
system, precisely BECAUSE it is respectable and trusted. As to why the Guardian is so insistent in demonising Russia, I would
propose that is integrates them further with a Brexit-ridden Tory government. Its Blairite columnists prefer May over Corbyn any
day.
The Guardian is trying to rescue citizens from 'dreadful dangers that we cannot see, or do not understand' – in other words they
play a central role in 'the power of nightmares'
https://www.youtube.com/embed/LlA8KutU2to
So Russians cannot do business in America but Americans must be protected to do business in Russia?
If you look at Ukraine and how US corporations are benefitting from the US-funded coup, you ask what the US did in Russia
in the 1990s and the effect it had on US business and ordinary Russian people. Were the two consistent with a common US template
of economic imperialism?
In particular, you ask what Bill Browder was doing, his links to US spying organisations etc etc. You ask if he supported
the rape of Russian State assets, turned a blind eye to the millions of Russians dying in the 1990s courtesy of catastrophic economic
conditions. If he was killing people to stay alive, he would not have been the only one. More important is whether him making
$100m+ in Russia needed conditions where tens of millions of Russians were starving .and whether he saw that as acceptable collateral
damage ..he made a proactive choice, after all, to go live in Moscow. It is not like he was born there and had no chance to leave
..
I do not know the trurh about Bill Browder, but one thing I do know: very powerful Americans are capable of organising mass
genocide to become rich, so there is no possible basis for painting all American businessmen as philanthropists and all Russians
as murdering savages ..
It's perfectly possible, in fact the norm historically, for people to believe passionately in the existence of invisible threats
to their well-being, which, when examined calmly from another era, resemble a form of mass-hysteria or collective madness. For
example; the religious faith/dogma that Satan, demons and witches were all around us. An invisible, parallel, world, by the side
of our own that really existed and we were 'at war with.' Satan was our adversary, the great trickster and disseminator of 'fake
news' opposed to the 'good news' provided by the Gospels.
What's remarkable, disturbing and frightening is how closely our media resemble a religious cult or the Catholic Church in
the Middle Ages. The journalists have taken on a role that's close to that of a priesthood. They function as a 'filtering' layer
between us and the world around us. They are, supposedly, uniquely qualified to understand the difference between truth and lies,
or what's right and wrong, real news and propaganda. The Guardian actually likes this role. They our the guardians of the truth
in a chaotic world.
This reminds one of the role of the clergy. Their role was to stand between ordinary people and the 'complexities' of the
Bible and separate the Truths it contained from wild and 'fake' interpretations, which could easily become dangerous and undermine
the social order and fundamental power relationships.
The big challenge to the role of the Church happened when the printing press allowed the ordinary people to access the information
themselves and worst still when the texts were translated into the common language and not just Latin. Suddenly people could access
the texts, read and begin to interpret and understand for themselves. It's hard to imagine that people were actually burned alive
in England for smuggling the Bible in English translation a few centuries ago. That's how dangerous the State regarded such a
'crime.'
One can compare the translation of the Bible and the challenge to the authority of the Church and the clergy as 'guardians
of the truth' to what's happeing today with the rise of the Internet and something like Wikileaks, where texts and infromation
are made available uncensored and raw and the role of the traditional 'media church' and the journalist priesthood is challenged.
We're seeing a kind of media counter-reformation. That's why the Guardian turned on Assange so disgracefully and what Wikileaks
represented.
A brilliant historical comparison. They're now on the legal offensive in censoring the internet of course, because in truth
the filter system is wholly vulnerable. Alternative media has been operating freely, yet the majority have continued to rely on
MSM as if it's their only source of (dis)information, utilizing our vast internet age to the pettiness of social media and prank
videos. Marx was right: capitalist society alienates people from their own humanity. We're now aliens, deprived of our original
being and floating in a vacuum of Darwinist competition and barbarism. And we wonder why climate change is happening?
Apparently we are "living in disorientating times" according to Viner, she goes on to say that "championing the public interest
is at the heart of the Guardian's mission".
Really? How is it possible for her to say that when many of the controversial articles which appear in the Guardian are not
open for comment any more. They have adopted now a view that THEIR "opinion" should not be challenged, how is that in the public
interest?
In the Observer on Sunday a piece also appeared smearing RT entitled: "MPs defend fees of up to £1,000 an hour to appear
on 'Kremlin propaganda' channel." However they allowed comments which make interesting reading. Many commenter's saw through their
ruse and although the most vociferous critics of the Graun have been banished, but even the mild mannered ones which remain appear
not the buy into the idea that RT is any different than other media outlets. With many expressing support for the news and op-ed
outlet for giving voice to those who the MSM ignore – including former Guardian writers from time to time.
Why Viner's words are so poisonous is that the Graun under her stewardship has become a agitprop outlet offering no balance.
In the below linked cringe worthy article there is no mention of RT being under attack in the US and having to register itself
and staff as foreign agents. NO DEFENCE OF ATTACKS ON FREEDOM OF THE PRESS by the US state is mentioned.
Surely this issue is at the heart of championing public interest?
For the political/media/business elites (I suppose you could call them 'the Establishment') in the US and UK, the main problem
with RT seems to be that a lot of people are watching it. I wonder how long it will be before access is cut. RT is launching a
French-language channel next month. We are already being warned by the French MSM about how RT makes up fake news to further Putin's
evil propaganda aims (unlike said MSM, we are told). Basically, elites just don't trust the people (this is certainly a constant
in French political life).
It's not just that they don't allow comments on many of their articles, but even on the articles where CiF is enabled, they ban
any accounts that disagree with their narrative. The end result is that Guardianistas get the false impression everyone shares
their view and that they are in the majority. The Guardian moderators are like Scientology leaders who banish any outsiders
for fear of influencing their cult members.
Everyone knows that Russia-gate is a feat of mass hypnosis, mesmerized from DNC financed lies. The Trump collusion myth is
baseless and becoming dangerously hysterical: but conversely, the Clinton collusion scandal is not so easy to allay. Whilst
it may turn out to be the greatest story never told: it looks substantive enough to me. HRC colluded with Russian oligarchy
to the tune of $145m of "donations" into her slush fund. In return, Rosatom gained control of Uranium One.
A curious adjunct to this corruption: HRC opposed the Magnitsky Act in 2012. Given her subsequent rabid Russophobia: you'd
have thought that if the Russians (as it has been spun) arrested a brave whistleblowing tax lawyer and murdered him in prison
– she would have been quite vocal in her condemnation. No, she wanted to make Russia
great again. It's amazing how $145m can focus ones
attention away from ones natural instinct.
[Browder and Magnitsky were as corrupt as each other: the story that the Russians took over Browder's hedge fund and implicated
them both in a $230m tax fraud and corruption scandal is as fantastical as the "Golden Shower" dossier. However, it seems to me
Magnitsky's death was preventable (he died from complications of pancreatitis, for which it seems he was initially refused treatment
) ]
So if we turn the clock back to 2010-2013, it sure looks to me as though we have a Russian collusion scandal: only it's not
one the Guardian will ever want to tell. Will it come out when the FBI 's "secret" informant (William D Cambell) testifies to
Congress sometime this week? Not in the Guardian, because their precious Hillary Clinton is the real scandal here.
This "tactic" – a bold or outrageous claim made in the headline or in the first few sentences of a piece that is proven false
in the very same article – is becoming depressingly common in the legacy media.
In other words, the so-called respectable media knowingly prints outright lies for propaganda and clickbait purposes.
I dropped a line to a friend yesterday saying "only in a parallel universe would a businessman/shady dealer/tax evader such as
Browder be described as an "anti-corruption campaigner."" Those not familiar with the history of Browder's grandfather, after
whom a whole new "deviation" in leftist thinking was named, should look it up.
Some months ago you saw tweets saying Russophobia had hit ridiculous levels. They hadn't seen anything yet. It's scary how easily
people can be brainwashed.
The US are the masters of molesting other nations. It's not even a secret what they've been up to. Look at their budgets or
the size of the intelligence buildings. Most journalists know full well of their programs, including those on social media, which
they even reported on a few years back. The Guardian run stories by the CIA created and US state funded RFE/RL & then tell
us with a straight face that RT is state propaganda which is destroying our democracy.
The madness spreads: today The Canary has/had an article 'proving' that the 'Russians' were responsible for Brexit, Trump, etc
etc.
Then there is the neo-liberal 'President' of the EU charging that the extreme right wing and Russophobic warmongers in the
Polish government are in fact, like the President of the USA, in Putin's pocket..
This outbreak is reaching the dimensions of the sort of mass hysteria that gave us St Vitus' dance. Oh and the 'sonic' terrorism
practised against US diplomats in Havana, in which crickets working for the evil one (who he?) appear to have been responsible
for a breach in diplomatic relations. It couldn't have happened to a nicer empire.
When national security establishment is trying to undermine sitting President this is iether color revolution or coup d'état. In
the USa it looks more like color revolution.
"Now you have this interesting dynamic where the national security establishment is effectively undermining a duly elected president
of the United States. I recognize that Trump is vulnerable, but these types of investigations often become highly politicized."
Notable quotes:
"... The Credico subpoena, after he declined a request for a "voluntary" interview, underscores how the investigation is moving into areas of "guilt by association" and further isolating whistleblowers who defy the powers-that-be through unauthorized release of information to the public, a point made by National Security Agency whistleblower Thomas Drake in an interview. ..."
"... Drake knows well what it means to blow the whistle on government misconduct and get prosecuted for it. A former senior NSA executive, Drake complained about a multi-billion-dollar fraud, waste, and widespread violation of the rights of civilians through secret mass surveillance programs. As a result, the Obama administration indicted Drake in 2010, "as the first whistleblower since Daniel Ellsberg charged with espionage," according to the Institute for Public Accuracy. ..."
"... In 2011, the government's case against him, which carried a potential 35 years in prison, collapsed. Drake went free in a plea deal and was awarded the 2011 Ridenhour Truth Telling Prize. ..."
"... In this hyper-inflated, politicized environment, it is extremely difficult to wade through the massive amount of disinformation on all sides. Hacking is something all modern nation-states engage in, including the United States, including Russia. The challenge here is trying to figure out who the players are, whose ox is being gored, and who is doing the goring. ..."
"... From all accounts, Trump was duly elected. Now you have the Mueller investigation and the House investigation. Where is this all leading? The US intelligence agency hasn't done itself any favors. The ICA provides no proof either, in terms of allegations that the Russians "hacked" the election. We do have the evidence disclosed by Reality Winner that maybe there was some interference. But the hyper-politicization is making it extraordinarily difficult. ..."
"... Well, if you consider the content of those emails .Certainly, the Clinton folks got rid of Bernie Sanders. ..."
"... The national security establishment was far more comfortable having Clinton as president. Someone central to my own case, General Michael Hayden, just a couple days ago went apoplectic because of a tweet from Trump taking on the mainstream media. Hayden got over 100,000 likes on his response. Well, Hayden was central to what we did in deep secrecy at the highest levels of government after 9/11, engaging in widespread surveillance and then justifying it as "raw executive authority." ..."
"... Now you have this interesting dynamic where the national security establishment is effectively undermining a duly elected president of the United States. I recognize that Trump is vulnerable, but these types of investigations often become highly politicized. I worry that what is really happening is being sacrificed on the altar of entertainment and the stage of political theater. ..."
"... What is happening to Randy is symptomatic of a larger trend. If you dare speak truth to power, you are going to pay the price. Is Randy that much of a threat, just because he is questioning authority? Are we afraid of the press? Are we afraid of having the uncomfortable conversations, of dealing with the inconvenient truths about ourselves? ..."
"... Yeah, it is definitely a way of describing the concept of fascism without using the word. The present Yankee regime seems to be quite far along that road, and the full-on types seem to be engaged in a coup to eliminate those they fear may not be as much in the fascist deep-state bag. ..."
"... How disgusting to have to live today in the society so accurately described by Orwell in 1984. It was a nice book to read, but not to live in! ..."
"... Truth is he enemy of coercive power. Lies and secrecy are essential in leading the sheeple to their slaughter. ..."
"... Perhaps the one good thing about Trumps election is that its shows democracy is still just about alive and breathing in the US, because as is pointed out in this article, Trump was never expected to win and those who lost are still in a state of shock and disbelief. ..."
"... One things for sure: the Neocons, the deep state, and all the rest of the skunks that infest Washington will make absolutely sure that future elections will go the way as planned, so perhaps we should celebrate Trump, because he may well be the last manifestation of the democracy in the US. ..."
"... In the end, what will bring this monstrously lumbering "Russia-gate" dog and pony show crashing down is that stupid, fake Fusion GPS dossier that was commissioned, paid for, and disseminated by Team Hillary and the DNC. Then, as with the sinking of the Titanic, all of the flotsam and jetsam floating within its radius of destruction will go down with it. What will left to pluck from the lifeboats afterwards is anyone's guess. All thanks to Hillary. ..."
The investigation to somehow blame Russia for Donald Trump's election has now merged with another establishment goal of isolating
and intimidating whistleblowers and other dissidents, as Dennis J Bernstein describes.
The Russia-gate investigation has reached into the ranks of journalism with the House Intelligence Committee's subpoena of Randy
Credico, who produced a series about WikiLeaks founder Julian Assange for Pacifica Radio and apparently is suspected of having passed
on early word about leaked Democratic emails to Donald Trump's supporter Roger Stone.
The Credico subpoena, after he declined a request for a "voluntary" interview, underscores how the investigation is moving
into areas of "guilt by association" and further isolating whistleblowers who defy the powers-that-be through unauthorized release
of information to the public, a point made by National Security Agency whistleblower Thomas Drake in an interview.
Drake knows well what it means to blow the whistle on government misconduct and get prosecuted for it. A former senior NSA
executive, Drake complained about a multi-billion-dollar fraud, waste, and widespread violation of the rights of civilians through
secret mass surveillance programs. As a result, the Obama administration indicted Drake in 2010, "as the first whistleblower since
Daniel Ellsberg charged with espionage," according to the Institute for Public Accuracy.
In 2011, the government's case against him, which carried a potential 35 years in prison, collapsed. Drake went free in a
plea deal and was awarded the 2011 Ridenhour Truth Telling Prize.
I interviewed Drake about the significance of Credico's subpoena, which Credico believes resulted from his journalism about the
persecution of Julian Assange for releasing information that powerful people would prefer kept hidden from the public. (I had a small
role in Credico's 14-part radio series, Julian Assange: Countdown to Freedom . It was broadcast first as part of his Live
on the Fly Series, over WBAI and later on KPFA and across the country on community radio.)
Credico got his start as a satirist and became a political candidate for mayor of New York City and later governor of New York,
making mainstream politicians deal with issues they would rather not deal with.
I spoke to Thomas Drake by telephone on Nov. 30, 2017.
Dennis Bernstein: How do you look at Russiagate, based on what you know about what has already transpired in terms of the
movement of information? How do you see Credico's role in this?
Thomas Drake: Information is the coin of the realm. It is the currency of power. Anyone who questions authority or is perceived
as mocking authority -- as hanging out with "State enemies" -- had better be careful. But this latest development is quite troubling,
I must say. This is the normalization of everything that has been going on since 9/11. Randy is a sort of 21st century Diogenes who
is confronting authority and pointing out corruption. This subpoena sends a chilling message. It's a double whammy for Randy because,
in the eyes of the US government, he is a media figure hanging out with the wrong media figure [Julian Assange].
Dennis Bernstein: Could you say a little bit about what your work was and what you tried to do with your expose?
Thomas Drake: My experience was quite telling, in terms of how far the government will go to try to destroy someone's life.
The attempt by the government to silence me was extraordinary. They threw everything they had at me, all because I spoke the truth.
I spoke up about abuse of power, I spoke up about the mass surveillance regime. My crime was that I made the choice to go to the
media. And the government was not just coming after me, they were sending a really chilling message to the media: If you print this,
you are also under the gun.
Dennis Bernstein: We have heard the charges again and again, that this was a Russian hack. What was the source? Let's trace
it back as best we can.
Thomas Drake:In this hyper-inflated, politicized environment, it is extremely difficult to wade through the massive
amount of disinformation on all sides. Hacking is something all modern nation-states engage in, including the United States, including
Russia. The challenge here is trying to figure out who the players are, whose ox is being gored, and who is doing the goring.
From all accounts, Trump was duly elected. Now you have the Mueller investigation and the House investigation. Where is this
all leading? The US intelligence agency hasn't done itself any favors. The ICA provides no proof either, in terms of allegations
that the Russians "hacked" the election. We do have the evidence disclosed by Reality Winner that maybe there was some interference.
But the hyper-politicization is making it extraordinarily difficult.
The advantage that intelligence has is that they can hide behind what they are doing. They don't actually have to tell the truth,
they can shade it, they can influence it and shape it. This is where information can be politicized and used as a weapon. Randy has
found himself caught up in these investigations by virtue of being a media figure and hanging out with "the wrong people."
Dennis Bernstein: It looks like the Russiagaters in Congress are trying to corner Randy. All his life he has spoken truth
to power. But what do you think the role of the press should be?
Thomas Drake: The press amplifies just about everything they focus on, especially with today's 24-hour, in-your-face social
media. Even the mainstream media is publishing directly to their webpages. You have to get behind the cacophony of all that noise
and ask, "Why?" What are the intentions here?
I believe there are still enough independent journalists who are looking further and deeper. But clearly there are those who are
hell-bent on making life as difficult as possible for the current president and those who are going to defend him to the hilt. I
was not surprised at all that Trump won. A significant percentage of the American electorate were looking for something different.
Dennis Bernstein : Well, if you consider the content of those emails .Certainly, the Clinton folks got rid of Bernie
Sanders.
Thomas Drake: That would have been an interesting race, to have Bernie vs. Trump. Sanders was appealing, especially to
young audiences. He was raising legitimate issues.
Dennis Bernstein: In Clinton, they had a known quantity who supported the national security state.
Thomas Drake:The national security establishment was far more comfortable having Clinton as president. Someone central
to my own case, General Michael Hayden, just a couple days ago went apoplectic because of a tweet from Trump taking on the mainstream
media. Hayden got over 100,000 likes on his response. Well, Hayden was central to what we did in deep secrecy at the highest levels
of government after 9/11, engaging in widespread surveillance and then justifying it as "raw executive authority."
Now you have this interesting dynamic where the national security establishment is effectively undermining a duly elected
president of the United States. I recognize that Trump is vulnerable, but these types of investigations often become highly politicized.
I worry that what is really happening is being sacrificed on the altar of entertainment and the stage of political theater.
What is happening to Randy is symptomatic of a larger trend. If you dare speak truth to power, you are going to pay the price.
Is Randy that much of a threat, just because he is questioning authority? Are we afraid of the press? Are we afraid of having the
uncomfortable conversations, of dealing with the inconvenient truths about ourselves?
"Raw Executive Authority" means Totalitarianism/Fascism.
exiled off mainstreet , December 7, 2017 at 4:23 pm
Yeah, it is definitely a way of describing the concept of fascism without using the word. The present Yankee regime seems
to be quite far along that road, and the full-on types seem to be engaged in a coup to eliminate those they fear may not be as
much in the fascist deep-state bag.
It is highly encouraging to know that a great many good and decent men and women Americans are 100% supportive of Mr, Randy
Credico as he prepares for his testimony before the House Intelligence Committee. Remember all those standing right there beside
you, speak what rightly needs to be spoken, and make history Mr. Credico!
jaycee , December 7, 2017 at 3:56 pm
The intensification of panic/hysteria was obviously triggered by the shock election of Trump. Where this is all heading is
on display in Australia, as the government is writing legislation to "criminalise covert and deceptive activities of foreign actors
that fall short of espionage but are intended to interfere with our democratic systems and processes or support the intelligence
activities of a foreign government." The legislation will apparently be accompanied by new requirements of public registration
of those deemed "foreign agents". (see http://www.wsws.org/en/articles/2017/12/07/auch-d07.html
).
This will be an attack on free speech, free thought, and political freedoms, justified by an orchestrated hysteria which ridiculously
assumes a "pure" political realm (i.e. the "homeland") under assault by impure foreign agents and their dirty ideas. Yes, that
is a fascist construct and the liberal establishment will see it through, not the alt-right blowhards.
mike k , December 7, 2017 at 5:49 pm
How disgusting to have to live today in the society so accurately described by Orwell in 1984. It was a nice book to read,
but not to live in!
john wilson , December 8, 2017 at 5:48 am
Actually Mike, the book was a prophesy but you aren't seen nothing yet. You me and the rest of the posters here may well find
ourselves going for a visit to room 101 yet.
fudmier , December 7, 2017 at 4:42 pm
Those who govern (527 of them) at the pleasure of the constitution are about to breach the contract that entitles them to govern.
Limiting the scope of information allowed to those who are the governed, silencing the voices of those with concerns and serious
doubts, policing every word uttered by those who are the governed, as well as abusing the constitutional privilege of force and
judicial authority, to deny peaceful protests of the innocents is approaching the final straw.
The governors and their corporate sponsors have imposed on those the governors govern much concern. Exactly the condition that
existed prior to July 4, 1776, which elicited the following:
When in the course of human events, it becomes necessary for one people to dissolve the Political bands which connected them
with another, and to assume among the Powers of the Earth, the separate and equal Station to which the laws of nature and of Nature's
God entitle them, a decent Respect to the Opinions of Mankind requires that they should declare the causes which impel them to
the separation.
Those who govern (527 of them and the puppet master oligarch behind them) will make certain that there's no support for the
next declaration. There's no respect to the opinions of the mankind, what matters is keeping the current status quo in place and
further advance it by silencing the independent media.
Maybe when the next "Mother of all bubbles" come, there's an opportunity for the mankind to be heard, but it's doubtful. What
has taken place during the last bubble is that the rich has gotten richer and the poor, well, you know the routine.
Truth is he enemy of coercive power. Lies and secrecy are essential in leading the sheeple to their slaughter.
john wilson , December 8, 2017 at 5:44 am
Perhaps the one good thing about Trumps election is that its shows democracy is still just about alive and breathing in
the US, because as is pointed out in this article, Trump was never expected to win and those who lost are still in a state of
shock and disbelief.
Trump's election has also shown us in vivid technicolour, just what is really going on in the deep state. Absolutely none of
this stuff would have come out had Clinton won and anything there was would have been covered up as though under the concrete
foundation of a tower block. However, Trump still has four years left and as a British prime minister once said, "a week is a
long time in politics". Well four more years of Trump is a hell of a lot longer so who knows what might happen in that time.
One things for sure: the Neocons, the deep state, and all the rest of the skunks that infest Washington will make absolutely
sure that future elections will go the way as planned, so perhaps we should celebrate Trump, because he may well be the last manifestation
of the democracy in the US.
Christene Bartels , December 8, 2017 at 9:57 am
In the end, what will bring this monstrously lumbering "Russia-gate" dog and pony show crashing down is that stupid, fake
Fusion GPS dossier that was commissioned, paid for, and disseminated by Team Hillary and the DNC. Then, as with the sinking of
the Titanic, all of the flotsam and jetsam floating within its radius of destruction will go down with it. What will left to pluck
from the lifeboats afterwards is anyone's guess. All thanks to Hillary.
Apparently, Santa isn't the only one making a list and checking it twice this year. He's going to have to share the limelight
with Karma.
"It's barbarism. I see it coming masqueraded under lawless alliances and predetermined
enslavements. It may not be about Hitler's furnaces, but about the methodical and
quasi-scientific subjugation of Man. His absolute humiliation. His disgrace"
Odysseas Elytis, Greek poet, in a press conference on the occasion of receiving the Nobel
Prize (1979)
"... Uber and Lyft are fraudulent schemes based on selling false hope to desperate drivers on one hand, while promising investors the 'opportunity' of getting in on the ground-floor of a new, and 'disruptive technology', sure to become a profitable monopoly, and so make a fortune when it they take it public. ..."
"... new and disruptive technology ..."
"... It's not a good job, it's not a good investment, it's not a 'new and disruptive technology', it's a scam, and anyone trying to sell any portion of it is a fraud. ..."
"... I think it's worse than a scam. It's a scam on the drivers and users, but I suspect that the investors know just what is up: destroy the taxi market, supplant it with Uber/Lyft, and enjoy your monopoly rents forever. Libertarianism indeed! That's the ground floor they're getting in on: entrepreneurial feudalism. ..."
"... Most of the litigation regarding Uber drivers is predicated on proving an employment relationship, contrary to Uber's assertion that the drivers are independent contractors. ..."
"... These drivers are overworked, underpaid, deceived, exploited employees of uber all but in name, the independent contractor nonsense is bulls***. Tell me how this is a win for the driver?? ..."
"... The assumption goes further than that. If you are depreciating an asset (wearing out your car), that's a cost. Replacing tires more often, paying for a commercial car rider (which Uber riders are supposed to do but Uber does not enforce) are all costs that need to be included even if the driver owns his car outright. ..."
"... That depreciation and upwardly trending running costs are ommited in the analysis seems to me to be gross incompetence or willful deception by the authors. ..."
"... That is my buddy in Seattle's experience with Lyft. He got laid off from his tech job and started driving after a lengthy unsuccessful job search but has no illusions about the "gig economy", doing it mostly just to get out of the house. The other day he told be he'd driven over 4 hours for slightly over $50. That's below the Seattle minimum wage and that's before accounting for his expenses. ..."
"... People may like the cheap fares, but that's only because they are heavily subsidized by flushing VC down the toilet and drivers working basically at a loss once expenses are considered. ..."
"... I'm not a frequent Uber user, but when I do I ask the driver what it's like. All say that it's much harder to make money now than it used to be. One driver actually attributed that to the ouster of Kalanick, on the belief that Kalanick had been ousted because he was pro-driver. (I didn't argue). That same driver told me he was getting $8 of my $22 Friday night fare. ..."
"... So, I think The Point with Uber it that it is mostly a political research project. What those VC investors actually pay for is to test to what extent they can get away with undercutting wages, how agressive and blatant one can cut corners on legal compliance, what the consequences for doing this are in different regions. What are the stakeholders? How should these be managed/manipulated? ..."
"... When a ride is requested the customer knows where they are going and about how much it will cost. Uber and Lyft have the same information. But the driver only gets a customer rating and an estimated time to pick up, and 10-15 seconds to decide if they will accept the ride. They are not allowed to call the customer and ask for the destination. If they cancel the ride, they are punished. When the driver shows up, the customer has up to five minutes to get in the vehicle before the driver can cancel on that person, and five minutes is a horrible waste of time to someone who is compensated pennies per minute for waiting. The driver has no idea how much the customer is actually paying (which is often a violation of state laws requiring full disclosure of fares). Drivers have no information, a very unfair economic reality. ..."
"... The companies are praying that elimination of drivers via automated vehicles will solve their financial problems, however I suspect that these companies are going to learn a hard lesson about the true cost of maintaining a fleet of hi tech vehicles. ..."
"... Out in San Francisco proper the number of ridehailing vehicles with expired registrations has increased dramatically. Savvy taxi drivers and ridehailing drivers are earning less across the board. Drivers are coming from San Diego to drive in the SF Bay Area. Plateless toll evasion on the toll bridges has skyrocketed since ridehailing came on the scene. ..."
In Buffalo last weekend for a family event. Tried Uber and Lyft around 7 pm Saturday from
our hotel in Cheektowaga to get to Town of Tonawanda. Not one single car available on either
service. Call to taxi dispatch, taxi at our hotel in less than 10 minutes.
Uber and Lyft absolutely failed in that scenario and left a poor impression for what would
have been our first rideshare trip.
I drove a taxi for many years, and I now work in IT for a group of auto dealers.
Last week, one of the general sales managers at work explained to me that people are '
selling ' cars to us in order to get out from under the expense of payments. Many of
these people are 'up-side-down' in their loans, meaning they owe more than the car is worth.
These folks are having to pay us to take the car off their hands, for example one customer
paid us $8,000 to ' buy ' his car.
Now understand that this is only part of the potential cost of attempting to make part of
a living by driving for Uber or Lyft.
You've wasted a year, making much less money than promised, you put 40K miles on your car
instead of the average 20K, and you end up with a car that isn't worth nearly what you owe on
it.
So now you've wised up to the fact that this is not a real 'opportunity', you've damaged
your financial situation and you're worse off than you were before.
That nice car that was going to help you make a living is now a weight holding you down,
it's hard for you to even look at it, and you can't afford to pay someone to 'buy'
it from you.
Uber and Lyft are fraudulent schemes based on selling false hope to desperate drivers
on one hand, while promising investors the 'opportunity' of getting in on the ground-floor of
a new, and 'disruptive technology', sure to become a profitable monopoly, and so make a
fortune when it they take it public.
It's not a good job, it's not a good investment, it's not a ' new and disruptive
technology ', it's a scam, and anyone trying to sell any portion of it is a fraud.
I've only taken Uber a few times, and when a Cuban-American fellow in Miami picked us up
in his $40k new SUV and told us how Uber was going to be his way out of the rat race, I
thought along the same lines as you, this is never going to work.
It's not a good job, it's not a good investment, it's not a 'new and disruptive
technology', it's a scam, and anyone trying to sell any portion of it is a
fraud.
I think it's worse than a scam. It's a scam on the drivers and users, but I suspect
that the investors know just what is up: destroy the taxi market, supplant it with Uber/Lyft,
and enjoy your monopoly rents forever. Libertarianism indeed! That's the ground floor
they're getting in on: entrepreneurial feudalism.
Also, maybe that the way investment tends to work.
It's a scam on the drivers and users, but I suspect that the investors know just what is
up: destroy the taxi market, supplant it with Uber/Lyft, and enjoy your monopoly rents
forever.
Anybody who has been following this discussion here at NC knows that is the play, as it
has been sold to investors, however, there is very little evidence that it will work to
investors benefit outside of a profitable IPO.
IMHO, that IPO has always been the end game.
As has been pointed out previously, it will be very hard, maybe impossible to drive enough
of the taxi industry out of business to create that monopoly, and thus make the IPO look
enticing.
My bet would be that Uber and Lyft miss that mark by a wide margin, and go down in history
as a foolish misadventure on the part of investors.
As the number of disappointed investors, and ex-drivers mounts up, it will be harder and
harder to recruit new 'sub-contractors' and I wouldn't rule out a class-action suit by
drivers, investors, or both.
As the number of disappointed investors, and ex-drivers mounts up, it will be harder and
harder to recruit new 'sub-contractors' and I wouldn't rule out a class-action suit by
drivers, investors, or both.
Probably not from the drivers -- Uber drivers for the last several years (~2013 or so, I
think?) have been subject to an arbitration clause with a class action waiver. There is an
opt-out provision (most likely in place only to support the ridiculous argument that the
class action waiver doesn't violate Section 7 of the NLRA because of the right, under Section
7, to refrain from participating in concerted activity) but no doubt the vast majority of
drivers have not opted out and are probably unaware of it. The numerous class actions against
Uber have either involved drivers who stopped working for Uber prior to their implementation
of arbitration or have tried to attack the enforceability of the arbitration clause.
Unfortunately, those arguments haven't been, and the pending ones are unlikely to be, very
successful. The argument involving Section 7 of the NLRA is currently pending before SCOTUS,
but based on oral arguments, this looks likely to result in another 5-4 partisan split in
favor of employers.
The argument involving Section 7 of the NLRA is currently pending before SCOTUS, but
based on oral arguments, this looks likely to result in another 5-4 partisan split in favor
of employers.
Most of the litigation regarding Uber drivers is predicated on proving an employment
relationship, contrary to Uber's assertion that the drivers are independent
contractors.
You are correct that asserting any rights under the NLRA will require proving a common-law
employment relationship, which is unfortunately a more restrictive standard than the FLSA's
broad "suffer or permit to work" standard (and used by many state laws).
Unsurprisingly, Uber's response has been to hire Littler and Gibson Dunn to stonewall the
investigation by playing games like ignoring NLRB administrative subpoenas, requiring the
NLRB to petition a district court for an order enforcing the subpoenas. The order the NLRB
sought
was eventually granted by the court , but this game managed to delay the proceedings for
several months. And with the NLRB now under complete Republican control, both on the GC and
Board side, it's hard to have hopes for a positive outcome for the drivers.
And there are even worse possible scenarios than making less money than expected. A friend
of mine used a small inheritance ($5k or so) as a down payment to buy a new-ish car, with the
idea of driving for Lyft. The hope was that he would at least make enough money to pay the
note on his off-hours and have a more modern / reliable / fuel efficient car to get to his
other 2-3 jobs. My friend is very much part of the precariat, so this felt like a win from
his perspective.
This went on for a couple of months or so and things went more or less according to his
meager expectations, so he was happy. Until he got rear ended in his nice new car. The car
was totaled, the guy who hit him uninsured. His cut rate insurance company paid off the car
at 2k or so less than he owed on it. Of course he had no gap coverage to cover that, and his
down payment is long gone. I let him borrow an old pickup until he was able to get the
insurance sorted out and arrange another beater so he didn't lose his other job(s).
In addition to the obvious costs (fuel) and abstract costs (depreciation), drivers have a
non-zero chance of death, injury, or plain old fender benders. And I'd bet most drivers don't
take that into account.
Zero workers comp, zero disability, and Uber's collision insurance has a high deductible
that guarantees risk is shifted onto its drivers, but for the long-tail crashes.
Not to mention drivers have only a vague idea what demand is like at any given time, while
Uber HQ has 100% perfect information on the level of demand and its algos can make a
reasonable guess as to the near-term expected demand.
The biased Research that you take apart here, is part of a wider and worrying phenomenon.
Uber Money is dominating economic Research on ride-hauling platforms. Uber is contracting
with many top-economists with their close links to prestigous publication channels. Even
reputable journals publish the resulting PR as if it was science. Critical Researchers have
no chance to compete, because they will not get the exclusive Uber-data, which Uber-loving
researchers like Angrist and Levitt can work with.
From Uber's perspective, why not game academia as well to help build the social values
they desire. Further proof that, despite the libertarian truisms, markets are absolutely a
product of politics and society rather than a natural phenomenon.
The embedded assumption for this analysis is that the average uber driver owns their car
outright (i.e. no vehicle finance/ lease repayments) and is available to work during peak
demand hours. This idealised "be your own boss, set your own hours and make lots of money"
myth has been shown up to be marketing fluff to attract gullible drivers who aren't savvy
enough to see through the obfuscated numbers uber presents at its driver recruitment
seminars. I'd wager that depreciation and dead miles, because they bite ever so silently by
piling on hour by hour, mile by mile without seemingly affecting earnings dropping down into
drivers "bottom lines", aren't ever mentioned at such seminars. IOW, drivers naively believe
that their net earnings are 75%, when they're anything but.
In my neck of the woods the situation is even more dire because uber has partnered with
South African banks and car dealerships to offer leases to unsuspecting drivers seduced by
the marketing cool aid and exaggerated earnings potential, with lease terms transferring the
bulk (read all) of the transaction risk to the driver. This has the effect of immediately
exploding the "work part time/set your own hours" myth because said drivers are now tethered
to uber (and have their free time rapaciously confiscated) in order to make their monthly
repayments to the banks. With obligations to the banks on a monthly basis top of mind, asset
down time becomes the bane of most of these drivers tenures with uber, with dead mile upon
dead mile driven in the hope of positioning oneself close enough to areas of peak demand
(leading to oversupply in such areas), artificially boosting supply for uber while wearing
out both asset and driver.
These drivers are overworked, underpaid, deceived, exploited employees of uber all but in
name, the independent contractor nonsense is bulls***. Tell me how this is a win for the
driver??
The assumption goes further than that. If you are depreciating an asset (wearing out your
car), that's a cost. Replacing tires more often, paying for a commercial car rider (which
Uber riders are supposed to do but Uber does not enforce) are all costs that need to be
included even if the driver owns his car outright.
I totally agree, and I should have made it explicitly clear that even if you own your car
outright the economics are junk owing to "hidden costs". I was addressing specifically the
tacit assumption this analysis hinges on to arrive at its conclusion that uber should be a no
brainer in the decision calculus of a driver looking to drive part time. That depreciation
and upwardly trending running costs are ommited in the analysis seems to me to be gross
incompetence or willful deception by the authors.
So though Uber says you can drive whenever you want, drivers often only work from, say,
7 a.m. to 11 a.m. or from 3 p.m. to 8 p.m., because fares are too low at other times.
That is my buddy in Seattle's experience with Lyft. He got laid off from his tech job and
started driving after a lengthy unsuccessful job search but has no illusions about the "gig
economy", doing it mostly just to get out of the house. The other day he told be he'd driven
over 4 hours for slightly over $50. That's below the Seattle minimum wage and that's before
accounting for his expenses.
He rarely even tries to drive during non-peak hours as there's
no money in it. Some fares earn him around $3 which is less than what it takes to ride the
damn bus. I would never have dreamed of getting in a cab in Seattle and paying less than $5
to get anywhere in Seattle, and that was 25 years ago.
People may like the cheap fares, but that's only because they are heavily subsidized by
flushing VC down the toilet and drivers working basically at a loss once expenses are
considered.
I'm not a frequent Uber user, but when I do I ask the driver what it's like. All say that
it's much harder to make money now than it used to be. One driver actually attributed that to
the ouster of Kalanick, on the belief that Kalanick had been ousted because he was
pro-driver. (I didn't argue). That same driver told me he was getting $8 of my $22 Friday
night fare.
I agree with the takedown of this piece, and the points previously made here about the
economics of ride-sharing and the implausibility of Uber ever deriving Amazon-like network
effects. I do think their app was a huge improvement over pre-Uber taxi dispatching (here in
DC, call a phone number, hope someone answers, then hope a taxi shows up). Also, I think that
it's at least possible that a demand-based per-ride fare structure would (assuming good
faith) better match supply and demand than traditional taxi time and distance-based fares.
Operating the system that enables the demand-based fares wouldn't be a ticket to world
domination, but it might improve utility for drivers and riders.
I do think their app was a huge improvement over pre-Uber taxi dispatching
The bar for "tech-disruption" is set pretty low with Uber. The local taxi companies (Taxi
Skåne) all have one, even in backwards Germany, where they might not take any card
payments but there is an app for getting a taxi wherever you are.
*Anyone*, literally, doing steady business can afford to have a decent "Rendevous-app"
made. Give a bunch of Norwegian teenagers err App Development Company three, six months and
about 15-50 kEUR and it is Done.
I can probably even get one to track my retriever on the app-store – but I don't
need it since she is a proper retriever, she finds stuff and comes back with it.
So, I think The Point with Uber it that it is mostly a political research project. What
those VC investors actually pay for is to test to what extent they can get away with
undercutting wages, how agressive and blatant one can cut corners on legal compliance, what
the consequences for doing this are in different regions. What are the stakeholders? How
should these be managed/manipulated?
The information gathered until Uber craters will be used to better tailor more serious
parasitic business ventures. It is an investment in the Next-Thing.
People complain about bitcoin energy use? Let's talk about uber deadhead miles/idling. If
you're in a city where uber cars must wear trade dress Just stand at a downtown corner and
watch all the empty cars drive by.
Certainly not convinced ridehail is a net plus. Uber HQ would have that data and if it is
not a talking point, the data must not be good
What a shame Uber is not a listed company. That is a short-indicator if there ever was
one. At least Iceland could afford a real Harward Professor write a paper declaring the
robust health of their economy right before it tanked.
The money mustache guy in Longmont, CO recently posted his experience as an "underground"
uber guy. Seems to confirm what I've heard around here (Berkeley/SF) about it not being the
pot of gold at the end of the rainbow. Certainly has added to the snarled traffic as people
use them to avoid walking short distances and as drivers carry on like amateurs. They drive
like part timers and stop in the middle of streets, rather than pulling to the side of
streets. http://www.mrmoneymustache.com/2017/11/22/mr-money-mustache-uber-driver/
Recently in Australia I've noticed when my friends have been catching Ubers that they have
been subject to surge pricing for little-to-no reason. I couldn't help but wonder if this is
a concerted effort by Uber to get their customers more accustomed to paying surge rates, for
when Uber can no longer afford to subsidise the rides.
It has always seemed to me that the Uber business model could only exist in a transient
economic situation -- that is, a time where the economy had done poorly enough to leave many
people unemployed, but before then had done well enough that many of those hard up people
owned a private car. A business model that depends on transient conditions will yield, of
course, transient business.
the Boston market, which has a particularly high level of licensed cabs per capita, nearly
twice as high as New York City.
They're talking about the City of Boston, which is only a tiny % of the Combined
Statistical Area and has far more people than population during the workday. A better
comparison than City of Boston-NYC would be City of Boston-Manhattan. I'm surprised that the
City of Boston doesn't have a much higher number of taxis per resident.
Comparing different municipalities in the US rarely makes sense since the size of a
municipality is so arbitrary. Combined Statistical Areas is a better focus since they're
standardized by social scientists working for the government.
When a ride is requested the customer knows where they are going and about how much it
will cost. Uber and Lyft have the same information. But the driver only gets a customer
rating and an estimated time to pick up, and 10-15 seconds to decide if they will accept the
ride. They are not allowed to call the customer and ask for the destination. If they cancel
the ride, they are punished. When the driver shows up, the customer has up to five minutes to
get in the vehicle before the driver can cancel on that person, and five minutes is a
horrible waste of time to someone who is compensated pennies per minute for waiting. The
driver has no idea how much the customer is actually paying (which is often a violation of
state laws requiring full disclosure of fares). Drivers have no information, a very unfair
economic reality.
The service is a terrific idea, but the economics of it are not realistic. Currently the
discounts are all being subsidized by a combination of VC money and drivers' lack of
knowledge.
The companies are praying that elimination of drivers via automated vehicles will solve
their financial problems, however I suspect that these companies are going to learn a hard
lesson about the true cost of maintaining a fleet of hi tech vehicles.
The question that has always confused me: since Uber offers a nicer "experience" than
taxis, why didn't they charge a premium for that from the beginning? Why dedicate yourself to
such an extreme burn rate?
Out in San Francisco proper the number of ridehailing vehicles with expired registrations
has increased dramatically. Savvy taxi drivers and ridehailing drivers are earning less
across the board. Drivers are coming from San Diego to drive in the SF Bay Area. Plateless
toll evasion on the toll bridges has skyrocketed since ridehailing came on the scene.
The situation is not sustainable. There are way too many vehicles out there. Generally
there are less rides too now. Services like Chariot or Ford Bike share have reduced ridership
for taxi/ridehailing. Apps like Tinder/Grinder reduce the need for barhopping. Services like
Munchery or Uber Eats eliminate a round trip for going out to eat.
Oddly enough Uber Eats competes against itself, UberX, as every delivery takes away two
rides from the livery side of the equation. People that get a ride out to eat need a ride
home.
U6 underemployment rate rose +0.1% from 7.9% to 8.0%
Here are the headlines on wages and the chronic heightened underemployment: Wages and
participation rates
Not in Labor Force, but Want a Job Now: rose +53,000 from 5.175 million to 5.238
million
Part time for economic reasons: rose +48,000 from 4.753 million to 4.801 million
Employment/population ratio ages 25-54: rose +0.2% from 78.8% to 79.0%
Average Weekly Earnings for Production and Nonsupervisory Personnel: rose +$.0.5 from a
downwardly revised $22.19 to $22.24, up +2.4% YoY. (Note: you may be reading different
information about wages elsewhere. They are citing average wages for all private workers. I
use wages for nonsupervisory personnel, to come closer to the situation for ordinary
workers.)
Holding Trump accountable on manufacturing and mining jobs
Trump specifically campaigned on bringing back manufacturing and mining jobs. Is he keeping
this promise?
Manufacturing jobs rose by +31,000 for an average of +15,000 a month vs. the last seven
years of Obama's presidency in which an average of 10,300 manufacturing jobs were added
each month.
Coal mining jobs fell -400 for an average of -15 a month vs. the last seven years of
Obama's presidency in which an average of -300 jobs were lost each month
September was revised upward by +20,000. October was revised downward by -17,000, for a
net change of +3,000.
likbez December 9, 2017 7:52 pm
There are now large categories of jobs, both part-time and full time, that can't provide
for living and are paying below or close to minimum wage (plantation economy jobs). it
looks like under neoliberalism this is the fastest growing category of jobs.
Examples are Uber and Lift jobs (which are as close to predatory scam as one can get) .
Many jobs in service industry, especially retail. See for example
Don't panic. Sit back, take a deep breath , and wait out the new developments.
Even though they have only a caretaker government now in Berlin, they have commissioned
experts to assess if and where the beautiful Trump tax reforms will violate the German/US
friendship treaty from the 1950s. Not a lot is known at the moment but the reduction in
corporate tax could be seen as a hostile act, providing an unfair advantage for American
companies. And then there is the end of tax deductability for parts bought in Europe. One
would have to look at the text of that friendship treaty but it looks all very probable.
What will happen then? Europe will have to say that they must sell their parts, to China
or Russia. Sanctions? You cannot blanket us with hostile acts, someone will say. Maybe you
should take a hike from Ramstein, if this is how you value our friendship. Sounds all very
drastic but has been a longtime coming.
Financialization of the economy and the lust for war goes hand in hand. That means that
"casino capitalism" is an aggressive capitalism.
" In the transition, politicians, who had no connection to domestic industry, found a
powerful niche promoting overseas wars for allies , like Saudi Arabia and Israel, and
disseminating domestic spats, intrigues and conspiracies to the voters." -- this is an astute
observation.
Notable quotes:
"... Simultaneously, finance reversed its relation to industry: Industrial capital was now harnessed to finance, speculation, real estate, insurance sectors and electronic gadgets/play-by-yourself ' i-phones' promoting isolated ' selfies' and idle chatter. ..."
"... Wall Street, Silicon Valley and Hollywood replaced Detroit, Pittsburgh, Cleveland and Chicago. Stockbrokers proliferated, while master tool-and-die makers disappeared and workers' children overdosed on 'Oxy'. ..."
"... In the transition, politicians, who had no connection to domestic industry, found a powerful niche promoting overseas wars for allies , like Saudi Arabia and Israel, and disseminating domestic spats, intrigues and conspiracies to the voters. ..."
"... In this historic transformation, American political culture put on a new face: perpetual wars, Wall Street swindles and Washington scandals. It culminated in the farcical Hillary Clinton – Donald Trump presidential election campaign: the war goddess-cuckquean of chaos versus the crotch-grabbing real-estate conman. ..."
"... Trump's presidential election campaign went about the country pleasuring the business and finance elite (promises of tax cuts, deregulations, re-contamination and jacking up the earth's temperature with a handful of jobs), and successfully pushed aside the outrage over his crude rump grabbing boasts. Wars, Wall Street, Silicon Valley and Hollywood all gathered to set the parameters of the United States' political economy: The chase was on! ..."
The chaotic free-for-all in the US political economy is manipulated by scandalmongers,
conspirators and flight capitalists. Instead of preparing an economic plan to ' make America
great again' , they have embraced the political blackmailers and intriguers of Saudi Arabia
in a sui-generis global political alliance. Both countries feature purges, resignations and
pugnacious politicos who have never been weaned from the destructive bosom of war.
As a point of history, the United States didn't start out as a bloated, speculative state of
crony capitalists and parasitical allies: The US was once a powerful industrial country,
harnessing finance and overseas investments to securing raw materials for domestic industries
and directing profits back into industry for higher productivity.
Fake, or semi-fake, political rivalries and electoral competition counted little as
incumbents retained their positions most of the time, and bi-partisan agreements ensured
stability through sharing the spoils of office.
Things have changed. Overseas neo-colonies started to offer more than just raw materials:
They introduced low-tax manufacturing sites promising free access to cheap, healthy and
educated workers. US manufacturers abandoned Old Glory, invested overseas, hoarded profits in
tax havens and happily evaded paying taxes to fund a new economy for displaced US workers.
Simultaneously, finance reversed its relation to industry: Industrial capital was now
harnessed to finance, speculation, real estate, insurance sectors and electronic
gadgets/play-by-yourself ' i-phones' promoting isolated ' selfies' and idle
chatter.
Wall Street, Silicon Valley and Hollywood replaced Detroit, Pittsburgh, Cleveland and
Chicago. Stockbrokers proliferated, while master tool-and-die makers disappeared and workers'
children overdosed on 'Oxy'.
In the transition, politicians, who had no connection to domestic industry, found a
powerful niche promoting overseas wars for allies , like Saudi Arabia and Israel, and
disseminating domestic spats, intrigues and conspiracies to the voters. Vietnam and
Watergate, Afghanistan and Volker, Iran-Contra and Reaganomics , Yugoslavia and Iraq,
daily drone strikes and bombings and Bill Clinton's White House sex scandals giving salacious
birth to SpecialProsecutors . . .
In this historic transformation, American political culture put on a new face: perpetual
wars, Wall Street swindles and Washington scandals. It culminated in the farcical Hillary
Clinton – Donald Trump presidential election campaign: the war goddess-cuckquean of chaos
versus the crotch-grabbing real-estate conman.
The public heard Secretary of State Clinton's maniacal laugh upon her viewing the
'snuff-film' torture and slaughter of the wounded Libya's President Gadhafi: She crowed: '
We came, we saw and he died' with a sword up his backside. This defined the Clinton
doctrine in foreign affairs, while slaughter of the welfare state and the bloated prison
industry would define her domestic agenda.
Trump's presidential election campaign went about the country pleasuring the business
and finance elite (promises of tax cuts, deregulations, re-contamination and jacking up the
earth's temperature with a handful of jobs), and successfully pushed aside the outrage over his
crude rump grabbing boasts. Wars, Wall Street, Silicon Valley and Hollywood all gathered to set
the parameters of the United States' political economy: The chase was on!
This great article is an elaborate intellectual expansion on what Mr. Gerald Celente of
Trendsresearch.com has been proclaiming for years that" while the business of China is
business, the business of America is war". Professor Petras is pointing to the moral decline
that is behind the social and economic decline of the nation of America that was once a
beacon of light to the world.
This analysis leaves the reader with little doubt as to the direction in which the momentum
of historic leadership is moving; it is to the East away from the West in a reversal of the
dawn of the Renaissance era of Europe. The last hope for the west to stay at the helm of
civilisation is to have a leader who can ignite a moral renaissance in the West short of
which the 21st century will definitely be China's century. The impetus for such a revival is
a shake up of the world of finance that will chase the money changers out of the altar of the
Western economy and put he lying scribes of the Western media in labour camp where they will
be re educated about the virtues of truth and reality.
Official truth has become a stinking mound of offal.
Has become?
A good thing about it is that we should know to laugh at it whenever we hear it, and
accept the fact that "authority" is lying until proven otherwise.
Were I to indulge my own theory, I should wish [the states] to practise neither commerce
nor navigation, but to stand with respect to Europe precisely on the footing of China.
We should thus avoid wars
-Thomas Jefferson, letter To G. K. van Hogendorp , Paris, Oct. 13, 1785
Isn't Western "civilization" just peachy? Civilization?
One has to have had a "naissance" of morals to experience a "re" of them, but yes, chasing
the money changers out of the temple and money worship out of our souls would have
helped.
Would have.
Our great mass of workers have labored for the money changers too long.
You're right about many things you presented, but you still don't understand the
multi-layered gradually administered releases of mis-information, dis-information, and
information, designed to awaken and transform our nation, planet, and human consciousness.
Given that half the population has below average intelligence, new positive leadership does
not merely announce that generations of psychopaths have manipulated them. As a personal
example, half the people I communicate with are sub-average intelligence, and I've learned to
very gradually wake them up, or they will, in their unreasonable thinking, try to make
trouble for me. There's the saying, "Don't throw pearls before swine." I know this too
harshly stated, and I should have gradually and gently presented it for half the reader's.
Sorry.
P.S. . Unz.com and it's reader's are likely far above average.
The tax-reform bill that US Republicans are attempting to implement is economically
indefensible and blatantly unfair. But the US has a much deeper problem: the Anglo-Saxon model
of representative government is in serious trouble, and nobody seems to know how to fix it.
BERKELEY – The tax bill that US Republicans have doggedly pushed through Congress is
not as big a deal as many are portraying it to be. It is medium-size news. The big news –
the much more weighty and ominous news – lies elsewhere.
Of course, medium-size is not nothing. If the tax bill does clear its final hurdle – a
conference committee must reconcile the Senate-approved bill with that of the House of
Representatives – and become law, it will complicate the tax system considerably, as it
opens many loopholes. It won't have any impact on economic growth – positive or negative
– but it would have an impact on the government's finances, causing revenues to decline
by the equivalent of about 1% of national income.
The missing resources would most likely be transferred to the top 1% of earners, raising
their share of total income from 22% to 23%. The top 0.01% would probably gain the most, with
their share of income rising from 5.1% to 5.5%. In this sense, the tax plan would be another
brick – not a huge brick, but a medium-size brick – in the increasingly impregnable
fortress of American plutocracy.
But the bill may well not become law at all. Consider the Republicans' efforts earlier this
year to repeal and replace the Affordable Care Act ("Obamacare") – an effort that, it now
seems clear, was pure Dingbat Kabuki.
The Republicans didn't actually want to take responsibility for changing the health-care
financing system, much less strip their own constituents of health care. But the party's
propaganda arm had worked so hard to convince its base that Obamacare represented a clear and
present danger to the country that its leaders had to act as if they were making a serious
effort to fulfill their promise to repeal and replace it.
So a majority of Republicans in the House of Representatives voted for the bill, expecting,
with reasonable confidence, that it would be blocked in the 100-member Senate, where fewer than
40 of the 52 Republicans actually wanted it to pass. Had any of the three Republican senators
who voted against the bill – John McCain of Arizona, Susan Collins of Maine, or Lisa
Murkowski of Alaska – made a different choice, there were probably about five more who
would have stepped in to nix it.
The same thing may be happening with the tax reform. It depends on whether at least three of
the ten Republican senators who have raised objections are serious, or are playing a different
game of Dingbat Kabuki: seeking to trick their constituents into thinking that they went the
extra mile to try to help them, and are not puppets of Senate Majority Leader Mitch
McConnell.
But, regardless of whether the tax bill survives the reconciliation process and becomes law,
the big news won't change: the Anglo-Saxon model of representative government is in serious
trouble. And there is no solution in sight.
For some 400 years, the Anglo-Saxon governance model – exemplified by the republican
semi-principality of the Netherlands, the constitutional monarchy of the United Kingdom, and
the constitutional republic of the United States of America – was widely regarded as
having hit the sweet spot of liberty, security, and prosperity. The greater the divergence from
that model, historical experience seemed to confirm, the higher the likelihood of repression,
insecurity, and poverty. So countries were frequently and strongly advised to emulate those
institutions.
Nobody would dare offer that same advice today. The UK, having been thrown into devastating
austerity by Conservative and Liberal leaders after the global economic crisis, is now being
led by the Conservatives toward a messy and damaging Brexit. And, in the US, the election of
President Donald Trump heralded the age of "alternative facts" and "governance by tweet,"
overseen by an erratic and ignorant leader who is clearly in over his head.
When Trump was first elected, some argued that it did not have to be a disaster. After all,
the optimists pointed out, President Ronald Reagan had been more a "chief of state" than a
"chief executive," as had George W. Bush.
As divisive as Chief of State Trump would be, according to this view, he wouldn't derail
policy, because electing a Republican president is more like electing the Republican Party
establishment. And that bench was very deep and very competent, despite its weakening in recent
years.
The optimists were wrong. After nearly a year in control of both houses of Congress and the
White House, the Republicans haven't achieved any of their four policy goals: repeal and
replacement of Obamacare, infrastructure development, trade-policy reform, or even tax reform.
This points to a broken system of politics and governance, one that Americans seem to have no
idea how to fix.
The US remains the world's preeminent superpower. But doubts are intensifying over whether
it's still up to the job. In this context, the Republicans' tax reform, however economically
indefensible and blatantly unfair it is, is far from America's biggest concern.
"... The Demopublican War Party: United to shovel more money into the maw of the oligarch class while stealing dollars, services, and servitude from the working class. Reverse Robin Hood/Reverse Socialism in full effect. ..."
"... Currently, we have $20T debt but the U.S. govt is borrowing at short term rates in order to get this amazingly low debt service. ..."
"... Does anyone else believe that this is the game the U.S. govt is playing? If it is then I wonder what the consequences are in keeping short term interest rates at artificially low levels in perpetuity. ..."
"... I'll start taking the "deficit hawks" seriously when they start talking Defense procurement reform. Until then, its just "balance the budget on the backs of widows and orphans". ..."
"... For those who are fortunate enough not to live in these Benighted States: have pity upon us, especially those of us who done our best to fight against this horror show. Democraps are either just as bad or worse bc of their duplicity. The GOP is, at least, totally loud and proud of who they are, and no more dog whistles for them. ..."
"... poll end of October 2017 shows widespread fed up with government policies and war https://www.charleskochinstitute.org/news/cki-real-clear-politics-foreign-policy-poll/ ..."
"... It is impressive how the Democrats do nothing, but nothing at all against the catastrophic tax 'reform', instead - me too! ..."
"... I am still waiting on my Reagan trickle down. Reagan and fellow thieves stole social security funds to make their deficit look lower. Those funds have not been paid back....approximately $3,000,000,000,000. Now the dead beats are planning on slipping out of town. ..."
"... We should go back to the 1960 tax structure , the one in place after eight years of Eisenhower, so it should get plenty of Republican support, yes? ..."
"... You are already seeing the consequences of artificially low short term rates. Negative yielding sovereign European debt - meaning you pay to lend to some European governments. ..."
"... People don't understand what money is our how it is and can be created. They imagine it is like gold and limited in supply so that government can spend only from a finite supply which they must obtain by taxes or loans that require interest to be paid. This fable is about as true as Santa Clause and the Tooth Fairy. Money has no value but as an instrument of exchange. It can be created by government to pay for benefit of a nation. Instead we allow private bankers to create money via loans (no printing press needed its just a line item on a spread sheet on their computers which shows up in the borrowers account) The privately owned central bank system limits or increases the supply by various means in a cyclical manner which leads to boom and bust cycles in the economy. The rich get richer after each bust cycle since they have cash to acquire assets available at depressed prices ..."
"... There's no reason why with the current state of technology so much money is needed to campaign for office. Almost as if the MSM is conditioning us to believe it necessary. There's no reason some one can't run a campaign using social media, YouTube and video conferencing instead of advertising (on same MSM) travelling long distances to campaign rallies and broadcast advertising. Microdonations and volunteering assistance can take care of the rest. If there is a will, there's a way to run an outsider as a candidate. The recent death of Anderson reminded me of his difficulties running, but he ran at a time when none of these technologies existed. ..."
"... Churning out extra dosh works when it is part of a larger plan to increase productivity by encouraging people outta pointless 'shit industry' service jobs into either outright production like manufacturing or primary industry, or infrastructure investment like railways, roads, bridges & renewable energy projects. Just pumping fresh new bills into health n education will be great for those who work in these sectors, but is unlikely to create much flow on to the rest of the population. ..."
House Speaker Paul Ryan (R-Wis.) on Thursday said the tax cuts included in the tax reform
package Republican lawmakers crafted in conjunction with the Trump Administration have to be
deficit neutral so as to conform with budget reconciliation rules.
The U.S. Republican tax cut plan that President Donald Trump wants passed by the end of the
year is unlikely to trigger a big deficit expansion because it will spur more investment and
job growth, House of Representatives Speaker Paul Ryan told Reuters in an interview on
Wednesday.
"Paul Ryan deficit hawk is also a growth advocate. Paul Ryan deficit hawk also knows that you
have to have a faster growing economy, more jobs, bigger take-home pay, that means higher tax
revenues ," Ryan told Chris Wallace on "Fox News Sunday."
The tax overhaul legislation that Ryan shepherded through the House -- the Senate takes up
its version this week -- would add at least $1 trillion to budget deficits over the next
decade, even when accounting for economic growth, according to independent tax analysts.
House Speaker Paul Ryan (R-Wis.) on Wednesday said House Republicans will aim to cut spending
on Medicare, Medicaid and welfare programs next year as a way to trim the federal deficit .
"We're going to have to get back next year at entitlement reform, which is how you tackle
the debt and the deficit ," Ryan said during an interview on Ross Kaminsky's talk radio
show.
And no. The Democrats aren't any better. Look at the trillions Obama handed to Wall Street.
That wasn't even a tax cut, it was a give-away. Obamacare is a sham, willfully constructed in
way that makes sure it can't survive. The Democrats only pretend to care for the people. As
soon as they again have a majority and fake intent for pro-social reforms the Repubs will again
whine about the deficit and the Democrats will be happy to fold.
The Demopublican War Party: United to shovel more money into the maw of the oligarch class
while stealing dollars, services, and servitude from the working class. Reverse Robin
Hood/Reverse Socialism in full effect.
Indeed. Two faces, same coin. The msm desperately wants to keep the relevant the age-old
rope-a-dope of the Demotards vs. Rethuglicans 2K17! Jesus, ever-loving-Christ, though, you
fuck with social security and Medicare and you bring on the wrath of AARP's membership.
Release the BLUE-HAIRS!
Can't wait, but that is another struggle for another day. In the mean time, I notice that
even the mention of Paul Ryan elicits a shudder. Such a slime.
It [was] a remarkably low $240B as of 2016. Does this mean that the Fed can just keep short term
rates low or even reduce them, vis-a-vis the Japanese model, and allow U.S. govt debt to grow
to arbitrarily high levels?
Currently, we have $20T debt but the U.S. govt is borrowing at short term rates in order
to get this amazingly low debt service. Now let's suppose over the next 50yrs our national
debt grows to a ridiculous $100T, if the fed puts short term rates at 0.1% then our annual
debt service will still be at the same levels or less.
Does anyone else believe that this is the game the U.S. govt is playing?
If it is then I wonder what the consequences are in keeping short term interest rates at
artificially low levels in perpetuity.
Here's to the evolving True Political
Awakening .
Move beyond the two-faced monkeys; the 2-faced division-makers; the 2 lying parties. Move
beyond them into yourself, your own mind and thoughts, owned by no-one; a critical and
independent thinker who seeks the truth.
I'll start taking the "deficit hawks" seriously when they start talking Defense procurement
reform. Until then, its just "balance the budget on the backs of widows and orphans".
There was a large mound formed recently over the grave of former Republican senator from WI
Bob Lafollette Sr., this protrusion was caused by his rapidly spinning corpse.
For those who are fortunate enough not to live in these Benighted States: have pity upon us,
especially those of us who done our best to fight against this horror show.
Democraps are either just as bad or worse bc of their duplicity. The GOP is, at least,
totally loud and proud of who they are, and no more dog whistles for them.
The Democrats, all while the GOP Tax SCAM was being shoved down our gobs, wasted all of
their time and "emotions" on a witch hunt to toss Al Franken outta the Senate. Franken is not
my favorite Senator by a long shot, but this is yet another chapter of the Democraps ACORNing
their own purportedly in the name of "taking the moral high ground." My Aunt Fanny.
Complicit, greedy, conniving, venal, deplorable bastards the whole d*mn lot with the
possible exception of Bernie Sanders (no great shakes but the pick of the litter).
Ugh. Don't get me started on all of those dual Israeli/USA citizens in riddling our
Congress. They are ALL in favor of this Jerusalem travesty with Schmuck Schumer leading the
charge. That's not about Trump... or not much about Trump. I place blame on worthless scum
like Schumer.
This is why people voted for Trump: they could see the worthlessness of both parties. Of
course, voting for Trump was a complete Mug's game, as for sure, the way things have turned
out was a foregone conclusion.
I am still waiting on my Reagan trickle down. Reagan and fellow thieves stole social security
funds to make their deficit look lower. Those funds have not been paid back....approximately
$3,000,000,000,000. Now the dead beats are planning on slipping out of town.
We should go back to the 1960 tax structure , the one in
place after eight years of Eisenhower, so it should get plenty of Republican support, yes?
top rate on regular income: 91%
top rate on capital gains: 25%
top rate on corporate tax: 52%
The top income tax tier back then was $400,000 - adjusted for inflation to 2017 dollars,
that's about $10 million. So anyone with an income of $10 million would still get a take-home
pay of $1 million a year. Seems like the right thing to do, doesn't it?
Good one b, the demodogs will stoop their feet point figures so they can raise lots of
$$$$$$$$$$$$$ to pay their friends the consultants and lose more seats. It's what they do
best.
I've almost given up. It's not just amerika; lookit Australia this week where the citizens
are being distracted by a same sex marriage beatup which should have been settled in 5
minutes years ago - meanwhile the last vestiges of Australia's ability to survive as a
sovereign state are being flogged off to anyone with a fat wedge in their kick.
Aotearoa isn't much better the 'new' government which was elected primarily because the
citizens were appalled to discover that for about the first time in 150 years, compatriots -
compatriots with jobs in 'the gig economy' were homeless in huge numbers, has just announced
that the previous government's housing policy was a total mess, and that fixing the problem
will be difficult -really Jacinda we never woulda guessed, I guess what yer really trying to
say is nothing is gonna change.
The englanders are in even worse trouble with their brexit mess, the political elite is
choosing to ignore a recent Northern Ireland poll which revealed that most people in the
north would rather hook up with Ireland than stay with an non EU UK, so the pols there are
arguing over semantics about the difference between "regulatory alignment" and "regulatory
equivalence" as it applies to Ulster while the pound is sinking so fast it is about to
establish equivalence with the euro by xmas.
No one is paying attention to what is really happening as in between giving us the lowdown on
which 2nd rate mummer was rude to a 3rd rate thespian and advertorials about the best
chronometer (who even wears a watch in 2017?) for that man in your life, the media simply
doesn't have the time much less the will to tell the citizens how quickly their lives are
about to go down the gurgler.
The only salient issue is - will the shit hit the fan before the laws are in place to
silence, lock up and butcher dissenters, or will there be a brief period where we hit the
barricades and have a moment of glory before humanity gets to enjoy serfdom Mk2?
b, have you really taken a look at federal government spending? What is the ratio of spending
by the German government between social programs and discretionary spending for defense,
agriculture subsidies, infrastructure, etc?
The majority of federal government spending is non-discretionary social entitlement
spending with the biggest being health care spending. Just Medicare & Medicaid is a third
of all federal government spending. Then you have to add health care spending for federal
government employees and members of Congress, Tricare and VA. With health care costs growing
at 9% each and every year as it has for the past 30 years, medical related expenditures as a
share of total federal government spending will continue to rise.
Deficits will continue to grow as these entitlement programs grow automatically as
eligibility grows. Even if all defense expenditures were zeroed out, the federal government
would still run a deficit.
You are already seeing the consequences of artificially low short term rates. Negative
yielding sovereign European debt - meaning you pay to lend to some European governments.
European junk bonds with 10 year duration yielding less than 10 yr US Treasury bond. Loss
making, junk rated European companies raising even more intermediate term debt at 0.001%.
Corporations borrowing to buy back stock. The Swiss National Bank creating money out of thin
air and owning $85 billion of US equity in major US companies like Apple & Google. The
Bank of Japan owning a third of all Japanese government bonds outstanding and the Top 10
holder of the companies in the Nikkei 100 index. Financial speculation off the charts across
the globe.
People don't understand what money is our how it is and can be created. They imagine it is
like gold and limited in supply so that government can spend only from a finite supply which
they must obtain by taxes or loans that require interest to be paid. This fable is about as true as Santa Clause and the Tooth Fairy. Money has no value but as an instrument of exchange. It can be created by government to
pay for benefit of a nation. Instead we allow private bankers to create money via loans (no
printing press needed its just a line item on a spread sheet on their computers which shows
up in the borrowers account) The privately owned central bank system limits or increases the
supply by various means in a cyclical manner which leads to boom and bust cycles in the
economy. The rich get richer after each bust cycle since they have cash to acquire assets
available at depressed prices
As for the debt owed by the US the privately owned Fed will ensure the government can
borrow whatever is needed for interest payments since they can create an infinite supply of
money by acquiring junk and calling them assets. Out pal OPEC (Saudis) keeps Petro dollar
(USD ) in demand and exchange rates are set within agreed upon limits by the worlds central
banks under the BIS, with input from various shadowy groups like Bilderbergers, trilaterals
and CFR. And if all else fails, an attack on the USD will result in the military option being
used
To remain in power corrupt governments rely on a citizen base that is uneducated or
misinformed, busy surviving to pay taxes and daily expenses, is dependent on government and
in debt and is well entertained. They must also be divided by religion, race, social, gender,
age and party (secular religion) and given a common external enemy to fear.
The system is working to perfection. Neoliberal economics is the icing on the cake and is
the gift that keeps on giving to the chosen ones.
Check out the pdf on money creation by the Bank of England
There's no reason why with the current state of technology so much money is needed to
campaign for office. Almost as if the MSM is conditioning us to believe it necessary. There's no reason some one can't run a campaign using social media, YouTube and video
conferencing instead of advertising (on same MSM) travelling long distances to campaign
rallies and broadcast advertising. Microdonations and volunteering assistance can take care
of the rest. If there is a will, there's a way to run an outsider as a candidate. The recent death of
Anderson reminded me of his difficulties running, but he ran at a time when none of these
technologies existed.
I think people are just too lazy to make the effort. Most elections people are just too
lazy to even vote.
While I agree that money can just be created there is a limit to that particularly when
low constraints on consumable supplies run parallel to established shortfalls on finite goods
such as houses, land, food etc. Inflation runs rampant and we weak humans distract ourselves
with cheap baubles instead of creating useful shit and putting a roof over the heads of our
children - "waddaya want for xmas kid, a freehold shithole or a new VR headset?" "I'll take
the vive Dad".
Churning out extra dosh works when it is part of a larger plan to increase productivity by
encouraging people outta pointless 'shit industry' service jobs into either outright
production like manufacturing or primary industry, or infrastructure investment like
railways, roads, bridges & renewable energy projects. Just pumping fresh new bills into
health n education will be great for those who work in these sectors, but is unlikely to
create much flow on to the rest of the population.
"... Ryan deficit BS there was a commenter ex-SA with a John H. Hotson link that I want to see go viral because it simply explains the history of the Gordian Knot we face as a species ..."
"... "Banking came into existence as a fraud. The fraud was legalized and we've been living with the consequences, both good and bad, ever since. Even so it is also a great invention-right up there with fire, the wheel, and the steam engine." ..."
@ Daniel ending with "This "Clash of Civilizations" type narrative is not encouraging." That
is exactly what they want you to focus on as a narrative rather than the simple truth about
the demise of private banking. On the previous thread about the Republican: Ryan deficit BS
there was a commenter ex-SA with a John H. Hotson link that I want to see go viral because it
simply explains the history of the Gordian Knot we face as a species
"Banking came into existence as a fraud. The fraud was legalized and we've been living
with the consequences, both good and bad, ever since. Even so it is also a great
invention-right up there with fire, the wheel, and the steam engine."
Clash of Civilizations is as vapid a meme as the common understanding of the Capitalism
myth as that article so clearly states. Spread his word far and wide to wake up the zombies.
It is time!
The US sanctions were partially anticompetitive move to block Russia selling its hydrocarbons to lucrative EU market.
Now Russia is becoming a major player in LNG and things might become more complex for the USA as all US efforts to built LNG
infrastructure int he USA in order to export the US LNG to Europe now are can backfire.
Notable quotes:
"... Russia plans to build 15 tankers as big as the 'Christophe de Margerie'. ..."
"... "Russia must accelerate work on development capacity to produce liquefied natural gas," Putin said at the ceremony. ..."
"... Costing $27 billion, the plant will have three production lines and a total capacity of 16.5 million tons of LNG per year. ..."
"... Shareholders of the Novatek project - Total and CNPC - will purchase LNG on a long-term basis. ..."
"... The ceremony was also attended by a member of Saudi Aramco's board of directors. The kingdom is considering taking part in Novatek's new project, Arctic LNG 2, according to Russian Energy Minister Aleksandr Novak. ..."
Russia has opened a liquefied natural gas (LNG) plant in the country's northern region of
Yamal. The first tanker with LNG was launched on Friday by Russian President Vladimir Putin.
The ice-breaking tanker is named after the former CEO of Total Christophe de Margerie who died
in a plane crash in Russia. The tanker can carry up to 173,000 cubic meters of LNG. Russia
plans to build 15 tankers as big as the 'Christophe de Margerie'.
"Russia must accelerate work on development capacity to produce liquefied natural
gas," Putin said at the ceremony.
The controlling stake in the enterprise belongs to Russian energy major Novatek. Twenty
percent each is owned by Total, and China's CNPC, and the remaining 9.9 percent belongs to the
China-based Silk Road Fund. Costing $27 billion, the plant will have three production lines and a total capacity of 16.5
million tons of LNG per year.
Almost 96 percent of the Yamal LNG plant's production has already been contracted. The main
customers will be the countries of the Asia-Pacific region, Novatek reported. Shareholders of the Novatek project - Total and CNPC - will purchase LNG on a long-term
basis.
The ceremony was also attended by a member of Saudi Aramco's board of directors. The kingdom
is considering taking part in Novatek's new project, Arctic LNG 2, according to Russian Energy
Minister Aleksandr Novak.
This is two years old article. Not much changed... Comments sound as written yesterday. Check it out !
The key incentive to Iran deal is using Iran as a Trojan horse against Russia in oil market -- the force which helps to keep oil prices low, benefitting
the USA and other G7 members and hurting Russia and other oil-producing nations. Iran might also serve as a replacement market for EU
goods as Russian market is partially lost. Due to sanctions EU now lost (and probably irrevocably) Russian market for food, and have difficulties in maintaining their share in other
sectors (cars, machinery) as Asian tigers come in.
Notable quotes:
"... The waning clout stems from the lobby siding with the revanchist Israeli Prime Minister Binyamin Netanyahu, whose Iran strategy since the 2012 US presidential campaign has been to unabashedly side with Republican hawks. AIPAC's alignment with the position effectively caused the group to marginalize itself; the GOP is now the only place where AIPAC can today find lockstep support. The tens of millions AIPAC spent lobbying against the deal were unable to obscure this dynamic. ..."
"... Senator Lindsey Graham of South Carolina took to the floor during the debate and pulled out an old trick from the run-up to the Iraq war: blaming Iran for 9/11 and saying a failure to act would result in a worse attack – is any indication, even Democrats like the pro-Israel hawk Chuck Schumer will find it untenable to sidle up to AIPAC and the Republicans. ..."
"... The problem with the right in the USA is that they offer no alternatives, nothing, nada and zilch they have become the opposition party of opposition. They rely on talking point memes and fear, and it has become the party of extremism and simplicity offering low hanging fruit and red meat this was on perfect display at their anti Iran deal rally, palin, trump, beck and phil robinson who commands ducks apparently. ..."
"... Is it any wonder the Iranians don't trust the US. After the US's spying exploits during the Iraqi WMD inspections, why are you surprised that Iran asks for 24 days notice of inspection (enough time to clear out conventional weapons development but not enough to remove evidence of nuclear weapons development). ..."
"... Most Americans don't know the CIA overthrew the Iranian government in 1953 and installed the Shaw. Most Republicans know that most Americans will believe what Fox news tells them. Republicans live in an alternate universe where there is no climate change, mammon is worshiped and wisdom is rejected hatred is accepted negotiation is replaced by perpetual warfare. Now most Americans are tired of stupid leadership and the Republicans are in big trouble. ..."
"... AIPAC - Eventually everything is seen for what is truly is. ..."
"... Israel is opposed because they wish to maintain their nuclear weapons monopoly in the region ..."
"... With the threat you describe from Israel it seems only sensible for Iran to develop nuclear weapons - if my was country (Scotland) was in Iran's place and what you said is true i would only support politicians who promised fast and large scale production of atomic weapons to counter the clear threat to my nation. ..."
"... Netanyahu loves to play the victim, but he is the primary cause that Jews worldwide, but especially in the United States, are rethinking the idea of "Israel." I know very few people who willingly identify with a strident right wing government comprised of rabid nationalists, religious fundamentalists, and a violent, almost apocalyptic settler community. ..."
"... The Israeli electorate has indicated which path it wishes to travel, but that does not obligate Jews throughout the world to support a government whose policies they find odious. ..."
"... As part of this deal the US and allies should guarantee Iran protection against Israeli aggression. Otherwise, considering Israel's threats, Iran is well justified in seeking a nuclear deterrent. ..."
"... AIPAC's defeat shows that their grip on the testicles of congress has been broken. ..."
"... Their primary goal was to keep Iran isolated and economically weak. They knew full well that the Iranians hadn't had a nuclear program since 2003, but Netanhayu needed an existential threat to Israel in order to justify his grip on power. All of this charade has bee at the instigation of and directed by Israel. And they lost They were beaten by that hated schwartze and the liberals that Israel normally counts on for unthinking support. ..."
"... No doubt Netanyahu will raise the level of his anger; he just can't accept that a United States president would do anything on which Israel hadn't stamped its imprimatur. It gets tiresome listening to him. ..."
"... It is this deal that feeds the military industrial complex. We've already heard Kerry give Israel and Saudi Arabia assurances of more weapons. And that $150 billion released to Iran? A healthy portion will be spent for arms..American, Russian, Chinese. Most of the commenters have this completely backwards. This deal means a bonanza for the arms industry. ..."
"... The Iran nuclear agreement accomplishes the US policy goal of preventing the creation of the fissionable material required for an Iranian nuclear weapons program. What the agreement does not do is eliminate Iran as a regional military and economic power, as the Israelis and Saudis -- who have invested hundreds of millions of dollars to lobby American politicians and brainwash American TV viewers -- would prefer. ..."
"... Rejection equals war. It's not surprising that the same crowd most stridently demanding rejection of the agreement advocated the disastrous invasion and occupation of Iraq. These homicidal fools never learn, or don't care as long as it's not their lives at risk. ..."
"... And how did the Republicans' foreign policy work out? Reagan created and financed Al Qaeda. Then Bush II invades Iraq with promises the Iraqis will welcome us with flowers (!), the war will be over in a few weeks and pay for itself, and the middle east will have a nascent democracy (Iraq) that will be a grateful US ally. ..."
"... I've seen Iranian statements playing internal politics, but I have never seen any actual Iranian threats. I've seen plenty about Israel assassinating people in other countries, using incendiaries and chemical weapons against civilians in other countries, conducting illegal kidnappings overseas, using terrorism as a weapon of war, developing nuclear weapons illegally, ethnically cleansing illegally occupied territories, that sort of thing. ..."
"... Iran is not a made-up country like Iraq it is as old as Greece. If the Iraq war was sold as pushover and failed miserably then an Iran war would be unthinkable. War can be started in an instant diplomacy take time. UK, France, Germany & EU all agree its an acceptable alternative to war. So as these countries hardly ever agree it is clear the deal is a good one. ..."
"... Rank and file Americans don't even know what the Iran deal is. And can't be bothered to actually find out. They just listen to sound bites from politicians the loudest of whom have been the wildly partisan republicans claiming that it gives Iran a green light to a nuclear weapon. Not to mention those "less safe" polls are completely loaded. Certain buzz words will always produce negative results. If you associate something positive "feeling safe" or "in favor of" anything that Iran signs off on it comes across as indirectly supporting Iran and skews the results of the poll. "Iran" has been so strongly associated with evil and negative all you have to do is insert it into a sentence to make people feel negatively about the entire sentence. In order to get true data on the deal you would have to poll people on the individual clauses the deal. ..."
"... American Jews are facing one of the most interesting choices of recent US history. The Republican Party, which is pissing into a stiff wind of unfavorable demographics, seems to have decided it can even the playing field by peeling Jews away from the Democrats with promises to do whatever Israel wants. So we have the very strange (but quite real) prospect of Jews increasingly throwing in their lot with the party of Christian extremists whose ranks also include violent antiSemites. ..."
"... The American Warmonger Establishment (that now fully entrenched "Military Industrial Complex" against which no more keen observer than President Dwight Eisenhower warned us), is rip-shit over the Iran Agreement. WHAT? We can't Do More War? That will be terrible for further increasing our obscene 1-percent wealth. Let's side with Israeli wingnut Netanyahu, who cynically leverages "an eye for an eye for an eye for an eye" to hold his "Power." ..."
"... AIPAC is a dangerous anti-american organization, and a real and extant threat to the sovereignty of the U.S. Any elected official acting in concert with AIPAC is colluding with a foreign government to harm the U.S. and should be considered treasonous and an enemy of the American people. ..."
The waning clout stems from the lobby siding with the revanchist Israeli Prime Minister Binyamin Netanyahu, whose Iran strategy
since the 2012 US presidential campaign has been to unabashedly side with Republican hawks. AIPAC's alignment with the position effectively
caused the group to marginalize itself; the GOP is now the only place where AIPAC can today find lockstep support. The tens of millions
AIPAC spentlobbying against the deal were unable to obscure this dynamic.
We may not look back at this as a sea change – some Senate Democrats who held firm against opposition to the deal are working
with AIPAC to pass subsequent legislation that contains poison pills designed to kill it – but rather as a rising tide eroding the
once sturdy bipartisan pro-Israeli government consensus on Capitol Hill. Some relationships have been frayed; previously stalwart
allies of the Israel's interests, such as Vice President Joe Biden, have reportedly said the Iran deal fight soured them on AIPAC.
Even with the boundaries of its abilities on display, however, AIPAC will continue its efforts. "We urge those who have blocked
a vote today to reconsider," the group said in a spin-heavy
statement casting a pretty objective defeat as victory with the headline, "Bipartisan Senate Majority Rejects Iran Nuclear Deal."
The group's allies in the Senate Republican Party have already promised to rehash the procedural vote next week, and its lobbyists
are still rallying for support in the House. But the Senate's refusal to halt US support for the deal means that Senate Democrats
are unlikely to reconsider, especially after witnessing Thursday's Republican hijinx in the House. These ploys look like little more
than efforts to embarrass Obama into needing to cast a veto.
If Republicans' rhetoric leading up to to their flop in the Senate – Senator Lindsey Graham of South Carolina took to the
floor during the debate and pulled out an old trick from the run-up to the Iraq war:
blaming Iran for 9/11 and
saying a failure to act would result in a worse attack – is any indication, even Democrats like the pro-Israel hawk Chuck Schumer
will find it untenable to sidle up to AIPAC and the Republicans.
Opponents of the deal want to say the Democrats played politics instead of evaluating the deal honestly. That charge is ironic,
to say the least, since most experts agree the nuclear deal is sound and the best agreement diplomacy could achieve. But there were
politics at play: rather than siding with Obama, Congressional Democrats lined up against the Republican/Netanyahu alliance. The
adamance of AIPAC ended up working against its stated interests.
Groups like AIPAC will go on touting their bipartisan bona fides without considering that their adoption of Netanyahu's own partisanship
doomed them to a partisan result. Meanwhile, the ensuing fight, which will no doubt bring more of the legislative chaos we saw this
week, won't be a cakewalk, so to speak, but will put the lie to AIPAC's claims it has a bipartisan consensus behind it. Despite their
best efforts, Obama won't be the one embarrassed by the scrambling on the horizon.
TiredOldDog 13 Sep 2015 21:47
a foreign country whose still hell bent on committing war crimes
I guess this may mean Israel. If it does, how about we compare Assad's Syria, Iran and Israel. How many war crimes per day
in the last 4 years and, maybe, some forecasts. Otherwise it's the usual gratuitous use of bad words at Israel. It has a purpose.
To denigrate and dehumanize Israel or, at least, Zionism.
ID7612455 13 Sep 2015 18:04
The problem with the right in the USA is that they offer no alternatives, nothing, nada and zilch they have become the
opposition party of opposition. They rely on talking point memes and fear, and it has become the party of extremism and simplicity
offering low hanging fruit and red meat this was on perfect display at their anti Iran deal rally, palin, trump, beck and phil
robinson who commands ducks apparently.
winemaster2 13 Sep 2015 17:01
Put a Brush Mustache on the control freak, greed creed, Nentanhayu the SOB not only looks like but has the same mentality as
Hitler and his Nazism crap.
Martin Hutton -> mantishrimp 12 Sep 2015 23:50
I wondered when someone was going to bring up that "forgotten" fact. Is it any wonder the Iranians don't trust the US.
After the US's spying exploits during the Iraqi WMD inspections, why are you surprised that Iran asks for 24 days notice of inspection
(enough time to clear out conventional weapons development but not enough to remove evidence of nuclear weapons development).
mantishrimp 12 Sep 2015 20:51
Most Americans don't know the CIA overthrew the Iranian government in 1953 and installed the Shaw. Most Republicans know
that most Americans will believe what Fox news tells them. Republicans live in an alternate universe where there is no climate
change, mammon is worshiped and wisdom is rejected hatred is accepted negotiation is replaced by perpetual warfare. Now most Americans
are tired of stupid leadership and the Republicans are in big trouble.
ByThePeople -> Sieggy 12 Sep 2015 20:27
Is pitiful how for months and months, certain individuals blathered on and on and on when it was fairly clear from the get
go that this was a done deal and no one was about cater to the war criminal. I suppose it was good for them, sucking every last
dime they could out of the AICPA & Co. while they acted like there was 'a chance'. Nope, only chance is that at the end of the
day, a politician is a politician and he'll suck you dry as long as you let 'em.
What a pleasure it is to see the United States Congress finally not pimp themselves out completely to a foreign country whose
still hell bent on committing war crimes. A once off I suppose, but it's one small step for Americans.
ByThePeople 12 Sep 2015 20:15
AIPAC - Eventually everything is seen for what is truly is.
ambushinthenight -> Greg Zeglen 12 Sep 2015 18:18
Seems that it makes a lot of sense to most everyone else in the world, it is now at the point where it really makes no difference
whether the U.S. ratifies the deal or not. Israel is opposed because they wish to maintain their nuclear weapons monopoly in the
region. Politicians here object for one of two reasons. They are Israeli first and foremost not American or for political expediency
and a chance to try undo another of this President's achievements. Been a futile effort so far I'd say.
hello1678 -> BrianGriffin 12 Sep 2015 16:42
With the threat you describe from Israel it seems only sensible for Iran to develop nuclear weapons - if my was country (Scotland)
was in Iran's place and what you said is true i would only support politicians who promised fast and large scale production of
atomic weapons to counter the clear threat to my nation.
nardone -> Bruce Bahmani 12 Sep 2015 14:12
Netanyahu loves to play the victim, but he is the primary cause that Jews worldwide, but especially in the United States,
are rethinking the idea of "Israel." I know very few people who willingly identify with a strident right wing government comprised
of rabid nationalists, religious fundamentalists, and a violent, almost apocalyptic settler community.
The Israeli electorate has indicated which path it wishes to travel, but that does not obligate Jews throughout the world to
support a government whose policies they find odious.
Greg Zeglen -> Glenn Gang 12 Sep 2015 13:51
good point which is found almost nowhere else...it is still necessary to understand that the whole line of diplomacy regarding
the west on the part of Iran has been for generations one of deceit...and people are intensely jealous of what they hold dear
- especially safety and liberty with in their country....
EarthyByNature -> Bruce Bahmani 12 Sep 2015 13:45
I do trust your on salary with a decent benefits package with the Israeli government or one of it's slavish US lobbyists. Let's
face it, got to be hard work pouring out such hateful drivel.
BrianGriffin -> imipak 12 Sep 2015 12:53
The USA took about six years to build a bomb from scratch. The UK took almost six years to build a bomb. Russia was able to
build a bomb in only four years (1945-1949). France took four years to build a bomb. https://en.wikipedia.org/wiki/France_and_weapons_of_mass_destruction
As part of this deal the US and allies should guarantee Iran protection against Israeli aggression. Otherwise, considering
Israel's threats, Iran is well justified in seeking a nuclear deterrent.
BrianGriffin -> HauptmannGurski 12 Sep 2015 12:35
"Europe needs business desperately."
Sieggy 12 Sep 2015 12:32
In other words, once again, Obama out-played and out-thought both the GOP and AIPAC. He was playing multidimensional chess
while they were playing checkers. The democrats kept their party discipline while the republicans ran around like a schoolyard
full of sugared-up children. This is what happens when you have grownups competing with adolescents. The republican party, to
put it very bluntly, can't get it together long enough to whistle 'Yankee Doodle Dandy' in unison.
They lost. Again. And worse than being losers, they're sore, whining, sniveling, blubbering losers. Even when they've been
spanked - hard - they swear it's not over and they're gonna get even, just you wait and see! Get over it. They lost - badly -
and the simple fact that their party is coming apart at the seams before our very eyes means they're going to be losing a lot
more, too.
AIPAC's defeat shows that their grip on the testicles of congress has been broken. All the way around, a glorious victory for
Obama, and an ignominious defeat for the republicans. And most especially, Israel. Their primary goal was to keep Iran isolated
and economically weak. They knew full well that the Iranians hadn't had a nuclear program since 2003, but Netanhayu needed an
existential threat to Israel in order to justify his grip on power. All of this charade has bee at the instigation of and directed
by Israel. And they lost They were beaten by that hated schwartze and the liberals that Israel normally counts on for unthinking
support.
Their worst loss, however, was losing the support of the American jews. Older, orthodox jews are Israel-firsters. The younger,
less observant jews are Americans first. Netanhayu's behavior has driven a wedge between the US and Israel that is only going
to deepen over time. And on top of that, Iran is re-entering the community of nations, and soon their economy will dominate the
region. Bibi overplayed his hand very, very stupidly, and the real price that Israel will pay for his bungling will unfold over
the next few decades.
BrianGriffin -> TiredOldDog 12 Sep 2015 12:18
"The Constitution provides that the president 'shall have Power, by and with the Advice and Consent of the Senate, to make
Treaties, provided two-thirds of the Senators present concur'"
Hardly a done deal. If Obama releases funds to Iran he probably would be committing an impeachable crime under US law. Even
many Democrats would vote to impeach Obama for providing billions to a sworn enemy of Israel.
Glenn Gang -> Bruce Bahmani 12 Sep 2015 12:07
"...institutionally Iranclad(sic) HATRED towards the west..." Since you like all-caps so much, try this: "B.S."
The American propel(sic) actually figured out something else---that hardline haters like yourself are desperate to keep the
cycle of Islamophobic mistrust and suspicion alive, and blind themselves to the fact that the rest of us have left you behind.
FACT: More than half of the population of Iran today was NOT EVEN BORN when radical students captured the U.S. Embassy in Teheran
in 1979.
People like you, Bruce, conveniently ignore the fact that Ahmedinejad and his hardline followers were voted out of power in
2013, and that Supreme Leader Ali Khamenei further marginalized them by allowing the election of new President Hassan Rouhani
to stand, though he was and is an outspoken reformer advocating rapprochement with the west. While his outward rhetoric still
has stern warnings about anticipated treachery by the 'Great Satan', Khamenei has allowed the Vienna agreement to go forward,
and shows no sign of interfering with its implementation.
He is an old man, but he is neither stupid nor senile, and has clearly seen the crippling effects the international sanctions
have had on his country and his people. Haters like you, Bruce, will insist that he ALWAYS has evil motives, just as Iranian hardliners
(like Ahmedinejad) will ALWAYS believe that the U.S. has sinister motives and cannot EVER be trusted to uphold our end of any
agreement. You ascribe HATRED in all caps to Iran, the whole country, while not acknowledging your own simmering hatred.
People like you will always find a 'boogeyman,' someone else to blame for your problems, real or imagined. You should get some
help.
beenheretoolong 12 Sep 2015 10:57
No doubt Netanyahu will raise the level of his anger; he just can't accept that a United States president would do anything
on which Israel hadn't stamped its imprimatur. It gets tiresome listening to him.
geneob 12 Sep 2015 10:12
It is this deal that feeds the military industrial complex. We've already heard Kerry give Israel and Saudi Arabia assurances
of more weapons. And that $150 billion released to Iran? A healthy portion will be spent for arms..American, Russian, Chinese.
Most of the commenters have this completely backwards. This deal means a bonanza for the arms industry.
Jack Hughes 12 Sep 2015 08:38
The Iran nuclear agreement accomplishes the US policy goal of preventing the creation of the fissionable material required
for an Iranian nuclear weapons program.
What the agreement does not do is eliminate Iran as a regional military and economic power, as the Israelis and Saudis -- who
have invested hundreds of millions of dollars to lobby American politicians and brainwash American TV viewers -- would prefer.
To reject the agreement is to accept the status quo, which is unacceptable, leaving an immediate and unprovoked American-led
bombing campaign as the only other option.
Rejection equals war. It's not surprising that the same crowd most stridently demanding rejection of the agreement advocated
the disastrous invasion and occupation of Iraq. These homicidal fools never learn, or don't care as long as it's not their lives
at risk.
American politicians opposed to the agreement are serving their short-term partisan political interests and, under America's
system of legalized bribery, their Israeli and Saudi paymasters -- not America's long-term policy interests.
ID293404 -> Jeremiah2000 12 Sep 2015 05:01
And how did the Republicans' foreign policy work out? Reagan created and financed Al Qaeda. Then Bush II invades Iraq with
promises the Iraqis will welcome us with flowers (!), the war will be over in a few weeks and pay for itself, and the middle east
will have a nascent democracy (Iraq) that will be a grateful US ally.
He then has pictures taken of himself in a jet pilot's uniform on a US aircraft carrier with a huge sign saying Mission Accomplished.
He attacks Afghanistan to capture Osama, lets him get away, and then attacks Iraq instead, which had nothing to do with 9/11 and
no ties with Al Qaeda.
So then we have two interminable wars going on, thanks to brilliant Republican foreign policy, and spend gazillions of dollars
while creating a mess that may never be straightened out. Never mind all the friends we won in the middle east and the enhanced
reputation of our country through torture, the use of mercenaries, and the deaths and displacement of hundreds of thousands of
civilians. Yeah, we really need those bright Republicans running the show over in the Middle East!
HauptmannGurski -> lazman 12 Sep 2015 02:31
That is a very difficult point to understand, just look at this sentence "not understanding the fact in international affairs
that to disrespect an American president is to disrespect Americans" ... too much emperor thinking for me. We have this conversation
with regard to Putin everywhere now, so we disrespect all 143 million Russians? There's not a lot of disrespect around for Japanese
PM Abe and Chinese Xi - does this now mean we respect them and all Japanese and Chinese? Election campaigns create such enormous
personality cults that people seem to lose perspective.
On the Iran deal, if the US had dropped out of it it would have caused quite a rift because many countries would have just
done what they wanted anyway. The international Atomic Energy Organisation or what it is would have done their inspections. Siemens
would have sold medical machines. Countries would grow up as it were. But as cooperation is always better than confrontation it
is nice the US have stayed in the agreement that was apparently 10 years in the making. It couldn't have gone on like that. With
Europe needing gazillions to finance Greece, Ukraine, and millions of refugees (the next waves will roll on with the next spring
and summer from April), Europe needs business desparately. Israel was happy to buy oil through Marc Rich under sanctions, now
it's Europe's turn to snatch some business.
imipak -> BrianGriffin 11 Sep 2015 21:56
Iran lacks weapons-grade uranium and the means to produce it. Iran has made no efforts towards nuclear weapons technology for
over a decade. Iran is a signatory of the NPT and is entitled to the rights enshrined therein. If Israel launches a nuclear war
against Iran over Iran having a medical reactor (needed to produce isotopes for medicine, isotopes America can barely produce
enough of for itself) that poses no security threat to anyone, then Israel will have transgressed so many international laws that
if it survives the radioactive fallout (unlikely), it won't survive the political fallout.
It is a crime of the highest order to use weapons of mass destruction (although that didn't stop the Israelis using them against
Palestinian civilians) and pre-emtive self-defence is why most believe Bush and Blair should be on trial at the ICJ, or (given
the severity of their crimes) Nuremberg.
Israel's right to self-defense is questionable, I'm not sure any such right exists for anyone, but even allowing for it, Israel
has no right to wage unprovoked war on another nation on the grounds of a potential threat discovered through divination using
tea leaves.
imipak -> Jeremiah2000 11 Sep 2015 21:43
Iran's sponsorship of terrorism is of no concern. Such acts do not determine its competency to handle nuclear material at the
5% level (which you can find naturally). There are only three questions that matter - can Iran produce the 90-95% purity needed
to build a bomb (no), can Iran produce such purity clandestinely (no), and can Iran use its nuclear technology to threaten Israel
(no).
Israel also supports international terrorism, has used chemical weapons against civilians, has directly indulged in terrorism,
actually has nuclear weapons and is paranoid enough that it may use them against other nations without cause.
I respect Israel's right to exist and the intelligence of most Israelis. But I neither respect nor tolerate unreasoned fear
nor delusions of Godhood.
imipak -> commish 11 Sep 2015 21:33
I've seen Iranian statements playing internal politics, but I have never seen any actual Iranian threats. I've seen plenty
about Israel assassinating people in other countries, using incendiaries and chemical weapons against civilians in other countries,
conducting illegal kidnappings overseas, using terrorism as a weapon of war, developing nuclear weapons illegally, ethnically
cleansing illegally occupied territories, that sort of thing.
Until such time as Israel implements the Oslo Accords, withdraws to its internationally recognized boundary and provides the
International Court of Justice a full accounting of state-enacted and state-sponsored terrorism, it gets no claims on sainthood
and gets no free rides.
Iran has its own crimes to answer, but directly threatening Israel in words or deeds has not been one of them within this past
decade. Its actual crimes are substantial and cannot be ignored, but it is guilty only of those and not fictional works claimed
by psychotic paranoid ultra-nationalists.
imipak -> moishe 11 Sep 2015 21:18
Domestic politics. Of no real consequence, it's just a way of controlling a populace through fear and a never-ending pseudo-war.
It's how Iran actually feels that is important.
For the last decade, they've backed off any nuclear weapons research and you can't make a bomb with centrifuges that can only
manage 20% enriched uranium. You need something like 90% enrichment, which requires centrifuges many, many times more advanced.
It'd be hard to smuggle something like that in and the Iranians lack the skills, technology and science to make them.
Iran's conventional forces are busy fighting ISIS. What they do afterwards is a concern, but Israel has a sizable military
presence on the Golan Heights. The most likely outcome is for Iran to install puppet regimes (or directly control) Syria and ISIS'
caliphate.
I could see those two regions plus Iraq being fully absorbed into Iran, that would make some sense given the new geopolitical
situation. But that would tie up Iran for decades. Which would not be a bad thing and America would be better off encouraging
it rather than sabre-rattling.
(These are areas that contribute a lot to global warming and political instability elsewhere. Merging the lot and encouraging
nuclear energy will do a lot for the planet. The inherent instability of large empires will reduce mischief-making elsewhere to
more acceptable levels - they'll be too busy. It's idle hands that you need to be scared of.)
Israelis worry too much. If they spent less time fretting and more time developing, they'd be impervious to any natural or
unnatural threat by now. Their teaching of Roman history needs work, but basically Israel has a combined intellect vastly superior
to that of any nearby nation.
That matters. If you throw away fear and focus only on problems, you can stop and even defeat armies and empires vastly greater
than your own. History is replete with examples, so is the mythologicized history of the Israeli people. Israel's fear is Israel's
only threat.
mostfree 11 Sep 2015 21:10
Warmongers on all sides would had loved another round of fear and hysteria. Those dark military industrial complexes on all
sides are dissipating in the face of the high rising light of peace for now . Please let it shine.
bishoppeter4 11 Sep 2015 20:09
The rabid Republicans working for a foreign power against the interest of the United States -- US citizens will know just what
to do.
"Netanyahu has no right to dictate what the US does."
But he has every right to point out how Obama is a weak fool. How's Obama's red line working in Syria? How is his toppling
of Qadaffi in Libya working? How about his completely inept dealings with Egypt, throwing support behind the Muslim Brotherhood
leaders? The leftists cheer Obama's weakening of American influence abroad. But they don't talk much about its replacement with
Russian and Chinese influence.
Russian build-up in Syria part of secret deal with Iran's Quds Force leader. Obama and Kerry are sending a strongly
worded message.
Susan Dechancey -> whateverworks4u 11 Sep 2015 19:05
Incredible to see someone prefer war to diplomacy - guess you are an armchair General not a real one.
Susan Dechancey -> commish 11 Sep 2015 19:04
Except all its neighbours ... not only threatened but entered military conflict and stole land ... murdered Iranian Scientists
but apart from that just a kitten
Susan Dechancey -> moishe 11 Sep 2015 19:00
Israel has nukes so why are they afraid ?? Iran will never use nukes against Israel and even Mossad told nuttyyahoo sabre rattling
Susan Dechancey 11 Sep 2015 18:57
Iran is not a made-up country like Iraq it is as old as Greece. If the Iraq war was sold as pushover and failed miserably
then an Iran war would be unthinkable. War can be started in an instant diplomacy take time. UK, France, Germany & EU all agree
its an acceptable alternative to war. So as these countries hardly ever agree it is clear the deal is a good one.
To be honest the USA can do what it likes now .. UK has set up an embassy - trade missions are landing Tehran from Europe.
So if Israel and US congress want war - they will be alone and maybe if US keeps up the Nuttyahoo rhetoric European firms can
win contracts to help us pay for the last US regime change Iraq / Isis / Refugees...
lswingly -> commish 11 Sep 2015 16:58
Rank and file Americans don't even know what the Iran deal is. And can't be bothered to actually find out. They just listen
to sound bites from politicians the loudest of whom have been the wildly partisan republicans claiming that it gives Iran a green
light to a nuclear weapon. Not to mention those "less safe" polls are completely loaded. Certain buzz words will always produce
negative results. If you associate something positive "feeling safe" or "in favor of" anything that Iran signs off on it comes
across as indirectly supporting Iran and skews the results of the poll. "Iran" has been so strongly associated with evil and negative
all you have to do is insert it into a sentence to make people feel negatively about the entire sentence. In order to get true
data on the deal you would have to poll people on the individual clauses the deal.
It's no different from how when you run a poll on who's in favor "Obamacare" the results will be majority negative. But
if you poll on whether you are in favor of "The Affordable Care Act" most people are in favor of it and if you break it down and
poll on the individual planks of "Obamacare" people overwhelming approve of the things that "Obamacare does". The disapproval
is based on the fact that Republican's have successfully turned "Obamacare" into a pejorative and has almost no reflection of
people feelings on actual policy.
To illustrate how meaningless those poll numbers are a Jewish poll (supposedly the people who have the most to lose if this
deal is bad) found that a narrow majority of Jews approve of the deal. You're numbers are essentially meaningless.
The alternative to this plan is essentially war if not now, in the very near future, according to almost all non-partisan policy
wonks. Go run a poll on whether we should go to war with Iran and see how that turns out. Last time we destabilized the region
we removed a secular dictator who was enemies with Al Queda and created a power vacuum that led to increased religious extremism
and the rise of Isis. You want to double down on that strategy?
MadManMark -> whateverworks4u 11 Sep 2015 16:34
You need to reread this article. It's exactly this attitude of yours (and AIPAC and Netanyahu) that this deal is not 100% perfect,
but then subsequently failed to suggest ANY way to get something better -- other than war, which I'm sorry most people don't want
another Republican "preemptive" war -- caused a lot people originally uncertain about this deal (like me) to conclude there may
not be a better alternative. Again, read the article: What you think about me, I now think about deal critics like you ("It seems
people will endorse anything to justify their political views.)
USfan 11 Sep 2015 15:34
American Jews are facing one of the most interesting choices of recent US history. The Republican Party, which is pissing
into a stiff wind of unfavorable demographics, seems to have decided it can even the playing field by peeling Jews away from the
Democrats with promises to do whatever Israel wants. So we have the very strange (but quite real) prospect of Jews increasingly
throwing in their lot with the party of Christian extremists whose ranks also include violent antiSemites.
Interesting times. We'll see how this plays out. My family is Jewish and I have not been shy in telling them that alliances
with the GOP for short-term gains for Israel is not a wise policy. The GOP establishment are not antiSemtic but the base often
is, and if Trump's candidacy shows anything it's that the base is in control of the Republicans.
But we'll see.
niyiakinlabu 11 Sep 2015 15:29
Central question: how come nobody talks about Israel's nukes?
hello1678 -> BrianGriffin 11 Sep 2015 14:02
Iran will not accept being forced into dependence on outside powers. We may dislike their government but they have as much
right as anyone else to enrich their own fuel.
JackHep 11 Sep 2015 13:30
Netanyahu is an example of all that is bad about the Israeli political, hence military industrial, establishment. Why Cameron's
government allowed him on British soil is beyond belief. Surely the PM's treatment of other "hate preachers" would not have been
lost on Netanyahu? Sadly our PM seems to miss the point with Israel.
The American Warmonger Establishment (that now fully entrenched "Military Industrial Complex" against which no more keen
observer than President Dwight Eisenhower warned us), is rip-shit over the Iran Agreement. WHAT? We can't Do More War? That will
be terrible for further increasing our obscene 1-percent wealth. Let's side with Israeli wingnut Netanyahu, who cynically leverages
"an eye for an eye for an eye for an eye" to hold his "Power."
And let's be treasonous against the United States by trying to undermine U.S. Foreign Policy FOR OUR OWN PROFIT. We are LONG
overdue for serious jail time for these sociopaths, who already have our country "brainwashed" into 53% of our budget going to
the War Profiteers and to pretending to be a 19th century Neo-Colonial Power -- in an Endless State of Eternal War. These people
are INSANE. Time to simply say so.
Boredwiththeusa 11 Sep 2015 12:58
At the rally to end the Iran deal in the Capitol on Wednesday, one of the AIPAC worshipping attendees had this to say to Jim
Newell of Slate:
""Obama is a black, Jew-hating, jihadist putting America and Israel and the rest of the planet in grave danger," said Bob
Kunst of Miami. Kunst-pairing a Hillary Clinton rubber mask with a blue T-shirt reading "INFIDEL"-was holding one sign that
accused Obama, Hillary Clinton, and John Kerry of "Fulfilling Hitler's Dreams" and another that queried, "DIDN'T WE LEARN ANYTHING
FROM 1938?"
His only reassurance was that, when Iran launches its attack on the mainland, it'll be stopped quickly by America's heavily
armed citizenry."
That is indicative of the mindset of those opposed to the agreement.
Boredwiththeusa 11 Sep 2015 12:47
AIPAC is a dangerous anti-american organization, and a real and extant threat to the sovereignty of the U.S. Any elected
official acting in concert with AIPAC is colluding with a foreign government to harm the U.S. and should be considered treasonous
and an enemy of the American people.
tunejunky 11 Sep 2015 12:47
AIPAC, its constituent republicans, and the government of Israel all made the same mistake in a common episode of hubris. by
not understanding the American public, war, and without the deference shown from a proxy to its hegemon, Israel's right wing has
flown the Israeli cause into a wall. not understanding the fact in international affairs that to disrespect an American president
is to disrespect Americans, the Israeli government acted as a spoiled first-born - while to American eyes it was a greedy, ungrateful
ward foisted upon barely willing hands. it presumed far too much and is receiving the much deserved rebuke.
impartial12 11 Sep 2015 12:37
This deal is the best thing that happened in the region in a while. We tried war and death. It didn't work out. Why not try
this?
"During my whole career at Goldman Sachs - 1967 to 1991 - I never owned a foreign stock or emerging market bonds. Now I have
hundreds of millions of dollars in Russia, Brazil, Argentina and Chile, and I worry constantly about the dollar-yen rate. Every
night before I go to bed I call in for the dollar-yen quote, and to find out what the Nikkei is doing and what the Hang Seng Index
is doing. We have bets in all these markets. Right now Paul [one of my traders] is long [on] the Canadian dollar. We have bets all
over the place. I would not have worried about any of these twenty years ago. Now I have to worry about all of them."
Economic globalization is probably the most fundamental transformation of the world's political and economic arrangements since
the Industrial Revolution. Decisions made in one part of the world more and more affect people and communities elsewhere in the
world. Sometimes the consequences of globalization are positive, liberating inventive and entrepreneurial talents and accelerating
the pace of sustainable development. But at other times they are negative, as when many people, especially in less-developed countries,
are left behind without a social safety net. Globalization undermines the ability of the nation to tax and to regulate its own economy.
This weakens the power of sovereign nations relative to that of large transnational corporations and distorts how social and economic
priorities are chosen.
Economic globalization is most often associated with rapid growth in the flow of goods and services across international borders.
Indeed, the economic "openness" of a nation is often measured by the value of its exports, imports, or their sum when compared to
the size of its economy. Economic globalization also involves large investments from outside each nation, often by transnational
corporations. These corporations often combine technology and know-how with their investments that enhance the productive capacity
of a nation. Previous position papers of the Mobilization, contained in Speaking of Religion & Politics: The Progressive Church
Tackles Hot Topics2, have dealt with globalization primarily in these terms.
But international trade and investment are only part of the openness that has come to be called globalization. Another part,
and arguably the most important, is the quickening flow of financial assets internationally. While a small portion of this flow
is directly associated with the "real" economy of production and exchange, its vast majority is composed of trades in the "paper"
economy of short-term financial markets. This paper economy is enormous: The value of global financial securities greatly exceeds
the value of annual world output of goods and services. Moreover, the paper economy often contributes to crises in the real economy.
Thus it is important to the well being of humanity and the planet as a whole, yet it is little understood by most people. This essay
undertakes to provide a basic understanding of this paper economy, especially as its more speculative features have multiplied during
the last two or three decades, so that Christians and others concerned about what is happening in our world can join in an intelligent
discussion of how the harmful consequences of financial markets can be controlled.
Financial markets 101
To better understand this paper economy, one first needs to know something about foreign exchange markets, international money
markets, and "external" financial markets.
In an open economy, domestic residents often engage in international transactions. American car dealers, for example, buy Japanese
Toyotas and Datsuns, while German computer companies sell electronic notebooks to Mexican businessmen. Similarly, Australian mutual
funds invest in the shares of companies all over the world, while the treasurer of a Canadian transnational corporation parks idle
cash in 90-day Bank of England notes. Most of these transactions require one or more participants to acquire a foreign currency.
If an American buys a Toyota and pays the Japanese Toyota dealer in dollars, for example, the latter will have to exchange the dollars
for yens in order to have the local currency with which to pay his workers and local suppliers.
The foreign exchange market is the market in which national currencies are traded. As in any market, a price must exist at which
trade can occur. An exchange rate is the price of a unit of domestic currency in terms of a foreign currency. Thus, if the exchange
rate of the dollar in terms of the Japanese yen increases, we say the dollar has depreciated and the yen has appreciated. Similarly,
a decrease in the dollar/yen exchange rate would imply an appreciation of the dollar and a depreciation of the yen.
Foreign exchange markets can be classified as spot markets and forward markets. In spot markets currencies are bought and sold
for immediate delivery and payment. In forward markets, currencies are bought or sold for future delivery and payment. A U.S. music
company, say, enters into a contract to buy British records for delivery in 30 days. To guard against the possibility of the dollar/pound
exchange rate increasing in the meantime, the company buys pounds forward, for delivery in 30 days, at the corresponding forward
exchange rate quoted today. This is called hedging.
Of course, there has to be a counterpart to the music company's forward purchase of pounds. Who is the seller of those pounds?
The immediate seller would be a commercial bank, as in the spot market. But the bank only acts as an intermediary. The ultimate
seller of forward pounds may be another hedger, like the music company, but with a position just its opposite. Suppose, for example,
that an American firm or individual has invested in 30-day British securities that it wants to convert back into dollars after the
end of 30 days. The investor may decide to sell the pound proceeds forward in order to assure itself of the rate at which the pounds
are to be converted back into dollars after 30 days.
Another type of investor may be providing the forward contract bought by the music company. This is the speculator, who attempts
to profit from changes in exchange rates. Depending on their expectations, speculators may enter the forward market either as sellers
or as buyers of forward exchange. In this particular case, the speculator may have reason to believe that the dollar/pound exchange
rate will decrease in the next 30 days, permitting him to obtain the promised pounds at a lower price in the spot market 30 days
hence.
The main instruments of foreign exchange transactions include electronic bank deposit transfers and bank drafts, bills of exchange,
and a whole array of other short-term instruments expressed in terms of foreign currency. Thus, foreign exchange transactions do
not generally involve a physical exchange of currencies across borders. They generally involve only changes in debits and credits
at different banks in different countries. Very large banks in the main financial centers such as New York, London, Brussels and
Zurich, account for most foreign exchange transactions. Local banks can provide foreign exchange by purchasing it in turn from major
banks.
Although the foreign exchange market is dispersed in many cities and countries, it is unified by keen competition among the highly
sophisticated market participants. A powerful force keeping exchange rate quotations in different places in line with each other
is the search on the part of market participants for foreign exchange arbitrage opportunities. Arbitrage is the simultaneous purchase
and sale of a commodity or financial asset in different markets with the purpose of obtaining a profit from the differential between
the buying and selling price.
When foreign exchange is acquired in order to engage in international transactions involving the purchase or sale of goods and
services, it is said that international trade has taken place in the real economy. When international transactions involve the purchase
or sale of financial assets, they are referred to as international financial transactions. They constitute the paper economy.
Financial markets are commonly classified as capital markets or money markets. Capital markets deal in financial claims that
reach more than one year into the future. Such claims include shares of stock, bonds, and long-term loans, among others. Money markets,
on the other hand, deal in short-term claims, with maturities of less than one year. These include marketable government securities
(like Treasury bills), large-denomination certificates of deposit issued by banks, commercial paper (representing short-term corporate
debt), money market funds, and many other kinds of short-term, highly liquid (easily transferable) financial instruments. It is
these short-term money market securities that account for most of the instability in the global paper economy.
Buying or selling a money market security internationally involves the same kind of foreign exchange risk that plagues buyers
or sellers of merchandise internationally. If one wishes to guard against the possibility of an increase or decrease in the foreign
exchange rate, one can insure against such fluctuations by "covering" in the forward market. By the same token, the decision about
whether to own domestic or foreign money market securities is not simply a comparison of the rates of interest paid on otherwise
comparable securities, because one must also take into account the gain (or loss) from purchasing foreign currency spot and selling
it forward. Thus, choosing the security with the highest return does not necessarily imply the one with the highest interest rate.
People who trade in international money markets, moreover, need to take into account many other variables, including the costs
of gathering and processing information, transaction costs, the possibility of government intervention and regulation, other forms
of political risk, and the inability to make direct comparisons of alternative assets. Speculating in international money markets
is a risky proposition.
International money markets involve assets denominated in different currencies. External financial markets involve assets denominated
in the same currency but issued in different political jurisdictions. Eurodollars, for example, are dollar deposits held outside
the United States (offshore), such as dollar deposits in London, Zurich, or even Singapore banks. The deposits may be in banks owned
locally or in the offshore banking subsidiaries of U.S. banks. Deutsche mark deposits in London banks or pound sterling deposits
in Amsterdam banks also are examples of external deposits. They are referred to as eurocurrency deposits. (The advent of a new common
currency in the European Community - the Euro - will require the development of new nomenclature for external financial markets)
External banking activities are a segment of the wholesale international money market. The vast majority of eurocurrency transactions
fall in the above $1 million value range, frequently reaching the hundreds of millions (or even billion) dollar value. Accordingly,
the customers of eurobanks are almost exclusively large organizations, including multinational corporations, government entities,
hedge funds, and international organizations, as well as eurobanks themselves. Like domestic banks, eurobanks that have excess reserves
may make loans denominated in eurocurrencies, expanding the supply of eurocurrency deposits. The eurocurrency market funnels funds
from lending countries to borrowing countries. Thus, it performs an important function as global financial intermediator.
Early history
The origins of what Karl Polanyi3 called haute finance can be traced to Renaissance Italy,
where as early as 1422 there were seventy-two bankers or bill-brokers in or near the Mecato Vecchio of Florence.4
Many combined trade with purely financial business. By the middle of the fifteenth century, the Medici of Florence had opened branches
in Bruges, London and Avignon, both as a means of financing international trade and as a way of marketing new kinds of financial
assets. Many banking terms and practices still in use today originated in the burgeoning financial centers of Renaissance Europe.
By the early seventeenth century, the Dutch and East India Companies began issuing shares to the public in order to fund imperial
enterprises closely linked to Holland and Britain. Their shares were made freely transferable, permitting development of a secondary
financial market for claims to future income. Amsterdam opened a stock exchange in 1611, and shortly thereafter, the British government
began issuing lottery tickets, an early form of government bonds, to finance colonial expansion, wars and other major areas of state
expenditure. A lively secondary market in these financial instruments also emerged.5
Throughout these early years, financial markets were anything but riskless and stable. Consider the famous Dutch tulip mania
of 1630, for example. This speculative bubble saw prices of tulip bulbs reach what seemed like absurd levels, yet "the rage among
the Dutch to possess them [tulips] was so great that the ordinary industry of the country was neglected." Some investors in Britain
and France shared this "irrational exuberance," though it was centered mostly in Holland. Then, not unlike speculative bubbles of
more recent vintage, prices crashed6, pushing the economy into a depression and leaving many
investors angry and confused.
Paris developed into an early financial center in the eighteenth century, but the Revolution of 1789 dissipated its power. The
New York Stock Exchange was formally organized in 1792 and the official London Stock Exchange opened in 1802. The expansion westward
of the railroads in the U.S. offered the financial community opportunity to sell railway shares and bonds that quickly became dominant
in the financial markets. Indeed, the bond markets of London, Paris, Berlin, and Amsterdam were vehicles for collecting massive
amounts of European savings and transferring it at higher returns to the emerging markets of the U.S., Canada, Australia, Latin
America and Russia in the century preceding World War I.
Forward markets soon developed, especially in the U.S., in order to counter the impact of long distances and unpredictable weather.
As capital and money markets expanded, other new financial instruments came into use. Joint stock companies were formed, enabled
by legislation that clarified the distinction between the owners and managers of corporations. This, in turn, helped stimulate the
growth of the American stock market in the late nineteenth century. To be sure, financial markets did not grow continuously in the
nineteenth century. Lending to the emerging markets was interrupted by defaults in the 1820s, 1850s, 1870s and 1890s, but each wave
of default was confined to a relatively small number of countries, permitting growth of financial flows to resume.7
In the four decades leading up to World War I, a truly worldwide economy was forged for the first time, extending from the core
of Western Europe and the U.S. to latecomers in Eastern Europe and Latin America and even to the countries supplying raw materials
on the periphery. Central to this expansion of trade and investment was an expanding system of finance that girded the globe. The
amount was enormous: between 1870 and 1914 something like $30 billion,8 the equivalent in
2002 dollars of $550 billion, was transferred to recipient countries, in a world economy perhaps one-twelfth as large as today's.
During this "Gilded Age" of haute finance, the risks of participating in international trade and investment were generously shared
with governments and the banking system. The reason is that foreign exchange rates were kept reasonably stable by the commitment
of most governments to the "high" gold standard. In this way, businesses and individuals engaging in international transactions
were reasonably certain that the value of their contracts was not going to change before they matured. Their exchange risk was shared
with government by its willingness to buy or sell gold in order to keep the exchange rate constant. Because of this assurance, financial
flows were reasonably free of regulation.
They were not immune from crises, however. When the sources of financial capital temporarily dried up, capital-importing countries
occasionally found they could not expand export earnings sufficiently to avoid suspending interest payments on their debts or abandoning
gold parity. On two occasions, the United States faced this possibility. The first was in 1893, when it switched in a sharp economic
downturn to bimetallism (which caused William Jennings Bryan to denounce the "cross of gold"), and the second was in 1907, which
led to the creation of the Federal Reserve System, handing to the government the function of lender of last resort previously carried
out by Wall Street banks under the tutelage of J. Pierpont Morgan.
In his magisterial book The Great Transformation, Karl Polanyi reflected on the pervasive influence of haute finance on the policies
of nations even in this "Gilded Age." The globalising financial markets and the gold standard, according to Polanyi, left very little
room for states, especially smaller ones, to adopt monetary and fiscal policies independent of the new international order. "Loans,
and the renewal of loans, hinged upon credit, and credit upon good behavior. Since, under constitutional government ..., behavior
is reflected in the budget and the external value of the currency cannot be detached from the appreciation of the budget, debtor
governments were well advised to watch their exchanges carefully and to avoid policies which might reflect upon the soundness of
budget positions." Thus, even one hundred years ago the then-dominant world power, Great Britain, speaking as it did so often through
the voice of the City of London, "prevailed by the timely pull of a thread in the international monetary network.9
Following World War I, the United States emerged not merely as a creditor country but as the primary source of new international
financial flows. At first, the principal borrowers were the national governments of the stronger countries, but as the boom in security
underwriting developed in the U.S, numerous obscure provinces, departments and municipalities found it possible to sell their bonds
to American investors.10 Just as domestic construction, land, and equity markets went through
speculative rises in the 1920s, so too did the U.S. experience a speculative surge in foreign investment. In the aftermath of successive
defaults by foreign debtors in 1932, the Senate Committee on Banking and Currency concluded:
The record of the activities of investment bankers in the flotation of foreign securities is one of the most scandalous chapters
in the history of American investment banking. The sale of these foreign issues was characterized by practices and abuses that violated
the most elementary principles of business ethics.11
Speculation in the stock markets leading up to 1929 offers still another window on the instability of short-term financial flows.
A speculative market can be defined as one in which prices move in response to the balance of opinion regarding the future movement
of prices rather than responding normally to changes in the demand for and supply of whatever is priced. Helped by the willingness
of Wall Street to allow people to buy stocks on margin, people were only too ready to bet prices would rise as long as others thought
so too. Day after day and month after month the price of stocks went up in 1927. The gains by later standards were not large, but
they had an aspect of great reliability. Then in 1928, the nature of the boom changed. "The mass escape into make-believe, so much
a part of the true speculative orgy, started in earnest.12
Following World War I, the gold standard itself took on new form. Nations were allowed to hold their international reserves in
either gold or foreign exchange. This worked for a while in the 1920s, but as speculation mounted and balances of payments disequilibria
grew, fears of devaluation led central banks to try to replace their foreign-exchange holdings with specie in a "scramble for gold."
The worldwide result of these shifts in central bank portfolios was an overall contraction of the supply of money and credit that
sapped aggregate demand and forced prices to fall and output levels to shrink. Thus, it can be argued - persuasively in our view
- that the Great Depression of the 1930s was as much, if not more, the result of mismanagement of money and credit as it was the
result of protectionist policies. Protectionist policies were more likely the result of slowed growth and stalled trade. Countries
that broke with the gold-exchange standard early, such as Britain in 1931, and pursued more expansionary monetary policies fared
somewhat better.
The Bretton Woods system
During the darkest days of World War II, a radically new economic architecture was designed for the postwar world at a New Hampshire
ski resort called Bretton Woods. With the competitive devaluation and protectionist policies of the 1930s still fresh in their minds,
the mostly British and American delegates to the conference wanted most of all to design a system with fixed exchange rates that
did not rely on national gold hoards to keep exchange rates stable. They decided to depend instead on strict controls of international
financial movements. In this way, they hoped to allow countries to pursue full-employment policies through appropriate monetary
(money and credit) and fiscal (tax and spending) policies without some of the anxieties associated with open financial markets.
The role of monetary and financial stabilizer was given to the International Monetary Fund (IMF), which was provided with modest
funds to assist nations to adjust imbalances in their external payments obligations. The International Bank for Reconstruction and
Development (IBRD, later the World Bank) assumed the task of helping to finance post-war reconstruction.13
The IMF as it emerged from Bretton Woods had inadequate reserves to advance money for the long periods that many countries require
for "soft-landings" from big current-account deficits. It would make only short-term loans. To make sure that borrowing nations
were constrained, "conditionality" attached to IMF loans became standard practice, even in the early years of the Fund's operation.
Policy limitations and "performance targets" tied to credit lines advanced under "standby agreements" began in the middle 1950s
and were universal by the 1960s, long before the notions of "stabilization" and "structural adjustment" came into common parlance.
The Bretton Woods agreement also imposed a foreign exchange standard by which exchange rates between major currencies were fixed
in terms of the dollar, and the value of the dollar was tied to gold at a U.S. guaranteed price of thirty-five dollars per ounce.
By devising a system that controlled financial movements and assisted with the adjustment of countries' balances of payments, the
new system succeeded in keeping exchange rates remarkably stable. They were changed only very occasionally, e.g., as when the value
of sterling relative to the dollar was reduced in 1949 and again in 1966. This meant that companies doing business abroad did not
need to worry constantly about the risk of exchanging one currency for another.
Among the reasons for this remarkable stability was the willingness of the central banks of other countries to hold an increasing
proportion of their official reserves in the form of U.S. dollars. It was an essential part of the system that the dollars held
by other countries would be seen as IOUs backed by the U.S. offer to exchange them for gold at a fixed pre-war price. But as the
balance-of-payments of the U.S. moved more deeply into deficits in the 1960s, there were more and more U.S. dollars held by other
countries, and this so-called "dollar overhang" became disturbingly large.15 General de
Gaulle called it "the exorbitant privilege," meaning that the Americans were paying their bills - for defense spending to fight
the Vietnam War among other things - with IOUs instead of real resources in the form of exports of goods and services.
Strict control over financial movements began to weaken as early as the 1950s, when the first eurodollar (later eurocurrency)
deposits were made in London. At first a trickle, limited originally to Europe, these offshore banking operations soon expanded
worldwide. The American "Interest Equalization Tax" (IET) instituted in 1963 raised the costs to banks of lending offshore from
their domestic branches.16 The higher external rates led dollar depositors such as foreign
corporations to switch their funds from onshore U.S. institutions to eurobanks. Thus, the real effect of the IET was to encourage
the dollar to follow the foreigners abroad, rather than the other way around. Eurobanks paid higher interest rates on deposits and
loaned eurocurrencies at lower rates than U.S. banks could at home. Still another large inflow of eurodeposits occurred in 1973-74
as the Organization of Petroleum Exporting Countries (OPEC) began "recycling" their surplus dollar earnings through eurobanks. Because
of their existence, a country such as Brazil could arrange within a reasonably regulation-free environment to obtain multimillion-dollar
loans from a consortium of offshore American, German and Japanese banks and thereby finance its oil imports. Net eurocurrency deposit
liabilities that amounted to around $10 billion in the mid-1960s, grew to $500 billion by 1980.
These eurocurrency transactions taught the players in financial markets how to shift their deposits, loans, and investments from
one currency to another whenever exchange rates or interest rates were thought to be ready to change. Even the ability of central
banks to regulate the supply of money and credit was undermined by the readiness of commercial banks to borrow and lend offshore.
Hence, the effectiveness of regulatory mechanisms that had been put in place to implement the Bretton Woods agreement - interest
rate ceilings, lending limits, portfolio restrictions, reserve and liquidity requirements - gradually eroded as offshore transactions
started to balloon.
The world economy developed at unprecedented rates during the roughly twenty-five years immediately following World War II. Growth
and employment rates during these years were at historic highs in most countries. Productivity also advanced rapidly in most developing
countries as well as in the technological leaders. These facts suggest that the system devised at Bretton Woods worked reasonably
well, despite occasional adjustments. To be sure, it helped to sow the seeds of its own destruction by failing to retain operational
control of international financial flows. But the twenty-five years of its survival leading up to August 15, 1971, when President
Nixon closed the gold window, have nonetheless come to be called by some economic historians the "Golden Years."
Controlling private risk
Fixed exchange rates did not last long after the U.S. stopped exchanging gold for claims on the dollar held by foreign central
banks. The pound sterling was allowed to float against the dollar in July, 1972. Japan set the yen free to float in February, 1973,
and most European currencies followed suit shortly thereafter. The Bretton Woods gold-dollar system was doomed.
The fact that exchange rates no longer were fixed meant that companies doing business in different countries had to cope with
the day-to-day shifts in the dollar's rate of exchange with other currencies. The risks of unexpected changes in the value of international
contracts suddenly had shifted from the public to the private sector. Corporate finance officers now had to hedge against possible
exchange losses by buying a currency forward and investing the equivalent in the short-term money market, or by investing in the
eurocurrency market. The corporations' banks, in turn, tried to match each foreign currency transaction with another contrary transaction
in order not to leave each of the banks exposed to foreign exchange risk overnight. Since no single bank was likely to balance its
foreign exchange positions exactly, the need arose to swap deposits in different currencies in order to match corporate hedging
transactions and to square the bank's books.
The price of this forward cover on inter-bank transactions - that is to say, the premium or discount on a currency's spot value
- has tended to accord with the differences between interest-rates offered for eurocurrency deposits in different currencies. This
is the connection between the foreign exchange market and the short-term credit markets, between exchange rates and interest rates.
Whenever exchange rates move up or down, therefore, their influence is immediately transmitted through the eurocurrency markets
to the credit markets.
It is this scramble to avoid private risk that accounted for the dramatic rise in international financial movements following
the demise of the Bretton Woods system. By 1973, daily foreign exchange trading around the world varied between $10 and $20 billion
per day. This amount was approximately twice the value of world trade at the time. Bank of International Settlements data suggests
that the daily average of foreign exchange trading had climbed by 1980 to about $80 billion, and that the ratio between foreign
exchange trading and international trade was more nearly ten to one. The data for 1992 was $880 billion and fifty to one, respectively;
for 1995, $l,260 billion and seventy to one; and for 2000, almost $1,800 and ninety to one.
There is very little doubt, therefore, that the lion's share of international financial flows is relatively short-run. Indeed,
about eighty percent of foreign exchange transactions are reversed in less than seven business days. Only a very small proportion
is used to finance international trade and direct foreign investment. The vast majority must be used with the expectation of gain
or to avoid losses that may result from changes in the value of financial assets. In general terms, they are speculative, made in
hope of capital gain or to hedge against potential capital loss, or to seek the gains of arbitrage based on slight differences in
rates of return in different financial centers.
Foreign exchange markets and markets for money and credit seem remote and abstract to most people. This section introduces the
real institutions that operate these markets and assesses the nature of their power.
Commercial banks They take deposits, lend money, and create credit to the extent their capitalization allows. In
Europe, they tend to combine commercial and investment banking services, but in the U.S. and Japan they are still kept at least
partially separate by regulation. The foreign exchange trading facilities of the largest commercial banks, e.g. Citibank and
J.P.Morgan/Chase in the U.S., tend to dominate the market. The banking industry as a whole represents the largest pool of world
financial capital.
Investment banks They facilitate international payments, manage new issues of stocks and bonds, advise on mergers
and acquisitions in all industries, and engage in securities and foreign exchange trading as allowed by law. Investment banks
(previously called merchant banks in the U.K.) have specialized in particular kinds of derivative products. Derivatives are
financial contracts whose value is based upon the value of other underlying financial assets such as stocks, bonds, mortgages
or foreign exchange.
Brokerage houses They handle the bulk of stock exchange transactions and a major part of foreign exchange transactions.
Investment banks recently have acquired several of the main brokerage houses in the U.S. The development of investor-friendly
methods of buying and selling securities, e.g., over-the-counter markets and electronic brokerage, also have diminished the
role of independent brokerage houses.
Mutual funds They are pools of funds provided by clients that are run by professional investment managers. These
collective investments are held in portfolios with various mixes of money-market instruments, bonds and equities. Mutual funds
account for the second largest pool of global financial capital.
Hedge funds They resemble mutual funds, but they are much less restricted in investment activities and techniques.
Their customers are high net-worth individuals and large institutional investors. They specialize in complex financial instruments
and tend to take significant speculative positions, especially on expected future changes in macroeconomic conditions. They
exploit arbitrage opportunities embedded in the relative prices of related securities. They frequent offshore centers and tax
havens.
Tax havens Offshore centers and tax havens shelter perhaps $10 trillion of wealth from capital and income taxation.
The British Virgin Islands, the Bahamas, Bermuda, the Cayman Islands, Dublin and Luxembourg are among the most important. Many
hedge funds are registered there.
Wealthy individuals They are an important source of funds, as many of them invest their liquid funds in financial
markets. They account for about eighty percent of hedge fund investors.
Private pension funds They function like annuities, receiving funds today in return for a promise to pay future benefits.
With large pools of funds to invest, they tend to depend on investment banks, mutual funds or hedge funds to supervise placement
of their assets in global financial markets.
Insurance companies They pool risks by selling protection against the loss of property, income, or life. Since the
risks they insure have various durations, they call for varied investment strategies. A portion of their funds is invested in
short-term financial instruments, often through mutual and hedge funds.
Transnational corporations They produce and sell goods and services in a number of countries. Their finance departments
seek the best ways to raise and transfer funds across borders, and administer the transfer prices18
of international trade conducted within the corporation. Some even have in-house corporate banks.
According to recent work by political scientists, the power of these financial actors is based in part on a complicated "process
of multiplication" of loans, assets and transactions. Many investors in financial markets buy financial instruments on very thin
margins, based on loans obtained by pledging the assets as collateral. This is called "leverage" in the jargon of financial markets.
In turn, the borrowed funds are invested in other financial assets, multiplying the demand for credit and financial assets. As demand
rises, more sophisticated financial assets are invented, including many forms of financial derivatives. A major portion of the accumulated
debt remains serviceable only as long as the prices of most assets will rise or at least remain relatively stable. If prices turn
down, they easily can lead to a chain-reaction. If investors respond instinctively like a herd, they will bring a far-reaching collapse
that constitutes a crisis.
As the flow of financial assets climbs, some bankers, brokers, and managers of financial institutions become prominent players
in the competition for investor dollars. Some become known for picking profitable places to invest and for promoting their selections
successfully. This can influence markets if people have confidence in their advice. A notorious example of the influence of prominent
players was the attack on British sterling in 1992 by George Soros' Quantum Fund. Believing that sterling was overvalued, the Fund
quietly established credit lines that allowed it to borrow $15 billion worth of sterling and sell it for dollars at the then "overvalued"
price. Its purpose, of course, was to pay back the loan with cheaper pounds after they had depreciated. Having gone long on dollars
and short on sterling, Soros decided to speak up noisily. He publicized his short-selling and made statements in newspapers that
the pound would soon be devalued. It wasn't long before sterling was devalued; he made $1 billion in profit.
The point can be made more generally: financial markets are subject to manipulation because they have become socially structured.
Market leaders and financial gurus are admired and followed (at least until very recently). The heavyweights thus dominate the business.
An obvious consequence of this is that there is a strong tendency in financial markets for further concentration of resources.
Another source of the power of financial actors is their obvious affinity for the rampant free-market philosophy of neo-liberalism.
The freedom with which they move financial capital around depends, of course, on the market-friendly policies of the so-called Washington
Consensus.19 As long as they are seen as part of the governing coalition, they derive special
powers to regulate themselves rather than be controlled by an independent government agency or civil society. Their power also is
reinforced by the activities of several collective associations of financial actors,20
which lobby on their behalf.
One more source of power for the financial actors is their knowledge that if they are big enough and sufficiently interlaced
with other financial actors, then the "system" will keep them from failing. Consider the case of Long-term Capital Management, a
hedge fund partnership started in 1994. It was able to borrow from various banks the equivalent of forty times its capitalization
in order to make bets on changes in the relative prices of bonds in the U.S. and abroad. When the Russian government announced a
devaluation and debt moratorium in August, 1998, it produced losses that the fund could not sustain. Nor could some of the banks
that had loaned large amounts to the fund. Accordingly, the Federal Reserve Bank of New York, fearful that the risk to the entire
system was too high, orchestrated a private rescue operation by fourteen banks and other financial institutions, which re-capitalized
the company for $3.5 billion.
Financial actors also have the power indirectly to influence non-financial actors such as firms or states. By providing economic
incentives to gamble and speculate on financial instruments, global financial markets divert funds from long-term productive investments.
In all probability, they also encourage banks and financial institutions to maintain a regime of higher real interest rates that
reduce the ability of productive enterprises to obtain credit. The volatility of global financial markets, moreover, brings uncertainty
and volatility in interest rates and exchange rates that are harmful to various sectors of the real economy, particularly international
trade.
The above stories about George Soros and Long-term Capital Management are good illustrations of the consequences for non-financial
actors of actions by financial actors. Both episodes are examples of games that are basically zero-sum, at least in the short-run.
Nothing new was produced; no new values were created. In the 1992 case about speculating against sterling, the Quantum Fund's profits
were at the expense of the British government, especially the Bank of England, and British taxpayers. In 1998, the losses suffered
by Long-term Capital Management came out of the pockets of the stockholders of the banks that bailed it out, as the stock-market
value of their shares depreciated. Hence, the financial system tends to feed itself by drawing more resources from other sectors
of the economy, undermining the vitality of the real economy.
Consequences of global financial flows
The dominant economic ideology of the last twenty-five years has been embodied in the so-called Washington Consensus. It is a
"market-friendly" ideology that traces its roots to longstanding policies of the IMF that encourage macroeconomic "stabilization;"
to adoption by the World Bank of ideas in vogue in Washington early in the Reagan period concerning deregulation and supply-side
economics; to the zeal of the Thatcher government in England for privatizing public enterprises; and perhaps most of all to the
neo-liberal tendencies of the business community and the economics profession in the U.S. The implementation of these policies of
economic "reform," by first "stabilizing" the macro-economy and then "adjusting" the market so that it can perform more efficiently,
are supposed to pay off in the form of faster output growth and rising real incomes
Among these policy prescriptions is financial liberalization in both the developed and the developing countries. Domestically
it is achieved by weakening or removing controls on interest and credit and by diluting the differences between banks, insurance
and finance companies. International financial liberation, on the other hand, demands removal of controls and regulations on both
the inflows and outflows of financial instruments that move through foreign exchange markets. It is the implementation of these
reforms that is perhaps the single most important cause of the surge in global financial flows. To be sure, the influence of technological
advances has broken the natural barriers of space and time for financial markets as twenty-four hour electronic trading has grown.
The fact that throughout most of the 1980s and 1990s the developed countries suffered from over-capacity and overproduction in manufacturing
may also have led the owners of financial capital to look for alternative profit opportunities.
It now is time to ask whether the implementation of all these reforms, on balance, has produced good or bad results. The focus
of this section will be mostly on the consequences of large and expanding international financial flows. After all, they are the
main concern of this essay. But first, we should ask whether or not the policies of growth and rising real incomes promoted by the
Washington Consensus have borne fruit.
Growth and income
There is little doubt that the introduction of the Washington Consensus' policy mix expanded the volume of international trade.
As a result, trade in goods and services has grown at more than twice the rate of global gross domestic product (GDP), and developing
countries' share of trade has risen from 23 to 29 percent. Increasing numbers of firms from developing countries, like their industrial-country
counterparts, engage in transnational production and adopt a global perspective in structuring their operations. The flow of foreign
direct investments and foreign portfolio investments has multiplied even more rapidly than trade, despite the financial instability
experienced in Asia, Brazil, Russia, and elsewhere in recent years.
The effects of liberalization have not been uniformly favorable, however. After at least ten full years of experience with the
Washington Consensus, several recent studies have begun to assess the consequences for developing countries of this experiment in
more open markets.21 Except for the years of crisis in a number of the countries studied,
most developing countries achieved moderate growth rates of gross domestic product in the 1990s - considerably higher than in the
l980s in Africa and Latin America during the debt crisis, but remarkably unchanged in most other regions. Moreover, average annual
growth in the 1990s was slightly lower than in the twenty-five years preceding the debt crisis when a strategy of substituting domestic
production for imports was in fullest use. When population growth rates are taken into consideration, the growth rate of per capita
income in the developing countries studied during the 1990s also was somewhat lower than in the 1960s and 1970s. Toward the end
of the 1990s, growth tapered off in many countries due to emerging domestic financial crises or external events. There is little
evidence in these figures, therefore, to suggest the strategy of liberalization boosted growth rates appreciably.
Nor did the distribution of income improve in most developing countries in the 1990s. On the contrary, virtually without exception
the wage differentials between skilled and unskilled workers rose with liberalization. The reasons for this varied widely among
countries, but one of the most important reasons was the fact that the number of relatively well-paid jobs in sectors of the economy
involved with international trade, though growing, was insufficient to absorb available workers, forcing many workers into more
precarious and poorly paid employment in the non-traded, informal trade, and service sectors or where traditional agriculture served
as a sponge for the labor market. Between the mid-1960s and the late-1990s, the poorest 20 percent of the world population saw its
share of income fall from 2.3 to 1.4 percent. Meanwhile, the share of the wealthiest quintile increased from 70 to 85 percent.22
Risk and reward
While all markets are imperfect and subject to failure, financial markets are more prone than others to fail because they are
plagued with three particular shortcomings: asymmetric information, herd behavior and self-fulfilling panics. Asymmetric information
is a problem whenever one party to an economic transaction has insufficient information to make rational and consistent decisions.
In most financial markets where borrowing and lending take place, borrowers usually have better information about the potential
returns and risks associated with the investments to be financed by the loans than do the lenders. This becomes especially true
as financial transactions disperse across the globe, often between borrowers and lenders of widely different cultures.
Asymmetric information leads to adverse selection and moral hazard. Adverse selection occurs when, say, lenders have too little
information to choose from among potential borrowers those who are most likely to use the loans wisely. The lenders' gullibility,
therefore, attracts more unworthy borrowers. Moral hazard occurs when borrowers engage in excessively risky activities that were
unanticipated by lenders and lead to significant losses for the lender. Yet another form of moral hazard occurs when lenders indulge
in lending indiscriminately because they assume that the government or an international institution will bail them out if the loans
go awry.
A good illustration of asymmetric information is the story of bank lending following OPEC's large increase in oil prices following
1973. Awash in cash, the oil exporters deposited large amounts in commercial banks that then perfected the Euro-currency loan for
developing countries. Eager to put excess reserves to use, the banks spent little time discriminating among potential borrowers,
in part because they believed host governments or international agencies would guarantee the loans. At the same time, developing
countries found they could readily borrow not only to import oil, but also to increase other kinds of expenditures. This meant they
could use borrowed funds to maintain domestic spending rather than be forced to adjust to the new realities of higher prices for
necessary imports. There is considerable evidence that moral hazard also was present in the Mexican crises in 1982 and 1994, and
in the Southeast Asian crises in 1997-8.
Yet another illustration of asymmetric information is the tendency of financial firms, especially on Wall Street and in the City
of London, to invent ever more complex derivatives to shift risk around the financial system. The market for these products is growing
rapidly, both on futures and options exchanges (two of the several places where derivatives are traded). A financial engineer, for
example, can take the risk in, say, a bond and break it down into a series of smaller risks, such as that inflation will reduce
its real value or that the borrower will default. These smaller risks can then be priced and sold, using derivatives, so that the
bondholder keeps only those risks he wishes to bear. But this is not a simple task, particularly when it involves assets with risk
exposures far into the future and which are traded so rarely that there is no good market benchmark for setting the price. Enron,
for instance, sold a lot of these sorts of derivatives, booking profits on them immediately even though there was a serious doubt
about their long-term profitability. Stories of huge losses incurred in derivative trading are legion. The real challenge before
central banks and regulatory bodies is to curb speculative behavior and bring discipline in derivative markets.
A second source of risk in financial markets is the tendency of borrowers and lenders alike to engage in herd behavior. John
Maynard Keynes, writing in the 1930s, suggested that financial markets are like "beauty contests." His analogy was to a game in
the British Sunday newspapers that asked readers to rank pictures of women according to their guess about the average choice by
other respondents. The winner, therefore, does not express his own preferences, but rather anticipates "what average opinion expects
average opinion to be." Accordingly, Keynes thought that anyone who obtained information or signals that pointed to swings in average
opinion and to how it would react to changing events had the basis for substantial gain. Objective information about economic data
was not enough. Rather, simple slogans "like public expenditure is bad," "lower unemployment leads to inflation," "larger deficits
lead to higher interest rates," were then the more likely sources of changes in public opinion. What mattered was that average opinion
believed them to be true, and that advance knowledge of, say, more public spending, lower unemployment, or larger deficits, respectively,
offered the speculator a special advantage.
A financial market that operates as a beauty contest is likely to be highly unstable and prone to severe changes. One reason
for this is that people trading in financial assets, even today, know very little about them. People who hold stock know little
about the companies that issued them. Investors in mutual funds know little about the stocks their funds are invested in. Bondholders
know little about the companies or governments that issued the bonds. Even knowledgeable professionals are often more concerned
with judging how swings in conventional opinion might change market values rather than with the long-term returns on investments.
Indeed, since careful analysis of risks and rewards is costly and time consuming, it often makes sense for fund managers and traders
to follow the herd. If they decide rationally not to follow the herd, their competence may be seriously questioned. On the other
hand, if fund managers follow the herd and the herd suffers losses, few will question their competence because others too suffered
losses. When financial markets are operated like a beauty contest, everyone wants to sell at the same time and nobody wants to buy.
The financial markets behaved as predicted shortly after several industrial countries, including the U.S. and Germany, abolished
all restrictions on international capital movements in 1973. The new system proved to be highly volatile, with exchange rates, interest
rates, and financial asset-prices subject to large short-term fluctuations. The markets also were susceptible to contagion when
financial tremors spread from their epicenter to other countries and markets that seemingly had little connection with the initial
problem. In less than five years, it already was clear that both the surpluses and the deficits on the major countries' balance
of payments were getting larger, not smaller, despite significant changes in the exchange rates.
In some cases, a financial crisis can be self-fulfilling. A rumor can trigger a self-fulfilling speculative attack, e.g. on a
currency, that may be baseless and far removed from the economic fundamentals (unlike the Soros story above). This can cause a sudden
shift in the herd's intentions and lead to unanticipated market movements that create severe financial crises. Consider, for example,
the succession of major financial crises that have pock-marked the recent history of international financial markets, including
Latin America's Southern Cone crisis of 1979-81, the developing-country debt crisis of 1982, the Mexican crisis of 1994-95, the
Asian crisis of 1997-98, the Russian crisis of 1998, the Brazilian crisis of 1999, and the Argentine crisis of 2001-02.
Perhaps the Asian crisis of 1997-98 is the most interesting in this regard, for there were relatively few signals beforehand
of impending crisis. All the main East Asian economies displayed in 1994-96 low inflation, fiscal surpluses or balanced budgets,
limited public debt, high savings and investment rates, substantial foreign exchange reserves and no signs of deterioration before
the crisis. This background has led many analysts to suppose that the crisis was a mere product of the global financial system.
But what could have triggered the herd to stampede out of Asian currencies? No doubt several factors were at work. Before the crisis
that started in the summer of 1997, there was a rise in short-term lending to Asians by Western and Japanese banks with little or
no premiums, a fact that the Bank for International Settlement raised questions about. Alert investors, especially hedge funds,
also noticed that substantial portions of East and Southeast Asian borrowings were going into non-productive assets and real estate
that often were linked to political connections. In fact, some of the funds pouring into non-productive assets were coming out of
the productive sector, mortgaging the longer-term viability of some real economies. Information about the structure and policies
of financial sectors was opaque. Thus, opinions began to change among key lenders about the regulation of financial sectors in several
Asian countries and their destabilizing lack of transparency. Suddenly, several important hedge funds reduced their exposure by
shorting currency futures, followed quickly by Western mutual funds. The calling of loans led quickly to deep depression in several
Asian countries. It has been estimated that the Asian crisis and its global repercussions cut global output by $2 trillion in 1998-2000.
Loss of government autonomy
Both economic theory and the experience of managing the external financial affairs of nations tell us that it is virtually impossible
to maintain (1) full financial mobility, (2) a fixed exchange rate, and (3) freedom to seek macro-economic balance (full employment
with little inflation) with appropriate monetary and fiscal policies. Only two of these policy objectives can be consistently maintained.
If the authorities try to pursue all three, they will sooner or later be punished by destabilizing financial flows, as in the run
up to the Great Depression around 1930 and in the months before sterling's collapse 1992. If a government tries to stimulate its
economy with lax monetary policy, for example, and players with significant market power like George Soros sense that at a fixed
exchange rate, foreigners will be unwilling to lend enough to finance the country's current account deficit, they will begin to
flee the home currency in order to avoid the capital losses they will suffer if and when there is a devaluation. If reserve losses
accelerate and more players follow suit, crisis ensues. The authorities are forced to devalue, interest rates soar, and the successful
attackers sit back to count their profits.
For nations wishing to retain reasonably independent monetary and fiscal authority in order to cater to domestic needs, the solution
is to allow the exchange rate to move up or down as conditions in the foreign exchange markets dictate, or to establish some sort
of control over the movement of financial instruments in and out of the country, or to devise some combination of these two adjustment
mechanisms. The debate over whether fixed or flexible exchange rates is the wiser policy continues to rage in academic quarters
and in finance ministries all over the world. For the most part, the international business community prefers reasonably fixed exchange
rates in order to minimize their costs of hedging foreign currency positions. Thus instituting some form of control over speculative
financial movements may be an appropriate solution to the "trilemma."
The capacity of a nation to levy enough taxes to finance needed public expenditures is another important reason to retain independent
authority. A central function of government has been to insulate domestic groups from excessive market risks, particularly those
originating in international transactions. This is the way governments have maintained domestic political support for liberalizing
trade and finance throughout the postwar period. Yet many governments are less able today to help citizens that are injured by freer
markets with unemployment compensation, severance payments, and adjustment assistance because the slightest hint of raising taxes
to pay for these vital public services leads to capital flight in a world of heightened financial mobility.
This is a dilemma. Increased integration into the world economy has raised the need of governments to redistribute tax revenues
or implement generous social programs in order to protect the vast majority of the population that remains internationally immobile.
At the same time, governments find themselves less able to maintain the safety nets needed to preserve social stability. It seems
reasonable to suppose, therefore, that doing things that will bolster the ability of governments to levy sufficient taxes - curbing
tax avoidance by transnational corporations, controlling offshore tax havens, regulating capital flight - would help make globalization
slightly more democratic.
Winners and losers
The people who benefit from speculative financial movements are, for the most part, better educated and wealthier than the vast
majority of fellow citizens. They are the elites, whatever the country. As noted above, they have fewer connections to the real
economy of production and exchange than most people. And their purpose in trading financial assets, again for the most part, is
to make a profit quickly rather than wait for an investment project to mature.
People who do not participate directly in the buying and selling of short-term financial instruments are nonetheless influenced
indirectly by the macroeconomic instability and contagion that often accompany interruptions in financial market flows. This is
true for people both in developed and developing countries. In developed countries, the voracious appetite of financial markets
for more and more resources saps the vitality of the real economy - the economy that most people depend upon for their livelihood.
It has been shown that real interest rates rise as a result of the expansion of speculative financial markets. This rise in real
interest rates, in turn, dampens real investment and economic growth while serving to concentrate wealth and political power within
a growing worldwide rentier class (people who depend for their income on interest, dividends, and rents).23
Rather, the long-term health of the economy depends upon directing investable funds into productive investments rather than into
speculation.
In developing countries, attracting global investors' attention is a mixed blessing. Capital market inflows provide important
support for building infrastructure and harnessing natural and human resources. At the same time, surges in money market inflows
may distort relative prices, exacerbate weakness in a nation's financial sector, and feed bubbles. As the 1997 Asian crisis attests,
financial capital may just as easily flow out of as into a country. Unstable financial flows often lead to one of three kinds of
crises:
Fiscal crises. The government abruptly loses the ability to roll over foreign debts and attract new foreign loans, possibly
forcing the government into rescheduling or default of its obligations.
Exchange crises. Market participants abruptly shift their demands from domestic currency assets to foreign currency assets,
depleting the foreign exchange reserves of the central bank in the context of a pegged exchange rate system.
Banking crises. Commercial banks abruptly lose the ability to roll over market instruments (i.e., certificates-of-deposit)
or meet a sudden withdrawal of funds from sight deposits, thereby making the banks illiquid and possibly insolvent.
Although these three types of crises sometimes appear singly, they more often arrive in combination because external shocks or
changed market expectations are likely to occur simultaneously in the market for government bonds, the foreign exchange market,
and the markets for bank assets. Approximately sixty developing countries have experienced extreme financial crises in the past
decade.24
The vast majority of people in the developing world suffer from these convulsive changes. They are tired of adjusting to changes
over which they exercise absolutely no control. Most people in these countries view Western capitalism as a private club, a discriminatory
system that benefits only the West and the elites who live inside "the bell jars" of poor countries. Even as they consume the consumer
goods of the West, they are quite aware that they still linger at the periphery of the capitalist game. They have no stake in it,
and they believe that they suffer its consequences. As Hernando deSoto puts it, "Globalization should not be just about interconnecting
the bell jars of the privileged few."25
Social solidarity
Karl Polanyi in The Great Transformation sought to explain how the "liberal creed" contributed to the catastrophes of war and
depression associated with the first half of the twentieth century. Polanyi's central argument, which in fact can be traced back
to Adam Smith, is that markets do indeed promote efficiency and change, but that they achieve this through undermining social coherence
and solidarity. Markets must therefore be embedded within social institutions that mitigate their negative consequences.
The evidence of more recent times suggests that the global spread of free-market policies has been accompanied by the decline
of countervailing institutions of social solidarity. Indeed, a main feature of the introduction of market-friendly policies has
been to weaken local institutions of social solidarity. Consider, for example, the top-down policy prescriptions of the IMF and
World Bank during the developing world's debt crisis in the 1980s. These policies evolved into an intricate web of expected behaviors
by developing countries. In order for developing countries to expect private businesses and financial interests to invest funds
within their borders and to boost the growth potential of domestic economies, they needed to drop the "outdated and inefficient"
policies that dominated development strategies for most of the postwar period and adopt in their place policies that are designed
to encourage foreign trade and freer financial markets. Without significant adjustments in the ways economies were managed, it was
suggested, nations soon would be left behind.
The list of Washington Consensus requirements was long and daunting:
Make the private sector the primary engine of economic growth
Maintain a low rate of inflation and price stability
Shrink the size of the state bureaucracy
Maintain as close to a balanced budget as possible, if not a surplus
Eliminate or lower tariffs on imported goods
Remove restrictions on foreign investment
Get rid of quotas and domestic monopolies
Increase exports
Privatize state-owned industries and utilities
Deregulate capital markets
Make currency convertible
Open industries, stock, and bond markets to direct foreign ownership
Deregulate the economy to promote domestic competition
Eliminate government corruption, subsidies and kickbacks
Open the banking and telecommunications systems to private ownership and competition
Allow citizens to choose from an array of competing pension options and foreign-run pension and mutual funds.
In a provocative article, Ute Pieper and Lance Taylor point out that market outcomes often conflict with other valuable social
institutions. In addition, they emphasize that markets function effectively only when they are "embedded" in society. The authors
then look carefully at the experience of a number of developing countries as they struggled to comply with the policy prescriptions
of the IMF and the Fund. In almost every case, they demonstrate conclusively that the impact of these efforts was to make society
an "adjunct to the market."26
An appropriate balance is not being struck between the economic and non-economic aspirations of human beings and their communities.
Indeed, the evidence is mounting that globalization's trajectory can easily lead to social disintegration - to the splitting apart
of nations along lines of economic status, mobility, region, or social norms. Globalization not only highlights and exacerbates
tensions among groups; it also reduces the willingness of internationally mobile groups to cooperate with others in resolving disagreements
and conflicts.
Policy options
History confirms that free-markets are inherently volatile institutions, prone to speculative booms and busts. Overshooting,
especially in financial markets, is their normal condition. To work well, free markets need not only regulation, but active management.
During the first half of the post-war era, world markets were kept reasonably stable by national governments and by a regime of
international cooperation. Only lately has a much earlier idea been revived and made an orthodoxy - the idea adopted by the Washington
Consensus that, provided there are clear and well-enforced rules-of-the-game, free markets can be self-regulating because they embody
the rational expectations that participants form about the future.
On the contrary, since markets are themselves shaped by human expectations, their behavior cannot be rationally predicted. The
forces that drive markets are not mechanical processes of cause and effect, as assumed in most of economic theory. They are what
George Soros has termed "reflexive interactions."27 Because markets are governed by highly
combustible interactions among beliefs, they cannot be self-regulating.
The question before us then, is what could be done to better regulate financial markets and to bring active management back into
the task of "embedding" markets in society, rather than the other way around? Monetary authorities such as the Federal Reserve System
in the U.S. and the central banks of other countries were formed long ago in order to dampen the inherent instabilities of financial
market in their home countries. But the evolution of an international regulatory framework has not kept pace with the globalization
of financial markets. The International Monetary Fund was not designed to cope with the volume and instability of recent financial
trends.
Capital controls
Given the problems outlined above about short-term speculative financial transactions, one might wonder why national policy-makers
have not insulated their financial markets by imposing some sort of control over financial capital. The answer, of course, is that
some have continued trying to do so despite discouragement from the IMF. For example, some have put limitations on the quantity,
conditions, or destinations of financial flows. Others have tried to impose a tax on short-term borrowing by national firms from
foreign banks. This is said to be "market-based" because it operates by altering the cost of foreign funds. If such transactions
were absolutely prohibited, they would be called "non-market" interventions.
A more extreme form of financial capital controls, one that controls movement of foreign exchange across international borders,
also has been tried in a number of countries. This form of control requires that some if not all foreign currency inflows be surrendered
to the central bank or a government agency, often at a fixed price that differs from that which would be set in free market. The
receiving agency then determines the uses of foreign exchange. The absence of exchange controls means that currencies are "convertible."
The neo-liberal argument opposing financial capital controls asserts that their removal will enhance economic efficiency and
reduce corruption. It is based on two basic propositions in economic theory that depend for their proof on perfectly competitive
markets in the real economy and perfectly efficient gatherers and transmitters of information in financial markets. Neither assumption
is realistic in today's world. Indeed, a number of empirical studies have reported the effectiveness of capital controls in controlling
capital flight, curbing volatile capital flows and protecting the domestic economy from negative external developments.
Developing countries have only recently abandoned, or still maintain, a variety of control regimes. Latin American countries
traditionally have used market-based controls, putting taxes and surcharges on selected financial capital movements or tying them
up in escrow accounts. Non-market based restrictions were more common in Asia until the early 1990s. Many commentators believe that
their sudden removal in the early 1990s was a contributing cause to the Asian financial crises in 1997-8. The experience of two
countries, Malaysia and Chile, with capital controls is especially instructive.
Malaysia, unlike its Asian neighbors, was reluctant to remove its restrictions on external borrowing by national firms unless
they could show how they could earn enough foreign exchange to service their debts. Then when the Asian crises hit, its government
imposed exchange controls, in effect making its local currency that was held outside the country inconvertible into foreign exchange.
After the ringget was devalued, exporters were required to surrender foreign currency earnings to the central bank in exchange for
local currency at the new pegged rate. The government also limited the amount of cash nationals could take abroad, and it prohibited
the repatriation of earnings on foreign investments that had been held for less than one year. Thus, Malaysia's capital controls
were focused mostly on controlling the outflow of short-term financial transactions. Happily, the authorities were able to stabilize
the currency and reduce interest rates, leading to a degree of domestic recovery.28
Chile, on the other hand, tried to limit the inflow of short-term financial transactions. It did so by imposing a costly reserve
requirement on foreign-owned capital held in the country for less than one year. Despite attempts to stimulate foreign direct investment
of the funds, most of the reserve deposits were absorbed in the form of increased reserves at the central bank. In turn, this created
a potential for expanding the money supply, which the government feared would lead to inflation. Rather than allow this to happen,
the government "sterilized" the inflows by selling government bonds from its portfolio. But this pushed down the prices of bonds
and pushed up the interest rates on them, discouraging business investment. Finally, when prices of copper (Chile's primary export)
fell sharply in 1998, the control regime was scrapped.29
The tobin tax
A global tax on international currency movements was first proposed by James Tobin, a Yale University economist, in 1972.30
He suggested that a tax of one-quarter to one percent be levied on the value of all currency transactions that cross national borders.
He reasoned that such a tax on all spot transactions would fall most heavily on transactions that involve very short round-trips
across borders. In other words, it would be speculators with very short time-horizons that the tax would deter, rather than longer-term
investors who can amortize the costs of the tax over many years. For example, the yearly cost of a 0.2 percent round trip tax would
amount to 48 percent of the value of the traded amount if the round trip were daily, 10 percent if weekly and 2.4 percent if monthly.
Since at least eighty percent of spot transactions in the foreign exchange markets are reversed in seven business days or less,
the tax could have a profound effect on the costs of short-term speculators.
Of course, for those who believe in the efficiency of markets and the rationality of expectations, a transactions tax would only
hinder market efficiency. They argue that speculative sales and purchases of foreign exchange are mostly the result of "wrong" national
monetary and fiscal policies. While we readily admit that national policies sometimes do not accord with desired objectives, they
nonetheless have little relevance for speculators focused on the next few seconds, minutes or hours.
Tobin did not intend for his proposal to involve a supranational taxation authority. Rather, governments would levy the tax nationally.
In order to make the tax rate uniform across countries, however, an international agreement would have to be entered into by at
least the principal financial centers. The revenue obtained from the tax could be designated for each country's foreign exchange
reserve for use during periods of instability, or it could be directed into a common global fund for uses like aid to the poorest
nations. In the latter case, the feasibility of the tax also would depend on an international political agreement. The revenue potential
is sizeable, and could run as high as $500 billion annually.
There are two other advantages often cited by proponents of the Tobin tax. Tobin's original rationale for a foreign exchange
transactions tax was to enhance policy autonomy in a world of high financial capital mobility. He argued that currency fluctuations
often have very significant economic and political costs, especially for producers and consumers of traded goods. A Tobin tax, by
breaking the condition that domestic interest rates may differ from foreign interest rates only to the extent that the exchange
rate is expected to change (see p. 10), would allow authorities to pursue different policies than those prevailing abroad without
exposing them to large exchange rate movements. More recent research suggests that this is only a very modest advantage.31
An additional advantage of the tax is that it could facilitate the monitoring of international financial flows. The world needs
a centralized data-base on all kinds of financial flows. Neither the Bank for International Settlements nor the IMF has succeeded
in providing enough information to monitor them all. This information should be regularly shared among countries and international
institutions in order to collectively respond to emerging issues.
The feasibility issues raised by the Tobin tax are more political than technical. One of the issues is about the likelihood of
evasion. All taxes suffer some evasion, but that has rarely been a reason for avoiding them. Ideally all jurisdictions should be
a party to any agreement about a common transactions tax, since the temptation to trade through non-participating jurisdictions
would be high. Failing that, one could levy a penalty on transactions with "Tobin tax havens" of, say, double the normal tax rate.
Moreover, one could limit the problem of substituting untaxed assets for taxed assets by applying the tax to forwards, swaps and
possibly other contracts.
Tobin and many others have assumed that the task of managing the tax should be assigned to the IMF. Others argue that the design
of the tax is incompatible with the structure of the IMF and that the tax should be managed by a new supranational body. Which view
will prevail depends upon the resolution of other outstanding issues. The Tobin tax is an idea that deserves careful consideration.
It should not be dismissed as too idealistic or too impractical. It addresses with precision the problems of excessive instability
in the foreign exchange markets, and it yields the additional advantage of providing a means to assist those in greater need.
Reforming the IMF
The IMF was established in 1944 to provide temporary financing for member governments to help them maintain pegged exchange rates
during a period of internal adjustment. With the collapse of the pegged exchange rate regime in 1971, that responsibility has been
eclipsed by its role as central arbiter of financial crises in developing countries. As noted above (p. 20), these crises may be
of three different kinds: fiscal crises, foreign exchange crises, and banking crises.
Under current institutional arrangements, a nation suffering a serious fiscal crisis that could easily lead to default must seek
temporary relief from its debts from three different (but interrelated) institutions: the IMF, which is sometimes willing to renegotiate
loans in return for promises to adopt more stringent policies (see above); the so-called Paris Club that sometimes grants relief
on bilateral (country to country) credits; and the London Club that sometimes gives relief on bank credits. This is an extremely
cumbersome process that fails to provide debtor countries with standstill protection from creditors, with adequate working capital
while debts are being renegotiated, or with ways to ensure an expeditious overall settlement. The existing process often takes several
years to complete.
There is a growing consensus that this problem is best resolved with creation of a new international legal framework that provides
for de facto sovereign bankruptcy. This could take the form of an International Bankruptcy Code with an international bankruptcy
court, or it could involve a less formal functional equivalent to its mechanisms: automatic standstills, priority lending, and comprehensive
reorganization plans supported by rules that do not require unanimous consent. Jeffrey Sachs recommends, for example, that the IMF
issue a clear statement of operating principles covering all stages of a debtor's progression through "bankruptcy" to solvency.
A new system of emergency priority lending from private capital markets could be developed, he suggests, under IMF supervision.
He also feels that the IMF and member governments should develop model covenants for inclusion in future sovereign lending instruments
that allow for priority lending and speedy renegotiation of debt claims.32
At the Joint Meeting of the IMF and the World Bank in September, 2002, the policy committee directed the IMF staff to develop
by April, 2003, a "concrete proposal" for establishing an internationally recognized legal process for restructuring the debts of
governments in default. It also endorsed efforts to include "collective action" clauses in future government bond issues to prevent
one or two holdout creditors from blocking a debt-restructuring plan approved by a majority of creditors. The objective of both
proposals is to resolve future debt crises quickly and before they threaten to destabilize large regions, as happened in Southeast
Asia in 1997-98.
Member countries rarely receive support from the IMF any longer to maintain a particular nominal exchange rate. Because financial
capital is so mobile now, pegged exchange rates probably are unsupportable. But there are special times when the IMF still might
give such support during a foreign exchange crisis. International lending to support a given exchange rate is legitimate if the
government is trying to establish confidence in a new national currency, or if its currency is recovering from a severe bout of
hyperinflation. Ordinarily the foreign exchange should be provided from an international stabilization fund supervised by the IMF.
National central banks usually supervise and regulate the domestic banking sector. Thus, banking crises normally are handled
by domestic institutions. This may not be possible, however, if the nation's banks hold large short-term liabilities denominated
in foreign currencies. If the nation's central bank has insufficient reserves of foreign currencies to fund a large outflow of foreign
currencies, there may be circumstances when the IMF or other lenders may wish to act as lenders-of-last-resort to a central bank
under siege. Nations like Argentina that have engaged in "dollarization" are learning about the downside risks of holding large
liabilities denominated in foreign currencies. The best way to avoid this problem is for governments and central banks to restrict
the use of foreign currency deposits or other kinds of short-term foreign liabilities at domestic banks.
Overall, what is most needed is the availability of more capital in developing countries and much quicker responses, amply funded,
to emerging financial crises.. George Soros has argued powerfully that the IMF needs to establish a better balance between crisis
prevention and intervention.33 The IMF has made some progress in prevention by introducing
Contingency Credit Lines (CCLs). The CCL rewards countries that follow sound policies by giving them access to IMF credit lines
before rather than after a crisis erupts. But CCL terms were set too high and there have been no takers. Soros also has recommended
the issuance of Special Drawing Rights (SDRs) that developed-countries would donate for the purpose of providing international assistance.
Its proceeds would be used to finance "the provision of public goods on a global scale as well as to foster economic, social, and
political progress in individual countries."34
A growing number of civil society institutions, however, oppose giving more money to the IMF unless it is basically reformed.
They point out that it is a committed part of the Washington Consensus, the application of whose policies have made societies adjuncts
of the market. They see the IMF as an instrument of the U.S. government and its corporate allies. The conditions it attaches to
loans for troubled countries often do more to protect the interests of first world investors than to promote the long-term health
of the developing countries. The needed chastening of speculative investors does not occur under these circumstances. There is evidence
that in several major crises, IMF requirements for assisting nations have in fact worsened the situation and protracted the crises.
The IMF opposed the policies that enabled Malaysia to weather the crisis in Southeast Asia, for example, while it urged the failed
policies of other Southeast Asian nations. The vast literature cited by Pieper and Taylor (p. 22) is a convincing chronicle of earlier
missteps. For such reasons as these, some civil society institutions argue that, unless IMF policies are changed, giving the institution
more money will do more harm than good.
Fortunately, the IMF's policies are beginning to change, partly as a result of criticisms by civil society institutions, but
more through recognition of the seriousness of the problems with the present system. In the wake of recent financial crises, leaders
in the IMF as well as the World Bank are looking for ways to reform the international financial architecture. Arguably, their emphasis
is shifting away from slavish devotion to the prescriptions of the Washington Consensus and toward more state intervention in financial
markets. Joseph Stiglitz, the Nobel Laureate who has been particularly critical of the IMF, nonetheless acknowledges that its policy
stances are improving.35
The IMF has begun to recognize the importance of at least functional public interventions in markets and the need to provide
more supporting revenues. It has realized that controls on external financial movements and prudent regulation can help contain
financial crises. It has abandoned the doctrine, long the backbone of structural adjustment policies, that raising the local interest
rate will stimulate saving and thereby growth. Both the IMF and the World Bank have rolled over or forgiven the bulk of official
debt owed by the poorest economies.
Whether these and other promising changes in IMF thinking and policy formation are sufficient to assure that its future responses
to crises will be benign still is not clear. While celebrating what they view as belated improvements, many critics of the IMF among
civil society institutions are not convinced that they are sufficiently basic. Even if the IMF avoids repeating some of its more
egregious mistakes, some believe that it is likely to continue to function chiefly for the benefit of the international financial
community rather than the masses of people. Rather, they believe that, at least in the long term, it would be much better for control
over international finance to reside in new institutions under a restructured United Nations. They favor the U.N. because it has
a broader mandate, is more open and democratic, and, in its practice, has given much greater weight to human, social, and environmental
priorities.
Many civil society institutions want the primary focus of reform to be on taming speculation, restoring the control of their
economies to nations, and embedding economies in the wider society. They believe that if these policies are adopted there will be
less need for large funding to deal with financial crises. There remains, however, the fact that such crises are occurring and will
continue to occur for some time. The IMF is the only institution positioned to respond to these crises. Hence, even for those who
sympathize with the goals of the civil society institutions, there is a strong argument for more financing for the IMF.
A world financial authority
A variety of public and private citizens and institutions have recently proposed the establishment of a World Financial Authority
(WFA) to perform in the domain of world financial markets what national regulators do in domestic markets. Some believe it should
be built upon the foundation of global financial surveillance and regulation that have already been laid by the Bank for International
Settlements in Basel, Switzerland. Others regard it as a natural extension of the activities of the IMF. Still others are less interested
in the precise institutional form it would take than in the clear delineation of the tasks that need to be done by someone.
Its first task probably should be to provide sufficient and timely financial assistance during crises to avert contagion and
defaults. This requires a lender-of-last-resort with sufficient resources and authority to disperse rescue money quickly. Perhaps
the best example to date is the bailout loan to Mexico by the U.S. Treasury and the IMF at the end of 1994. It supplied sufficient
liquidity for Mexico to make the transition back to stability and to pay back the loans ahead of time. The management of the Asian
crises in 1997-8, on the other hand, was badly handled. The bailout packages offered by the IMF were not only significantly smaller
than in the Mexico case; they also were constrained with so many conditions that a year later only twenty percent of the funds had
been disbursed. This slow response to the crisis probably worsened the contagion. Surprisingly, the error was repeated in the Russian
crisis in 1998 and the Brazilian crisis in 1999.
A World Financial Authority also should provide the necessary regulatory framework within which the IMF or a successor institution
can develop as a lender-of-last-resort. As long as domestic regulatory procedures function properly, there will be no need for a
world authority to be involved, any more than to certify that domestic regulatory procedures are effective. In countries where domestic
financial regulation is unsatisfactory, the WFA would assist with regulatory reform. In this way, the WFA could aid financial reconstruction,
reduce the likelihood of moral hazard, and give confidence to backers of the operation.
There is little appetite today, especially in Washington, to create a new international bureaucracy. This fact gives support
to the idea of building the WFA from the existing infrastructure of the Bank for International Settlements (BIS). The BIS is a meeting
place for national central bankers who have constructed an increasingly complicated set of norms, rules and decision-making procedures
for handling and preventing future crises. Its committees and cooperative cross-border regulatory framework enjoy the confidence
of governments and of the financial community. It may well be the best place to govern an international regulatory authority at
the present time.
Theological and ethical considerations
While Christian theology cannot provide us with detailed recommendations on how to correct the adverse consequences of speculative
financial movements, it can provide us with an empowering perspective or worldview. Our theological expressions of the faith describe
the source of our spiritual energy and hope. They betray our ultimate values and the source of our ethical norms. They shape how
we perceive and judge the "signs of the times."
God's world and human responsibilities
Nothing in creation is independent of God. "The earth is the Lord's and all that is in it, the world, and all those who live
in it." (Ps. 24:1 NRSV) Thus, no part of the creation - whether human beings, other species, the elements of soil and water, even
human-made things - is our property to use as we wish. All is to be treated in accord with the values and ground rules of a loving
God, their ultimate owner, who is concerned for the good of the whole creation. All of God's creation therefore deserves to be treated
with appropriate care and concern, no matter how remote from one's daily consciousness or existence.
The doctrine of creation reminds us that our ultimate allegiance is not to the nationalistic and human-centered values of our
culture, but rather to the values of the loving Maker of heaven and earth. When we seek plenty obsessively, consume goods excessively,
compete against others compulsively, or commit ourselves to Economic Fate, we are worshiping false gods. Modern idolatries are often
encountered in economic forms, just as in the New Testament's warnings about the spiritual perils of prosperity in the parables
of the rich, hoarding fool (Luke 12:15-21) and the rich youth (Matt. 19:16-24 and Luke 18:18-25).
The fact that so much of financial speculation is divorced from the real economy of production and exchange suggests that its
paper transactions are more like bets in a casino than an essential component of God's real economy, which seeks the good of all
creation. It is wrong to subject people to the effects of wholesale gambling. The fact that the practice of financial speculation
is secretive, compulsively competitive, and frequented by lone rangers, moreover, hints at a cult of false idols. Its practitioners,
including especially day-traders, seem interested only in exceedingly short-term personal financial advantage, unconcerned about
the long-term consequences of their actions or their impact on others. This also indicates a degree of idolatry that contradicts
the doctrine of creation.
Image of God
The conviction that human beings have a God-given dignity and worth (Gen. 1:26-28) unites humanity in a universal covenant of
rights and responsibilities - the family of God. All humans are entitled to the essential conditions for expressing their human
dignity and for participation in defining and shaping the common good. These rights include satisfaction of basic biophysical needs,
environmental safety, full participation in political and economic life, and the assurance of fair treatment and equal protection
of the laws. These rights define our responsibilities in justice to one another, locally, nationally and - because they are human
rights - internationally.
Financial speculation often leads to unmanageable floods of funds into and out of host societies, creating unwanted bubbles and
panics. Financial speculators normally ignore the human consequences of their activities on the rights of people in host societies,
where economic adjustments are shared widely and painfully. Their primary interest is short-term personal financial gain. The absence
of a sense of covenantal unity with their brothers and sisters of the developing world is a sad commentary on the governing ethic
of speculators in the capital markets. Their arrogance calls for some form of control over foreign exchange and financial capital
markets.
Justice in covenant
The rights and responsibilities associated with the image of God are inextricably tied to the stress on justice in Scripture
and tradition. We render to others their due because of our loving respect for their God-given dignity and value. The God portrayed
in Scripture is the "lover of justice" (Ps. 99:4, 33:5, 37:28, 11:7; Isa. 30:18, 61:8; Jer. 9:24). Justice is at the ethical core
of the biblical message. Faithfulness to covenant relationships, moreover, demands a justice that recognizes special obligations,
"a preferential option" to widows, orphans, the poor, and aliens, which is to say the economically vulnerable and politically oppressed.
Hence, the idea of the Jubilee Year (Lev. 25) was meant to prevent unjust concentrations of power and poverty. Jesus' ministry embodies
concern for the rights and needs of the poor; He befriended and defended the dispossessed and the outcasts.
The fact that the liberalization of trade and finance has failed to improve the distribution of incomes, indeed, that it has
widened the gap between rich and poor in virtually every country, is not a sign of distributive justice but of its opposite. The
standard of living for the least skilled, least mobile, and poorest citizens of many developing countries has declined absolutely.
This, too, is an unjust result of a broken system. The fact that governments that wish to assist the vulnerable and weak of their
societies are less able to do so, in part because they no longer can levy sufficient taxes on foreign interests, is a violation
of justice in community.
Sin and judgment
Sin is a declaration of autonomy from God, a rebellion against the sovereign source of our being. It makes the self and its values
the center of one's existence, in defiance of God's care for all. Sin tempts us to value things over people, measuring our worth
by the size of our wealth and the quantity of goods we consume, rather than by the quality of our relationships with God and with
others. Sin involves injustice because its self-centeredness defies God's covenant of justice, grasping more than one's due and
depriving others of their due.
Sin is manifested not only in individuals, but also in social institutions and cultural patterns. These structural injustices
are culturally acceptable ways of giving some individuals and groups of people advantage over others. Because they are pervasive
and generally invisible, they compel our participation. They benefit some and harm many others. Whether or not we deserve blame
as individuals and churches for these social sins depends in part on whether we defend or resist them, tolerate or reject them.
The fact that the freeing of financial markets has permitted financial speculators to engage in high-risk gambles without regard
to the consequences for others is abundant evidence of both individual and institutional sin. The policies of the Washington Consensus
frequently lead to adverse consequences for the poor and the environment, even as its proponents gain advantages from the implementation
of such policies. They are another serious expression of social sin in our time. These policies inevitably increase the concentration
of economic power in fewer hands. The fact that the global spread of free-market policies has led to the decline of countervailing
institutions of
social solidarity means that it is easier for the centers of economic power to corrupt governments, control markets, alienate
neighbors, manipulate public opinion, and contribute to a sense of political impotency in the public.
The Church's mission and hope
The church is called to be an effective expression of the Reign of God, which Jesus embodied and proclaimed. This ultimate hope
is a judgment on our deficiencies
and a challenge to faithful service. God's goal of a just and reconciled world is not simply our final destiny but an agenda
for our earthly responsibilities. We are called to be a sign of the Reign of God, on earth as it is in heaven, to reflect the coming
consummation of God's new covenant of shalom to the fullest extent possible.
A new financial architecture
In her path-breaking book, Casino Capitalism,36 Susan Strange likens the Western financial
system to a vast casino. As in a casino,
"the world of high finance today offers the players a choice of games. Instead of roulette, blackjack, or poker, there is dealing
to be done - the foreign-exchange market and all its variations; or in bonds, government securities or shares. In all these markets
you may place bets on the future by dealing forward and by buying or selling options and all sorts of other recondite financial
inventions. Some of the players - banks especially - play with very large stakes. There are also many quite small operators. There
are tipsters, too, selling advice, and peddlers of systems to the gullible. And the croupiers in this global finance casino are
the big bankers and brokers. They play, as it were, "for the house.' It is they, in the long run, who make the best living."
She goes on to observe that the big difference between ordinary kinds of gambling and speculation in financial markets is that
one can choose not to gamble at roulette or poker, whereas everyone is affected by "casino capitalism." What goes on in the back
offices of banks and hedge funds "is apt to have sudden, unpredictable and unavoidable consequences for individual lives."
It is this volatility, this instability in financial markets that has given rise to recurring financial crises. They must be
tamed. In the wake of recent financial crises, people are beginning to look for ways to reform the international financial architecture.
Although it is difficult to move from general theological convictions to specific proposals, we offer the following suggestions
for consideration by Christians and other persons of good will.
Capital controls should be an integral part of national strategies to tame the financial system. They can be made an effective
and meaningful tool to protect and insulate the domestic economy from volatile capital flows and other negative external developments.
Regulatory and supervisory measures should supplement capital controls when appropriate. They should include regulation
of financial derivatives and hedge funds. Regulation is a necessary complement to domestic capital controls. Nations influenced
by hedge funds and their complex financial instruments should seek international cooperation, including the governments of host
countries, to regulate their practices.
A new international legal framework should be created, which provides for de facto sovereign bankruptcy. The existing international
system for dealing with insolvent governments is woefully inadequate. Provision must be made for automatic standstills, priority
lending, and planned reorganizations.
An international transactions tax (like the Tobin tax) should be designed and implemented to discourage short-term speculative
capital movements. It is neither "too idealistic" nor "too impractical." It would reduce short-term trading and strengthen the
defensibility of the exchange rate regime.
International cooperation should be sought to curb dubious activities of offshore financial centers. Strict international
regulation and supervision of offshore centers is essential to curb tax and regulatory evasions. They also are a primary conduit
for money laundering and various criminal activities.
The IMF's responsibilities as a lender-of-last-resort should be enhanced, expanding its authority and resources to make
possible quick action to avert financial crises. The IMF must have effective and swift mechanisms to increase the Fund's access
to official monies in times of crisis, including authority to borrow directly from financial markets under those circumstances.
A World Financial Authority based on the cross-border regulatory framework of the Bank for International Settlements should
be developed. It should provide the necessary regulatory framework within which the IMF or a successor organization can develop
as a lender-of-last-resort.
Of these recommendations, perhaps the most controversial is that more funds be given to the IMF. We noted above that much of
the criticism of the IMF is justified. We also acknowledged that the IMF is improving its policies. We hope that these improvements
will continue. Meanwhile, there is no other viable candidate to serve as lender-of-last-resort - an absolutely essential feature
of any new financial architecture.
The major reason some civil society institutions resist funding the IMF further is its history of misguided structural adjustment
policies, policies that are now widely recognized to have caused widespread suffering. We hope that recent changes will improve
this situation as well and enable the IMF to perform the important role we recommend for it.
Along with the World Bank, it is beginning to contextualize its performance criteria and conditionalities, taking much more seriously
the unique circumstances of particular economies. It is listening more and nitpicking less. To be sure, the IMF is not likely to
abandon its policy of making its loans conditional on the adoption by borrowing countries of mutually agreed economic policies.
Even so, there is considerable evidence that when it has had more resources on hand, conditionality has been correspondingly wiser
and less draconian.
The IMF now recognizes that it can leave more decisions to developing countries partly because these have better informed and
more sophisticated employees than was once the case. Certainly in Latin America and Asia and increasingly in Africa, country economic
teams are better qualified technically than the lower rung Ph.D.s from American and European universities to whom the IMF and World
Bank entrust their missions. Local economists can do financial programming and standard macroeconomic modeling as well as or better
than the people from Washington can; they also know how to do investment project analysis. To be sure, decisions about financial
and project plans must include input from many other elements of a society.
We can encourage the IMF (and World Bank) to reverse the typical procedure in setting conditions for multilateral loans. Instead
of waiting for it to specify the policies that must be followed to justify additional financing, country economic teams, in consultation
with other agencies of their government, should be allowed to propose economic programs to the IMF. Disagreements between Washington
staff assessments and the local teams could be resolved directly or by third-party arbitration. The scope of economic conditionality
could also be restricted, for example, just to a balance-of-payments target, while the country could pursue its own agenda regarding
inflation, income distribution, and growth.
What Christians can do
A primary part of the "principalities and powers" referred to in the Bible is composed of the political-economic institutions
and processes that govern how people relate economically to each other and to God's whole creation. The church has a stake in their
design. Yet many church members feel powerless to change basic political-economic reality. They think either that the economic conditions
of society result "naturally" from the forces of markets that are only marginally within the power of human control, or that economic
conditions result from powerful interests that are beyond the reach of ordinary citizens. Thus, there's nothing that can be done
about it, or there's nothing we can do about it.
On the contrary, Mobilization for the Human Family believes that the political economy is shaped by deliberate social policy
decisions; that conditions at any given time are the result of those decisions; that conditions can be changed by human decisions;
and that the will of a nation's and the world's citizens about what the commitments and purposes of the nation and the world should
be can be expressed in the political economy through the framework of democratic process provided in our national and transnational
polity. Accordingly, we offer below some suggestions for action that may be taken by individual Christians and by our churches and
their denominations to correct some correctable flaws of financial globalization.
Actions by individual Christian
Pray for persons working in governments, international organizations, institutions, and non-governmental organizations who
are trying to work toward a better world, including especially a world financial architecture that better assures fairness in
capital markets.
In the management of personal and family investments, seek fuller understanding of the uses to which the banks, companies,
mutual funds, and investment counselors are putting your money. Avoid speculative investments that are likely to be made without
regard to their consequences for others.
Reflect upon decisions about work and career choices that are consistent with a Christ-like commitment to economic justice
for all.
Organize Bible study in your local congregation, where possible together with people of other backgrounds and life-styles,
to learn and identify with God's continuing struggle to seek economic justice in the world.
Commit oneself to some voluntary organization that is trying to promote greater economic justice in the local and/or global
economy.
Become involved politically in your area or nation, seeking political and economic change in the direction of economic justice.
Actions by churches and denominations
Concern for economic justice must be fully reflected in the prayer life, worship, and educational programs and mission outreach
of all congregations.
Seek assistance from members who work for banks, brokerage houses, and mutual funds to help mould an educational program
that will assist members of the congregation to become more socially responsible investors.
Seek collaborative programs among clusters of congregations, perhaps with the aid of local Councils of Churches, to provide
educational opportunities where Christians and other faith groups can come to understand some of the complex economic issues
amidst which they live and work. Since virtually nothing is now available to explain the problems of financial speculation,
this paper could be used to assist study of this phenomenon.
Over and beyond educational programs, local churches - again perhaps best working together in the same neighborhood or town
- can enter into a deliberate dialogue or partnership with one or more voluntary bodies in the civic society, so as to put their
energies into the health of the wider society. Engagement with the International Forum on Globalization (l009 General Kennedy
Avenue #2, San Francisco, CA 94129) is a good way to explore the means of influencing the debate on the globalization of trade
and finance.
At the denominational level, churches should review their investment criteria to reassure themselves that social responsibility
is a primary goal of their financial management.
Also at the denominational level, agencies responsible for the formation of social witness policies need to monitor global
economic indicators on a continuing basis in order to assist its programmatic agencies to form effective and timely social witness
regarding the local and national consequences of the globalization of trade and finance.
Want to know more?
Globalization is a vast topic. For a general introduction, see Sarah Anderson and John Cavanagh, Field Guide to the Global Economy
(New York: New Press, 2000) and Thomas Friedman, The Lexus and the Olive Tree: Understanding Globalization (New York: Farrar Straus
Giroux, 1999). A classic introduction to the financial side of globalization is Susan Strange, Casino Capitalism, (New York: Mnchester
University Press, 1986). See also Kavaljit Singh, The Globalisation of Finance: A Citizen's Guide (London: Zed Books, 1999) and
John Eatwell and Lance Taylor, Global Finance at Risk: The Case for International Regulation (New York: The New Press, 2000). The
best introduction to the Tobin Tax is Mahbub ul Haq et al (eds), The Tobin Tax: Coping with Financial Volatility (New York: Oxford
University Press, 1996). For how church people might react, see Pamela Brubaker, Globalization at What Price? (Cleveland: Pilgrim
Press, 2001).
Questions For Discussion
How have the linkages and interconnections of international finance impacted your life? On balance, do you regard them as
advantages or disadvantages for a healthy Christian life?
The frequency and severity of recent financial crises have fueled calls for a radical redesign of the rules of global finance.
If you were the advisor to an international commission asked to design "A New International Financial Architecture," what would
you recommend?
Do you favor allowing sovereign nations to declare bankruptcy? What Christian traditions might be invoked to support or
deny such an action?
A growing number of civil society institutions oppose giving more money to the IMF. They point out that it is part of the
Washington Consensus, the application of whose policies have made societies adjuncts of the market. Yet this paper suggests
that the IMF needs more money. As a committed Christian, which view do you favor?
Is it too late to expect justice in a globalizing world? Since much of the direction the global economy has taken is irreversible,
how can a balance between market and society be negotiated? How might Christians play a role in those negotiations?
Up early today and lit the shop woodstove; just waiting for light to get on with my day which
always starts (after chores) with my dog and I going for a walk.
Ron, I do not disagree with your post or comments, with the exception of when population
will peak and the aspect/timing of social disruption?
On this morning wait for daylight I have been reading various blog sites with CNN ticking
over in the background. Maybe it is the speed of the news cycle and my being used to the
insanity of what is being reported, but today, after seeing the Trump tweets on Muslim
Violence (film clips), the so-called tax plan, sexual misconducts, the recent reports on KSA,
Yemen, Syria, and what is ramping up concerning North Korea, I think we are at a crux right
now. I think there will be a Market collapse and war; perhaps global in scale. Further to
that I don't see any desire or mechanism for defusing tensions or a way to recall the
situation.
I am 62 and was a kid during a recent/last big social reset. I had older sibs and parents
who moved us north to Canada in '68 because they had had enough. My WW2 veteran parents
proclaimed they had seen enough to be afraid, and sold out to start over and build new lives.
While I was thinking about it, and your post, I realized that in today's situation there are
no simple answers and not really any places to run to. It seems different because of the
population numbers and armaments, plus the willingness of people to pretend it's just
'tribal/crooked politics as usual'. Then, I thought about photographs and how a few
catapulted us into rapid change last century. Certainly, the haunted faces of the Dust Bowl
sparked a move towards reform. Images from the south and the stories of the KKK perhaps Rosa
Parks herself helped galvanize the Civil Rights Movement. For me, the image of the young lady
holding the dead student at Kent State, (her anguish), the burning Monk and young girl coated
with napalm coupled with the lie about the Gulf of Tonkin incident pushed me into cynicism;
so much that I was not surprised about the non-existent WMD of Iraq.
Perhaps it won't be an image, or story that we look back to as a turning point. Maybe it
will be a tweet. Maybe it will be the Market collapse or a premptive attack on North Korea
that sets everything in motion. I just think we are loaded and tamped down like a pipe bomb
ready to blow.
I do not think we will continue to grow in population until 2050. I think it could start
to unravel pretty fast and any day. I don't see any step back from war(s) in either the ME,
or Korea.
From Wiki: (just one event that pales alongside today's triggers)
Kent State
"Just five days after the shootings, 100,000 people demonstrated in Washington, D.C.,
against the war and the killing of unarmed student protesters. Ray Price, Nixon's chief
speechwriter from 1969 to 1974, recalled the Washington demonstrations saying, "The city was
an armed camp. The mobs were smashing windows, slashing tires, dragging parked cars into
intersections, even throwing bedsprings off overpasses into the traffic down below. This was
the quote, student protest. That's not student protest, that's civil war."[10] Not only was
Nixon taken to Camp David for two days for his own protection, but Charles Colson (Counsel to
President Nixon from 1969 to 1973) stated that the military was called up to protect the
administration from the angry students; he recalled that "The 82nd Airborne was in the
basement of the executive office building, so I went down just to talk to some of the guys
and walk among them, and they're lying on the floor leaning on their packs and their helmets
and their cartridge belts and their rifles cocked and you're thinking, 'This can't be the
United States of America. This is not the greatest free democracy in the world. This is a
nation at war with itself.'"
I apologize if this seems North American centric; and in blinders. I wish to reiterate
that our population numbers, plus increasing divide and disparity, proliferation of weapons
and intolerance, coupled with environmental degradation and Climate Change, makes this much
much worse. It's a gun waiting for a trigger, imho.
Yes, things are pretty bad. But things were bad during the Kent State/Nixon era. Yet we
survived.
It has been my experience, following this biosphere destruction for many years now, that
people who see and understand the destruction, almost always expect things to fall apart real
soon. They never do.
I once spent several months as a stockbroker. One thing I learned during that period was a
truth about insider traders. That is traders who trade the stock of the company they work for.
They see things happening inside their company and expect it to cause great trouble or great
profit. They are almost always right and almost always way too early with their predictions.
Things just never seem to happen as fast as they expected.
We, you and I and a few others, are insiders to this problem that I have described in my
above post. We know something terrible is going to happen. But most of us expect it to happen
way before it actually will happen.
An example is "The Population Bomb" by Paul Ehrlich. I think he was spot on, but things just
did not happen as fast as he expected. I hope to avoid his mistake.
Yep, Ron, and we need to be careful about saying "this time is different". Perhaps we need a
list of things that really are different this time.
One that should be obvious to anyone paying attention is that, in the late 60s, US debt to
GDP was in the mid 30% range. It is now over 100% according to a number of sources. As Gail T.
is wont to say, unserviceable debt will likely be the trigger that results in a cascading
failure of financial systems, and everything else is likely to follow. In short, our financial
house of cards has grown three-fold in 50 years, as the global reserve currency is tagged to
nothing.
I think the debt problem is a little overblown. Now people use debt differently sometimes
implying "total debt" and sometimes "public debt" and sometimes "central government debt".
Which one are you talking about? I don't read Tverberg's stuff. Looking at your numbers and the
link below
They have been over 100% debt to GDP since 1999 and have been around 200% since 2014.
If Japan has collapsed, I missed it. Note that I agree with the idea that when the US
economy is doing well (which at present is the case), that paying down debt is a better idea
than reducing taxes. I would raise taxes if anything ( a carbon tax would be ideal) and reduce
the deficit to less than zero and pay down the debt.
Or just balance the budget and let economic growth reduce the debt to GDP ratio.
As for Japan, most of what they owe is to themselves while they own a lot of that US debt,
above. Japan also uses the carry trade to stay afloat.
I only posted this as being one of the things that is different about our situation ~50
years ago. People can make of it what they will. I personally think it is significant since the
world runs on credit. No credit, no growth.
Hard to imagine no credit. Also in the 1960s there was less borrowing by the government (so
less credit) and higher growth rates (at least in the US) than today. In the old days there was
concern the government would "crowd out" private debt, as if there was some fixed amount of
debt the system could sustain and the system always remained at this maximum debt level.
Instead it seems the system had room for higher levels of debt as government debt as
increased, but there is little evidence of "crowding out". There may be some maximum debt level
that an economy can sustain and Japan may be there. Also note that 50 years ago debt was at
fairly low levels, but in 1946 Debt to GDP was 118% of GDP, rapid economic growth from 1946 to
1974 reduced this debt to GDP to 31%, by 1992 it was at 61%, and in 2016 it was 105%.
Strange that the Republicans want to raise the debt higher by cutting taxes, this made sense
when the economy was doing poorly during the Obama years and the aftermath of the GFC.
I agree debt could become a problem and would be worried if central government debt to GDP
was 200% (as in Japan).
I also don't buy into the unfunded liabilities argument, laws change and governments don't
always fulfill their promises, that is just a fact of life.
Personally I believe Tverberg is a person who has discovered a niche she can exploit and is
making a living out of it. I had the pleasure of seeing her make her canned presentation at a
conference once, where all the presentations were repeated several times over for three days so
the entire attending crowd could see them all.
If you ask her a real question, she seizes up like a deer in headlights. She knows some
elementary level stuff that is worth some thought, in the case of people who know little or
nothing about the overall economy and environment.
Her answer in the case of a real question is the same answer you get from a politician who
doesn't WANT to answer. She just pretends you asked a DIFFERENT question, and provides a stock
answer to THAT question.
She doesn't have anything to say worth listening to , in terms of the level of understanding
of the contributing members of this forum.
UK government debt to GDP was well over 400% for decades running; it was never a problem. Don't
worry about it. Government debt is not really debt, it's actually money.
Good point on the rate. I remember my grade 11 Social Studies teacher talking to me after class
in 1972. One of our class texts was The Population Bomb. He expected to see, in his lifetime, a
collapse of sorts. When I asked him to expand further he described small scale gardens/farms of
no more the 2 acres. The primary machinery used would be walk-behind tractors.
I smiled at the memory when I bought my BCS walk-behind ten years ago. I smile every spring
when I till the gardens. I still think he was right, just off on the timing (just like I was
when I got out of stocks several years ago and put my money in term deposits.)
The older I get, the less I understand. I take comfort in knowing my Dad wouldn't get it,
either.
I thought Ehrlich's book "The Dominant Animal" was fairly well measured, and generally in line
with the post above (I haven't read the population bomb).
"... By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She now spends much of her time in
Asia and is currently working on a book about textile artisans. ..."
"... The Unbanking of America: How the New Middle Class Survives ..."
Posted on
December 4, 2017 by Jerri-Lynn ScofieldBy Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She now spends much of her time in Asia
and is currently working on a book about textile artisans.
Three Democrats and three Republicans have co-sponsored a resolution, under the Congressional Review Act (CRA), to scuttle the
Consumer Financial Protection Bureau's payday lending rule.
CRA's procedures to overturn regulations had been invoked, successfully, only once before Trump became president. Congressional
Republicans and Trump have used CRA procedures multiple times to kill regulations (as I've previously discussed (see
here ,
here ,
here and here ). Not
only does CRA provide expedited procedures to overturn regulations, but once it's used to kill a regulation, the agency that promulgated
the rule is prevented from revisiting the issue unless and until Congress provides new statutory authority to do so.
Payday Lending
As I wrote in an extended October post,
CFPB Issues Payday Lending Rule: Will it Hold, as the Empire Will Strike Back, payday lending is an especially sleazy part of
the finance sewer, in which private equity swamp creatures, among others, operate. The industry is huge, according to this
New York Times report I quoted
in my October post, and it preys on the poorest, most financially-stressed Americans:
The payday-lending industry is vast. There are now more payday loan stores in the United States than there are McDonald's restaurants.
The operators of those stores make around $46 billion a year in loans, collecting $7 billion in fees. Some 12 million people,
many of whom lack other access to credit, take out the short-term loans each year, researchers estimate.
The CFPB's payday lending rule attempted to shut down this area of lucrative lending– where effective interest rates can spike
to hundreds of points per annum, including fees (I refer interested readers to my October post, cited above, which discusses at greater
length how sleazy this industry is, and also links to the rule; see also this
CFPB fact sheet
and press
release .)
Tactically, as with the ban on mandatory arbitration clauses in consumer financial contracts– an issue I discussed further in
RIP, Mandatory Arbitration
Ban , (and in previous posts referenced therein), the CFPB under director Richard Cordray made a major tactical mistake in not
completing rule-making sufficiently before the change of power to a new administration- 60 "session days" of Congress, thus making
these two rules subject to the CRA.
The House Financial Services Committee
press release lauding
introduction of CRA resolution to overturn the payday lending rule is a classic of its type, so permit me to quote from it at length:
These short-term, small-dollar loans are already regulated by all 50 states, the District of Columbia and Native American tribes.
The CFPB's rule would mark the first time the federal government has gotten involved in the regulation of these loans.
.
House Financial Services Committee Chairman Jeb Hensarling (R-TX), a supporter of the bipartisan effort, said the CFPB's rule
is an example of how "unelected, unaccountable government bureaucracy hurts working people."
"Once again we see powerful Washington elites using the guise of 'consumer protection' to actually harm consumers and make
life harder for lower and moderate income Americans who may need a short-term loan to keep their utilities from being cut off
or to keep their car on the road so they can get to work," he said. "Americans should be able to choose the checking account they
want, the mortgage they want and the short-term loan they want and no unelected Washington bureaucrat should be able to take that
away from them."
[Rep Dennis Ross, a Florida Republican House co-sponsor]. said, "More than 1.2 million Floridians per year rely on Florida's
carefully regulated small-dollar lending industry to make ends meet. The CFPB's small dollar lending rule isn't reasonable regulation
-- it's a de facto ban on what these Floridians need. I and my colleagues in Congress cannot stand by while an unaccountable federal
agency deprives our constituents of a lifeline in times of need, all while usurping state authority. Today, we are taking bipartisan
action to stop this harmful bureaucratic overreach dead in its tracks."
"The rule would leave millions of Americans in a real bind at exactly the time need a fast loan to cover an urgent expense,"
said Daniel Press, a policy analyst with the Competitive Enterprise Institute, in a statement after the bill's introduction.
Consumer advocates think otherwise (also from CNBC):
"Payday lenders put cash-strapped Americans in a crippling cycle of 300 percent-interest loan debt," Yana Miles, senior legislative
counsel at the Center for Responsible Lending, said in a statement.
Prospects Under CRA
When I wrote about this topic in October, much commentary assumed that prospects for CRA overturn were weak. I emphasized instead
the tactical error of failing to insulate the rule from CRA, which could have been done if the CFPB had pushed the rule through well
before Trump took office:
If the payday rule had been promulgated in a timely manner during the previous administration it would not have been as vulnerable
to a CRA challenge as it is now. Even if Republicans had then passed a CRA resolution of disapproval, a presidential veto would
have stymied that. Trump is an enthusiastic proponent of deregulation, who has happily embraced the CRA– a procedure only used
once before he became president to roll back a rule.
Now, the Equifax hack may have changed the political dynamics here and made it more difficult for Congressional Republicans–
and finance-friendly Democratic fellow travellers– to use CRA procedures to overturn the payday lending rule.
The New York Times certainly seems to think prospects for a CRA challenge remote:
The odds of reversal are "very low," said Isaac Boltansky, the director of policy research at Compass Point Research & Trading.
"There is already C.R.A. fatigue on the Hill," Mr. Boltansky said, using an acronymn for the act, "and moderate Republicans
are hesitant to be painted as anti-consumer.
I'm not so sure I would take either side of that bet. [Jerri-Lynn here: my subsequent emphasis.]
A more telling element than CRA-fatigue in my assessment of the rule's survival prospects was my judgment that Democrats wouldn't
muster to defend the payday lending industry– although that assumption has not fully held, as this recent
American Banker account makes clear:
After the
payday rule was finalized in October , it was widely expected that Republicans would attempt to overturn it. It's notable,
though, that the effort has attracted bipartisan support in the House.
.
Passage in the Senate, however, may be a much heavier lift. The chamber's
vote to overturn the arbitration rule in late October came down to the wire, forcing Republicans to call in Vice President
Mike Pence to cast the tie-breaking vote.
Bottom Line
I continue to think that this rule will survive– as the payday lending industry cannot count on a full court press lobbying effort
by financial services interests. Yet as I wrote in October, I still hesitate to take either side of the bet on this issue.
I think this whole article is totally disingenuous. There is a serious need for many Americans to have access to small amount,
short term loans. While, these lenders may appear predatory, they do serve a large sector of society.
Maybe you need to read: The Unbanking of America: How the New Middle Class Survives by
Lisa Servon . It might be worth the read.
Where's the Post Office Bank when you need it. This overturning of the rule is just an effort to stop the Post Office Bank
from gaining traction as the alternative non-predatory source of small loans to the people. Most pay day lender companies are
owned by large financial players.
I agree that's a far better approach and indeed, I discussed the Post Office bank in my October post– which is linked to in
today's post. Permit me to quote from my earlier post:
The payday lending industry preys on the poorest financial consumers. One factor that has allowed it to flourish is current
banking system's inability to provide access to basic financial services to a shocking number of Americans. Approximately 38
million households are un or underbanked– roughly 28% of the population.
Now, a sane and humane political system would long ago have responded with direct measures to address that core problem,
such as a Post Office Bank (which Yves previously discussed in this post,
Mirabile Dictu! Post Office Bank Concept Gets Big Boost and which have long existed in other countries.)
Regular readers are well aware of who benefits from the current US system, and why the lack of institutions that cater to
the basic needs of financial consumers rather than focusing on extracting their pound(s) of flesh is not a bug, but a feature.
So, instead, the United States has a wide-ranging payday lending system. Which charges borrowers up to 400% interest rates
for short-term loans, many of which are rolled over so that the borrower becomes a prisoner of the debt incurred.
With phrasing like "unbanked" or "underbanked", I worry that you've bought into the banking-industry framing of this issue,
which I'm sure is not your intent.
Ordinary people should not need any bank (not even a government or post office bank) for everyday life, with the possible exception
of mortgages. De-financialization of the medium of exchange, and basic payments, is something the public should be fighting for.
I would consider myself an ordinary person and I pay in cash when purchasing day to day items the vast majority of the time
and yet I'd still prefer to deposit my money in a bank rather than hiding it in my mattress for any number of good reasons.
Banks aren't the problem – their predatory executives are.
But there are, or at least ought to be, safe and secure ways to store money other than by lending it to banks or stuffing it
into mattresses. Or carrying wads of cash.
For instance, a debit card (or possibly cell phone) with a secure identity / password can already act as a cashless wallet.
The digital cash could be stored directly on the device, and accounted for through something similar to TreasuryDirect, without
any intermediaries. But this would require the Federal Government to get serious about having a modern Digital Dollar of some
kind (not bitcoin, shudder)
Even better would be State Banks. Every state should have one. I believe the State Bank of North Dakota made money in 2008.
While the TBTF Banks came hat in hand to our Reps. Of course OUR Reps handed them a blank check and told them to "Make it go Away".
However Post Office Banks would be GREAT!!
This is the boilerplate argument that always gets brought up by payday loan defenders, and there is a good bit of truth to
it. However, what you are not mentioning is that there are already far superior options available to pretty much any person who
needs a small, short term loan. That solution is your friendly neighborhood Credit Union, most of which offer very low interest
lines of overdraft coverage. I don't mind saying that it has saved my heiny on more than one occasion. Pay check a little late
in arriving? No problem, transfer $200 from your overdraft account into your checking account on-line and you're good to go. Pay
it back at your convenience, also on-line, at 7% APR.
Payday lenders are legal loansharks. The problems with their predatory lending model and the damage it does to low-income people
are well documented. Simply pointing out that there is a reason that people end up at payday lenders is not a valid justification
for the business practices of those lenders, especially when there are much better alternatives readily available.
Very true! There are several web sites that point out how the fees associated with payday loans raise the effective annual
percentage rate into the stratosphere, ranging from 300% to over 600%. Here's one:
One frustration that I have with legislation in general, and finance legislation in particular, is that it does not tell the
truth, the whole truth and nothing but the truth.
In my Panglossian world, I envision a financial services bill that lays out the following:
Define the problem
Unserviced people: X percent( for discussion, say 10% to make the math easy) of people are un-serviced (or under-, or rapaciously-serviced)
by conventional financial companies, whether banks, credit unions or other, whatever other is conventionally.
Unserviced and don't want: Y percent of that X percent (say, 50% of 10%, so 5%) doesn't want services.
Unserviced and want: 1-Y percent of that X percent (say, 50% of 10%, so 5%) wants services but can not get them. That could be
due to various factors, ranging from bad credit (how defined?, say FICO < 600?) to geographic remoteness (no branches within miles,
no internet, precious little slow mail service, whatever).
Within that deemed unserved 5% of the population, what are the costs to serve and what are the alternatives?
What would an honest service provider need to provide service, accounting for credit risks and the like, and still make a profit
sufficient to induce investment?
If I knew how to make and add a nice graphic, I'd include a waterfall chart here to show the costs and components of the interest
and fees paid in regular and default mode. Sorry, please bear with me as I make up numbers.
Default mode costs:
Interest at 275%
Plus: Fees at 25%
Less: cost of funds 20%
Less: personnel, overhead, etc 5%
Less: added default cost not in personnel etc line, say 25%
Pre-tax profit: 250%
In that little example, who couldn't make money at those rates?
Extending the notion of APR and Truth-In-Lending to include payday lenders and anyone else without a brick-and-mortar branch
who wants to do business in the US, how about mandating some type of honest waterfall chart as dreamt of above?
Then cross-reference and publicize the voting on finance legislation with the campaign contributions from payday people and
their ilk, and layer in the borrower costs and credit scores and other metrics in those Congressional districts and zip+4 codes
and census tracts and whatever other level of granularity will help provide any amount of disinfecting sunlight to help see the
scattering cockroaches.
The problem I suspect is that your "friendly neighborhood credit union" is actually rarely anywhere near the neighborhoods
where people who need these kind of loans live.
They don't have cars and mass transit is non-existent or so slow they couldn't get to the Credit Union during business hours,
and back again, anyway. That's the problem with expecting Private Enterprise to be a solution for people at the bottom. They don't
set up shop where those people live, or the ones that do are not exactly do-gooders.
I just checked and a lot of credit unions let you apply for a loan online, (earlier you can set up membership online). So the
issue of transport and time is lessened assuming folks have some form of net access.
One might ask why there are millions of people reduced to having to get ripped off by payday and auto-title lenders, to somehow
survive from week to week. Maybe because people can't make a living wage? Can't save any money, however prudent and abstemious
they may be? Because inter-citizen cruelty and Calvinism are so very strong a force in this rump of an Empire?
Some of the comments here seem to build on the baseline assumption that's part of the liberal-neoliberal mantra, "You get what's
coming to you (or the pittance we can't quite squeeze out of you yet)".
diptherio, I am guessing you may mean that there are models of better alternatives readily available, like paying
a living wage, a social safety net for the worst off, a postal bank, national health care, stuff like that. I don't see that there
are any alternatives actually available to most real people "on the ground."
You are, of course, correct in that the underlying problem is that so many people are forced to live on so little that they
need payday loans in the first place. Thanks for pointing that out.
My point is simply that in the short-term, as a matter of practicality for those of us who don't always make it until payday
before running out of money, a CU overdraft account is a very good option.
This is a far superior option and thank you for bringing it up. The only problem is most banks and credit unions will not tell
you it exists because they make a lot more money if you just keep bouncing checks.
I only learned about it when I worked for WAMU. We were tasked by management with promoting various new products to customers
as a condition of being paid a monthly bonus which was the only thing that made the job pay enough to live on. Funny, they never
asked us to promote the overdraft line of credit (aka an ODLOC), ever. I do remember one of my managers tell me that circa 2000
or so, WAMUs operating costs for the entire company for the entire year were offset just by the fees they collected off of bounced
checks etc.
The fees or interest you pay for using an ODLOC are a small fraction of what you'd pay for bouncing just one check. IIRC, if
I overdrew by $200 or so and paid it back on my next payday, the interest was generally less than $1. My local credit union has
since added a $5 fee for accessing the ODLOC on top of the interest, but it's still much less than a bounced check fee or interest
on a payday loan. I believe that depending on your credit history, you can get an ODLOC of up to $2500 or so which pretty much
negates the need for any payday loans.
A friend of mine was evicted from her apartment because of a payday loan. She failed to pay it off in full quick enough and
it spiraled out of control tripling in a very short time. I really fail to see how usury is beneficial to society.
Frank Pistone is part of the dying breed known as the American Loan Shark. Not so long ago, the loan shark flourished, offering
short-term, high-interest loans to desperate people with nowhere else to turn. Today, however, Pistone and countless others
like him are being squeezed out by the major credit-card companies, which can offer money to the down-and-out at lower rates
of interest and without the threat of bodily harm
I read Servon's book. It is not a brief on behalf of the payday loan industry. She worked at a couple of payday lenders and
explains how they serve the communities they're in, but a few things need to be noted:
The business she was most sympathetic with was a small, local one with only a couple of storefronts, in an east coast inner
city. The owner and his help knew the customer base, often by name. Much of her sympathy came from her respect for the women who
were dishing out the loans at the windows, not the owners and not the business model. This local joint operated like the most
benign of old time pawnbroker/loansharking operation from the early part of the last century.
Most "Cash America" storefront shops (on shabby, midcentury shopping strips in inner ring scuburbs across the US) aren't this
decent. They aren't "part of a community" in any sense. And the rates are usurious any way, for all of them.
Thank you to Ms. Scofield for continuing to cover this and related businesses. The upper, cleaner part of our finance industry
derives more filthy lucre from these kinds of loan shops than they ever want you to know (sub-prime lending shops, title loans
shops . there are a lot of modalities for fleecing the poor and the near-poor nowadays).
The NC staff must be pleased that it seems like so many subtle apologists for the looters, predators, "intelligence community,"
and so forth, appear to be turning up here early in the opening of new site posts. I'm guessing the Elite are not exactly quaking
in fear that NC's reporting will catalyze some change that might sweep the political economy in the direction of what the mopery
would categorize as "fairness," but still
Raised the dollar definition of middle class and declared a 'new middle class' or could it be 'new middle class' is actually
referring to the 'new middle poor'. The former middle class is desperately trying to avoid a plunge into the pits of the 'poor
poor'. Payday Loan predators are greasing the handrails.
"Where will the money-changers change money if not in the Holy Temple? Aren't we starving the priests of much-needed revenue?
This Jesus guy is totally disingenuous."
In good neo liberal fashion that Jesus dude got exactly what he deserved. The effrontry of that guy to chase those hard working
money lenders out of the temple square. Got exactly what was coming to him.
H.J.Res.122 – Providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted
by the Bureau of Consumer Financial Protection relating to "Payday, Vehicle Title, and Certain High-Cost Installment Loans".
December 1, 2017
Sponsor Rep. Ross, Dennis A. [R-FL-15] (Introduced 12/01/2017)
Rep. Hastings, Alcee L. [D-FL-20]
Rep. Graves, Tom [R-GA-14]
Rep. Cuellar, Henry [D-TX-28]
Rep. Stivers, Steve [R-OH-15]
Rep. Peterson, Collin C. [D-MN-7]
Ahhh ..look at this list. TWO Florida lawbreakers introducing this banker bill. And one from Minnesota. Y'all know that Jacksonville,
FL and St. Paul, MN are the two places where the forgeries continue to be provided to the financial crooks? So, it goes to figure
that the lawbreakers are attempting to protect the financial crooks committing forgery in their prospective states! How appro.
If any of these House critters are "representing" you, time for lots of calls to them.
And thanks, SD, for listing them. I always wonder why our vaunted free press so seldom lists the sponsors of legislation when
it's reported on . Hhmm .
m .
I have mixed feelings about this specific issue.
The larger issue of a grossly skewed economic system is what needs to be fixed.
There will always be people that lack common sense and brains regarding money. There will always be people that will take advantage
of that.
I don't know how or why you would try and legislate that away.
We need to move in the direction of solving the biggest problems and not get wrapped up in the little problems.
The numbers above sound horrendous, but 7 billion in profit on 46 billion loaned is 14% return. Credit card companies are worse.
7 billion in profit off of 12 million people is $600 per person. Alot for poor folks I recognize, but not necessarily life shattering
for all.
The "system" loves to wrangle around with issues like this (trivial in my mind) so the handful of big ones go unattended.
some have apparently not felt it necessary to bail out family members for aggressive, egregious and immediate interest rates
and escalations charged by these scammers
but there certainly appears concerted effort by (likely) shills to perpetuate scams (and to discredit Consumer Financial Protection
Agency and Liz Warren )
I think there's an error in the original article, where it says:
CRA's procedures to overturn legislation had been invoked, successfully, only once before Trump became president. Congressional
Republicans and Trump have used CRA procedures multiple times to kill regulations (emphasis added)
My understanding is that CRA gives Congress the power to overturn executive branch regulations , not legislation
(which Congress already can overturn anyway). Is that incorrect?
P.S. It's sad that it might not even matter. Nowadays the public can't tell the difference between regulations (written by
unaccountable, unelected officials who take the revolving door back to working at the firms they regulated) and legislation (written
by unaccountable, only notionally elected politicians who get paid off in various ways by lobbyists for the same firms)
You're correct– fixed it! Slip of the fingers there that I didn't catch when I proofread the post. As the rest of the paragraph
makes clear, CRA procedures are used to overturn regulations.
Thanks for reading my work so carefully and drawing the error to my attention.
Finally bipartisan!
Trump loves it
Obomber woulda loved it
She who cannot be named woulda loved it, too.
Time for them all to get over that little spat she did it before trump should appoint her to something useful I bet she'd love
secdef
Where is the lovely Debbie Wasserman schultz in all of this? She has not surprisingly been a leading cheerleader for these
pay day lender sharks. but hey, what the hey, the lobby money is good!
This was written a decade ago. neoliberalism is a stable social system but nothing changed, although fault lines of the system
became more evident.
Notable quotes:
"... "The prototype of the successful man in modern society is not the scientist, the inventor, the scholar. It is the financier, the gambler and those with social pull. The others share [in the winnings] sometimes, it is true, but their share is modest compared with the oligarchs and tycoons; and they don't usually keep their share for long. They are no match for the commercial prowlers." ..."
"... Mr Monks contrasted businesses' healthy profitability with the ruthless way some have treated their staff recently, whether through large-scale redundancies or the constant threat that jobs may be sent off-shore or outsourced. While median wages have stagnated, record executive salaries are legion. ..."
"... he was appalled by the increasingly "shameless", short-termist behaviour of overpaid corporate executives. "More and more they resemble the Bourbons - and they should be aware of what eventually happened to the Bourbons." ..."
"... "All this is too important to be left to the practitioners who have a vested interest in obscuring what they do from the rest of us," he said. And, with bonus season fast approaching, he took one final, sweeping aim at the high rollers of "casino capitalism". Their actions are "dangerous to economic stability, traditional industry and jobs", he said. "I would like to see the City pages of the press more challenging and less respectful on these matters . . . Our future - the world's future - is too important to place in the hands of the new capitalists." ..."
"... Half a century ago, Nye Bevan expressed a similar concern. In In Place of Fear he wrote: "There is a sense of injustice in modern society, and this induces a feeling of instability even in normal circumstances. The rewards are not in keeping with social worth, and the consciousness of this, both among the successful and the unsuccessful, will simmer and bubble, blowing up into geysers of political and social disturbance in times of economic stress." ..."
"The prototype of the successful man in modern society is not the scientist, the inventor, the scholar. It is the financier, the
gambler and those with social pull. The others share [in the winnings] sometimes, it is true, but their share is modest compared
with the oligarchs and tycoons; and they don't usually keep their share for long. They are no match for the commercial prowlers."
A snap-shot of London's Mayfair district, home to the burgeoning hedge-fund phenomenon, in November 2006? Actually, no. The above
words were written in 1952 by the Labour politician Aneurin Bevan in his book In Place of Fear. Bevan had a gift - his most
passionate supporters would say a genius - for exposing the truth of a situation in language that could be both scintillating and
pungent.
Fifty years ago, he criticised the prime minister of the day, Sir Anthony Eden, for his reckless actions during the Suez crisis.
"[He] has been pretending that he is now invading Egypt in order to strengthen the United Nations," Bevan said in a famous speech
in Trafalgar Square. "Every burglar of course could say the same thing: he could argue that he was entering the house in order to
train the police. So, if Sir Anthony Eden is sincere in what he is saying, and he may be . . . then he is too stupid to be a prime
minister!" Here was political rhetoric with a touch of prophesy about it.
It was the enduring appeal of speeches such as these that helped draw a good crowd to the fifth annual Bevan memorial lecture
in London last week. The lecture was to be given by John Monks, formerly general secretary of the British Trades Union Congress,
now the Brussels-based leader of the European trade union confederation.
No one in the audience would have been expecting Bevanite rhetorical fireworks from Mr Monks. That has never been his style. Between
1993 and 2003, he led the British trade union movement with modesty and distinction. He was the moderate's moderate: avoiding confrontation
wherever possible and advocating partnership at work between management and employees. Business leaders were happy to do business
with him.
They would not have found this lecture so easy to deal with. Confronted by today's turbo-charged capitalism, Mr Monks cast off
his former moderation. He even seemed to be on the verge of recanting his commitment to the partnership model. "Partnership with
who?" he asked. There has been, he said, a "disintegration of the social nexus between worker and employer - a culture containing
broad social rights and obligations. The new capitalism wants none of it."
Mr Monks contrasted businesses' healthy profitability with the ruthless way some have treated their staff recently, whether through
large-scale redundancies or the constant threat that jobs may be sent off-shore or outsourced. While median wages have stagnated,
record executive salaries are legion.
He admitted that he had possibly been a bit naive in the past. "I did not fully appreciate what was happening on the other side
of the table," Mr Monks said. While he sympathised with business leaders for the relentless pressure they find themselves under -
"It cannot be easy running a firm . . . when you are up for sale every day and every night of every year" - he was appalled by the
increasingly "shameless", short-termist behaviour of overpaid corporate executives. "More and more they resemble the Bourbons
- and they should be aware of what eventually happened to the Bourbons."
For someone like me, who has sat through 10 years of reasonableness from John Monks, this speech was remarkable, devastating stuff.
Maybe there is something in the Brussels water. Perhaps the ghost of Nye Bevan was speaking through him. Or was it just anxiety over
the career choice of his daughter's boyfriend? He is now working for - you guessed it - a hedge fund. Whatever its cause, a challenge
was being thrown down.
"All this is too important to be left to the practitioners who have a vested interest in obscuring what they do from the rest
of us," he said. And, with bonus season fast approaching, he took one final, sweeping aim at the high rollers of "casino capitalism".
Their actions are "dangerous to economic stability, traditional industry and jobs", he said. "I would like to see the City pages
of the press more challenging and less respectful on these matters . . . Our future - the world's future - is too important
to place in the hands of the new capitalists."
Will corporate leaders - those that have read this far anyway - simply shrug their shoulders and get back to their slashing and
burning ways? Is Mr Monks merely offering a wholly predictable, knee-jerk, lefty rant? I do not think so. This general secretary
just does not do lefty rants. So business people should take note. When the John Monkses of this world say enough is enough, that
the capitalist system itself is sick, you can be sure that elsewhere in the world there is deep-seated, lingering resentment and
unhappiness.
Half a century ago, Nye Bevan expressed a similar concern. In In Place of Fear he wrote: "There is a sense of injustice
in modern society, and this induces a feeling of instability even in normal circumstances. The rewards are not in keeping
with social worth, and the consciousness of this, both among the successful and the unsuccessful, will simmer and bubble, blowing
up into geysers of political and social disturbance in times of economic stress."
Reading these words, you can see why so many people were prepared to come out on a dark Tuesday night...
Susan Strange, who died just after the publication of her latest book, was one of the most compelling academic advocates
of the view that the global casino is out of control.
Notable quotes:
"... Susan Strange, who died just after the publication of her latest book, was one of the most compelling academic advocates of the view that the global casino is out of control. Although she is not a household name, she played an important role in developing the intellectual framework to support the casino thesis. Her Casino Capitalism (1986) is a Keynesian account of the damage inflicted on the world as a result of financial deregulation which was taken up by many better known writers such as William Greider in the US and Will Hutton in Britain. ..."
"... Mad Money, the sequel to Casino Capitalism, takes into account the impact of information technology and the rise of financial crime. It also places new emphasis on the role of international institutions. For example, she backs George Soros's plan for an international credit insurance corporation as a complement to the IMF. ..."
The dominant image of the financial markets is that of a giant casino. Brash young men in red braces, driven by insatiable greed,
gamble with huge sums every day. When the bets go wrong the innocent suffer. Reckless financial markets pose an immediate threat
to the future prosperity of humanity.
Susan Strange, who died just after the publication of her latest book, was one of the most compelling academic advocates
of the view that the global casino is out of control. Although she is not a household name, she played an important role
in developing the intellectual framework to support the casino thesis. Her Casino Capitalism (1986) is a Keynesian account of the
damage inflicted on the world as a result of financial deregulation which was taken up by many better known writers such as William
Greider in the US and Will Hutton in Britain.
With the onset of the Asian financial crisis Strange's account of financial markets has become almost mainstream. Her ideas inform
many of the discussions about a "new international financial architecture." Economists who would once have scorned her views
now agree with her that deregulation has gone too far and that new forms of regulation are needed.
The British government has floated the idea of a world financial authority to regulate global finance.
The IMF, once a bastion of
free market economics, has conceded that capital controls may be necessary under some circumstances.
Mad Money, the sequel to Casino Capitalism, takes into account the impact of information technology and the rise of financial
crime. It also places new emphasis on the role of international institutions. For example, she backs George Soros's plan for an
international credit insurance corporation as a complement to the IMF.
"... Barbarians at the Gate: The Fall of RJR Nabisco ..."
"... The Wall Street Journal ..."
"... The triumph of gossip over substance is manifest in many other ways. Wall Street's deft manipulation of the business press is barely touched upon, and the laissez-faire ..."
"... Fulminations about the socially corrosive effects of greed aside, the buyout phenomenon may represent one of the biggest changes in the way American business is conducted since the rise of the public corporation, nothing less than a transformation of managerial into financial capitalism. The ferocious market for corporate control that emerged during the 1980s has few parallels in business history, but there are two: the trusts that formed early in this century and the conglomerate mania that swept corporate America during the 1960s. Both waves resulted in large social and economic costs, and there is little assurance that the corporate infatuation with debt will not exact a similarly heavy toll. ..."
"... the high levels of debt associated with buyouts and other forms of corporate restructuring create fragility in business structures and vulnerability to economic cycles ..."
"... Germany and Japan incur higher levels of debt for expansion and investment, whereas equivalent American indebtedness is linked to the recent market for corporate control. That creates a brittle structure, one that threatens to turn the U.S. government into something of an ultimate guarantor if and when things do fall about. It is too easy to construct a scenario in which corporate indebtedness forces the federal government into the business of business. The savings-and-loan bailout is a painfully obvious harbinger of such a development. ..."
"... The many ramifications of the buyout mania deserve thoughtful treatment. Basic issues of corporate governance and accountability ought to be openly debated and resolved if the American economy is to deliver the maximum benefit to society and not just unconscionable rewards to a handful of bankers, all out of proportion to their social productivity. It is disappointing, but a sign of the times, that the best book about the deal of deals fails to educate as well as it entertains. ..."
Inside Casino Capitalism Barbarians at the Gate: The Fall of RJR Nabisco
By Bryan Burrough and John Helyar
Harper & Row. 528 pp. $22.95
In 1898, Adolphus Green, chairman of the National Biscuit Company, found himself faced with the task of choosing a trademark for
his newly formed baking concern. Green was a progressive businessman. He refused to employ child labor, even though it was then
a common practice, and he offered his bakery employees the option to buy stock at a discount. Green therefore thought that his trademark
should symbolize Nabisco's fundamental business values, "not merely to make dividends for the stockholders of his company, but to
enhance the general prosperity and the moral sentiment of the United States." Eventually he decided that a cross with two bars and
an oval – a medieval symbol representing the triumph of the moral and spiritual over the base and material – should grace the package
of every Nabisco product.
If they had wracked their brains for months, Bryan Burrough and John Helyar could not have come up with
a more ironic metaphor for their book. The fall of Nabisco, and its corporate partner R.J. Reynolds, is nothing less than the exact
opposite of Green's business credo, a compelling tale of corporate and Wall Street greed featuring RJR Nabisco officers who first
steal shareholders blind and then justify their epic displays of avarice by claiming to maximize shareholder value.
The event which made the RJR Nabisco story worth telling was the 1988 leveraged buyout (LBO) of the mammoth tobacco and food
conglomerate, then the 19th-largest industrial corporation in America. Battles for corporate control were common during the loosely
regulated 1980s, and the LBO was just one method for capturing the equity of a corporation. (In a typical LBO, a small group of
top management and investment bankers put 10 percent down and finance the rest of their purchase through high-interest loans or
bonds. If the leveraged, privately-owned corporation survives, the investors, which they can re-sell public shares, reach the so-called
"pot of gold"; but if the corporation cannot service its debt, everything is at risk, because the collateral is the corporation
itself.
The sheer size of RJR Nabisco and the furious bidding war that erupted guaranteed unusual public scrutiny of this particular
piece of financial engineering. F. Ross Johnson, the conglomerate's flamboyant, free-spending CEO (RJR had its own corporate airline),
put his own company into play with a $75-a-share bid in October. Experienced buyout artists on Wall Street, however, immediately
realized that Johnson was trying to play two incompatible games. LBOs typically put corporations such as RJR Nabisco through a ringer
in order to pay the mammoth debt incurred after a buyout. But Johnson, desiring to keep corporate perquisites intact, "low-balled"
his offer. Other buyout investors stepped forward with competing bids, and after a six-week-long auction the buyout boutique of
Kohlberg, Kravis, Roberts & Company (KKR) emerged on top with a $109-a-share bid. The $25-billion buyout took its place as one of
the defining business events of the 1980s
Burrough and Helyar, who covered the story for The Wall Street Journal, supply a breezy, colorful, blow-by-blow account
of the "deal from hell" (as one businessman characterized a leveraged buyout). The language of Wall Street, full of incongruous
"Rambo" jargon from the Vietnam War, is itself arresting. Buyout artists, who presumably never came within 10,000 miles of wartime
Saigon, talk about "napalming" corporate perquisites or liken their strategy to "charging through the rice paddies, not stopping
for anything and taking no prisoners."
At the time, F. Ross Johnson was widely pilloried in the press as the embodiment of excess; his conflict of interest was obvious.
Yet Burrough and Helyar show that Johnson, for all his free-spending ways, was way over his head in the major leagues of greed,
otherwise known as Wall Street in the 1980s. What, after all, is more rapacious: the roughly $100 million Johnson stood to gain
if his deal worked out over five years, or the $45 million in expenses KKR demanded for waiting 60 minutes while Ross Johnson prepared
a final competing bid?
Barbarians is, in the parlance of the publishing world, a good read. At the same time, unfortunately, a disclaimer
issued by the authors proves only too true. Anyone looking for a definitive judgment of LBOs will be disappointed. Burrough and
Helyar do at least ask the pertinent question: What does all this activity have to do with building and sustaining a business? But
authors should not only pose questions; they should answer them, or at least try.
Admittedly, the single most important answer to the RJR puzzle could not be provided by Burrough and Helyar because it
is not yet known. The major test of any financial engineering is its effect on the long-term vitality of the leveraged corporation,
as measured by such key indicators as market share (and not just whether the corporation survives its debt, as the authors imply).
However, a highly-leveraged RJR Nabisco is already selling off numerous profitable parts of its business because they are no longer
a "strategic fit": Wall Street code signifying a need for cash in order to service debts and avoid bankruptcy.
If the authors were unable to predict the ultimate outcome, they still had a rare opportunity to explain how
and why an LBO is engineered. Unfortunately, their fixation on re-creating events and dialogue – which admittedly produces a fast-moving
book – forced them to accept the issues as defined by the participants themselves. There is no other way to explain the book's uncritical
stance. When, for example, the RJR Nabisco board of directors tried to decide which bid to accept, Burrough and Helyar report that
several directors sided with KKR's offer because the LBO boutique "knew the value of keeping [employees] happy." It is impossible
to tell from the book whether the directors knew this to be true or took KKR's word. Even a cursory investigation would have revealed
that KKR is notorious for showing no concern for employees below senior management after a leveraged buyout.
The triumph of gossip over substance is manifest in many other ways. Wall Street's deft manipulation of the business press is
barely touched upon, and the laissez-faire environment procured by buyout artists via their political contributions is
scarcely mentioned, crucial though it is. Nowhere are the authors' priorities more obvious than in the number of words devoted to
Henry Kravis's conspicuous consumption compared to those devoted to the details of the RJR deal. In testimony before Congress last
year, no less an authority than Treasury Secretary Nicholas Brady – himself an old Wall Street hand – noted that the substitution
of tax-deductible debt for taxable income is "the mill in which the grist of takeover premiums is ground."
In the case of RJR Nabisco, 81 percent of the $9.9 billion premium paid to shareholders was derived from tax breaks achievable
after the buyout. This singularly important fact cannot be found in the book, however; nor will a reader learn that after the buyout
the U.S. Treasury was obligated to refund RJR as much as $1 billion because of its post-buyout debt burden. In Barbarians,
more time is spent describing Kravis's ostentatious gifts to his fashion-designer wife than to the tax considerations that make
or break these deals.
Fulminations about the socially corrosive effects of greed aside, the buyout phenomenon may represent one of the biggest changes
in the way American business is conducted since the rise of the public corporation, nothing less than a transformation of managerial
into financial capitalism. The ferocious market for corporate control that emerged during the 1980s has few parallels in business
history, but there are two: the trusts that formed early in this century and the conglomerate mania that swept corporate America
during the 1960s. Both waves resulted in large social and economic costs, and there is little assurance that the corporate infatuation
with debt will not exact a similarly heavy toll.
As the economist Henry Kaufman has written, the high levels of debt associated with buyouts and other forms of corporate restructuring
create fragility in business structures and vulnerability to economic cycles. Inexorably, the shift away from equity invites the
close, even intrusive involvement of institutional investors (banks, pension funds, and insurance companies) that provide the financing.
Superficially, this moves America closer to the system that prevails in Germany and Japan, where historically the relationship between
the suppliers and users of capital is close. But Germany and Japan incur higher levels of debt for expansion and investment, whereas
equivalent American indebtedness is linked to the recent market for corporate control. That creates a brittle structure, one that
threatens to turn the U.S. government into something of an ultimate guarantor if and when things do fall about. It is too easy to
construct a scenario in which corporate indebtedness forces the federal government into the business of business. The savings-and-loan
bailout is a painfully obvious harbinger of such a development.
The many ramifications of the buyout mania deserve thoughtful treatment. Basic issues of corporate governance and accountability
ought to be openly debated and resolved if the American economy is to deliver the maximum benefit to society and not just unconscionable
rewards to a handful of bankers, all out of proportion to their social productivity. It is disappointing, but a sign of the times,
that the best book about the deal of deals fails to educate as well as it entertains.
"... Taking jefemt's thinking further, imagine the health insurance provider was not only monopolistic (owned the entire market), but was also a GSE (government sponsored enterprise). Now take it one more step and imagine it was an actual part of the government and not merely a GSE. ..."
"... I was thinking of this too as a reponse to Why Steve Bannon Wants You to Believe in the Deep State" [Politico]. "Like the Death Star, the American Deep State does not, of course, exist. " ..."
"... Indeed, I think of the insurance industry as being part of the deep state already. It seems that congress's preference is that this part of the deep state is outsourced. So that's it not a GSE, and not even a monopoly, but maintained as an oligopoly. And then, well hey whatever surplus it can hoover up is fair game. After all free-hand of the market and all that. [And heaven knows, we don't want to crowd that out.] ..."
"... The CIA has a long history of drug trafficking. The FBI traffics in blackmail. The NSA in network surveillance. DIA, special ops. NRO, satelite throughput. 11 more in the US of A and countless more globally. They all have opaque resources outside of regular channels. ..."
"... Great documentary about the 80's cocaine business in Miami called "Cocaine Cowboys." It's real life Scarface. Guess who the Feds sent to get a handle on the cocaine smuggling? See-eye-aye man George H.W. Bush. Coincidence? ..."
Paradoxically, we appear to be seeing a coalescence and consolidation of insurers, we will end up being delightfully exceptional,
again -- effectively being single-payer, private sector, paying a monopoly an add-on cost of 35-40% to a parasitic industry whose
executives and employees do not contribute to the CARE equation.
Taking jefemt's thinking further, imagine the health insurance provider was not only monopolistic (owned the entire market),
but was also a GSE (government sponsored enterprise). Now take it one more step and imagine it was an actual part of the government
and not merely a GSE.
Conceivably, it wouldn't even have to live off appropriations from congress, assuming it was equally as extractive from the
private sector as it is now (i.e. revenue model is the same). Talk about good living. Who knows, maybe they pocket their proceeds
into some kind of surplus in Treasury dept.
But let's assume they had to give up on revenue models. [Afterall, it's easier to find partners in congress when you have an
appropriations process that binds you to them.] Then they would be exposed. Somebody would get the bright idea that this agency
doesn't need as much staffing since they are no longer revenue oriented. That indeed, they could have the same staffing profile
as the agency responsible for medicare. Indeed they could be folded into medicare.
I was thinking of this too as a reponse to Why Steve Bannon Wants You to Believe in the Deep State" [Politico]. "Like the
Death Star, the American Deep State does not, of course, exist. "
Indeed, I think of the insurance industry as being part of the deep state already. It seems that congress's preference is that
this part of the deep state is outsourced. So that's it not a GSE, and not even a monopoly, but maintained as an oligopoly. And
then, well hey whatever surplus it can hoover up is fair game. After all free-hand of the market and all that. [And heaven knows,
we don't want to crowd that out.]
In contrast to other parts of the deep state that don't really have a revenue model. In which case, those parts need to be
insourced by the Fed Gov.
The CIA has a long history of drug trafficking. The FBI traffics in blackmail. The NSA in network surveillance. DIA, special
ops. NRO, satelite throughput. 11 more in the US of A and countless more globally. They all have opaque resources outside of regular
channels.
Great documentary about the 80's cocaine business in Miami called "Cocaine Cowboys." It's real life Scarface. Guess who the Feds sent to get a handle on the cocaine smuggling? See-eye-aye man George H.W. Bush. Coincidence?
The Phillips Curve is back. In saying so, I do not mean to imply that being "back" refers to
a sudden reappearance of a stable empirical relationship between unemployment (or the output
gap) and inflation. The Phillips Curve is back in the same way that conspiracy theories about
the assassination of JFK are back after the recent release of government documents. In other
words, the Phillips Curve is something that people desperately want to believe in, despite the
lack of evidence.
The Phillips Curve is all the rage among central bankers. Since the Federal Reserve embarked
on quantitative easing, they have been ensuring the public that QE would not be inflationary
because of the slack in the economy. Until labor market conditions tighten, there would be
little threat of inflation. Then, as the labor market tightened, the Federal Reserve warned
that they might have to start raising interest rates to prevent these tightening conditions
from creating inflation.
What is remarkable about this period is that the Federal Reserve has undershot its target
rate of inflation throughout this entire period -- and continues to do so today. So what does
this tell us about the Phillips Curve and what can we learn about monetary policy?
If one looks at the data on unemployment and inflation (or even the output gap and
inflation), you could
more easily draw Orion the Hunter as you could a stable Phillips Curve. Fear not,
sophisticated advocates of the Phillips Curve will say. This is simply the Lucas Critique at
play here. If a Phillips Curve exists, and if the central bank tries to exploit it, then it
will not be evident in the data. In fact, if you take a really basic 3-equation-version of the
New Keynesian model, there is a New Keynesian Phillips Curve in the model. However, when you
solve for the equilibrium conditions, you find that inflation is a function of demand shocks,
technology shocks, and unexpected changes in interest rates. The output gap doesn't appear in
the solution. But fear not, this simply means that monetary policy is working properly. The
Phillips Curve is apparently like the observer effect in quantum mechanics in that when we try
to observe the Phillips Curve, we change the actual result (this is a joke, please do not leave
comments about why I've misunderstood the observer effect).
... ... ...
What all of this means is that even given the fact that the New Keynesian model features an
equation that resembles the Phillips curve, this does not imply that there is some predictive
power that comes from thinking about this equation in isolation. In addition, it certainly does
not imply that changes in the output gap cause changes in the rate of inflation. There
is no direction of causation implied by this one equilibrium condition.
"... This Note argues that the current framework in antitrust-specifically its pegging competition to "consumer welfare," defined as short-term price effects-is unequipped to capture the architecture of market power in the modern economy. We cannot cognize the potential harms to competition posed by Amazon's dominance if we measure competition primarily through price and output. ..."
"... This Note maps out facets of Amazon's dominance. Doing so enables us to make sense of its business strategy, illuminates anticompetitive aspects of Amazon's structure and conduct, and underscores deficiencies in current doctrine. The Note closes by considering two potential regimes for addressing Amazon's power: restoring traditional antitrust and competition policy principles or applying common carrier obligations and duties. ..."
Amazon is the titan of twenty-first century commerce. In addition to being a retailer, it is now a marketing platform, a delivery
and logistics network, a payment service, a credit lender, an auction house, a major book publisher, a producer of television
and films, a fashion designer, a hardware manufacturer, and a leading host of cloud server space. Although Amazon has clocked
staggering growth, it generates meager profits, choosing to price below-cost and expand widely instead. Through this strategy,
the company has positioned itself at the center of e-commerce and now serves as essential infrastructure for a host of other businesses
that depend upon it. Elements of the firm's structure and conduct pose anticompetitive concerns -- yet it has escaped antitrust
scrutiny.
This Note argues that the current framework in antitrust-specifically its pegging competition to "consumer welfare," defined
as short-term price effects-is unequipped to capture the architecture of market power in the modern economy. We cannot cognize
the potential harms to competition posed by Amazon's dominance if we measure competition primarily through price and output.
Specifically, current doctrine underappreciates the risk of predatory pricing and how integration across distinct business
lines may prove anticompetitive. These concerns are heightened in the context of online platforms for two reasons. First, the
economics of platform markets create incentives for a company to pursue growth over profits, a strategy that investors have rewarded.
Under these conditions, predatory pricing becomes highly rational-even as existing doctrine treats it as irrational and therefore
implausible. Second, because online platforms serve as critical intermediaries, integrating across business lines positions these
platforms to control the essential infrastructure on which their rivals depend. This dual role also enables a platform to exploit
information collected on companies using its services to undermine them as competitors.
This Note maps out facets of Amazon's dominance. Doing so enables us to make sense of its business strategy, illuminates anticompetitive
aspects of Amazon's structure and conduct, and underscores deficiencies in current doctrine. The Note closes by considering two
potential regimes for addressing Amazon's power: restoring traditional antitrust and competition policy principles or applying
common carrier obligations and duties.
"... The fact is that the rise of the West to global dominance is due to a historical anomaly. It was fuelled (literally) by the discovery and harnessing of the chemical energy embedded in coal (late 18thC) and then oil (late 19thC). The first doubled the population, and as first movers gave the West a running start. The second turned on the afterburners, and population grew >3.5 fold. Again the West led the way. To fuel that ahistorical step-function growth curve, control of resources on a global scale became its civilizational imperative. ..."
From Patrick Armstrong's article (a good one, by the way):
A Russian threat is good for business: there's poor money in a threat made of IEDs, bomb
vests and small arms. Big profits require big threats.
Actually, I'd say the Russian threat is necessary to keep the Europeans too
frightened to protest while the U.S. steals wealth from them. After all, when the U.S.
imports goods and "pays" for them with printed money, it is basically stealing those goods.
The U.S. is draining a lot of wealth from Europe (like $150 billion a year), so something
must be done to keep them docile. Russia's perfect for that.
"(Failed) West and a multipolar Rest". The latter is what I think will actually happen
in the near and medium term.
I think we already have it, except I don't think West has failed yet. Or it has in a way,
the process of failing goes on, but the consequences have not been felt much in the West
yet.
Well, exogenous events aside, "decline and fall" is necessarily a process. A
series of steps and plateaus is typical. A major step occurred in 2007/8, when the money
failed. The bankers, in a frankly heroic display of coordination, propped up the $$$ and the
West got a decade long plateau. Things are going wobbly again, financially speaking and I
suspect the next step function to occur rather soon. Stays of execution have been exhausted, so
it'll be interesting how the West handles it, and how the RoW reacts.
Europeans have been invited to join the Eurasian Project, to create a continental market from
"Lisbon to Vladivostok". Latent dreams of Hegemony hold at least some of their elites back. The
USA has also been invited, but its dreams remain much more virile. That is, until Trump who's
backers seem to read the writing on the wall better than the Straussians.
I don't see any other power than the West (=US) aspiring to 'manage the world'....
The other 'powers' have very modest, regional aspirations... US seems to be obsessed with it.
The fact is that the rise of the West to global dominance is due to a
historical anomaly. It was fuelled (literally) by the discovery and harnessing of the chemical
energy embedded in coal (late 18thC) and then oil (late 19thC). The first doubled the
population, and as first movers gave the West a running start. The second turned on the
afterburners, and population grew >3.5 fold. Again the West led the way. To fuel that
ahistorical step-function growth curve, control of resources on a global scale became its
civilizational imperative.
That growth curve has plateaued, and the rest of the world has caught/is catching up
developmentally. The resources the West needs aren't going to be available to it in the way
they were 100 years ago. Them days is over, for everybody really, but especially for the West
because it has depleted its own hi-ROI resources, and both of its means of control (IMF$ System
& U$M) of what's left of everybody else's are failing simultaneously. So its plateau will
not be flat, or not flat for long between increasingly violent steps.
The West rode an ahistorical rogue wave of development to a point just short of Global
Hegemony. That wave broke, and is now rolling back out into the world leaving the West just
short of its civilizational resource requirements. No way to get back on a broken wave. In any
case, China now holds the $$$ hammer, and Russia holds the military hammer, and they've now got
the surfboard. Both of them, led by historically aware elites, know that Hegemony doesn't work,
so will focus on keeping their neck of the woods as stable & prosperous as possible while
hell blazes elsewhere.
What is really going on is that West has over-reached and can barely handle its own
problems.
IMHO, what's really going on is that the West's problems are simply symptomatic of
what "decline and fall", if not "collapse" looks like from within a failing system. A long time
ago I read the diary of a Roman nobleman who in the most matter-of-fact style wrote of exactly
the same things Westerners complain about today. How this, that or the other thing no longer
works the way it did. For all of his 60+ years, every day was infinitesimally worse than the
day before, until finally he decides to pack up his Roman households and move to his estates in
Spain. It took 170(iirc) more years of continuous decline until Alaric finally arrived at the
Gates of Rome. If wholly due to internal causes, collapse is almost always a slow motion train
wreck.
...
'there would be a vacuum' and 'Russians would move in'. This is obvious nonsense and only
elderly paranoid Cold Warrior types believe it (peterAUS?).
Actually, it's just stupid. Cold Warrior or not, the view betrays a deep and
abiding ignorance of both history and a large part of what drove the West's hegemonic
successes. That both militate against anyone else ever even trying such a thing on a global
scale can't be seen if you look at historical developments and the rest of the world through
10' of 1" pipe.
The idea that Russia wants/needs the Baltics is even more laughable than that it wants/needs
the Ukraine or Poland. None of these tarbabies have anything to offer but trouble. Noisome
flies on an elephant, it is only if they make themselves more troublesome as outsiders than
they would be as vassals would Russia move.
On the topic of outsourcing, IMO it can be cheaper if done right. On paper it always seems like a great idea, but in practice
it's not always the best idea financially and/or getting the same or better result in comparison to keeping it in-house. I've worked
for companies where they have outsourced a particular department/function to companies where I am the one the job is outsourced to.
My observation has been the success of getting projects done (e.g.: programing) or facilitating a role (e.g.: sys admin) rely on a few
factors regardless of outsourcing or not.
Notable quotes:
"... On the topic of outsourcing, IMO it can be cheaper if done right. On paper it always seems like a great idea, but in practice it's not always the best idea financially and/or getting the same or better result in comparison to keeping it in-house. I've worked for companies where they have outsourced a particular department/function to companies where I am the one the job is outsourced to. My observation has been the success of getting projects done (e.g.: programing) or facilitating a role (e.g.: sys admin) rely on a few factors regardless of outsourcing or not. ..."
On the topic of outsourcing, IMO it can be cheaper if done right. On paper it always seems like a great idea, but in practice
it's not always the best idea financially and/or getting the same or better result in comparison to keeping it in-house. I've
worked for companies where they have outsourced a particular department/function to companies where I am the one the job is outsourced
to. My observation has been the success of getting projects done (e.g.: programing) or facilitating a role (e.g.: sys admin) rely
on a few factors regardless of outsourcing or not.
The first is a golden rule of sorts on doing anything:
Cheap
Quality
Fast
You can only pick two; NO exceptions. I've encountered so many upper management types that foolishly think they can get away
with having all three. In my experience 9/10 of the time it turns out a lack of quality bites them in the butt sometime down the
road when they assumed they somehow managed to achieve all three.
The second is communication. Mostly everyone in at least the US has experienced the pain of being subjected to some company's
outsourced customer service and/or tech support that can't effectively communicate with both parties on the same page of understanding
one another. I really shouldn't need to explain why communication, understanding one another is so important. Sadly this is something
I have to constantly explain to my current boss with events like today where my non-outsourced colleague rebooted a number of
production critical servers when he was asked to reboot just one secondary server.
Third is the employee's skill in doing the job. Again, another obvious one, but I've observed that it isn't always on the hiring
menu. Additionally I've seen some people that interview well, but couldn't create a "Hello World" HTML page for a web developer
position as an example. There's no point in hiring or keeping a hired individual to do a job that they lack the skill to do; even
if it's an entry-level position with training, that person should be willing to put for the effort to learn and take notes. I
accept that everyone has their own unique skills that can aide or hinder their ability to learn and be proficient with a particular
task. However, I firmly believe anyone can learn to do anything as long as they put their mind to it. I barely have any artistic
ability and my drawing skills are stick figures at best (XKCD is miles ahead of me); if I were to put forth the effort to learn
how to draw and paint, I could become a good artist. I taught an A+ technician certification class at a tech school a while back
and I had a retired Marine that served in the Vietnam War as one of my students. One could argue his best skill was killing and
blowing stuff up. He worked hard and learned to be a technician and passed CompTIA's certification test without a problem. That
leads me to the next point.
Lastly is attitude of the end employee doing the actual work. It boggles my mind how so many managers loose the plot when it
comes to employee morale and motivation. Productivity generally is improved when those two are improved and it usually doesn't
have to involve spending a bunch of money. The employee's attitude should be getting the work done correctly in a reasonable amount
of time. Demanding it is a poor approach. Poisoning an employee will result in poisoning the company in a small manner all the
way up to the failure of the company. Employees should be encouraged through actual morale improvements, positive motivation,
and incentives for doing more work at the same and/or better quality level.
Outsourcing or keeping things in house can be successful and possibly economical if approached correctly with the appropriate
support of upper management.
How dramatic? Isn't outsourcing done (like it or not) to reduce costs?
Outsourcing is done to reduce the projected costs that PHBs see. In reality, outsourcing can lead to increased costs and delays
due to time zone differences and language/cultural barriers.
I have seen it work reasonably well, but only when the extra effort and delays caused by the increased need for rework that
comes from complex software projects. If you are working with others on software, it is so much quicker to produce quality software
if the person who knows the business requirements is sitting right next to the person doing design and the person cutting code
and the person doing the testing, etc, etc.
If these people or groups are scattered around the world with different cultures and native languages, communication can suffer,
increasing misunderstanding and reducing the quality. I have personally seen this lead to massive increase in code defects in
a project that went from in house development to outsourced.
Also, time zone differences cause problems. I have noticed that the further west people live, the less likely they are to take
into account how far behind they are. Working with people who fail to realise that their Monday morning is the next day for someone
else, or that by the time they are halfway through Friday, others are already on their weekend is not only frustrating, it leads
to slow turn around of bug fixes, etc.
Yeah, I'm told outsourcing keeps costs down, but I am yet to see conclusive evidence of that in the real world. At least in
complex development. YMMV for support/call centre stuff.
That explains why after dissolution of the USSR organized crime reached such level: this is standard capitalism development scenario.
Notable quotes:
"... In fact, the evolution of the modern economy owes more than you might think to these outlaws. That's the theme of " Forging Capitalism: Rogues, Swindlers, Frauds, and the Rise of Modern Finance " by Ian Klaus. It's a history of financial crimes in the 19th and early 20th centuries that traces a recurring sequence: new markets, new ways to cheat, new ways to transact and secure trust. As Klaus says, criminals helped build modern capitalism. ..."
"... Cochrane, in a way, was convicted of conduct unbecoming a man of his position. Playing the markets, let alone cheating, was something a man of his status wasn't supposed to do. Trust resided in social standing. ..."
"... The stories are absorbing and the larger theme is important: "Forging Capitalism" is a fine book and I recommend it. But I have a couple of criticisms. The project presumably began as an academic dissertation, and especially at the start, before Klaus starts telling the stories, the academic gravity is crushing. ..."
"... Nonetheless, Klaus is right: Give the markets' ubiquitous and ingenious criminals their due. They helped build modern capitalism, and they aren't going away. Just ask Bernie Madoff. ..."
Whenever buyers and sellers get together, opportunities to fleece the other guy arise. The history of markets is, in part, the
history of lying, cheating and stealing -- and of the effort down the years to fight commercial crime.
In fact, the evolution of the modern economy owes more than you might think to these outlaws. That's the theme of "Forging
Capitalism: Rogues, Swindlers, Frauds, and the Rise of Modern Finance" by Ian Klaus. It's a history of financial crimes in the
19th and early 20th centuries that traces a recurring sequence: new markets, new ways to cheat, new ways to transact and secure trust.
As Klaus says, criminals helped build modern capitalism.
And what a cast of characters. Thomas Cochrane is my own favorite. (This is partly because he was the model for Jack Aubrey in
Patrick O'Brian's "Master and Commander" novels, which I've been reading and rereading for decades. Presumably Klaus isn't a fan:
He doesn't note the connection.)
Cochrane was an aristocrat and naval hero. At the height of his fame in 1814 he was put on trial for fraud. An associate had spread
false rumors of Napoleon's death, driving up the price of British government debt, and allowing Cochrane to avoid heavy losses on
his investments. Cochrane complained (with good reason, in fact) that the trial was rigged, but he was found guilty and sent to prison.
The story is fascinating in its own right, and the book points to its larger meaning. Cochrane, in a way, was convicted of
conduct unbecoming a man of his position. Playing the markets, let alone cheating, was something a man of his status wasn't supposed
to do. Trust resided in social standing.
As the turbulent century went on, capitalism moved its frontier outward in every sense: It found new opportunities overseas; financial
innovation accelerated; and buyers and sellers were ever more likely to be strangers, operating at a distance through intermediaries.
These new kinds of transaction required new ways of securing trust. Social status diminished as a guarantee of good faith. In its
place came, first, reputation (based on an established record of honest dealing) then verification (based on public and private records
that vouched for the parties' honesty).
Successive scams and scandals pushed this evolution of trust along. Gregor MacGregor and the mythical South American colony of
Poyais ("the quintessential fraud of Britain's first modern investment bubble," Klaus calls it); Beaumont Smith and an exchequer
bill forging operation of remarkable scope and duration; Walter Watts, insurance clerk, theatrical entrepreneur and fraudster; Harry
Marks, journalist, newspaper proprietor and puffer of worthless stocks. On and on, these notorious figures altered the way the public
thought about commercial trust, and spurred the changes that enabled the public to keep on trusting nonetheless.
The stories are absorbing and the larger theme is important: "Forging Capitalism" is a fine book and I recommend it. But I
have a couple of criticisms. The project presumably began as an academic dissertation, and especially at the start, before Klaus
starts telling the stories, the academic gravity is crushing.
Trust, to be simple with our definition, is an expectation of behavior built upon norms and cultural habits. It is often dependent
upon a shared set of ethics or values. It is also a process orchestrated through communities and institutions. In this sense,
it is a cultural event and thus a historical phenomenon.
No doubt, but after a first paragraph like that you aren't expecting a page-turner. Trust me, it gets better. When he applies
himself, Klaus can write. Describing the messenger who brought the false news of Napoleon's death, he says:
Removed from the dark of the street, the man could be seen by the light of two candles. He looked, a witness would later testify,
"like a stranger of some importance." A German sealskin cap, festooned with gold fringes, covered his head. A gray coat covered
his red uniform, upon which hung a star Neighbors and residents of the inn stirred and peered in as the visitor penned a note.
Tell me more.
My other objection is to the book's repeated suggestion that Adam Smith and other classical proponents of market economics naively
underestimated the human propensity to deceive and over-credited the market's ability to promote good behavior. Klaus doesn't examine
their claims at length or directly, but often says things such as:
The sociability in which Adam Smith had placed his hopes for harnessing self-interest was not a sufficient safeguard in the
sometimes criminal capitalism of the ruthless free market.
Of course it wasn't. Smith didn't believe that the market's civilizing tendencies, together with humans' instinct for cooperation,
were a sufficient safeguard against fraud or breach of contract or other commercial wrongs. He was nothing if not realistic
about human nature. And by the way, many of the subtle adaptations to the shifting risk of fraud that Klaus describes were private
undertakings, not government measures. Far from being surprised by them, Smith would have expected their development.
Nonetheless, Klaus is right: Give the markets' ubiquitous and ingenious criminals their due. They helped build modern capitalism,
and they aren't going away. Just ask Bernie Madoff.
To contact the author on this story: Clive Crook at [email protected]
"... What happened to the old "sysadmin" of just a few years ago? We've split what used to be the sysadmin into application teams, server teams, storage teams, and network teams. There were often at least a few people, the holders of knowledge, who knew how everything worked, and I mean everything. ..."
"... Now look at what we've done. Knowledge is so decentralized we must invent new roles to act as liaisons between all the IT groups. Architects now hold much of the high-level "how it works" knowledge, but without knowing how any one piece actually does work. In organizations with more than a few hundred IT staff and developers, it becomes nearly impossible for one person to do and know everything. This movement toward specializing in individual areas seems almost natural. That, however, does not provide a free ticket for people to turn a blind eye. ..."
"... Does your IT department function as a unit? Even 20-person IT shops have turf wars, so the answer is very likely, "no." As teams are split into more and more distinct operating units, grouping occurs. One IT budget gets split between all these groups. Often each group will have a manager who pitches his needs to upper management in hopes they will realize how important the team is. ..."
"... The "us vs. them" mentality manifests itself at all levels, and it's reinforced by management having to define each team's worth in the form of a budget. One strategy is to illustrate a doomsday scenario. If you paint a bleak enough picture, you may get more funding. Only if you are careful enough to illustrate the failings are due to lack of capital resources, not management or people. A manager of another group may explain that they are not receiving the correct level of service, so they need to duplicate the efforts of another group and just implement something themselves. On and on, the arguments continue. ..."
What happened to the old "sysadmin" of just a few years ago? We've split what used to be the sysadmin into application teams,
server teams, storage teams, and network teams. There were often at least a few people, the holders of knowledge, who knew how everything
worked, and I mean everything. Every application, every piece of network gear, and how every server was configured -- these
people could save a business in times of disaster.
Now look at what we've done. Knowledge is so decentralized we must invent new roles to act as liaisons between all the IT
groups. Architects now hold much of the high-level "how it works" knowledge, but without knowing how any one piece actually does
work. In organizations with more than a few hundred IT staff and developers, it becomes nearly impossible for one person to do and
know everything. This movement toward specializing in individual areas seems almost natural. That, however, does not provide a free
ticket for people to turn a blind eye.
Specialization
You know the story: Company installs new application, nobody understands it yet, so an expert is hired. Often, the person with
a certification in using the new application only really knows how to run that application. Perhaps they aren't interested in
learning anything else, because their skill is in high demand right now. And besides, everything else in the infrastructure is
run by people who specialize in those elements. Everything is taken care of.
Except, how do these teams communicate when changes need to take place? Are the storage administrators teaching the Windows
administrators about storage multipathing; or worse logging in and setting it up because it's faster for the storage gurus to
do it themselves? A fundamental level of knowledge is often lacking, which makes it very difficult for teams to brainstorm about
new ways evolve IT services. The business environment has made it OK for IT staffers to specialize and only learn one thing.
If you hire someone certified in the application, operating system, or network vendor you use, that is precisely what you get.
Certifications may be a nice filter to quickly identify who has direct knowledge in the area you're hiring for, but often they
indicate specialization or compensation for lack of experience.
Resource Competition
Does your IT department function as a unit? Even 20-person IT shops have turf wars, so the answer is very likely, "no."
As teams are split into more and more distinct operating units, grouping occurs. One IT budget gets split between all these groups.
Often each group will have a manager who pitches his needs to upper management in hopes they will realize how important the team
is.
The "us vs. them" mentality manifests itself at all levels, and it's reinforced by management having to define each team's
worth in the form of a budget. One strategy is to illustrate a doomsday scenario. If you paint a bleak enough picture, you may
get more funding. Only if you are careful enough to illustrate the failings are due to lack of capital resources, not management
or people. A manager of another group may explain that they are not receiving the correct level of service, so they need to duplicate
the efforts of another group and just implement something themselves. On and on, the arguments continue.
Most often, I've seen competition between server groups result in horribly inefficient uses of hardware. For example, what
happens in your organization when one team needs more server hardware? Assume that another team has five unused servers sitting
in a blade chassis. Does the answer change? No, it does not. Even in test environments, sharing doesn't often happen between IT
groups.
With virtualization, some aspects of resource competition get better and some remain the same. When first implemented, most
groups will be running their own type of virtualization for their platform. The next step, I've most often seen, is for test servers
to get virtualized. If a new group is formed to manage the virtualization infrastructure, virtual machines can be allocated to
various application and server teams from a central pool and everyone is now sharing. Or, they begin sharing and then demand their
own physical hardware to be isolated from others' resource hungry utilization. This is nonetheless a step in the right direction.
Auto migration and guaranteed resource policies can go a long way toward making shared infrastructure, even between competing
groups, a viable option.
Blamestorming
The most damaging side effect of splitting into too many distinct IT groups is the reinforcement of an "us versus them" mentality.
Aside from the notion that specialization creates a lack of knowledge, blamestorming is what this article is really about. When a project is delayed, it is all too easy to blame another group. The SAN people didn't allocate storage on time,
so another team was delayed. That is the timeline of the project, so all work halted until that hiccup was restored. Having someone
else to blame when things get delayed makes it all too easy to simply stop working for a while.
More related to the initial points at the beginning of this article, perhaps, is the blamestorm that happens after a system
outage.
Say an ERP system becomes unresponsive a few times throughout the day. The application team says it's just slowing down, and
they don't know why. The network team says everything is fine. The server team says the application is "blocking on IO," which
means it's a SAN issue. The SAN team say there is nothing wrong, and other applications on the same devices are fine. You've ran
through nearly every team, but without an answer still. The SAN people don't have access to the application servers to help diagnose
the problem. The server team doesn't even know how the application runs.
See the problem? Specialized teams are distinct and by nature adversarial. Specialized staffers often relegate
themselves into a niche knowing that as long as they continue working at large enough companies, "someone else" will take care
of all the other pieces.
I unfortunately don't have an answer to this problem. Maybe rotating employees between departments will help. They gain knowledge
and also get to know other people, which should lessen the propensity to view them as outsiders
And I feel like the Democrats get so distracted. They have been talking about sexual
harassment and stuff instead of the TAX BILL. It is so damn easy to get them to take their
eyes off the ball! and get played again and again. . . and TRAGIC given the consequences . .
.
It's the perfect "distraction". Allows them to engage in virtue-signaling and "fighting
for average Americans". It's all phony, they always "lose" in the end getting exactly what
they wanted in the first place, while not actually having to cast a vote for it.
It's all related, less safety net and more inequality means more desperation to take a
job, *ANY* job, means more women putting up with sexual harassment (and workplace bullying
and horrible and illegal workplace conditions etc.) as the price of a paycheck.
Horrible Toomey's re-election was a parallel to the Clinton/Trump fiasco. The Democrats
put up a corporate shill, Katie McGinty that no-one trusted.
"Former lobbyist Katie McGinty has spent three decades in politics getting rich off the
companies she regulated and subsidized. Now this master of the revolving-door wants
Pennsylvania voters to give her another perch in government: U.S. Senator." Washington
Examiner.
She was a Clintonite through and through, that everyone, much like $Hillary, could see
through.
To paraphrase the Beatles, you say you want a revolution but you don't really mean it. You
want more of the same because it makes you feel good to keep voting for your Senator or your
Congressman. The others are corrupt and evil, but your guys are good. If only the others were
like your guys. News flash: they are all your guys.
America is doomed. And so much the better. Despite all America has done for the world, it
has also been a brutal despot. America created consumerism, super-sizing and the Kardashians.
These are all unforgivable sins. America is probably the most persistently violent country in
the world both domestically and internationally. No other country has invaded or occupied so
much of the world, unless you count the known world in which case Macedonia wins.
This tax plan is what Americans want because they are pretty ignorant and stupid. They are
incapable of understanding basic math so they can't work out the details. They believe that
any tax cut is inherently good and all government is bad so that is also all that matters.
They honestly think they or their kids will one day be rich so they don't want to hurt rich
people. They also believe that millionaires got their money honestly and through hard work
because that is what they learned from their parents.
Just send a blank check to Goldman Sachs. Keep a bit to buy a gun which you can use to
either shoot up a McDonalds or blow your own brains out.
And some people still ask me why I left and don't want to come back. LOL
Macedonia of today is not the same are that conquered the world. They stole the name from
Greeks.
That being said, the US is ripe for a change. Every policy the current rulers enact seems
to make things better. However, I suspect a revolution would kill majority of the population
since it would disrupt the all important supply chains, so it does not seem viable.
However, a military takeover could be viable. If they are willing to wipe out the most
predatory portions of the ruling class, they could fix the healthcare system, install a
high-employment policy and take out the banks and even the military contractors. Which could
make them very popular.
Yeah, right. Have you seen our generals? They're just more of the same leeches we
have everywhere else in the 0.01%. Have you seen any of the other military dictatorships
around the world, like actually existing ones? They're all brilliantly corrupt and total
failures when it comes to running any sort of economy. Not to mention the total loss of civil
rights. Americans have this idiotic love of their military thanks to decades of effective
propaganda and think the rule of pampered generals would somehow be better than the right to
vote. Bleh.
This is a military dictatorship. The fourth and sixth amendments have been de facto
repealed. Trump cared about one thing and one thing only, namely to repeal the estate tax. He
is the ultimate con man and this was his biggest con. It is truly amazing how he accomplished
this. He has saved his family a billion $$$. He will now turn over governing to the generals
and Goldman Sachs. He may even retire. Truly amazing. One has to admire the sheer perversity
of it all. When will the American electorate get tired of being conned? The fact is they have
nothing but admiration for Trump. We live in a criminal culture, winner take all. America
loves its winners.
There is an old 2003 David Brooks column in which he mentions that
"The Democrats couldn't even persuade people to oppose the repeal of the estate tax, which
is explicitly for the mega-upper class. Al Gore, who ran a populist campaign, couldn't even
win the votes of white males who didn't go to college, whose incomes have stagnated over the
past decades and who were the explicit targets of his campaign. Why don't more Americans want
to distribute more wealth down to people like themselves?"
Then Brooks goes on to explain
"The most telling polling result from the 2000 election was from a Time magazine survey
that asked people if they are in the top 1 percent of earners. Nineteen percent of Americans
say they are in the richest 1 percent and a further 20 percent expect to be someday. So right
away you have 39 percent of Americans who thought that when Mr. Gore savaged a plan that
favored the top 1 percent, he was taking a direct shot at them."
The Republicans have conditioned people to believe government services (except for
defense/military) are run poorly and need to be "run like a business" for a profit.
The problem is that not all government services CAN be profitable (homeless care, mental
health care for the poor, EPA enforcement, OSHA enforcement). And when attempts are made to
privatize some government operations such as incarceration, the result is that the private
company tries to maximize profits by pushing for laws to incarcerate ever more people.
The history of the USA as viewed by outsiders, maybe 50 years hence, will be that of a
resource consuming nation that spent a vast fortune on military hardware and military
adventures when it had little to fear due to geography, a nation that touted an independent
press that was anything but, a nation that created a large media/entertainment industry which
helped to keep citizens in line, a nation that fostered an overly large (by 2 or 3 times per
Paul Whooley) parasitical financial industry that did not perform its prime capital
allocation task competently as it veered from bubble to bubble and a nation that managed to
spend great sums on medical care without covering all citizens.
But the USA does have a lot of guns and a lot of frustrated people.
Maybe Kevlar vests will be the fashion of the future?
The provision to do away with the estate tax, if not immediately, in the current versions
(House and Senate) is great news for the 1%, and bad for the rest of us.
And if more people are not against that (thanks for quoting the NYTImes article), it's the
failure of the rest of the media for not focusing more on it, but wasting time and energy on
fashion, sports, entertainment, etc.
he provision to do away with the estate tax . . . is great news for the 1%
I think it's even a little more extreme than that. The data is a few years old, but it is
only the top 0.6% who are affected by estate taxes in the United States. See the data at
these web sites:
The military adventures were largely in support of what Smedley Butler so accurately
called the Great "Racket" of Monroe Doctrine colonialism and rapacious extractive
"capitalism" aka "looting."
It took longer and costed the rich a bit more to buy up all the bits of government, but
the way they've done will likely be more compendious and lasting. Barring some "intervening
event(s)".
While Republicans show their true colors, im out there seeing a resurgence of civil
society. And im starting to reach Hard core Tea Party types. Jobs, Manufacturing, Actual
Policy.
"... Carrying Capacity : Carrying capacity is a well-known ecological term that has an obvious and fairly intuitive meaning: "the maximum population size of a species that the environment can sustain indefinitely, given the food, habitat, water and other necessities available in the environment". Unfortunately, that definition becomes more nebulous the closer you look at it – especially when we start talking about the planetary carrying capacity for humans. Ecologists claim that our numbers have already surpassed the carrying capacity of the planet, while others (notably economists and politicians ) claim we are nowhere near it yet! ..."
"... Overshoot : When a population surpasses its carrying capacity it enters a condition known as overshoot. Because carrying capacity is defined as the maximum population that an environment can maintain indefinitely, overshoot must by definition be temporary. Populations ..."
"... to (or below) the carrying capacity. How long they stay in overshoot depends on how many stored resources there are to support their inflated numbers. Resources may be food, but they may also be any resource that helps maintain their numbers. For ..."
"... one of the primary resources is energy, whether it is tapped as flows (sunlight, wind, biomass) or stocks (coal, oil, gas, uranium etc.). A species usually enters overshoot when it taps a particularly rich but exhaustible stock of a resource. Like oil, for instance ..."
"... The zoomass of wild vertebrates is now vanishingly small compared to the biomass of domestic animals. In 1900 there were some 1.6 billion large domesticated animals, including about 450 million head of cattle and water buffalo (HYDE 2011); a century later the count of large domestic animals had surpassed 4.3 billion, including 1.65 billion head of cattle and water buffalo and 900 million pigs (FAO 2011). Calculations using these head counts and average body weights (they have increased everywhere since 1900, but the differences between larger body masses in North America and Europe and lower weights elsewhere persist) yield estimates of at least 35 Mt C of domesticated zoomass in 1900 (more than three times the total of all wild land mammals) and at least 120 Mt C in the year 2000, a 3.5-fold increase in 100 years (and 25 times the total of wild mammalian zoomass). And cattle zoomass alone is now at least 250 times greater than the zoomass of all surviving African elephants, which in turn is less than 2 percent of the zoomass of Africa's nearly 300 million bovines (Table 2). ..."
"... Carrying Capacity, Overshoot and Species Extinction ..."
11/29/2017 Notice: Please limit your comments below to the subject matter of this post only. There is a petroleum post above this
one for all petroleum and natural gas posts and a non-petroleum post below this one for comments on all other matters.
First, let us define carrying capacity and overshoot. And none has done that better than
Paul Chefurka .
Carrying Capacity : Carrying capacity is a well-known ecological term that has an obvious and fairly intuitive meaning: "the
maximum population size of a species that the environment can sustain indefinitely, given the food, habitat, water and other necessities
available in the environment". Unfortunately, that definition becomes more nebulous the closer you look at it – especially when we
start talking about the planetary carrying capacity for humans. Ecologists claim that our numbers have already surpassed the carrying
capacity of the planet, while others (notably economists and politicians ) claim we are nowhere near it yet!
Overshoot : When a population surpasses its carrying capacity it enters a condition known as overshoot. Because carrying capacity
is defined as the maximum population that an environment can maintain indefinitely, overshoot must by definition be temporary. Populations
always decline to (or below) the carrying capacity. How long they stay in overshoot depends on how many stored resources
there are to support their inflated numbers. Resources may be food, but they may also be any resource that helps maintain their numbers.
For humans one of the primary resources is energy, whether it is tapped as flows (sunlight, wind, biomass) or stocks (coal,
oil, gas, uranium etc.). A species usually enters overshoot when it taps a particularly rich but exhaustible stock of a resource.
Like oil, for instance
When we talk about carrying capacity we need to define exactly who or what we are carrying. Are we talking about humans, all animals
or what? Well, let's just talk about terrestrial vertebrate biomass.
Okay, Vaclav Smil and Paul Chefurka (and the estimates of most earth biologists) are correct, the long-term carrying capacity
of terrestrial vertebrate biomass is a little over 200,000,000 tons. But how do we know that amount is correct? Easily, because that
is what it was for millions of years before the advent of agriculture and other things brought about by modern day Homo sapiens.
Plant and animal species all struggle to survive. In doing so they have evolved to fill every available niche on earth. If a plant
can grow in an area, any area, it will do so. If an animal can find a habitat in any area on earth, it will do so. At least since
the mid-Triassic, about 225 million years ago, plants and animals have occupied every available niche on earth. If any animal overshot
its habitat, dieoff would soon correct that situation. So for many millions of years, the terrestrial vertebrate biomass remained
at about two hundred million tons, give or take. I say that because climate change, sea levels rising and falling, continental drift
would cause the long-term carrying capacity to wax or wane. Also, the estimate is just that, an estimate. It could be slightly higher
or lower. But the long-term carrying capacity of the earth always remained at one hundred percent of what it was possible to carry.
Then about 10,000 years ago man invented agriculture. At first, this only enabled a slight increase in population. Soon only plants
that produced the most grain, fruit or tuber per plant, or per area of ground, was selected for replanting. Genetic engineering goes
back thousands of years.
Then they discovered fertilizer. Animal and human waste could greatly increase plant production. Animals were domesticated and
the plow was invented. More food per area of ground could be produced. Then chemical fertilizers were invented and the population
floodgates were opened. At first phosphates from bird guano dramatically increased agricultural production but around the middle
of the last century nitrate fertilizers from the Haber Bosch process enabled the green revolution and enabled the population to expand
three fold.
It's mostly cows, then humans, then pigs then chickens then Interesting that the biomass of chickens is ovwe three times that
of all the wild animals combined. If this chart does not shock you then you are totally unable to be shocked by anything concerning
the earth's biosphere.
The world population is still expanding at an alarming rate. By 1989 the population was expanding by about 88 million people per
year. Then by the year 2000 population growth had slowed to about 77 million per year. Then the slowdown stopped and started to increase
again. it stands at about 79 million per year according to the US Census Bureau.
Now they are saying it will start to slow. But that slowdown has not yet started. True, the fertility rate has been dropping but
that has been offset by the increase in population. The fertility rate is dropping but on more and more people.
Notice the U.S. Census Bureau starts the slowdown at almost the exact date this chart was drawn, August 2017. If they had drawn
this chart in 1995, then no doubt they would have started their prediction of constant decline in 1995.
But I have no doubt that the population will start to decline. It must, it must because we are destroying the ability of the planet
to feed all its people.
Paul Chefurka created the above graph in May 2011. I think he was a little off. He has the world population hitting almost 8 billion
then starting to drop around 2030.
I am more inclined to agree with the U.S. Census Bureau who thinks the world population will hit 9.4 billion around 2050. Then
I believe the population will start to fall. The rate of population decline and how far it will fall is hard to predict. That will
depend on many things but primarily on if and when globalization collapses. The collapse of globalization will bring about civil
strife, border wars, and famine around the world.
I want to call your attention to the green, wild animal, portion of the second graph at the top of this post. Notice the wild
animal portion of the terrestrial vertebrate biomass, by 1900, had dropped to about 20% of its historical value. Then by 2000, it
had dropped to half that amount. Then by 2050, we expect that 2000 value to be cut in half again.
By 2100, it will very likely all be gone. Well, almost all gone. There will still be plenty of rats and mice and perhaps a few
other small vertebrates will still survive, but all the large megafauna, except humans, will be gone. Gone forever or at least for
the next million years or so. It will take that long for new megafauna to evolve after the human population has been greatly reduced
to a billion or even a few million people.
But the far distant future is of little concern to us now. The sad fact of the matter is your descendants will live in a world
completely free of wild megafauna. There is no way to avoid that fact now, it is already too late to stop the destruction.
WHY?
Yes, why? Why are we destroying the earth's ecosystem? Why are we driving most all wild animals into extinction? Why have we dramatically
overpopulated the planet with human beings? Why did all this happen? However, when you ask why, you are implying that all this had
a cause, that someone or some group of people are to blame for this damn mess we have gotten ourselves into.
Was it the early farmers who invented agriculture. Or was it the early industrialists like James Watt or Thomas Edison? Or was
it Fritz Haber and Carl Bosch, are they the villains that got us into such a damn mess? No, it was none of these people. It was no
one person or no group of people. It was not even any revolution like the industrial revolution, the medical revolution or the green
revolution. There is no one to blame and there is nothing to blame.
Agriculture enabled the very small early population to expand. The industrial revolution and later the green revolution enabled
more people to be fed. The medical revolution enabled more babies to survive and people to live much longer. Our population has exploded
simply because it could. We have always lived to the limit of our existence and we always will. It was just human nature pure and
simple.
Now many will say that we are now controlling our population, that we have learned how to limit our fertility rate. Well, yes
and no. Reference the below chart and table that were produced by the
Population Reference Bureau in 2012.
In the developed world, where most of the world's energy is consumed, we almost have zero population growth. But in the less developed
world, the population is still growing.
Here is the perfect example of what is happening, what is still happening , in much of the world. Notice the difference in the
infant mortality rate and the annual infant deaths. Most of the world's people are still living at the very limit of their existence.
<sarc>But not to worry. The death rate is rising, babies are dying, the population will soon start to fall in the undeveloped
world. </sarc>
Note: The Paul Chefurka graphs in this post were created, primarily, with data from the research of Vaclav Smil and is published
in this 24 page PDF file: Harvesting
the Biosphere: The Human Impact . The file includes over 2 pages of notes and 4 pages of references where Smil sources and documents
every stat he quotes. Below are a table and some text from the paper.
The zoomass of wild vertebrates is now vanishingly small compared to the biomass of domestic animals. In 1900 there were some
1.6 billion large domesticated animals, including about 450 million head of cattle and water buffalo (HYDE 2011); a century later
the count of large domestic animals had surpassed 4.3 billion, including 1.65 billion head of cattle and water buffalo and 900 million
pigs (FAO 2011). Calculations using these head counts and average body weights (they have increased everywhere since 1900, but the
differences between larger body masses in North America and Europe and lower weights elsewhere persist) yield estimates of at least
35 Mt C of domesticated zoomass in 1900 (more than three times the total of all wild land mammals) and at least 120 Mt C in the year
2000, a 3.5-fold increase in 100 years (and 25 times the total of wild mammalian zoomass). And cattle zoomass alone is now at least
250 times greater than the zoomass of all surviving African elephants, which in turn is less than 2 percent of the zoomass of Africa's
nearly 300 million bovines (Table 2).
Please comment below but only on the subject matter of this post.
Great summary. Mainly so I don't have to think about all the depressing aspects: do you not think if humans disappeared but even
a few of our larger domesticated animals survived that evolution could go bonkers and we'd have new familes and species springing
up all over in far less than a million years. After all homo sapiens are only a few hundred thousand years, and dogs (admittedly
still technically wolves) only a few thousand. It would depend a bit whether we left much of the planet that was actually habitable
of course – i.e. there'd need to be plenty of evolution pressure, but not too much. I guess your point would be we'd get new species
but not the mega fauna, but I think there's evidence that isolated small islands can lead to either pygmy species or giants depending
on the exact environment.
George, I would have to start by saying that humans are not going to disappear. Other than extinction via natural disaster, like
a giant meteorite hitting the earth, species are driven into extinction. That is they are outcompeted for territory and
resources. Humans are the drivers of extinction, no species will drive us into extinction. We occupy every habitable niche on
earth and will likely continue to do so even after our numbers have been dramatically reduced.
If we have a collapse of globalization, and I believe that is inevitable and will happen within the next one hundred years,
then the human population will be devastated by civil strife, border wars, and famine. Seven to nine billion hungry people will
be a disaster for all other animal life, domestic as well as wild. So I do not believe there will be enough domestic animal life
to kick-start evolution of new wild species of megafauna. As I have said before, we will eat the songbirds out of the trees. So
there sure as hell will not be any cows left.
Okay, so perhaps it will not take a million years for other large megafauna to evolve. Perhaps it will only be in the hundreds
of thousands of years.
So, after we eat the songbirds from the trees, what the hell will we eat then?
Is it not possible that the human species will drive itself to extinction because we are so successful at destroying the natural
environment which we depend upon for our survival?
After industrial civilization collapses, the great human die-off will rapidly reduce human numbers by more than 90%. Life for
the remaining humans will be extraordinarily hard. If the overall stress level is high enough, it will be very difficult for humans
to raise enough offspring to reproductive age to maintain the species over time. Biologists call this pre-extinction phase die
out. Once a species numbers fall below replacement level, they go extinct.
And what the hell do you mean: "If we have a collapse of globalization, and I believe that is inevitable and will happen within
the next one hundred years "? Within the next 100 years? You are dreaming! We are in the early stages of apocalypse right now!
Rapid die-off will begin within the next few years. 100 years from now, there will be no one alive who will remember it.
Cunning said; "After industrial civilization collapses, the great human die-off will rapidly reduce human numbers by more than
90%." ..
..while what is left of nature will rapidly move into the niches vacated by species humans have wiped out. If (big if, maybe)
there are remaining reproductively viable human populations, they will exploit those recovering niches at rates which will be
far below the astounding rates of exploitation during the industrial age. Where humans have abandoned their schemes of destroying
the natural world for their own purposes, nature, in some form, recovers quite quickly.
On the other hand, if global warming goes off the scale (ala Guy McPherson, et al), all bets are off. Everything larger than
a shrew will be toast.
Once a species numbers fall below replacement level, they go extinct.
The replacement level for animals in the wild and the replacement level for domestic animals are two different things entirely.
For animals in the wild, the replacement level may be several hundred to several thousand. Animals in the wild have to find each
other in order to reproduce. For domestic animals, the replacement level is two.
In this regard, we Homo sapiens are far more like domestic animals than wild animals. An example would be the Polynesians who
migrated to distant islands in sailing outrigger canoes. Their numbers, in those canoes, likely numbered only a dozen or so. Yet
huge numbers eventually sprang from tiny numbers.
Yes, stress during periods of great strife and famine will be great. Stress will likely take a great toll. But there will always
be survivors. Everyone is not equally affected by stress. Some can overcome, some cannot. It is a little like a plague or disease.
There are always some who are immune or otherwise escape the problem.
As for rapid die-off coming within a few years, yes that may happen but I doubt it. Humans societies are far more resilient
than you might expect. For instance, look at Somalia, or Venezuela. Somalia, a failed state, has been in turmoil for decades yet
no massive die-off has occurred. Venezuela is in a state of almost total anarchy, yet no massive die-off as of yet.
I believe the die-off will start within the next hundred years. Next week is within the next hundred years. But I doubt
it will happen by then, or even within the next few years or so. In my opinion, it will take several decades for things to really
fall apart.
You said:
"But I doubt it will happen by then, or even within the next few years or so. In my opinion, it will take several decades for
things to really fall apart."
What about Limits to Growth? That study forecast that real problems would begin in the first or second decade of the 21st century,
in other words, now. Why is Limits to Growth wrong? How do we avoid sudden, catastrophic collapse once world economic growth comes
to an end?
What about the fragile, debt ridden financial/credit/monetary system? Have you read the Korowicz paper? How will industrial
civilization gradually unwind over many decades when the world economy freezes very suddenly and food stops arriving at the grocery
stores? That should lead to a very rapid die-off as every city suddenly becomes uninhabitable.
What about Limits to Growth? That study forecast that real problems would begin in the first or second decade of the 21st century,
in other words, now. Why is Limits to Growth wrong?
Hey, I have a copy of Limits to Growth right here in my hand. On what page do they predict catastrophic collapse before 2050.
Help me out here but I just can't seem to find it.
As to real problems, hell yes, we are having real problems right now. We have been having real problems in Venezuela and a
lot of other places. But there is a tremendous difference between real problems and catastrophic collapse.
And what about all the other terrible things you are say are happening right now. Hell yes, they are happening and they are
terrible. But they have not yet led to catastrophic collapse. But it is very likely they will lead to collapse in three
or four decades from now.
It's actually from a Guardian article, taken from Bardi's "The Limits to Growth Revisited". I don't know what page the original
graph was on, but I have a copy of the original 1972 graph which shows the same curves, without the more recent data curves.
Guardian article "Limits to Growth was right. New research shows we're nearing collapse" :
It depends on what you call collapse. The UK and USA are both following the curve such that life expectancy is starting to decline.
I think industrial productivity might be going the same way in UK, and definitely our health and old age care systems (which is
one of the measures he uses for "services") are in decline (though the government always finds a way to massage the numbers so
far). One of the authors of LtG has said that once one of the main curves is definitely through an extrema then the models probably
don't work any more – which I took to mean possible accelerating chaos, but might mean something else.
This a unique, one-time only collapse because we never relied on fossil fuels in the past, and we certainly won't in the future.
If you look at energyskeptic/3) Fast Crash, you'll see the many reasons I think collapse will unfold quickly. Turchin, who has
looked at the patterns of collapse in civilizations going back to Mesopotamia, says it takes about 20 years on average. That is
in line with Hook's estimate of a 6% exponential decline, which is the rate at which the 500 giant oil fields decline on average
after peaking (something like 270 of them last I checked), all others (offshore, shale, smaller, and so on) decline much faster,
hence Hooks estimate of an exponential increase of .0015 a year as non-giants increasingly contribute to what's left of production
(giants are now 60% of world oil production). If Hook (2009) is right, that means we'll be down to 10% of what we produce after
global peak production in 16 years. At that point, even if governments are rationing oil wisely to grow and distribute food, you're
reaching the breaking point. Oil makes all other resources possible, so although many resources reaching their limits, the decline
of oil will be the true beginning of the end. No more pumping water from the Ogallala 1,000 feet down, going 10,000 miles on factory
farm fishing boats, and so on. Oil is masking how incredibly far we are over overshoot. Above all, 99% of the supply chain transport
– trucks, rail, ships – depends on oil. 80% of communities in the U.S. depend entirely on oil, by far the least efficient mode
of transportation of the three. Well, it is too big a topic to cover in a comment. I have a lot more to say in my book "When Trucks
Stop Running".
Oh, and when I heard Dennis Meadows speak at the 2006 Pisa Italy ASPO conference, he said that if anything Limits to growth
was head of schedule, with collapse starting as early as 2020. We'll see, too many factors. Also in the past, nations avoided
collapse way past their carrying capacity by trading or conquering other nations, like the Roman Empire, which had to import food
from Carthage and Egypt, no way to grow enough food in Italy.
I'm hoping to see more comments from you in the future, and not just in this one thread, lol.
It's very common for experts in any given field to presume there are none in other fields that are capable of solving the problems
they see as civilization killers.
There are no guarantees of success, but success is possible when it comes to finding and implementing solutions to problems
such as the eventual depletion of oil.
Once the shit starts hitting the fan pretty hard and fast in terms of declining oil supplies, both good and bad things will
happen on a scale that will take the breath away.
The bad will unquestionably include economic collapse across large swathes of some and maybe most societies.
The good will come in the form of action on the part of awakened LEVIATHAN, the nation state. Those of us who cannot see that
once LEVIATHAN stirs and focuses on such problems as we FORCED to deal with soon have little understanding of history , human
nature, and technology.
Now WHETHER , or NOT, Leviathan, Uncle Sam, John BULL, the Russian BEAR, et al, can do enough to keep the wheels on and turning,
instead of falling off, is an open question.
I believe they can, depending on how far gone things are once they begin to come to grips with the various troubles that will
threaten their existence.
People CAN AND DO come together, and work together, sometimes. Consider the case of the USA. We were mostly all isolationists
the day before Pearl Harbor, but within a couple of days after, we were all ready to to go flat out to murder our enemies on the
grand scale, and DID.
Neither I nor anybody else can prove either way whether we WILL work together well enough to prevent outright collapse meaning
we die hard deaths by the tens of millions even here in a country such as the USA.
There's no question that we CAN work together, once we realize we must. Whether we get started soon enough is probably going
to determine just how bad things will get in economic terms.
But between what scientists and engineers can do for us, by way of providing us with better tools, and what we can collectively
do for ourselves by way of collective action, there's a real possibility that some countries will pull thru ok, no longer sleek
and lazy and fat and wasteful, but at least still functional, and with most of their populations still alive and leading a reasonably
dignified life style.
I will have more to say about what Leviathan awakened, scared and enraged can do later on, way down thread someplace within
the next few days, by relating some historical examples.
I too feel that one day the trucks will stop running. It will be a very interesting transition to observe. I imagine it will have
a progression that goes something like this:
-trucks running will increase in cost as will the things that they are running about with inside them.
– trucks will run to less and less places.
-trucks will run to less and less places less frequently.
-trucks will run only very rarely and only for high priority reasons.
-trucks will stop running altogether.
As this process takes place I imagine there will be measures taken to fill some of the void, where and when it is possible
to do so.
Ron – do you think humans will still be around in a million years or even a hundred thousand? If they are I think it will only
be because they have made themselves irrelevant to the environment (i.e. small in numbers and having found a way to live sustainably)
and other species will be evolving without too much human involvement.
Yes, George, I think humans will be around in a million years. Not nearly as many as are around today however. If I had to guess,
and I do have to guess, then I would guess around 10 to 15 million humans would be around a million years from now. That would
be one person alive then for every 500 alive today.
Of course, all fossil fuel would be gone and everyone would live off the land.
But if you doubt human survival, then just what do you think will wipe everyone out? What will bring the human population to
zero?
That sounds as good a guess as any. Part of my point was that they could only survive if they were not intrusive, and therefore
would not be an impediment to evolution of other mega fauna. I think average species life time is estimated at around 1 to 2 million
years, homo is a family rather than a species so the sapiens could go and something else come along, like we took out the Neanderthals.
On the other hand if the bottlenecks get small enough in different locations we could just be whittled away by different causes.
I think average species life time is estimated at around 1 to 2 million years,
The point is George, Homo sapiens is not an average species. If we were an average species we would still be competing with
other species for food and territory, losing some of those battles and winning others. But our numbers would be kept in check
by our success and failure of that struggle, just like every other average species.
Our dominance has overwhelmed all other species. Like a plague, we are killing them all off. There is nothing average about
us as a species.
Ok, but our numbers were kept in check and we were competing like that for almost all of our history, until the Holocene interglacial
came along and we decided agriculture was a good idea, or maybe we had a go before and it never took in a less stable climate.
But before that there is evidence of some pretty tight bottlenecks when we were almost gone either locally (e.g. in India) or
globally. And things like the Roman empire collapse suggest we can forget any kind of technological advantages in a couple of
generations.
But since our brains to a degree where we could create stone tools and use fire, our population has been on a slow increase,
bottlenecks notwithstanding.
What has made us not average is our brains, our mental ability. That is the one thing that has given us a huge advantage
over all other species.
We are smart enough to wrestle all the world from every other species that stood in our way. If another species had something
that we wanted, including even their flesh, we got it. We are smart enough to dominate the world, but not smart enough to see
that we are destroying it.
My point is that unless we find a niche in which we can exist sustainably despite our intelligence and ability to get whatever
we want and dominate the world, then we won't survive very long, and may not even then.
I think some (you for example) are smart enough to see that we are destroying our World.
It may not be a majority view, though I think the numbers are increasing.
I would agree that we so far have not demonstrated that we are smart enough to change what we are doing (reduce the rate that
we destroy the planet as rapidly as possible to zero (or negative, by which I mean restore the planet closer to a natural or sustainable
state).
This may never be accomplished, but we cam move in that direction while reducing our numbers and our impact.
What it is about our brains that makes us not average is our capacity to deny reality. The mind over reality transition (Varki
&Brower) is arguably what gave "sapiens" the advantage, successful but apparently impossible risk taking, to do away with neanderthalensis.
In small scale hunter bands surrounded by magafaunal predators, denial of reality is a decided advantage, but in mass societies
with the capacity to produce mass belief in non-realityy, it is the disadvantage that could do us in. Although not experimentally
demonstrable, the idea that this mind over reality transition was an evolutionary event in the hominid genus 100-200 thousand
years ago is a plausible explanation for sapiens' dramatic cortical development and the development or consolidation of female
sexual selection, not present in our forebears or current great apes.
In a future world scratching a living as we did for most of our history as hunter-gatherer bands, but from a depleted world
absent of any predators, we might evolve the ability to believe reality, without sacrificing cortical development. The first inhabitants
of my country (Australia) managed to get by fot 60,000 years by killing off the megafauna. They were helped by climate change
which dessicated the continent, but hung in there making it an extremely attractive aquisition by my ancestors when they came
along.
In broad terms, I agree with what you are saying here.
"Our dominance has overwhelmed all other species. Like a plague, we are killing them all off. There is nothing average about
us as a species."
But we aren't doing any better than rats or fire ants, lol.
You're dead on about humanity not being an average species. We will be around at least until some other species capable of
wiping us out evolves, and it's unlikely that we will ALLOW such a species to exist, unless it's a microbe and we can't wipe it
out.
If chimps were to evolve just a little further along the lines of using tools and being able to communicate and work together,
and started attacking humans, numerous humans armed only with primitive weapons such as fire and bows and arrows would kill every
last chimp, and they wouldn't lose any time in doing so.
This brings up an interesting question. We know chimps use stone tools as hammers to break nuts, etc, , and that they fight
ORGANIZED fights to the death sometimes.
Is there any evidence they are using stones as weapons . YET?
I once heard an interesting story about chimps. Might have been in one of Pinker's books, I can't recall.
If you hang a bunch of bananas from the ceiling that a chimp cannot reach and you leave an A-frame ladder laying on the ground
the chimp will set the ladder upright and get the bananas.
If you do the same thing with 2 chimps and a ladder so heavy that one chimp alone cannot set it upright, but 2 chimps working
together could set it upright, they'll never get on the same page, so to speak, and cooperate in setting up the ladder. They will
both try individually and fail. The bananas will never be reached.
The charts in your post suggest about 1 billion might work, I would say 500 million would be my guess, not sure where you come
up with 10 to 15 million.
Note that 500 million is roughly the World population in 1550 CE.
Just a different guess as I think a sustainable society could be reached by 2300 at these lower population levels, though perhaps
fertility levels will remain below replacement over the long term so population will continually decline eventually some optimum
will be determined and fewer than two children will not be encouraged.
Humans, that is Homo Sapiens per se, maybe not. Don't forget Cro-Magnons probably caused the extinction of Homo Neandertalis in
about 40,000 years or so ago. Some other future species of the Genus Homo, very likely will be around for another million or so
years. This is what I think they might look like. Maybe they will be called Homo technoligicus implantabilis, feel free to call
them whatever you want. In any case resistance will be futile and you will be assimilated.
Cheers!
.
First of all, Ron, a species which destroys its own food supply or its own habitat *does* go extinct. They're currently referred
to as "superpredators" -- it's happened repeatedly throughout history.
Second, regarding population growth, my primary charity for 20 years has promoted sex ed, access to contraceptions, and education
of women worldwide. We know how to halt and reverse population growth in the "underdeveloped world". It's not difficult except
for the religious groups which oppose contraception and oppose women's liberation.
Often the same religious groups who promote burning of fossil fuels. And deforestation.
Basically, whether humans survive depends on whether we defeat those groups, IMO.
Countries like Cuba which are very underdeveloped but essentially *lack* those religious groups (thank you Godless Communism!)
they're doing OK on population stabilization.
There are countries that are religious such as Iran that have seen rapid demographic transition (15 years for TFR to go from
over 5 to under 2). Also non-communist nations such as South Korea saw rapid transitions.
I agree education and gender equality as well as access to modern contraception are helpful.
Religion has it's points, as Twain used to put it, both good and bad. Preachers and priests have a way of figuring out what
is in their own best interests, short term, medium term, and long term.
There are some religions or cultures, which are not necessarily one and the same thing , that do encourage or more or less
actually force women to bear lots of children.
I come from a culture that is very often ridiculed here in this forum, which doesn't bother me at all personally. It's ridiculed
on such a broad scale that it's hard to find a public forum peopled with technically well educated people where ridicule isn't
the NORM.
As religion goes, my own personal extended family is about as religious as they come in the USA. My nieces and nephews and
third cousins, the children of my FIRST cousins, are having kids at less than the necessary 2.1 rate needed to maintain our blood
lines, lol. My informal seat of the pants estimate is that the extended family birth rate is down to somewhere around one point
five.
It's well known that the birth rate in some countries that are supposedly Catholic has fallen like a rock over the last couple
of decades.
And while I can't prove it, it's my firm opinion that once the priesthood in any country comes to understand that it's own
long term interests are best served by encouraging small families, small families WILL BE ENCOURAGED. That may not happen for
another generation or so, and it may not happen at all in some countries, if there is no top down control of the culture and religion.
Priests and preachers don't exist to serve GOD, or any combinations of gods, etc. They exist because they have found a way
to provide a secure and relatively easy way of living largely off the work of their followers.
This is not to say their followers don't get back as much or more as they contribute. Every society has to have leaders, and
priests and preachers can be and have often been very effective leaders. Some of them are effective leaders today.
First of all, Ron, a species which destroys its own food supply or its own habitat *does* go extinct. They're currently referred
to as "superpredators" -- it's happened repeatedly throughout history.
Really, I have never heard of that. The only superpredator I ever heard of are human beings. But if you can give an example
of a species destroying its own food supply and habitat, please enlighten me.
Humans on Easter island is the only thing that comes to my mind when thinking of such an example. I'm no expert on Easter island,
however I understand people there did not go extinct, and that there was a small group living there when the island was found
by Europeans. Again, not terribly well informed about that particular bit of history.
When things begin to collapse the grid infrastructure will collapse. Coal factories in China and elsewhere will shut down and
dimming will end. James Hansen estimated that warming may be held back by 50% by dimming, so we can expect warming to shoot up.
http://www.columbia.edu/~jeh1/mailings/2013/20130329_FaustianBargain.pdf
With collapses of civilization their will be no remediation of forest fires. Chemical and Nuclear Dumps will burn as well as
the nuclear power plants that have gone Fukushima.
A very underappreciated study is that of decaying leaves around Chernobyl While horses and other wildlife might now roam around
Chernobyl the implications of leaves not decaying is enormous. "However, there are even more fundamental issues going on in the
environment. According to a new study published in Oecologia, decomposers -- organisms such as microbes, fungi and some types
of insects that drive the process of decay -- have also suffered from the contamination. These creatures are responsible for an
essential component of any ecosystem: recycling organic matter back into the soil. Issues with such a basic-level process, the
authors of the study think, could have compounding effects for the entire ecosystem."
Read more:
http://www.smithsonianmag.com/science-nature/forests-around-chernobyl-arent-decaying-properly-180950075/
To just state that humans wouldn't disappear is nothing more than an assertion, as is stating that they would certainly disappear.
However what faces humans is much more daunting than just the chaos of civilization collapse. Those who survive everything else
will have a hard time reproducing with all that radiation around
https://chernobylguide.com/chernobyl_mutations/
Of course long before civilization collapses the countries of the world may well play out the scenario that Richard Heinberg
describes – Last Man Standing. Sound like politics today?
I posted this as a reply to a comment by GF a few threads back.
I highly recommend the following three ASU Origins Project debates and panel discussions to get a good feel for the big picture.
It might take up a good four hours or so of your time. This isn't something suitable for sound bites. It involves a lot of in
depth cross disciplinary knowledge.
"Why did all this happen? However, when you ask why, you are implying that all this had a cause, that someone or some group of
people are to blame for this damn mess we have gotten ourselves into".
I would like to suggest, respectfully, that this wording is the wrong way around. The essence of the problem is that no one
has been in charge, no one has taken responsibility – and that is hardly changing at all.
The world is teeming with governments, corporations, NGOs, and "leaders" of all kinds. But what are all those leaders, and
their estimable organizations, really trying to do? Some are aiming to earn as much money as possible. Others are trying amass
as much power as possible. Most of their programmes have a lot to do with gaining more money and power – which become interchangeable
at a certain point (as can be seen from a study of the US Congress, for example).
An intelligent alien visitor to our planet would reasonably conclude that, although individual humans are intelligent to various
degrees, the human species as a whole is profoundly unintelligent. It has ample means of diagnosing what has happened, is happening,
and will happen. Yet, because it has never developed any organ comparable to the individual's conscious brain, it does nothing
about the obvious threats it faces.
Tom, I think my wording was correct, you just did not quote all of my explanation. You wrote:
The essence of the problem is that no one has been in charge, no one has taken responsibility
No one can take responsibility because no one is in charge of the human race. And as far as being "profoundly unintelligent",
I think that is an unfair charge. Having a blind spot in our DNA does not imply that we are unintelligent. The human race has
never been faced with such a dilemma before. Our brains evolved to its present state during our hunter-gatherer days. We are molded
by evolution to do everything possible to survive and reproduce. There is nothing in our DNA that tells us to protect the biosphere
because the lives of our grandchildren depend upon it. So we don't.
What is happening is just human nature. That's all.
Evolution has resulted in all species, including humans, having a biotic potential that is greater than the carrying capacity
of the niches in which they live. Populations are limited by resource limits and predation, not by self restraint or mutual agreement.
It would have been very unusual, perhaps unique in evolutionary history, for humans to have deliberately limited our population,
even though it might have been theoretically possible due to our 'intelligent' ability to foresee our probable future. Despite
Malthus, Limits to Growth and many other warnings, no realistic attempt has been made to remain below carrying capacity.
As you note, a massive die-off is inevitable, the only real question is when. Like The Cunning Linguist, I personally think
it will be whenever people lose confidence in the global monetary system, as in Korowicz's "Trade Off: Financial system supply-chain
cross contagion – a study in global systemic collapse". Once money stops flowing so does the food supply.
What would cause this rejection of the monetary system? I don't follow the argument. Everyone decides at once that money is
no longer a reasonable medium of exchange. Didn't happen during any financial crisis so far, people couldn't access their money
at Banks after the 1929 crash, but this was less of a problem in OECD nations during the GFC.
The ETP nonsense is just that, anyone who knows their thermodynamics knows that theory is full of holes.
No, but we did come close in 2008. All sorts of debt instruments including commercial paper, CDOs (the root of the problem),
many derivatives and letters of credit all froze up. Without prompt dramatic action by the central banks and the US Treasury,
the financial system could have collapsed. Nobody knew who was solvent or insolvent, so the central banks had to backstop every
financial institution. All this over some mortgage securities based on the US housing market.
Now imagine that growth has turned to continuous worldwide economic recession, the inevitable fate of the global market economy
in the face of energy and resource depletion ( it will happen despite the stupidity of the Hill's Group). Unemployment increases
year after year and tax revenues continuously fall. Every kind of debt instrument, from sovereign debt to mortgages, to municipal
and corporate bonds is more and more likely never to be repaid. Defaults are increasing with greater and greater frequency. The
equities of every company become suspect as more and more companies go under.
Sooner or later, a critical mass of people are going to realize that most debts can never be repaid and are therefore worthless
as assets. Since almost all money is created from debt, almost all money becomes worthless.
The only thing that makes money work is confidence in its value. When confidence in money (debt repayment) fails, the monetary
system fails and without a monetary system, the global market fails.
Billions of lives are dependent on that market functioning smoothly every day. When it fails to function, people will die.
I fully expect to lose every financial asset I own at some point, that's why I am preparing to live without money. Unfortunately,
most people in the developed world can't do that, though they should be trying to do so with utmost urgency.
I admit that if there were a concerted international effort to declare a debt jubilee and start all over with a new world currency,
some form of monetary system might continue after the present one collapses, but I really doubt that creditor countries and debtor
countries are going to cooperate with the rapidity and solidarity needed to manage such a transition.
And even though all the productive assets in the world would still continue to exist after a financial collapse, without a
market to mediate their interconnected function, everything would grind to a halt. I don't see an international command economy
taking over either. That would be harder than creating a whole new monetary system.
The global market economy is very complicated and very fragile. I certainly wouldn't trust my family's life to something that
could collapse virtually overnight and neither should you.
I cannot imagine a continuous world wide economic recession, this is a fundamental flaw in your argument.
Well, I can't imagine how the global market economy and industrial civilization are going to have a steady state economy forever
at present levels of production and affluence. Overshoot means eventual retrenchment and die-off.
Up-thread you estimated the carrying capacity of the earth at around 500 million people. You obviously expect to gracefully
reach that level (in 2300!) through birth control while still maintaining current standards of living.
I expect that we will reach that population, or fewer, due to complications from resource-depletion-caused economic failure
(famine, war, pandemic). There simply isn't enough energy available to make the transition you desire without also destroying
the climate, even if there were the political will to do so, which there isn't.
I suggest looking at the history of the last 100 years to decide which future is more probable. Humanity has had the ability
to create a high technology, steady-state civilization with sustainable population levels for over a century, but has failed to
do so. There is still no evidence that we are serious about making the attempt now. I wonder why you can believe that such a thing
will happen at a time when the resources to make it happen will be declining rapidly. Continuous world-wide recession is a certainty
and unless you are very old, you will live to see it.
And as far as your suggestions for prepping go, my family has already got it's lifeboat ready in a rural tropical community.
I've got the productive land, the community and the guns. I don't expect to rely on gold at all. To my mind, the best durable
trade items are ammo, fishing equipment and livestock.
If raising my own food and living without money is necessary, I can do it. If your eco-modernist utopia magically appears,
I won't be disappointed, or regret one iota of the 'unnecessary' preparations I will have made, but I prefer to err on the side
of prudence.
I don't expect to live forever and as I said don't plan ahead for scenarios I believe have a very low probability of occurring.
As fossil fuel resources become scarce they will become more expensive and we will use them more carefully (or efficiently). There
has been no need to do so for the past 100 years as they have been relatively cheap and abundant. There will be enough energy
from Wind, solar, hydro, and perhaps nuclear to make the transition, as fossil fuel becomes expensive these will be produced as
they will become cheaper alternatives. Much of freight traffic can be moved to rail, which can be electrified, moving goods from
rail to factory or store can be done on overhead wires on main roads with EV used for the last few miles.
Also keep in mind that fossil fuels by nature are quite inefficient in producing electricity with about 60% of the energy wasted,
for heating systems compared to heat pumps there is also higher energy use. The transition to non-fossil fuels will result in
about one third the energy use for the same exergy (or work and useful heat) provided.
I make no assumptions about living standards being maintained, perhaps the transition will be very difficult and living standards
in the OECD will decrease while living standards in less developed nations increase. Note that declining population will reduce
resource pressure and realization of resource limits (as will be clear from fossil fuel scarcity) by the majority of citizens
may lead to changes in social behavior.
Also note that we have only been aware of the climate problem for about 38 years (using Charney report in 1979 as the starting
point).
If fossil fuels are very limited (say 1200 Pg C emissions from 1800-2100) then climate change might be less of a problem, but
this will still be adequate for a transition to non-fossil fuels. Even 1000 Pg of total carbon emissions from all anthropogenic
sources (including fossil fuel, cement and land use change) may be adequate for an energy transition, though it will need to begin
in earnest in the next 5 to 10 years, the sooner we begin the easier it will be to accomplish.
"What is happening is just human nature. That's all."
EXACTLY.
I posted a long rant down thread trying to get this across to people who somehow think we are DEFECTIVE because we don't collectively
behave more rationally, hoping to get it across in terms that are intelligible to those of us who have HEARD of evolution, but
never actually studied it for more than an hour or two at the most.
Nonsense, this is just Libertarian propaganda, which is actually a fake religion invented by real estate investors in the fifties
in a political catfight to avoid rent control legislation. It has now widen to some kind of pseudo-Darwinistic hocus pocus, but
it ignores the obvious fact that we became the world's dominant species be collaboration and long term thinking.
We're doomed if we don't get along with each other, and lots of propaganda is pushing you to believe we never have or could,
and never can or will. But that doesn't make it true.
I'd like to question the assertion that no one is in charge of the human race. In "Against the Grain: A Deep History of the Earliest
States" (Yale, 2017), James C. Scott demonstrates fairly convincingly that humans actively avoided adopting grain-based agriculture
because the labor:reward tradeoff was far less satisfactory than what could be obtained through hunting and gathering. The accumulation
of surplus, and presumably the insurance a surplus would provide against yearly fluctuations in food supply, in other words, was
an insufficient motivation for humans to give up hunting and gathering. As Scott documents quite clearly, this refusal to adopt
agriculture as the basis of the human economy persisted for more than 5,000 years in Mesopotamia, and much longer elsewhere.
So what caused the shift? Alas, Scott fails to explore this in any detail. (Just one of the many weaknesses of the book, which
nevertheless manages to make its central argument very well.)
I will speculate that what caused the change was the coming-together of a sufficiently large number (five? a dozen? who knows?)
of individuals who lacked the ability to feel remorse, shame, or compassion, and who were motivated purely by a desire to enrich
and empower themselves. Modern psychology calls these types psychopaths. I suggest that it was these individuals who, likely with
help from others with the related disorder of sadism (see recent research on "the dark tetrad"), were first able to subjugate
(Scott uses the very apposite term "domesticate") human communities and force them to labor on the land to produce a surplus,
which of course then could be appropriated by the psychopaths and their henchmen.
I am not aware of anyone else who has advanced the notion that civilization was founded by psychopaths and sadists. But recent
psychological research (popularized in books such as Babiak and Hare, "Snakes in Suits: When Psychopaths Go to Work") suggest
that psychopaths are four times more commonly represented in upper management than in the population as a whole, so it seems plausible
to me, at least, that the project of civilization and its attendant destruction of the ecosphere has been, from its inception,
forced upon humanity by a small minority.
Phil, thanks for a great post. I have no doubt that psychopaths have had a great influence on civilization. Many great leaders
were no doubt psychopaths. Hitler and Stalin come to mind. However, not all of them were psychopaths. Rosevelt, Washington, Jefferson,
and many other U.S. presidents were not psychopaths. Neither was Churchill or Gandhi.
However, your original sentence was: I'd like to question the assertion that no one is in charge of the human race.
So I kept reading, waiting for you to tell us just who was in charge of the human race. Of course you did not do that.
My short answer to your question would be to ask "Cui bono?" Doubtless not everyone who reaps the most benefit from the biocidal
trajectory of late capitalism is dominated by one or more of the traits of the Dark Tetrad, of course. Some of us might even be
able to argue plausibly that we were unaware of the consequences of our actions. But even though late capitalist society is sufficiently
robust that it continues to work out its internal logic without a lot of direct guidance by the dark few, I doubt it would last
long without their presence among the wealthy and powerful classes. If their interventions on behalf of the killing machine could
be eliminated, my guess is that dismantling the machine would be a much easier project.
Ultimately, it's the ones in positions of power who manifest the traits of the Dark Tetrad whose interventions are critical
to maintaining the status quo. If anyone can be said to rule the earth, it's them.
An intelligent alien visitor to our planet would reasonably conclude that, although individual humans are intelligent to various
degrees, the human species as a whole is profoundly unintelligent. It has ample means of diagnosing what has happened, is happening,
and will happen. Yet, because it has never developed any organ comparable to the individual's conscious brain, it does nothing
about the obvious threats it faces.
That is my view as well! Though some like E.O. Wilson argue that we have evolved into an eusocial species and can at least
in theory function as a hive or termite mound. Where the collective intelligence emerges and even though the individual ants or
bees are stupid the anthill is an entity unto itself is smart and knows how to defend itself. See also Douglas Hofstader and Daniel
Dennett's book, 'The Mind's I', Chapter 11 titled Prelude Ant Fugue. http://themindi.blogspot.com/2007/02/chapter-11-prelude-ant-fugue.html
Also check out Curtis Marean's talk at the end of Inconvenient Truths – From Love to Extinctions from the link I provided above
from the ASU origins debates. He specifically makes that analogy about aliens, in his talk.
Marean is a professor in the School of Human Evolution and Social Change and the associate director of the Institute of
Human Origins at Arizona State University. He is interested in the relation between climate and environmental change and human
evolution, both for its significance as a force driving past human evolution, and as a challenge to be faced in the near future.
Curtis has focused his career on developing field and laboratory teams and methods that tap the synergy between the disciplines
to bring new insights to old scientific problems. He has spent over 20 years doing fieldwork in Africa, and conducting laboratory
work on the field-collected materials, with the goal of illuminating the final stages of human evolution – how modern humans became
modern.
" Yet, because it has never developed any organ comparable to the individual's conscious brain, it does nothing about the obvious
threats it faces."
Such an organ would be very costly, in terms of depriving humanity of the energy and resources devoted to it, depriving us
of the use of these resources for other purposes.
Evolution doesn't create organs that will be useful in dealing with new circumstances, by plan, ahead of time, except by accident.
It's just a "lucky accident" FOR US TODAY that our own ancestors evolved hands capable of grasping things such as branches ..
which set the stage for us to be able later on to grasp a stone and use it as a hammer or weapon.
No planning is involved. NONE. Various deists who accept the reality of evolution but still believe in higher powers disagree
of course.
I can't prove they are wrong. I don't believe anybody else can. All we can do is demonstrate that they have no evidence that
such higher powers exist.
An absence of evidence is not evidence of absence, lol.
I doubt if "intelligent" aliens are any different than we are – and therefore probably have a very short life expectancy should
they ever get to an industrial age – evolution can only work from one generation to the next and is therefore incompatible with
longer term planning for species longevity.
"It has often been said that, if the human species fails to make a go of it here on the Earth, some other species will take over
the running. In the sense of developing intelligence this is not correct. We have or soon will have, exhausted the necessary physical
prerequisites so far as this planet is concerned. With coal gone, oil gone, high-grade metallic ores gone, no species however
competent can make the long climb from primitive conditions to high-level technology. This is a one-shot affair. If we fail, this
planetary system fails so far as intelligence is concerned. The same will be true of other planetary systems. On each of them
there will be one chance, and one chance only." – Sir Fred Hoyle
Thanks for posting this Hoyle quote Steve. I have read it before, many times. And the truth of it is so obvious. All the things
that have enabled this wonderful abundant life will soon be gone. Then what?
We recycle what we can, we use less of scarce resources as prices rise and we try to find substitutes for resources as they
become scarce. Also population will fall as TFR falls (with a time lag due to population momentum) putting less pressure on resources.
None of this will be easy, and perhaps not possible, hard to predict the future.
Dennis, Hoyle here, is talking about long-term. Recycle or not, we will run out of all fossil fuels and eventually all metals.
However, recyclig will help, in the short term anyway.
No, we cannot really predict the future. All we can do is look at what is happening right now and say: "If this continues ."
And Dennis, it will continue. Human nature may be changed by evolution. But that will take many generations and tremendous
evolutionary pressure. So right now, human nature being what it is, we can predict that collapse is just down the road. Just how
far down the road is what we are trying to figure out right now.
Ron, if we look at the apparent numbers, say of many species, collapse appears already here, just that the shockwave hasn't hit
yet. Remember, if you see an explosion in the distance, it takes awhile to hit.
Yes some things will continue and others will not.
For example fossil fuel output has grown pretty steadily in absolute terms (about 163 million tonnes of oil equivalent per
year from 1981 to 2016) and I expect that will change (it will not continue).
The total fertility ratio has decreased at about 1.38% per year from 1965 to 2015, but I expect this will continue until the
World TFR approaches the high income nation average of about 1.75 (which would be reached in 2040 if the 1965-2015 rate of decrease
continues).
There may be more fossil fuels available than either of us think, but if my medium scenarios are correct there may be enough
fossil fuel to enable a transition to non-fossil fuel, then we just need to deal with other depleting resources.
Note that the fact that fossil fuels have peaked and declined (which should be apparent by 2035 at the latest), may enable
people to realize that this will be true for every scarce resource and perhaps we will plan ahead and recycle, and use resources
more efficiently.
Much of this is a matter of education.
Perhaps the meaning of soon we use differently.
When you say "will soon be gone." Can you define soon in years.
The sun will eventually destroy all life on Earth, but not "soon", as I define it.
Well, perhaps I should not have said "gone". There will always be trace amounts of everything left. And nothing will suddenly
disappear. There will be a decline curve for everything. But let's deal with the one with the least future abundance, oil. I believe
we are at peak oil right, or very near it anyway. The bumpy plateau may last from 5 to 10 years. Then the decline curve will
be much steeper than the ascent.
Dennis, you must be familiar with the phrase "You cannot get blood from a turnip". High prices will not create more oil in the
ground. We will most definitely have higher prices but they will be high because we have reached the peak. So, $100 oil will not
create a higher peak.
Just my guess but I believe the plateau will average less than 82 million bpd.
Is it a trailing 12 month average of between 80 and 82 Mb/d?
I imagine we will break above 82 Mb/d in 2018 if oil prices are over $65/b (Brent in 2016$) for the annual average in 2016.
For the most recent 12 months (EIA data) ending August 2017 we are at 80.93 Mb/d.
In the low price environment since 2015 the trend in World output is an annual increase of 280 kb/d. This rate of increase
is likely to double (at minimum) with oil prices over $80/b, which would bring us to 82 Mb/d by 2019 or 2020, perhaps this will
be as high a output rises, but my guess is that there is a 50% probability that output will continue to rise above this and perhaps
a 25% probability it may reach 85 Mb/d around 2025.
I thought I did that Dennis. I the bumpy plateau will average about 82 million barrels per day or less. There could be spikes
and dips and it will last from 2 to as much as 10 years. But when it heads down, it will do so with a vengeance.
Ehrlich underestimated the Green Revolution and Haber/Bosch factor that was really upping food production at the time.
Ultimately, he will be proven right.
I met Ehrlich personally when he visited Va Tech sometime around 1972. Visiting scholars often have smaller seminar meetings after
making their presentation to the larger U community, which he did. Not many people attended the particular seminar I participated
in , probably less than a couple of dozen. I was taking some ag courses there at the time, and enjoyed a long conversation with
him.
You're dead on. He badly underestimated what we farmers could do, and are still doing, given the necessary industrial support
system that keeps industrial level agriculture humming.
Sooner or later . We are going to have to deal with the Population Bomb. The resources we are devoting to industrial ag aren't
going to last forever. Neither are nature's one time gifts of soil and water so long as we are in overshoot.
I was head over heels in love with a milk and corn fed girl from Ohio and we were about ready to join the Peace Corp or something
along that line, and go someplace and save the people in some backwards community by teaching them how to farm the American way
all day and enjoy each other all night of course.
But one of my crusty and profane old professors took me aside and asked me if I really wanted to go to XXXXX and teach starving
people how to produce twice as much food so that twice as many of them would starve a generation down the road.
HE was right about the increase in production just resulting in more mouths to feed . back then. Since then, things have changed
dramatically . in SOME countries.
There are good reasons to believe that birth rates may fall dramatically within the next decade or two in at least some of
the countries that still have exploding populations. Maybe a few of them will manage to avoid starvation on the grand scale long
enough for their populations to stabilize and decline.
It's too late for falling birth rates to prevent famine on the grand scale in a hell of a lot of places.
First off, do I think it's technically possible that we can feed a population that peaks around nine billion a few decades
down the road?
This answer depends on how well energy supplies and the overall world economy holds up, with some wild cards thrown in relating
to climate, depletion of certain critical resources such as fresh water and minerals such as easily mined phosphate rock, etc.
New technology and the reactions of the people to it will also play a big role.The role played by governments local to national
to international will be critical, and huge, because only governments will have power enough to FORCE some changes that may and
probably will be necessary.
Here are a few examples.
It may be necessary to force well to do people aka the middle classes, to give up eating red meat for the most part, so that
grain ordinarily fed to cattle and hogs can be diverted to human consumption.
(I expect rich people will still be able to get a ribeye or pork chop any time by buying up ration tickets, or buying on the
black market, or paying an exorbitant consumption tax, or any combination of these strategies.)
Fuels, especially motor fuels, may be tightly rationed, so that enough will be available to run farms and food processing and
distribution industries.
Large numbers of people may be paid or coerced into going to work on farms or in community gardens or greenhouses.
A substantial fraction of the resources currently devoted to other needs or wants may have to be diverted to building sewage
treatment infrastructure designed to capture and recycle the nutrients in human sewage.
I could go on all day.
Bottom line, I think that barring bad luck, it is technically possible that we can feed that many people that long, and for
a while afterwards, as the population hopefully starts trending down.
As a practical matter, I don't think there WILL BE food enough for nine billion.
It's more likely in my opinion that some countries are going to come up desperately short of food, and be unable to beg, buy
or steal it from other countries. Some people, and some countries, are likely to resort to taking food, and other resources of
course by force from weaker neighbors .. maybe even "neighbors" on the far side of oceans.
I may be too pessimistic, but I'm one of the regulars here who think that climate change for the worse, much worse, is in the
cards, and I spend a few hours every week reading history. Humans have always been ready to go to war, even without good reasons.
A lot of people in desperate situations are going to see war as their best option, in my opinion, over the next half century.
Maybe my fellow Yankees will be willing to give up their burgers for beans so that kids in some far off country can eat. I'm
not so sure we are compassionate enough to do so on the grand scale.
If total fertility ratios continue to fall (for the World they fell from 5 in 1965 to 2.5 in 2015) about a 1.38% per year,
there may be no catastrophic collapse.
If that average rate should continue for 16 years then World TFR would be at 2 (below replacement level) by 2031. If the rate
of decrease in TFR experienced from 1965 to 2015 continues for 35 years (to 2050), the TFR for the World would be 1.54 in 2050.
Based on UN data from 2015, 65% of the World's population had a weighted average TFR (weighted by population) of 2.05, but
a more sophisticated calculation using estimates of the population of Women of child bearing age I have not done, I simply used
total population to weight the TFR from each nation which implicitly assumes the age structure of each nation is identical which
is clearly false.
Exactly! That's been my point from the very beginning. It is already way too late to fix things.
We have a predicament that must be dealt with, not a problem that can be solved.
Yeah, they shot white people. Can't have that. Nowadays the cops shoot three people on average every day in America. Nobody cares,
life is cheap in America. Gun deaths are the price of freedom. Native Americans run about three times the risk of white folks,
and black folks run about twice the risk.
It is obvious that humans are the major drivers of extinction on the planet. We are in the Sixth Extinction event and we cause
it directly and indirectly through our actions. the why is quite obvious, all species live to propagate and expand to their limits,
our limits are global at this point and so are our effects. I don't see energy as much of a problem as there is plenty of it in
various forms and we can obtain it if we want it. That however means continuing the high tech industrial form of civilization
which we have embarked upon. Can that be made sustainable and much less harmful, even helpful? Of course it can, it's all about
wise choices and thinking before we act instead of just going for profit.
The loss of vertebrates is just horrible but the loss of invertebrates will be the undoing of our farming and food production
and much of the other life that depends upon them. The loss of insect life due to global human generated poisoning of the environment,
especially food production areas, will unwind much of the food production.
As collapse starts, the chaos of riots and crime will rise sharply. All those mentally ill and drug addicted people will no longer
have their chemicals, causing a trigger point of violence and chaotic actions.
However the major fast cause of loss of human life will be disease. People forget how it was just a few generations ago before
antibiotics. Diseases will spread rapidly among the weak and starving, public sanitation will fail causing more disease to spread.
Clean water supplies will become absent, compromised or even purposely wrecked. Hospitals will fail because of both being overrun
and the power will fail plus supplies will fail. Disease will grow and spread among both people and their animals. It could take
less than a generation to drastically reduce the population of the species, with the resulting loss of knowledge, technical ability
and industrial ability the cascade will go further.
In the bad case scenarios much of the infrastructure will burn putting up a cloud of aerosols and GHG's as well as causing a large
toxic pulse to the environment.
But on the other side humans are very inventive and determined to continue the system that supports a huge population. So we
may expand this time forward for quite a while, but only through smart choices and changing how we do things such as agriculture,
industry and technology. Smart choices, not choices just for profit.
Humans need not worry about the Falling EROI, the Falling Carrying Capacity or the degradation of the environment. Those no
longer matter now that BITCOIN is now trading over $11,000.
Technology will solve all our problems and Bitcoin will make us all wealthy once again.
Ron -- The full text of this paper in SCIENCE will cost you 15 bucks but in my opinion, is well worth it; below is the Abstract.
Commenters are welcome to talk about educating women, etc. but its too late for Africa for the balance of this century. I have
personally observed the situation in Central Africa where you can see a school each containing about 1,000 kids located at roughly
one-kilometer intervals along all significant roads -- a lot of kids. Virtually all schools in Africa are run by churches (of
all types), and you can guess what these guys are teaching about birth control: I've asked, and the answer is NOTHING. AFRICANS
LOVE KIDS. And, health care has improved greatly over the past few decades meaning general health has been upgraded and infant
mortality has been reduced greatly. In fact, I would say the bulk of the UN's efforts in Africa are directed towards improving
general health at which they have been successful.
Sorry for the inarticulate ramble but this is a rather personal interest of mine partly because our family is supporting a
young girl in Uganda who will soon become a medical doctor. I had promised to stop commenting on the Blog but the African over
population crisis issue is one dear to my heart.
WORLD POPULATION STABILIZATION UNLIKELY THIS CENTURY
"The United Nations recently released population projections based on data until 2012 and a Bayesian probabilistic methodology.
Analysis of these data reveals that, contrary to previous literature, the world population is unlikely to stop growing this century.
There is an 80% probability that world population, now 7.2 billion people, will increase to between 9.6 billion and 12.3 billion
in 2100. This uncertainty is much smaller than the range from the traditional UN high and low variants. Much of the increase is
expected to happen in Africa, in part due to higher fertility rates and a recent slowdown in the pace of fertility decline. Also,
the ratio of working-age people to older people is likely to decline substantially in all countries, even those that currently
have young populations."
There is an 80% probability that world population, now 7.2 billion people, will increase to between 9.6 billion and 12.3 billion
in 2100.
I think you are about 237,500,000 too low with your estimate of world population. Well, that was as of a few minutes ago. It
was 7,437,500,000 last time I checked. World Population Clock
However, I think the UN is way off on their population projection. I believe that world population will reach 9 billion by
2050, just about a billion and a half above where it is now. However, I doubt it will ever go much above that. The UN, of course,
is predicting no catastrophes. After all, that's not their job.
The UN systematically underestimates the fall in birth rate associated with better education for women and their access to health
care and contraceptives.
My work suggests that the world runs out of more land that can be put under grain by 2035. This is mainly Brazil and Russia. Just
about every country in Africa is importing grain now. Therefore most of their population growth has to be fed on imported grain.
Most of the costs in producing grain are in energy so a rising oil price will have a leveraged effect on food prices.
Glad you decided to comment. Yes Africa is indeed a problem as far as population growth. With education and improved access to health care and internet
access on smart phones, African women may become empowered and decide to control their fertility using modern birth control. The
transition to lower fertility can happen in a generation.
As an anecdotal example, my family and my wife's averaged a Total fertility ratio (TFR) of 5.5 for the two families (close
to the average sub-Saharan TFR), the next generation of 11 children in total had a total of 6 children for a TFR of about 1.1.
Unscientific and likely too optimistic, but not that different from what occurred in the upper middle income nations of the
World (population about 2.4 billion in 2015) where TFR decreased from 4.93 in 1975 to 1.93 in 2000 a period of 25 years.
It is the low income nations that have lagged in reducing TFR, economic development is a key ingredient to getting population
under control. Easier to say than to accomplish.
Dennis – I guess this site is rightfully energy-centric but what's your view on the other limits that are showing up like potable
water, top soil, phosphorus?
I think recycling human waste might help with top soil and phosphorus, though a Farmer would know more than me. I think recycling
water from sewers can also be done and eventually the expansion of solar power may allow desalination of sea water.
In short, I think there are solutions to these issues, especially as we move to more sustainability (less beef production would
help) and a peak in population as education levels improve would also help.
Some nations such as Iran have made amazing progress on their TFR, from 1990 to 2005 (15 years) the TFR fell from 5.62 to 1.97
and by 2015 it had fallen to 1.75.
African nations should find out what happened in Iran over that period and import some of the lessons learned.
Note that there are many examples of a rapid demographic transition, another is South Korea where total fertility ratio (TFR)
decreased from 5.63 to 1.60 from 1965 to 1990 and in 2015 had fallen to 1.26.
Using South Korea as an example of increased sustainability (the point here?) is not helping your case much Dennis. As their TFR
decreased, their consumption grew exponentially. Just since 1991:
Seems their per-capita energy use has skyrocketed in the last 60 years or so, and they now import most of their energy sources.
They became 9th in CO2 emissions as of 2005. Looks like increased standards-of-living and declining birth rates are not much of
a solution for reducing planetary impacts.
I agree. The point was that population growth can be reduced.
We need two things to happen, reduced use of fossil fuels (which peak fossil fuels will take care of by 2030) and reduced population
(which peak population in 2050 to 2070 will take care of).
Figure below is from page 1153 of the article linked above.
Note that in 2015 the TFR for South Korea was 1.26, if average life expectancy does not rise above 90 years and World TFR falls
to 1.25 by 2100, then World Population falls from 8 billion to 2 billion in about 100 years. This reduces the use of resources
and the pressure on other species.
Transition to wind and solar with pumped hydro, wind gas, and thermal storage backup can reduce carbon emissions and reforestation
as population falls will help to absorb some of the carbon in the atmosphere. Carbon capture and storage of burned biofuels and
cement that absorbs CO2 would be other options for reducing atmospheric CO2.
As fossil fuel peaks prices will rise and the transition to non-fossil fuel will speed up.
The process will be messy, but we are likely to muddle through as there is not much alternative (or not a better one as I see
it.)
I think a common factor in all countries seeing large falls in birth rates is that they are preceded by large falls in death rates.
This typically takes a couple of generations, which is one of the biggest causes of population overshoot. In Iran it was maybe
a bit faster but not much – from above 20 per 1000 in the 50s and 12 in the eighties to around 4 now.
Regarding fertilizers, when you realize that there was a "human bones" market in the 19th century, and that for instance England
"emptied" the catacombs in Sicily for that, or took back the soldiers bones from Waterloo, you get a sense of the urgency for
fertilizer without phosphorus or natural gas based ones.
See for instance below :
"England is robbing all other countries of their fertility. Already in her eagerness for bones, she has turned up the battlefields
of Leipsic, and Waterloo, and of Crimea; already from the catacombs of Sicily she has carried away skeletons of many successive
generations. Annually she removes from the shores of other countries to her own the manorial equivalent of three million and a
half of men Like a vampire she hangs from the neck of Europe." https://livinghistoryfarm.org/farminginthe40s/crops_04.html
Or below : https://medium.com/study-of-history/the-bones-of-waterloo-a3beb35254a3
I had a better link regarding the bones from Sicily catacombs (many due to the plague epidemia I think), but cannot find it
back.
And this page above (from "Justus Von Liebig : the chemical gatekeeper" p 178) is also interesting on other aspects, suggesting
Liebig would today address energy ..
The churches which promote childbearing must be destroyed. They are basically the enemies of humanity. Since they're losing in
North America, Europe, South America, and most of Asia, they are targeting Africa.
(And *targeting* is the correct word -- they are deliberately sending missionaries to spread their sick, twisted doctrines
and spending lots of money to do so.)
If you read my story below, Food for the Poor is a religious group. In Jamaica I believe it is affiliated with
Missionaries for the Poor , an international Catholic organisation.
So while they are doing yeoman service in providing shelter for poor folks, they are doing diddly squat to encourage poor folks
to stop creating more mouths to feed and bodies to clothe and shelter. Isn't that just dandy?
Incidentally here's a recent newspaper article from my neck of the woods:
Youth unemployment in the Caribbean is said to be the highest in the world, and crime, partly fuelled by this high rate
of joblessness, is a major obstacle to economic growth in the region, according to Christine Lagarde, managing director of the
International Monetary Fund (IMF).
The IMF boss, who addressed the sixth High Level Caribbean Forum, held yesterday at The Jamaica Pegasus hotel in Kingston,
said that crime imposed several economic costs such as public spending on security and the criminal justice system, as well as
private spending on security. She also highlighted social costs arising from the loss of income owing to victimisation and incarceration.
Can anybody spot my comment? Hint: I used a pseudonym that should be familiar with everybody here.
Can we be so unpolitical correct to call for "A Pope onA Rope?"
Someone must draw a line in the sand- or should we all be under a religious spell?
Or do we want to break that spell?
This was discussed just this morning on NYC NPR, concerning homelessness and the housing provided for low income people. The gist
of it was that although there were programs to help the people with food and housing, very little was really being done to solve
the problems.
"This uncertainty is much smaller than the range from the traditional UN high and low variants. Much of the increase is expected
to happen in Africa, in part due to higher fertility rates and a recent slowdown in the pace of fertility decline. Also, the ratio
of working-age people to older people is likely to decline substantially in all countries, even those that currently have young
populations."
I have the impression that many of us myself included have an outdated and still colonialist view of African societies. I think
changes happening in many parts of Africa will surprise us and technologically leapfrog over much of the built infrastructure
of the OECD countries. I have seen it happen first hand in previously underprivileged parts of Brazil.
How we're using drones to deliver blood and save lives
Keller Rinaudo wants everyone on earth to have access to basic health care, no matter how hard it is to reach them. With
his start-up Zipline, he has created the world's first drone delivery system to operate at national scale, transporting blood
and plasma to remote clinics in East Africa with a fleet of electric autonomous aircraft. Find out how Rinaudo and his team are
working to transform health care logistics throughout the world -- and inspiring the next generation of engineers along the way.
BTW, I have a serious question! Does this kind of technology make the population crisis in Africa better or worse? Would like
to hear some thoughts on the matter.
It is uncanny how this lead post has come about just when I have been thinking about this subject recently. I am currently very
depressed, to the point I suspect it may be clouding my better judgment with respect to various matters. This depression is partly
caused by my views of the future of my little island in particular and the world in general. Let me try and illustrate how my
thoughts have been brought into focus recently.
I travel around the city I live in, passing through all the different types of communities from time to time. We have pockets
of extreme wealth as evidenced by palatial homes with swimming pools, tennis courts and all the creature comforts you would expect
in the home of a wealthy first world resident. Leaving these pockets of extreme wealth, one doesn't have to drive for more than
five minutes to reach pockets of extreme poverty, people who are so poor, they cannot pay rent and cannot envision ever buying
a plot of land or a house, so they build structures on any piece of land that they can get away with. This type of activity extends
across the island and there is no area that does not experience informal settlement (aka squatting). There is a political aspect
to this, in that in an effort to garner the votes of the large voting block that poor people make up succesive governments have
not discouraged squatting, to the point of encouraging it. See
yesterday's cartoon in one of the local rags
for a satirical perspective of the situation but, I digress.
I try to avoid too much contact with people outside my socioeconomic and educational class because it inevitably leads me to
being depressed but, sometimes I end up in that exact situation. This past Monday night was one such case and it was my observations
from Monday night that got me thinking about Peak Oil and carrying capacity and overshoot. I was invited to visit a gathering
and told to bring drinks and that they were going to cook so, I decided not to eat a meal before leaving the city. It was a forty
five minute drive, including a drive through late evening heavy traffic heading westward out of the city, past a big highway construction
project being carried out by a Chinese (honest to God, from China) construction firm that has been active in the island for a
number of years. On arriving at my destination I was told by my host that the gathering was at another house less than half a
mile away.
This particular house was one of
39 houses made
possible by the efforts of a couple from Grand Junction, Colorado (with pics) along with
the local branch of
Food For The Poor . I estimate that, these "houses" measure about
13ft. by 15 ft. inside and are supposed to include a kitchen, a bathroom and two bedrooms. The sister of my host was the recipient
of this house, being qualified for the charity as a result of being unemployed with four children, one of whom was either newborn
or yet to be born at the time the house was handed over to her. She was not yet thirty years old when her last child was born.
Does anybody see where I am going with this yet?
Back to the gathering. On arriving at the house my host informed that no food had been cooked. By this time I was hungry and
asked where was the nearest cook-shop where I could purchase a meal. I traveled with my host to Old Harbour, the nearest town
apart from Spanish Town. I can only describe Spanish Town as an overpopulated, crime infested, thug controlled mess, that becomes
a ghost town by midnight even though it is surprisingly busy by day. I asked my host if I should buy a meal for them also and
they declined but, by the time we got back to the house, they declared that they were hungry and needed to get something to cook
to go with the rice they had. So off we went to try and find a local shop that had what they wanted and was still open. First
one was a 24 hour joint, built using an old cargo truck body but it didn't have all they wanted so it was off to another one that
we managed to catch just as they were closing. We came away with a small packet of "veggie chunks" and some cooking oil. The little
propane stove had been fired up and the rice was almost done so in less than fifteen minutes a meal of rice and veggie chunks
was being served to four or five adults, one of whom had an infant, less than a year old, sharing the meal with her.
So let me weave together how all of this ties in with the subject of the lead post. First the "house" was only possible through
the generosity of citizens of a first world, developed country. The materials that made the house (lumber corrugated, galvanized
steel) are the products of extractive industries that rely heavily of FF, petroleum in particular. The soft drinks and alcohol
that I brought to the gathering were manufactured, distributed and retailed in a system, heavily dependent on external energy.
My vehicle runs of diesel. The rice for the meal I ate and the one at the house was imported from outside the island, again produced
and delivered with lots of help from petroleum. The chicken I ate was locally produced with imported grain, a product of industrial
scale agriculture, probably in the USA. Thankfully many of the chicken farmers are involved in a project that started with
15 kW systems at about 40 chicken
farms and seems to be expanding. The veggie chunks are a meat substitute protein made from soy meal, again a product of industrial
scale agriculture.
The cooking oil was probably one of soy, palm, canola, corn or coconut oil, produced at an industrial scale and imported to
the island. Jamaica was once an exporter of coconut oil before the industry was decimated by a disease called lethal yellowing
back in the early 70s. Virtually the entire population of coconut palms on the island was wiped out by this disease and even though
efforts have been made to resuscitate the industry using disease resistant varieties, more than forty years on, the manufacture
of coconut oil in Jamaica is a tiny cottage industry.
So here we have five or adults, two males and three females, one of which had four children with the other two having one each.
There were other people at the gathering but as far as I am aware only two had jobs, the brother of my host who left before the
meal and the woman with the infant who has a part time job selling lotto tickets. All of these people are living on the edge,
heavily dependent on a system that is in danger of collapse for their very survival and they are far from alone. there are thousands
of them if not hundreds of thousands on this island alone.
If for whatever reason industrial scale agriculture fails, the songbirds are going to be eaten out of the trees. I used to
dissect rats in my sixth form (12 and 13th grade) biology classes and there ain't much meat on them but, if we get hungry enough
maybe we'll turn on the rats. Without affordable propane, every tree and shrub will end up as firewood. This is the reason why
I have an almost obsessive focus on renewable energy, solar in particular. It is my hope that the deployment of renewable energy
can stay ahead of FF depletion long enough for global civilization to transition away from FF. It is my hope that our civilization,
seeing itself on a real time, renewable energy budget, will begin to recognize the fragility of our situation. I have to ask Ron
and others to forgive me as I continue to bring attention to the hopeful stories. It is the only way I can keep myself from sliding
into depression and despair. It is the only way I can cope.
The Green Revolution in the 60s was supposed to solve all our problems, and it solved a lot of them, especially in Europe and
Asia. It works well when you have a lot of water and farm intensively, but is destructive in semi-arid conditions and when used
in extensive agriculture, like the American Midwest.
After the Green Revolution, Asia boomed and Africa fell behind, prompting racist theories. Geography and climate are more likely
explanations. In India, for example, the more arid north did less well than the wetter south. The Chinese were the first to realize
the problem, and started a new generation of re-greening projects to boost agricultural production.
Meanwhile bad farming practices continues to rapidly degrade wide stretches of North America and South America. I was reading
recently about a county in SD that lost 19 inches (not feet!) of topsoil between 1960 and 2014. Many places in America simply
abandoned farming, like New England and Appalachia. People blame red dirt and the crick risin' in Appalachia and glacial rocks
in New England, but that wasn't a problem before soil degradation set in.
The Green Revolution focused on genetics and chemistry, which makes sense if applied correctly. Development economists were
puzzled that Kenyan farmers were uninterested in high yield seeds, but the explanation as simple: They need a regular water supply,
not better seeds. A lot of places in the world get 3-4 weeks of rain a years, and good seeds don't solve this problem. Pumping
the water out of the aquifier isn't the solution either, just ask anyone in Antelope Valley CA, a former grassland turned desert
by the alfalfa farmers.
My mother warned my to watch out for flash floods when camping in the desert. It took me decades to understand why flash floods
are a particular problem in the desert: More or less by definition, deserts are places where there are flash floods. The flash
floods are both cause and symptom of soil degradation. Deserts aren't places where there isn't enough water -- they are places
where rainwater runs off the surface instead of seeping into the soil. Degraded soil can't absorb water fast enough, surface runoff
degrades soil.
The problem with industrial agriculture is that it treats the great outdoors like a hydroponic farm -- it ignores soil ecology
and just assumes the hydrology will work itself out.
A more modern approach starts with water and soil. It's spreading rapidly in Africa, for example with the sand dams in Kenya,
the terracing in Ethiopia and Kenya, and the various planting pit (like zai and demi-lunes) in the Sahel and agroforestry (planting
trees in fields, or crops in orchards) in a lot of arid places.
It's true that mankind is pushing the limits of what the current ecosystem can carry, but it's also true that the ecosystem
could be much bigger than it currently is.
Meanwhile bad farming practices continues to rapidly degrade wide stretches of North America and South America. I was reading
recently about a county in SD that lost 19 feet of topsoil between 1960 and 2014.
There is a serious problem with that statement. No place on earth has 19 feet of topsoil, not even 19 inches over an entire
county.
Topsoil Wikipedia Topsoil is the upper, outermost layer of soil, usually the top 2 inches (5.1 cm) to 8 inches (20 cm). It has
the highest concentration of organic matter and microorganisms and is where most of the Earth's biological soil activity occurs.
EDIT: Here's a shot from Kalkriese, Germany where they are digging out a Roman-German battlefield. The artifacts are all found
at or just below the border between the black topsoil and the red dirt underneath it -- that was 7 BC
In the Kalkriese area, the farmers used sod planting ("Plaggendüngung"), i.e. they removed the top soil on large areas to improve
the soil on their fields.
Therefore, Kalkriese is an example how NOT to do it.
I think the thickness of the topsoil in the area speaks for itself.
My point is that as Ron points out, there is a limited carrying capacity for the planet, but I don't really think we are there
yet, because there are relatively simple methods available to make huge areas of the Earth's surface. Of course, even if it's
possible, it isn't clear it will happen.
there are relatively simple methods available to make huge areas of the Earth's surface.
That seems to be an incomplete sentence. Make huge areas of the Earth's surface what ? Desert? We sure can do that.
We are doing more of that every year. Scrubland? We are doing that also by cutting down the forest and trying to make farmland
out of it. After a few years the land will row nothing of value. That's happening in the Amazon right now.
There is nothing we can do to increase human habitual area without reducing the wild habitual area. That is what my post is
all about. We are destroying every wild thing by destroying their habitat, by taking their habitat for ourselves.
Your last paragraph is not correct. Much of the world is desert, and that desert could be much more productive than it is,
given the right agriculture methods.
Whether that will actually happen is another question of course.
That very same first world country that donated the materials has plenty of homeless and large amounts of poor. It also has large
amounts of empty buildings and huge amounts of food waste, yet they do not take care of their own. That is even a sadder situation
as people freeze to death, starve, and die of simple preventable health problems in one of the richest countries in the world.
Basic needs are not met and the governing bodies are constantly fighting to reduce the paltry benefits that are given. It's a
country full of hate for their own people and hate back at the haters.
There's no inherent evolutionary advantage to caring for people you have no relation to. That's the real reason why all of these
'safety net' programs you describe are hated in the general sense and under attack as time marches on.
Now Tony, we all know the public programs are under attack because of the greed and selfishness of people who already have too
much money and stuff.
We all know it is the greed and the overconsumption that is causing the destruction of our environment and possibly the whole
human race. That is a huge evolutionary disadvantage.
Helping, sharing and cooperating is the advantage. The selfish and greedy are like ticks sucking the world dry for their own personal
benefit.
I study the evolution of human ultra-sociality and the role of culture in enabling it. I am especially interested in how
humans evolved the capacity to cooperate with millions of genetically unrelated individuals, and how this links to the origins
of moral sentiments, prosocial behavior, norms, and large-scale warfare. To address these issues, I combine formal modeling of
the evolution of cooperation with fieldwork among the Turkana. The Turkana are an egalitarian pastoral society in East Africa
who cooperate, including in costly inter-ethnic raids, with hundreds of other Turkana who are not kin nor close friends. Through
systematic empirical studies in this unique ethnographic context, my research project here aims to provide a detailed understanding
of the mechanisms underpinning cooperation and moral origins.
I haven't read your good article just yet (although it is doubtful any of it will surprise me or add to what is already more
or less understood), but just to mention that I recently listened to a
podcast from Chris Martenson's site, Peak Prosperity, featuring William Rees from the University of BC
Two things about the podcast that stood out was that William was in fine form (articulate, clear, concise, passionate, 'deathly'
serious, etc.); and the second was his mention of possibly fundamentally changing the natural system of Atlantic cod (fisheries),
so that they may never recover. Not everything can simply reverse, and quickly enough, if they can, such as, say, with the depletion
of the ozone layer, and when it involves all kinds of living systems– much, and the intricacies/complex interconnections, of which
we are blissfully unaware of, despite some of our arrogant pretensions to the contrary (such as with regard to the avocation of
most if not all forms of geoengineering)– it is very serious.
What concerns me also is how some people, such as on this site, can ostensibly claim a required greenwashed BAU from out of
one side of their mouths, while on the other side, express grave concerns for the ecosystem. We cannot have it both ways.
To me, much greenwashed BAU is just swapping out different forms of rampant resource extraction, pollution and inequability
for other forms.
The system, along with its 'power-politics', is still intact.
IOW, there is no real change.
Loren, assuming that's you, I am certain that radical decline, if not outright collapse, is already well underway, despite
the obstinate mindlessness of some people. Just because some don't see something or want to see something doesn't mean it is not
there.
My simple recommendation, especially for certain people WRT this deathwish-for-a-culture is to let go/
get out (and in the process, learn things like permaculture and
local community resilience, and how our ancestors did some of it). Your comforts are much of an illusion (and predicated, for
example, on natural draw-down).
I knew you'd show up sooner or later and since you've always been critical of my support for renewables and EVs, let's bite.
"To me, much greenwashed BAU is just swapping out different forms of rampant resource extraction, pollution and inequability
for other forms.
The system, along with its 'power-politics', is still intact.
IOW, there is no real change."
Are you saying that "there is no real change" going from corporate owned, centrally located, large scale, FF fired generators
to small scale, individually or community owned, distributed renewable generators? If so, that's not what the FF and corporate
generator class in Australia thinks. They have captured the Australian federal government and are fighting renewables as hard
as they can.
Are you saying "there is no real change" going from ICE powered vehicles to EVs that, are perfectly happy to suck electrons
from any source including renewable sources individually owned or owned by a co-op of which the vehicle owner is invested? That's
not an opinion shared by the Koch brothers who are spending millions of dollars to try and paint EVs in a bad light in the eyes
of the public.
Surely you realize that an individual with solar on their roof and an EV is giving a big middle finger to the status quo, including
FF corporations and utilities who will no longer be able to feed at that individual's trough. In case you don't realize it, that
is a very big disruption of "system, along with its 'power-politics'" and no, in case you haven't been listening, "The system,
along with its 'power-politics'", will not be "still intact."
Now if you read my fairly long narrative further up, I hope the point I am trying to make does not escape you. That point is
that there are millions, no lets make that billions of poor poorly educated folks who depend on things like industrial agriculture
and the current status quo for the basic necessities of life, food, clothing and shelter. If the status quo collapses they are
dead, let me say that again, dead! I'm all for dismantling the status quo and replacing it with something that is much kinder
to all life on this pale blue dot we call home but, I shudder at the thought of millions or billions of human beings starving
to death, just as I shudder at what we are doing to the biosphere. Can you see why I'm depressed right now?
There is no real change if we are still relying on the monstrosity that is the crony-capitalist plutarchy/government-big-biz
symbiosis, such as for solar panels, etc. and/or what some misleadingly refer to as 'renewable'.
If you are in the biz– and I think you wrote hereon that you indeed are– then some might suggest, maybe even me, that you are,
say, 'soft-shilling' and/or rationalizing for your product using POB as your platform, and maybe problematically skewing the narrative
a little more towards a dystopic system that we should be getting the hell out of, while making preparations to do so, like learning
how to do the basics in a local, resilient context so that we do not need industrial agro. The longer we rely on industrial anything–
and as if it's somehow morally/ethically neutral– the harder/faster we will likely fall, maybe along something of a seneca curve.
We cannot eat solar panels and electricity is not a necessity, except to for the brainwashed and the brainwashers.
Attempting to play on people's heartstrings, such as about poor people in so-called undeveloped locales to sell a product they
don't need and that would risk locking them– and others– into a certain ('Western') lifestyle, in some contexts, approaches contemptible,
by the way.
You should already know how sociogeopoliticultural ideologies like Westernisation is foisted upon the global masses through
physical, cultural, mental and intellectual colonialism, with the result often being wars and deaths to people and traditional
ways of life. Just consider the Middle East right now. In the name of what? Oil and oligarchy?
You've said it yourself hereon that you have some kind of slavery in your family, yes? Well, many people are still slaves anyway,
if with coats of white paint. Libya was in the news recently about that– slavery– incidentally.
If we want to do solar panels etc. the right, ethical ways, we need sea changes, such as that avoid slavery and privilege-by-gun,
but I highly doubt we will manage them in time, and suspect that we are already long past that time.
I am not yet in the business of doing anything with solar PV so, as of right now I have no product that I am shilling for, soft
or hard. I am in a business connected to entertainment if you must know. The entertainment business can by no means be classified
as non-discretionary and recent technology has allowed far more people to compete with me so it will be necessary to get out of
that at some point. How about viewing this as something I see as as worthwhile pursuit for the future of mankind, given my skill
set and thus my advocating it as a worthwhile area for me to pursue a vocation in? I am not only advocating for solar PV because
it's a field I can participate in but, because I think it can contribute a great deal to reductions in carbon emissions among
other noble aspirations.
Are you going to start suggesting that I want to get into the business of manufacturing and selling EVs just because I am suggesting
that large scale EV adoption would be a good thing? I ain't no Elon Musk if that's what your thinking. Now, if the shit hits the
fan and motor fuels became really unobtainium, I might take a stab at an EV conversion business, a la Jack Rickard but, right
now even Jack seems disillusioned with that pursuit, having posted only one new video since the middle of August and only two
new blog posts since the last week of July. At any rate the necessary preconditions for such a business to be successful in an
age of factory made EVs, do not exist.
I am with OFM on the point that some of your ideas for agriculture cannot adequately serve the needs of a rapidly growing population
of 7.5 billion people. My dad who was a descendant of rebel runaway slaves, known in Jamaica as
Maroons , was into agriculture and left me and my
surviving sister a six acre homestead when he died. I can tell you agriculture ain't a walk in the park. It's damned hard work
and carries all sorts of risks not faced by other pursuits (droughts, thieves, diseases pests etc.) . You seem to have some romantic
view of agriculture that I do not share.
As for locking people in to a western lifestyle, that doesn't apply to Jamaica. The western lifestyle came with colonization
and slavery. Do you think that people outside of the developed word should forgo electricity, computers, cell phones, the internet
and other modern conveniences?
Despite all of that, the Caribbean has been bucking western culture for centuries. Trinidad and Tobago has their carnival and
it's music and Jamaica has had as big an impact on western culture with our music (reggae and ska) as western culture has had
on us. Even this past weekend, a dark skinned Jamaican woman sporting a huge afro, placed third in the Miss Universe pageant.
The girl that won was from South Africa and could pass for Caucasian whether she is or not and I didn't see any other black women
in the contest sporting an afro hairstyle (not that I watched it).
When it comes to some things, that train has already left the station. No point in romanticizing about what could have been.
I'd rather focus on what small steps we can take to improve things in the here and now, while moving us to a more sustainable
future. I will probably remain depressed until the new year. Probably more to with not having any immediate family around for
"the festive season" than anything else. Maybe the new year will bring some good news on the renewable/sustainability front! That
would cheer me up!
Islandboy–
After being in Central America for quite a while, and that heavy Catholic noose around everyones neck, it was so liberating to
get out to the islands.
Lets Party Mon!
Now you're talking! We in the Caribbean know how to party! I wouldn't be surprised if we woke up the morning after the collapse
and said, "Collapse? What collapse? We were too busy partying to notice"
Having said that, Trinidad is heavily influenced by catholicism, their carnival being associated with the catholic observance
of Lent. I don't see any evidence of the Trinis (as they are known in the islands) taking the admonitions of their various religious
leaders too seriously. Hell! I've never been to Trinidad carnival but, I hear it's one wild party!
On the other hand, Trinidad should have some long term concerns about what they are going to do after Oil and Gas production
fall below consumption and they have to start importing hydrocarbons. What if either prices are too high or supplies are limited?
What if prices collapse due to lack of demand as Seba suggests will happen after EVS and solar begin to dominate transport and
electricity generation?
Way too early to say. The article dated October 4, 2017 says this:
"The feasibility study will evaluate the viability of installing the wind farm, which would represent one of the first offshore
wind installations in Jamaica and the greater Caribbean region."
I expect the feasibility study is going to take months and I would expect them to do some detailed analysis of the offshore
wind resource in the process. It is good that this study is being done so soon after two devastating hurricanes have hit the region.
Should keep hurricanes very much in the picture.
Looking at some Caribbean buoy data it looks like wind would be a good source of power for the islands.
Beside the wind, the island has about 54 billion kwh/day of sunlight falling on it. That is more than ten times the total energy
production per year for the island. Energy is not a problem, how the energy is generated is the problem.
Cover less than 0.1 percent of the island with solar panels and make up the difference with wind power.
I have done some numbers in terms of what it would take to power the island entirely with renewables, mostly solar. Not impossible
but the technocrats, one of whom is a college classmate of mine, cannot wrap their head around 100% renewable electricity!
Incidentally, I came across a video presentation on Youtube (with a really annoying backing track) that at about
3 minutes in contains the following text:
"Seba's forecasts are predicated on the assumption that the cost of generating and storing electricity will continue to fall
– to the point where just about all generation will be solar by 2030. But electricity production would only have to increase by
18 percent in the US to cope with a complete switch to EVs, he said"
That 18% figure squares quite nicely with some back of the envelope calculations I have done.
I've made good friends with a couple of guys from Jamaica who have friends and family here that have managed to get their permanent
paperwork taken care of.
Unfortunately it doesn't look as if they will ever be able to get permanent resident status. They're older guys, and about
as mellow and fun people to be around as I have ever met. They come up for an extended family visit every fall, which just HAPPENS
to be the time of year local farmers need a lot of extra help, lol.
As soon as I'm finished with family duties, I'm going down to spend a month with them.
Will be spending some money on food and utilities and a few new nice things for them of course, because while they're friends,
they're not well off.
We cannot eat solar panels and electricity is not a necessity, except to for the brainwashed and the brainwashers.
Than do the world a favor and unplug yourself from all sources of electricity! At least we here won't have to read your fantasies!
BTW there are plenty of people who understand that the current capitalist system is not the answer, read Kate Raeworth's, Donut
Economics for starters.
Modern humans could no more live without electricity in the 21st century than they could live without food and water. Try living
without refrigeration in any city in the world. You would cause massive starvation in a few days. Try providing medical care to
an urban population without electricity.
You have to be completely delusional to suggest that electricity is not a necessity!
That's all irrelevant to my point which still stands– especially when the system is destroying our planet. We have lived with
electricity for a relative split second of our existence as a species on this planet.
Besides, if we're not treating the planet properly, do we even deserve electricity and its conveniences? I think not.
And then there are assorted uses for electricity, some being more questionable as priorities than others.
Electric car versus fridge?
FWIW, I have personally lived without refrigeration for months in a major city, at least at home after shopping at the grocery
store LOL, but also in the country– more hard-core.
If your local community especially is growing and processing its own food, then it's easy.
There's pickling, drying, fermenting, spicing/salting, alcohol, etc., and natural cool-storage, such as root cellars and simple
cooling-by-evaporation systems.
There's also 'eating as you go'. Other animals do that, and I've never heard of an animal that needs a fridge or electricity,
have you? Maybe your cat at home, but even Meow Mix can last outside the fridge, yes?
But some of us have to actually help make the changes, such as to the narrative, and limit the cling to some kinds of BAU narratives
and fantasies.
Do it for Mother Earth, Fred. Or me. Or Harvey Weinstein or whoever/whatever motivates you. Coral.
Obviously, we can't just turn off the lights and fridges overnight, but there are plenty of ways to manage, maintain and consume
food that don't require a fridge. So if we can't just turn off the lights and fridges overnight, maybe we should start talking
more about how to live without them and/or with greater resilience.
But even if the juice stays on forevermore, some juiceless skills and knowledge are great to learn, have and apply.
BTW, I just watched this documentary on rare earths– the apparently
highly-polluting stuff that's supposed to help power, until they run out, all these new and relatively-useless electrical gadgets
now and in the future to get off of those other pollutants.
but just to mention that I recently listened to a podcast from Chris Martenson's site, Peak Prosperity, featuring William Rees
from the University of BC
Highly recommended.
And I'm not a fan of some of Martenson's guests.
I came across the podcast indirectly via another site, but do sometimes run into Chris' material. He seems good at interviewing
and is easy to follow in videos.
This post is going to be a gold mine for me, because it relates directly to so much of what I'm working on for publication in
book form if I ever manage to finish it to my satisfaction. Here's hoping it attracts over a thousand comments, lol! I'm especially
interested in comments that dispute my own, because those are the ones enable me to understand my own blind spots.
Now so far, nobody has said anything about what I will refer to as the SECOND key fact that one must understand to understand
evolution. Hoyle missed the first one altogether, making a total fool of himself, although he was a brilliant scientist, one of
the top men in HIS field, his mistake being that he failed to understand that evolution BUILDS on it's PAST " accomplishments".
The second key fact I am hereby pointing out is that while evolution creates new life forms that reproduce to fill any and
all available niches, there's no GUIDANCE involved, no overall PLAN, no GOD in charge, if you wish to put it that way.
Evolution is characterized in large part by parsimony, by being conservative in the use of resources. Animals that don't have
use for claws don't have claws like tigers, lol, and animals that don't eat grass out in the fields don't have digestive systems
like COWS. Evolution creates organisms that are "good at" taking advantage of whatever resources are available, WITHOUT REGARD
ANY FUTURE CONSEQUENCES because there is NO LONG TERM PLAN. Behavioral BRAKES that aren't needed don't evolve, lol, and countless
things that would be extremely useful, like eyes in the back of our heads, which would keep us from being attacked from the rear,
don't often evolve either, because .. well because of more factors than I have any inclination to cover at this minute. Half of
the SHORT answer is that eyes in the back of our heads would cost us more in terms of sacrificing something else than they would
gain for us. The other half of the SHORT answer is that since pure chance plays such a big role . the odds are astronomically
high against it happening anyway.
This a comment/ rant, not a BOOK. The BOOK is in the works, and will be available free to member of this forum who may want
to read it and point out shortcomings in it before I publish it, most likely for free on the net. I'm not so arrogant as to think
anybody will PAY for it, lol.
Dead ends, blind alleys, and death, at the individual level, and or at the species level, means absolutely NOTHING to "Mother
Nature" because she is not sentient, she's not moral, she's not even ALIVE in the usual sense. She's just an artifact, a tool,
that we naked apes have invented in our efforts to understand reality.
What I'm getting at, since She IS parsimonious, is that She does not provide brakes where none are needed.
Sometimes things do evolve that prove to be useful under new circumstances, but when this happens, it's just a lucky accident
for the creature involved. If for instance a creature evolves a forelimb capable of grasping a branch, so that it can climb better,
lol, later on the ability to GRASP something MAY come in very handy, because it sets the stage for that creature being able to
grasp a stone which can be used as a tool or weapon. This does NOT mean the creature WILL eventually discover the use of tools
and weapons. It DOES mean the probability of such evolution is vastly enhanced. There's NO PLANNING INVOLVED . except in the minds
of deists who accept the reality of evolution while also retaining the concept of a God or gods or some guiding force of some
sort.
IF the need arises for BRAKES, well then, die off, or even extinction, takes care of the problem. If a given species eats only
a given plant, and that plant goes extinct, Mother Nature does not grieve for either the plant, nor the species that feeds exclusively
upon it,which very likely also goes extinct. She doesn't even consciously keep score, as indifferently as a hired bookkeeper keeps
books for a client he has never met and will never meet. She does however inadvertently create a RECORD of historical "scores"
, which we can read. It's the fossil record.
It's rather amusing that professional biologists go around talking about human stupidity as if there is something inherently
WRONG with people, as if we are collectively DEFECTIVE. We are what we are because we are final product ( up until today ) of
our own evolutionary history. We're as " good " or "well designed "as we are evolved to be, like all other living creatures.
Engineers build in safety margins, and add features that may be useful, under certain circumstances, when they design things,
because they DO work with and from PRECONCEIVED PLANS. Mother Nature doesn't make plans, she just deals and redeals the cards,
over and over, and will continue to do so until all life on this planet perishes which won't be until the sun expands sufficiently
to destroy the last vestiges of life on it.
We are NOT something different from the rest of biological creation, we do NOT operate under different rules, we aren't on
some sort of fucking pedestal, separate from the rest of the biosphere. THAT whole crock of shit sort of thinking is one of the
cornerstones of kinds of the thinking that some of the regulars here like to make fun of, such as religion, nationalism, racism,
etc.
A biologist who talks about humanity as if humanity SHOULD BE EXPECTED to display a hive like consciousness has his head up
his ass. NO. NO. No.
We have succeeded,basically for no other reason that accident in the last analysis, to the point we compete mostly with each
other, rather than other species.
The evolved PROGRAMS hard wired into our brains that drive our behavior DO NOT include much in the way of built in brakes,
because BRAKES HAVE COSTS. If we over populate, if we use up critical resources on which we depend for our survival, and perish,
there's NOBODY who gives a shit.. other than some of us who are aware of the fact that we ARE in overshoot. Mother Nature is INCAPABLE
of giving a shit.
The whole fucking idea that we are SOMETHING SPECIAL was probably originated by the first priests and their allies. It's an
idea that has little to do with any discussion based on real SCIENCE within the context of understanding our own overshoot .
Now none of this rant should be interpreted as indicating I don't know and understand that humans are tribal creatures, that
we are social creatures, and that we survive and thrive because we DO live and work cooperatively. The thing is , we survive and
thrive as COMPETING communities, tribes, and nations, rather than as a SINGLE global community. Wolf packs compete. Prides of
lions compete. Bands of chimps compete. We humans compete with each other. Talking as if we are DEFECTIVE because we behave this
way is a waste of time.
When the shit hits the fan hard enough and fast enough, we do sometimes cooperate with our former enemies, at least temporarily.Old
enemies can be new allies.
It's at least THEORETICALLY POSSIBLE that we can cooperate as a SPECIES, at the global level, in order to solve some or maybe
even most of the problems associated with our own overshoot. We have cooperated before at levels up to and including the global
level. In WWII, most of the developed countries of the world were involved as partisans on one or the other side. We cooperate
to some extent at the global level now, in economic terms, and in terms of our physical security, as for instance in arms control
agreements.
But just because it's theoretically possible that we can cooperate at the species level globally doesn't mean it's going to
happen. I don't think there's any real likelihood of it happening, although alliances consisting of the various major economic
and military powers do exist and will continue to exist and some of these alliances will prove to be critically important in determining
the course of future history.
"A biologist who talks about humanity as if humanity SHOULD BE EXPECTED to display a hive like consciousness has his head up his
ass. NO. NO. No." Do you mean E. O. Wilson has his head up his ass?
In his newly published The Social Conquest of the Earth -- the 27th book from this two-time winner of the Pulitzer Prize
-- Wilson argues the nest is central to understanding the ecological dominance not only of ants, but of human beings, too. Ants
rule the microhabitats they occupy, consigning other insects and small animals to life at the margins; humans own the macroworld,
Wilson says, which we have transformed so radically and rapidly that we now qualify as a kind of geological force. How did we
and the ants gain our superpowers? By being super-cooperators, groupies of the group, willing to set aside our small, selfish
desires and I-minded drive to join forces and seize opportunity as a self-sacrificing, hive-minded tribe. There are plenty of
social animals in the world, animals that benefit by living in groups of greater or lesser cohesiveness. Very few species, however,
have made the leap from merely social to eusocial, "eu-" meaning true. To qualify as eusocial, in Wilson's definition, animals
must live in multigenerational communities, practice division of labor and behave altruistically, ready to sacrifice "at least
some of their personal interests to that of the group." It's tough to be a eusocialist. Wouldn't you rather just grab, gulp and
go? Yet the payoffs of sustained cooperation can be huge. Eusociality, Wilson writes, "was one of the major innovations in the
history of life," comparable to the conquest of land by aquatic animals, or the invention of wings or flowers. Eusociality, he
argues, "created superorganisms, the next level of biological complexity above that of organisms." The spur to that exalted state,
he says, was always a patch of prized real estate, a focal point luring group members back each day and pulling them closer together
until finally they called it home. "All animal species that have achieved eusociality, without exception, at first built nests
that they defended from enemies," Wilson writes. An anthill. A beehive. A crackling campfire around which the cave kids could
play, the cave elders stay and the buffalo strips blacken all day. Trespassers, of course, would be stoned on sight.
As is evident by some of the comments on this thread, while the hive may be able to display collective intelligence, the individual
ants can still be pretty dumb! Do check out the link I posted to 'The Mind's I' chapter 11 Prelude to Ant Fugue.
The idea is still sound! If humans have not yet evolved to the point that they are able to include the whole globe as a part of
their hive Well, that's a separate issue and may indeed mean that we are collectively fucked! Because not enough of us have reached
that particular point in our evolution.
As George Carlin once said: "The Planet is fine, it's the people that are fucked"
An idea is sound only if it can be implemented, otherwise it is just a bunch of sugars turned to heat and in this case trees turned
to wastepaper.
My point was not that E.O. Wilson is wrong, but that he would not have presented such a point if he did not think it possible
or even probable. It was OFM that was the one saying it was not possible, which is a rather narrow view of humanity. Humanity
cooperates on large scale right now.
Looking at the update of Limits to Growth I get the feeling that the flattening out of some of the parameters (energy, industrial
output) may be misinterpreted. The same thing would happen if an energy and industrial transistion were occurring.
The key question is what does a transistion look like initially?
A field to a forest transistion looks a lot like field, then some bushes with a few small trees, then eventually almost all
trees. Originally the trees are hardly there at all and don't seem to be having much effect as their leaves smoother a lot of
plant life around them and they take up more and more of the solar energy that used to reach the ground. It starts small then
spreads to complete takeover.
An energy and industrial transistion goes hand in hand with a social/governmental transistion. It looks small and scattered
at first but steadily fills in even despite the resistance of the legacy systems. Key to the fast takeover is the weakening of
the previous growth and it's demise leaving easy space for the takeover.
For example, I have a kitchen ceiling light fixture. It has three bulb positions. I had replaced the three 60 watt incandescent
bulbs years ago with a 100 watt CFL (running actual 25 watts).
Last night the CFL started flickering so I pulled it and it had burn marks on the base of the bulb. The CFL bulb has now been
replaced by two 60 watt equivalent LED bulbs which together use only 16 watts and provide more light than the CFL.
Also the LED bulbs may never have to be replaced in my lifetime. 180 watts to 16 watts and no more replacement, that is high ground
transistion! Now $4 replaces over $500 on the user end and eliminates large amounts of pollution.
The power cost and economics have overshadowed the legacy instrument in an inexorable way. The death of an individual instrument
allowed the replacement by a superior one.
I think that effect has been happening all across the world in many areas of energy use and industrial process for decades. This
effect may have been interpreted as a reduction in energy and industrial output while it is really mostly a transistion in process.
So how do we get a fast takeover? Strand and remove the old legacy assets and systems plus do not replace dead systems with
the same system. The action is harsh, but that is how it is done.
I will know we are on the right course when I see those large glass buildings being stripped of their components, their glass
re-used, their steel reused and recycled, their wiring removed as they are removed. Why and how do we put up R2 buildings that
soak up huge amounts of energy for heating and cooling? They need to go now. Passenger vehicles that get less than 150 pMPG need
to go now and no passenger vehicle that gets below 400 pMPG should be built ever again. There are many inefficient, harmful and
problematical systems that could be removed and changed.
Trash the old ways now and insert better ways, ones that work longer with less harm. Make new systems that heal soil and nature
in general. The collapse is occurring now, take advantage of it by putting in superior systems that allow E.O. Wilson's Half-Earth
idea to flourish, not finish.
Personally, until a lot of the old stupid harmful systems are put aside we can't see clearly if a fast collapse is at hand
or not. Maybe if we just stop following bad and stupid we can ease off our consumption of the planet and reverse some of the major
problems we face. There may be no real need to go through a grand scale collapse and huge loss of species.
""It was OFM that was the one saying it was not possible, which is a rather narrow view of humanity. "
BULLSHIT.
Here's what I actually said in a comment upthread. It was posted a day previous to your comment, lol.
"It's at least THEORETICALLY POSSIBLE that we can cooperate as a SPECIES, at the global level, in order to solve some or maybe
even most of the problems associated with our own overshoot. We have cooperated before at levels up to and including the global
level. In WWII, most of the developed countries of the world were involved as partisans on one or the other side. We cooperate
to some extent at the global level now, in economic terms, and in terms of our physical security, as for instance in arms control
agreements. "
Perhaps I ought to lecture you a little on the meaning of the word EXPECT within the context I used it, which I think is obvious
enough to anybody who WANTS to understand. In this context, expect means (or not ) that cooperation will happen spontaneously,
or with only moderate incentives.
I don't think global level cooperation will happen, IF it happens, until the incentives to cooperate are OBVIOUS and overwhelming,
when it comes to really changing the way we do things. I don't think any competent biologist will argue with this position, speaking
in the broadest terms, painting with the so called broad brush.
We do after all have a few thousand years of known history that indicates that we are as apt to fight as cooperate, lol.
When the shit hits the fan hard enough, id it also hits slowly enough for us wake up , I EXPECT ( PREDICT ) that WE WILL COOPERATE
on the grand scale, at least up to the nation state level, in most nations, and frequently at the international level, and MAYBE
even at the global level.
I must admit I'm a little behind in reading E O Wilson, who is as capable a scientist as any in his field, and head and shoulders
above almost all the rest, in my opinion. He's also one of the best writers ever in his field, probably THE best writer in biology
in my personal opinion.
But so far as a I know, and I have read all of his older books, unless I'm mistaken, he would basically agree with me, because
I am, as I interpret his work, AGREEING WITH HIM.
There's a HELL OF DIFFERENCE between EXPECTING people to cooperate on the grand scale, and believing they are capable of doing
so.I believe we are capable of cooperating on the grand scale, given sufficient motivation to do so, and have said so already
in this thread. I don't EXPECT us to cooperate with people we see as outsiders and enemies, but given new circumstances, new conditions,
new problems, new fears, we can and sometimes do find new common ground, and make friends with former enemies.
I'm ready to bet the farm that I'm WITH E O WILSON, rather than AGAINST HIM.
Nuance matters.
To me at least, lol.
A couple of days back in another thread, you lectured me, telling me to THINK GLOBALLY, as if to imply I 'm unaware that most
of the people in the world are still desperately poor. I have never said that most of humanity is well off. I have never IMPLIED
that most of humanity is well off.
What I DID say, is that FOR WHAT IT'S WORTH, quoting myself, that there is a sound case to be made for the trickle down effect,
and that a substantial number of even very poor people humanity HAVE ALREADY benefited greatly from economic and technological
progress.
Hundreds of millions of desperately poor people are benefiting today from progress made in fields ranging from public health
to industrial agriculture to renewable energy , etc. Hundreds of millions of very poor people are making relatively fast economic
progress by some measures, for instance in the rate at which they are able to make use of at least some electricity, even if it's
only a single light powered by a battery recharged by a small solar panel.
The less you have, the greater the marginal value of anything new you are able to get.
Just one rechargeable light is worth a LOT to a person who has no other option than perhaps a candle or kerosene lamp or a
home made torch.
Incidentally I can remember being told by my grand parents that back when they were kids, it wasn't at all usual to literally
light a ( corn ) shuck to provide some light so as to make a quick run to the outdoor privy or take care of some other after dark
chore. They had kerosene, but it was considered wasteful to use it unnecessarily.
Things can and do get better sometimes, even on the global scale, lol.
E.O. Wilson would not have written the book Half Earth if he did not think that people could and would cooperate on a grand scale.
I don't think he was just blowing wind. Your statement was a direct affront to him and many others.
I have not read his latest book yet " The Social Conquest of Earth" which relates to this subject.
" Your statement was a direct affront to him and many others."
Bullshit again. You're deliberately twisting my words into something I didn't say.
You brought up his name, and you have put words in his mouth, as well as mine, in a manner of speaking.
I will say it again. There's a DIFFERENCE between EXPECTING or PREDICTING cooperation between large and diverse groups of people
EXCEPT when circumstances leave the various groups little or no choice, and they have COME TO UNDERSTAND that the only real option
they have IS to cooperate.
ONCE various competing groups or societies come to understand that they have little or nothing in the way of viable choice
other than cooperation, well then I PREDICT OR EXPECT them to cooperate.
I believe my position is entirely consistent with E O Wilson's thinking and beliefs, speaking in general terms.
If you want to play word games,I'm ready, because it's TRAINING as well as entertainment for me. I need all the practice I
can get when it comes to making my arguments clear before I go out on my own with my own book and web site .. EVENTUALLY.
The audience here is sophisticated enough to understand nuance, lol.
You ask for opposing opinions then you get nasty and personal and show no sign of wanting to learn or discuss anything, just shove
your ideas. Since you apparently are not capable of dealing with opinions or thoughts other than your own, I will cease interacting
with you. Plus you are always yelling in your comments, very rude.
Here is what you actually said ""A biologist who talks about humanity as if humanity SHOULD BE EXPECTED to display a hive like
consciousness has his head up his ass. NO. NO. No."
I want opposing opinions , and I'm always on the lookout for new facts. I do NOT want my words twisted into pretzels so that they
appear to mean something diametrically opposite to what I actually said, by taking them out of context.
I think you are more interested in finding personal fault with me than you are in actually discussing facts, possibilities,
and ideas.
I use a lot of caps, but seldom more than five or six words at a time, because caps are a lot quicker for me than taking time
to use italics or bold.
I'm not presenting a paper for publication here, lol. I'm just participating in a conversation. If you want to take offense,
feel free, it's still somewhat of a free country.
" Your statement was a direct affront to him and many others."
Bullshit again. You're deliberately twisting my words into something I didn't say.
You brought up Wilson , and you have put words in his mouth, as well as mine, in a manner of speaking.
I will say it again.
There's a DIFFERENCE between EXPECTING or PREDICTING cooperation between large and diverse groups of people under ordinary
circumstances versus under new and compelling circumstances.
IF AND WHEN circumstances leave various groups little or no choice other than cooperation, , and they have COME TO UNDERSTAND
that the only real option they have IS cooperation , well then .
I expect or predict that such groups WILL cooperate, sometimes, maybe even almost every time.
I believe my position is entirely consistent with E O Wilson's thinking and beliefs, speaking in general terms.
The audience here is sophisticated enough to understand nuance, lol.
Well, MOST of the audience here , anyway.
Understanding is tough for those who prefer NOT to understand.
This is pretty much nonsense. People are very different than other animals because they get ideas in their head and follow them.
That's the secret to our success -- we change our game plan all the time instead of being stuck in a single niche like most species.
It's always hard to guess which ideas are going to work out, but societies choose -- so to speak -- whether to destroy themselves
or not.
America has been choosing self destruction for several decades, and the eschatology our wacky creed planted in our minds seems
very attractive, especially to old farts -- the alternative is to try something different.
Many societies have shown themselves to be resilient an sustainable. America has a colonial mentality that doesn't support
that, even when it's obvious. My grandmother was born in Kansas and when she talked about the Dust Bowl she would shake her head
and say, "I always told them not to cut down those cottonwoods -- they were the only thing keeping the farm from being blown away".
Now they're depleting the aquifier in Kansas by planting maize for diesel. So the desert will continue to spread.
But the Japanese aren't like that at all. They've been planting trees for centuries. They don't have much choice, because the
hills aren't very stable there. They'll get through.
And the Sahel Zone, the world's worst and poorest place, is changing as well. They've started replanting. A lot of them will
survive.
Crazy hippies like this may do better than you think. Civilizations come and go, the species won't die for a while.
Root hog or die, as my father used to say. You can't imagine a world without Walmart, but it isn't the end of the world.
Another thought -- The Tasmanians. They were probably the wolrd's most primitive culture. They were cut off from the very old
Australian mainland after the Ice Ages, and seems to have even forgotten fishhooks one of mankind's oldest technologies. But they
had their ways, and they survived.
thank you Ron for this posting. I am in complete agreement with you on this.
nothing more important. it is a bizarre and tragic spectacle to behold, and to participate in.
what a poor use of such an incredible biosphere.
Many people from the looks of it here try to deal with the crises we face as a species and civilization the same way as myself.
I spend much time here in front of modern electronic gadgetry. It's useful in distracting the mind from a diseased dying world
along with a way to pass the time while waiting on my Lord and Savior to return to cleanse all the wickedness Satan has saturated
humans with. Yes this is truly a sick sad world we live in now. Matthew 13:38-40.
It's useful in distracting the mind from a diseased dying world along with a way to pass the time while waiting on my Lord
and Savior to return to cleanse all the wickedness Satan has saturated humans with.
You are likely to be waiting a very long time. Religious stupidity makes the problem worse, never better.
1. Any quotes of someone's book on collapse and how collapse happens based on history . . . all worthless. There is no history.
2) There is no history because there has never been 7 billion before. There has never been collapse with nuclear weapons involved
before. There has never been collapse with the maggot and fly total in the atmosphere from 6.5 billion corpses before.
3) Chinese oil consumption lags US per capita and they are striving mightily to correct that, as they should. When per capita
consumption growth becomes difficult, they HAVE to take oil from someone else. That someone else's population starts to starve
for lack of food production or transport. They object to the theft of "their" oil. War. They must. War or starve.
4) Consider Japan. Consider the relations between China and Japan. Japan cries out . . . you're taking this oil to improve
your country's standard of living and you are starving our country to death to do this. How can you find morality in this? China
will have no trouble whatsoever contriving morality in this.
5) Simply that. When there isn't enough to go around, no one will quietly accept inadequate amounts. Nor should they. All other
stuff about global warming and debt and sacrificing lifestyle for someone else is just so much bizarre delusion. You got too little
to live, you kill whoever took it.
'Black Earth: The Holocaust as History and Warning' by Timothy Snyder is quite good. If you're not into the minutia of east European
history circa WW2 then just cut to the conclusion. 'Bloodlands: Europe Between Hitler and Stalin' is good too.
Almost anyone, I suppose, can call himself or herself an anarchist, if he or she believed that the society could be managed
without the state. And by the state -- I don't mean the absence of any institutions, the absence of any form of social organisation
-- the state really refers to a professional apparatus of people who are set aside to manage society, to preëmpt the control of
society from the people. So that would include the military, judges, politicians, representatives who are paid for the express
purpose of legislating, and then an executive body that is also set aside from society. So anarchists generally believe that,
whether as groups or individuals, people should directly run society.
-Murray Bookchin
Anarchism is founded on the observation that since few men are wise enough to rule themselves, even fewer are wise enough
to rule others.
-Edward Abbey
Let's assume for a moment a World without any governments at all.
Let's also assume there at 7.4 billion people in the World.
I just don't see how that works. The World is not a perfect place, but it is far from clear that a World without any government(s)
would be an improvement.
When some one comes up with a plan that is appealing to the majority of citizens in some nation, perhaps such a form of non-government
will be instituted.
Collapse Dynamics: Initial Conditions, Media Manipulation and The Short-Circuiting of Consensuality
Hi Dennis,
I see anarchy, if it is understood correctly, as potentially having government if it is optional/consensual/legitimate.
For example, if I want you to represent me until which time as I say otherwise , then you can if you wish
.
I also see anarchy as potentially 'hierarchical', or at least pseudohierarchical, if it is chosen freely.
So, for example, if I want you to tie me to a bed and have your way with me as your 'slave' if you wish ,
until which time as I or you opt out , then that is still ok. (fans face with hand)
It is about consensuality and a large part of the whole idea behind media manipulation of the masses is to 'short-circuit'
consensuality– IOW, to make the masses consent to what they might not have normally consented to.
At the moment, I do not consent, for example, to what we call 'government' to take my money, or 'skim my labor', such as in
the form of taxation. It is an 'initial condition' (think the butterfly effect) that can cascade, and seems to have cascaded,
over time into dangerous, 'hurricane', territory. I mention this angle also to hopefully appeal to your apparent understanding
and appreciation of physics and physical dynamics over time.
Right now, there is software available, ostensibly to support government governing consensually, called
Loomio . There are likely others as well.
Your assertion does not necessarily stand to reason and is just an assertion without support. I could flip/modify it this way:
If taxes were consensual, then people would likely feel a greater sense of belonging to their locales and how they are shaped
and so give them freely and as they see fit.
Consensual tax collection could be viewed as part of the modus operandi of actual government, rather than as a kind of
large-scale centralized armed coercive mob, such that it appears.
See also here . I'll paraphrase
some of it for you (again)
" if economics is to become an instrument of freedom and prosperity instead of an instrument of statism, then there are
certain fundamental fallacies that must be continually challenged and discredited. Chief among these is the persistent non
sequitur from externality to coercion -- that is, the bogus conclusion that coercion is a proper means to solve problems involving
economic externalities.
One of the most blatant examples of this non sequitur occurs in discussions of the 'free rider problem' and the alleged
solution of government provision of so-called 'public goods'. This is a particularly insidious economic theory that bears a
great deal of the responsibility of derailing economics into the ditch of statism." ~
Ben O'Neill
A system that works for many more people, rather than a handful of elites, would appear to be a system that truly echoes what
the people actually want, rather than what they are forced to.
On the matter of carrying capacity, I have a minor quibble with some of the ideas presented here. Let me start by outlining my
understanding of what is being said about carrying capacity.
"So for many millions of years, the terrestrial vertebrate biomass remained at about two hundred million tons, give or take"
So that lays a base line for carrying capacity but, unnatural selection, the selection of higher output varieties of crops
or genetic engineering of crops would have raised the carrying capacity and I suggest, that increased carrying capacity would
be sustainable indefinitely. The use of fertilizer, primarily organic types, if done in a sustainable way and by that I mean,
returning animal and human waste streams to the soil, would also result in a more or less permanent increase in carrying capacity.
So far, I've outlined two methods that humans could have used to positively influence carrying capacity more or less permanently.
The big change in carrying capacity comes with the FF age and the industrial revolution, first with the advent of mechanization
and then with the Haber-Bosch process. A quick Internet search to refresh my memory of what the Haber-Bosch process entails, reveals
that it is the chemical synthesis of ammonia (NH3) from nitrogen and hydrogen. Herein lies the basis for the connection between
the petroleum industry and fertilizer industries and by extension carrying capacity. However, if we have enough excess energy
we can easily get nitrogen from the atmosphere and hydrogen from water though I'm not sure how well that would work at a industrial
scale at a global level.
So between the manufacture of fertilizers and the use of diesel powered machinery in farming, we have seen a huge increase
in the ability to produce food. Ostensibly this ability can only last as long as the NG used to obtain hydrogen at an industrial
scale and the petroleum to fuel the farm machines. However, the University of Minnesota has a Wind to Nitrogen
Fertilizer project that aims to use excess wind power to manufacture ammonia so, it may well be that, if sufficient amounts
of renewable energy can be harnessed, the manufacture of nitrogen fertilizers could be extended way beyond the end of the petroleum
age.
That is the basis for my minor quibble. Obviously, fossil hydrocarbons have allowed us to increase the carrying capacity of
the planet in a way that can only last as long as the finite hydrocarbon reserves do. Might it not be the case that, a transition
to renewable energy on a massive scale would allow a more or less sustainable increase in the carrying capacity of the planet
above and beyond the 200 million tons of terrestrial vertebrate biomass that existed 10,000 years ago? I would argue that, from
the standpoint of energy, renewable energy has the potential to yield a far more sustainable increase in carrying capacity than
fossil energy has. What the level of that carrying capacity is would require a fair amount of academic research.
I fully concede that there are all sorts of other resource limits that will negatively affect carrying capacity. Maybe I'm
just bargaining.
Islandboy, there is no doubt that the carrying capacity of human beings can be increased somewhat by the use of organic
fertilizers. But it is chemical fertilizers that have very dramatically and very temporally increased our carrying capacity.
Of course when the carrying capacity of humans is increased the carrying capacity of wild species, especially megafauna is
decreased.
That is one thing that just drives me up the wall. Everyone is concerned about the welfare of human beings. No one seems to
give a rats ass about the welfare of all other species.
Hi Ron, I hope your doing well. Thank you for a great post. It sure explains why Costco was so F'n busy last weekend.
"No one seems to give a rats ass about the welfare of all other species"
That's just not all true. I'm pretty sure GoneFishing cares about his dog a lot more than myself.
"the selection of higher output varieties of crops or genetic engineering of crops would have raised the carrying capacity
and I suggest, that increased carrying capacity would be sustainable indefinitely"
I think you could include the knowledge of harvesting water and controlled irrigation also increasing sustainable capacity
Humans evolved to become the equivalent of RNA in cells. We use tools and information, primarily in technological cells and use
them with ATP equivalent fossil fuels to do work. Like organisms or cells in the ecosystem, human organizations seek to grow,
profit and take market share – to further their existence.
The human brain is primarily a reward seeking organ as is most neural tissue in the ecosystem. Since humans are dissipative
structures, not seeking rewards is the greatest threat they face. Most other threats, short of being chased by a pack of wild
dogs, can be watered down and ignored since the brain must concentrate on getting resources and energy. Even though a human can
think about things, it does not substitute for being greedy and gathering as much wealth as possible and reproducing prolifically.
We're selected for doing that.
The natural greed which evolved because of natural scarcity in the ecosystem, did not wane as we evolved into a technological
setting. There is no limit on our desires to be "rich" because we perceive associated advantages in survival and reproduction.
Civilization is an explosive cancer that emerged from the ecosystem to consume and destroy the ecological body. Humans are the
RNA that can't stop reproducing and stimulate the growth of new cells and distribution systems until the entire consumable earth
is covered and the ecosystem dies or at least becomes much less complex.
In many wealthy nations total fertility has fallen below the replacement level, in fact for about half the World's population
TFR is below replacement (dividing things up by nation state). Generally it is higher income nations where this is the case and
correlation between education level and total fertility is very strong.
These facts and the trend in Global education levels for women don't square very well with your theory.
As Ron has suggested, homo sapiens sapiens is not your average species.
Even the education occurs in schools, the cellular equivalent of the nucleolus. Instead of pursuing the rewards of children, women
are pursuing "wealth" created by the technological system. I'm not sure which one is most damaging.
The natural greed which evolved because of natural scarcity in the ecosystem, did not wane as we evolved into a technological
setting. There is no limit on our desires to be "rich" because we perceive associated advantages in survival and reproduction.
And out of which orifice did you pull all that BS out of?! Let me guess, you are of the Neo-Liberal Economist school of though,
right? Try cracking a few tomes on human evolution and anthropology instead of failed 20th century memes about the nature of man
and rationality of markets.
You don't see any greed? None in the ecosystem? Why is everyone trying to accumulate more wealth? Why do all organisms struggle
to eat and reproduce to the maximum? Look in the cell, it's all happened before, but mostly with sunshine at the base.
Why do we worship the likes of Warren Buffett?
Cooperation exists, but only to enhance competition against a similarly cooperating group.
Blowing Up the Territory Trump's biggest break came from the Democratic party. Booking Hillary Clinton as the good guy in this match was a colossal
error, especially when the most improbable thing in all of politics was waiting in the wings: a legit babyface.
Bernie Sanders came off like Paddington Bear next to Hillary Clinton. Bernie was a nice old Jewish man from Vermont who legitimately
meant well, and he got a real pop from his fans. He drew like crazy. Hell, even I sent him money, the first time I have ever contributed
to a political campaign -- every time he got on TV and started shooting about marijuana smokers going to jail while Wall Street
hoodlums were walking, I Paypaled him five bucks. I had waited my whole life to hear a politician cut a promo like that -- I think
he eventually ended up with a Jackson from me, straight from my personal pot budget.
As a face, Clinton just had too much baggage, a lot of it achingly familiar: A partner known for predatory sexual behavior,
wicked family ties to big business, an entitled daughter, a family charity fund loaded with foreign money, lies, flip flops. .
. . What was good for the goose might have been tolerable for the gander, but all she really got was a cheap pop, and if she had
any moral high ground at all, she lost it when former Democratic operative Donna Brazile, while working for CNN, leaked potential
questions to the Clinton campaign before a debate with Sanders. That was cheating, behavior clearly unbecoming to a babyface.
But more important was that she failed to deliver on the only thing that matters: she didn't draw. For a while it looked like
there might be a "Dusty finish," a gimmick ending (named for Dusty Rhodes, the legendary wrestler and booker who invented it)
in which one wrestler is declared the winner, only to have the decision reversed on a technicality -- for instance, interference
from Russian hackers. This was a finish guaranteed to drive crowds insane, but Hillary couldn't put it over.
So who's the best worker? If we are using the Hulk Hogan index, it is indisputably Donald Trump. He won the election. He's
the president.
But when it all comes tumbling down, be ready for a fresh wave of Trump-brand kayfabe -- transparently flawed in both conception
and execution, except that he actually believes it. He'll ride off in his helicopter claiming that Washington was too dirty to
clean up, that he tried but he couldn't drain the swamp, that they wouldn't accept the One Honest Man. He'll blame obstructionist
Democrats for staging a witch hunt, and the Republicans for not having the guts to back him. In wrestling parlance this is called
"blowing up the territory."
Pundits will argue: How much of it was real, how much reality show? How much was a put-on, how much of it was a guy legit
skating at the edges of madness and dementia? Was it a work, a shoot, or a worked shoot? The only thing we can be sure of is that
the secular writers will get it wrong. And, existentially, at least, Trump will still wear spandex when he mows the lawn. He can't
help himself, that's just the kind of jerk he is.
Organisms evolved a bias to maximize fitness by maximizing power. With greater power, there is greater opportunity to allocate
energy to reproduction and survival, and therefore, an organism that captures and utilizes more energy than another organism in
a population will have a fitness advantage.
Individual organisms cooperate to form social groups and generate more power. Differential power generation and accumulation result
in a hierarchical group structure.
"Politics" is power used by social organisms to control others. Not only are human groups never alone, they cannot control their
neighbors' behavior. Each group must confront the real possibility that its neighbors will grow its numbers and attempt to take
resources from them. Therefore, the best political tactic for groups to survive in such a milieu is not to live in ecological
balance with slow growth, but to grow rapidly and be able to fend off and take resources from others[5].
The inevitable "overshoot" eventually leads to decreasing power attainable for the group with lower-ranking members suffering
first. Low-rank members will form subgroups and coalitions to demand a greater share of power from higher-ranking individuals
who will resist by forming their own coalitions to maintain it. Meanwhile, social conflict will intensify as available power continues
to fall.
Eventually, members of the weakest group (high or low rank) are forced to "disperse."[6] Those members of the weak group who do
not disperse are killed,[7] enslaved, or in modern times imprisoned. By most estimates, 10 to 20 percent of all the people who
lived in Stone-Age societies died at the hands of other humans.[8] The process of overshoot, followed by forced dispersal, may
be seen as a sort of repetitive pumping action -- a collective behavioral loop -- that drove humans into every inhabitable niche
of our planet.
Here is a synopsis of the behavioral loop described above:
Step 1. Individuals and groups evolved a bias to maximize fitness by maximizing power, which requires over-reproduction and/or
over-consumption of natural resources (overshoot), whenever systemic constraints allow it. Differential power generation and accumulation
result in a hierarchical group structure.
Step 2. Energy is always limited, and overshoot eventually leads to decreasing power available to some members of the group, with
lower-ranking members suffering first.
Step 3. Diminishing power availability creates divisive subgroups within the original group. Low-rank members will form subgroups
and coalitions to demand a greater share of power from higher-ranking individuals, who will resist by forming their own coalitions
to maintain power.
Step 4. Violent social strife eventually occurs among subgroups who demand a greater share of the remaining power.
Step 5. The weakest subgroups (high or low rank) are either forced to disperse to a new territory, are killed, enslaved, or imprisoned.
Step 6. Go back to step 1.
The above loop was repeated countless thousands of times during the millions of years that we were evolving[9]. This behavior
is inherent in the architecture of our minds -- is entrained in our biological material -- and will be repeated until we go extinct.
Carrying capacity will decline[10] with each future iteration of the overshoot loop, and this will cause human numbers to decline
until they reach levels not seen since the Pleistocene. http://www.dieoff.org
"There's no indication that we're going to do anything philosophically different," said Jim Blackburn, an environmental law
professor at Rice University. "With a few modifications, it's business as usual."
As Houston rebuilds from the most expensive hurricane in U.S. history, local officials plan to dredge waterways, build new
reservoirs and a coastal barrier to protect against storms that experts say are growing in intensity due to a warming climate.
They have asked Washington for $61 billion to pay for it all.
Apart from our own actions there may be random events that can take us out. There's a report in the Times today of research into
super-eruptions. The Toba explosion, 75,000 years ago, almost took out Homo sapiens. The latest research indicates such events
(maybe not quite as bad) happen on average every 17,000 years instead of every few hundred thousand as previously thought, and
we are currently in an unusually long hiatus from these.
The biggest explosion since "civilization" started was probably Krakatoa in the 6th century, which has been proposed as the
beggining of the dark ages in Europe and the end of a couple of other civilizations, though there's a bit of controversy about
that theory, but it was much milder than an explosion from one of the major calderas would be.
Continuing from above (this mirrors my own experience in Central Africa where families currently seem to be averaging about four
kids each):
POPULATION GROWTH IN AFRICA: GRASPING THE SCALE OF THE CHALLENGE
"In the past year (2016) the population of the African continent grew by 30 million. By the year 2050, annual increases will
exceed 42 million people per year and total population will have doubled to 2.4 billion, according to the UN. This comes to 3.5
million more people per month, or 80 additional people per minute since the early 1990s, family planning programmes in Africa
have not had the same attention (as Asia and Latin America), RESULTING IN SLOW, SOMETIMES NEGLIGIBLE, FERTILITY DECLINES. IN A
HANDFUL OF COUNTRIES, PREVIOUS DECLINES HAVE STALLED ALTOGETHER AND ARE REVERSING."
WHY HAVE FOUR CHILDREN WHEN YOU COULD HAVE SEVEN? FAMILY PLANNING IN NIGER
" but Hamani is unusual in that three babies are enough for her. Despite having the highest fertility rate in the world, women
and men alike in Niger say they want more children than they actually have – women want an average of nine, while men say they
want 11."
Sounds like an explosion that will lead to implosion and migration. Families used to be fairly large in the European and American
regions not long ago. Some still are. There are 27.7 million people in Uganda. But by 2025 the population will almost double to 56 million, close to that of Britain,
which has a similar land mass. In 44 years its population will have grown by nearly as much as China's.
"You look at these numbers and think 'that's impossible'," said Carl Haub, senior demographer at the US-based Population Reference
Bureau, whose latest global projections show Uganda as the fastest-growing country in the world. Midway through the 21st century,
if current birthrates persist, Uganda will be the world's 12th most populous country with 130 million people – more than Russia
or Japan.
That sounds about right and from personal observation almost all 27.7 million of them are school kids who (currently) are quite
well nourished and with decent health care. A big problem, as I see it, is that virtually all schools in Uganda are run by "Western"
churches who seen determined to increase the size of their flock by NOT teaching their students about contraception and the benefits
thereof: sound familiar?
Doug – like you I have some sponsorship in Africa – a general women's group rather than an individual. From their letters what
they want is education (both formal for the children and also just tips on farming and running a business), enough money (very
little) to start a business so they can feed their children, a way to manage HIV if they are infected (many still are) and peace
and quiet. What they don't want is more children, forced marriage through kidnap, the return of their husbands to beat them up,
interference from the elders (all men) in their business. Often they only realise these options are even possible after they have
had contact with the groups set up by the charity.
George – My African experiences are mainly restricted to Uganda (the pearl of Africa) where my family visit annually and have
done so for almost 20 years; we love the country, the people, the wildlife. Its been a joy watching the girl we assisted progress
from kindergarten to medical school; to meet and relate to her extended family who've become our close friends. The country (Uganda)
and the people are currently doing well, very well indeed (unless you happen to be gay). Wildlife parks flourish and are well
managed. My concerns relate to the future. There are too many kids. In my opinion, without reigning in population growth the country
will face immense over-population problems in the future. I hope I'm wrong. Having said that, I agree with your comments -- all
of them. And its true, woman's business groups are in many respects the future of Africa.
For anyone seeking a plausible scientific explanation for why:
– one species has a uniquely powerful brain
– why the brain of that species is capable of visiting the moon but incapable of understanding or acting on it's own overshoot
– why one small group of hominids exploded about 100,000 to take over the planet
– why religion emerged simultaneous with the behaviorally modern mind about 100,000 years ago
– and more big questions: https://un-denial.com/2017/06/25/why-my-interest-in-denial/
I find this theory by Ajit Varki and Danny Brower very satisfying.
That's a smart site you have there. I read that book some time ago, it's interesting but I thought a bit of a just-so story, but
that's maybe becasue the ideas woud be so hard to prove one way or the other. It's a pity Brower died before his ideas got out
to more discussion.
Your initial reaction to the theory is perfectly reasonable and common.
If you dig deeper and start connecting dots I think you may find it is the best available explanation for many big unanswered
questions. The theory may not be correct but there are no known facts that slay it, nor any other equally elegant theories that
fit the data better.
Varki acknowledges the difficulty of testing the theory, but does point to some promising avenues of research. Unfortunately
Varki's speciality and day job is in a different domain so his theory is likely to sit on the shelf until some young scientist
with a defective denial gene picks up the baton.
I did find it neat and convincing as you say, but that's the point of just-so stories, plus it's difficult to know where to go
if it is correct, but I'm going to be visiting your site without question.
WILL OVERPOPULATION LEAD TO PUBLIC HEALTH CATASTROPHE?
"Our new projections are probabilistic, and we find that there will probably be between 9.6 and 12.3 billion people in 2100,"
Prof. Raftery told Medical News Today. "This projection is based on a statistical model that uses all available past data on fertility
and mortality from all countries in a systematic way, unlike previous projections that were based on expert assumptions."
"A key finding of the study is that the fertility rate in Africa is declining much more slowly than has been previously estimated,
which Prof. Raftery tells us "has major long-term implications for population."
No discussion about human evolution or even biological evolution across all species can be considered complete without at least
a basic understanding of the biochemical and molecular biological basis of CRIPR-Cas9 gene editing technology and gene drives.
Sam Harris' latest podcast has a discussion of this technology with Jennifer Doudna.
In this episode of the Waking Up podcast, Sam Harris speaks with Jennifer Doudna about the gene-editing technology CRISPR/Cas9.
They talk about the biology of gene editing, how specific tissues in the body can be targeted, the ethical implications of changing
the human genome, the importance of curiosity-driven science, and other topics.
E.O. Wilson
I have always been a great admirer of E.O Wilson. I have followed his work for years. I especially liked "Sociobiology" and "Consilience".
I have followed his feud with Stephen J. Gould, Steven Rose, R.C. Lewontin, and Leon Kamin, (as reported by Steven Pinker and
Richard Dawkins). (I always came down on the side of Wilson et al.) And I am very proud to say he is a fellow Alabamian.
That being said, there are areas where I must disagree with him. For instance:
From Kirkus Reviews of "Half Earth": In this final volume of his trilogy, Wilson (The Meaning of Human Existence, 2014, etc.) opens with a compelling proposal on
how to slow current species extinction rates: set aside half of the planet (noncontiguously) as wilderness preserves free from
human encroachment, a measure that the author claims would stabilize more than 80 percent of species.
Fred Magyar, above, quotes from Edward O. Wilson's New Take on Human Nature: Wilson argues the nest is central to understanding the ecological dominance not only of ants, but of human beings, too ..
By being super-cooperators, groupies of the group, willing to set aside our small, selfish desires and I-minded drive to join
forces and seize opportunity as a self-sacrificing, hive-minded tribe ..
To qualify as eusocial, in Wilson's definition, animals must live in multigenerational communities, practice division of
labor and behave altruistically, ready to sacrifice "at least some of their personal interests to that of the group." It's tough
to be a eusocialist.
First, the idea that we would or could set aside half the earth for wildlife is preposterous. Which parts of the U.S. would
we set aside, parts that make half the land area? Could we convince every African nation to do the same? Or Russia? Or China,
South Korea or Japan?
Second, as much as I admire Wilson, I think he is just flat wrong on his new take on human nature. And I think Pinker and Dawkins
would agree with that opinion. If you had read Pinker's "
The Blank Slate: The Modern Denial of Human Nature ," and I have, you would know exactly what I mean. Our minds are not blank
slates to be molded by society, to be made to behave like ants in a colony, like a self-sacrificing, hive-minded tribe. All those
traits that Wilson says we must give up are in our genes, human nature.
I will not deny that humans can be ruled. An Iron Fist could compel us to behave in such a matter. But all such Iron Fists
carry within itself the seeds of its own destruction. Absolute power corrupts absolutely. It's just human nature.
After reading your eight fifty six am, I'm telling ya straight .. Between your ears, where you live intellectually, you are
a TRUE conservative.
The people who we refer to today as conservatives, meaning those who inhabit the right wing politically, are not REAL conservatives,
not according to my definition.
Don't forget that I am a follower of the Humpty Dumpty School of Linguistics. Words mean exactly what I intend them to mean,
when I use them, rotfl.
To my way of thinking, the first and single most important qualification of a TRUE conservative is that he must have a sound
grasp of human nature. You have it. You understand that we cooperate with friends, family, known community, and compete with outsiders
.. and that when circumstances compel us to do so, we make friends or at least ally ourselves with former enemies or strangers,
and work together .. but mostly only when we have little or no choice but to do so.
I'm just teasing you a little, not making fun of you.
Decent people, left or right wing, want the same things, when you get down to the basics. Peace, dignified life, freedom from
unnecessary worries, etc.
I haven't yet read Wilson's latest books. Hoping to get around to it, this winter.
We need to keep it in mind that just because somebody presents a grand plan in a book, and writes as if it might be possible
to implement it, he does not necessarily believe there's a snowball's chance on a red hot stove that his plan will ever actually
be implemented.
Such books are sometimes intended as sources of inspiration for a new generation of people following along in his footsteps
.. and such a plan MIGHT be implemented . a few centuries down the road, lol. Stranger things have happened, historically.
Such a book can be the result of an old man's dreams being put in libraries so as to achieve a sort of immortality . Wilson
had that already of course.
I reckon you're even older than I am, and here's wishing you the best at the personal level.
To my way of thinking, the first and single most important qualification of a TRUE conservative is that he must have a sound
grasp of human nature. You have it. You understand that we cooperate with friends, family, known community, and compete with outsiders
.. and that when circumstances compel us to do so, we make friends or at least ally ourselves with former enemies or strangers,
and work together .. but mostly only when we have little or no choice but to do so.
Sorry Mac, but I just don't get the connection. The definition you pen here could just as well be the definition of a True
Liberal.
I am a conservative when it comes to conserving the environment, saving animal habitat and saving species from extinction.
But those are qualities held by most liberals and not held by so-called conservatives. Right-wing Republicans call themselves
conservatives.
So I just have to accept the lexicon as it exist today. I am a liberal, not a conservative.
"Sorry Mac, but I just don't get the connection. The definition you pen here could just as well be the definition of a True Liberal."
You DO GET IT, Ron, except you haven't yet quite got around to thinking of labels as jokes or weapons . Labels are for partisans.
Labels are clubs we use to pound each other into submission.
People with real working brains generally come to the same basic conclusions, regardless of the way they're labeled by themselves
or others. There's usually more than one route by which we can travel and arrive at the truth.
You're a man willing to tell it like it is, as for instance when you have pointed out the realities of the way things work
in some countries where you worked yourself. A partisan D just won't repeat that sort of stuff, true or not.
When you say you're a liberal, you're just labeling yourself. What you ARE is something else. You're a man with a working brain,
a man who understands reality, a man who tells it like it is, as you perceive it to be.
It is however true that the so called liberals are more often right by a substantial margin than the so called conservatives
in terms of having objective facts on their side when considering issues such as the environment, public health, and many others.
But they're not always right. Sometimes the liberal camp seems to have it's head as far up its backside as the conservative
camp.
The leaders of both camps seem to be more interested in having plenty of foot soldiers to serve as cannon fodder than they
are in the actual welfare of the country.
I can provide as good arguments for any sort of truly sound public policy from a conservative pov as you can from a liberal
pov.
To me this proves we both have working brains, and are capable of looking the truth in the eye, and publicly agreeing on what
IS true, and what is not.
If we could free ourselves of goddamned infernal partisan politics and identity politics , based on our community cultures,
we could make things happen politically.
If for instance we could put the question of subsidizing wind and solar power to a referendum, I could easily convince most
of the so called conservatives I know that voting in favor of subsidies would be a GREAT BARGAIN for them, long term. Well, the
ones with brains enough that they know a little about the business world anyway. That's at least half of them, and more than enough.
They won't ordinarily support subsidizing renewable energy as part of a package deal because they perceive the PACKAGE to be
weighted in favor of their political and cultural enemies. Supporting renewable energy subsidies would mean voting for D's and
they don't like the overall D agenda.
I'm not sure WHERE this comment will appear, but hopefully it will be below my two forty pm.
Allow me to approach this liberal/ conservative label thing from a different direction.
Suppose you meet a new person, and get to talking about oh let us say water pollution, and fishing, and having to spend your
local tax money on a sophisticated water treatment plant, because there's too much of this or that and the other as well in the
river that passes your town to drink the water, without spending a lot of money. .
If you NEVER MENTION anything that LABELS you as a liberal or conservative, you can talk meaningfully to just about anybody
about this issue.
Identify yourself as a liberal, or a conservative, you more or less automatically blow your opportunity to say anything to
your new POTENTIAL friend who thinks of himself as your opposite and enemy, politically, other than something he already knows
and believes, even if what that something is factually incorrect.
Label yourself as a liberal, and the typical serious Christian voter in the state of Alabama automatically thinks of you as
a murderer of yet to be born children. Forget labeling yourself, avoid it to the extent you can, and you have an EXCELLENT shot
at talking to that voter about supporting only candidates who have a decent record of being respectful to women, immigrants, minorities,
etc.
If I label myself as a conservative, I've automatically blown my chance to have a serious conversation with a liberal about
the possibility of having some real choice in education . meaning breaking the teacher's unions and government's de facto monopoly
control of our educational system.
You may not like this idea, but think about this how much better are your options NOW, given that we have email, fax, UPS,
Fed Ex , etc, when it comes to getting a letter or package where it needs to go FOR SURE and RIGHT AWAY?
I have heard lots of liberals say that allowing any real choice in the schools would mean the end of any real opportunity for
poor kids, inner city kids, etc, to get a decent education. Sometimes, in the same breath almost, I hear those same liberals admit
that the public schools in lots of communities large and small are literal disaster areas, where hardly any of the kids learn
anything. I used to know quite a few of this sort , back in my younger days, when I was living in the Fan and hanging out with
the older ( grad students mostly ) kids at VCU having a good time, taking a course or two per semester to keep my grad student
ID up to date. I spent about ten years there off and on.
Ya know WHAT? EVERY LAST COUPLE I knew among them moved out of town when their OWN kids got old enough to go to school.
Quite a few of them spent their careers as teachers, lol. And my guess is that not more than one out of ten of those couples
ever moved to a place where the schools were the sort of hell holes we read about so often these days .. and that tenth couple
of course had NO KIDS, lol.
Yet they almost universally believe in the de facto teacher / government educational monopoly as it exists today, as it totally
ruins the prospects of millions of kids denying them, or more accurately, their parents, any real choice in the schools their
kids attend. If liberal versus conservative comes into the conversation, it's OVER. The liberals aren't going to listen, any more
than conservatives listen.
How many members of this forum think Roy Moore ought to be tarred and feathered ? How many have ever had the intellectual integrity
to say the same thing about Bill Clinton?
Liberals are liberals, and conservatives are conservatives, and the gulf between can be as vast as the gulf between East and
West. Communication is tough to impossible.
But if we avoid the labels . communication can happen.
Incidentally this rant does NOT mean I am a supporter of the Trump administration in general, or the Trump education department
in particular. Nothing I know of concerning the Trump administration seems to be about the good of the COUNTRY or of the majority
of the people of this country.
First, the idea that we would or could set aside half the earth for wildlife is preposterous.
Even stopping the rape and scrape accelerating is highly unlikely.
This is total fantasy.
At best, the survivors (if any) on the other side of the wall we are about to crash into, will have enough wisdom and intelligence
to embrace the condition they are in.
First, the idea that we would or could set aside half the earth for wildlife is preposterous.
That isn't what he proposes even though it is the title of his book. May I suggest you read it! What he is really arguing for
is more along the lines of a network of ecological corridors that might connect already existing nature preserves, parks and private
property and therefore allow isolated pockets of natural ecosystems to be connected with others.
To be very clear, E.O. Wilson is not in any way naive about our predicament and says so.
That's not to say he has thrown in the towel, especially given that he is now in the later portion of his 80's. He apparently
doesn't want to go down without a fight.
I have read his book twice already and have the Kindle version on my laptop. To be honest I'm not what anyone might call overly
optimistic about the prospects of his proposals coming to pass. Having said that, I do admire his deep knowledge base about the
natural world and have the greatest admiration for the man! More power to him for trying!
Fred, I read Half Earth and have to agree with E.O. Wilson. I think my personal bias is toward nature, but that aside, humans
can do what is needed. All the gadgetry in the world cannot replace a functioning ecosystem. Those functions are mandatory for
the preservation of life on earth. We need to preserve, expand and enhance (if we get smart enough) natural ecosystems around
the world.
Why not build armies? Armies called the United Conservation and Environmental Protection Corp, whose job is to protect and expand
natural areas around the world. It would increase employment and be funded by monies that otherwise go to military purposes. This
and other organizations could be doing things that make the people proud to be human, rather than just wheels and cogs in basically
destructive system.
This is not naïve, this is just choices. Humans make choices, that is one of our inherent abilities. Our current state and
appearance is due to a set of previous choices that have not quite worked out. We get stuck in old choices, time to make new ones.
I think my personal bias is toward nature, but that aside, humans can do what is needed.
Really now? If humans can do what is needed then why the hell are they not doing it. Species are going extinct at a rate as
fast as the last great extinction 65 million years ago. And the extinction rate is accelerating. If humans can do what is needed
it is goddamn time they got started.
Our current state and appearance is due to a set of previous choices that have not quite worked out. We get stuck in old
choices, time to make new ones.
Those choices were made, and are being made, by 7 billion people. And yes, it is time those 7 billion people changed the way
they are behaving, it is time they made different choices. But don't hold your breath.
I am sorry Fishing, but I just don't share your optimism.
Yup, reminds me of China, driving to a restaurant half way across Beijing with a car full of Chinese because they knew about a
hot spot where some endangered species or other was on the menu: get it before you're too late. Life in the real world!
"Although extinction is a natural phenomenon, it occurs at a natural "background" rate of about one to five species per year.
Scientists estimate we're now losing species at 1,000 to 10,000 times the background rate, with literally dozens going extinct
every day. It could be a scary future indeed, with as many as 30 to 50 percent of all species possibly heading toward extinction
by mid-century."
"If humans can do what is needed then why the hell are they not doing it. "
"I am sorry Fishing, but I just don't share your optimism."
By destroying the environment we destroy ourselves. I think that will soon become quite apparent and then those who are already
on track can leverage that.
Really now? If humans can do what is needed then why the hell are they not doing it. Species are going extinct at a rate as
fast as the last great extinction 65 million years ago. And the extinction rate is accelerating. If humans can do what is needed
it is goddamn time they got started.
Ok, let's assume for a moment using round numbers that there are currently 7.5 billion humans living on this tiny planet as
I type these words. How many of those humans do you suppose are actually aware of the fact that we are probably in the midst of
the sixth mass extinction? I'm going to go way out on a limb here and guess about a couple hundred thousand.
Now most of those couple hundred thousand are in shock and denial of reality. So there are maybe 100,000 humans who are aware
and are actually starting to do something.
While that may sound like a minuscule amount I can cite data and research that shows that may be enough to really start to
change the current paradigm in a big way.
Yea, the feud between Gould/Lewontin/Rose VS Wilson/Dawkins/Dennett has been interesting.
Being somewhat Marxist in my orientation, I was kinda presupposed to the Gould camp, but the Wilson/Dawkins have proven to ring
much truer. The Blank Slate puts the nails in the coffin for Marxist view of human nature, as Marx viewed it as totally a function
of environment. Pinker buried that view.
Orr was always Gould and Lewontin's go to guy with media, as he had power in the NYT's and Boston Globe, and could often control
reviews and and coverage.
It has been interesting.
I'm sure most here are familiar with what Carl Sagan said about our Pale Blue Dot
This excerpt from Sagan's book Pale Blue Dot was inspired by an image taken, at Sagan's suggestion, by Voyager 1 on February
14, 1990. As the spacecraft left our planetary neighborhood for the fringes of the solar system, engineers turned it around for
one last look at its home planet. Voyager 1 was about 6.4 billion kilometers (4 billion miles) away, and approximately 32 degrees
above the ecliptic plane, when it captured this portrait of our world. Caught in the center of scattered light rays (a result
of taking the picture so close to the Sun), Earth appears as a tiny point of light, a crescent only 0.12 pixel in size.
At present, the Voyager 1 spacecraft is 21 billion kilometers from Earth, or about 141 times the distance between the Earth
and Sun. It has, in fact, moved beyond our Solar System into interstellar space. However, we can still communicate with Voyager
across that distance.
This week, the scientists and engineers on the Voyager team did something very special. They commanded the spacecraft to fire
a set of four trajectory thrusters for the first time in 37 years to determine their ability to orient the spacecraft using 10-millisecond
pulses.
FURTHER READING
The Voyagers have reached an anniversary worth celebrating
After sending the commands on Tuesday, it took 19 hours and 35 minutes for the signal to reach Voyager. Then, the Earth-bound
spacecraft team had to wait another 19 hours and 35 minutes to see if the spacecraft responded. It did. After nearly four decades
of dormancy, the Aerojet Rocketdyne manufactured thrusters fired perfectly.
"The Voyager team got more excited each time with each milestone in the thruster test. The mood was one of relief, joy,
and incredulity after witnessing these well-rested thrusters pick up the baton as if no time had passed at all," said Todd Barber,
a propulsion engineer at the Jet Propulsion Laboratory in California.
So was I. Well, sort of. My dad was a Deacon in the Primitive Baptist Church but he was not a crusading evangelical.
I have told this story before but I will do it again here.
I was about 17 or so when I sidled up to my dad who was sitting in his easy chair. I asked: "Dad, how did them kangaroos get
from Australia to over there where Noah's Ark was? And how did they get back?" Dad jumped up from his chair, stuck his finger
right in my face and yelled: "Son, that is the word of God and that is not for you to question."
When countries begin to hit the wall economically ( as happened in Germany in the 1930's for example), the populace will often
out of desperation (and ignorance of course) enable a dictator to come to power. This is with the false hope that grandiose promises
of prosperity will be fulfilled.
This explains why Trump was elected, even though the American has yet to be tested by disruption, much.
As the world hits the wall of growth limits, the risk is for more and more leadership failures, the rise of warlords, the failure
of functioning democracies.
Violent choices and dysfunctional government will serve to be a mechanism of population decline, ugly population decline. Current
events can be seen through this lens as time unfolds.
Hard to watch.
May be better to have no TV.
The de-evolution will be televised, will be televised, will be televised
The general population in Germany did not really enable Hitler to come to power. He was appointed as a compomise by the two leading
parties in an election who had split the main vote. They both thought he would make such a mess of it that they would sweep the
board at the next election. As soon as he was appointed he started killing or imprisoning these smart opposition leaders, and
there wasn't another clean election. It was more like an extended coupe, admittedly with a large number of supporters, often ex
WW-I soldier thugs, in the general population.
George is in the bullseye about how Hitler came to power, considering he was painting fast with a broad brush in such a short
comment. I have devoted many a long evening to reading the history of war in the twentieth century, so as to better understand
the history of my time.
Wars are usually the result of politicians either wanting them, or being boxed into situations where they either can't avoid
them or consider them the best of an assortment of bad options.
Point taken George. Despite that the general notion that as crunch time develops, there will be a trend towards extremist and
totalitarian regimes throughout the world. Along with pockets of failed states, anarchy and warlords. 'Have nots' will take big
risks.
No devolution involved. Just human nature.
The loose knit groups with similar hates, anger and dislikes were temporarily brought together. It was an inverse election that
utilized the negative and more volatile side of human nature. it only hangs together with constant stirring and occasional negative
results (pound the enemy). Finger pointing and passing the buck is not enough, the groups start fracturing.
A question for Dennis Coyne, or any other cornucopian who believes renewable energy will save the world from economic collapse,
at least for the next 200 years or so.
Dennis, I understand your very optimistic outlook for the welfare of future human populations. I don't agree with it but I
understand your argument. But as I understand it, and please correct me if I am wrong, your entire argument deals with the
human population of the earth. I don't remember reading your predicted outlook for the rest of the animal kingdom? Perhaps
you did make one and I just missed it.
That being said, you have read my outlook many times. And it was all repeated in my post above. Do you agree or disagree? Just
where do you see the large wild animal population in the year 2100? Please elaborate.
Edit: Dennis, I know you do not consider yourself a cornucopian, however, I was just comparing your outlook for the
future of civilization to mine. And using that comparison?
Nice! I was just thinking about a response to a comment following
one of mine
further up and this pops up, which dovetails nicely into what I've been thinking. In my comment I mention using wind power
to make ammonia as a foundation for chemical nitrogen fertilizer and you (Ron) in you reply stated that, " But it is chemical
fertilizers that have very dramatically and very temporally increased our carrying capacity." I don't know if you realized
this but, that sort of was my point in that, the manufacture of ammonia and the resulting chemical fertilizer using excess wind
(and/or solar) power might well result in a much extended (permanent) increase in carrying capacity by allowing us to continue
the manufacture of chemical nitrogen fertilizer (ammonium nitrate if memory serves me right) in the absence of oil and NG.
This can be viewed as a downside to the ongoing exponential increasing capacity of renewable electricity generation. If renewables
grow big enough fast enough, there will be incentives to use any excess to do things like manufacture fertilizer allowing mankind's
expansion into wild habitats to continue. I think it is important that the existing population of the planet continues to have
more or less adequate food supplies in order to avoid the sort of situation that exist in Haiti but, the real problem as I see
it, is to get poor people in less developed countries to believe that they would be better off not having as many children. Based
on utterances I have heard in my neck of the woods, as recently as last night, many of these people do not see any problem with
having lots of kids. There seems to be an attitude abroad that there is a great big world out there, just ready for the taking.
No limits. I wonder whatever gives people that idea?
I wanted to post some pictures of garbage, sitting in open storm water channels, just waiting for the next big shower of rain
to be washed out of existence. At least that must be what the people who dump this stuff into the drains think. I have to wonder
if they ever bother to think about where it's going to end up but, it seems to be a simple case of out of sight, out of mind.
I guess some readers will have figured out that if you visit any area of the Jamaican coastline that does not have a regular,
structured clean up crew, you will see where the trash ends up. I have seen it and it is depressing.
I don't know if you realized this but, that sort of was my point in that, the manufacture of ammonia and the resulting chemical
fertilizer using excess wind (and/or solar) power might well result in a much extended (permanent) increase in carrying capacity
by allowing us to continue the manufacture of chemical nitrogen fertilizer (ammonium nitrate if memory serves me right) in
the absence of oil and NG.
Errr . I don't know if you realize it but you cannot make nitrogen fertilizer without natural gas . or some other source of
hydrogen. Of course, you might get the hydrogen from water via electrolysis but that would be super expensive.
Fertilizer Made with Natural
Gas Is Lifting Our World Referred to by some as the most important technological advance of the 20th century .Between 3 and 5 percent of the world's
annual natural gas production – roughly 1 to 2 percent of the world's annual energy supply – is converted using the process to
produce more than 500 million tons of nitrogen fertilizer, which is believed to sustain about 40 percent of the world's 7 billion
people. Approximately half of the protein in today's humans originated with nitrogen fixed through the Haber-Bosch process.
"Of course, you might get the hydrogen from water via electrolysis but that would be super expensive."
Not if you are experiencing negative electricity prices as has happened when there's lots of wind and no demand or transmission
capacity for the electricity being generated. I think OFM has alluded to this a few times in his ramblings, suggesting that hydrogen
production via electrolysis or desalination might be useful ways of avoiding otherwise wasted electricity when the resource is
available but, there is limited demand or transmission capacity.
We are pursuing a Grand Challenge – the challenge to feed the world while sustaining the environment. In the spirit of this
grand challenge, a team of researchers across the University are pursuing an elegant concept in which wind energy, water, and
air are used to produce nitrogen fertilizer.
WCROC energy from the windEnergy generated from the wind is used to separate hydrogen from water. Nitrogen is pulled from air.
The hydrogen and nitrogen are then combined to form nitrogen fertilizer that nourishes the plants surrounding the farmer.
Next to water, nitrogen fertilizer is the most limiting nutrient for food production. Minnesota farmers import over $400
million of nitrogen fertilizer each year and are subjected to volatile price swings. Furthermore, nitrogen fertilizer is currently
produced using fossil energy which contributes significantly to the carbon footprint of agricultural commodities.
Siemens is participating in an all electric ammonia synthesis and energy storage system demonstration programme at Rutherford
Appleton Laboratory, near Oxford. The demonstrator, which will run until December 2017, is supported by Innovate UK. Collaborators
include the University of Oxford, Cardiff University and the Science & Technology Facilities Council.
I do not know much about the subject so I should probably not offer an opinion, but because you asked
I agree that humans are the problem and believe that fewer humans (as in reduced population) will improve the situation. Will
humans choose to protect some of the mega fauna, until population falls to a more sustainable level? I have no idea.
Is it possible? I would say yes.
High probability? My guess would be no (less than a 66% probability).
So I do not have a prediction for the Earth's megafauna in 2100, except to say I doubt your prediction that we will be reduced
to rats and mice, etc. is correct. This is no doubt because I believe there will be a gradual transition to a more sustainable
society. I believe some of the mega fauna might be preserved until human population falls to 1 billion or so (by 2150 to 2200).
Most likely in North America, Scandanavia, and Siberia, and perhaps in the Himalaya and parts of South America. The rapid expansion
of population in Africa makes it less likely the megafauna will survive there.
I am using the 40 kg cutoff for megafauna, though there are many definitions.
Note that some would consider cornucopian an insult.
Certainly I do not think fossil fuels are as abundant as those who believe scenarios such as the RCP8.5 scenario (with about
5000 Pg of carbon emissions) are plausible.
I also do not believe resources are unlimited or infinitely substitutable, which tends to be the cornucopian viewpoint. There
is great need to utilize resources more efficiently and to recycle as much as possible (cradle to grave manufacturing should be
required by law).
Now if you define cornucopian as someone who is less pessimistic than you, then I am by that definition a cornucopian.
I am certainly more optimistic than you, but if we all agreed there would be little to discuss.
Clearly the future is unclear.
The outlook for the wild megafauna is tragic and we should do what we can to preserve species diversity. Getting human population
to peak and decline would improve the situation of other species, but I share your pessimism that this will be enough, I am just
less pessimistic than you.
I believe some of the mega fauna might be preserved until human population falls to 1 billion or so (by 2150 to 2200).
Okay, let's do the math. It looks like the world will reach 9 billion people by 2050. Then if it were to fall to 1 billion
by 2150, that would be a decline of 80,000,000 per year or 219,178 per day. That is deaths above births. That would be a catastrophic
collapse by any stretch of the imagination. And of course, most of those deaths would be by starvation. And for sure, as I said
before, we would eat the songbirds out of the trees.
Hell, if that scenario takes place, there will likely be no rats left. No, no, no, Dennis, please forgive me. You are definitely
not a cornucopian. Oh God, how could I have been so wrong?
The most rapid population decreases have been from disease. A few bouts of virulent diseases in a world with little medical help
and control could dramatically reduce population.
Population Collapse in Mexico (Down to about 5% in a century)
See chart below. If total fertility ratio (TFR) falls to 1.5 by 2050 then population can fall from 9 billion to 4.5 billion
by 2125 and to 2.25 billion by 2200 and to 1 billion by 2300, a fall in TFR to 1.25 (South Korea is about 1.26) would result in
more rapid population decline. It is not clear how low TFR can go for the World, it was cut in half in 40 years, whether that
can continue so that 1.27 is reached in 2055 is unknown. This scenario assumes life expectancy rises to no higher than 90 for
the World.
Deaths would be natural rather than from starvation, this is just a matter of people choosing to have fewer children as is
the case today in many East Asian countries such as South Korea and Japan and in many European nations as well.
Education for women and access to birth control and electrification (watch tv, instead of other forms of entertainment leading
to increased family size), and empowerment of women in general will reduce population growth. Higher income also helps.
Keeping things in perspective, why not go with the experts until they're proven wrong?
WORLD POPULATION LIKELY TO SURPASS 11 BILLION IN 2100
"American Statistical Association. "World population likely to surpass 11 billion in 2100: US population projected to grow
by 40 percent over next 85 years."
THERE'S A STRONG CHANCE THAT ONE-THIRD OF ALL PEOPLE WILL BE AFRICAN BY 2100
The combination of declining mortality and relatively high fertility is the driver of rapid population growth in Africa. Even
if fertility would continue to decline, as assumed by the UN medium scenario, it will not bring down the growth rate in the near
future, let alone halt population growth. This is because of "demographic inertia". And this is because Africa has a high proportion
of young adults of reproductive age. Even if each one had very few children, the number of births would remain high.
We are all African– it's just some of us have been gone for a while.
(well if you are east of the Wallace Line, you are part Denisovan, and west, part Neanderthal and a species we haven't discovered
yet)
Dennis, you are assuming that the population will alter their fertility rates to a lower value. Yes, that has already happened
in developed countries. The fertility rates in undeveloped countries are still controlled by what their economy and environment
will bear.
The vast majority of the human population lives in undeveloped countries. They will continue to push, push, push against the
very limits of their existence. And that will still be the case 50 years from now, and 100 years from now, and 150 years from
now.
There are reasons the fertility rate is dropping in developed countries. Female empowerment, contraception, and so on. There
are entirely different reasons the fertility rate is dropping in undeveloped countries. Poor nutrition, almost no prenatal care
and so on. Also, much higher infant death rate helps keep the population in check. Please check my chart above from the Population
Reference Bureau.
I think that if you could just live just one year in Bangladesh, or the Congo, or Zimbabwe, or . you would have an entirely
different outlook. You would be forced to take off those rose-colored glasses.
Again, check the Population Reference Bureau chart above.
" if you could just live just one year in Bangladesh, or the Congo, or Zimbabwe, or . you would have an entirely different outlook.
You would be forced to take off those rose-colored glasses."
Wouldn't take a year, one week would do it: even keeping the rose-colored glasses on.
I spent a bit of time on leave in "Liberated Burma"/Karen State shortly after the fall of Manerplaw. A week would do it, however
I was there for about 3 months. I haven't had a bad day since.
I linked up with some folks in Mae Sot on the Thai side. It was well planned before hand. There's was a lot of back and forth
across the border in those days. Did some long range mobile medical patrols in Karen and Karenni State. Got chased around by Tatmadaw/SLORC
a bit. When I was 25 that was my idea of a good time. Yeah, kinda fucked I know.
Yea --
I was the only Farang around in Masi, and everyone else was going back and forth.
Very interesting place.
That was a long time ago, in a land far, far away.
It would be impossible in the homogeneous police state we are currently inhabiting.
I spent about 5 months hitchhiking through North and West Africa in 1981-2. Tunisia, Algeria, Niger, Nigeria, Gabon, Republic
of Congo, and Zaire (as it was known in 1982).
The TFR of half the World's population as of 2015 is less than 2. The World TFR decreased from 5.02 in 1965 to 2.51 in 2015.
The problem I see with fertility rates is the same problem I see with planting trees. Even though I support a foundation to plant
trees I realize that future changes could allow people to wipe out those and other trees very quickly, thus rendering the effort
useless. I also realize the preserved areas of nature and wilderness could quickly disappear or be irreparably harmed by government
decree, war and material/food pressures.
The same goes with lower fertility rates. Since they are only based on decisions and not biological, the lower rates could reverse
quite quickly. Just stress the population and see how fast it will change.
Once people realize that technological progress is an empty dead system that moves us to an empty dead world, birth rates will
climb quickly.
Rather than adding to our knowledge, Tompkins argues computers and smartphones represent "deskilling devices; they make
us dumber. We're immersed in a system that now requires the use of a cell phone just to get around, just to function and so the
logic of that cell phone has been imposed on us.
"The computer is a mechanism for acceleration, it accelerates economic activity and this is eating up the world. It's eating
up resources, it's processing, it's manufacturing, it's distributing, it's consuming. That's what the computer's real work does
and it does that 24/7, 365 days a year, non-stop just to satisfy our own narrow needs."
Tompkins foresees a dark future dominated as he puts it by more ugliness, damaged landscapes, extinct species, extreme poverty,
and lack of equity and says humanity faces a stark choice; either to transition now to a different system or face a painful collapse.
"The extinction crisis is the mother of all crises. There will be no society, there will be no economy, there will be no
art and culture on a dead planet basically. We've stopped evolution."
Rather than adding to our knowledge, Tompkins argues computers and smartphones represent "deskilling devices; they make us
dumber. We're immersed in a system that now requires the use of a cell phone just to get around, just to function and so the logic
of that cell phone has been imposed on us.
So put the damn cell phones to better use. They can also make us smarter They can be used to track illegal logging in endangered
rain forests. The fact that I have a device in my pocket that gives me access to all of human knowledge and access to GPS does
not make me dumber.
Really? You have cell service in the rain forests? I barely have cell service where I live and it disappears totally between the
mountains near me. I don't need electronic mapping and GPS to get around so no problem for me.
Let the rest feel nervous as they get out of touch. For many it's a disaster if they lose their phones, fully dependent.
I don't need electronic mapping and GPS to get around so no problem for me.
I actually learned how to use a sextant and a compass but GPS is available so I admit that I do use it upon occasion.
In any case my point was that it is possible to use technology for purposes other than tweeting or posting selfies of oneself
to Facebook every ten minutes.
Fred, they are highly capable machines but just machines. How they are used is determined by the machine and the operator interface.
I could go on for hours how they have had very bad effects on personal time and personal interactions. For many people life is
a series of texts and phone calls with real time life being the background now. Interruptions are the norm now. Sacrilege is when
they have to turn them off.
@Fred
I come close to nailing a textwalker or walkytalky nearly every time I am out on my bike. SOP, watch out for the buggers. It amazes
me that people are unable to move about (foot, moto, car, bus, truck) without a phone in their hand.
A question for Dennis Coyne, or any other cornucopian who believes renewable energy will save the world from economic collapse,
at least for the next 200 years or so.
Ok, I'll take a nibble!
First of all, why do we have to accept the current definition of what the economy has to be? All of nature has existed on renewable
energy since the beginning of life on this planet 3.8 billion years ago, so obviously the problem isn't renewable energy. If it
were, life wouldn't even exist. The extractive, linear growth based neo liberal idea of the economy that we have come to accept
as normal, is a relatively recent construct that was created by a small group of people at the beginning of the 20th century and
it certainly is an aberration! Personally I don't think it is worth saving.
That economy will certainly collapse and no energy source can ever make it sustainable. Therefore it will by definition collapse.
However there is nothing that says we need to continue on that path. There are indeed choices that people and societies can make.
Even to the point of something that is considered radical and taboo like limiting population growth. (that is a separate dissertation
from my point here)
With regards alternative economic thinking maybe start with Kate Raeworth. Not everyone in the world who has ideas that are
out of the box are automatically naive cornucopians.
How to Think Like a 21st Century Economist. 45:00 minutes.
What is the goal of economics? Does GDP really tell us all we need to know about a country's wealth and well-being? Our
guest in this show argues that our economic system should be designed to meet everyone's needs, while living within the means
of the planet.
Kate Raworth is the author of the acclaimed book 'Doughnut Economics', and she will join us in the studio for an exploration
of a new 21st century economic model and why she believes so many economists have got it wrong for so long.
The implications of her Doughnut Economics are profound and and can be read and embraced as a roadmap for change not just
by experts or economists, but by everyone! This is a chance to challenge her with your questions and critiques.
If you want to think a bit more about how ideas like E.O. Wilson's Half Earth might look here's a TED talk that touches on
it.
Nature is everywhere -- we just need to learn to see it 16:00 minutes
How do you define "nature?" If we define it as that which is untouched by humans, then we won't have any left, says environmental
writer Emma Marris. She urges us to consider a new definition of nature -- one that includes not only pristine wilderness but
also the untended patches of plants growing in urban spaces -- and encourages us to bring our children out to touch and tinker
with it, so that one day they might love and protect it.
Emma Marris is a writer focusing on environmental science, policy and culture, with an approach that she paints as being
"more interested in finding and describing solutions than delineating problems, and more interested in joy than despair."
I agree with Gone Fishing, we do have choices! There are people all over the world who are making them.
Regarding the first paragraph of your reply. Conflating the functioning of ecosystems
using the renewable energy from the sun with the 'Renewable Energy' required by industrial civilisation is a common mistake. The
energy from the sun is renewable.
The infrastructure required to collect and store that energy requires the mining of the
requisite minerals,transportation,smelting,manufacturing,installation. The energy
required for all of that is supplied by fossil fuels. All of that infrastructure,and all of the
rest of the human-constructed industrial world,has to be rebuilt. Solar panels last
about 25-30 years. Wind Turbines about 50 years. Our industrial constructed world
has an immense amount of embedded fossil fuel energy. The mineral density of many ores are declining now,which means that the
energy required to extract a given amount of mineral is increasing. I haven't done much reading on this site. No doubt someone
has posted this link before. It gives a good idea of the scale of the construction required.
Natural ecosystems are quite different. The energy collection occurs using biodegradable
and recyclable materials,without the energy input of fossil fuels. https://en.wikipedia.org/wiki/Cubic_mile_of_oil
Have a read of the numbers in the link. All recycling requires energy. I don't know if anyone has done an analysis of the amount
of energy
required,but it would be very large. It is also worth remembering that some of the minerals in that infrastructure are difficult
to separate and
recycle.
Plenty of people have investigated recycling and are doing it. You obviously haven't. Even the Giga-Factory is building a recycling
facility.
On the personal level, I have just replaced my washing machine and stove as the old ones were falling apart – literally. The
stove is ready to go to the local recycler where it will be separated and then sent to be melted back to new steel. The washer
will be checked over by a refurbisher who will decide if he can use it or it's parts and what is left will go to the recycler.
Simple. All my waste metal goes to the recycler but, unfortunately, we have no glass recycling so that just has to go to land
fill.
Elton John blares so loudly on Donald Trump's campaign plane that staffers can't hear themselves think. Press secretary
Hope Hicks uses a steamer to press Trump's pants -- while he is still wearing them. Trump screams at his top aides, who are subjected
to expletive-filled tirades in which they get their "face ripped off."
And Trump's appetite seems to know no bounds when it comes to McDonald's, with a dinner order consisting of "two Big Macs,
two Fillet-O-Fish, and a chocolate malted."
[ ]
In another episode, Lewandowski describes how staffer Sam Nunberg was purposely left behind at a McDonald's because Nunberg's
special-order burger was taking too long. "Leave him," Trump said. "Let's go." And they did.
Trump's fast-food diet is a theme. "On Trump Force One there were four major food groups: McDonald's, Kentucky Fried Chicken,
pizza and Diet Coke," the authors write.
The plane's cupboards were stacked with Vienna Fingers, potato chips, pretzels and many packages of Oreos because Trump, a
renowned germaphobe, would not eat from a previously opened package.
The book notes that "the orchestrating and timing of Mr. Trump's meals was as important as any other aspect of his march
to the presidency," and describes the elaborate efforts that Lewandowski and other top aides went through to carefully time their
delivery of hot fast food to Trump's plane as he was departing his rallies.
One of the biggest problems we face as population and industry grows is obtaining enough fresh water. Sure there is a lot of water
on the planet, but it is mostly salty.
Marcia Barbosa talks about the many anomalies of water and how exploiting them with nano-tubes could help address the problem
of freshwater shortages.
Marcia Barbosa has a PhD in physics from Brazil's Universidade Federal do Rio Grande do Sul, where she is now the director
of its Physics Institute. She studies the complex structure of the water molecule, and has developed a series of models of its
properties which may contribute to our understanding of how earthquakes occur, how proteins fold, and could play an important
role in generating cleaner energy and treating diseases. She is actively involved in promoting Women in Physics and was named
the 2013 L'Oreal-UNESCO for Women in Science Awards Laureate for Latin America.
Tks, GF!
LOL! I'm head over heels in love with her!
I kept imagining her giving her talk to this sound track
https://www.youtube.com/watch?v=Wunq6YlcSX0
Can you see all the dancers dressed as raindrops on a Samba Float in a Carnival Parade?
Fred – As you know my bag is astrophysics, with climate change denial being merely irritating BUT when I see science news headlines
like the following then I really get pissed off, or feel sick. Who gives a shit if Earth can "carry" 7 or 9 or 11 billion people
when dolphins & elephants are relegated to "bush meat" and when species are disappearing at increasingly alarming rates. You're
probably the only one here qualified to assess this issue so please give us your thoughts.
CURRENT EXTINCTION RATE 10 TIMES WORSE THAN PREVIOUSLY THOUGHT
"Life on earth is remarkably diverse. Globally, it is estimated that there are 8.7 million species living on our planet, excluding
bacteria. Unfortunately, human activities are wiping out many species and it's been known for some time that we are increasing
the rate of species extinction. But just how dire is the situation? According to a new study, it's 10 times worse than scientists
previously thought with current extinction rates 1,000 times higher than natural background rates."
Doug, if you get a chance, watch the ASU Origins project debates to which I have posted links recently addressing the topic of
extinction. This is a very serious cross disciplinary discussion and can't really be done justice in a quick response here. It
probably necessitates a full post of similar length to Ron's.
I look on space habitats as being trapped inside a giant iron lung. Exploration is one thing, but actually thinking of Mars as
a possible home for humans is just sad.
Couldn't agree more! And that's from someone who lived and worked in a hyperbaric chamber as a saturation diver on oil rigs. I'd
say that is pretty close to living in an iron lung as well
The part about going to Mars that has always bothered me is the radiation exposure.
The problem is that neoliberal ideology entered the state of the crisis in 2008 much like Bolshevik ideology entered the
crisis after WWII. The USSR managed to survive for another 50 years after that.
Notable quotes:
"... Multipolar is just that – leave exercise of power and responsibility as close to the local situation as possible. Brussels telling Poland who should be a TV presenter, or Washington deciding what people in rural Hungary should read is idiotic. What's the point of all this busy-body behaviour? It is always justified by some slogans about preventing 'human rights violations'. Right. We have seen the results – a lot more people have died and suffered because of 'humanitarian' interventions than from anything else in the last 20+ years. ..."
"... I do find the current rapprochement between Russia and the major Moslem states amusing. It goes beyond Turkey and Iran, Moscow is working all of them, Egypt, Sudan, I suspect it is a clever attempt to beat US at its own game – US has spent about four decades arming and unleashing any Islamic force it could find against Russians (and Slavs in general), using methods that were beyond brutal and hypocrisy that eventually backfired. Maybe turning it around is a good strategy. It is inconsistent, but when you fight extreme stupidity, often the only thing that works is to use more stupidity ..."
"... Orwell's vision is but one of the possibilities. Another is Armageddon. Yet another is a "(Failed) West and a multipolar Rest". The latter is what I think will actually happen in the near and medium term. Things being what they are, it may even be the best we can hope for. ..."
"... I don't see any other power than the West (=US) aspiring to 'manage the world'. Maybe some ISIS fanatics have the same dream, but they are not in a position to achieve it. West has 'managed' it very poorly: mindless interventions, wars, migrants, hypocrisy, threats and blackmail. ..."
"... The other 'powers' have very modest, regional aspirations. Russia or China really don't care that much who wins the elections in Portugal, or what regional papers write in Hungary – US seems to be obsessed with it. And the only justification that Western defenders offer when pressed is that 'there would be a vacuum' and 'Russians would move in'. This is obvious nonsense and only elderly paranoid Cold Warrior types believe it ..."
"... Europeans have been invited to join the Eurasian Project, to create a continental market from "Lisbon to Vladivostok". Latent dreams of Hegemony hold at least some of their elites back. ..."
"... The West rode an ahistorical rogue wave of development to a point just short of Global Hegemony. That wave broke, and is now rolling back out into the world leaving the West just short of its civilizational resource requirements. No way to get back on a broken wave. In any case, China now holds the $$$ hammer, and Russia holds the military hammer, and they've now got the surfboard. Both of them, led by historically aware elites, know that Hegemony doesn't work, so will focus on keeping their neck of the woods as stable & prosperous as possible while hell blazes elsewhere. ..."
"The same "hegemon with allies/vassals" as it is now, only in that case divided in
three"
Why? There is absolutely nothing about 'multipolar' that dictates three, or four
'hegemons', or even lists who would the 'multis' be. The idea is simply that most people,
most of the time are better off left alone.
Is that so hard to understand? Why should people in Washington (or Moscow, Beijing,
Brussels, ) be intimately involved with how others live their lives, with their fights and
alliances? Knowledge always dissipates with distance, and most of the 'masters of the
universe' are not that smart to start with.
Multipolar is just that – leave exercise of power and responsibility as close to the
local situation as possible. Brussels telling Poland who should be a TV presenter, or
Washington deciding what people in rural Hungary should read is idiotic. What's the point of
all this busy-body behaviour? It is always justified by some slogans about preventing 'human
rights violations'. Right. We have seen the results – a lot more people have died and
suffered because of 'humanitarian' interventions than from anything else in the last 20+
years.
I do find the current rapprochement between Russia and the major Moslem states amusing. It
goes beyond Turkey and Iran, Moscow is working all of them, Egypt, Sudan, I suspect it is a
clever attempt to beat US at its own game – US has spent about four decades arming and
unleashing any Islamic force it could find against Russians (and Slavs in general), using
methods that were beyond brutal and hypocrisy that eventually backfired. Maybe turning it
around is a good strategy. It is inconsistent, but when you fight extreme stupidity, often
the only thing that works is to use more stupidity
"The same "hegemon with allies/vassals" as it is now, only in that case divided in
three"
Why? There is absolutely nothing about 'multipolar' that dictates three, or four
'hegemons', or even lists who would the 'multis' be. The idea is simply that most people,
most of the time are better off left alone.
Peter's is the apocalyptic view made famous by Orwell. He may be right, it may all unravel
and Oceania, Eurasia & Eastasia run a classic 3-power calculus of shifting alliances in a
struggle for control of the "hinterlands". Not at all impossible, but certainly not what the
proponents of the multipolar world want.
The idea is much more than the notion that most people want to "be left alone". The
Multipolar world as it is actually being constructed by its proponents, from its monetary
structures to its security, commercial and trade regimes, is precisely the attempt to prevent
that Orwellian development in the face of Western decline. Their foundational tenet is that
Globalization as a world-historical trend is here to stay (for at least the next few
generations), and the "compartmentalization" of the world into alliances and hegemonies as
historically occurred is no longer a viable option. The 3 Orwellian powers are all nuclear
now, and the #1 priority is to mitigate the risk of war between them. Best to do that by
dissolving them into a matrix of commercial and developmental programs that they'd be loathe
to destroy.
EG: Though Russia considers both China and Iran "strategic partners", there is no formal
alliance with either of them, and there won't be. Alliances cannot be "forbidden", but the
countries that have signed onto the multipolar world program view alliances with
suspicion.
As a introduction to the coming multipolar world, Kupchan's Western-centric analysis is a
good place to start: https://www.amazon.com/No-Ones-World-Council-Relations/dp/0199325227 "Kupchan provides a detailed strategy for striking a bargain between the West and the
rising rest by fashioning a new consensus on issues of legitimacy, sovereignty, and
governance."
Assuming he even knows the least thing about what the multipolar world is trying to do,
Peter's view is that their attempt will fail. Maybe so.
To "fashion a new consensus on issues of legitimacy, sovereignty, and governance" requires
that the professional criminal class that grabbed the remains of Western power a decade and a
half ago has been forced to let go. If not, the world indeed faces an abyss.
Orwell's vision is but one of the possibilities. Another is Armageddon. Yet another is a
"(Failed) West and a multipolar Rest". The latter is what I think will actually happen in the
near and medium term. Things being what they are, it may even be the best we can hope
for.
"(Failed) West and a multipolar Rest". The latter is what I think will actually happen
in the near and medium term.
I think we already have it, except I don't think West has failed yet. Or it has in a way,
the process of failing goes on, but the consequences have not been felt much in the West
yet.
I don't see any other power than the West (=US) aspiring to 'manage the world'. Maybe some
ISIS fanatics have the same dream, but they are not in a position to achieve it. West has
'managed' it very poorly: mindless interventions, wars, migrants, hypocrisy, threats and
blackmail.
The other 'powers' have very modest, regional aspirations. Russia or China really don't
care that much who wins the elections in Portugal, or what regional papers write in Hungary
– US seems to be obsessed with it. And the only justification that Western defenders
offer when pressed is that 'there would be a vacuum' and 'Russians would move in'. This is
obvious nonsense and only elderly paranoid Cold Warrior types believe it (peterAUS?). What is
really going on is that West has over-reached and can barely handle its own problems. So they
scream 'Russians are coming' to distract, or to prolong the agony. Russians are not coming,
they don't care in 2017, they can barely control their huge territory today. More you see
squealing and lying in the Western media, more it shows that they have not much else to work
with.
"(Failed) West and a multipolar Rest". The latter is what I think will actually happen
in the near and medium term.
I think we already have it, except I don't think West has failed yet. Or it has in a
way, the process of failing goes on, but the consequences have not been felt much in the
West yet.
Well, exogenous events aside, "decline and fall" is necessarily a process. A series of
steps and plateaus is typical. A major step occurred in 2007/8, when the money failed. The
bankers, in a frankly heroic display of coordination, propped up the $$$ and the West got a
decade long plateau. Things are going wobbly again, financially speaking and I suspect the
next step function to occur rather soon. Stays of execution have been exhausted, so it'll be
interesting how the West handles it, and how the RoW reacts.
Europeans have been invited to join the Eurasian Project, to create a continental market from
"Lisbon to Vladivostok". Latent dreams of Hegemony hold at least some of their elites back.
The USA has also been invited, but its dreams remain much more virile. That is, until Trump
who's backers seem to read the writing on the wall better than the Straussians.
I don't see any other power than the West (=US) aspiring to 'manage the world' .
The other 'powers' have very modest, regional aspirations US seems to be obsessed with
it.
The fact is that the rise of the West to global dominance is due to a historical anomaly.
It was fuelled (literally) by the discovery and harnessing of the chemical energy embedded in
coal (late 18thC) and then oil (late 19thC). The first doubled the population, and as first
movers gave the West a running start. The second turned on the afterburners, and population
grew >3.5 fold. Again the West led the way. To fuel that ahistorical step-function growth
curve, control of resources on a global scale became its civilizational imperative.
That growth curve has plateaued, and the rest of the world has caught/is catching up
developmentally. The resources the West needs aren't going to be available to it in the way
they were 100 years ago. Them days is over, for everybody really, but especially for the West
because it has depleted its own hi-ROI resources, and both of its means of control (IMF$
System & U$M) of what's left of everybody else's are failing simultaneously. So its
plateau will not be flat, or not flat for long between increasingly violent steps.
The West rode an ahistorical rogue wave of development to a point just short of Global
Hegemony. That wave broke, and is now rolling back out into the world leaving the West just
short of its civilizational resource requirements. No way to get back on a broken wave. In
any case, China now holds the $$$ hammer, and Russia holds the military hammer, and they've
now got the surfboard. Both of them, led by historically aware elites, know that Hegemony
doesn't work, so will focus on keeping their neck of the woods as stable & prosperous as
possible while hell blazes elsewhere.
What is really going on is that West has over-reached and can barely handle its own
problems.
IMHO, what's really going on is that the West's problems are simply symptomatic of what
"decline and fall", if not "collapse" looks like from within a failing system. A long time
ago I read the diary of a Roman nobleman who in the most matter-of-fact style wrote of
exactly the same things Westerners complain about today. How this, that or the other thing no
longer works the way it did. For all of his 60+ years, every day was infinitesimally worse
than the day before, until finally he decides to pack up his Roman households and move to his
estates in Spain. It took 170(iirc) more years of continuous decline until Alaric finally
arrived at the Gates of Rome. If wholly due to internal causes, collapse is almost always a
slow motion train wreck.
'there would be a vacuum' and 'Russians would move in'. This is obvious nonsense and
only elderly paranoid Cold Warrior types believe it (peterAUS?).
Actually, it's just stupid. Cold Warrior or not, the view betrays a deep and abiding
ignorance of both history and a large part of what drove the West's hegemonic successes. That
both militate against anyone else ever even trying such a thing on a global scale can't be
seen if you look at historical developments and the rest of the world through 10′ of
1″ pipe.
The idea that Russia wants/needs the Baltics is even more laughable than that it
wants/needs the Ukraine or Poland. None of these tarbabies have anything to offer but
trouble. Noisome flies on an elephant, it is only if they make themselves more troublesome as
outsiders than they would be as vassals would Russia move.
Why do you think so? I think we are about to enter an occasional plateau and things will
be stable or even improve for a while. The Rome analogies are instructive, but they only take you so far. E.g. Rome was
collapsing for about two centuries, on and off. Rome was also infinitely more brutal than
today's West and the 'barbarians' were real barbarians, not aspiring migrants led by
well-paid NGO comprador class. Why do you think it is getting wobbly?
"The power and influence of the financial sector threatens a continuation of the regulatory capture that contributed to the financial
crisis. Financial firms, too often, have significant say in the appointment of high regulatory officials.
The tendency of some former government officials to obtain highly lucrative positions in the financial sector after leaving
government may well act as an inducement to those remaining in government to serve the interest of the financial sector rather
than those of the public."
The Western Banks are all over these markets, from commodities to equities. They are creating huge amounts of money debt, and providing
it to the financial industry as top down stimulus. What results is little aggregate or 'organic' growth and a series of paper asset
bubbles. They should be ashamed but they are too busy plundering to feel any twinge of conscience. They are like a herd of swine,
racing for the abyss.
I had to chuckle when the pampered princesses and giggling jackals were talking about the jobs report tomorrow,
and said that the ideal situation would be 'a strong jobs number with no wage growth,' a true 'goldilocks' scenario.
I have given up any expectation of reform from within. There will have to be some eye-opening incidents to shake the complacency
of the fortunate few.
"... complex systems are prone to catastrophic failure, how that possibility is held at bay through a combination of redundancies and ongoing vigilance, but how, due to the impractical cost of keeping all possible points of failure fully (and even identifying them all) protected, complex systems "always run in degraded mode". Think of the human body. No one is in perfect health. At a minimum, people are growing cancers all the time, virtually all of which recede for reasons not well understood. ..."
"... every major investment leads to further investments (no matter how dumb or large) to protect the value of past investments. ..."
"... Tainter argues that the energy cost (defined broadly) of maintaining the dysfunction eventually overwhelms the ability of the system to generate surpluses to meet the rising needs of maintenance. ..."
"... a combination of shrinking revenue base and the subordination of all systemic needs to the needs of individual emperors to stay in power and therefore stay alive. ..."
"... In each case, some elite individual or grouping sees throwing good money after bad as necessary to keeping their power and their positions. Our current sclerotic system seems to fit this description nicely. ..."
"... One point that Tainter made is that collapse is not all bad. He presents evidence that the average well being of people in Italy was probably higher in the sixth century than in the fifth century as the Western Roman Empire died. Somewhat like death being necessary for biological evolution collapse may be the only solution to the problem of excessive complexity. ..."
"... The Iron Law of Institutions (agents act in ways that benefit themselves in the context of the institution [system], regardless of the effect those actions have on the larger system) would seem to mitigate against any attempts to correct our many, quickly failing complex social and technological systems. ..."
"... It is that cumulative concentration of wealth and power over time which is ultimately destabilizing, producing accepted social norms and customs that lead to fragility in the face of both expected and unexpected shocks. This fragility comes from all sorts of specific consequences of that inequality, from secrecy to group think to brain drain to two-tiered justice to ignoring incompetence and negligence to protecting incumbents necessary to maintain such an unnatural order. ..."
"... The problem arises with any societal order over time in that corrosive elements in the form of corruptive behavior (not principle based) by decision makers are institutionalized. I may not like Trump as a person but the fact that he seems to unravel and shake the present arrangement and serves as an indicator that the people begin to realize what game is being played, makes me like him in that specific function. ..."
"... However, the failure was made immeasurably worse due to the fact that Exxon had failed to supply that pump-station with a safety manual, so when the alarms started going off the guy in the station had to call around to a bunch of people to figure out what was going on. So while it's possible that the failure would have occurred no matter what, the failure of the management to implement even the most basic of safety procedures made the failure much worse than it otherwise would have been. ..."
"... . . .but it is also true that the incentives of the capitalist system ensure that there will be more and worse accidents than necessary , as the agents involved in maintaining the system pursue their own personal interests which often conflict with the interests of system stability and safety. ..."
"... In Claus Jensen's fascinating account of the Challenger disaster, NO DOWNLINK, he describes how the managers overrode the engineers' warnings not to fly under existing weather conditions. We all know the result. ..."
"... Globalization factors in maximizing the impact of Murphy's Law: ..."
"... Where one can only say: "Forgive them Father, for they know not what they do" ..."
Lambert found a short article by Richard
Cook that I've embedded at the end of the post. I strongly urge you to read it in full. It discusses how complex systems are
prone to catastrophic failure, how that possibility is held at bay through a combination of redundancies and ongoing vigilance, but
how, due to the impractical cost of keeping all possible points of failure fully (and even identifying them all) protected, complex
systems "always run in degraded mode". Think of the human body. No one is in perfect health. At a minimum, people are growing cancers
all the time, virtually all of which recede for reasons not well understood.
The article contends that failures therefore are not the result of single causes. As Clive points out:
This is really a profound observation – things rarely fail in an out-the-blue, unimaginable, catastrophic way. Very often just
such as in the MIT article the fault or faults in the system are tolerated. But if they get incrementally worse, then the ad-hoc
fixes become the risk (i.e. the real risk isn't the original fault condition, but the application of the fixes).
https://en.wikipedia.org/wiki/Windscale_fire#Wigner_energy
documents how a problem of core instability was a snag, but the disaster was caused by what was done to try to fix it. The plant
operators kept applying the fix in ever more extreme does until the bloody thing blew up.
But I wonder about the validity of one of the hidden assumptions of this article. There is a lack of agency in terms of who is
responsible for the care and feeding of complex systems (the article eventually identifies "practitioners" but even then, that's
comfortably vague). The assumption is that the parties who have influence and responsibility want to preserve the system, and have
incentives to do at least an adequate job of that.
There are reasons to doubt that now. Economics has promoted ways of looking at commercial entities that encourage "practitioners"
to compromise on safety measures. Mainstream economics has as a core belief that economies have a propensity to equilibrium, and
that equilibrium is at full employment. That assumption has served as a wide-spread justification for encouraging businesses and
governments to curtail or end pro-stability measures like regulation as unnecessary costs.
To put it more simply, the drift of both economic and business thinking has been to optimize activity for efficiency. But highly
efficient systems are fragile. Formula One cars are optimized for speed and can only run one race.
Highly efficient systems also are more likely to suffer from what Richard Bookstaber called "tight coupling." A tightly coupled
system in one in which events occur in a sequence that cannot be interrupted. A way to re-characterize a tightly coupled system is
a complex system that has been in part re-optimized for efficiency, maybe by accident, maybe at a local level. That strips out some
of the redundancies that serve as safeties to prevent positive feedback loops from having things spin out of control.
To use Bookstaber's nomenclature, as opposed to this paper's, in a tightly coupled system, measures to reduce risk directly make
things worse. You need to reduce the tight coupling first.
A second way that the economic thinking has arguably increased the propensity of complex systems of all sorts to fail is by encouraging
people to see themselves as atomized agents operating in markets. And that's not just an ideology; it's reflected in low attachment
to institutions of all sorts, ranging from local communities to employers (yes, employers may insist on all sorts of extreme shows
of fealty, but they are ready to throw anyone in the dust bin at a moment's notice). The reality of weak institutional attachments
and the societal inculcation of selfish viewpoints means that more and more people regard complex systems as vehicles for personal
advancement. And if they see those relationships as short-term or unstable, they don't have much reason to invest in helping to preserving
the soundness of that entity. Hence the attitude called "IBY/YBG" ("I'll Be Gone, You'll Be Gone") appears to be becoming more widespread.
I've left comments open because I'd very much enjoy getting reader reactions to this article. Thanks!
So many ideas . Mike Davis argues that in the case of Los Angeles, the key to understanding the city's dysfunction is in the
idea of sunk capital – every major investment leads to further investments (no matter how dumb or large) to protect the value
of past investments.
Tainter argues that the energy cost (defined broadly) of maintaining the dysfunction eventually overwhelms the ability
of the system to generate surpluses to meet the rising needs of maintenance.
Goldsworthy has argued powerfully and persuasively that the Roman Empire in the West was done in by a combination of shrinking
revenue base and the subordination of all systemic needs to the needs of individual emperors to stay in power and therefore stay
alive. Their answer was endlessly subdividing power and authority below them and using massive bribes to the bureaucrats
and the military to try to keep them loyal.
In each case, some elite individual or grouping sees throwing good money after bad as necessary to keeping their power
and their positions. Our current sclerotic system seems to fit this description nicely.
I immediately thought of Tainter's "The Complex of Complex Cultures" when I starting reading this. One point that Tainter
made is that collapse is not all bad. He presents evidence that the average well being of people in Italy was probably higher
in the sixth century than in the fifth century as the Western Roman Empire died. Somewhat like death being necessary for biological
evolution collapse may be the only solution to the problem of excessive complexity.
Tainter insists culture has nothing to do with collapse, and therefore refuses to consider it, but he then acknowledges that
the elites in some societies were able to pull them out of a collapse trajectory. And from the inside, it sure as hell looks like
culture, as in a big decay in what is considered to be acceptable conduct by our leaders, and what interests they should be serving
(historically, at least the appearance of the greater good, now unabashedly their own ends) sure looks to be playing a big, and
arguably the defining role, in the rapid rise of open corruption and related social and political dysfunction.
Then I'll add my two cents: you've left out that when systems scale linearly, the amount of complexity, and points for failure,
and therefore instability, that they contain scale exponentially–that is according to the analysis of James Rickards, and supported
by the work of people like Joseph Tainter and Jared Diamond.
Ever complex problem that arises in a complex system is fixed with an even more complex "solution" which requires ever more
energy to maintain, and eventually the inevitably growing complexity of the system causes the complex system to collapse in on
itself. This process requires no malignant agency by humans, only time.
Maybe call the larger entity "meta-stable?" Astro and geo inputs seem to have been big perturbers. Lots of genera were around
a very long time before naked apes set off on their romp. But then folks, even these hot, increasingly dry days, brag on their
ability to anticipate, and profit from, and even cause, with enough leverage, de- stability. Good thing the macrocosms of our
frail, violent, kindly, destructive bodies are blessed with the mechanisms of homeostasis.
Too bad our "higher" functions are not similarly gifted But that's what we get to chat about, here and in similar meta-spaces
Agree, positive density of ideas, thoughts and implications.
I wonder if the reason that humans don't appreciate the failure of complex systems is that (a) complex systems are constantly
trying to correct, or cure as in your cancer example, themselves all the time until they can't at which point they collapse, (b)
that things, like cancer leading to death, are not commonly viewed as a complex system failure when in fact that is what it is.
Thus, while on a certain scale we do experience complex system failure on one level on a daily basis because we don't interpret
it as such, and given that we are hardwired for pattern recognition, we don't address complex systems in the right ways.
This, to my mind, has to be extended to the environment and the likely disaster we are currently trying to instigate. While
the system is collapsing at one level, massive species extinctions, while we have experienced record temperatures, while the experts
keep warning us, etc., most people to date have experienced climate change as an inconvenience - not the early stages of systemwide
failure.
Civilization collapses have been regular, albeit spaced out, occurrences. We seem to think we are immune to them happening
again. Yet, it isn't hard to list the near catastrophic system failures that have occurred or are currently occurring (famines,
financial markets, genocides, etc.).
And, in most systems that relate to humans with an emphasis on short term gain how does one address system failures?
To paraphrase President Bill Clinton, who I would argue was one of the major inputs that caused the catastrophic failure of
our banking system (through the repeal of Glass-Steagall), it all depends on what the definition of WE is.
Civilizational collapse is extremely common in history when one takes a long term view. I'm not sure though that I would
describe it as having that much "regularity" and while internal factors are no doubt often important external factors like the
Mongol Onslaught are also important. It's usually very hard to know exactly what happened since historical documentation tends
to disappear in periods of collapse. In the case of Mycenae the archaeological evidence indicates a near total population decline
of 99% in less than a hundred years together with an enormous cultural decline but we don't know what caused it.
As for long term considerations the further one tries to project into the future the more uncertain such projections become
so that long term planning far into the future is not likely to be evolutionarily stable. Because much more information is available
about present conditions than future conditions organisms are probably selected much more to optimize for the short term rather
than for the largely unpredicatble long term.
it's not in question. Evolution is about responding to the immediate environment. Producing survivable offspring (which requires
finding a niche). If the environment changes (Climate?) faster than the production of survivable offspring then extinction (for
that specie) ensues.
Now, Homo sapien is supposedly "different" in some respects, but I don't think so.
I agree. There's nothing uniquely special about our species. Of course species can often respond to gradual change by migration.
The really dangerous things are global catastrophes such as the asteroid impact at the end of the Cretaceous or whatever happened
at the Permian-Triassic boundary (gamma ray burst maybe?).
Interesting that you sit there and type on a world-spanning network batting around ideas from five thousand years ago, or yesterday,
and then use your fingers to type that the human species isn't special.
Do you really think humans are unable to think about the future, like a bear hibernating, or perhaps the human mind, and its
offspring, human culture and history, can't see ahead?
Why is "Learn the past, or repeat it!" such a popular saying, then?
The Iron Law of Institutions (agents act in ways that benefit themselves in the context of the institution [system], regardless
of the effect those actions have on the larger system) would seem to mitigate against any attempts to correct our many, quickly
failing complex social and technological systems.
This would tend to imply that attempts to organize large scale social structures is temporary at best, and largely futile.
I agree. The real key is to embrace and ride the wave as it crests and callapses so its possible to manage the fall–not to try
to stand against so you get knocked down and drowned. Focus your efforts on something useful instead of wasting them on a hopeless,
and worthless, cause.
Civilization is obviously highly unstabe. However it should remembered that even Neolithic cultures are almost all less than
10,000 years old. So there has been little time for evolutionary adaptations to living in complex cultures (although there is
evidence that the last 10,000 years has seen very rapid genetic changes in human populations). If civilization can continue indefinitely
which of course is not very clear then it would be expected that evolutionary selection would produce humans much better adapted
to living in complex cultures so they might become more stable in the distant future. At present mean time to collapse is probably
a few hundred years.
Well said, but something I find intriguing is that the author isn't talking so much about civilizational collapse. The focus
is more on various subsystems of civilization (transportation, energy, healthcare, etc.).
These individual components are not inherently particularly dangerous (at a systemic/civilizational level). They have been
made that way by purposeful public policy choices, from allowing enormous compensation packages in healthcare to dismantling our
passenger rail system to subsidizing fossil fuel energy over wind and solar to creating tax incentives that distort community
development. These things are not done for efficiency. They are done to promote inequality, to allow connected insiders and technocratic
gatekeepers to expropriate the productive wealth of society. Complexity isn't a byproduct; it is the mechanism of the looting.
If MDs in hospital management made similar wages as home health aides, then how would they get rich off the labor of others? And
if they couldn't get rich, what would be the point of managing the hospital in the first place? They're not actually trying to
provide quality, affordable healthcare to all Americans.
It is that cumulative concentration of wealth and power over time which is ultimately destabilizing, producing accepted
social norms and customs that lead to fragility in the face of both expected and unexpected shocks. This fragility comes from
all sorts of specific consequences of that inequality, from secrecy to group think to brain drain to two-tiered justice to ignoring
incompetence and negligence to protecting incumbents necessary to maintain such an unnatural order.
The problem arises with any societal order over time in that corrosive elements in the form of corruptive behavior (not
principle based) by decision makers are institutionalized. I may not like Trump as a person but the fact that he seems to unravel
and shake the present arrangement and serves as an indicator that the people begin to realize what game is being played, makes
me like him in that specific function. There may be some truth in Thomas Jefferson's quote: "The tree of liberty must be
refreshed from time to time with the blood of patriots and tyrants. It is its natural manure." Those presently benefiting greatly
from the present arrangement are fighting with all means to retain their position, whether successfully or not, we will see.
Well said, washunate. I think an argument could be run that outside economic areas, the has been a drive to de-complexity.
Non economic institutions, bodies which exist for non market/profit reasons are or have been either hollowed out, or co-opted
to market purposes. Charities as vast engines of self enrichment for a chain of insiders. Community groups, defunded, or shriveled
to an appendix by "market forces". The list goes on and on.
Reducing the "not-market" to the status of sliced-white-bread makes us all the more dependant on the machinated complexities of
"the market" .god help us .
Joseph Tainter's thesis, set out in "The Collapse of Complex Societies" is simple: as a civilization ages its use of energy
becomes less efficient and more costly, until the Law of Diminishing Returns kicks in, generates its own momentum and the system
grinds to a halt. Perhaps this article describes a late stage of that process. However, it is worth noting that, for the societies
Tainter studied, the process was ineluctable. Not so for our society: we have the ability -- and the opportunity -- to switch
energy sources.
An interesting article as usual, but here is another take.
Indeed, sometimes complex systems can collapse under the weight of their own complexity (Think: credit default swaps). But
sometimes there is a single simple thing that is crushing the system, and the complexity is a desperate attempt to patch things
up that is eventually destroyed by brute force.
Consider a forced population explosion: the people are multiplied exponentially. This reduces per capita physical resources,
tends to reduce per-capita capital, and limits the amount of time available to adapt: a rapidly growing population puts an economy
on a treadmill that gets faster and faster and steeper and steeper until it takes superhuman effort just to maintain the status
quo. There is a reason why, for societies without an open frontier, essentially no nation has ever become prosperous with out
first moderating the fertility rate.
However, you can adapt. New technologies can be developed. New regulations written to coordinate an ever more complex system.
Instead of just pumping water from a reservoir, you need networks of desalinization plants – with their own vast networks of power
plants and maintenance supply chains – and recycling plans, and monitors and laws governing water use, and more efficient appliances,
etc.etc.
As an extreme, consider how much effort and complexity it takes to keep a single person alive in the space station.
That's why in California cars need to be emissions tested, but in Alabama they don't – and the air is cleaner in Alabama. More
people needs more controls and more exotic technology and more rules.
Eventually the whole thing starts to fall apart. But to blame complexity itself, is possibly missing the point.
"But because system operations are never trouble free, human practitioner adaptations to changing conditions actually
create safety from moment to moment. These adaptations often amount to just the selection of a well-rehearsed routine from
a store of available responses; sometimes, however, the adaptations are novel combinations or de novo creations of new approaches."
This may just be a rationalization, on my part, for having devoted so much time to historical studies– but it seems to me that
historians help civilizations prevent collapse, by preserving for them the largest possible "store of available responses."
Thanks for posting this very interesting piece! As you know, I am a fan Bookstaber's concept of tight coupling. Interestingly,
Bookstaber (2007) does not reference Cook's significant work on complex systems.
Before reading this article, I considered the most preventable accidents involve a sequence of events uninterrupted by human
intelligence. This needs to be modified by Cook's points 8, 9. 10 and 12.
In using the aircraft landing in the New York river as an example of interrupting a sequence of events, the inevitable accident
occurred but no lives were lost. Thus the human intervention was made possible by the unknowable probability of coupling the cause
with a possible alternative landing site. A number of aircraft accidents involve failed attempts to find a possible landing site,
even though Cook's point #12 was in play.
A possible issue with or a misunderstanding of #7. Catastrophic failure can be made up of small failures that tend to follow
a critical path or multiple critical paths. While a single point of origin for catastrophic failure may rarely if ever occur in
a complex system, it is possible and likely in such a system to have collections of small failures that occur or tend to occur
in specific sequences of order. Population explosion (as TG points out) would be a good example of a failure in a complex
social system that is part of a critical path to catastrophic failure.
Such sequences, characterized by orders of precedence, are more likely in tightly coupled systems (which as Yves points out
can be any system pushed to the max). The point is, they can be identified and isolated at least in situations where a complex
system is not being misused or pushed to it's limits or created due to human corruption where such sequences of likelihood may
be viewed or baked into the system (such as by propaganda->ideology) as features and not bugs.
I agree completely that maximum efficiency comes with horrible costs. When hospitals are staffed so that people are normally
busy every minute, patients routinely suffer more as often no one has time to treat them like a human being, and when things deviate
from the routine, people have injuries and deaths. Same is true in other contexts.
Agreed, but that's not caused by efficiency. That's caused by inequality. Healthcare has huge dispariaties in wages and working
conditions. The point of keeping things tightly staffed is to allow big bucks for the top doctors and administrators.
Yes. When one efficiency conflicts with and destroys another efficiency. Eq. Your mother juggled a job and a family and ran
around in turbo mode but she dropped everything when her kids were in trouble. That is an example of an efficiency that can juggle
contradictions and still not fail.
Might this nurse observe that in hospitals, there isn't and can't be a "routine" to deviate from, no matter how fondly "managers"
wish to try to make it and how happy they may be to take advantage of the decent, empathic impulses of many nurses and/or the
need to work to eat of those that are just doing a job. Hence the kindly (sic) practice of "calling nurses off" or sending them
home if "the census is down," which always runs aground against a sudden influx of billable bodies or medical crises that the
residual staff is expected to just somehow cope with caring for or at least processing, until the idiot frictions in the staffing
machinery add a few more person-hours of labor to the mix. The larger the institution, the greater the magnitude and impact (pain,
and dead or sicker patients and staff too) of the "excursions from the norm."
It's all about the ruling decisions on what are deemed (as valued by where the money goes) appropriate outcomes of the micro-political
economy In the absence of an organizing principle that values decency and stability and sustainability rather than upward wealth
transfer.
The author presents the best-case scenario for complex systems: one in which the practitioners involved are actually concerned
with maintaining system integrity. However, as Yves points out, that is far from being case in many of our most complex systems.
For instance, the Silvertip pipeline spill near Billings, MT a few years ago may indeed have been a case of multiple causes
leading to unforeseen/unforeseeable failure of an oil pipeline as it crossed the Yellowstone river. However, the failure was
made immeasurably worse due to the fact that Exxon had failed to supply that pump-station with a safety manual, so when the alarms
started going off the guy in the station had to call around to a bunch of people to figure out what was going on. So while it's
possible that the failure would have occurred no matter what, the failure of the management to implement even the most basic of
safety procedures made the failure much worse than it otherwise would have been.
And this is a point that the oil company apologists are all too keen to obscure. The argument gets trotted out with some regularity
that because these oil/gas transmission systems are so complex, some accidents and mishaps are bound to occur. This is true–but
it is also true that the incentives of the capitalist system ensure that there will be more and worse accidents than necessary,
as the agents involved in maintaining the system pursue their own personal interests which often conflict with the interests of
system stability and safety.
Complex systems have their own built-in instabilities, as the author points out; but we've added a system of un-accountability
and irresponsibility on top of our complex systems which ensures that failures will occur more often and with greater fall-out
than the best-case scenario imagined by the author.
As Yves pointed out, there is a lack of agency in the article. A corrupt society will tend to generate corrupt systems just
as it tends to generate corrupt technology and corrupt ideology. For instance, we get lots of little cars driving themselves about,
profitably to the ideology of consumption, but also with an invisible thumb of control, rather than a useful system of public
transportation. We get "abstenence only" population explosion because "groath" rather than any rational assessment of obvious
future catastrophe.
All systems have a failure rate, including people. We don't get to live in a world where we don't need to lock our doors and
banks don't need vaults. (If you find it, be sure to radio back.)
The article is about how we deal with that failure rate. Pointing out that there are failures misses the point.
. . .but it is also true that the incentives of the capitalist system ensure that there will be more and worse
accidents than necessary, as the agents involved in maintaining the system pursue their own personal interests which
often conflict with the interests of system stability and safety.
How true. A Chinese city exploded. Talk about a black swan. I wonder what the next disaster will be?
After a skimmy read of the post and reading James' lead-off comment re emperors (Brooklin Bridge comment re misuse is somewhat
resonant) it seems to me that a distinguishing feature of systems is not being addressed and therefore being treated as though
it's irrelevant.
What about the mandate for a system to have an overarching, empowered regulatory agent, one that could presumably learn from
the reflections contained in this post? In much of what is posted here at NC writers give due emphasis to the absence/failure
of a range of regulatory functions relevant to this stage of capitalism. These run from SEC corruption to the uncontrolled movement
of massive amount of questionably valuable value in off the books transactions between banks, hedge funds etc. This system intentionally
has a deliberately weakened control/monitoring function, ideologically rationalized as freedom but practically justified as maximizing
accumulation possibilities for the powerful. It is self-lobotomizing, a condition exacerbated by national economic territories
(to some degree). I'm not going to now jump up with 3 cheers for socialism as capable of resolving problems posed by capitalism.
But, to stay closer to the level of abstraction of the article, doesn't the distinction between distributed opacity + unregulated
concentrations of power vs. transparency + some kind of central governing authority matter? Maybe my Enlightenment hubris is riding
high after the morning coffee, but this is a kind of self-awareness that assumes its range is limited, even as it posits that
limit. Hegel was all over this, which isn't to say he resolved the conundrum, but it's not even identified here.
Think of Trump as the pimple finally coming to a head: he's making the greed so obvious, and pissing off so many people that
some useful regulation might occur.
Another thought about world social collapse: if such a thing is likely, (and I'm sure the PTB know if it is, judging from the
reports from the Pentagon about how Global Warming being a national security concern) wouldn't it be a good idea to have a huge
ability to overpower the rest of the world?
We might be the only nation that survives as a nation, and we might actually have an Empire of the World, previously unattainable.
Maybe SkyNet is really USANet. It wouldn't require any real change in the national majority of creepy grabby people.
Government bureaucrats and politicians pursue their own interests just as businessmen do. Pollution was much worst in the non-capitalist
Soviet Union, East Germany and Eastern Europe than it was in the Capitalist West. Chernobyl happened under socialism not capitalism.
The present system in China, although not exactly "socialism", certainly involves a massively powerful govenment but a glance
at the current news shows that massive governmental power does not necessarily prevent accidents. The agency problem is not unique
to or worse in capitalism than in other systems.
I'd throw in the theory of cognitive dissonance as an integral part of the failure of complex systems. (Example Tarvis and
Aronon's recent book: Mistakes Were Made (But Not by me))
We are more apt to justify bad decisions, with bizarre stories, than to accept our own errors (or mistakes of people important
to us). It explains (but doesn't make it easier to accept) the complete disconnect between accepted facts and fanciful justifications
people use to support their ideas/organization/behavior.
I think this one suffers "Metaphysical Foo Foo Syndrome" MFFS. That means use of words to reference realities that are inherently
ill-defined and often unobservable leading to untestable theories and deeply personal approaches to epistemological reasoning.
just what is a 'complex system"? A system implies a boundary - there are things part of the system and things outside the system.
That's a hard concept to identify - just where the system ends and something else begins. So when 'the system' breaks down, it's
hard to tell with any degree of testable objectivity whether the breakdown resulted from "the system" or from something outside
the system and the rest was just "an accident that could have happened to anybody'"
maybe the idea is; '"if something breaks down at the worst possible time and in a way that fkks everything up, then it must
have been a complex system". But it could also have been a simple system that ran into bad luck. Consider your toilet. Maybe you
put too much toilet paper in it, and it clogged. Then it overflowed and ran out into your hallway with your shit everywhere. Then
you realized you had an expensive Chinese rug on the floor. oh no! That was bad. you were gonna put tthat rug away as soon as
you had a chance to admire it unrolled. Why did you do that? Big fckk up. But it wasn't a complex system. It was just one of those
things.
Actually, it was a system too complex for this individual. S(He) became convinced the plumbing would work as it had previously.
But doo to poor maintenance, too much paper, or a stiff BM the "system" didn't work properly. There must have been opportunity
to notice something anomalous, but appropriate oversight wasn't applied.
It coould happen to anybody after enough pizza and red wine
people weren't meant to be efficient. paper towels and duct tape can somettmes help
This ocurred to me: The entire 1960s music revolution would't have happened if anybody had to be efficient about hanging out
and jamming. You really have to lay around and do nothing if you want to achieve great things. You need many opportunities to
fail and learn before the genius flies. That's why tightly coupled systems are self-defeating. Because they wipe too many people
out before they've had a chance to figure out the universe.
Excellent example of tight coupling: Toilet -> Floor -> Hallway -> $$$ Rug
Fix: Apply Break coupling procedure #1: Shut toilet door.
Then: Procedure #2 Jam inexpensive old towels in gap at the bottom.
As with all such measures this buys the most important thing of all – time. In this case to get the $$$Rug out of the way.
IIRC one of Bookstaber's points was that that, in the extreme, tight coupling allows problems to propagate through the system
so fast and so widely that we have no chance to mitigate before they escalate to disaster.
To put it more simply, the drift of both economic and business thinking has been to optimize activity for efficiency.
I think that's an interesting framework. I would say effeciency is achieving the goal in the most effective manner possible.
Perhaps that's measured in energy, perhaps labor, perhaps currency units, but whatever the unit of measure, you are minimizing
that input cost.
What our economics and business thinking (and most importantly, political thinking) has primarily been doing, I would say,
is not optimizing for efficiency. Rather, they are changing the goal being optimized. The will to power has replaced efficiency
as the actual outcome.
Unchecked theft, looting, predation, is not efficient. Complexity and its associated secrecy is used to hide the inefficiency,
to justify and promote that which would not otherwise stand scrutiny in the light of day.
What nonsense. All around us 'complex systems' (airliners, pipelines, coal mines, space stations, etc.) have become steadily
LESS prone to failure/disaster over the decades. We are near the stage where the only remaining danger in air travel is human
error. We will soon see driverless cars & trucks, and you can be sure accident rates will decline as the human element is taken
out of their operation.
see fukushima, lithium batteries spontaneously catching fire, financial engineering leading to collapse unless vast energy
is invested in them to re stabilize Driverless cars and trucks are not that soon, tech buddies say ten years I say malarkey based
on several points made in the article, while as brooklyn bridge points out public transit languishes, and washunate points out
that trains and other more efficient means of locomotion are starved while more complex methods have more energy thrown at them
which could be better applied elsewhere. I think you're missing the point by saying look at all our complex systems, they work
fine and then you ramble off a list of things with high failure potential and say look they haven't broken yet, while things that
have broken and don't support your view are left out. By this mechanism safety protocols are eroded (that accident you keep avoiding
hasn't happened, which means you're being too cautious so your efficiency can be enhanced by not worrying about it until it happens
then you can fix it but as pointed out above tightly coupled systems can't react fast enough at which point we all have to hear
the whocoodanode justification )
So here's a question. What is the failure heirarchy. And why don't those crucial nodes of failsafe protect the system. Could
it be that we don't know what they are?
While 90% of people were producing food a few decades ago, I think a large percentage will be producing energy in a few decades
right now we are still propping up our golf courses and avoiding investing in pipelines and refineries. We are still exploiting
the assets of the 50s and 60s to live our hyper material lives. Those investments are what gave us a few decades of consumerism.
Now everyone wants government to spend on infra without even knowing what needs to go and what needs to stay. Maybe half of
Californians need to get out of there and forget about building more infra there just a thought.
America still has a frontier ethos how in the world can the right investments in infra be made with a collection of such values?
We're going to get city after city imploding. More workers producing energy and less leisure over the next few decades. That's
what breakdown is going to look like.
What you say is true, but only if you have a sufficient number of failures to learn from. A lot of planes had to crash for
air travel to be as safe as it is today.
I am surprised to see no reference to John Gall's General
Systematics in this discussion, an entire study of systems and how they misbehave. I tend to read it from the standpoint of
managing a complex IT infrastructure, but his work starts from human systems (organizations).
The work is organized around aphorisms - Systems tend to oppose their own proper function - The real world is what it is
reported to the system - but one or two from this paper should be added to that repertoire. Point 7 seems especially important.
From Gall, I have come to especially appreciate the Fail-Safe Theorem: "when a Fail-Safe system fails, it fails by failing to
fail safe."
Instead of writing something long and rambling about complex systems being aggregates of smaller, discrete systems, each depending
on a functioning and accurate information processing/feedback (not IT) system to maintain its coherence; and upon equally well
functioning feedback systems between the parts and the whole - instead of that I'll quote a poem.
" Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold; "
IIRC in Robert A. Heinlein's "The Puppet Masters" there's a different version:
Big fleas have little fleas
Upon their backs to bite 'em,
And little fleas have lesser fleas
And so, ad infinitum.
Since the story is about humans being parasitized and controlled by alien "slugs" that sit on their backs, and the slugs in
turn being destroyed by an epidemic disease started by the surviving humans, the verse has a macabre appropriateness.
Terrific post- just the sort of thing that has made me a NC fan for years.
I'm a bit surprised that the commentators ( thus far ) have not referred to the Financial Crisis of 2008 and the ensuing Great
Recession as being an excellent example of Cook's failure analysis.
Bethany McLean and Joe Nocera's
All The Devils Are Here www.amazon.com/All-Devils-Are-Here-Financial/dp/159184438X/
describes beautifully how the erosion of the protective mechanisms in the U.S. financial system, no single one of which would
have of itself been deadly in its absence ( Cook's Point 3 ) combined to produce the Perfect Storm.
It brought to mind Garett Hardin's The Tragedy Of The Commons
https://en.wikipedia.org/wiki/Tragedy_of_the_commons
. While the explosive growth of debt ( and therefore risk ) obviously jeopardized the entire system, it was very much within the
narrow self interest of individual players to keep the growth ( and therefore the danger ) increasing.
Bingo. Failure of the culture to properly train its members. Not so much a lack of morality as a failure to point out that
when the temple falls, it falls on Samson.
The next big fix is to use the US military to wall off our entire country, maybe include Canada (language is important in alliances)
during the Interregnum.
Why is no one mentioning the Foundation Trilogy and Hari Seldon here?
My only personal experience with the crash of a complex, tightly-coupled system was the crash of the trading floor of a very
big stock exchange in the early part of this century. The developers were in the computer room, telling the operators NOT to roll
back to the previous release, and the operators ignored them and did so anyway. Crash!
In Claus Jensen's fascinating account of the Challenger disaster, NO DOWNLINK, he describes how the managers overrode the
engineers' warnings not to fly under existing weather conditions. We all know the result.
Human error was the final cause in both cases.
Now we are undergoing the terrible phenomenon of global warming, which everybody but Republicans, candidates and elected, seems
to understand is real and catastrophic. The Republicans have a majority in Congress, and refuse–for ideological and monetary reasons–to
admit that the problem exists. I think this is another unfolding disaster that we can ascribe to human error.
"Human error" needs unpacking here. In this discussion, it's become a Deus ex Humanitas. Humans do what they do because their
cultural experiences impel them to do so. Human plus culture is not the same as human. That's why capitalism doesn't work in a
selfish society.
But highly efficient systems are fragile. Formula One cars are optimized for speed and can only run one race.
Another problem with obsessing about (productive or technical) efficiency is that it usually means a narrow focus on the most
measured or measurable inputs and outputs, to the detriment of less measurable but no less important aspects. Wages are easier
to measure than the costs of turnover, including changes in morale, loss of knowledge and skill, and regard for the organization
vs. regard for the individual. You want low cost fish? Well, it might be caught by slaves. Squeeze the measurable margins, and
the hidden margins will move.
1) Measuring what is easy instead of what is important.
2) Measuring many things and then optimizing all of them optimizes the whole.
Then, have some linear thinker try to optimize those in a complex system (like any organization involving humans) with multiple
hidden and delayed feedback loops, and the result will certainly be unexpected. Whether for good or ill is going to be fairly
unpredictable unless someone has actually looked for the feedback loops.
It's nice to see well spelled out a couple of intuitions I've had for a long time. For example, that we are going in the wrong
direction when we try to streamline instead of following the path of biology: redundancies, "dirtiness" and, of course, the king
of mechanisms, negative feedback (am I wrong in thinking that the main failure of finance, as opposed to economy, is that it has
inbuilt positive feedback instead of negative?). And yes, my professional experience has taught me that when things go really
wrong it was never just one mistake, it is a cluster of those.
Yes, as you hint here, and I would make forcefully explicit: COMPLEX vs NOT-COMPLEX is a false dichotomy that is misleading
from the start.
We ourselves, and all the organisms we must interact with in order to stay alive, are individually among the most complex systems
that we know of. And the interactions of all of us that add up to Gaia are yet more complex. And still it moves.
Natural selection built the necessary stability features into our bodily complexity. We even have a word for it: homeostasis.
Based on negative feedback loops that can keep the balancing act going. And our bodies are vastly more complex than our societies.
Society's problem right now is not complexity per se, but the exploitation of complexity by system components that
want to hog the resources and to hell with the whole, quite exactly parallel to the behavior of cancer cells in our bodies when
regulatory systems fail.
In our society's case, it is the intelligent teamwork of the stupidly selfish that has destroyed the regulatory systems. Instead
of negative feedback keeping deviations from optimum within tolerable limits, we now have positive feedback so obvious it is trite:
the rich get richer.
We not only don't need to de-complexify, we don't dare to. We really need to foster the intelligent teamwork that our society
is capable of, or we will fail to survive challenges like climate change and the need to sensibly control the population. The
alternative is to let natural selection do the job for us, using the old reliable four horsemen.
We are unlikely to change our own evolved selfishness, and probably shouldn't. But we need to control the monsters that we
have created within our society. These monsters have all the selfishness of a human at his worst, plus several natural large advantages,
including size, longevity, and the ability to metamorphose and regenerate. And as powerful as they already were, they have recently
been granted all the legal rights of human citizens, without appropriate negative feedback controls. Everyone here will already
know what I'm talking about, so I'll stop.
Formula One cars are optimized for speed and can only run one race.
Actually I believe F1 has rules regarding the number of changes that can be made to a car during the season. This is typically
four or five changes (replacements or rebuilds), so a F1 car has to be able to run more than one race or otherwise face penalties.
Yes, F-1 allows four power planets per-season it has been up dated lately to 5. There isn't anything in the air or ground as
complex as a F-1 car power planet. The cars are feeding 30 or more engineers at the track and back home normal in England millions
of bit of info per second and no micro-soft is not used but very complex programs watching every system in the car. A pit stop
in F-1 is 2.7 seconds anything above 3.5 and your not trying hard enough.
Honda who pride themselves in Engineering has struggled in power planet design this year and admit they have but have put more
engineers on the case. The beginning of this Tech engine design the big teams hired over 100 more engineers to solve the problems.
Ferrari throw out the first design and did a total rebuild and it working.
I'm sure those in F-1 system designs would look at stories like this and would come to the conclusion that these nice people
are the gate keepers and not the future. Yes, I'm a long time fan of F-1. Then again what do I know.
The sad thing in F-1 the gate keepers are the owners CVC.
Interesting comment! One has to wonder why every complex system can't be treated as the be-all. Damn the torpedos. Spare no
expense! Maybe if we just admitted we are all doing absolutely nothing but going around in a big circle at an ever increasing
speed, we could get a near perfect complex system to help us along.
In the link it's the humans of McLaren that make all the decisions on the car and the race on hand. The link is about humans
working together either in real race time or designing out problems created by others.
Globalization factors in maximizing the impact of Murphy's Law:
Meltdown potential of a globalized 'too big to fail' financial system associated with trade imbalances and international
capital flows, and boom and bust impact of volatile "hot money".
Environmental damage associated with inefficiency of excessive long long supply chains seeking cheap commodities and dirty
polluting manufacturing zones.
Military vulnerability of same long tightly coupled 'just in time" supply chains across vast oceans, war zones, choke points
that are very easy to attack and nearly impossible to defend.
Consumer product safety threat of manufacturing somewhere offshore out of sight out of mind outside the jurisdiction of
the domestic regulatory system.
Geographic concentration and contagion of risk of all kinds – fragile pattern of horizontal integration – manufacturing
in China, finance in New York and London, industrialized mono culture agriculture lacking biodiversity (Iowa feeds the world).
If all the bulbs on the Christmas tree are wired in series, it takes only one to fail and they all go out.
Globalization is not a weather event, not a thermodynamic process of atoms and molecules, not a principle of Newtonian physics,
not water running downhill, but a hyper aggressive top down policy agenda by power hungry politicians and reckless bean counter
economists. An agenda hell bent on creating a tightly coupled globally integrated unstable house of cards with a proven capacity
for catastrophic (trade) imbalance, global financial meltdown, contagion of bad debt, susceptibility to physical threats of all
kinds.
Any complex system contains non-linear feedback. Management presumes it is their skill that keeps the system working over some
limited range, where the behavior approximates linear. Outside those limits, the system can fail catastrophically. What is perceived
as operating or management skill is either because the system is kept in "safe" limits, or just happenstance. See chaos theory.
Operators or engineers controlling or modifying the system are providing feedback. Feedback can push the system past "safe"
limits. Once past safe limits, the system can fail catastrophically Such failure happen very quickly, and are always "a surprise".
All complex system contain non-linear feedback, and all appear manageable over a small rage of operation, under specific conditions.
These are the systems' safe working limits, and sometimes the limits are known, but in many case the safe working limits are
unknown (See Stock Markets).
All systems with non-linear feedback can and will fail, catastrophically.
All predicted by Chaos Theory. Best mathematical filed applicable to the real world of systems.
So I'll repeat. All complex system will fail when operating outside safe limits, change in the system, management induced and
stimulus induced, can and will redefine those limits, with spectacular results.
We hope and pray system will remain within safe limits, but greed and complacency lead us humans to test those limits (loosen
the controls), or enable greater levels of feedback (increase volumes of transactions). See Crash of 2007, following repeal of
Glass-Stegal, etc.
First, I don't think the use of "practitioner" is an evasion of agency. Instead, it reflects the very high level of generality
inherent in systems theory. The pitfall is that generality is very close to vagueness. However, the piece does contain an argument
against the importance of agency; it argues that the system is more important than the individual practitioners, that since catastrophic
failures have multiple causes, individual agency is unimportant. That might not apply to practitioners with overall responsibility
or who intentionally wrecked the system; there's a naive assumption that everyone's doing their best. I think the author would
argue that control fraud is also a system failure, that there are supposed to be safeguards against malicious operators. Bill
Black would probably agree. (Note that I dropped off the high level of generality to a particular example.)
Second, this appears to defy the truism from ecology that more complex systems are more stable. I think that's because ecologies
generally are not tightly coupled. There are not only many parts but many pathways (and no "practitioners"). So "coupling" is
a key concept not much dealt with in the article. It's about HUMAN systems, even though the concept should apply more widely than
that.
Third, Yves mentioned the economists' use of "equilibrium." This keeps coming up; the way the word is used seems to me to badly
need definition. It comes from chemistry, where it's used to calculate the production from a reaction. The ideal case is a closed
system: for instance, the production of ammonia from nitrogen and hydrogen in a closed pressure chamber. You can calculate the
proportion of ammonia produced from the temperature and pressure of the vessel. It's a fairly fast reaction, so time isn't a big
factor.
The Earth is not a closed system, nor are economies. Life is driven by the flow of energy from the Sun (and various other factors,
like the steady rain of material from space). In open systems, "equilibrium" is a constantly moving target. In principle, you
could calculate the results at any given condition , given long enough for the many reactions to finish. It's as if the potential
equilibrium drives the process (actually, the inputs do).
Not only is the target moving, but the whole system is chaotic in the sense that it's highly dependent on variables we can't
really measure, like people, so the outcomes aren't actually predictable. That doesn't really mean you can't use the concept of
equilibrium, but it has to be used very carefully. Unfortunately, most economists are pretty ignorant of physical science, so
ignorant they insistently defy the laws of thermodynamics ("groaf"), so there's a lot of magical thinking going on. It's really
ideology, so the misuse of "equilibrium" is just one aspect of the system failure.
I avoided physics, being not so very mathematical, so learned the chemistry version – but I do think it's the one the economists
are thinking of.
What I neglected to say: it's an analogy, hence potentially useful but never literally true – especially since there's no actual
stopping point, like your table.
There is much simpler way to look at it, in terms of natural cycles, because the alternative is that at the other extreme,
a happy medium is also a flatline on the big heart monitor. So the bigger it builds, the more tension and pressure accumulates.
The issue then becomes as to how to leverage the consequences. As they say, a crisis should never be wasted. At its heart, there
are two issues, economic overuse of resources and a financial medium in which the rent extraction has overwhelmed its benefits.
These actually serve as some sort of balance, in that we are in the process of an economic heart attack, due to the clogging of
this monetary circulation system, that will seriously slow economic momentum.
The need then is to reformulate how these relationships function, in order to direct and locate our economic activities within
the planetary resources. One idea to take into consideration being that money functions as a social contract, though we treat
it as a commodity. So recognizing it is not property to be collected, rather contracts exchanged, then there wouldn't be the logic
of basing the entire economy around the creation and accumulation of notational value, to the detriment of actual value. Treating
money as a public utility seems like socialism, but it is just an understanding of how it functions. Like a voucher system, simply
creating excess notes to keep everyone happy is really, really stupid, big picture wise.
Obviously some parts of the system need more than others, but not simply for ego gratification. Like a truck needs more road
than a car, but an expensive car only needs as much road as an economy car. The brain needs more blood than the feet, but it doesn't
want the feet rotting off due to poor circulation either.
So basically, yes, complex systems are finite, but we need to recognize and address the particular issues of the system in question.
Perhaps in a too-quick scan of the comments, I overlooked any mention of Nassim Nicholas Taleb's book, Antifragile. If so,
my apologies. If not, it's a serious omission from this discussion.
I first wondered about something related to this theme when I first heard about just in time sourcing of inventory. (Now also
staff.) I wondered then whether this was possible because we (middle and upper class US citizens) had been shielded from war and
other catastrophic events. We can plan based on everything going right because most of us don't know in our gut that things can
always go wrong.
I'm genX, but 3 out of 4 of my grandparents were born during or just after WWI. Their generation built for redundancy, safety,
stability. Our generation, well. We take risks and I'm not sure the decision makers have a clue that any of it can bite them.
The just-in-time supply of components for manufacturing was described in Barry Lynn's book "Cornered" and identified as creating
extreme fragility in the American production system. There have already been natural disasters that shutdown American automobile
production in our recent past.
Everything going right wasn't part of the thinking that went into just-in-time parts. Everything going right - long enough
- to steal away market share on price-point was the thinking. Decision makers don't worry about any of this biting them. Passing
the blame down and golden parachutes assure that.
This is really a very good paper. My direct comments are:
point 2: yes. provided the safety shields are not discarded for bad reasons like expedience or ignorance or avarice. See Glass-Steagall
Act, for example.
point 4: yes. true of all dynamic systems.
point 7: 'root cause' is not the same as 'key factors'. ( And here the doctor's sensitivity to malpractice suits may be guiding
his language.) It is important to determine key factors in order to devise better safety shields for the system. Think airplane
black boxes and the 1932 Pecora Commission after the 1929 stock market crash.
It's easy, complexity became too complex. And I can't read the small print. We are devolving into a world of happy people with
gardens full of flowers that they live in on their cell phones.
There are a number of counter-examples; engineered and natural systems with a high degree of complexity that are inherently
stable and fault-tolerant, nonetheless.
1. Subsumption architecture is a method of controlling robots, invented by Rodney Brooks in the 1980s. This scheme
is modeled on the way the nervous systems of animals work. In particular, the parts of the robot exist in a hierarchy of subsystems,
e.g., foot, leg, torso, etc. Each of these subsystems is autonomously controlled. Each of the subsystems can override the autonomous
control of its constituent subsystems. So, the leg controller can directly control the leg muscle, and can override the foot subsystem.
This method of control was remarkably successful at producing walking robots which were not sensitive to unevenness of the surface.
In other words, the were not brittle in the sense of Dr. Cook. Of course, subsumption architecture is not a panacea. But it is
a demonstrated way to produce very complex engineered systems consisting of many interacting parts that are very stable.
2. The inverted pendulum Suppose you wanted to build a device to balance a pencil on its point. You could imagine
a sensor to detect the angle of the pencil, an actuator to move the balance point, and a controller to link the two in a feedback
loop. Indeed, this is, very roughly, how a Segway remains upright. However, there is a simpler way to do it, without a sensor
or a feedback controller. It turns out that if your device just moves the balance point sinusoidaly (e.g., in a small circle)
and if the size of the circle and the rate are within certain ranges, then the pencil will be stable. This is a well-known consequence
of the Mathieu equation. The lesson here is that stability (i.e., safety) can be inherent in systems for subtle reasons that defy
a straightforward fault/response feedback.
3. Emergent behavior of swarms Large numbers of very simple agents interacting with one another can sometimes exhibit
complex, even "intelligent" behavior. Ants are a good example. Each ant has only simple behavior. However, the entire ant colony
can act in complex and effective ways that would be hard to predict from the individual ant behaviors. A typical ant colony is
highly resistant to disturbances in spite of the primitiveness of its constituent ants.
4. Another example is the mammalian immune system that uses negative selection as one mechanism to avoid attacking
the organism itself. Immature B cells are generated in large numbers at random, each one with receptors for specifically configured
antigens. During maturation, if they encounter a matching antigen (likely a protein of the organism) then the B cell either dies,
or is inactivated. At maturity, what is left is a highly redundant cohort of B cells that only recognize (and neutralize) foreign
antigens.
Well, these are just a few examples of systems that exhibit stability (or fault-tolerance) that defies the kind of Cartesian
analysis in Dr. Cook's article.
Glass-Steagall Act: interactions between unrelated functionality is something to be avoided. Auto recall: honking the horn
could stall the engine by shorting out the ignition system. Simple fix is is a bit of insulation.
ADA software language: Former DOD standard for large scale safety critical software development: encapsulation, data hiding,
strong typing of data, minimization of dependencies between parts to minimize impact of fixes and changes. Has safety critical
software gone the way of the Glass-Steagall Act? Now it is buffer overflows, security holes, and internet protocol in hardware
control "critical infrastructure" that can blow things up.
That explains why after dissolution of the USSR organized crime reached such level: this is standard capitalism development scenario.
Notable quotes:
"... In fact, the evolution of the modern economy owes more than you might think to these outlaws. That's the theme of " Forging Capitalism: Rogues, Swindlers, Frauds, and the Rise of Modern Finance " by Ian Klaus. It's a history of financial crimes in the 19th and early 20th centuries that traces a recurring sequence: new markets, new ways to cheat, new ways to transact and secure trust. As Klaus says, criminals helped build modern capitalism. ..."
"... Cochrane, in a way, was convicted of conduct unbecoming a man of his position. Playing the markets, let alone cheating, was something a man of his status wasn't supposed to do. Trust resided in social standing. ..."
"... The stories are absorbing and the larger theme is important: "Forging Capitalism" is a fine book and I recommend it. But I have a couple of criticisms. The project presumably began as an academic dissertation, and especially at the start, before Klaus starts telling the stories, the academic gravity is crushing. ..."
"... Nonetheless, Klaus is right: Give the markets' ubiquitous and ingenious criminals their due. They helped build modern capitalism, and they aren't going away. Just ask Bernie Madoff. ..."
Whenever buyers and sellers get together, opportunities to fleece the other guy arise. The history of markets is, in part, the
history of lying, cheating and stealing -- and of the effort down the years to fight commercial crime.
In fact, the evolution of the modern economy owes more than you might think to these outlaws. That's the theme of "Forging
Capitalism: Rogues, Swindlers, Frauds, and the Rise of Modern Finance" by Ian Klaus. It's a history of financial crimes in the
19th and early 20th centuries that traces a recurring sequence: new markets, new ways to cheat, new ways to transact and secure trust.
As Klaus says, criminals helped build modern capitalism.
And what a cast of characters. Thomas Cochrane is my own favorite. (This is partly because he was the model for Jack Aubrey in
Patrick O'Brian's "Master and Commander" novels, which I've been reading and rereading for decades. Presumably Klaus isn't a fan:
He doesn't note the connection.)
Cochrane was an aristocrat and naval hero. At the height of his fame in 1814 he was put on trial for fraud. An associate had spread
false rumors of Napoleon's death, driving up the price of British government debt, and allowing Cochrane to avoid heavy losses on
his investments. Cochrane complained (with good reason, in fact) that the trial was rigged, but he was found guilty and sent to prison.
The story is fascinating in its own right, and the book points to its larger meaning. Cochrane, in a way, was convicted of
conduct unbecoming a man of his position. Playing the markets, let alone cheating, was something a man of his status wasn't supposed
to do. Trust resided in social standing.
As the turbulent century went on, capitalism moved its frontier outward in every sense: It found new opportunities overseas; financial
innovation accelerated; and buyers and sellers were ever more likely to be strangers, operating at a distance through intermediaries.
These new kinds of transaction required new ways of securing trust. Social status diminished as a guarantee of good faith. In its
place came, first, reputation (based on an established record of honest dealing) then verification (based on public and private records
that vouched for the parties' honesty).
Successive scams and scandals pushed this evolution of trust along. Gregor MacGregor and the mythical South American colony of
Poyais ("the quintessential fraud of Britain's first modern investment bubble," Klaus calls it); Beaumont Smith and an exchequer
bill forging operation of remarkable scope and duration; Walter Watts, insurance clerk, theatrical entrepreneur and fraudster; Harry
Marks, journalist, newspaper proprietor and puffer of worthless stocks. On and on, these notorious figures altered the way the public
thought about commercial trust, and spurred the changes that enabled the public to keep on trusting nonetheless.
The stories are absorbing and the larger theme is important: "Forging Capitalism" is a fine book and I recommend it. But I
have a couple of criticisms. The project presumably began as an academic dissertation, and especially at the start, before Klaus
starts telling the stories, the academic gravity is crushing.
Trust, to be simple with our definition, is an expectation of behavior built upon norms and cultural habits. It is often dependent
upon a shared set of ethics or values. It is also a process orchestrated through communities and institutions. In this sense,
it is a cultural event and thus a historical phenomenon.
No doubt, but after a first paragraph like that you aren't expecting a page-turner. Trust me, it gets better. When he applies
himself, Klaus can write. Describing the messenger who brought the false news of Napoleon's death, he says:
Removed from the dark of the street, the man could be seen by the light of two candles. He looked, a witness would later testify,
"like a stranger of some importance." A German sealskin cap, festooned with gold fringes, covered his head. A gray coat covered
his red uniform, upon which hung a star Neighbors and residents of the inn stirred and peered in as the visitor penned a note.
Tell me more.
My other objection is to the book's repeated suggestion that Adam Smith and other classical proponents of market economics naively
underestimated the human propensity to deceive and over-credited the market's ability to promote good behavior. Klaus doesn't examine
their claims at length or directly, but often says things such as:
The sociability in which Adam Smith had placed his hopes for harnessing self-interest was not a sufficient safeguard in the
sometimes criminal capitalism of the ruthless free market.
Of course it wasn't. Smith didn't believe that the market's civilizing tendencies, together with humans' instinct for cooperation,
were a sufficient safeguard against fraud or breach of contract or other commercial wrongs. He was nothing if not realistic
about human nature. And by the way, many of the subtle adaptations to the shifting risk of fraud that Klaus describes were private
undertakings, not government measures. Far from being surprised by them, Smith would have expected their development.
Nonetheless, Klaus is right: Give the markets' ubiquitous and ingenious criminals their due. They helped build modern capitalism,
and they aren't going away. Just ask Bernie Madoff.
To contact the author on this story: Clive Crook at [email protected]
"... On a net basis, in fact, fully 97% of the $1.412 trillion revenue loss in the Senate Committee bill over the next decade is attributable to the $1.369 trillion cost of cutting the corporate rate from 35% to 20% (and repeal of the related AMT). All the rest of the massive bill is just a monumental zero-sum pot stirring operation ..."
"... Whereas if the US spent the same 1 to 2 percent on defense (meaning its own territory) that normal countries do, individual tax cuts could be cut back to the Reagan-era maximum of 28 percent, permanently. Alternately, individual taxation could remain the same and everyone could have health care and maybe free college too. ..."
"... These choices are unavailable because the unauditable Defense Dept and spook agencies have made themselves politically untouchable. This is the real scandal of the tax bill. ..."
On a net basis, in fact, fully 97% of the $1.412 trillion revenue loss in the Senate
Committee bill over the next decade is attributable to the $1.369 trillion cost of cutting
the corporate rate from 35% to 20% (and repeal of the related AMT). All the rest of the
massive bill is just a monumental zero-sum pot stirring operation
The zero-sum game details:
1. eliminating state and local deductions
2. higher personal deductions
3. doubling child tax credit
4. tax credit for private education
5. new income brackets and rates
And the huge 35%-to-20% (or whatever) corporate tax reduction.
According to MMT, this perversion of that theory (and pervert MMT will always be
practiced) should put money into the system. The 'government can spend as much as it wants, deficits don't matter,' is 1) not
sufficient to ensure a desirable outcome and 2) can be abused to lead to many undesirable
results. As for the zero-sum game, it's zero-sum, so some of us 99% will benefit and the rest will
suffer. Some may enjoy higher personal deductions, child tax credit or a lower rate in a new tax
bracket.
Whereas if the US spent the same 1 to 2 percent on defense (meaning its own territory)
that normal countries do, individual tax cuts could be cut back to the Reagan-era maximum of
28 percent, permanently. Alternately, individual taxation could remain the same and everyone could have health care
and maybe free college too.
These choices are unavailable because the unauditable Defense Dept and spook agencies have
made themselves politically untouchable. This is the real scandal of the tax bill.
A Republican party unable to deliver individual tax cuts after harping relentlessly on the
theme for a decade is revealed as a fraud, a laughingstock and a failure on its own
terms.
"... If the goal is to prevent excessive compensation of top layers of executives, it is probably non-constructive to treat tax issues in isolation from the general problem of neoliberalism with its powerful mechanisms of redistribution of the wealth up. ..."
I will ease the pain from this early morning (when GOP senate slashed corporate taxes) by escaping into fantasy, I mean theory,
but I repeat myself.
A key theoretical argument about taxing profits (due to Diamond and Mirrlees I think) is that the tax can be very very high if
firms maximize profits, because maximizing 0.5X is just the same problem as maximizing X. This is a tax on pure profits (profits
minus capital times the cost of capital) .
The practical implication is that we should figure out what corporations maximize and apply a high flat tax rate on it, because
maximizing 0.1X is the same problem as maximizing X.
Theory then goes crazy and assume that firms maximize shareholder value equal to the present discounted stream of dividends. If
so, we should tax dividends. This is roughly similar to the new law in which investment is treated as an expense, so profits minus
investment is taxed.
There are lots of problems (aside from the fact that only in shareholders' dreams do manager maximize shareholder value). We would
have to tax stock buybacks too (just another way to get money to shareholders). Taxing dividends but not interest paid encourages
high leverage (for example through leveraged buyouts). Here again a tax on buying and retiring shares would be useful (not politically
possible but useful). A really heavy tax on dividends would make initial public offerings unattractive -- I think a subsidy for new
share issue would be nice (reallly politically impossible).
But the idea is just tax money going to shareholders and it is based on the assumption that getting money to shareholders is the
whole point and maximizing 0.01X is the same problem as maximizing X.
The assumption is crazy.
I think top management of corporations maximizes compensation of top management subject to a limit that, if they go too far, it
will be very profitable to take over the coporation and fire them. This means that, if the aim is to generate compensation for top
management, we should tax compensation of top management. Highly. I am quite sure that if the tax were 99% it would raise a lot of
money (provided all compensation could be detected). They *will* pay themselves no matter how much it costs the shareholders.
Now this strikes me as a pretty good idea. I think top management has to be defined as those with the top total compensation not
any title (otherwise the CEO will call himself his secretaries secretary). Now this does encourage taking corporations private. But
really, CEO compensation is obscene and is just begging to be taxed.
likbez , December 3, 2017 1:03 am
If the goal is to prevent excessive compensation of top layers of executives, it is probably non-constructive to treat tax
issues in isolation from the general problem of neoliberalism with its powerful mechanisms of redistribution of the wealth up.
My impression is that due to the complexity of the USA laws and the army of well paid corporate lawyers (including tax lawyers)
it is just a matter of time when any new tax system will be perverted.
For example, when there is a high tax on executive compensation, nothing prevents a corporation to donate money to charity,
and then this charity can hire corporate officers (or their relatives) to the board. Various form of "trusts" or "loans" also
can be played with.
You need some general mechanism of suppression of the power of the financial oligarchy. An institutional framework, like the
New Deal capitalism, has been. Tax laws are an important part of such a framework, but by themselves, they are not enough.
Renegade ( ex-? ) Republican David Stockman NAILS IT TO THE WALL:
To be sure, some element of political calculus always lies behind legislation. For instance, the Dems didn't pass the Wagner
Act in 1935, the Voting Rights Act of 1965 or the Affordable Care Act of 2010 as exercises in pure civic virtue -- these measures
targeted huge constituencies with tens of millions of votes at stake.
Still, threadbare theories and untoward effects are just that; they can't be redeemed by the risible claim that this legislative
Rube Goldberg contraption being jammed through sight unseen ( in ACA redux fashion ) is for the benefit of the rank
and file Republican voters, and most especially not for the dispossessed independents and Dems of Flyover America who voted
for Trump out of protest against the failing status quo.
To the contrary. The GOP tax bill is of the lobbies, by the PACs and for the money. Period.
There is no higher purpose or even nugget of conservative economic principle to it. The battle cry of "pro-growth tax cuts"
is just a warmed over 35-year-old mantra from the Reagan era that does not remotely reflect the actual content of the bill
or disguise what it really is: namely, a cowardly infliction of more than $2 trillion of debt on future American taxpayers
in order to fund tax relief today for the GOP's K Street and Wall Street paymasters.
On a net basis, in fact, fully 97% of the $1.412 trillion revenue loss in the Senate Committee bill over the next decade
is attributable to the $1.369 trillion cost of cutting the corporate rate from 35% to 20% (and repeal of the related AMT).
All the rest of the massive bill is just a monumental zero-sum pot stirring operation.
Stockman, who knows federal budgeting better than most of us know the contents of our own homes, goes on to shred the tax bill
item by item, leaving a smoking, scorched-earth moonscape in his deadly rhetorical wake. And he's not done yet.
But Lordy, how he scourges the last hurrah of the know-nothing R party, just before it gets pounded senseless at the polls
next year. Bubble III is the last hope of the retrograde Republican Congressional rabble. But it's a 50/50 proposition at best
that our beloved bubble lasts through next November. :-(
thanks Jim, yes, this looks like it will knock the legs out of the "main st" economy, but over at versailles on the potomac
they'll be listening to/playing the fiddle and watching the country burn while guzzling 300 dollar scotch and and admiring their
campfire.
Right next to "Versailles on the Potomac" is the site of the former Bonus Army camp, Anacostia Flats. The burning of the Bonus
Army camp at Anacostia Flats could be seen, as a red glow, from the White House. Historians charitable to Herbert Hoover suggest
that Gen. Douglass MacArthur 'conned' Hoover into letting the Army 'disperse' the Bonus Army. The resulting spectacle can be said
to be one of the prime reasons why the American public rejected Hoover when he ran for re-election against Franklin Roosevelt.
I don't know if Hoover played the fiddle, but MacArthur was known to be able to play politicians like one.
The lesson here, if there is one, is that the present occupant of the White House had better be very circumspect about taking
advice from Generals.
"anacostia flats" bonus army raided by Wall Street General MacArthur which is reason in previous iteration of Wall Street power
grab by "American Liberty League", ("The Plot To Seize the White House"-Jules Archer) Marine General Smedley Butler felt forced
play whistle-blower, providing FDR leverage he needed to prosecute banksters.
Big River Bandido December 2, 2017 at 3:26 pm
The gist of the commenter's statement was true - Democrats are totally complicit in the end result of Republican economic and
foreign policy. Until now, Republicans could only deliver on their promises when Democrats helped them out. The Democrats' enabling
strategy eventually alienated their own core supporters. With this tax cut, the Republicans have shown, for the first time, the
ability to enact and sign their own legislation.
The Democrats basically accommodated the Republicans long enough to ensure their own irrelevance. They will not rise again
until their "mixed stances" and those who encourage them are purged.
"... Today when we consider the major countries of the world we see that in many cases the official leaders are also the leaders in actuality: Vladimir Putin calls the shots in Russia, Xi Jinping and his top Politburo colleagues do the same in China, and so forth. However, in America and in some other Western countries, this seems to be less and less the case, with top national figures merely being attractive front-men selected for their popular appeal and their political malleability, a development that may eventually have dire consequences for the nations they lead. As an extreme example, a drunken Boris Yeltsin freely allowed the looting of Russia's entire national wealth by the handful of oligarchs who pulled his strings, and the result was the total impoverishment of the Russian people and a demographic collapse almost unprecedented in modern peacetime history. ..."
"... An obvious problem with installing puppet rulers is the risk that they will attempt to cut their strings, much like Putin soon outmaneuvered and exiled his oligarch patron Boris Berezovsky. ..."
"... One means of minimizing such risk is to select puppets who are so deeply compromised that they can never break free, knowing that the political self-destruct charges buried deep within their pasts could easily be triggered if they sought independence. I have sometimes joked with my friends that perhaps the best career move for an ambitious young politician would be to secretly commit some monstrous crime and then make sure that the hard evidence of his guilt ended up in the hands of certain powerful people, thereby assuring his rapid political rise. ..."
"... The gist is that elite need a kill switch on their front men (and women). ..."
"... McCain's father connected with the infamous Board of Inquiry which cleared Israel in that state's attack on USS LIBERTY during Israel's seizure of the Golan Heights. ..."
"... Another stunning article in which the author makes reference to his recent acquisition of what he considers to be a reliably authentic audio file of POW McCain's broadcasts from captivity. Dynamite stuff. ..."
"... Also remarkable; fantastic. It's hard to believe, and a testament to the boldness of Washington dog-and-pony shows, because this must have been well-known in insider circles in Washington – anything so damning which was not ruthlessly and professionally suppressed and simply never allowed to become part of a national discussion would surely have been stumbled upon before now. Land of the Cover-Up. ..."
An interesting article on John McCain. I disagree with the contention that McCain hid knowledge that many American POWs were left
behind (undoubtedly some voluntarily choose to remain behind but not hundreds ). However, the article touched on some ideas that
rang true:
Today when we consider the major countries of the world we see that in many cases the official leaders are also the leaders
in actuality: Vladimir Putin calls the shots in Russia, Xi Jinping and his top Politburo colleagues do the same in China, and
so forth. However, in America and in some other Western countries, this seems to be less and less the case, with top national
figures merely being attractive front-men selected for their popular appeal and their political malleability, a development that
may eventually have dire consequences for the nations they lead. As an extreme example, a drunken Boris Yeltsin freely allowed
the looting of Russia's entire national wealth by the handful of oligarchs who pulled his strings, and the result was the total
impoverishment of the Russian people and a demographic collapse almost unprecedented in modern peacetime history.
An obvious problem with installing puppet rulers is the risk that they will attempt to cut their strings, much like Putin
soon outmaneuvered and exiled his oligarch patron Boris Berezovsky.
One means of minimizing such risk is to select puppets who
are so deeply compromised that they can never break free, knowing that the political self-destruct charges buried deep within
their pasts could easily be triggered if they sought independence. I have sometimes joked with my friends that perhaps the best
career move for an ambitious young politician would be to secretly commit some monstrous crime and then make sure that the hard
evidence of his guilt ended up in the hands of certain powerful people, thereby assuring his rapid political rise.
The gist is that elite need a kill switch on their front men (and women).
Seems to be a series of pieces dealing with Vietnam POWs: the following linked item was interesting and provided a plausible explanation:
that the US failed to pay up agreed on reparations
Remarkable and shocking. Wheels within wheels – this is the first time I have ever seen McCain's father connected with the infamous
Board of Inquiry which cleared Israel in that state's attack on USS LIBERTY during Israel's seizure of the Golan Heights.
Another stunning article in which the author makes reference to his recent acquisition of what he considers to be a reliably authentic
audio file of POW McCain's broadcasts from captivity. Dynamite stuff. The conclusion regarding aspiring untenured historians is
quite downbeat:
Also remarkable; fantastic. It's hard to believe, and a testament to the boldness of Washington dog-and-pony shows, because this
must have been well-known in insider circles in Washington – anything so damning which was not ruthlessly and professionally suppressed
and simply never allowed to become part of a national discussion would surely have been stumbled upon before now. Land of the
Cover-Up.
The most important part of power elite in neoliberal society might not be financial oligarchy, but intelligence agencies elite.
If you look at the role
of Brennan in "Purple color revolution" against Trump that became clear that heads of the agencies are powerful political players
with resources at hand, that are not available to other politicians.
Notable quotes:
"... Men in positions of great power have been forced to realize that their aspirations and responsibilities have exceeded the horizons of their own experience, knowledge, and capability. Yet, because they are in chargeof this high-technology society, they are compelled to do something. This overpowering necessity to do something -- although our leaders do not know precisely what to do or how to do it -- creates in the power elite an overbearing fear of the people. It is the fear not of you and me as individuals but of the smoldering threat of vast populations and of potential uprisings of the masses. ..."
"... This power elite is not easy to define; but the fact that it exists makes itself known from time to time. Concerning the power elite, R. Buckminster Fuller wrote of the "vastly ambitious individuals who [have] become so effectively powerful because of their ability to remain invisible while operating behind the national scenery." Fuller noted also, "Always their victories [are] in the name of some powerful sovereign-ruled country. The real power structures [are] always the invisible ones behind the visible sovereign powers." ..."
"... This report, as presented in the novel, avers that war is necessary to sustain society, the nation, and national sovereignty, a view that has existed for millennia. Through the ages, totally uncontrolled warfare -- the only kind of "real" war -- got bigger and "better" as time and technology churned on, finally culminating in World War II with the introduction of atomic bombs. ..."
"... This is why, even before the end of World War II, the newly structured bipolar confrontation between the world of Communism and the West resulted in the employment of enormous intelligence agencies that had the power, invisibly, to wage underground warfare, economic and well as military, anywhere -- including methods of warfare never before imagined. These conflicts had to be tactically designed to remain short of the utilization of the H-bomb by either side. There can never be victories in such wars, but tremendous loss of life could occur, and there is the much-desired consumption and attrition of trillions of dollars', and rubles', worth of war equipment. ..."
"... Since WWII, there has been an epidemic of murders at the highest level in many countries. Without question the most dynamic of these assassinations was the murder of President John F. Kennedy, but JFK was just one of many in a long list that includes bankers, corporate leaders, newsmen, rising political spokesmen, and religious leaders. ..."
"... The ever-present threat of assassination seriously limits the number of men who would normally attempt to strive for positions of leadership, if for no other reason than that they could be singled out for murder at any time. This is not a new tactic, but it is one that has become increasingly utilized in pressure spots around the world. ..."
"... Under totalitarian or highly centralized nondemocratic regimes, the intelligence organization is a political, secret service with police powers. It is designed primarily to provide personal security to those who control the authority of the state against all political opponents, foreign and domestic. These leaders are forced to depend upon these secret elite forces to remain alive and in power. Such an organization operates in deep secrecy and has the responsibility for carrying out espionage, counterespionage, and pseudoterrorism. This methodology is as true of Israel, Chile, or Jordan as it has been of the Soviet Union. ..."
"... The second category of intelligence organization is one whose agents are limited to the gathering and reporting of intelligence and who have no police functions or the power to arrest at home or abroad. This type of organization is what the CIA was created to be; however, it does not exist. ..."
"... Over the decades since the CIA was created, it has acquired more sinister functions. All intelligence agencies, in time, tend to develop along similar lines. The CIA today is a far cry hum the agency that was created in 1947 by the National Security Act. As President Harry S. Truman confided to close friends, the greatest mistake of his administration took place when he signed that National Security Act of 1947 into law. It was that act which, among other things it did, created the Central Intelligence Agency.3 ..."
True existence of these multimegaton hydrogen bombs has so drastically changed the Grand Strategy of world powers that, today
and for the future, that strategy is being carried out by the invisible forces of the CIA, what remains of the KGB, and their lesser
counterparts around the world.
Men in positions of great power have been forced to realize that their aspirations and responsibilities have exceeded the
horizons of their own experience, knowledge, and capability. Yet, because they are in chargeof this high-technology society, they
are compelled to do something. This overpowering necessity to do something -- although our leaders do not know precisely what to
do or how to do it -- creates in the power elite an overbearing fear of the people. It is the fear not of you and me as individuals
but of the smoldering threat of vast populations and of potential uprisings of the masses.
This power elite is not easy to define; but the fact that it exists makes itself known from time to time. Concerning the power
elite, R. Buckminster Fuller wrote of the "vastly ambitious individuals who [have] become so effectively powerful because of their
ability to remain invisible while operating behind the national scenery." Fuller noted also, "Always their victories [are] in the
name of some powerful sovereign-ruled country. The real power structures [are] always the invisible ones behind the visible sovereign
powers."
The power elite is not a group from one nation or even of one alliance of nations. It operates throughout the world and no doubt
has done so for many, many centuries.
... ... ...
From this point ot view, warfare, and the preparation tor war, is an absolute necessity for the welfare of the state and for control
of population masses, as has been so ably documented in that remarkable novel by Leonard Lewin Report From Iron Mountain on
the Possibility and Desirability of Peace and attributed by Lewin to "the Special Study Group in 1966," an organization whose
existence was so highly classified that there is no record, to this day, of who the men in the group were or with what sectors of
the government or private life they were connected.
This report, as presented in the novel, avers that war is necessary to sustain society, the nation, and national sovereignty,
a view that has existed for millennia. Through the ages, totally uncontrolled warfare -- the only kind of "real" war -- got bigger
and "better" as time and technology churned on, finally culminating in World War II with the introduction of atomic bombs.
Not long after that great war, the world leaders were faced suddenly with the reality of a great dilemma. At the root of this
dilemma was the new fission-fusion-fission H-bomb. Is it some uncontrollable Manichean device, or is it truly a weapon of war?
... ... ...
Such knowledge is sufficient. The dilemma is now fact. There can no longer be a classic or traditional war, at least not the all-out,
go-for-broke-type warfare there has been down through the ages, a war that leads to a meaningful victory for one side and abject
defeat for the other.
Witness what has been called warfare in Korea, and Vietnam, and the later, more limited experiment with new weaponry called the
Gulf War in Iraq.
... ... ...
This is why, even before the end of World War II, the newly structured bipolar confrontation between the world of Communism
and the West resulted in the employment of enormous intelligence agencies that had the power, invisibly, to wage underground warfare,
economic and well as military, anywhere -- including methods of warfare never before imagined. These conflicts had to be tactically
designed to remain short of the utilization of the H-bomb by either side. There can never be victories in such wars, but tremendous
loss of life could occur, and there is the much-desired consumption and attrition of trillions of dollars', and rubles', worth of
war equipment.
One objective of this book is to discuss these new forces. It will present an insider's view of the CIA story and provide
comparisons with the intelligence organizations -- those invisible forces -- of other countries. To be more realistic with the priorities
of these agencies themselves, more will be said about operational matters than about actual intelligence gathering as a profession.
This subject cannot be explored fully without a discussion of assassination. Since WWII, there has been an epidemic of murders
at the highest level in many countries. Without question the most dynamic of these assassinations was the murder of President John
F. Kennedy, but JFK was just one of many in a long list that includes bankers, corporate leaders, newsmen, rising political spokesmen,
and religious leaders.
The ever-present threat of assassination seriously limits the number of men who would normally attempt to strive for positions
of leadership, if for no other reason than that they could be singled out for murder at any time. This is not a new tactic, but it
is one that has become increasingly utilized in pressure spots around the world.
It is essential to note that there are two principal categories of intelligence organizations and that their functions are determined
generally by the characteristics of the type of government they serve -- not by the citizens of the government, but by its leaders.
Under totalitarian or highly centralized nondemocratic regimes, the intelligence organization is a political, secret service
with police powers. It is designed primarily to provide personal security to those who control the authority of the state against
all political opponents, foreign and domestic. These leaders are forced to depend upon these secret elite forces to remain alive
and in power. Such an organization operates in deep secrecy and has the responsibility for carrying out espionage, counterespionage,
and pseudoterrorism. This methodology is as true of Israel, Chile, or Jordan as it has been of the Soviet Union.
The second category of intelligence organization is one whose agents are limited to the gathering and reporting of intelligence
and who have no police functions or the power to arrest at home or abroad. This type of organization is what the CIA was created
to be; however, it does not exist.
Over the decades since the CIA was created, it has acquired more sinister functions. All intelligence agencies, in time, tend
to develop along similar lines. The CIA today is a far cry hum the agency that was created in 1947 by the National Security Act.
As President Harry S. Truman confided to close friends, the greatest mistake of his administration took place when he signed that
National Security Act of 1947 into law. It was that act which, among other things it did, created the Central Intelligence Agency.3
Well, that was a gigantic lie. The truth is that every major policy employed by Central
Banks since 2008 have been about one thing
Maintaining the bond bubble.
Governments around the world have used the bubble in bonds to finance their bloated budgets.
If interest rates were anywhere NEAR normal levels, most countries would lurch towards default
in a matter of weeks.
If you think this is conspiracy theory, consider that the European Central Bank openly
admitted this in its semi-annual Financial Stability Review this week:
Even so, [the ECB] said that "higher interest rates may trigger concerns about sovereigns'
debt-servicing capacity," and noted that "distrust in mainstream political parties continues to
rise, leading to fragmentation of the political landscape away from the established
consensus."
Source: Bloomberg.
In plain speak, the ECB is admitting here that if rates were to rise, the financial world
would quickly realize that most countries couldn't finance their debt payments. Indeed, the
five largest economies in the world are all near or above Debt to GDP levels of 100%
As I explained in my bestseller, The Everything Bubble: the Endgame For Central Bank
Policy , the bubble in bonds is what finances this entire mess. It's what lets the
political class continue to spend money the government doesn't have. And it's why the entire
financial system is now in a bubble.
Remember, sovereign bonds are the bedrock for the current fiat-based financial system, so
when they go into a bubble, EVERYTHING goes into a bubble, as all risk assets adjust to
ridiculously cheap interest rates.
This is why I coined the term The Everything Bubble in 2014 It's also why I wrote a book on
this issue as well as what's coming down the pike: because when this bubble bursts (as all
bubbles do) the policies Central Banks employ will make those from 2008-2015 look like a
cakewalk.
We are putting together an Executive Summary outlining all of these issues as well as what's
to come when The Everything Bubble bursts.
It will be available exclusively to our clients. If you'd like to have a copy delivered to
your inbox when it's completed, you can join the wait-list here:
Well, that was a gigantic lie. The truth is that every major policy employed by Central
Banks since 2008 have been about one thing
Maintaining the bond bubble.
Governments around the world have used the bubble in bonds to finance their bloated budgets.
If interest rates were anywhere NEAR normal levels, most countries would lurch towards default
in a matter of weeks.
If you think this is conspiracy theory, consider that the European Central Bank openly
admitted this in its semi-annual Financial Stability Review this week:
Even so, [the ECB] said that "higher interest rates may trigger concerns about sovereigns'
debt-servicing capacity," and noted that "distrust in mainstream political parties continues to
rise, leading to fragmentation of the political landscape away from the established
consensus."
Source: Bloomberg.
In plain speak, the ECB is admitting here that if rates were to rise, the financial world
would quickly realize that most countries couldn't finance their debt payments. Indeed, the
five largest economies in the world are all near or above Debt to GDP levels of 100%
As I explained in my bestseller, The Everything Bubble: the Endgame For Central Bank
Policy , the bubble in bonds is what finances this entire mess. It's what lets the
political class continue to spend money the government doesn't have. And it's why the entire
financial system is now in a bubble.
Remember, sovereign bonds are the bedrock for the current fiat-based financial system, so
when they go into a bubble, EVERYTHING goes into a bubble, as all risk assets adjust to
ridiculously cheap interest rates.
This is why I coined the term The Everything Bubble in 2014 It's also why I wrote a book on
this issue as well as what's coming down the pike: because when this bubble bursts (as all
bubbles do) the policies Central Banks employ will make those from 2008-2015 look like a
cakewalk.
We are putting together an Executive Summary outlining all of these issues as well as what's
to come when The Everything Bubble bursts.
It will be available exclusively to our clients. If you'd like to have a copy delivered to
your inbox when it's completed, you can join the wait-list here:
"... Not only the media is supportive of the extortion scheme. US Treasury Secretary Steven Mnuchin told CNBC: "I think that the Crown Prince [Mohammed bin Salman] is doing a great job at transforming the country." President Trump blessed MBS along similar lines. Not a word of condemnation came out of President Putin, either. Even Al Jazeera, though reporting the extortion in a matter-of-fact way, didn't make too much out of it. ..."
"... But the blanket of silence covering the Extortion Racket beats all. Usually, the global media mainstream system propagates and amplifies the news in a game of rebounding agencies that indirectly end up also to maximize headline sales, wrote the Italian journalist Claudio Resta. But in this case, the important and spectacular news made no headlines. In our Society of the Spectacle , failing to exploit the "spectacular" is a waste of the most valuable resource for the media. ..."
Hundreds of other princes and gentlemen were tortured, too, until they agreed to surrender
their ill-gotten assets, 70% of all they have. As I write, and as you read these lines, the
torture goes on, and so far MBS has already milked his victims of hundreds of billions $$ worth
of cash and assets.
"An Extortion racket", you'll exclaim. Perhaps MBS watched The Godfather in his
impressionable youth and was impressed by efficiency of their methods. However, he has solved,
or rather is in the process of solving, the problem of solvency.
Perhaps this is the method to be advised to Trump and Putin, as well as to other leaders? If
the neoliberal dogma forbids taxing, if the offshore are sacred, what remains for a diligent
leader but a plush five-star hotel and a band of experienced torturers?
But surely, the torturer will be condemned and ostracised by human rights' defenders! Not at
all. Not a single voice, neither from liberal left nor from authoritarian right objected to
this amazing deed of mass torture and extortion. While the co-owner of Twitter has been
subjected to daily beatings, the prime voice of liberal conscience, Tom Friedman of the New
York Times, eulogised MBS as the bearer of progress. In an article as panegyric as they come,
titled Saudi Arabia's
Arab Spring, at Last and subtitled "The crown prince has big plans for his society".
Tom Friedman does not use the word "extortion", saying that [MBS's] "government arrested
scores of Saudi princes and businessmen on charges of corruption and threw them into a
makeshift gilded jail -- the Riyadh Ritz-Carlton -- until they agreed to surrender their
ill-gotten gains." No condemnation at all! Can you imagine what he would say if Putin were to
arrest his oligarchs "until they agreed to surrender their ill-gotten gains"?
I believe one line in Friedman's eulogy, saying that the Saudis are content with the
extortion act: "the mood among Saudis I spoke with was: "Just turn them all upside down, shake
the money out of their pockets and don't stop shaking them until it's all out!" Moreover, I am
sure the Americans would applaud if their billionaires were to get the MBS treatment. The
Russians were mighty pleased when Putin locked up the oligarch Khodorkovsky, and complained
that he was the only one to be jailed. They would love to see the whole lot of oligarchs who
plundered Russia through manifestly fraudulent, staged auctions under American advisers in
Yeltsin's days, to be shaken "until it's all out".
Not only the media is supportive of the extortion scheme. US Treasury Secretary Steven
Mnuchin told CNBC: "I think that the Crown Prince [Mohammed bin Salman] is doing a great job at
transforming the country." President Trump blessed MBS along similar lines. Not a word of
condemnation came out of President Putin, either. Even Al Jazeera, though
reporting the extortion in a matter-of-fact way, didn't make too much out of it.
There is a veritable conspiracy around the MBS actions, a conspiracy embracing the media and
governments. He kidnapped the Lebanese Prime Minister, placed him under arrest, took away his
telephone and watch, forced him to read on TV a resignation letter composed by MBS people,
– and the response of the world has been subdued. He bombed Yemen, causing hundreds of
thousands to die of cholera and famine, and the world does not give a damn. Do you remember the
response when the Russians bombed Aleppo? None of this indignation accompanies MBS's war on
Yemen.
But the blanket of silence covering the Extortion Racket beats all. Usually, the global
media mainstream system propagates and amplifies the news in a game of rebounding agencies that
indirectly end up also to maximize headline sales, wrote the Italian journalist Claudio Resta.
But in this case, the important and spectacular news made no headlines. In our Society
of the Spectacle , failing to exploit the "spectacular" is a waste of the most valuable
resource for the media.
The potential for a great spectacle is all here. The arrest of dignitaries and princes of
blood, including the famous Al-Walid bin al-Talal, well-known investor and Bakr bin Laden,
brother of the most notorious Osama would normally feed the media for days. Add to it the
marvelous setting of the glorious hotel on the verge of the desert. Make it even more dramatic
by open rocket fire on the escaping helicopter of Prince Mansour bin Muqrin , killing him
and the other dignitaries who tried to flee.
Such a story, so brilliant and spectacular, with the colour and costume of a Middle Eastern
monarchy, could sell newspapers for a week at least. But it was followed by deafening
silence.
The same media that overwhelms us with the flood of details and opinions in a case of human
rights violations in Russia or China in this case shows off an Olympic indifference to the fate
of the princes and billionaires, unjustly and arbitrarily arrested and tortured in a country of
no constitution or Habeas Corpus. The United Nations joins in the conspiracy of silence.
This is probably the most unusual aspect of the story, reminiscent of The Dog that
Didn't Bark by Sir Arthur Conan Doyle. In that Sherlock Holmes story, a dog did not bark
during the night when a race horse was removed from a stable, and that indicated that the thief
was the dog's master.
In the case of MBS, the media dog keeps silent. It means that its mighty mega-owner, whom I
called The Masters of Discourse, allowed and authorised the racket. We witness a unique media
event, bordering with revelation. How could it be that a prince of a third-league state would
be allowed the licence to kidnap prime-ministers, kill princes by ground-to-air missiles, keep
and torture great businessmen and dignitaries with impunity and the media would keep mum?
Is it fear of the robber barons that the example of MBS extorting billions from his
super-rich will be picked up and acted upon in their own lands? Perhaps.
Heritage Foundation is just a neocon swamp filled with "national security parasites". What you can expect from them ?
Notable quotes:
"... A 2009 Heritage Foundation report, " Maintaining the Superiority of America's Defense Industrial Base ," called for further government investment in aircraft weaponry for "ensuring a superior fighting force" and "sustaining international stability." ..."
"... These special pleas pose a question: which came first, Heritage's heavy dependence on funds from defense giants, or the foundation's belief that unless we steadily increase our military arsenal we'll be endangering "international stability"? Perhaps the answer lies somewhere in the middle: someone who is predisposed to go in a certain direction may be more inclined to do so if he is being rewarded in return. ..."
"... No doubt both corporations will continue to look after Heritage, which will predictably call for further increases, whether they be in aerospace or shipbuilding. ..."
"... National Review ..."
"... Like American higher education, Conservatism Inc. is very big business. Whatever else it's about rates a very far second to keeping the money flowing. "Conservative" positions are often simply causes for which foundations and media enterprises that have the word "conservative" attached to them are paid to represent. It is the label carried by an institution or publication, not necessarily the position it takes, that makes what NR or Heritage advocates "conservative." ..."
According to recent
reports the Heritage Foundation, clearly the most established and many would say politically influential conservative think tank
in Washington, is considering David Trulio, Lockheed Martin vice president and longtime lobbyist for the defense industry, to be
its next president. While Heritage's connection to Washington's sprawling national security industry is already well-established,
naming Trulio as its president might be seen as gilding the lily.
If anything, reading this report made me more aware of the degree to which the "conservative policy community" in Washington depends
on the whims and interests of particular donors.
And this relationship is apparently no longer something to be concealed or embarrassed by. One can now be open about being in
the pocket of the defense industry. Trulio's potential elevation to Heritage president at what we can assume will be an astronomical
salary, will no doubt grease the already well-oiled pipeline of funds from major contractors to this "conservative" foundation, which
already operates with an
annual disclosed budget of almost $100 million.
A 2009 Heritage Foundation report, "
Maintaining
the Superiority of America's Defense Industrial Base ," called for further government investment in aircraft weaponry for "ensuring
a superior fighting force" and "sustaining international stability." In 2011, senior national security fellow James Carafano
wrote " Five Steps
to Defend America's Industrial Defense Base ," which complained about a "fifty billion dollar under-procurement by the Pentagon"
for buying new weaponry. In 2016,
Heritage made the case for
several years of reinvestment to get the military back on "sound footing," with an increase in fiscal year 2016 described as "an
encouraging start."
These special pleas pose a question: which came first, Heritage's heavy dependence on funds from defense giants, or the foundation's
belief that unless we steadily increase our military arsenal we'll be endangering "international stability"? Perhaps the answer lies
somewhere in the middle: someone who is predisposed to go in a certain direction may be more inclined to do so if he is being rewarded
in return. Incidentally, the 2009 position paper seems to be directing the government to throw more taxpayer dollars to Boeing
than to its competitor Lockheed. But it seems both defense giants have landed a joint contract this year to produce a new submersible
for the Navy, so it may no longer be necessary to pick sides on that one at least. No doubt both corporations will continue to
look after Heritage, which will predictably call for further increases, whether they be in aerospace or shipbuilding.
Although one needn't reduce everything to dollars and cents, if we're looking at the issues Heritage and other likeminded foundations
are likely to push today, it's far more probable they'll be emphasizing the national security state rather than, say, opposition
to gay marriage or the defense of traditional gender roles. There's lots more money to be made advocating for the former rather than
the latter. In May 2013, Heritage
sponsored a formal debate between "two conservatives" and "two liberals" on the issue of defense spending, with Heritage and
National Review presenting the "conservative" side. I wondered as I listened to part of this verbal battle why is was considered
"conservative" to call for burdening American taxpayers with massive increases in the purchase of Pentagon weaponry and planes that
take
17 years to get off the ground.
Like American higher education, Conservatism Inc. is very big business. Whatever else it's about rates a very far second to
keeping the money flowing. "Conservative" positions are often simply causes for which foundations and media enterprises that have
the word "conservative" attached to them are paid to represent. It is the label carried by an institution or publication, not necessarily
the position it takes, that makes what NR or Heritage advocates "conservative."
In any event, Mr. Trulio won't have to travel far if he takes the Heritage helm. He and his corporation are already ensconced
only a few miles away from Heritage's Massachusetts Avenue headquarters, if the information provided by Lockheed Martin is correct.
It says: "Headquartered in Bethesda, Maryland, Lockheed Martin is a global security and aerospace company that employs approximately
98,000 people worldwide and is principally engaged in the research, design, development, manufacture, integration and sustainment
of advanced technology systems, products and services." A company like that can certainly afford to underwrite a think tank -- if
the price is right.
Paul Gottfried is Raffensperger Professor of Humanities Emeritus at Elizabethtown College, where he taught for twenty-five
years. He is a Guggenheim recipient and a Yale PhD. He writes for many websites and scholarly journals and is the author of thirteen
books, most recently Fascism: Career of a Concept and Revisions and Dissents . His books have been translated into multiple
languages and seem to enjoy special success in Eastern Europe.
"... Since World War II the United States has used the Dollar Standard and its dominant role in the IMF and World Bank to steer trade and investment along lines benefiting its own economy. But now that the growth of China's mixed economy has outstripped all others while Russia finally is beginning to recover, countries have the option of borrowing from the Asian Infrastructure Investment Bank (AIIB) and other non-U.S. consortia. ..."
"... The problem with surrendering is that this Washington Consensus is extractive and lives in the short run, laying the seeds of financial dependency, debt-leveraged bubbles and subsequent debt deflation and austerity. The financial business plan is to carve out opportunities for price gouging and corporate profits. Today's U.S.-sponsored trade and investment treaties would make governments pay fines equal to the amount that environmental and price regulations, laws protecting consumers and other social policies might reduce corporate profits. "Companies would be able to demand compensation from countries whose health, financial, environmental and other public interest policies they thought to be undermining their interests, and take governments before extrajudicial tribunals. These tribunals, organised under World Bank and UN rules, would have the power to order taxpayers to pay extensive compensation over legislation seen as undermining a company's 'expected future profits.' ..."
"... At the center of today's global split are the last few centuries of Western social and democratic reform. Seeking to follow the classical Western development path by retaining a mixed public/private economy, China, Russia and other nations find it easier to create new institutions such as the AIIB than to reform the dollar standard IMF and World Bank. Their choice is between short-term gains by dependency leading to austerity, or long-term development with independence and ultimate prosperity. ..."
"... The price of resistance involves risking military or covert overthrow. Long before the Ukraine crisis, the United States has dropped the pretense of backing democracies. The die was cast in 1953 with the coup against Iran's secular government, and the 1954 coup in Guatemala to oppose land reform. Support for client oligarchies and dictatorships in Latin America in the 1960 and '70s was highlighted by the overthrow of Allende in Chile and Operation Condor's assassination program throughout the continent. Under President Barack Obama and Secretary of State Hillary Clinton, the United States has claimed that America's status as the world's "indispensible nation" entitled it back the recent coups in Honduras and Ukraine, and to sponsor the NATO attack on Libya and Syria, leaving Europe to absorb the refugees. ..."
"... The trans-Atlantic financial bubble has left a legacy of austerity since 2008. Debt-ridden economies are being told to cope with their downturns by privatizing their public domain. ..."
"... The immediate question facing Germany and the rest of Western Europe is how long they will sacrifice their trade and investment opportunities with Russia, Iran and other economies by adhering to U.S.-sponsored sanctions. American intransigence threatens to force an either/or choice in what looms as a seismic geopolitical shift over the proper role of governments: Should their public sectors provide basic services and protect populations from predatory monopolies, rent extraction and financial polarization? ..."
"... Today's global financial crisis can be traced back to World War I and its aftermath. The principle that needed to be voiced was the right of sovereign nations not to be forced to sacrifice their economic survival on the altar of inter-government and private debt demands. The concept of nationhood embodied in the 1648 Treaty of Westphalia based international law on the principle of parity of sovereign states and non-interference. Without a global alternative to letting debt dynamics polarize societies and tear economies apart, monetary imperialism by creditor nations is inevitable. ..."
"... The past century's global fracture between creditor and debtor economies has interrupted what seemed to be Europe's democratic destiny to empower governments to override financial and other rentier interests. Instead, the West is following U.S. diplomatic leadership back into the age when these interests ruled governments. This conflict between creditors and democracy, between oligarchy and economic growth (and indeed, survival) will remain the defining issue of our epoch over the next generation, and probably for the remainder of the 21 st century. ..."
"... wiki/Anglo-Persian Oil Company "In 1901 William Knox D'Arcy, a millionaire London socialite, negotiated an oil concession with Mozaffar al-Din Shah Qajar of Persia. He financed this with capital he had made from his shares in the highly profitable Mount Morgan mine in Queensland, Australia. D'Arcy assumed exclusive rights to prospect for oil for 60 years in a vast tract of territory including most of Iran. In exchange the Shah received £20,000 (£2.0 million today),[1] an equal amount in shares of D'Arcy's company, and a promise of 16% of future profits." Note the 16% = ~1/6, the rest going off-shore. ..."
"... The Greens in Aus researched the resources sector in Aus, to find that it is 83% 'owned' by off-shore entities. Note that 83% = ~5/6, which goes off-shore. Coincidence? ..."
"... Note that in Aus, the democratically elected so-called 'leaders' not only allow exactly this sort of economic rape, they actively assist it by, say, crippling the central bank and pleading for FDI = selling our, we the people's interests, out. Those traitor-leaders are reversing 'Enlightenment' provisions, privatising whatever they can and, as Michael Hudson well points out the principles, running Aus into debt and austerity. ..."
"... US banking oligarchs will expend the last drop of our blood to prevent a such a linking, just as they were willing to sacrifice our blood and treasure in WW1 and 2, as is alluded to here.: ..."
"... The past century's global fracture between creditor and debtor economies has interrupted what seemed to be Europe's democratic destiny to empower governments to override financial and other rentier interests. Instead, the West is following U.S. diplomatic leadership back into the age when these interests ruled governments. This conflict between creditors and democracy, between oligarchy and economic growth (and indeed, survival) will remain the defining issue of our epoch over the next generation, and probably for the remainder of the 21st century. ..."
"... It's important to note that such interests have ruled (owned, actually) imperial Britain for centuries and the US since its inception, and the anti-federalists knew it. ..."
"... "After World War I the U.S. Government deviated from what had been traditional European policy – forgiving military support costs among the victors. U.S. officials demanded payment for the arms shipped to its Allies in the years before America entered the Great War in 1917. The Allies turned to Germany for reparations to pay these debts." The Yank banker, the Yankee Wall Street super rich, set off a process of greed that led to Hitler. ..."
"... But they didn't invent anything. They learned from their WASP forebears in the British Empire, whose banking back to Oliver Cromwell had become inextricably entangled with Jewish money and Jewish interests to the point that Jews per capita dominated it even at the height of the British Empire, when simpleton WASPs assume that WASPs truly ran everything, and that WASP power was for the good of even the poorest WASPs. ..."
"... The Berlin Baghdad railway was an important cause for WWI. ..."
"... Bingo. Stopping it was a huge factor. There was no way the banksters of the world were going to let that go forward, nor were they going to let Germany and Russia link up in any other ways. They certainly were not about to allow any threats to the Suez Canal nor any chance to let the oil fields slip from their control either. ..."
"... This is not how the Enlightenment was supposed to evolve ..."
"... In fact, this is exactly how it was supposed to work. The wave of liberal democracies was precisely to overturn the monarchies, which were the last bulwark protecting the people from the full tyranny of the financiers, who were, by nature, one-world internationalists. ..."
"... The real problem with this is that any form of monetary arrangement involves an implied trusteeship, with obligations on, as well as benefits for, the trustee. The US is so abusing its trusteeship through the continual use of an irresponsible sanctions regime that it risks a good portion of the world economy abandoning its system for someone else's, which may be perceived to be run more responsibility. The disaster scenario would be the US having therefore in the future to access that other system to purchase oil or minerals, and having that system do to us what we previously did to them -- sanction us out. ..."
"... " Marx believed that capitalism was inherently built upon practices of usury and thus inevitably leading to the separation of society into two classes: one composed of those who produce value and the other, which feeds upon the first one. In "Theories of Surplus Value" (written 1862-1863), he states " that interest (in contrast to industrial profit) and rent (that is the form of landed property created by capitalist production itself) are superfetations (i.e., excessive accumulations) which are not essential to capitalist production and of which it can rid itself." ..."
In theory, the global financial system is supposed to help every country gain. Mainstream teaching of international finance, trade
and "foreign aid" (defined simply as any government credit) depicts an almost utopian system uplifting all countries, not stripping
their assets and imposing austerity. The reality since World War I is that the United States has taken the lead in shaping the international
financial system to promote gains for its own bankers, farm exporters, its oil and gas sector, and buyers of foreign resources –
and most of all, to collect on debts owed to it.
Each time this global system has broken down over the past century, the major destabilizing force has been American over-reach
and the drive by its bankers and bondholders for short-term gains. The dollar-centered financial system is leaving more industrial
as well as Third World countries debt-strapped. Its three institutional pillars – the International Monetary Fund (IMF), World Bank
and World Trade Organization – have imposed monetary, fiscal and financial dependency, most recently by the post-Soviet Baltics,
Greece and the rest of southern Europe. The resulting strains are now reaching the point where they are breaking apart the arrangements
put in place after World War II.
The most destructive fiction of international finance is that all debts can be paid, and indeed should be paid, even when
this tears economies apart by forcing them into austerity – to save bondholders, not labor and industry. Yet European countries,
and especially Germany, have shied from pressing for a more balanced global economy that would foster growth for all countries and
avoid the current economic slowdown and debt deflation.
Imposing austerity on Germany after World War I
After World War I the U.S. Government deviated from what had been traditional European policy – forgiving military support costs
among the victors. U.S. officials demanded payment for the arms shipped to its Allies in the years before America entered the Great
War in 1917. The Allies turned to Germany for reparations to pay these debts. Headed by John Maynard Keynes, British diplomats sought
to clean their hands of responsibility for the consequences by promising that all the money they received from Germany would simply
be forwarded to the U.S. Treasury.
The sums were so unpayably high that Germany was driven into austerity and collapse. The nation suffered hyperinflation as the
Reichsbank printed marks to throw onto the foreign exchange also were pushed into financial collapse. The debt deflation was much
like that of Third World debtors a generation ago, and today's southern European PIIGS (Portugal, Ireland, Italy, Greece and Spain).
In a pretense that the reparations and Inter-Ally debt tangle could be made solvent, a triangular flow of payments was facilitated
by a convoluted U.S. easy-money policy. American investors sought high returns by buying German local bonds; German municipalities
turned over the dollars they received to the Reichsbank for domestic currency; and the Reichsbank used this foreign exchange to pay
reparations to Britain and other Allies, enabling these countries to pay the United States what it demanded.
But solutions based on attempts to keep debts of such magnitude in place by lending debtors the money to pay can only be temporary.
The U.S. Federal Reserve sustained this triangular flow by holding down U.S. interest rates. This made it attractive for American
investors to buy German municipal bonds and other high-yielding debts. It also deterred Wall Street from drawing funds away from
Britain, which would have driven its economy deeper into austerity after the General Strike of 1926. But domestically, low U.S. interest
rates and easy credit spurred a real estate bubble, followed by a stock market bubble that burst in 1929. The triangular flow of
payments broke down in 1931, leaving a legacy of debt deflation burdening the U.S. and European economies. The Great Depression lasted
until outbreak of World War II in 1939.
Planning for the postwar period took shape as the war neared its end. U.S. diplomats had learned an important lesson. This time
there would be no arms debts or reparations. The global financial system would be stabilized – on the basis of gold, and on creditor-oriented
rules. By the end of the 1940s the United States held some 75 percent of the world's monetary gold stock. That established the U.S.
dollar as the world's reserve currency, freely convertible into gold at the 1933 parity of $35 an ounce.
It also implied that once again, as in the 1920s, European balance-of-payments deficits would have to be financed mainly by the
United States. Recycling of official government credit was to be filtered via the IMF and World Bank, in which U.S. diplomats alone
had veto power to reject policies they found not to be in their national interest. International financial "stability" thus became
a global control mechanism – to maintain creditor-oriented rules centered in the United States.
To obtain gold or dollars as backing for their own domestic monetary systems, other countries had to follow the trade and investment
rules laid down by the United States. These rules called for relinquishing control over capital movements or restrictions on foreign
takeovers of natural resources and the public domain as well as local industry and banking systems.
By 1950 the dollar-based global economic system had become increasingly untenable. Gold continued flowing to the United States,
strengthening the dollar – until the Korean War reversed matters. From 1951 through 1971 the United States ran a deepening balance-of-payments
deficit, which stemmed entirely from overseas military spending. (Private-sector trade and investment was steadily in balance.)
U.S. Treasury debt replaces the gold exchange standard
The foreign military spending that helped return American gold to Europe became a flood as the Vietnam War spread across Asia
after 1962. The Treasury kept the dollar's exchange rate stable by selling gold via the London Gold Pool at $35 an ounce. Finally,
in August 1971, President Nixon stopped the drain by closing the Gold Pool and halting gold convertibility of the dollar.
There was no plan for what would happen next. Most observers viewed cutting the dollar's link to gold as a defeat for the United
States. It certainly ended the postwar financial order as designed in 1944. But what happened next was just the reverse of a defeat.
No longer able to buy gold after 1971 (without inciting strong U.S. disapproval), central banks found only one asset in which to
hold their balance-of-payments surpluses: U.S. Treasury debt. These securities no longer were "as good as gold." The United States
issued them at will to finance soaring domestic budget deficits.
By shifting from gold to the dollars thrown off by the U.S. balance-of-payments deficit, the foundation of global monetary reserves
came to be dominated by the U.S. military spending that continued to flood foreign central banks with surplus dollars. America's
balance-of-payments deficit thus supplied the dollars that financed its domestic budget deficits and bank credit creation – via foreign
central banks recycling U.S. foreign spending back to the U.S. Treasury.
In effect, foreign countries have been taxed without representation over how their loans to the U.S. Government are employed.
European central banks were not yet prepared to create their own sovereign wealth funds to invest their dollar inflows in foreign
stocks or direct ownership of businesses. They simply used their trade and payments surpluses to finance the U.S. budget deficit.
This enabled the Treasury to cut domestic tax rates, above all on the highest income brackets.
U.S. monetary imperialism confronted European and Asian central banks with a dilemma that remains today: If they do not turn around
and buy dollar assets, their currencies will rise against the dollar. Buying U.S. Treasury securities is the only practical way to
stabilize their exchange rates – and in so doing, to prevent their exports from rising in dollar terms and being priced out of dollar-area
markets.
The system may have developed without foresight, but quickly became deliberate. My book Super Imperialism sold best in
the Washington DC area, and I was given a large contract through the Hudson Institute to explain to the Defense Department exactly
how this extractive financial system worked. I was brought to the White House to explain it, and U.S. geostrategists used my book
as a how-to-do-it manual (not my original intention).
Attention soon focused on the oil-exporting countries. After the U.S. quadrupled its grain export prices shortly after the 1971
gold suspension, the oil-exporting countries quadrupled their oil prices. I was informed at a White House meeting that U.S. diplomats
had let Saudi Arabia and other Arab countries know that they could charge as much as they wanted for their oil, but that the United
States would treat it as an act of war not to keep their oil proceeds in U.S. dollar assets.
This was the point at which the international financial system became explicitly extractive. But it took until 2009, for the first
attempt to withdraw from this system to occur. A conference was convened at Yekaterinburg, Russia, by the Shanghai Cooperation Organization
(SCO). The alliance comprised Russia, China, Kazakhstan, Tajikistan, Kirghizstan and Uzbekistan, with observer status for Iran, India,
Pakistan and Mongolia. U.S. officials asked to attend as observers, but their request was rejected.
The U.S. response has been to extend the new Cold War into the financial sector, rewriting the rules of international finance
to benefit the United States and its satellites – and to deter countries from seeking to break free from America's financial free
ride.
The IMF changes its rules to isolate Russia and China
Aiming to isolate Russia and China, the Obama Administration's confrontational diplomacy has drawn the Bretton Woods institutions
more tightly under US/NATO control. In so doing, it is disrupting the linkages put in place after World War II.
The U.S. plan was to hurt Russia's economy so much that it would be ripe for regime change ("color revolution"). But the effect
was to drive it eastward, away from Western Europe to consolidate its long-term relations with China and Central Asia. Pressing Europe
to shift its oil and gas purchases to U.S. allies, U.S. sanctions have disrupted German and other European trade and investment with
Russia and China. It also has meant lost opportunities for European farmers, other exporters and investors – and a flood of refugees
from failed post-Soviet states drawn into the NATO orbit, most recently Ukraine.
To U.S. strategists, what made changing IMF rules urgent was Ukraine's $3 billion debt falling due to Russia's National Wealth
Fund in December 2015. The IMF had long withheld credit to countries refusing to pay other governments. This policy aimed primarily
at protecting the financial claims of the U.S. Government, which usually played a lead role in consortia with other governments and
U.S. banks. But under American pressure the IMF changed its rules in January 2015. Henceforth, it announced, it would indeed be willing
to provide credit to countries in arrears other governments – implicitly headed by China (which U.S. geostrategists consider to be
their main long-term adversary), Russia and others that U.S. financial warriors might want to isolate in order to force neoliberal
privatization policies. [1] I provide the full
background in "The IMF Changes its Rules to Isolate China and Russia," December 9, 2015, available on michael-hudson.com, Naked
Capitalism , Counterpunch and Johnson's Russia List .
Article I of the IMF's 1944-45 founding charter
prohibits it from lending to a member engaged in civil war or at war with another member state, or for military purposes generally.
An obvious reason for this rule is that such a country is unlikely to earn the foreign exchange to pay its debt. Bombing Ukraine's
own Donbass region in the East after its February 2014 coup d'état destroyed its export industry, mainly to Russia.
Withholding IMF credit could have been a lever to force adherence to the Minsk peace agreements, but U.S. diplomacy rejected that
opportunity. When IMF head Christine Lagarde made a new loan to Ukraine in spring 2015, she merely expressed a verbal hope for peace.
Ukrainian President Porochenko announced the next day that he would step up his civil war against the Russian-speaking population
in eastern Ukraine. One and a half-billion dollars of the IMF loan were given to banker Ihor Kolomoiski and disappeared offshore,
while the oligarch used his domestic money to finance an anti-Donbass army. A million refugees were driven east into Russia; others
fled west via Poland as the economy and Ukraine's currency plunged.
The IMF broke four of its rules by lending to Ukraine: (1) Not to lend to a country that has no visible means to pay back the
loan (the "No More Argentinas" rule, adopted after the IMF's disastrous 2001 loan to that country). (2) Not to lend to a country
that repudiates its debt to official creditors (the rule originally intended to enforce payment to U.S.-based institutions). (3)
Not to lend to a country at war – and indeed, destroying its export capacity and hence its balance-of-payments ability to pay back
the loan. Finally (4), not to lend to a country unlikely to impose the IMF's austerity "conditionalities." Ukraine did agree to override
democratic opposition and cut back pensions, but its junta proved too unstable to impose the austerity terms on which the IMF insisted.
U.S. neoliberalism promotes privatization carve-ups of debtor countries
Since World War II the United States has used the Dollar Standard and its dominant role in the IMF and World Bank to steer
trade and investment along lines benefiting its own economy. But now that the growth of China's mixed economy has outstripped all
others while Russia finally is beginning to recover, countries have the option of borrowing from the Asian Infrastructure Investment
Bank (AIIB) and other non-U.S. consortia.
At stake is much more than just which nations will get the contracting and banking business. At issue is whether the philosophy
of development will follow the classical path based on public infrastructure investment, or whether public sectors will be privatized
and planning turned over to rent-seeking corporations.
What made the United States and Germany the leading industrial nations of the 20 th century – and more recently, China
– has been public investment in economic infrastructure. The aim was to lower the price of living and doing business by providing
basic services on a subsidized basis or freely. By contrast, U.S. privatizers have brought debt leverage to bear on Third World countries,
post-Soviet economies and most recently on southern Europe to force selloffs. Current plans to cap neoliberal policy with the Trans-Pacific
Partnership (TPP), Transatlantic Trade and Investment Partnership (TTIP) and Transatlantic Free Trade Agreement (TAFTA) go so far
as to disable government planning power to the financial and corporate sector.
American strategists evidently hoped that the threat of isolating Russia, China and other countries would bring them to heel if
they tried to denominate trade and investment in their own national currencies. Their choice would be either to suffer sanctions
like those imposed on Cuba and Iran, or to avoid exclusion by acquiescing in the dollarized financial and trade system and its drives
to financialize their economies under U.S. control.
The problem with surrendering is that this Washington Consensus is extractive and lives in the short run, laying the seeds
of financial dependency, debt-leveraged bubbles and subsequent debt deflation and austerity. The financial business plan is to carve
out opportunities for price gouging and corporate profits. Today's U.S.-sponsored trade and investment treaties would make governments
pay fines equal to the amount that environmental and price regulations, laws protecting consumers and other social policies might
reduce corporate profits. "Companies would be able to demand compensation from countries whose health, financial, environmental and
other public interest policies they thought to be undermining their interests, and take governments before extrajudicial tribunals.
These tribunals, organised under World Bank and UN rules, would have the power to order taxpayers to pay extensive compensation over
legislation seen as undermining a company's 'expected future profits.' "
This policy threat is splitting the world into pro-U.S. satellites and economies maintaining public infrastructure investment
and what used to be viewed as progressive capitalism. U.S.-sponsored neoliberalism supporting its own financial and corporate interests
has driven Russia, China and other members of the Shanghai Cooperation Organization into an alliance to protect their economic self-sufficiency
rather than becoming dependent on dollarized credit enmeshing them in foreign-currency debt.
At the center of today's global split are the last few centuries of Western social and democratic reform. Seeking to follow
the classical Western development path by retaining a mixed public/private economy, China, Russia and other nations find it easier
to create new institutions such as the AIIB than to reform the dollar standard IMF and World Bank. Their choice is between short-term
gains by dependency leading to austerity, or long-term development with independence and ultimate prosperity.
The price of resistance involves risking military or covert overthrow. Long before the Ukraine crisis, the United States has
dropped the pretense of backing democracies. The die was cast in 1953 with the coup against Iran's secular government, and the 1954
coup in Guatemala to oppose land reform. Support for client oligarchies and dictatorships in Latin America in the 1960 and '70s was
highlighted by the overthrow of Allende in Chile and Operation Condor's assassination program throughout the continent. Under President
Barack Obama and Secretary of State Hillary Clinton, the United States has claimed that America's status as the world's "indispensible
nation" entitled it back the recent coups in Honduras and Ukraine, and to sponsor the NATO attack on Libya and Syria, leaving Europe
to absorb the refugees.
Germany's choice
This is not how the Enlightenment was supposed to evolve. The industrial takeoff of Germany and other European nations involved
a long fight to free markets from the land rents and financial charges siphoned off by their landed aristocracies and bankers. That
was the essence of classical 19 th -century political economy and 20 th -century social democracy. Most economists
a century ago expected industrial capitalism to produce an economy of abundance, and democratic reforms to endorse public infrastructure
investment and regulation to hold down the cost of living and doing business. But U.S. economic diplomacy now threatens to radically
reverse this economic ideology by aiming to dismantle public regulatory power and impose a radical privatization agenda under the
TTIP and TAFTA.
Textbook trade theory depicts trade and investment as helping poorer countries catch up, compelling them to survive by becoming
more democratic to overcome their vested interests and oligarchies along the lines pioneered by European and North American industrial
economies. Instead, the world is polarizing, not converging. The trans-Atlantic financial bubble has left a legacy of austerity
since 2008. Debt-ridden economies are being told to cope with their downturns by privatizing their public domain.
The immediate question facing Germany and the rest of Western Europe is how long they will sacrifice their trade and investment
opportunities with Russia, Iran and other economies by adhering to U.S.-sponsored sanctions. American intransigence threatens to
force an either/or choice in what looms as a seismic geopolitical shift over the proper role of governments: Should their public
sectors provide basic services and protect populations from predatory monopolies, rent extraction and financial polarization?
Today's global financial crisis can be traced back to World War I and its aftermath. The principle that needed to be voiced
was the right of sovereign nations not to be forced to sacrifice their economic survival on the altar of inter-government and private
debt demands. The concept of nationhood embodied in the 1648 Treaty of Westphalia based international law on the principle of parity
of sovereign states and non-interference. Without a global alternative to letting debt dynamics polarize societies and tear economies
apart, monetary imperialism by creditor nations is inevitable.
The past century's global fracture between creditor and debtor economies has interrupted what seemed to be Europe's democratic
destiny to empower governments to override financial and other rentier interests. Instead, the West is following U.S. diplomatic
leadership back into the age when these interests ruled governments. This conflict between creditors and democracy, between oligarchy
and economic growth (and indeed, survival) will remain the defining issue of our epoch over the next generation, and probably for
the remainder of the 21 st century.
Endnotes
[1] I provide the full background in
"The IMF Changes its Rules to Isolate China and Russia," December 9, 2015, available on michael-hudson.com, Naked Capitalism
, Counterpunch and Johnson's Russia List .
"Austerity" is such a misused word these days. What the Allies did to Germany after Versailles was austerity, and everyone paid
dearly for it.
What the IMF and the Western Banking Cartel do to third world countries is akin to a pusher hopping up addicts on debt and
then taking it away while stripping them of their assets, pretty much hurting only the people of the third world country; certainly
not the WBC, and almost certainly not the criminal elite who took the deal.
The Austerity everyone complains about in the developed world these days is a joke, hardly austerity, for it has never meant
more than doing a little less deficit-spending than in prior periods, e.g. UK Labour whining about "Austerity" is a joke, as the
UK debt has done nothing but grow, which in terms understandable to simple folk like me means they are spending more than they
can afford to carry.
" The immediate question facing Germany and the rest of Western Europe is how long they will sacrifice their trade and investment
opportunities with Russia, Iran and other economies by adhering to U.S.-sponsored sanctions "
In the whole article not a word about the euro, also an instrument of imperialism, that mainly benefits Germany, the country
that has to maintain a high level of exports, in order to feed the Germans, and import raw materials for Germany's industries.
Isolating China and Russia, with the other BRICS countries, S Africa, Brazil, India, dangerous game.
This effort forced China and Russia to close cooperation, the economic expression of this is the Peking Petersburg railway, with
a hub in Khazakstan, where the containers are lifted from the Chinese to the Russian system, the width differs.
Four days for the trip.
The Berlin Baghdad railway was an important cause for WWI.
Let us hope that history does not repeat itself in the nuclear era.
Edward Mead Earle, Ph.D., 'Turkey, The Great Powers and The Bagdad Railway, A study in Imperialism', 1923, 1924, New York
The U.S. response has been to extend the new Cold War into the financial sector, rewriting the rules of international finance
to benefit the United States and its satellites – and to deter countries from seeking t o break free from America's
financial free ride .
Nah, the NY banksters wouldn't dream of doing such a thing; would they?
This is not how the Enlightenment was supposed to evolve
What I said, and beautifully put, the whole article.
World War I may well have been an important way-point, but the miserable mercantile modus operandi was well established
long before.
An interesting A/B case:
a) wiki/Anglo-Persian Oil Company
"In 1901 William Knox D'Arcy, a millionaire London socialite, negotiated an oil concession with Mozaffar al-Din Shah Qajar of
Persia. He financed this with capital he had made from his shares in the highly profitable Mount Morgan mine in Queensland, Australia.
D'Arcy assumed exclusive rights to prospect for oil for 60 years in a vast tract of territory including most of Iran. In exchange
the Shah received £20,000 (£2.0 million today),[1] an equal amount in shares of D'Arcy's company, and a promise of 16% of future
profits." Note the 16% = ~1/6, the rest going off-shore.
b) The Greens in Aus researched the resources sector in Aus, to find that it is 83% 'owned' by off-shore entities. Note
that 83% = ~5/6, which goes off-shore. Coincidence?
Then see what happened when the erstwhile APOC was nationalized; the US/UK perpetrated a coup against the democratically elected
Mossadegh, eventual blow-back resulting in the 1979 revolution, basically taking Iran out of 'the West.'
Note that in Aus, the democratically elected so-called 'leaders' not only allow exactly this sort of economic rape, they
actively assist it by, say, crippling the central bank and pleading for FDI = selling our, we the people's interests, out. Those
traitor-leaders are reversing 'Enlightenment' provisions, privatising whatever they can and, as Michael Hudson well points out
the principles, running Aus into debt and austerity.
We the people are powerless passengers, and to add insult to injury, the taxpayer-funded AusBC lies to us continually. Ho,
hum; just like the mainly US/Z MSM and the BBC do – all corrupt and venal. Bah!
Now, cue the trolls: "But Russia/China are worse!"
The immediate question facing Germany and the rest of Western Europe is how long they will sacrifice their trade and investment
opportunities with Russia, Iran and other economies by adhering to U.S.-sponsored sanctions.
US banking oligarchs will expend the last drop of our blood to prevent a such a linking, just as they were willing to sacrifice
our blood and treasure in WW1 and 2, as is alluded to here.:
Today's global financial crisis can be traced back to World War I and its aftermath.
Excellent.:
The principle that needed to be voiced was the right of sovereign nations not to be forced to sacrifice their economic survival
on the altar of inter-government and private debt demands Without a global alternative to letting debt dynamics polarize societies
and tear economies apart, monetary imperialism by creditor nations is inevitable.
This is a gem of a summary.:
The past century's global fracture between creditor and debtor economies has interrupted what seemed to be Europe's
democratic destiny to empower governments to override financial and other rentier interests. Instead, the West is following
U.S. diplomatic leadership back into the age when these interests ruled governments. This conflict between creditors and democracy,
between oligarchy and economic growth (and indeed, survival) will remain the defining issue of our epoch over the next generation,
and probably for the remainder of the 21st century.
Instead, the West is following U.S. diplomatic leadership back into the age when these interests ruled governments. It's
important to note that such interests have ruled (owned, actually) imperial Britain for centuries and the US since its inception,
and the anti-federalists knew it.
Here is a revolution as radical as that which separated us from Great Britain.
You will find all the strength of this country in the hands of your enemies [ ed comment: the money grubbers ]
Patrick Henry June 5 and 7, 1788―1788-1789 Petersburg, Virginia edition of the Debates and other Proceedings . . . Of the
Virginia Convention of 1788
The Constitution had been laid down under unacceptable auspices; its history had been that of a coup d'état.
It had been drafted, in the first place, by men representing special economic interests. Four-fifths of them were
public creditors, one-third were land speculators, and one-fifth represented interests in shipping, manufacturing, and merchandising.
Most of them were lawyers. Not one of them represented the interest of production -- Vilescit origine tali.
- Albert Jay Nock [Excerpted from chapter 5 of Albert Jay Nock's Jefferson, published in 1926]
"After World War I the U.S. Government deviated from what had been traditional European policy – forgiving military support
costs among the victors. U.S. officials demanded payment for the arms shipped to its Allies in the years before America entered
the Great War in 1917. The Allies turned to Germany for reparations to pay these debts." The Yank banker, the Yankee Wall Street
super rich, set off a process of greed that led to Hitler.
But they didn't invent anything. They learned from their
WASP forebears in the British Empire, whose banking back to Oliver Cromwell had become inextricably entangled with Jewish money
and Jewish interests to the point that Jews per capita dominated it even at the height of the British Empire, when simpleton WASPs
assume that WASPs truly ran everything, and that WASP power was for the good of even the poorest WASPs.
To Michael Hudson,
Great article. Evidence based, factually argued, enjoyably readable.
Replacements for the dollar dominated financial system are well into development. Digital dollars, credit cards, paypal, stock
and currency exchange online platforms, and perhaps most intriguing The exponential rise of Bitcoin and similar crypto-currencies.
The internet is also exponentially exposing the screwing we peasants have been getting by the psychopath, narcissistic, hedonistic,
predatory lenders and controllers. Next comes the widespread, easily usable, and inexpensive cell phone apps, social media exposures,
alternative websites (like Unz.com), and other technologies that will quickly identify every lying, evil, jerk so they can be
neutrilized / avoided
"Textbook trade theory depicts trade and investment as helping poorer countries catch up, compelling them to survive by
becoming more democratic to overcome their vested interests and oligarchies along the lines pioneered by European and North
American industrial economies."
I must be old; the economic textbooks I had did explain the benefits of freer trade among nations using Ricardo and Trade Indifference
Curves, but didn't prescribe any one political system being fostered by or even necessary for the benefits of international trade
to be reaped.
to be honest, this way of running things only need to last for 10-20 more years before automation will replace 800 million jobs.
then we will have a few trillionaire overlords unless true AI comes online. by that point nothing matters as we will become zoo
animals.
What the IMF and the Western Banking Cartel do to third world countries is akin to a pusher hopping up addicts on debt and
then taking it away while stripping them of their assets, pretty much hurting only the people of the third world country; certainly
not the WBC, and almost certainly not the criminal elite who took the deal.
That's true and the criminals do similar asset stripping to their own as well, through various means.
It's always the big criminals against the rest of us.
The Berlin Baghdad railway was an important cause for WWI.
Bingo. Stopping it was a huge factor. There was no way the banksters of the world were going to let that go forward, nor
were they going to let Germany and Russia link up in any other ways. They certainly were not about to allow any threats to the
Suez Canal nor any chance to let the oil fields slip from their control either.
The wars were also instigated to prevent either Germany or Russia having control of, and free access to warm water ports
and the wars also were an excuse to steal vast amounts of wealth from both Germany and Russia through various means.
All pious and pompous pretexts aside, economics was the motive for (the) war (s), and the issues are not settled to this day.
I.e., it's the same class of monstrously insatiable criminals who want everything for themselves who're causing the major troubles
of the day.
Unfortunately, as long as we have SoB's who're eager to sacrifice our blood and treasure for their
benfit, things will never change.
The golden rule is one thing. The paper rule is something else.
May you live in interesting times.
The golden rule is for dreamers, unfortunately. Those who control paper money rule, and your wish has been granted; we live
in times that are both interesting and fascinating, but are nevertheless the same old thing. Only the particular particulars
have changed.
Essentially, the anti-EU and anti-euro line that Professor Hudson has being pushing for years, which has now morphed into a pro-Putin
line as the anti-EU faction in the US have sought to use Putin as a "useful idiot" to destroy the EU. Since nobody in Europe reads
these articles, Ii doesn't really matter and I certainly don't see any EU leader following the advice of someone who has never
concealed his hostility to the EU's very existence: note the use of the racist slur "PIIGS" to refer to certain EU Member States.
Thus, Professor Hudson is simply pushing the "let Putin win in Ukraine" line dressed up in fine-sounding economic jargon.
Since nobody in Europe reads these articles, Ii doesn't really matter
None of it rally matters anyway, no matter how valid. To paraphrase Thucydides, the money grubbers do what they want and the
rest of us are forced to suck it up and limp along.
and I certainly don't see any EU leader following the advice
I doubt that that's Hudson's intent in writing the article. I see it as his attempt to explain the situation to those of us
who care about them even though our concern is pretty much useless.
I do thank him for taking the time to pen this stuff which I consider worthwhile and high quality.
That sounds good but social media is the weapon of choice in the EU too. Lot's of kids know and love Hudson. Any half capable
writer who empathetically explains why you're getting fucked is going to have some followers. Watering, nutrition, weeding. Before
too long you'll be on the Eurail to your destination.
said: "The Yank banker, the Yankee Wall Street super rich, set off a process of greed that led to Hitler." If true, so what?
That's a classic example of 'garbage in, garbage out'. http://www.codoh.com
This is not how the Enlightenment was supposed to evolve
In fact, this is exactly how it was supposed to work. The wave of liberal democracies was precisely to overturn the monarchies,
which were the last bulwark protecting the people from the full tyranny of the financiers, who were, by nature, one-world internationalists.
The real problem with this is that any form of monetary arrangement involves an implied trusteeship, with obligations on,
as well as benefits for, the trustee. The US is so abusing its trusteeship through the continual use of an irresponsible
sanctions regime that it risks a good portion of the world economy abandoning its system for someone else's, which may be perceived
to be run more responsibility. The disaster scenario would be the US having therefore in the future to access that other system
to purchase oil or minerals, and having that system do to us what we previously did to them -- sanction us out.
The proper
use by the US of its controlled system thus should be a defensive one -- mainly to act so fairly to all players that it, not someone
else, remains in control of the dominant worldwide exchange system. This sensible course of conduct, unfortunately, is not being
pursued by the US.
there is fuzzy, and then there is very fuzzy, and then there is the fuzziness compounded many-fold. The latter is this article.
Here from wiki: "
" Marx believed that capitalism was inherently built upon practices of usury and thus inevitably leading to the separation
of society into two classes: one composed of those who produce value and the other, which feeds upon the first one. In "Theories
of Surplus Value" (written 1862-1863), he states " that interest (in contrast to industrial profit) and rent (that is the form
of landed property created by capitalist production itself) are superfetations (i.e., excessive accumulations) which are not
essential to capitalist production and of which it can rid itself."
Wiki goes on to identify "rentier" as used by Marx, to be the same thing as "capitalists." What the above quotation says
is that capitalism CAN rid itself of genuine rent capital. First, the feudal rents that were extracted by landowners were NOT
part of a free market system. Serfdom was only one part of unfree conditions. A general condition of anarchy in rules and laws
by petty principalities characteristic of feudalism, both contained commerce and human beings. There was no freedom, political
or economic.
The conflation (collapsing) of rents and interest is a Marxist error which expands into complete nonsense when a competitive
economy has replaced feudal conditions. ON top of that, profits from a business, firm, or industrial enterprise are NOT rents.
Any marxist is a fool to pretend otherwise, and is just another ideological (False consciousness ) fanatic.
Germany loans money back to the poorer nations who buy her exports just as China loans money to the United States (they purchase
roughly a third of our Treasury bonds) so that Americans can continue to buy Chinese manufactured goods.
The role to be played by the USA in the "new world order" is that of being the farmer to the world. The meticulous Asians will
make stuff.
The problem with this is that it is based on 19th century notions of manufacturing. Technique today is vastly more complicated
than it was in the 1820′s and a nation must do everything in its power to protect and nurture its manufacturing and scientific
excellence. In the United States we have been giving this away to our competitors. We educate their children at our taxpayer's
expense and they take the knowledge gained back to their native countries where, with state subsidies, they build factories that
put Americans out of work. We fall further and further behind.
Less regulation is one campaign promise made by the president that is coming true...
Reducing government regulation is tough. It's resisted by all those who benefit, including
government employees who administer the many programs. Every president since Jimmy Carter has
attempted to lower the cost of regulation. At best, any cuts have been tiny and mostly centered
on trimming paperwork. But less regulation is one campaign promise made by Donald Trump that is
coming true. With tax and health-care reform problematic and given the president's
protectionist leanings, deregulation is probably a major driver of the stock market rally.
the only credit trumpanyahoo deserves is for giving the last vestiges of what was left of
this country to the money printers, allowing them to print/steal/lie/cheat/war at will...
"... The only problem with One Belt One Road is US Intel stoking color revolutions in every critical spot along the belts and roads ..."
"... LOL.. yes.. the USA Stocks the ponds from any of their 800 military bases used to sustain their Dollar Reserve virtue. And if you object, they give you sanctions akin to a modern-day Walmart version of Stalingrad. ..."
"... Remember Maynard Keynes attempted to set up the BANCOR, a composite currency but was overruled by the US in the dreadful Anglo American loan fiasco in 1944. That is when the Americans took down the British Sterling by force and replace the Pound with the US Dollar Reserve Currency. Since then the USA has exported its inflation. ..."
"... Watch the Treasuries too. Saudi wants to sell off $750 Billion in US Treasuries. They are moving closer to Russia and China. Trump in my eyes is the last Bully or last straw for the rest of the world. If you don't agree with the USA, they use the US Dollar reserve as a weapon against you. A Reserve Currency should not be political. Both Russia and China need to modernize their Banking systems. It shouldn't be too much of a stretch to move the center of commodities to Hong Kong. With China as the biggest buyer of commodities, they have a real interest in underwriting commodities. There is absolutely zero reason to be trading Iron ore in Us dollars. The US doesn't buy iron ore or make much of it. The YUAN will lever reserve trade one commodity at a time. China is presently the largest buyer of oil so when that pops YUAN, the Dollar will collapse. ..."
"... This phony RINOTAX euphoria that the markets will rise 17% is wrong. This has already been factored in. What is going to happen is this thing will be foie grassed through and it will be a monumental letdown. ..."
"... Unlike western democracies or republics or oligarchies if you prefer, China has a plan and their plan is long range and not based on next week's, or next month's or next year's elections. That is an unbelievable economic andf political advantage it enjoys ..."
LOL.. yes.. the USA Stocks the ponds from any of their 800 military bases used to sustain
their Dollar Reserve virtue. And if you object, they give you sanctions akin to a modern-day
Walmart version of Stalingrad.
Not even a mention of the biggest event in China... The Yuan was approved Oct 2016 for use
as a global reserve currency. Australian Iron ore is already trading in Yuan and saving 14%
on the transaction over the US Dollar. This breaks the stranglehold of the US Dollar Reserve.
Russia is already setting up a Yuan Bond trading platform. This will lead to oil futures. I
agree with the author. Buy the Yuan. Nothing can stop China with the Yuan as a reserve
currency.
Remember Maynard Keynes attempted to set up the BANCOR, a composite currency but was
overruled by the US in the dreadful Anglo American loan fiasco in 1944. That is when the
Americans took down the British Sterling by force and replace the Pound with the US Dollar
Reserve Currency. Since then the USA has exported its inflation.
Watch the Treasuries too. Saudi wants to sell off $750 Billion in US Treasuries. They are
moving closer to Russia and China. Trump in my eyes is the last Bully or last straw for the
rest of the world. If you don't agree with the USA, they use the US Dollar reserve as a
weapon against you. A Reserve Currency should not be political. Both Russia and China need to
modernize their Banking systems. It shouldn't be too much of a stretch to move the center of
commodities to Hong Kong. With China as the biggest buyer of commodities, they have a real
interest in underwriting commodities. There is absolutely zero reason to be trading Iron ore
in Us dollars. The US doesn't buy iron ore or make much of it. The YUAN will lever reserve
trade one commodity at a time. China is presently the largest buyer of oil so when that pops
YUAN, the Dollar will collapse.
Imagine the scale of US dollar inflation if suddenly dollars were not being held in
reserve across the globe. It is mind-numbing.
I could be wrong of course but if this maps the way it appears with dumb Trump at the
helm, the USA could be in for a depression that makes wheelbarrow money for a cup of coffee
look like deflation. When the rats start selling bonds to get out first, the house of cards
comes down hard.
This phony RINOTAX euphoria that the markets will rise 17% is wrong. This has already been
factored in. What is going to happen is this thing will be foie grassed through and it will
be a monumental letdown. That will be the Trigger for the first big leg of the unraveling.
Inexperience Fed Chair who is not an economist, no FED ammo left, Bond Market pitches. Stocks
drop 50% and the euphoria is over. China, Russia, and India are going to take down the mighty
dollar. If you think you can just sit on the sidelines in Cash... what will those dollars be
worth? 10 Cents on the dollar? All asset classes will collapse homes, cars, dollar bills.
Mountains of debt backed up by the frothy bond market as the rats desert the sinking
ship!
Unlike western democracies or republics or oligarchies if you prefer, China has a plan and
their plan is long range and not based on next week's, or next month's or next year's
elections. That is an unbelievable economic andf political advantage it enjoys.
Former Goldmanite and current Minneapolis Fed president, Neel Kashkari, conducted
another #AskNeel session on Twitter where the dovish FOMC voter (he was the only one to
dissent to the Fed's rate hike decision earlier this year) received numerous questions. Among
them was the following one from Zero Hedge:
#AskNeel You have
admitted the Fed has a "third mandate" and are worried about financial instability. What do you
look at to gauge "instability" and what is the biggest S&P drop the Fed will accept before
intervening
Our job is not to protect investors. Tech bubble bursting didn't cause crisis - only mild
recession. We don't see leverage building across the economy the way it did in housing run-up.
If stocks correct - fine. Need to worry about what would trigger a real crisis. #AskNeelhttps://t.co/Wl7Pv1BX18
The answer echoed a similar
response from back in March , when he claimed that he doesn't "care about stock market fall
itself. Care abt potential financial instability. Stock market drop unlikely to trigger
crisis."
Needless to say, Kashkari's answer was token, superficial and condescending: while he is
right that the tech bubble bursting didn't cause a crisis, the Fed's dramatic easing in
response to the bursting of the tech bubble bursting lay the foundations for the housing and
credit bubble; in other words, the Fed responded to one bubble by creating an even bigger
bubble, and the bursting of that bubble in 2007/2008 did cause a crisis: the biggest financial
crisis since the Great Depression to be precise. And, in turn, the bursting of the current
global financial bubble - in which the Fed has been joined by all other central banks to inject
$20 trillion in global liquidity, or a third of global GDP - and is the biggest in history,
will have a far more disastrous outcome than the last one.
Kashkari also said that "we don't see leverage building across the economy the way it did in
housing run-up", which of course is a surprisingly naive way of looking at leverage, especially
following last night's explanation from
Fasakanara that when one takes into account ehe world's vol-sellers, it's all just one
giant, $22 trillion position shorting volatility with record gama and all-time high leverage,
both explicit and synthetic. Which also makes his next statement that the Fed needs "to worry
about what would trigger a real crisis" especially bizarre: we now live in a world in which the
market itself, thanks to QE and NIRP, has become systemic risk (see
""It's All One Single, Giant $22 Trillion Position": How Market Risk Became Systemic Risk
").
The fact that, as Kashkari confirms, the Fed is completely oblivious to its footprint and
impact in the market should be terrifying to anyone. Well, anyone but not traders because
despite what Kashkari also claimed, namely that " If stocks correct - fine ", one thing we can
be certain of is that the moment stocks have a 5-10% swoon, the Fed will be right back assuring
traders that it will ease back on its tightening, if not launch QE4 (right, James Bullard?)
Neel..I have respect for u but I know what I saw in August 2015..market dropped 7-8% and fed
speak became "the case for tightening is less compelling"...
But wait, it gets better, because in the very next question, immediately after stating that
the Fed's job is not to protect investors, in response to a question whether the Fed creates
moral hazard by keeping rates extra low, Kashkari answers that " If we raised interest rates to
drive down the stock market, how does that help workers/wages/employment? " Or investors, for
that matter. But the point is that the Fed quite clearly is intent on keeping stocks high.
The punchline: his very next statement: "If Greenspan had acted on his irrational exuberance
call the economic costs may have been high."
We pay close attention to leverage across asset classes and economy. If we raised interest
rates to drive down the stock market, how does that help workers/wages/employment? If Greenspan
had acted on his irrational exuberance call the economic costs may have been high. #AskNeelhttps://t.co/hfDycYCXkg
Here's a thought: if Greenspan had acted on his "irrational exuberance" call, there would
have been pain, yes, but there would never be a tech bubble, and there would never be a global
financial crisis, Lehman, AIG or trillions and trillions in central bank liquidity keeping the
global financial system propped up now. In fact, Kashkari's statement once again demonstrates
just how utterly clueless the "macroprudential regulators" at the Fed truly are.
* * *
There were some other tangential, but notable insights from the Minneapolis Fed president.
One was his accurate observation that the
Fed's constantly wrong dot plots have destroyed the Fed's credibility:
I'm not a fan of the dot plot. Forward guidance is a wonderful tool. Forward misguidance may
do harm and undermine our credibility . I would rather only give guidance when we are pretty
sure about the path forward
In response to whether the Fed's ZIRP was responsible for "zombie companies" in the shale
patch and the record glut of oil inventory, the former
Goldmanite was non-commital :
I think low interest rates brought down costs for people and businesses to invest - across
sectors. That is what they were designed to do. But commodity markets always have cycles of
under and overinvestment.
When asked how US investors are supposed to compete with foreign buyers of US stocks,
including such buyers as the Swiss National Bank which is price-indescriminate as it creates
money out of thin air, Kashkari's response :
It is a global market for investors. I don't think US economic growth would be stronger if
we forbade foreign investment. If we can get job and wage growth up, that will help regular
Americans make ends meet and save for their futures.
That Kashkari explicitly ignored the stated implication, namely that foreign central banks
buying US stocks has led to a giant asset bubble, was one more warning either how clueless or
how devious and premeditated this entire asset reflation experiment truly is.
Kashkari was also asked if the Fed would "ever consider forgiving the Treasury debt on its
books?" to
which the answer - sadly for the Magic Money Treers who have no grasp of elementary finance
- was "No. That would violate our independence and likely cause high inflation as people lost
confidence in the Fed's independence. "
Among the other interesting exchanges was a question if the Fed plans on using blockchain in
the future, where the response was that "researches
around the Fed System are looking at it (and other fintech developments). Too soon to know how
and if it will be used by the Fed."
Kashkari also touched on inflation price targeting: when asked "What level of inflation
would be a reason to 'tap the brakes'?" He responded that, as price targeting would suggest,
"2% core PCE on a 12-month basis would be a good place to start. We've been 1.3% for 5+ years
so we should be comfortable at 2.7% for 5+ years. That's what we are saying when we call it a
target and not a ceiling." In other words, Kashkari supports doubling the rate of core
inflation for the next 5 years.
Finally when asked "at what point does the flattening of the Treasury curve become a concern
for the Fed?" Kashkari responded that "it's
a concern now. We r raising rates, driving the front end up, meanwhile inflation expectations r
low keeping the long end anchored. The more we commit to driving rates higher (regardless of
data), the more we risk pressuring inflation expectations to the downside." He has good reason
to be concerned: the flatter - and eventually inverted - the curve gets, the more the market is
telling the Fed what should be obvious to everyone, if not Kashkari: that the Fed has lost
control, as
Citi warned last week .
Strong global economic growth and Saudi Arabia bringing a risk premium to oil prices could
send Brent oil prices surging to $80 next year ,
more than
25 percent compared to current prices, according to economist Jim O'Neill, a former
chairman of Goldman Sachs Asset Management.
"While oil prices could be about $60 per barrel in November 2018, my guess is that they will
have risen to about $80 per barrel in the meantime," O'Neill wrote in Barron's on Saturday.
Although the economist himself admits that predicting oil prices is a tough job at which he
failed when he said in January 2015 that prices would not continue to fall, he now differs from
most of the analysts who expect oil prices to be around $60 next year. O'Neill doesn't believe
that oil prices will stagnate for a year.
On the demand side, world economic growth has picked up this year "and is now probably
growing at a rate of 4 percent or higher. With the exception of India and the United Kingdom,
eight of the 10 largest economies are expanding at the same time," O'Neill said.
Although many oil consuming countries try to lessen their dependence on oil, the transition
won't take place overnight, so the oil market is adjusting to stronger demand, the economist
notes. Looking at the supply side, events in Saudi Arabia are suddenly adding a premium to oil
prices. "The Saudi government has been implementing radical changes, both domestically and in
its foreign policy, and its reasons for doing so are not entirely clear," O'Neill writes. In
addition, the economist argues that the Brent spot price has now moved above the five-year
forward price, which suggests that a trend change may be underway. "For my part, I'm unsure,
but I wouldn't be surprised if it happened," O'Neill says, referring to the trend change.
Venezuela's oil production has been sliding for years, but the descent accelerated in 2015
amid low oil prices and a deteriorating cash position for PDVSA and the government. Production
dipped below 1.9 million barrels in recent weeks, the lowest level in more than three
decades.
The problems will only grow worse, especially because they tend to snowball. Without cash,
PDVSA will struggle to import diluent to blend with its heavy oil – the result could be
steeper production losses. Again, without cash, existing facilities cannot be maintained,
likely leading to an accelerating pace of decline. An array of refineries are "completely
paralyzed," the head of an oil workers union told Bloomberg. Defaults on more debt payments
could spark retaliation from creditors, which could eventually put oil exports in jeopardy.
In short, the woes in Venezuela's oil industry contributed to the crisis, but the dire
economic situation will accelerate the decline of oil production.
A group of analysts told Bloomberg that they expect Venezuela's output to average 1.84 mb/d
in 2018, a level that seems surprisingly optimistic given the pace of decline underway. Other
analysts predict output will plunge much lower.
"... Not only the media is supportive of the extortion scheme. US Treasury Secretary Steven Mnuchin told CNBC: "I think that the Crown Prince [Mohammed bin Salman] is doing a great job at transforming the country." President Trump blessed MBS along similar lines. Not a word of condemnation came out of President Putin, either. Even Al Jazeera, though reporting the extortion in a matter-of-fact way, didn't make too much out of it. ..."
"... But the blanket of silence covering the Extortion Racket beats all. Usually, the global media mainstream system propagates and amplifies the news in a game of rebounding agencies that indirectly end up also to maximize headline sales, wrote the Italian journalist Claudio Resta. But in this case, the important and spectacular news made no headlines. In our Society of the Spectacle , failing to exploit the "spectacular" is a waste of the most valuable resource for the media. ..."
Hundreds of other princes and gentlemen were tortured, too, until they agreed to surrender
their ill-gotten assets, 70% of all they have. As I write, and as you read these lines, the
torture goes on, and so far MBS has already milked his victims of hundreds of billions $$ worth
of cash and assets.
"An Extortion racket", you'll exclaim. Perhaps MBS watched The Godfather in his
impressionable youth and was impressed by efficiency of their methods. However, he has solved,
or rather is in the process of solving, the problem of solvency.
Perhaps this is the method to be advised to Trump and Putin, as well as to other leaders? If
the neoliberal dogma forbids taxing, if the offshore are sacred, what remains for a diligent
leader but a plush five-star hotel and a band of experienced torturers?
But surely, the torturer will be condemned and ostracised by human rights' defenders! Not at
all. Not a single voice, neither from liberal left nor from authoritarian right objected to
this amazing deed of mass torture and extortion. While the co-owner of Twitter has been
subjected to daily beatings, the prime voice of liberal conscience, Tom Friedman of the New
York Times, eulogised MBS as the bearer of progress. In an article as panegyric as they come,
titled Saudi Arabia's
Arab Spring, at Last and subtitled "The crown prince has big plans for his society".
Tom Friedman does not use the word "extortion", saying that [MBS's] "government arrested
scores of Saudi princes and businessmen on charges of corruption and threw them into a
makeshift gilded jail -- the Riyadh Ritz-Carlton -- until they agreed to surrender their
ill-gotten gains." No condemnation at all! Can you imagine what he would say if Putin were to
arrest his oligarchs "until they agreed to surrender their ill-gotten gains"?
I believe one line in Friedman's eulogy, saying that the Saudis are content with the
extortion act: "the mood among Saudis I spoke with was: "Just turn them all upside down, shake
the money out of their pockets and don't stop shaking them until it's all out!" Moreover, I am
sure the Americans would applaud if their billionaires were to get the MBS treatment. The
Russians were mighty pleased when Putin locked up the oligarch Khodorkovsky, and complained
that he was the only one to be jailed. They would love to see the whole lot of oligarchs who
plundered Russia through manifestly fraudulent, staged auctions under American advisers in
Yeltsin's days, to be shaken "until it's all out".
Not only the media is supportive of the extortion scheme. US Treasury Secretary Steven
Mnuchin told CNBC: "I think that the Crown Prince [Mohammed bin Salman] is doing a great job at
transforming the country." President Trump blessed MBS along similar lines. Not a word of
condemnation came out of President Putin, either. Even Al Jazeera, though
reporting the extortion in a matter-of-fact way, didn't make too much out of it.
There is a veritable conspiracy around the MBS actions, a conspiracy embracing the media and
governments. He kidnapped the Lebanese Prime Minister, placed him under arrest, took away his
telephone and watch, forced him to read on TV a resignation letter composed by MBS people,
– and the response of the world has been subdued. He bombed Yemen, causing hundreds of
thousands to die of cholera and famine, and the world does not give a damn. Do you remember the
response when the Russians bombed Aleppo? None of this indignation accompanies MBS's war on
Yemen.
But the blanket of silence covering the Extortion Racket beats all. Usually, the global
media mainstream system propagates and amplifies the news in a game of rebounding agencies that
indirectly end up also to maximize headline sales, wrote the Italian journalist Claudio Resta.
But in this case, the important and spectacular news made no headlines. In our Society
of the Spectacle , failing to exploit the "spectacular" is a waste of the most valuable
resource for the media.
The potential for a great spectacle is all here. The arrest of dignitaries and princes of
blood, including the famous Al-Walid bin al-Talal, well-known investor and Bakr bin Laden,
brother of the most notorious Osama would normally feed the media for days. Add to it the
marvelous setting of the glorious hotel on the verge of the desert. Make it even more dramatic
by open rocket fire on the escaping helicopter of Prince Mansour bin Muqrin , killing him
and the other dignitaries who tried to flee.
Such a story, so brilliant and spectacular, with the colour and costume of a Middle Eastern
monarchy, could sell newspapers for a week at least. But it was followed by deafening
silence.
The same media that overwhelms us with the flood of details and opinions in a case of human
rights violations in Russia or China in this case shows off an Olympic indifference to the fate
of the princes and billionaires, unjustly and arbitrarily arrested and tortured in a country of
no constitution or Habeas Corpus. The United Nations joins in the conspiracy of silence.
This is probably the most unusual aspect of the story, reminiscent of The Dog that
Didn't Bark by Sir Arthur Conan Doyle. In that Sherlock Holmes story, a dog did not bark
during the night when a race horse was removed from a stable, and that indicated that the thief
was the dog's master.
In the case of MBS, the media dog keeps silent. It means that its mighty mega-owner, whom I
called The Masters of Discourse, allowed and authorised the racket. We witness a unique media
event, bordering with revelation. How could it be that a prince of a third-league state would
be allowed the licence to kidnap prime-ministers, kill princes by ground-to-air missiles, keep
and torture great businessmen and dignitaries with impunity and the media would keep mum?
Is it fear of the robber barons that the example of MBS extorting billions from his
super-rich will be picked up and acted upon in their own lands? Perhaps.
Strong global economic growth and Saudi Arabia bringing a risk premium to oil prices could
send Brent oil prices surging to $80 next year ,
more than
25 percent compared to current prices, according to economist Jim O'Neill, a former
chairman of Goldman Sachs Asset Management.
"While oil prices could be about $60 per barrel in November 2018, my guess is that they will
have risen to about $80 per barrel in the meantime," O'Neill wrote in Barron's on Saturday.
Although the economist himself admits that predicting oil prices is a tough job at which he
failed when he said in January 2015 that prices would not continue to fall, he now differs from
most of the analysts who expect oil prices to be around $60 next year. O'Neill doesn't believe
that oil prices will stagnate for a year.
On the demand side, world economic growth has picked up this year "and is now probably
growing at a rate of 4 percent or higher. With the exception of India and the United Kingdom,
eight of the 10 largest economies are expanding at the same time," O'Neill said.
Although many oil consuming countries try to lessen their dependence on oil, the transition
won't take place overnight, so the oil market is adjusting to stronger demand, the economist
notes. Looking at the supply side, events in Saudi Arabia are suddenly adding a premium to oil
prices. "The Saudi government has been implementing radical changes, both domestically and in
its foreign policy, and its reasons for doing so are not entirely clear," O'Neill writes. In
addition, the economist argues that the Brent spot price has now moved above the five-year
forward price, which suggests that a trend change may be underway. "For my part, I'm unsure,
but I wouldn't be surprised if it happened," O'Neill says, referring to the trend change.
Venezuela's oil production has been sliding for years, but the descent accelerated in 2015
amid low oil prices and a deteriorating cash position for PDVSA and the government. Production
dipped below 1.9 million barrels in recent weeks, the lowest level in more than three
decades.
The problems will only grow worse, especially because they tend to snowball. Without cash,
PDVSA will struggle to import diluent to blend with its heavy oil – the result could be
steeper production losses. Again, without cash, existing facilities cannot be maintained,
likely leading to an accelerating pace of decline. An array of refineries are "completely
paralyzed," the head of an oil workers union told Bloomberg. Defaults on more debt payments
could spark retaliation from creditors, which could eventually put oil exports in jeopardy.
In short, the woes in Venezuela's oil industry contributed to the crisis, but the dire
economic situation will accelerate the decline of oil production.
A group of analysts told Bloomberg that they expect Venezuela's output to average 1.84 mb/d
in 2018, a level that seems surprisingly optimistic given the pace of decline underway. Other
analysts predict output will plunge much lower.
LOL.. yes.. the USA Stocks the ponds from any of their 800 military bases used to sustain
their Dollar Reserve virtue. And if you object, they give you sanctions akin to a modern-day
Walmart version of Stalingrad.
Not even a mention of the biggest event in China... The Yuan was approved Oct 2016 for use
as a global reserve currency. Australian Iron ore is already trading in Yuan and saving 14%
on the transaction over the US Dollar. This breaks the stranglehold of the US Dollar Reserve.
Russia is already setting up a Yuan Bond trading platform. This will lead to oil futures. I
agree with the author. Buy the Yuan. Nothing can stop China with the Yuan as a reserve
currency.
Remember Maynard Keynes attempted to set up the BANCOR, a composite currency but was
overruled by the US in the dreadful Anglo American loan fiasco in 1944. That is when the
Americans took down the British Sterling by force and replace the Pound with the US Dollar
Reserve Currency. Since then the USA has exported its inflation.
Watch the Treasuries too. Saudi wants to sell off $750 Billion in US Treasuries. They are
moving closer to Russia and China. Trump in my eyes is the last Bully or last straw for the
rest of the world. If you don't agree with the USA, they use the US Dollar reserve as a
weapon against you. A Reserve Currency should not be political. Both Russia and China need to
modernize their Banking systems. It shouldn't be too much of a stretch to move the center of
commodities to Hong Kong. With China as the biggest buyer of commodities, they have a real
interest in underwriting commodities. There is absolutely zero reason to be trading Iron ore
in Us dollars. The US doesn't buy iron ore or make much of it. The YUAN will lever reserve
trade one commodity at a time. China is presently the largest buyer of oil so when that pops
YUAN, the Dollar will collapse.
Imagine the scale of US dollar inflation if suddenly dollars were not being held in
reserve across the globe. It is mind-numbing.
I could be wrong of course but if this maps the way it appears with dumb Trump at the
helm, the USA could be in for a depression that makes wheelbarrow money for a cup of coffee
look like deflation. When the rats start selling bonds to get out first, the house of cards
comes down hard.
This phony RINOTAX euphoria that the markets will rise 17% is wrong. This has already been
factored in. What is going to happen is this thing will be foie grassed through and it will
be a monumental letdown. That will be the Trigger for the first big leg of the unraveling.
Inexperience Fed Chair who is not an economist, no FED ammo left, Bond Market pitches. Stocks
drop 50% and the euphoria is over. China, Russia, and India are going to take down the mighty
dollar. If you think you can just sit on the sidelines in Cash... what will those dollars be
worth? 10 Cents on the dollar? All asset classes will collapse homes, cars, dollar bills.
Mountains of debt backed up by the frothy bond market as the rats desert the sinking
ship!
Unlike western democracies or republics or oligarchies if you prefer, China has a plan and
their plan is long range and not based on next week's, or next month's or next year's
elections. That is an unbelievable economic andf political advantage it enjoys.
Former Goldmanite and current Minneapolis Fed president, Neel Kashkari, conducted
another #AskNeel session on Twitter where the dovish FOMC voter (he was the only one to
dissent to the Fed's rate hike decision earlier this year) received numerous questions. Among
them was the following one from Zero Hedge:
#AskNeel You have
admitted the Fed has a "third mandate" and are worried about financial instability. What do you
look at to gauge "instability" and what is the biggest S&P drop the Fed will accept before
intervening
Our job is not to protect investors. Tech bubble bursting didn't cause crisis - only mild
recession. We don't see leverage building across the economy the way it did in housing run-up.
If stocks correct - fine. Need to worry about what would trigger a real crisis. #AskNeelhttps://t.co/Wl7Pv1BX18
The answer echoed a similar
response from back in March , when he claimed that he doesn't "care about stock market fall
itself. Care abt potential financial instability. Stock market drop unlikely to trigger
crisis."
Needless to say, Kashkari's answer was token, superficial and condescending: while he is
right that the tech bubble bursting didn't cause a crisis, the Fed's dramatic easing in
response to the bursting of the tech bubble bursting lay the foundations for the housing and
credit bubble; in other words, the Fed responded to one bubble by creating an even bigger
bubble, and the bursting of that bubble in 2007/2008 did cause a crisis: the biggest financial
crisis since the Great Depression to be precise. And, in turn, the bursting of the current
global financial bubble - in which the Fed has been joined by all other central banks to inject
$20 trillion in global liquidity, or a third of global GDP - and is the biggest in history,
will have a far more disastrous outcome than the last one.
Kashkari also said that "we don't see leverage building across the economy the way it did in
housing run-up", which of course is a surprisingly naive way of looking at leverage, especially
following last night's explanation from
Fasakanara that when one takes into account ehe world's vol-sellers, it's all just one
giant, $22 trillion position shorting volatility with record gama and all-time high leverage,
both explicit and synthetic. Which also makes his next statement that the Fed needs "to worry
about what would trigger a real crisis" especially bizarre: we now live in a world in which the
market itself, thanks to QE and NIRP, has become systemic risk (see
""It's All One Single, Giant $22 Trillion Position": How Market Risk Became Systemic Risk
").
The fact that, as Kashkari confirms, the Fed is completely oblivious to its footprint and
impact in the market should be terrifying to anyone. Well, anyone but not traders because
despite what Kashkari also claimed, namely that " If stocks correct - fine ", one thing we can
be certain of is that the moment stocks have a 5-10% swoon, the Fed will be right back assuring
traders that it will ease back on its tightening, if not launch QE4 (right, James Bullard?)
Neel..I have respect for u but I know what I saw in August 2015..market dropped 7-8% and fed
speak became "the case for tightening is less compelling"...
But wait, it gets better, because in the very next question, immediately after stating that
the Fed's job is not to protect investors, in response to a question whether the Fed creates
moral hazard by keeping rates extra low, Kashkari answers that " If we raised interest rates to
drive down the stock market, how does that help workers/wages/employment? " Or investors, for
that matter. But the point is that the Fed quite clearly is intent on keeping stocks high.
The punchline: his very next statement: "If Greenspan had acted on his irrational exuberance
call the economic costs may have been high."
We pay close attention to leverage across asset classes and economy. If we raised interest
rates to drive down the stock market, how does that help workers/wages/employment? If Greenspan
had acted on his irrational exuberance call the economic costs may have been high. #AskNeelhttps://t.co/hfDycYCXkg
Here's a thought: if Greenspan had acted on his "irrational exuberance" call, there would
have been pain, yes, but there would never be a tech bubble, and there would never be a global
financial crisis, Lehman, AIG or trillions and trillions in central bank liquidity keeping the
global financial system propped up now. In fact, Kashkari's statement once again demonstrates
just how utterly clueless the "macroprudential regulators" at the Fed truly are.
* * *
There were some other tangential, but notable insights from the Minneapolis Fed president.
One was his accurate observation that the
Fed's constantly wrong dot plots have destroyed the Fed's credibility:
I'm not a fan of the dot plot. Forward guidance is a wonderful tool. Forward misguidance may
do harm and undermine our credibility . I would rather only give guidance when we are pretty
sure about the path forward
In response to whether the Fed's ZIRP was responsible for "zombie companies" in the shale
patch and the record glut of oil inventory, the former
Goldmanite was non-commital :
I think low interest rates brought down costs for people and businesses to invest - across
sectors. That is what they were designed to do. But commodity markets always have cycles of
under and overinvestment.
When asked how US investors are supposed to compete with foreign buyers of US stocks,
including such buyers as the Swiss National Bank which is price-indescriminate as it creates
money out of thin air, Kashkari's response :
It is a global market for investors. I don't think US economic growth would be stronger if
we forbade foreign investment. If we can get job and wage growth up, that will help regular
Americans make ends meet and save for their futures.
That Kashkari explicitly ignored the stated implication, namely that foreign central banks
buying US stocks has led to a giant asset bubble, was one more warning either how clueless or
how devious and premeditated this entire asset reflation experiment truly is.
Kashkari was also asked if the Fed would "ever consider forgiving the Treasury debt on its
books?" to
which the answer - sadly for the Magic Money Treers who have no grasp of elementary finance
- was "No. That would violate our independence and likely cause high inflation as people lost
confidence in the Fed's independence. "
Among the other interesting exchanges was a question if the Fed plans on using blockchain in
the future, where the response was that "researches
around the Fed System are looking at it (and other fintech developments). Too soon to know how
and if it will be used by the Fed."
Kashkari also touched on inflation price targeting: when asked "What level of inflation
would be a reason to 'tap the brakes'?" He responded that, as price targeting would suggest,
"2% core PCE on a 12-month basis would be a good place to start. We've been 1.3% for 5+ years
so we should be comfortable at 2.7% for 5+ years. That's what we are saying when we call it a
target and not a ceiling." In other words, Kashkari supports doubling the rate of core
inflation for the next 5 years.
Finally when asked "at what point does the flattening of the Treasury curve become a concern
for the Fed?" Kashkari responded that "it's
a concern now. We r raising rates, driving the front end up, meanwhile inflation expectations r
low keeping the long end anchored. The more we commit to driving rates higher (regardless of
data), the more we risk pressuring inflation expectations to the downside." He has good reason
to be concerned: the flatter - and eventually inverted - the curve gets, the more the market is
telling the Fed what should be obvious to everyone, if not Kashkari: that the Fed has lost
control, as
Citi warned last week .
Less regulation is one campaign promise made by the president that is coming true...
Reducing government regulation is tough. It's resisted by all those who benefit, including
government employees who administer the many programs. Every president since Jimmy Carter has
attempted to lower the cost of regulation. At best, any cuts have been tiny and mostly centered
on trimming paperwork. But less regulation is one campaign promise made by Donald Trump that is
coming true. With tax and health-care reform problematic and given the president's
protectionist leanings, deregulation is probably a major driver of the stock market rally.
the only credit trumpanyahoo deserves is for giving the last vestiges of what was left of
this country to the money printers, allowing them to print/steal/lie/cheat/war at will...
"... With the Federal Reserve facing a Herculean conundrum in unwinding its crisis-era monetary policy - and a likely leadership
transition on the horizon - Goldman Sachs (GS) suggested on Saturday the central bank could move early to reduce the vast sums of government
and mortgage-backed securities (MBS) it holds on its books. ..."
"... "This could be important for balance sheet policy because many Republican-leaning economists have criticized quantitative easing
(QE) and have expressed a preference for rapid balance sheet rundown, perhaps even through asset sales," wrote Daan Struyven, a Goldman
economist. ..."
"... A potential fire sale of Treasurys and mortgage-backed securities by the Fed "could have significantly more adverse effects
on financial conditions than gradual runoff, and the mere risk of such an outcome might set up another 'taper tantrum,' " Struyven added.
..."
"... Some market observers have long argued that the Fed has distorted financial conditions with QE, and the central bank faces
a huge task trying to pare down its bloated balance sheet. ..."
Yellen's exit may prompt the Fed to pare its balance sheet sooner rather than later, Goldman says
Yuri Gripas | Reuters
It's often said that good things come to those who wait - but a bloated $4.5 trillion balance sheet might be a notable exception
to that rule.
With the Federal Reserve facing a Herculean conundrum in unwinding its crisis-era monetary policy - and a likely leadership
transition on the horizon - Goldman Sachs (GS) suggested on Saturday the central bank could move early to reduce the vast sums of
government and mortgage-backed securities (MBS) it holds on its books.
In a research note to clients, the bank pointed to the likelihood that President Donald Trump may "reshape the leadership" of
the Federal Open Market Committee (FOMC), the Fed's powerful policy-making body, as the terms of Fed Chair Janet Yellen and Vice
Chair Stanley Fischer expire in early 2018.
"This could be important for balance sheet policy because many Republican-leaning economists have criticized quantitative
easing (QE) and have expressed a preference for rapid balance sheet rundown, perhaps even through asset sales," wrote Daan Struyven,
a Goldman economist.
If the new appointments-especially the new chair-are thought to favor aggressive balance sheet normalization, perhaps even including
asset sales, and if all decisions are left up to the incoming team, financial markets might experience heightened uncertainty during
the transition."
Goldman suggested there was a "strong 'risk management' case for an announcement of very gradual balance sheet runoff later this
year," because of the political risk associated with new leadership at the Fed.
"Our forecast is that the discussion around reinvestment continues for most of this year and the plan is formally announced in
December 2017," Struyven said. "At that meeting, we expect the committee to hold the funds rate steady after hiking in both June
and September. We expect the quarterly hikes to resume in March 2018."
The economist harked back to 2013's "taper tantrum," in which markets reacted the Fed's suggestions of tighter monetary policy
by sending bond yields surging and stocks reeling - albeit temporarily.
A potential fire sale of Treasurys and mortgage-backed securities by the Fed "could have significantly more adverse effects
on financial conditions than gradual runoff, and the mere risk of such an outcome might set up another 'taper tantrum,' " Struyven
added.
'The uncertainty is substantial'
As the central bank begins a campaign to tighten benchmark interest rates - making a quarter-point hike just last week - it's
renewed a debate over how to unwind the Fed's massive bond buying program.
Some market observers have long argued that the Fed has distorted financial conditions with QE, and the central bank faces
a huge task trying to pare down its bloated balance sheet.
"The bigger the Fed's credit footprint, the more it interferes with the efficient employment and pricing of credit," wrote George
Selgin, a senior fellow and director of the Center for Monetary and Financial Alternatives at the libertarian-leaning Cato Institute,
in a blog post last month.
"By directing a large share of savings to purchases of longer-term MBS and Treasury securities, for example, the Fed has artificially
raised both the prices of those securities, and the importance of the housing market and the federal government relative to the rest
of the U.S. economy," Selgin wrote. "It has also dramatically increased its portfolio's duration gap and, by so doing, the risk that
it will suffer losses should it sell assets before they mature."
On Friday, Minneapolis Federal Reserve Bank President Neel Kashkari, the lone dissenter against the U.S. central bank's decision
last week to raise interest rates, the U.S. economy is still falling short on employment and inflation.
Kashkari, an alumnus of both Goldman Sachs and the U.S. Treasury who oversaw the government's Temporary Asset Relief Program (TARP)
during the financial crisis, believes the Fed should wait on raising interest rates until it publishes a detailed plan for how and
when it will reduce its $4.5 trillion balance sheet.
Goldman set forth two scenarios under which the Fed could begin trimming its balance sheet. Under an "early start, passive runoff"
scenario, the bank said the Fed "gradually tapers reinvestment in December 2017 over 10 months but does not sell assets."
Conversely, under a "late start, active sales" scenario, Goldman said the Fed could cease reinvesting in bonds in July 2018 "without
tapering and actively sells $40bn of assets per month."
Under the latter, the Fed could shrink its balance sheet by about $250 billion per quarter starting in the second half of next
year, "with similar contributions from maturing assets and active sales," the bank added.
However, neither scenario is without its risks, Goldman's economist wrote: "While our baseline estimate suggests relatively little
tightening from balance sheet rundown, the uncertainty is substantial. The 2013 'taper tantrum' also provides a reminder that the
impact of balance sheet policy on financial conditions is uncertain and could be larger than our baseline estimate."
Every time the Fed deals with the financial asset trading marketplaces the private parties wish to make a profit, no wonder
Goldman is shilling to get the more valuable Fed holdings 'sold' to these parties.
No article on reserves or Fed asset holdings is legitimate unless it also discusses the use of administrative offset with Treasury
(whether the bonds are mature and as a result, redeemable at that time, or not, they could all be offset with Treasury now).
The Fed has a lot it can do with the assets they bought with newly created money, but subsidizing the money center banks once
again ought to be low on the list (moral hazard rewarded again?). The asset-handling plans should be pursued only after Treasury
coordination talks are settled and according to well discussed, publicly known plans.
It is not clear to me who the public should trust here, so open public programming should be expected and press involvement
sought after by the Fed. Look at the magnitudes here, no one should be looking the other way on this.
RGC what is your point except to note that private interests sweep monies out of private positions in order to create the cash
to buy the bond being offered by the Fed should they sell some. It is a way to sweep excess monies out of the economic system,
though that is not a completed end-game unless the Fed destroys the money or it is remitted to Treasury where it covers other
claims for payment (reducing the need to borrow anew) turnstiling the monies back into the economy.
It is simpler with regard to Treasury to have both sides agree to osset their position.
But offsets means that Treasury offers none or fewer bonds for sale to outsude interests, including China and other govts or
within the banks or elsewhere.
Is the Fed ready to do all of these approaches, and is it coordinated with the oublic's govt via Treasury agreement?
The Fed has instruments with 8 percent coupons, I just don't like the idea of them selling these to the banking segment, at
a price that allows them to profit, with little risk, especially when you consider that they were the ones who caused the financial
crisis in the first place.
It will be interesting to see what the Feds do, what they do with the cash they get, and what Treasury and the Trump Administration
does as more cash remittances come in (and why was this not done to help the Obama Admin look good fiscally before?).
This aritcle is two years old and not much happned during those two years. But still there is a chance that highly authomated factories
can make manufacturing in the USA again profitable. the problme is that they will be even more profible in East Asia;-)
The rise of technologies such as 3-D printing and advanced robotics means that the next few decades for Asia's economies will
not be as easy or promising as the previous five.
OWEN HARRIES, the first editor, together with Robert Tucker, of The National Interest, once reminded me that experts-economists,
strategists, business leaders and academics alike-tend to be relentless followers of intellectual fashion, and the learned, as Harold
Rosenberg famously put it, a "herd of independent minds." Nowhere is this observation more apparent than in the prediction that we
are already into the second decade of what will inevitably be an "Asian Century"-a widely held but rarely examined view that Asia's
continued economic rise will decisively shift global power from the Atlantic to the western Pacific Ocean.
No doubt the numbers appear quite compelling. In 1960, East Asia accounted for a mere 14 percent of global GDP; today that figure
is about 27 percent. If linear trends continue, the region could account for about 36 percent of global GDP by 2030 and over half
of all output by the middle of the century. As if symbolic of a handover of economic preeminence, China, which only accounted for
about 5 percent of global GDP in 1960, will likely surpass the United States as the largest economy in the world over the next decade.
If past record is an indicator of future performance, then the "Asian Century" prediction is close to a sure thing.
Stagnation that is gripping several of the world's largest economies should be viewed as a secular, long term phenomenon, not
something transient. It is connected with the neoliberalism entering a new phase of its development, when New Deal was already
devoured, 90% or so of population standard of living slides and thus there are no direct mechanisms to increase consumer demand.
Notable quotes:
"... Stagnation is gripping several of the world's largest economies and many view this as secular, not transient. ..."
"... Above all, ideology must conceal, denigrate, diminish, slander and distract from the ONE effective strategy that workers collectively have. This is the spectre that haunts all economics. ..."
"... For many of those who consume the bottom layers of it, what they are ingesting is a barbarous Pink Slime cultural sludge that makes them stupid, frivolous, dependent, impulsive and emotionally erratic – something like perpetual 15 year olds. ..."
"... In the center, we have the neoliberals, who are convinced that our world will spontaneously and beneficially organize itself if only we turn the macroeconomic tumblers and stumble on the right interest rate, or inflation rate, or some other version of the One Parameter to Rule Them All mindset. They are also too devoted to the religion of demand-goosing: the idea that everything will be all right as long as we generate enough "demand" – as though it makes no difference whether people are demanding high fructose cotton candy or the collected works of Shakespeare. ..."
"... Profits and income share at the top soared; wages and income share at the bottom fell, and employment was maintained by speculative bubbles and increasing debt until the last bubble burst, and the system collapsed. ..."
"... How is an increasing deficit and QE supposed to solve our problems in this situation other than by propping up a failed system that makes the rich richer and the poor poorer by increasing government debt? ..."
"... It seems quite clear to me that it is going to take a very long time for the system to adjust to this situation in the absence of a fall in the value of the dollar and the concentration of income. That kind of adjustment means reallocating resources in a very dramatic way so as to accommodate an economy in which resources are allocated to serve the demands of the wealthy few in the absence of the ability of those at the bottom to expand their debt relative to income. ..."
"... It was the fall in the concentration of income that led to mass markets (large numbers of people with purchasing power out of income) that made investment profitable after WW II in the absence of speculative bubbles, and it was the increase in the concentration of income that led to the bubble economy we have today that has led us into the Great Recession. ..."
"... I think neoliberalism naturally leads to secular stagnation. This is the way any economic system that is based on increasing of inequality should behave: after inequality reached certain critical threshold, the economy faces extended period of low growth reflecting persistently weak private demand. ..."
"... The focus on monetary policy and the failure to enact fiscal policy options is structural defect of neoliberalism ideology and can't be changed unless neoliberal ideology is abandoned. Which probably will not happen unless another huge crisis hit the USA. 2008 crisis, while discrediting neoliberalism, was clearly not enough for the abandonment of this ideology. Like in most cults adherents became more fanatical believers after the prophecy did not materialized. ..."
"... In a way behaviour of the USA elite in this respect is as irrational as behavior of the USSR elite. My impression is that they will stick to neoliberal ideology to the bitter end. But at the same time they are much more reckless. Recent attempt to solve economic problems by unleashing a new wars and relying of war time mobilization so far did not work. Including the last move is this game: Russia did not bite the offer for military confrontation that the USA clearly made by instilling coup d'état in Ukraine. ..."
This column argues that many economies need both demand-side stimulus and supply-side reform to close the output gap and restore
potential-output growth. A combined monetary-fiscal stimulus – i.e. helicopter money – is needed to close the output gap, and
this should be accompanied with extensive debt restructuring, policies to halt rising inequality, and additional public infrastructure
investment.
Selected Skeptical Comments
Sandwichman -> anne:
Workers, collectively, have a single, incontrovertible lever for effecting change -- withholding their labor power. Nothing
-- not even imprisonment or death -- can prevent workers from withholding their labor power! Kill me and see how much work you
can get out of me.
This is the elementary fact that the elites don't want workers to know. "It is futile!" "It is a fallacy!" "You will only hurt
yourselves!"
Once one comprehends the strategic importance of making the withholding of labor power taboo, everything else falls into place.
Economics actually makes sense as a persuasive discourse to dissuade from the withholding of labor power.
Above all, ideology must conceal, denigrate, diminish, slander and distract from the ONE effective strategy that workers
collectively have. This is the spectre that haunts all economics.
Dan Kervick:
Good stuff by Buiter et al, but here are some suggested additions to the litany of supply side woes:
1. Ineffective economic organization, both inside corporate firms and outside of them.
a. Many corporations are now quite dysfunctional as engines of long-term value creation – but not dysfunctional as vehicles
of short-term value extraction for their absurdly over-incentivized key stakeholders.
b. The developed world societies are facing an extreme failure of strategic economic leadership, at both the national and global
level, and at both the formal level of government and the informal level of visionary public intellectuals and industrial "captains".
There is no coherent consensus on which way lies the direction of progress. Since nobody is setting the agenda for what the future
looks like, risk trumps confidence everywhere and nobody knows what to invest in.
2. Dyspeptic dystopianism. The intellectual culture of our times is polluted by obsessive, nail-biting negativity and
demoralizing storylines preaching hopelessness: the robots are going to destroy all the jobs; the Big One is going to bury everything,
the real "neutral" interest rate is preposterously negative, etc. etc. etc. With so much doom and gloom in the air, there is no
reason to invest wealth, rather than consume it. Robert Schiller touched on this at a recent talk at LSE.
3. The popular culture of 2015 America is – as in so many other areas - a tale of two cultural cities.For many
of those who consume the bottom layers of it, what they are ingesting is a barbarous Pink Slime cultural sludge that makes them
stupid, frivolous, dependent, impulsive and emotionally erratic – something like perpetual 15 year olds. People like this
can be duped by the most shallow demagoguery and consumerist manipulation, and can't organize themselves to pursue their enlightened
self-interest. Enlightened artists and cultural custodians need to step up, organize and find a way to seize the American mind
back from the clutches of consumer capitalist garbage-mongers and philistine society-wreckers.
4. Laissez faire backwardness. We are struggling under left-right-center conspiracy of Pollyanna freedom fools, who
despite their constant kvetching at one another all share in common the view that progress is self-organizing.
On the left we have the Chomsky and Graeber-style "libertarian socialists" who are convinced we could have a functioning and
prosperous society in which seemingly every action is voluntary and spontaneous, nobody is ever compelled to do anything that
their delicate little hearts don't throb to do, and who seemingly have no idea of what it takes even to run a carrot farm.
On the right, we have the clueless paranoid libertarians who think the whole world should revolve around their adolescent desire
not to be "tread on", and seem to have no idea of what it takes – and what it took historically - to build a livable civilization.
In the center, we have the neoliberals, who are convinced that our world will spontaneously and beneficially organize itself
if only we turn the macroeconomic tumblers and stumble on the right interest rate, or inflation rate, or some other version of
the One Parameter to Rule Them All mindset. They are also too devoted to the religion of demand-goosing: the idea that everything
will be all right as long as we generate enough "demand" – as though it makes no difference whether people are demanding high
fructose cotton candy or the collected works of Shakespeare.
5. I'm an optimist! This is all going to change. We have nearly reached Peak Idiocracy. We're on the verge of a new age of
social organization and planning and a return to mixed economy common sense and public-spirited mobilization and adulthood. This
will happen because ultimately all of those teenagers will stop denying reality, and stop struggling to escape the realization
that a more organized and thoughtfully planned way of life is the only thing that will work in our small, resource strapped, crowded
21st century planet.
George H. Blackford:
Since the 80s, US companies have been buying abroad to sell at home as foreign countries used our trade deficits to depress
their exchange rates. Profits and income share at the top soared; wages and income share at the bottom fell, and employment
was maintained by speculative bubbles and increasing debt until the last bubble burst, and the system collapsed.
There seem to be no more bubbles in the offing. The dollar is overvalued. Debt relative to income is unprecedented, and the
concentration of income has created stagnation for lack of investment opportunities.
How is an increasing deficit and QE supposed to solve our problems in this situation other than by propping up a failed
system that makes the rich richer and the poor poorer by increasing government debt? Does anyone really believe this sort
of thing can go on forever in the absence of a fall in the value of the dollar and in the concentration of income? Who's going
to be left holding the bag when this system collapses again?
It seems quite clear to me that it is going to take a very long time for the system to adjust to this situation in the
absence of a fall in the value of the dollar and the concentration of income. That kind of adjustment means reallocating resources
in a very dramatic way so as to accommodate an economy in which resources are allocated to serve the demands of the wealthy few
in the absence of the ability of those at the bottom to expand their debt relative to income.
We didn't smoothly transition from an agricultural economy to one based on manufacturing. That transition was plagued with
a great deal of civil unrest, speculative bubbles, booms and busts that eventually led to a collapse of the system and the Great
Depression.
And we didn't smoothly transition out of the Great Depression. That was ended by WW II and dramatic changes in our economic
system, the most dramatic changes being the role and size of government and the fall in the concentration of income for thirty-five
years after 1940.
It was the fall in the concentration of income that led to mass markets (large numbers of people with purchasing power
out of income) that made investment profitable after WW II in the absence of speculative bubbles, and it was the increase in the
concentration of income that led to the bubble economy we have today that has led us into the Great Recession.
What this means to me is that we are not going to get out of the mess we are in today in the absence of some kind of catastrophe
comparable to WW II if we, and the rest of the world, do not come to grips with the fundamental problem we face in this modern
age, namely, the trade deficit and the concentration of income.
I think neoliberalism naturally leads to secular stagnation. This is the way any economic system that is based on increasing
of inequality should behave: after inequality reached certain critical threshold, the economy faces extended period of low growth
reflecting persistently weak private demand.
An economic cycle enters recession when total spending falls below expected by producers and they realize that production level
is too high relative to demand. What we have under neoliberalism is kind of Marx constant crisis of overproduction.
The focus on monetary policy and the failure to enact fiscal policy options is structural defect of neoliberalism ideology
and can't be changed unless neoliberal ideology is abandoned. Which probably will not happen unless another huge crisis hit the
USA. 2008 crisis, while discrediting neoliberalism, was clearly not enough for the abandonment of this ideology. Like in most
cults adherents became more fanatical believers after the prophecy did not materialized.
The USA elite tried partially alleviate this problem by resorting to military Keynesianism as a supplementary strategy. But
while military budget was raised to unprecedented levels, it can't reverse the tendency. Persistent high output gap is now a feature
of the US economy, not a transitory state.
"Top everything" does not help iether (top cheap oil is especially nasty factor). Recent pretty clever chess gambit to artificially
drop oil price playing Russian card, and sacrificing US shall industry like a pawn (remember that Saudi Arabia is the USA client
state) was a very interesting move, but still expectation are now so low that cheap gas stimulus did not work as expected in the
USA. It would be interesting to see how quickly oil will return to early 2014 price level because of that. That will be the sign
that gambit is abandoned.
In a way behaviour of the USA elite in this respect is as irrational as behavior of the USSR elite. My impression is that
they will stick to neoliberal ideology to the bitter end. But at the same time they are much more reckless. Recent attempt to
solve economic problems by unleashing a new wars and relying of war time mobilization so far did not work. Including the last
move is this game: Russia did not bite the offer for military confrontation that the USA clearly made by instilling coup d'état
in Ukraine.
Now it look like there is a second attempt to play "madman" card after Nixon's administration Vietnam attempt to obtain concession
from the USSR by threatening to unleash the nuclear war.
"... During the two decades following the neoliberal economists' take-over of Western governments in the 1980s, many felt that the almost mystical terms of economics - such as derivatives, hedging, leverage, contangos, etc - were beyond the understanding of most ordinary people. ..."
"... They pursued them as a matter of faith in the market and its processes, despite the apparent warning signs of their imminent failure. ..."
"... as within many custom or belief systems, what economics enshrines is a social order. One where a dominant minority are able to take a small quantity of wealth from each member of the majority in order to maintain their higher status. ..."
"... idea of economics as an exploitative mechanism is echoed in the cover picture of the book, Bosch's The Conjurer ..."
"... Within its exposition of economics as a quasi-religious theory, Brian Davey's book helps us to understand why economic theory is driving us toward a global system failure - and why politics and economics are incapable of responding to the pressing ecological crisis which the pursuit of economic growth has spawned. ..."
Brian Davey's new book, Credo: Economic Beliefs in a World in Crisis, is an analysis of economic theory as if it were a system
of religious belief.
It's a timely book. The simplistic, perhaps 'supernatural' assumptions which underpin key parts of economic theory demand far
more attention. It's a debate we've failed to have as a society.
... ... ...
During the two decades following the neoliberal economists' take-over of Western governments in the 1980s, many felt that
the almost mystical terms of economics - such as derivatives, hedging, leverage, contangos, etc - were beyond the understanding of
most ordinary people.
And without understanding those terms, irrespective of our gut feeling that there was something wrong, how could we challenge
the political lobby those theories had put into power? In the end it took the
financial crash of 2007/8 to demonstrate
that those in charge of this system didn't understand the complexity and risk of those practices either.
They pursued them as a matter of faith in the market and its processes, despite the
apparent
warning signs of their imminent failure. Those outside 'orthodox' economics could already see where the economy
was heading in the longer-term.
Question is, did economists learn anything from that failure? Or,
through austerity, have they once again committed us to their dogmatic belief system, unchanged by that experience?
... ... ...
However, through simple hubris or optimism bias, the political
class has been convinced that 'fracking' is a solution to our economic woes
- even though there is a paucity of verifiable evidence to demonstrate those claims, and
it has already lost billions of investors money.
Economics is a reflection of power
Ultimately though, as within many custom or belief systems, what economics enshrines is a social order. One where a dominant
minority are able to take a small quantity of wealth from each member of the majority in order to maintain their higher status.
This idea of economics as an exploitative mechanism
is echoed in the cover picture of the book, Bosch's
The Conjurer - where a magician distracts
the public with a sleight of hand trick so that they can be more easily robbed by his associate.
Again, in a world where we're hitting the limits to human material growth, political models of well-being based upon wealth and
consumption are damaging to human society in the long-term. The evidence that we're heading for a longer-term failure is there, as
was the case with the warning signs before the 2007 crash. The problem is that those in positions of power
do not wish to see it.
... ... ...
Within its exposition of economics as a quasi-religious theory, Brian Davey's book helps us to understand why economic theory
is driving us toward a global system failure - and why politics and economics are incapable of responding to the pressing ecological
crisis which the pursuit of economic growth has spawned.
Contrary to the economic hubris of many world leaders, set alongside the reality of ecological limits humanity is not 'too big
to fail'.
"... An interview by Gordon T. Long of the Financial Repression Authority. Originally published at his website ..."
"... One of the most important distinctions that investors have to understand is the difference between secular and cyclical trends Let us begin with definitions from the Encarta® World English Dictionary: ..."
"... Secular – occurring only once in the course of an age or century; taking place over an extremely or indefinitely long period of time ..."
"... Cycle – a sequence of events that is repeated again and again, especially a causal sequence; a period of time between repetitions of an event or phenomenon that occurs regularly ..."
"... Secular stagnation is when the predators of finance have eaten too many sheeple. ..."
"... Real estate rents in this latest asset bubble, whether commercial or residential, appear to have been going up in many markets even if the increases are slowing. That rent inflation will likely turn into rent deflation, but that doesn't appear to have happened yet consistently. ..."
"... Barter has always existed and always will. Debt money expands and contracts the middle class, acting as a feedback signal, which never works over the long term, because the so encapsulated system can only implode, when natural resource liquidation cannot be accelerated. The whole point is to eliminate the initial requirement for capital, work. Debt fails because both sides of the same coin assume that labor can be replaced. The machines driven by dc technology are not replacing labor; neither the elites nor the middle class can fix the machines, which is why they keep accelerating debt, to replace one failed technology only to be followed by the next, netting extortion by whoever currently controls the debt machine, which the majority is always fighting over, expending more energy to avoid work, like the objective is to avoid sweating, unless you are dumb enough to run on asphalt with Nike gear. ..."
"... . . . The whole argument for privatization, for instance, is the opposite of what was taught in American business schools in the 19th century. The first professor of economics at the Wharton School of Business, which was the first business school, was Simon Patten. He said that public infrastructure is a fourth factor of production. But its role isn't to make a profit . It's to lower the cost of public services and basic inputs to lower the cost of living and lower the cost of doing business to make the economy more competitive. But privatization adds interest payments, dividends, managerial payments, stock buybacks, and merges and acquisitions . Obviously these financialized charges are factored into the price system and raise the cost of living and doing business . ..."
GORDON LONG: Thank you for joining us. I'm Gordon Long with the Financial Repression Authority. It's my pleasure to have with
me today Dr. Michael Hudson Professor Hudson's very well known in terms of the FIRE economy to-I think, to a lot of our listeners,
or at least he's recognized by many as fostering that concept. A well known author, he has published many, many books. Welcome, Professor
Hudson.
MICHAEL HUDSON: Yes.
LONG: Let's just jump into the subject. I mentioned the FIRE economy cause I know that I have always heard it coming from yourself-or,
indirectly, not directly, from yourself. Could you explain to our listeners what's meant by that terminology?
HUDSON: Well it's more than just people getting fired. FIRE is an acronym for Finance, Insurance and Real Estate. Basically that
sector is about assets, not production and consumption. And most people think of the economy as being producers making goods and
services and paying labor to produce them – and then, labour is going to buy these goods and services. But this production and consumption
economy is surrounded by the asset economy: the web of Finance, Insurance, and Real Estate of who owns assets, and who owes the debts,
and to whom.
LONG: How would you differentiate it (or would you) with what's often referred to as financialization, or the financialization
of our economy? Are they one and the same?
HUDSON: Pretty much. The Finance, Insurance, and Real Estate sector is dominated by finance. 70 to 80% of bank loans in North
America and Europe are mortgage loans against real estate. So instead of a landowner class owning property clean and clear, as they
did in the 19 th century, now you have a democratization of real estate. 2/3 or more of the population owns their own
home. But the only way to buy a home, or commercial real estate, is on credit. So the loan-to-value ratio goes up steadily. Banks
lend more and more money to the real estate sector. A home or piece of real estate, or a stock or bond, is worth whatever banks are
willing to lend against it
As banks loosen their credit terms, as they lower their interest rates, take lower down payments, and lower amortization rates
– by making interest-only loans – they are going to lend more and more against property. So real estate is bid up on credit. All
this rise in price is debt leverage. So a financialized economy is a debt-leveraged economy, whether it's real estate or insurance,
or buying an education, or just living. And debt leveraging means that a larger proportion of assets are represented by debt. So
debt equity ratios rise. But financialization also means that more and more of people's income and corporate and government tax revenue
is paid to creditors. There's a flow of revenue from the production-and-consumption economy to the financial sector.
LONG: I don't know if you know Richard Duncan. He was with the IMF, etc, and lives in Thailand. He argues right now that capitalism
is no longer functioning, and really what he refers to what we have now is "creditism." Because in capitalism we have savings that
are reinvested into productive assets that create productivity, which leads to a higher level of living. We're not doing that. We
have no savings and investments. Credit is high in the financial sector, but it's not being applied to productive assets. Is he valid
in that thinking?
HUDSON: Not as in your statement. It's confused.
LONG: Okay.
HUDSON: There's an enormous amount of savings. Gross savings. The savings we have that are mounting up are just about as large
as they've ever been – about, 18-19% of the US economy. They're counterpart is debt. Most savings are lent out to borrowers se debt.
Basically, you have savers at the top of the pyramid, the 1% lending out their savings to the 99%. The overall net savings may be
zero, and that's what your stupid person from the IMF meant. But gross savings are much higher. Now, the person, Mr. Duncan, obviously-I
don't know what to say when I hear this nonsense. Every economy is a credit economy.
Let's start in Ancient Mesopotamia. The group that I organized out of Harvard has done a 20-study of the origins of economic structuring
in the Bronze Age, even the Neolithic, and the Bronze Age economy – 3200 BC going back to about 1200 BC. Suppose you're a Babylonian
in the time of Hammurabi, about 1750 BC, and you're a cultivator. How do you buy things during the year? Well, if you go to the bar,
to an ale woman, what she'd do is write down the debt that you owe. It was to be paid on the threshing floor. The debts were basically
paid basically once a year when the income was there, on the threshing floor when the harvest was in. If the palace or the temples
would advance animals or inputs or other public services, this would be as a debt. It was all paid in grain, which was monetized
for paying debts to the palace, temples and other creditors.
The IMF has this Austrian theory that pretends that money began as barter and that capitalism basically operates on barter. This
always is a disinformation campaign. Nobody believed this in times past, and it is a very modern theory that basically is used to
say, "Oh, debt is bad." What they really mean is that public debt is bad. The government shouldn't create money, the government shouldn't
run budget deficits but should leave the economy to rely on the banks. So the banks should run and indebt the economy.
You're dealing with a public relations mythology that's used as a means of deception for most people. You can usually ignore just
about everything the IMF says. If you understand money you're not going to be hired by the IMF. The precondition for being hired
by the IMF is not to understand finance. If you do understand finance, you're fired and blacklisted. That's why they impose
austerity programs that they call "stabilization programs" that actually are destabilization programs almost wherever they're imposed.
LONG: Is this a lack of understanding and adherence to the wrong philosophy, or how did we get into this trap?
HUDSON: We have an actively erroneous view, not just a lack of understanding. This is not by accident. When you have an error
repeated year after year after year, decade after decade after decade, it's not really insanity doing the same thing thinking it'll
be different. It's sanity. It's doing the same thing thinking the result will be the same again and again and again. The result
will indeed be austerity programs, making budget deficits even worse, driving governments further into debt, further into reliance
on the IMF. So then the IMF turns them to the knuckle breakers of the World Bank and says, "Oh, now you have to pay your debts by
privatization". It's the success. The successful error of monetarism is to force countries to have such self-defeating policies that
they end up having to privatize their natural resources, their public domain, their public enterprises, their communications and
transportation, like you're seeing in Greece's selloffs. So when you find an error that is repeated, it's deliberate. It's not insane.
It's part of the program, not a bug.
LONG: Where does this lead us? What's the roadmap ahead of us here?
HUDSON: A thousand years ago, if you were a marauding gang and you wanted to take over a country's land and its natural resources
and public sector, you'd have to invade it with military troops. Now you use finance to take over countries. So it leads us into
a realm where everything that the classical economists saw and argued for – public investment, bringing costs in line with the actual
cost of production – that's all rejected in favor of a rentier class evolving into an oligarchy. Basically, financiers – the
1% – are going to pry away the public domain from the government. Pry away and privatize the public enterprises, land, natural resources,
so that bondholders and privatizers get all of the revenue for themselves. It's all sucked up to the top of the pyramid, impoverishing
the 99%.
LONG: Well I think most people, without understanding economics, would instinctively tell you they think that's what's happening
right now, in some way.
HUDSON: Right. As long as you can avoid studying economics you know what's happened. Once you take an economics course you step
into brainwashing. It's an Orwellian world.
LONG: I think you said it perfectly well there. Exactly. It gets you locked into the wrong way of thinking as opposed to just
basic common sense. Your book is Killing the Host . What was the essence of its message? Was it describing exactly what we're
talking about here?
HUDSON: Finance has taken over the industrial economy, so that instead of finance becoming what it was expected to be in the 19
th century, instead of the banks evolving from usurious organizations that leant to governments, mainly to wage war, finance
was going to be industrialized. They were going to mobilize savings and recycle it to finance the means of production, starting with
heavy industry. This was actually happening in Germany in the late 19 th century. You had the big banks working with government
and industry in a triangular process. But that's not what's happening now. After WW1 and especially after WW2, finance reverted to
its pre-industrial form. Instead of allying themselves with industry, as banks were expected to do, banks allied themselves with
real estate and monopolies, realizing that they can make more money off real estate.
The bank spokesman David Ricardo argued against the landed interest in 1817, against land rent. Now the banks are all in favor
of supporting land rent, knowing that today, when people buy and sell property, they need credit and pay interest for it. The banks
are going to get all the rent. So you have the banks merge with real estate against industry, against the economy as a whole. The
result is that they're part of the overhead process, not part of the production process.
LONG: There's a sense that there's a crisis lying ahead in the next year, two years, or three years. The mainstream economy's
so disconnected from Wall Street economy. What's your view on that?
HUDSON: It's not disconnected at all. The Wall Street economy has taken over the economy and is draining it. Under what economics
students are taught as Say's Law, the economy's workers are supposed to use their income to buy what they produce. That's why Henry
Ford paid them $5 a day, so that they could afford to buy the automobiles they were producing.
LONG: Exactly.
HUDSON: But Wall Street is interjecting itself into the economy, so that instead of the circular flow between producers and consumers,
you have more and more of the flow diverted to pay interest, insurance and rent. In other words, to pay the FIRE sector. It all ends
up with the financial sector, most of which is owned by the 1%. So, their way of formulating it is to distract attention from today's
debt quandary by saying it's just a cycle, or it's "secular stagnation." That removes the element of agency – active politicking
by the financial interests and Wall Street lobbyists to obtain all the growth of income and wealth for themselves. That's what happened
in America and Canada since the late 1970s.
LONG: What does an investor do today, or somebody who's looking for retirement, trying to save for the future, and they see some
of these things occurring. What should they be thinking about? Or how should they be protecting themselves?
HUDSON: What all the billionaires and the heavy investors do is simply try to preserve their wealth. They're not trying to make
money, they're not trying to speculate. If you're an investor, you're not going to outsmart Wall Street billionaires, because the
markets are basically fixed. It's the George Soros principle. If you have so much money, billions of dollars, you can break the Bank
of England. You don't follow the market, you don't anticipate it, you actually make the market and push it up, like the Plunge Protection
Team is doing with the stock market these days. You have to be able to control the prices. Insiders make money, but small investors
are not going to make money.
Since you're in Canada, I remember the beginning of the 1960s. I used to look at the Treasury Bulletin and Federal Reserve
Bulletin figures on foreign investment in the US stock market. We all used to laugh at Canada especially. The Canadians don't
buy stocks until they're up to the very top, and then they lose all the money by holding these stocks on the downturn. Finally, when
the market's all the way at the bottom, Canadians decide to begin selling because they finally can see a trend. So they miss the
upswing until they decide to buy at the top once again. It's hilarious to look at how Canada has performed in the US bond market,
and they did the same in the silver market. I remember when silver was going up to $50. The Canadians said, "Yes, we can see the
trend now!" and they began to buy it. They lost their shirts. So, basically, if you're a Canadian investor, move.
LONG: So the Canadian investors are a better contrarian indicator than the front page cover, you're saying.
HUDSON: I'd think so. Once they get in, you know the bubble's over.
LONG: Absolutely on that one. What are you currently writing? What is your current focus now?
HUDSON: Well, I just finished a book. You mentioned Killing the Host . My next book will be out in about three months:
J is for Junk Economics . It began as a dictionary of terms, so I can provide people with a vocabulary. As we got in the argument
at the beginning of your program today, our argument is about the vocabulary we're using and the words you're using. The vocabulary
taught to students today in economics – and used by the mass media and by government spokesmen – is basically a set of euphemisms.
If you look at the television reports on the market, they say that any loss in the stock market isn't a loss, it's "profit taking".
And when they talk about money. the stock market rises – "Oh that's good news." But it's awful news for the short sellers it wipes
out. Almost all the words we get are kind of euphemisms to conceal the actual dynamics that are happening. For instance, "secular
stagnation" means it's all a cycle. Even the idea of "business cycles": Nobody in the 19 th century used the word "business
cycle". They spoke about "crashes". They knew that things go up slowly and then they plunge very quickly. It was a crash. It's not
the sine curve that you have in Josef Schumpeter's book on Business Cycles . It's a ratchet effect: slow up, quick down. A
cycle is something that is automatic, and if it's a cycle and you have leading and lagging indicators as the National Bureau of Economic
Research has. Then you'd think "Oh, okay, everything that goes up will come down, and everything that goes down will come up, just
wait your turn." And that means governments should be passive.
Well, that is the opposite of everything that's said in classical economics and the Progressive Era, when they realized that economies
don't recover by themselves. You need a-the government to step in, you need something "exogenous," as economist say. You need something
from outside the system to revive it. The covert idea of this business cycle analysis is to leave out the role of government. If
you look at neoliberal and Austrian theory, there's no role for government spending, and no role of public investment. The whole
argument for privatization, for instance, is the opposite of what was taught in American business schools in the 19 th
century. The first professor of economics at the Wharton School of Business, which was the first business school, was Simon Patten.
He said that public infrastructure is a fourth factor of production. But its role isn't to make a profit. It's to lower the cost
of public services and basic inputs to lower the cost of living and lower the cost of doing business to make the economy more competitive.
But privatization adds interest payments, dividends, managerial payments, stock buybacks, and merges and acquisitions. Obviously
these financialized charges are factored into the price system and raise the cost of living and doing business.
LONG: Well, Michael, we're-I thank you for the time, and we're up against our hard line. I know we didn't have as much time as
we always like, so we have to break. Any overall comments you'd like to leave with our listeners who might be interested this school
of economics?
HUDSON: Regarding the downturn we're in, we're going into a debt deflation. The key of understanding the economy is to look at
debt. The economy has to spend more and more money on debt service. The reason the economy is not recovering isn't simply because
this is a normal cycle. And It's not because labour is paid too much. It's because people are diverting more and more of their income
to paying their debts, so they can't afford to buy goods. Markets are shrinking – and if markets are shrinking, then real estate
rents are shrinking, profits are shrinking. Instead of using their earnings to reinvest and hire more labour to increase production,
companies are using their earnings for stock buybacks and dividend payouts to raise the share price so that the managers can take
their revenue in the form of bonuses and stocks and live in the short run. They're leaving their companies as bankrupt shells, which
is pretty much what hedge funds do when they take over companies.
So the financialization of companies is the reverse of everything Adam Smith, John Stuart Mill, and everyone you think of as a
classical economist was saying. Banks wrap themselves in a cloak of classical economics by dropping history of economic thought from
the curriculum, which is pretty much what's happened. And Canada-I know since you're from Canada, my experience there was that the
banks have a huge lobbying power over government. In 1979, I wrote for the IRPP Institute there on Canada In the New Monetary
Order . At that time the provinces of Canada were borrowing money from Switzerland and Germany because they could borrow it at
much lower interest rates. I said that this was going to be a disaster, and one that was completely unnecessary. If Canadian provinces
borrow in Francs or any other foreign currency, this money goes into the central bank, which then creates Canadian dollars to spend.
Why not have the central bank simply create these dollars without having Swiss francs, without having German marks? It's unnecessary
to have an intermediary. But the more thuggish banks, like the Bank of Nova Scotia, said, "Oh, that way's the road to serfdom." It's
not. Following the banks and the Austrian School of the banks' philosophy, that's the road to serfdom. That's the road
to debt serfdom. It should not be taken now. It lets universities and the government be run by neoliberals. They're a travesty of
what real economics is all about.
LONG: Michael, thank you very much. I learned a lot, appreciate it; certainly appreciate how important it is for us to use the
right words on the right subject when we're talking about economics. Absolutely agree with you. Talk to you again?
Interesting, but after insulting Duncan, Hudson says the banks stopped partnering with industry and went into real estate,
which sounded like what Duncan said.
I mention this because for a non- expert like myself it is sometimes difficult to tell when an expert is disagreeing with someone
for good reasons or just going off half- cocked. I followed what Hudson said about the evils of the IMF, but didn't see where
Duncan had defended any of that, unless it was implicit in saying that capitalism used to function better.
"As we got in the argument at the beginning of your program today, our argument is about the vocabulary we're using and the
words you're using. The vocabulary taught to students today in economics – and used by the mass media and by government spokesmen
– is basically a set of euphemisms ."Almost all the words we get are kind of euphemisms to conceal the actual dynamics that are
happening."
May consider it's about recognizing and deciphering the "doublespeak", "newspeak", "fedspeak", "greenspeak" etc, whether willing
or unwitting using words for understanding and clarifying as opposed to misleading and confusing dialectic as opposed to sophistry.
What I objected to was the characterization of today's situation as "financialization." I explained that financialization is
the FIRST stage - when finance WORKS. We are now in the BREAKDOWN of financialization - toward the "barter" stage.
Treating "finance" as an end stage rather than as a beginning stage overlooks the dynamics of breakdown. It is debt deflation.
First profits fall, and as that occurs, rents on commercial property decline. This is already widespread here in New York, from
Manhattan (8th St. near NYU is half empty) to Queens (Austin St. in Forest Hills.).
I wrote an article you might be interested in reading. It outlines a tax policy which would help prevent what you are discussing
in your article. The abuse of credit to receive rents and long term capital gains.
Thank you for another eye-opening exposition. My political economy education was negative (counting a year of Monetarism and
Austrian Economics around 1980), so I appreciate your interviews as correctives.
From your interview answer to the question about what we, the 99+% should do,I gathered only that we should not try to beat
the market. Anything more than that?
From my understanding, post Plaza banking lost most of its traditional market to the shadow sector, as a result, expanded off
into C/RE and increasingly to Financialization of everything sundry.
Disheveled Marsupial interesting to note Mr. Hudson's statement about barter, risk factors – ?????
One of the most important distinctions that investors have to understand is the difference between secular and cyclical
trends Let us begin with definitions from the Encarta® World English Dictionary:
Secular – occurring only once in the course of an age or century; taking place over an extremely or indefinitely long period
of time
Cycle – a sequence of events that is repeated again and again, especially a causal sequence; a period of time between repetitions
of an event or phenomenon that occurs regularly
Secular stagnation is a condition of negligible or no economic growth in a market-based economy . When
per capita income stays at relatively high levels, the percentage of savings is likely to start exceeding the percentage of longer-term
investments in, for example, infrastructure and education, that are necessary to sustain future economic growth. The absence of
such investments (and consequently of the economic growth) leads to declining levels of per capita income (and consequently of
per capita savings). With the reduced percentage savings rate converging with the reduced investment rate, economic growth comes
to a standstill – ie, it stagnates. In a free economy, consumers anticipating secular stagnation, might transfer their savings
to more attractive-looking foreign countries. This would lead to a devaluation of their domestic currency, which would potentially
boost their exports, assuming that the country did have goods or services that could be exported.
Persistent low growth, especially in Europe, has been attributed by some to secular stagnation initiated by stronger European
economies, such as Germany, in the past few years.
Words. What they mean depends on who's talking.
Secular stagnation is when the predators of finance have eaten too many sheeple.
Markets are shrinking – and if markets are shrinking, then real estate rents are shrinking, profits are shrinking.
Real estate rents in this latest asset bubble, whether commercial or residential, appear to have been going up in many
markets even if the increases are slowing. That rent inflation will likely turn into rent deflation, but that doesn't appear to
have happened yet consistently.
Perhaps he meant to say that markets are going to shrink as the debt deflation becomes more evident?
Yes, I think we are into turnip country now. Figure 1 in
this
prior article looks clear enough – even if you don't like the analysis that went with it. Wealth inequality still climbs but
income inequality has plateaued since Clinton I. Whatever the reasons for that, the 1% should be concerned – where is the ROI?
Barter has always existed and always will. Debt money expands and contracts the middle class, acting as a feedback signal,
which never works over the long term, because the so encapsulated system can only implode, when natural resource liquidation cannot
be accelerated. The whole point is to eliminate the initial requirement for capital, work. Debt fails because both sides of the
same coin assume that labor can be replaced. The machines driven by dc technology are not replacing labor; neither the elites
nor the middle class can fix the machines, which is why they keep accelerating debt, to replace one failed technology only to
be followed by the next, netting extortion by whoever currently controls the debt machine, which the majority is always fighting
over, expending more energy to avoid work, like the objective is to avoid sweating, unless you are dumb enough to run on asphalt
with Nike gear.
Labor has no problem with multiwhatever presidents, geneticists, psychologists, or economists, trying to hunt down and replace
labor, in or out of turn, but none are going to be any more successful than the others. Trump is being employed to bypass the
middle class and cut a deal. There is no deal. Labor is always going to pay males to work and their wives to raise children. Obviously,
the majority will vote for a competing economy, and it is welcome to do so, but if debt works so well, why is the majority voting
to kidnap our kids with public healthcare and education policies.
I'm not sure I heard an answer to the question of what people, who might be trying to save for the future or plan for retirement,
can do? Is the point that there isn't anything? Because I'm definitely between rocks and hard places
Yeah, he basically said there is no good savings plan. Big-money interests have rigged the rules and are now manipulating the
market (this used to be the definition of what was NOT allowed). Thus, they use computer algorithms to squeeze small amounts out
of the market millions of times. This means that the "investments" are nothing of the sort. You don't "invest" in something for
milliseconds. He said that the 1% are mostly just trying to hold on to what they have. Very few trust the rigged markets.
Low rent & cheap energy are key to the arts & innovations. My model has to work for airports, starts at the fuel farm as the
CIA & MI6 Front Page Avjet did. Well before that was Air America. I wonder if now American Airlines itself is a Front.
All of America is a Front far as I can about tell. Hadn't heard that Manhattan rents were coming down. Come in from out of
town, how you going to know? Not supposed to I guess.
I got that textbook and I liked that guy John Commons. He says capitalism is great, but it always leads to Socialism because
of unbridled greed.
The frenzy to find another stable cash currency showing in Bit Coin and the discussion of Future Tax Credits while the Euro
is controlled by the rent takers demands change on both sides of the Atlantic.
We got shot dead protesting the war, and civil rights backlash is the gift that keeps giving to the Southerners looking up
every day in every courthouse town, County seat is all about spreading fear and desperation.
How to change it all without violence is going to be really tricky.
. . . So, basically, if you're a Canadian investor, move.
LONG: So the Canadian investors are a better contrarian indicator than the front page cover, you're saying.
HUDSON: I'd think so. Once they get in, you know the bubble's over.
When one reads the financial press in Canada, every dollar extracted by the lords of finance is a glorious taking by brilliant
people at the top of the financial food chain from the stupid little people at the bottom, but when it counts, there was silence,
in cooperation with Canada's one percent.
The story starts about five years ago, with smart meters. Everyone knows what they are, a method by which electrical power
use can be priced depending on the time of day, and day of the week.
To make this tasty, Ontario's local utilities at first kept the price the same for all the time, and then after all the meters
were installed, came the changes, phased in over time. Prices were increased substantially, but there was an out. If you changed
your living arrangements to live like a nocturnal rodent and washed your clothes in the middle of the night, had supper later
in the evening or waited for weekend power rates you could still get low power rates, from the three tier price structure.
The local utilities bought the power from the government of Ontario power generation utility, renamed to Hydro One, and this
is where Michael Hudson's talk becomes relevant.
The successful error of monetarism is to force countries to have such self-defeating policies that they end up having to
privatize their natural resources, their public domain, their public enterprises, their communications and transportation, like
you're seeing in Greece's selloffs. So when you find an error that is repeated, it's deliberate. It's not insane. It's
part of the program, not a bug .
LONG: Where does this lead us? What's the roadmap ahead of us here?
HUDSON: A thousand years ago, if you were a marauding gang and you wanted to take over a country's land and its natural
resources and public sector, you'd have to invade it with military troops. Now you use finance to take over countries. So it leads
us into a realm where everything that the classical economists saw and argued for – public investment, bringing costs
in line with the actual cost of production – that's all rejected in favor of a rentier class evolving into an oligarchy. Basically,
financiers – the 1% – are going to pry away the public domain from the government. Pry away and privatize the public enterprises,
land, natural resources, so that bondholders and privatizers get all of the revenue for themselves. It's all sucked up to the
top of the pyramid, impoverishing the 99% .
Eighteen months ago, there was an election in Ontario, and the press was on radio silence during the whole time leading up
to the election about the plans to "privatize" Hydro One. I cannot recall one instance of any mention that the new Premier, Kathleen
Wynne was planning on selling Hydro One to "investors".
Where did this come from? Did the little people rise up and say to the politicians "you should privatize Hydro One" for whatever
reason? No. This push came from the 1% and Hydro One was sold so fast it made my head spin, and is now trading on the Toronto
Stock exchange.
At first I though the premier was an economic ignoramus, because Hydro One was generating income for the province and there
was no other power supplier, so one couldn't even fire them if they raised their prices too high.
One of the arguments put forward by the 1% to privatize Hydro One was a classic divide and conquer strategy. They argued that
too many people at Hydro One were making too much money, and by privatizing, the employees wages would be beat down, and the resultant
savings would be passed on to customers.
Back to Michael Hudson
. . . The whole argument for privatization, for instance, is the opposite of what was taught in American business schools
in the 19th century. The first professor of economics at the Wharton School of Business, which was the first business school,
was Simon Patten. He said that public infrastructure is a fourth factor of production. But its role isn't to make a profit
. It's to lower the cost of public services and basic inputs to lower the cost of living and lower the cost of doing
business to make the economy more competitive. But privatization adds interest payments, dividends, managerial payments,
stock buybacks, and merges and acquisitions . Obviously these financialized charges are factored into the price system
and raise the cost of living and doing business .
Power prices have increased yet again in Ontario since privatization, and Canada's 1% are "making a killing" on it. There has
been another change as well. Instead of a three tier price structure, there are now two, really expensive and super expensive.
There is no longer a price break to living like a nocturnal rodent. The 1% took that for themselves.
I am so tired of seeing that old lie about Old Henry and the $5 a day. I realize it was just a tossed off reference to something
most people believe for the purpose of describing a discarded policy, but the fact is very, very few of Old Henry's employees
ever got that pay. See, there were strings attached.
Old Henry hired a lot of spies, too. He sent them around to the neighborhoods where his workers lived (it was convenient having
them all in Detroit). If the neighbors saw your kid bringing a bucket of beer home from the corner tavern for the family, you
didn't get the $5.
If your lawn wasn't mowed to their satisfaction, you didn't get the $5. If you were thought not to bathe as often as they liked,
you didn't get the $5. If you didn't go to a church on Sundays, you didn't get the $5. If you were an immigrant and not taking
English classes at night school, you didn't get the $5. There were quite a lot of strings attached. The whole story was a public
relations stunt, and Old Henry never intended to live up to it; he hated his workers.
"... Primates with about exponentially increasing physical technologies continue to deliberately ignore and misunderstand themselves as much as is humanly possible, due to the history of warfare making and maintaining the currently existing political economy, whose maliciousness is manifesting through runaway vicious feedback loops, whereby the excessively successful control of Civilization through applications of the methods of organized crime are resulting in that Civilization manifesting runaway criminal insanities. Indeed, in that context, where there is almost nothing but the central core of triumphant organized crime, namely bankster dominated governments, surrounded by various layers of controlled "opposition" groups, which stay within the same bullshit-based frames of reference regarding those phenomena, the overall situation is that society becoming about exponentially sicker and insane. ..."
"... In general, "Asset Managers" are stuck inside taking for granted that everything they do has become almost totally based on being able to enforce frauds, despite some of them noticing the increasingly blatant ways that there are accumulating apparent anomalies in those systems, as vicious feedback loops drive those systems to become about exponentially more fraudulent, and therefore increasingly unbalanced. To come to better terms with those apparent anomalies requires going through series of intellectual scientific revolutions and profound paradigm shifts, which overall become ways that human beings better understand themselves as manifestations of general energy systems. However, since doing so requires recognizing how and why governments are necessarily the biggest forms of organized crime, dominated by the best organized gangsters, the banksters, it continues to be politically impossible to accomplish that. ..."
"... At each open, algos compute the increase in their AUM from the prior day and their margin reach. They then begin buying. All algos do this. Buying whenever cash/margin exists; selling whenever profit targets exist. On pullbacks, the algos withdraw, volume evaporates, minimizing the drop. The algos collectively increase equity prices without consideration of the value of the money involved. Not valuations. No fundamentals. Just ones and zeroes. Just a program. ..."
Macro-prudential regulations follow financial crises, rarely do they precede one. Even when evidence is abundant of systemic risks
building up, as is today, regulators and policymakers have a marked tendency to turn an institutional blind eye, hoping for imbalances
to fizzle out on their own – at least beyond the duration of their mandates. It does not work differently in economics than it does
for politics, where short-termism drives the agenda, oftentimes at the expenses of either the next government, the broader population
or the next generation.
It does not work differently in the business world either, where corporate actions are selected based on the immediate gratification
of shareholders, which means pleasing them at the next round of earnings, often at the expenses of long-term planning and at times
exposing the company itself to disruption threats from up-and-comers.
Long-term vision does not pay; it barely shows up in the incentive schemes laid out for most professions . Economics is no exception.
Orthodoxy and stillness preserve the status quo, and the advantages hard earned by the few who rose from the ranks of the establishment
beforehand.
Yet, when it comes to Central Banking, and more in general policymaking, financial stability should top the priority list. It
honorably shows up in the utility function, together with price stability and employment, but is not pursued nearly as actively as
them. Central planning and interventionism is no anathema when it comes to target the decimals of unemployment or consumer prices,
yet is residual when it comes to master systemic risks, relegated to the camp of ex-post macro-prudential regulation. This is all
the more surprising as we know all too well how badly a deep unsettlement of financial markets can reverberate across the real economy,
possibly leading into recessions, unemployment, un-anchoring of inflation expectations and durable disruption to consumer patterns.
There is no shortage of reminders for that in the history books, looking at the fallout of dee dives in markets in 1929, 2000 and
2007, amongst others.
Intriguingly, the other way round is accepted and even theorized. Manipulating bond and stock prices, directly or indirectly,
is mainstream policy theory today. From Ben Bernanke's 'portfolio balance channel theory', to the relentless pursuit of the 'wealth
effect' via financial repression under Janet Yellen and Haruhiko Kuroda, to Mario Draghi tackling the fragmentation of credit markets
across the EU via direct asset purchases, the practice has become commonplace. To some, like us, the 'wealth effect' may be proving
to be more of an 'inequality effect' than much, leading to populism and constantly threatening regime change, but that is beyond
the scope of this note today.
What we want to focus on instead is the direct impact that monetary interventionism like Quantitative Easing ('QE') and Negative
or Zero Interest Rate Policies ('NIRP' or 'ZIRP') have on the structure of the market itself, how they help create a one-sided investment
community, oftentimes long-only, fully invested when not levered up, relying on record-highs for bonds and stocks to perpetuate themselves
endlessly - despite a striking disconnect from fundamentals, life-dependent on the lowest levels of volatility ever seen in history
. The market structure morphed under the eyes of policymakers over the last few years, to become a pressure cooker at risk of blowing-up,
with a small but steadily growing probability as times goes by and the bubble inflates. The
positive feedback loops between monetary flooding and the private investment
community are culpable for transforming an ever present market risk into a systemic risk, and for masking as peaceful what is instead
an unstable equilibrium and
market fragility.
Positive Feedback Loops create divergence from general equilibrium, and Systemic Risks
Positive feedback loops , in finance like in biology, chemistry, cybernetics, breed system instability, as they orchestrate a
further divergence from equilibrium . An unstable equilibrium is defined as one where a small disturbance is sufficient to trigger
a large adjustment.
QE and NIRP have two predominant effects on markets: (i) relentless up-trend in stocks and bonds (the 'Trend Factor') , dominated
by the buy-the-dip mentality, which encapsulates the 'moral hazard' of investors knowing Central Banks are prompt to come to their
rescue (otherwise known as 'Bernanke/Yellen/Kuroda/Draghi put'), and (ii) the relentless down-trend in volatility the 'Volatility
Factor').
Two Factors Explain All: Trend and Volatility
The most fashionable investment strategies these days are directly impacted by either one or both of these drivers. Such strategies
make the bulk of the overall market, after leverage or turnover is taken into account : we will refer to them in the following as
'passive' or 'quasi-passive' . The trend impacts the long-only community, crowning it as a sure winner, making the case for low-
cost passive investing. The low volatility permeates everything else, making the case for full- investment and leverage.
The vast majority of investors these days are not independent from the QE environment they operate within : ETFs and index funds,
Risk Parity funds and Target Volatility vehicles, Low Volatility / Short Volatility vehicles, trend-chasing algos, Machine Learning-inspired
funds, behavioral Alternative Risk Premia funds. They are the poster children of the QE world. We estimate combined assets under
management of in excess of $8trn across the spectrum. They form a broad category of 'passive' or 'quasi-passive' investors, as are
being mechanically driven by two main factors: trend and volatility.
Source: Fasanara Presentations | Market Fragility
- How to Position for Twin Bubbles Bust, 16 th October 2017. The slide is described in details in this
video recording.
Extraordinary monetary policies have feedback loops with the asset management industry as a whole, reinforcing the effects on
markets of such policies in a vicious – or virtuous - cycle . QE and NIRP help a large number of investment strategies to flourish,
validating their success and supporting their asset gathering in the process, and are in return helped in boosting bond and stock
markets by their flows joining the already monumental public flows.
Private flows so reach singularity with public flows, and the whole market economy morphs into a one big common bet on ever-rising
prices, in shallow volatility. Here is the story of how $15trn of money printing by major Central Banks in the last ten years, of
which $3.7trn in 2017 alone, is joined by total assets of $8trn managed into buying the same safe and risk assets across, with leverage,
indiscriminately.
How Market Risk became Systemic Risk
Let's give a cursory look at the main players involved (a recent presentation we did is recorded
here) . As markets trend higher, no matter what happens (ever against the
shocked disbeliefs of Brexit, Trump, an Italian failed referendum and nuclear threats in North Korea), investors understand the outperformance
that comes from pricing risks out of their portfolios entirely and going long-only and fully-invested. Whoever under-weighs positions
in an attempt to be prudent ends up underperforming its benchmarks and is then penalized with redemptions. Passive investors who
are long-only and fully invested are the winners, as they are designed to be bold and insensitive to risks. As Central Banks policies
reduce the level of interest rates to zero or whereabouts, fees become ever more relevant, making the case for passive investing
most compelling. The rise of ETF and passive index funds is then inevitable.
According to JP Morgan, in the last 10 years, $2trn left active managers in equities and $2trn entered passive managers (pag.39
here) . We may be excused for thinking they are the
same $ 2trn of underlying investors progressively pricing risk provisions out of books, de facto , while chasing outperformance and
lower fees.
To be sure, ETFs are a great financial innovation, helping reducing costs in an expensive industry and giving entry to markets
previously un-accessible to most investors. Yet, what matters here is their impact on systemic risks, via positive feedback loops.
In circular reference, beyond Central Banks flows, markets are helped rise by such classes of valuations-insensitive passive investors,
which are then rewarded with further inflows, with which they can then buy more. The more expensive valuations get, the more they
disconnect from fundamentals, the more divergence from equilibrium occurs, the larger fat-tail risks become.
In ever-rising markets, 'buy-and-hold' strategies may only possibly be outsmarted by 'buy-the-dip' strategies. Whatever the outcome
of risk events, be ready to buy the dip quickly and blindly. As more investors design themselves up to do so, the dips are shallower
over time, leading to an S&P500 that never lost 3% in 2017, an historical milestone. Machine learning is another beautiful market
innovation, but what is there to learn from the time series of the last several years, if not that buy- the-dip works, irrespective
of what caused the dip. Big Data is yet another great concept, shaping the future of us all. Yet, most data ever generated in humankind
dates back three years only, in and by itself a striking limitation. The quality of the deduction cannot exceed the quality of the
time series upon which the data science was applied. If the time series is untrustworthy, as is heavily influenced by monumental
public flows ($300bn per months), what trust can we put on any model output originating from it? What pattern recognition can we
really be hopeful of getting, in the first place? May some of it just be a commercial disguise for going long, selling volatility
and leveraging up in various shapes or forms? What is hype and what is real? A short and compromised data series makes it hard, if
not possible, to really know. Once public flows abate and price discovery is let free again, then and only then will we be in a position
to know the difference.
Low volatility does what trending markets alone cannot. A state of low volatility presents the appearance of
stuporous, innocuous, narcotized markets, thus
enticing new swathes of unfitting investors in, mostly retail-type 'weak hands'. Weak hands are investors who are brought to like
investments by certain characteristics which are uncommon to the specific investment itself, such as featuring a low volatility.
It is in this form that we see bond-like investors looking at the stock market for yield pick-up purposes, magnetized by levels of
realized volatility similar to what fixed income used to provide with during the Great Moderation. It is in this form that Tech companies
out of the US have started filling the coffers of not just Growth ETF, where they should rightfully reside, but also Momentum ETF,
and even, incredibly, Low-Volatility ETF.
Low volatility is also a dominant input for Risk Parity funds and Target Volatility vehicles . The lower the volatility, the higher
the leverage allowed in such players, mechanically. All of which are long-only players, joining public flows, again helping the market
rise to record levels in the process, in circular reference. Rewarded by new inflows, the buying spree gathers momentum, in a virtuous
circle. Valuations are no real input in the process, volatility is what matters the most. Volatility is not risk, except for them
it is.
It goes further than that. It is not only the level of volatility that count, but its direction too . As volatility implodes,
relentlessly, into historical lows never seen before in history, a plethora of investment strategies is launched to capitalize on
just that, directly: Short Volatility vehicles . They are the best performing strategy of the last decade, by and large. The problem
here is that, due to construction, as volatility got to single-digit territory, relatively small spikes are now enough to trigger
wipe-out events on several of these instruments. Our analysis shows that if equity volatility doubles up from current levels (while
still being half of what it was as recently as in August 2015), certain Short Vol ETFs may stand to lose up to 75% or more. Moreover,
short positions on long-vol ETFs can lose up to 250% of capital. For some, 'termination events' are built into contracts for sudden
losses of this magnitude, meaning that the notes would be prematurely withdrawn. It is one thing to expect a spike in volatility
to cause losses, it is quite another to know that a minor move is all it takes to trigger a default event.
On such spikes in volatility, Morgan Stanley Quant Derivatives Strategy desk warns further that market makers may be forced to
rebalance their exposure non-linearly on a spike in volatility. A drop in the S&P 500 of 5% in one day may trigger approximately
$ 400mn of Vega notional of rebalancing (pag.48 here)
. We estimate that half a trillion dollars of additional selling on S&P stocks may occur following a correction of between 5% and
10%. That is a lot of selling, pre-set in markets, waiting to strike. Unless you expect the market to not have another 5% sell-off,
ever again.
What do ETFs, Risk Parity and Target Vol vehicles, Low Vol / Short Vol vehicles, trend-chasing algos, Machine Learning, behavioral
Alternative Risk Premia, factor investing have in common? Except, of course, being the 'winners take all' of QE-driven markets. They
all share one or more of the following risk factors: long-only, fully invested when not leveraged-up, short volatility, short correlation,
short gamma Thanks to QE and NIRP, the whole market is becoming one single big position.
The 'Trend Factor' and the 'Volatility Factor' are over-whelming, making it inevitable for a high- beta, long-bias, short-vol
proxy to disseminate across. Almost inescapably so, given the time series the asset management industry has to deal with, and derive
its signals from.
Several classes of investors may move to sell in lock-steps if and when markets turn. The boost to asset prices and the zero-volatility
environment created the conditions for systemic risks in the form of an over-compensation to the downside. Record-low volatility
breeds market fragility, it precedes system instability.
Flows Matter, Both Ways!
We will know soon if the fragility of markets is that bad. The undoing of loose monetary policies (NIRP, ZIRP) will create a liquidity
withdrawal of over $1 trillion in 2018 alone (pag.61-62
here) . The reaction of the passive and quasi-passive communities will determine the speed of the adjustment in the pricing for
both safe and risk assets, and how quickly risk provisions will re- enter portfolios. Such liquidity withdrawal will represent the
first real crash-test for markets in 10 years.
As public spending on Wall Street abates, the risk is evident of seeing the whole market turning with it. The shocks of Trump
and Brexit did not manage to derail markets for long, as public flows were overwhelming. Flows is what mattered, above all elusive,
over-fitting economic narratives justifying price action at the margin. Flows may matter again now as they fade
Systemic Risk is Not Just About Banks: Look at Funds
The role of trending markets is known when it comes to systemic risks: a not sufficient but necessary condition. Most trends do
not necessarily lead to systemic risks, but hardly systemic risks ever build up without a prolonged period of uptrend beforehand.
Prolonged uptrends in any asset class hold the potential to instill the perception that such asset class will grow forever, irrespective
of the fundamentals, and may thus lead to excessive risk taking, excess leverage, the formation of a bubble and, ultimately, systemic
risks. The mind goes to the asset class of real estate, its undeterred uptrend into 2006/2007, its perception of perpetuity ("we
have never had a decline in house prices on a nationwide basis''
Ben Bernanke) , the credit bubble built on banks hazardous activities on subprime mortgages as a result, and the systemic risks
which emanated, with damages spanning well beyond the borders of real estate.
The role of volatility is also well-researched, especially low volatility. Hayman Minsky, in his "
Financial Instability
Hypothesis '' in 1977, analyses the behavioral changes induced by a reduction of volatility, postulating that economic agents
observing a low risk are induced to increase risk taking, which may in turn lead to a crisis: "stability is destabilizing". In a
recent study, Jon Danielsson, Director
of the Systemic Risk Centre at the LSE, finds unambiguous support for the 'low volatility channel', insofar as prolonged periods
of low volatility have a strong predictive power over the incidence of a banking crisis, owing to excess lending and excess leverage
. The economic impact is the highest if the economy stays in the low volatility environment for five years : a 1% decrease in volatility
below its trend translates in a 1.01% increase in the probability of a crisis. He also finds that, counter-intuitively, high volatility
has little predictive power : very interesting, when the whole finance world at large is based on retrospective VAR metrics, and
equivocates high volatility for high risk.
Both a persistent trend and prolonged low-volatility can lead banks to take excessive risks. But what about their impact on the
asset management industry?
Thinking at the hard economic impact of the Great Depression (1929-1932) and the Great Recession (2007-2009), and the eminent
role played by banks in both, it comes as little surprise that the banking sector captures all the attention. However, what remains
to be looked into, and perhaps more worrying in today's environment, is the role of prolonged periods of uptrend and low-vol on the
asset management industry
In 2014, the Financial Stability Board (FSB), an international body that makes recommendations to G20 nations on financial risks,
published a consultation paper asking whether fund managers might need to be designated as " global systemically important financial
institution " or G-SIFI, a step that would involve greater regulation and oversight. It did not result in much, as the industry lobbied
in protest, emphasizing the difference between the levered balance sheet of a bank and the business of funds.
The reason for asking the question is evident: (i) sheer size , as the AM industry ballooned in the last few years, to now represent
over [15trnXX] for just the top 5 US players!, (ii) funds have partially substituted banks in certain market-making activities, as
banks dialed back their participation in response to tighter regulation and (iii) , funds can indeed do damage: think of LTCM in
1998, the fatal bailout of two Real Estate funds by Bear Stearns in 2007, the money market funds 'breaking the buck' in 2008 amongst
others.
But it is not just sheer size that matters for asset managers. What may worry more is the positive feedback loops discussed above
and the resulting concentration of bets in one single global pot , life-dependent on infinite momentum/trend and ever-falling volatility.
Positive feedback loops are the link for the sheer size of the AM industry to become systemically relevant. Today more than ever,
they morph market risks in systemic risks.
Volatility will not forever be low, the trend will not forever go: how bad a damage when it stops? As macro prudential policy
is not the art of "whether or not it will happen" but of "what happens if", it is hard not to see this as a blind spot for policymakers
nowadays.
I have never seen it this bad, the numbers are all moutof wack!
It seems many of us are drawn to a good illusion and this proves true for most people in their daily life as well. In some
ways, it could be said that our culture has become obsessed with avoiding what is real.
We must remember that politicians and those in power tend to throw people under the bus rather than rise up and take responsibility
for the problems they create. The article below looks at how we have grown to believe things are fine.
The real estate boom features all the unknowns in today's thinking, which is why they are global.
This simple equation is unknown.
Disposable income = wages – (taxes + the cost of living)
You can immediately see how high housing costs have to be covered by wages; business pays the high housing costs for expensive
housing adding to costs and reducing profits. The real estate boom raises costs to business and makes your nation uncompetitive
in a globalised world.
The unproductive lending involved that leads to financial crises.
The economy gets loaded up with unproductive lending as future spending power has been taken to inflate the value of the nation's
housing stock. Housing is more expensive and the future has been impoverished.
" banks make their profits by taking in deposits and lending the funds out at a higher rate of interest" Paul Krugman, 2015.
He wouldn't know, that's financial intermediation theory.
Bank lending creates money, which pours into the economy fuelling the boom; it is this money creation that makes the housing
boom feel so good in the general economy. It feels like there is lots of money about because there is.
The housing bust feels so bad because the opposite takes place, and money gets sucked out of the economy as the repayments
overtake new lending. It feels like there isn't much money about because there isn't.
They were known unknowns, the people that knew weren't the policymakers to whom these things were unknown.
The global economy told policymakers there was something seriously wrong in 2008, but they ignored it, I didn't.
They had pushed Greece into debt deflation by cutting Government spending with austerity.
It wasn't just the IMF, the Troika all went along with this fatally flawed policy, this means the ECB and EU Commission also
didn't know what they were doing.
Richard Koo had watched as Western "experts" told Japan to cut Government spending and seen the fall in GDP as the economy
went downhill. The only way to get things going again was to increase Government spending and he has had decades to work out what
was going on.
The Troika's bad economics has been wreaking havoc across the Club-Med.
Another superficially correct analysis of "Positive Feedback Loops create divergence from general equilibrium, and Systemic
Risks." The vicious feedback loops which have the most leverage are all aspects of the funding of the political processes, which
have resulted in runaway systems of legalized lies, backed by legalized violence, the most important of which are the ways that
the powers of public governments enforce frauds by private banks, the big corporations that have grown up around those big banks.
About exponentially advancing technologies have enabled enforced frauds to become about exponentially more fraudulent. The
underlying drivers were the ways that the combined money/murder systems developed, whose social successfulness became more and
more based on maximizing maliciousness. From a superficial point of view, those results may appear to be due to incompetence,
however, from a deeper point of view those results make sense as due to the excessively successful applications of the methods
of organized crime through the political processes, due to the vicious feedback loops of the funding of those political processes.
The only connections between human laws and natural laws are the abilities to back up lies with violence. Natural selection
pressures have driven Globalized Neolithic Civilization to develop the most dishonest artificial selection systems possible, while
the continuation of the various vicious feedback loops that made and maintained those developments are driving about exponentially
increasing dishonesty. Although the laws of nature are not going to stop working, and the laws of nature underpinned the runaway
development of excessively successful vicious feedback loops of organized crime, on larger and larger scales, to result in Globalized
Neolithic Civilization, the overall results are that Civilization is becoming about exponentially more psychotic. Since Civilization
necessarily operates according to the principles and methods of organized crime, while those who became the biggest and best organized
forms of organized crime, namely, banker dominated governments, also necessarily became most dishonest about themselves, and yet,
their bullshit social stories continue to dominate the public schools, and mainstream mass media, as well as the publicly significant
controlled "opposition" groups.
Political economy is INSIDE human ecology, and therefore, the greatest systematic risks are to be found in the tragic trajectory
of human ecologies which are almost totally buried under maximized maliciousness. "Public debates" about the human death control
systems are based on previously having being as deceitful and treacherous as possible regarding those topics. The most extreme
forms of that manifest as the ways that money is measurement backed by murder. Of course, that the debt controls are backed by
the death controls are issues which are generally not publicly admitted nor addressed.
Global Neolithic Civilization has become almost totally based on being able to enforce frauds, in ways which have become about
exponentially more fraudulent, as the vicious feedback loops which enable that to happen automatically reinforce themselves to
get worse, faster. The almost total triumph of enforced frauds has resulted in social "realities" which are becoming exponentially
more insane, since the social successfulness of enforced frauds requires the most people do not understand that, because they
have been conditioned to not want to understand that. Rather, almost everyone takes for granted deliberately ignoring and misunderstanding
the laws of nature in the most absurdly backward ways possible, because of the long history of successful warfare based on deceits
and treacheries becoming the more recent history of successful finance based on enforcing frauds, despite that tragic trajectory
of vicious feedback loops resulting in about exponentially increasing overall fraudulence.
Various superficially correct analyses, such as the one in the article above, are typical of the content on Zero Hedge , which
does not come remotely close to recognizing the degree to which the dominate natural languages and philosophy of science have
undergone series of compromises with the biggest bullies' bullshit-based world views, which became the banksters' bullshit about
economics. Although it is theoretically possible for human beings to better understand themselves and Civilization, it continues
to become more and more politically impossible to do so, due to the ever increasing vicious feedback loops of enforced frauds
achieving symbolic robberies ...
Although the laws of nature are never going to stop working, it is barely possible to exaggerate the degree to which Civilization
overall is becoming about exponentially more psychotic, due to the social "realities" based on successfully enforcing frauds becoming
more and more out of touch with the surrounding, relatively objective, physical and biological facts. The various superficially
correct analyses presented on Zero Hedge regarding that kind of runaway collective psychosis, driven by the vicious feedback loops
of the funding of all aspects of the funding of the political processes, tend to always grossly understate the seriousness of
that situation, especially including the crucial issues of how to operate the human murder systems after the development of weapons
of mass destruction, which is unavoidable due to the rapid development of globalized electronic monkey money frauds, backed by
the threat of force from apes with atomic weapons.
Those who believe that possessing precious metals, or cryptocurrencies, etc., are viable solutions to those problems are not
remotely close to being in the right order of magnitude. Although there is no doubt that exponentially more "money" is being made
out of nothing as debts, in order to "pay" for strip-mining the natural resources of a still relatively fresh planet, and so,
there is no doubt that the exponentially decreasing value of that "money" is driving the accumulation of apparent anomalies, such
as outlined in the article above, the actually crucial issues continue to be the ways that money is measurement backed by murder,
as the most abstract ways that private property are claims backed by coercions. Stop-gap individual responses to the runaway fraudulence,
such as faith in possessing precious metals or cryptocurrencies, make some relative sense in terms of the public "money" supplies
becoming exponentially more fraudulent, but otherwise dismally fail to be in the ball park of the significant issues driven by
prodigious progress in physical sciences, WITHOUT any genuine progress in political sciences, other than to continue to be able
to better enforce bigger frauds, through the elaborations of oxymoronic scientific dictatorships, which adamantly refuse to become
more genuinely scientific about themselves.
Primates with about exponentially increasing physical technologies continue to deliberately ignore and misunderstand themselves
as much as is humanly possible, due to the history of warfare making and maintaining the currently existing political economy,
whose maliciousness is manifesting through runaway vicious feedback loops, whereby the excessively successful control of Civilization
through applications of the methods of organized crime are resulting in that Civilization manifesting runaway criminal insanities.
Indeed, in that context, where there is almost nothing but the central core of triumphant organized crime, namely bankster dominated
governments, surrounded by various layers of controlled "opposition" groups, which stay within the same bullshit-based frames
of reference regarding those phenomena, the overall situation is that society becoming about exponentially sicker and insane.
That Civilization has been driven by natural selection pressures to manifest runaway psychoses is not going to stop the laws
of nature from continuing to work through that Civilization. However, that will nevertheless drive the currently dominate artificial
selection systems to become increasingly psychotic, in ways whereby their vicious feedback loops are less and less able to be
sanely responded to ... Although some human beings have better and better understood some general energy systems, e.g., electric
and atomic energy, etc., since warfare was the oldest and best developed forms of social science and engineering, whose successfulness
was based on being able to maximize maliciousness, and since those then enabled successful finance to become based on runaway
enforced frauds, human beings living within Globalized Neolithic Civilization are so hidebound by adapting to living inside those
vicious feedback loops based on being able to enforce frauds that those human beings are mostly unwilling and unable to better
understand themselves as also manifestations of general energy systems.
As the report, embedded in the article, begins by quoting Leonardo da Vinci:
"Learn how to see. Realize that everything connects to everything else."
In general, "Asset Managers" are stuck inside taking for granted that everything they do has become almost totally based
on being able to enforce frauds, despite some of them noticing the increasingly blatant ways that there are accumulating apparent
anomalies in those systems, as vicious feedback loops drive those systems to become about exponentially more fraudulent, and therefore
increasingly unbalanced. To come to better terms with those apparent anomalies requires going through series of intellectual scientific
revolutions and profound paradigm shifts, which overall become ways that human beings better understand themselves as manifestations
of general energy systems. However, since doing so requires recognizing how and why governments are necessarily the biggest forms
of organized crime, dominated by the best organized gangsters, the banksters, it continues to be politically impossible to accomplish
that.
At each open, algos compute the increase in their AUM from the prior day and their margin reach. They then begin buying.
All algos do this. Buying whenever cash/margin exists; selling whenever profit targets exist. On pullbacks, the algos withdraw,
volume evaporates, minimizing the drop. The algos collectively increase equity prices without consideration of the value of the
money involved. Not valuations. No fundamentals. Just ones and zeroes. Just a program.
"... Well, again, what he was doing was running a program of a certain scale, of a large scale, through a set of standard macroeconomic assumptions. And that, again, is a reasonable exercise. If you ask me what my personal view is, I've written a whole book called The End of Normal in which I lay out reasons for my chronic pessimism about the capacity of the world economy to absorb a great deal more rapid economic growth. ..."
"... But that's not in the standard models, and it would not be appropriate to layer that on to a forecast of this kind. What Friedman was criticized for was not for putting his thumb on the scale, but for failing to put his thumb on the scale. In fact, that was the reasonable thing to do ..."
"... So what we had here was a, what was essentially an academic exercise that produced a result that was highly favorable to the Sanders position, and showed that if you did an ambitious program you would get a strong growth response. It's reasonable, certainly, for the first three or four years that that would transpire in practice. And what happened was that people who didn't like that result politically jumped on it in a way which was, frankly speaking, professionally irresponsible, in my view. It was designed to convey the impression, which it succeeded in doing for a brief while through the broad media, that this was not a reputable exercise, and that there were responsible people on one side of the debate, and irresponsible people on the other. ..."
"... The true nature of Capitalism has obviously been forgotten over time. Today we think it brings prosperity to all, but that was certainly never the intention. Today's raw Capitalism is showing its true nature with ever rising inequality. Capitalism is essentially the same as every other social system since the dawn of civilization. The lower and middle classes do all the work and the upper, leisure Class, live in the lap of luxury. The lower class does the manual work; the middle class does the administrative and managerial work and the upper, leisure, class live a life of luxury and leisure. ..."
"... The nature of the Leisure Class, to which the benefits of every system accrue, was studied over 100 years ago. "The Theory of the Leisure Class: An Economic Study of Institutions", by Thorstein Veblen. (The Wikipedia entry gives a good insight. It was written a long time ago but much of it is as true today as it was then. This is the source of the term conspicuous consumption.) We still have our leisure class in the UK, the Aristocracy, and they have been doing very little for centuries. The UK's aristocracy has seen social systems come and go, but they all provide a life of luxury and leisure and with someone else doing all the work. ..."
"... Feudalism – exploit the masses through land ownership. Capitalism – exploit the masses through wealth (Capital) ..."
"... Now the competition has gone, the US middle class is being wiped out. The US is going third world, with just rich and poor and no middle class. Raw Capitalism can only return Capitalism to its true state where there is little demand and those at the bottom live a life of bare subsistence. ..."
"... "The Marxian capitalist has infinite shrewdness and cunning on everything except matters pertaining to his own ultimate survival. On these, he is not subject to education. He continues wilfully and reliably down the path to his own destruction" ..."
"... "We came, we saw, he died" rinse and repeat for 5,000 years. ..."
"... By the 1920s, mass production techniques had improved to such an extent that relatively wealthy consumers were required to purchase all the output the system could produce and extensive advertising was required to manufacture demand for the chronic over-supply the Capitalist system could produce. ..."
"... They knew that if wealth concentrated too much there would not be enough demand. ..."
"... Fiscal conservatism, which champions a balanced budget and expenditure restraints, is often hailed as a politico-economic philosophy as well as a policy of financial responsibility. In practice, it has been used as an argument against free spending by governments which can lead to high levels of debt and inflation. It has not been a positive philosophy which advocates the pro-growth and stability benefits coming from balanced budgets. Rather, it is a negative one – reacting against excessive spending and its consequences. This is probably why modern examples of fiscal conservatism in the United States and the United Kingdom have not led to sustainable growth or a significant reduction in public debt. Instead, in the case of the Ronald Reagan era in the US in the 1980s, public debt soared as fiscal conservatism and other policies were abandoned. ..."
"... Galbraith is probably my favorite economist, and eminently reasonable here. It makes me think that Sanders should have used him, or someone like him as an adviser/in house economist, rather than relying on external analyses like Friedman. ..."
"... Is the American public, trained/indoctrinated to think of the USG budget in terms of a household budget analogy, ready for MMT? ..."
"... To me, too many of the supposed (and actual) intellectuals and high level advisers were experts in rationalizing and explaining the chosen party views, but still employed the Cato Institute suggestion to use "Leninist" propaganda techniques as put forth in the 1996 Newt Gingrich/Frank Luntz GoPac memo, "Language: A Key Mechanism of Control." ..."
"... Galbraith said casually about the thesis of his new book: This really is the new normal for capitalism – meaning low growth – because there is not much growth left. ..."
PERIES: James, the Council of Economic Advisors, they put out economic forecasts each year. And there has been some wildly
optimistic ones. For example, if you look at the 2010 predictions for 2012 and 2013 they have not quite been attained. And one would
say it was done in the interest of trying to make the administration that they were serving more impressive. But what accounts for
this particular attack on Friedman's projection and other fellow economists?
GALBRAITH: This was a classic case of professional bad manners and rank-pulling. What we had here were four former chairs
of the president's Council of Economic Advisors, and two from President Obama, two from President Clinton, who decided to use their
big names and their titles in order to launch an attack on a professor of economics at the University of Massachusetts who had written
a paper evaluating the Sanders economic program.
It's likely that the four bigwigs thought that Professor Friedman was a Bernie Sanders supporter. In fact, as of that time he
was a Hillary Clinton supporter and a modest donor to her campaign. What he had done was simply to write his evaluation of the economic
effects of the ambitious Sanders reform program. The four former council chairs announced that on the basis of their deep commitment
to rigor and objectivity, they had discovered that this forecast was unrealistic. And what I pointed out was that that claim was
based on no evidence and no analysis whatsoever. And when you pressed down on it you found that it was simply based on the obvious
fact that we haven't seen the kinds of growth rates that Professor Friedman's analysis suggested the Sanders program would produce.
And for a very simple reason: the Sanders program is bigger. It's more ambitious than anything we've seen in recent years, so it's
not surprising that when you put it through a model it generates a higher growth rate.
So that was the basic underlying facts, and these guys, two men and two women, announced that they, that it was a disreputable
study, but failed to present any analysis that suggested they'd actually even read the paper before they denounced it. And that's
what I pointed out in my counter letter, in a number of articles that have appeared since.
PERIES: James, so in your letter, how do you counter them? What methods did you use to come to your conclusions?
GALBRAITH: Well, I, no need to say anything beyond the fact that I had looked in their letter for the rigor that they were
so proud of, for the objectivity and the analysis that they were so proud of, and I'd found that they had not done any. They had
not made any such claim, not done any such work.
So that began to provoke a discussion. It's fair to say ultimately, without apologizing for effectively launching an ad hominem
attack on an independent academic researcher, one of the former chairs, Christina Romer of President Obama's council, and her husband
David Romer, a fellow economist, did produce a paper in which they spelled out their differences with the, with the Friedman paper.
But that, again, raised another set of interesting issues which we've continued to discuss at various, various outlets of the press.
PERIES: Now, James Friedman's claim that the growth rate from Sanders' plan to be around 5.3 percent. And some economists,
including Dean Baker at the Center for Economic Policy and Research, have claimed that this is unrealistic. What do you make of that?
GALBRAITH: Well, the question is whether it is an effect, let's say, a reasonable projection, of putting the Sanders program
into an economic model. And the answer to that question, yes, Professor Friedman did a reasonable job. He spelled out what the underlying
assumptions that he was using were. He spelled out the basic rules of thumb that macroeconomists had used for decades to assess the
effects of an economic program. In this case, an expansionary economic program. And he ran them through his model and reported the
results, a perfectly reasonable thing to do.
Now, one can be skeptical. And I am, and Dean Baker is, lots of people are skeptical that the world would work out quite that
way, because lots of things, in fact, happen which are not accounted for in a model. And we've talked, we've basically put together
a list of things that you think might be problematic. But the exercise here was not to put everything into paper that might happen
in the world. The exercise was to take the kind of bare bones that economists use to assess and to compare the consequences of alternative
programs, and to ask what kind of results do you get out? And that's what, again, what Jerry Friedman did. It was a reasonable exercise,
he came up with a reasonable answer, and he reported it.
PERIES: Now, Friedman seems to think that the rate of full employment in 1999 is attainable. However, many labor economists
seem to think that the larger share of the elderly currently in society compared to 1999 explains some of the lack of labor participation,
which creates a lower full employment ceiling that's contradicting Friedman's report. Your thoughts on that?
GALBRAITH: Well, I think it is a fact that the population is getting older. But as, I think, any economist would tell you,
that when you offer jobs in the labor market, the first thing that happens is the people who are looking for work take those jobs.
The second thing that happens is that people who might look for work when jobs were available start coming back into the labor market.
And if that is not enough to fill the vacancies that you have, it's perfectly open to employers to raise their wages so as to bring
more people in, or to increase the pace at which they innovate and substitute technology for labor so that they don't need the work.
So there's no real crisis involved in the situation if it turns out five years from now we're at 3.5 percent unemployment, and
they were beginning to run short of labor. That's not a reason to, at this stage, say no, we're not going to engage in the exercise
and run a more expansionary, vigorous reform program, a vigorous infrastructure project, a major reform of healthcare, a tuition-free
public education program. All of those things, which were part of what Friedman put into his paper, should be done anyway. The fact
that the labor market forecast might prove to have some different, the labor market might have different characteristics in five
years' time is from our present point of view just a, it's an academic or a theoretical proposition, purely.
PERIES: And Friedman's paper, he looks at a ten-year forecast. Did you feel that when you looked at the specifics of that,
including college, universal healthcare, infrastructure spending and of course, expanding Social Security and so on, that those categories
and his predictions or projections, rather, made sense to you?
GALBRAITH:Well, again, what he was doing was running a program of a certain scale, of a large scale, through a set
of standard macroeconomic assumptions. And that, again, is a reasonable exercise. If you ask me what my personal view is, I've written
a whole book called The End of Normal in which I lay out reasons for my chronic pessimism about the capacity of the world economy
to absorb a great deal more rapid economic growth.
But that's not in the standard models, and it would not be appropriate to layer that on to a forecast of this kind. What Friedman
was criticized for was not for putting his thumb on the scale, but for failing to put his thumb on the scale. In fact, that was the
reasonable thing to do.
On the contrary, and on the other side, when Christina and David Romer did put out their forecast, their own criticism of the
Friedman paper, they concluded by asserting that if this program were tried, inflation would soar. So they there were making an allegation
for which, again, they had no evidence and no plausible model, that in the world in which we presently live would produce that result.
So what we had here was a, what was essentially an academic exercise that produced a result that was highly favorable to the
Sanders position, and showed that if you did an ambitious program you would get a strong growth response. It's reasonable, certainly,
for the first three or four years that that would transpire in practice. And what happened was that people who didn't like that result
politically jumped on it in a way which was, frankly speaking, professionally irresponsible, in my view. It was designed to convey
the impression, which it succeeded in doing for a brief while through the broad media, that this was not a reputable exercise, and
that there were responsible people on one side of the debate, and irresponsible people on the other.
And that was, again, something that–an impression that could be conveyed through the mass media, but would not withstand scrutiny,
and didn't withstand scrutiny, once a few of us stood up and started saying, okay, where's your evidence, on what are you basing
this argument? And revealed the point, which the Romers implicitly conceded, and I give them credit for that, that in order to criticize
a fellow economist you need to do some work.
The true nature of Capitalism has obviously been forgotten over time. Today we think it brings prosperity to all, but that
was certainly never the intention. Today's raw Capitalism is showing its true nature with ever rising inequality. Capitalism is
essentially the same as every other social system since the dawn of civilization. The lower and middle classes do all the work
and the upper, leisure Class, live in the lap of luxury. The lower class does the manual work; the middle class does the administrative
and managerial work and the upper, leisure, class live a life of luxury and leisure.
The nature of the Leisure Class, to which the benefits of every system accrue, was studied over 100 years ago. "The Theory
of the Leisure Class: An Economic Study of Institutions", by Thorstein Veblen. (The Wikipedia entry gives a good insight. It was
written a long time ago but much of it is as true today as it was then. This is the source of the term conspicuous consumption.)
We still have our leisure class in the UK, the Aristocracy, and they have been doing very little for centuries. The UK's aristocracy
has seen social systems come and go, but they all provide a life of luxury and leisure and with someone else doing all the work.
Feudalism – exploit the masses through land ownership. Capitalism – exploit the masses through wealth (Capital)
Today this is done through the parasitic, rentier trickle up of Capitalism:
a) Those with excess capital invest it and collect interest, dividends and rent.
b) Those with insufficient capital borrow money and pay interest and rent.
All this was much easier to see in Capitalism's earlier days.
Malthus and Ricardo never saw those at the bottom rising out of a bare subsistence living. This was the way it had always been
and always would be, the benefits of the system only accrue to those at the top.
It was very obvious to Adam Smith:
"The Labour and time of the poor is in civilised countries sacrificed to the maintaining of the rich in ease and luxury. The
Landlord is maintained in idleness and luxury by the labour of his tenants. The moneyed man is supported by his extractions from
the industrious merchant and the needy who are obliged to support him in ease by a return for the use of his money. But every
savage has the full fruits of his own labours; there are no landlords, no usurers and no tax gatherers."
Like most classical economists he differentiated between "earned" and "unearned" wealth and noted how the wealthy maintained
themselves in idleness and luxury via "unearned", rentier income from their land and capital.
We can no longer see the difference between the productive side of the economy and the unproductive, parasitic, rentier side.
This is probably why inequality is rising so fast, the mechanisms by which the system looks after those at the top are now hidden
from us.
In the 19th Century things were still very obvious.
1) Those at the top were very wealthy
2) Those lower down lived in grinding poverty, paid just enough to keep them alive to work with as little time off as possible.
3) Slavery
4) Child Labour
Immense wealth at the top with nothing trickling down, just like today.
This is what Capitalism maximized for profit looks like. Labour costs are reduced to the absolute minimum to maximise profit.
The beginnings of regulation to deal with the wealthy UK businessman seeking to maximise profit, the abolition of slavery and
child labour. The function of the system is still laid bare. The lower class does the manual work; the middle class does the administrative
and managerial work and the upper, leisure, class live a life of luxury and leisure. The majority only got a larger slice of the
pie through organised Labour movements.
By the 1920s, mass production techniques had improved to such an extent that relatively wealthy consumers were required to
purchase all the output the system could produce and extensive advertising was required to manufacture demand for the chronic
over-supply the Capitalist system could produce. They knew that if wealth concentrated too much there would not be enough demand.
In the 1950s, when Capitalism had healthy competition, it was essential that the Capitalist system could demonstrate that it was
better than the competition. The US was able to demonstrate the superior lifestyle it offered to its average citizens.
Now the competition has gone, the US middle class is being wiped out. The US is going third world, with just rich and poor
and no middle class. Raw Capitalism can only return Capitalism to its true state where there is little demand and those at the
bottom live a life of bare subsistence.
When you realise the true nature of Capitalism, you know why some kind of redistribution is necessary and strong progressive
taxation is the only way a consumer society can ever be kept functioning.
A good quote from John Kenneth Galbraith's book "The Affluent Society", which in turn comes from Marx.
"The Marxian capitalist has infinite shrewdness and cunning on everything except matters pertaining to his own ultimate
survival. On these, he is not subject to education. He continues wilfully and reliably down the path to his own destruction"
Marx made some mistakes but he got quite a lot right.
Perhaps, Western civilization had already cultivated and concentrated psychopathic personality traits in its elite before Capitalism
ever begun. Early European history is an endless procession of wars at home and abroad as the elite took their wealth by force
and the masses were kept in check by force whenever necessary.
No peaceful group could ever survive this relentless onslaught of millennia. This psychopathic elite then took their warlike
ways to every corner of the earth. The wealthy elite from this era then became the wealthy elite of the next Capitalist era. Even
today their bloodlust cannot be sated as they look to control a global empire.
Certainly countless hundreds of peaceful, responsible, inclusive, open, empathetic indigenous societies have been co-opted/overthrown
by the western model.
Yes, but it's not just the western model that overthrows peaceful societies. The empires of China, the Japanese monarchies,
the empires of India (together with a cringeworthy caste system), the human sacrificing Aztecs, Mayas, and Incas, all prove that
tyranny is not a western invention.
When a local population becomes too large to be supported by simple egalitarian hunting and gathering, something else is required.
That something is agriculture, and almost inevitably, the organization, specialization, and partial urbanization required by large
scale agricultural society leads to exploitation and tyranny. This is seen in the earliest societies for which we have a written
record, Sumer and Egypt.
Thanks for the explanations of Veblen and Galbraith, which I find enduring basics over more than 100 years of speculation,
real investment, and the best way to keep consumer society healthy.
My unschooled, simple, way to measure the health of an economy is in the Velocity of Money in the real economy of useful products
and services. It appears to be very far below where it was when we did our best, and lower than when we first started measuring
it near the beginning of the Great Depression.
By the 1920s, mass production techniques had improved to such an extent that relatively wealthy consumers were required
to purchase all the output the system could produce and extensive advertising was required to manufacture demand for the chronic
over-supply the Capitalist system could produce.
They knew that if wealth concentrated too much there would not be enough demand.
Of course the Capitalists could never find it in themselves to raise wages and it took the New Deal and Keynesian thinking
to usher in the consumer society.
Fiscal conservatism, which champions a balanced budget and expenditure restraints, is often hailed as a politico-economic
philosophy as well as a policy of financial responsibility. In practice, it has been used as an argument against free spending
by governments which can lead to high levels of debt and inflation. It has not been a positive philosophy which advocates the
pro-growth and stability benefits coming from balanced budgets. Rather, it is a negative one – reacting against excessive spending
and its consequences. This is probably why modern examples of fiscal conservatism in the United States and the United Kingdom
have not led to sustainable growth or a significant reduction in public debt. Instead, in the case of the Ronald Reagan era in
the US in the 1980s, public debt soared as fiscal conservatism and other policies were abandoned.
A Monetarily Sovereign government does not need to reduce debt. In the U.S. (which is Monetarily Sovereign) federal so-called
"debt" is actually the total of deposits in T-security accounts at the Federal Reserve Bank. In short, "debt" is bank deposits.
Why anyone would want to reduce the size of deposits at the world's safest bank is a mystery to me - other than the misleading
use of the word "debt."
While all bank accounts are, in fact, debt of banks, most banks boast about the size of their depositors' accounts.
Contrary to popular myth, federal debt (i.e. deposits at the FRB) does not lead to inflation. America's "debt" has grown more
than 9,000% in the past 75 years, and the Fed is struggling to create inflation.
Galbraith is probably my favorite economist, and eminently reasonable here. It makes me think that Sanders should have
used him, or someone like him as an adviser/in house economist, rather than relying on external analyses like Friedman. It
would possibly have given his program more gravitas – first amongst elites, and then more generally. At least it would have had
a chance of changing the broader discussion. Whether you agree with it or not, right now the general MSM reporting on the Sanders
plan is that it doesn't add up.
This is speculative, but since Prof. Kelton is actually the economist for the Minority (the Democrats) of the Senate Banking
committee, there may be reasons of protocol that Sanders isn't using her policy ideas at the moment.
Another possibility is that trying to introduce a new economic paradigm while running for the nomination may be a bridge too
far. If Sanders tried to explain to people that taxes don't fund federal spending, etc., heads would explode.
I'm also not sure how one would use Prof. Kelton's ideas without bringing in a whole bunch of MMT concepts. Maybe if Sanders
wins the nomination he can begin to bring some of these ideas into the conversation.
He won't use her ideas simple because the American voter in not yet amenable to the facts of
Monetary Sovereignty .
Try explaining even to your best friend that:
1. Unlike state and local taxes, Federal taxes do not fund federal spending.
2. Even if FICA were eliminated, Social Security and Medicare benefits dramatically could (and should) be increased. There are
no federal "trust funds."
3. Federal deficits are necessary for economic growth
4. Federal "debt" is nothing more than deposits in T-security accounts at the Federal Reserve Bank.
5. America never has had, and is absolutely in no danger of, hyper-inflation.
Perhaps, if Bernie wins the election, he will be freer to educate the masses, as well as the economics community, but meanwhile
he has to claim the popular myth that federal spending has to be "paid for" by taxes.
Is the American public, trained/indoctrinated to think of the USG budget in terms of a household budget analogy, ready
for MMT? I think it's politically OK to use MMT informed policies–"deficits don't matter"–as the Republicans have, but not
OK to openly acknowledge doing so. MMT runs head on into bedrock beliefs like the protestant moral virtues of thrift and fiscal
responsibility. People cling to this stuff as tightly as they cling to their religion and guns.
MMT is a volatile, explosive doctrine. Tell an ordinary off-the-street taxpayer that Federal taxes don't fund Federal expenditures,
that Federal taxes destroy the money they collect and so keep inflation at desired levels, and ready yourself to answer this:
"If I'm just paying taxes so the money can be burned, why should I pay taxes? What good does paying taxes for that do me,
or people like me?"
And be prepared not to have your answer heard, comprehended, or accepted, after it is given.
It could lead directly and quickly to the end of a system of tax collection based on voluntary compliance. It could ignite
a revolution.
MMT is an unpopular doctrine. Whether it is the true theory, or a truer theory than others, of the state of the world–is not
the point.
She can't. She's his staffer (on the Senate Budget Committee) so she is now allowed to work on the campaign. It would be a
big ethics violation and would produce a scandal. Staffers cannot work on any of their bosses campaigns, including re-elections.
Remember, they are government employees, not on Sanders' personal payroll.
My old party has worked hard to try discredit James Galbraith. I was faced with some ridicule from a Bush era international
negotiator for trying to read "The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too" in
an airport waiting area.
To me, too many of the supposed (and actual) intellectuals and high level advisers were experts in rationalizing and explaining
the chosen party views, but still employed the Cato Institute suggestion to use "Leninist" propaganda techniques as put forth
in the 1996 Newt Gingrich/Frank Luntz GoPac memo, "Language: A Key Mechanism of Control."
I don't oppose them (at that level) expressing their well thought out views, even using the "persuasive" techniques described
in the document at http://www.informationclearinghouse.info/article4443.htm
but I do fault them for trying to prevent people from freely exploring far more comprehensive information and views.
We left the party ancestors had founded and stayed loyal to for 5 generations, though, because of the lower level dirty tricksters
("opposition researchers") that wanted us to corrupt the processes as one fund raiser told me, "We have to fight dirtier than
Democrats."
Galbraith is a voice that must be listened to, just as there may be many others that we should be able to listen to (as I assume
we could have under the old "Fairness Doctrine" before the corporate take over of almost all fully accessible media).
stg Galbraith said casually about the thesis of his new book: This really is the new normal for capitalism – meaning low
growth – because there is not much growth left. So maybe we are headed for a no growth world in which stability and sustainability
dictate enterprise which is used to maintain a steady state – so that sounds more socialist than capitalist out of necessity.
I believe this is our future too. And I think I understand Varoufakis' and Galbraith's "modest proposal" in a clearer light because
growth must be used going forward not willy-nilly, but to achieve our ends. And also too – a while back the link that effectively
said we had it backwards when we assume that capitalism supports socialism – because capitalism in reality lives off and is only
possible under sufficient socialism. And it seems the 4 presidential advisors are more out to lunch than their letter showed.
Can't respond to all the nonsense. I just read Wolfer's piece and it seems to miss the point (as with the Romers), as noted
in the following 2 articles. I especially recommend the 2nd one from John Cassidy in the New Yorker.
as usual, i hear a lot "they" failed conservatism, never, Conservatism is just the age old avenue to "scam" the other. Bush
"failed" at conservatism, i.e., it was Bush's fault not the ideology of Conservatism. on and on, this self repeated/reinforced
"idea" that we have just not "found" the correct "application" of the ideal/reality that is Conservatism.
it does get old, too. all the people killed due to Conservatism and its' perpetrators. Greed, in other words, and the age old
scam with "new and improved" tactics. These people have no concept of what "society" is, why we are all interrelated. to scam
one is to scam us all. and these people are definitely not Christian in the "Jesus Christ" i've always heard about. Whatsoever
you do unto the poor, you do unto me!
i just suppose psychopaths use any avenue for their "crimes." as i've heard, too, any great fortune is usually the result of
a great crime.
It was Open Access week last week, but I was too busy trying to meet the deadline today for submitting my book manuscript to
Open Book Publishers . That sounds like a good excuse if one cares
about open access, right? I slept too little for too many days, so don't expect any creative thoughts or subtle analyses from me
tonight. But here's two interesting things I discovered while having a look on the web figuring out whether anything interesting
happend during Open Access week.
First, Cambridge University digitalised the PhD dissertation
of Stephen Hawking and put it online. Apparently the website crashed when that got announced. Any Cambridge University alumni
who want to make their PhD dissertation Open Access
are invited doing so (no more need to go to the reading room and sign a fat notebook that one has accessed a particular PhD dissertation,
as I once did. Although, I should confess, it felt like an adventure. But it's highly inefficient obviously).
Second, for some weeks now, Open Book Publishers has been offering the PDFs of all of their books open access, to celebrate the
100th book they published (their regular regime is to have the books as html open access and selling the PDFs for a few pounds, or
else the author can pay a fee for making the PDF open access).
Importantly, this may only last for another a day or two (I am drawing from my memory when I saw a tweet on that about two months
ago), so while it lasts it may be worth checking out their collection of books in the humanities and the social sciences, such as
Naom Chomsky's Delhi Lectures , Ruth Finnegan's book
on Oral literature in Africa or
textbooks on maths for university .
All for nothing. Because, as their slogan goes, knowledge is for sharing .
Worth mentioning in this context: the CORE project released the final version of their impressive economics textbook "The Economy",
freely (as in CC by-nc-dd licensed) available at http://www.core-econ.org/the-economy/
I think that having open access publishers is great, and I would love to have books published this way. Here's the concern: I
suspect that my University's promotions committee, etc, will view this kind of publication as "inferior" to one with some snazzy
University Press.
I was wondering whether anyone has any advice about how to handle the fact that there are perverse incentives to publish your
work in a format which will cost someone £70, rather than for free?
I don't see a way of changing the situation Steve mentions except by having well established scholars who don't need to worry
about those kinds of thing take the lead. Eg, Ingrid. and David Velleman (who has two books with Open Book, which I greedily downloaded).
And Sam Bowles! -- thanks for the tip ccc, I knew about this from Bowles and had seen parts of it, but not the whole thing which
looks great!
Steve, I fully understand the worry – and even for me (tenured full professor) there is a "status cost" to be paid by not publishing
with an established University Press. But it's a vicious circle that has to be broken – and I agree with Harry, that those of
us who can "afford" to publish Open Access, should do so, in order to try to contribute to the status of the Open Access Press.
I should say that in terms of refereeing – I've published two co-edited books, one with OUP, one with CUP – and the refereeing
process at Open Books was the same, if not better. And a very important advantage of publishing with a publisher such as Open
Books is the much shorter time between delivering the final manuscript and publication – if you do all your work properly, it's
a matter of weeks or a few months, not, as with the established University Presses, (almost) a year (I've always wondered what
the hell happens in that year, especially if they turn back the proofs which are full with typo's!)
I've been thinking someone should write a paper with the title: "If you have tenure, why don't you publish Open Access?"
@3,4: Possibly the switch to open access needs to be done at an institutional level, rather than by individuals.
e.g. A declaration by government evaluations such as the REF that publications won't be counted unless they are open access,
followed by a declaration by your department that publications from now onwards won't be counted for promotions unless they are
open access, might create the right incentives.
[There are potential issues regarding fairness towards academics who are moving between universities . how do you fairly compare
job candidates when one is from a university that demanded open access publication, and another is from a university that didn't?]
Not to make too much of the obvious, given that I'm writing a blog comment, but blogs offer some great opportunities here.
CT readers got to see nearly all of Zombie Economics before the book appeared, and if I ever finish Economics in
Two Lessons it will be long after much of it was posted here.
This is an old article by Jesse, but today it sound even more pertinent then two years ago, before Trump ascendance to power.
"... Corrupt officials burden taxpayers with unsustainable amounts of debt for unproductive, grossly overpriced projects. "
.
"...would be wrong in these instances to blame the whole country, the whole government, or all corporations, except perhaps for
sleepwalking, and sometimes willfully, towards the abyss. For the most part a relatively small band of scheming and devious fellows
abuse and corrupt every form of government and organization and law in order to achieve their private ambitions, often using various
forms of intimidation and reward."
. "...The TPP and TTIP are integral initiatives in this effort of extending financial obligations, debt, and control."
. "..."Economic powers continue to justify the current global system where priority tends to be given to speculation and
the pursuit of financial gain. As a result, whatever is fragile, like the environment, is defenseless before the interests of the deified
market, which becomes the only rule." Francis I, Laudato Si "
This video below may help one to understand some of the seemingly obtuse demands from the Troika with regard to Greece.
The video is a bit dated, but the debt scheme it describes remains largely unchanged. The primary development has been the creation
of an experiment called the European Union and the character of the targets. One might also look to the wars of 'preventative intervention'
and 'colour revolutions' that raise up puppet regimes for examples of more contemporary economic spoliation. From largely small and
Third World countries, the candidates for debt peonage have become the smaller amongst the developed Western countries, the most
vulnerable on the periphery. And even the domestic populations of the monetary powers, the US, Germany, and the UK, are now feeling
the sting of financialisation, debt imposition through crises, and austerity. What used to only take place in South America and Africa
has now taken place in Jefferson County Alabama. Corrupt officials burden taxpayers with unsustainable amounts of debt for unproductive,
grossly overpriced projects.
It would be wrong in these instances to blame the whole country, the whole government, or all corporations, except perhaps
for sleepwalking, and sometimes willfully, towards the abyss. For the most part a relatively small band of scheming and devious fellows
abuse and corrupt every form of government and organization and law in order to achieve their private ambitions, often using various
forms of intimidation and reward. It is an old, old story. And then there is the mass looting enable by the most recent financial
crisis and Bank bailouts. If the people will not take on the chains of debt willingly, you impose them indirectly, while giving the
funds to your cronies who will use them against the very people who are bearing the burdens, while lecturing them on moral values
and thrift. It is an exceptionally diabolical con game.
The TPP and TTIP are integral initiatives in this effort of extending financial obligations, debt, and control. You might
ask yourself why the House Republicans, who have fought the current President at every turn, blocking nominees and even stages many
mock votes to repeatedly denounce a healthcare plan that originated in their own think tank and first implemented by their own presidential
candidate, are suddenly championing that President's highest profile legislation, and against the opposition of his own party? The
next step, after Greece is subdued, will be to extend that model to other, larger countries. And to redouble the austerity at home
under cover of the next financial crisis by eliminating cash as a safe haven, and to begin the steady stream of digital 'bailing-in.'
This is why these corporatists and statists hate gold and silver, by the way. And why it is at the focal point of a currency war.
It provides a counterweight to their monetary power. It speaks unpleasant truths. It is a safe haven and alternative, along with
other attempts to supplant the IMF and the World Bank, for the rest of the world. So when you say, the Philippines deserved it,
Iceland deserved it, Ireland deserved it, Africa deserves it, Jefferson County deserved it, Detroit deserved it, and now Greece deserves
it, just keep in mind that some day soon they will be saying that you deserve it, because you stood by and did nothing.
Because when they are done with all the others, for whom do you think they come next? If you wish to see injustice stopped,
if you wish to live up to the pledge of 'never again,' then you must stand for your fellows who are vulnerable. The economic hitmen
have honed their skills among the poor and relatively defenseless, and have been coming closer to home in search of new hunting grounds
and fatter spoils.
There is nothing 'new' or 'modern' about this. This is as old as Babylon, and evil as sin. It is the power of darkness of the
world, and of spiritual wickedness in high places. The only difference is that it is not happening in the past or in a book, it is
happening here and now.
"Economic powers continue to justify the current global system where priority tends to be given to speculation and the
pursuit of financial gain. As a result, whatever is fragile, like the environment, is defenseless before the interests of the
deified market, which becomes the only rule." Francis I, Laudato Si
You may also find some information about the contemporary applications of these methods in The IMF's 'Tough Choices' On Greece
by Jamie Galbraith.
"Plunderers of the world, when nothing remains on the lands to which they have laid waste by wanton thievery, they search
out across the seas. The wealth of another region excites their greed; and if it is weak, their lust for power as well. Nothing from
the rising to the setting of the sun is enough for them. Among all others only they are compelled to attack the poor as well as the
rich. Robbery, rape, and slaughter they falsely call empire; and where they make a desert, they call it peace."
Tacitus, Agricola Posted by Jesse at 11:46 AM Email This BlogThis! Share to Twitter Share to Facebook Share to Pinterest
Category: currency war, debt peonage, debt slavery, neo-colonialism, new world order
"This overly narrow hiring spec then leads to absurd, widespread complaint that companies can't find people with the right skills"
. In the IT job markets such postings are often called purple squirrels
Notable quotes:
"... In particular, there seems to be an extremely popular variant of the above where the starting proposition "God makes moral people rich" is improperly converted to "Rich people are more moral" which is then readily negated to "Poor people are immoral" and then expanded to "Poor people are immoral, thus they DESERVE to suffer for it". It's essentially the theological equivalent of dividing by zero ..."
"... That said, the ranks of the neoliberals are not small. They constitute what Jonathan Schell calls a "mass minority." I suspect the neoliberals have about the same level of popular support that the Nazis did at the time of their takeover of Germany in 1932, or the Bolsheviks had in Russia at the time of their takeover in 1917, which is about 20 or 25% of the total population. ..."
"... The ranks of the neoliberals are made to appear far greater than they really are because they have all but exclusive access to the nation's megaphone. The Tea Party can muster a handful of people to disrupt a town hall meeting and it gets coast to coast, primetime coverage. But let a million people protest against bank bailouts, and it is ignored. Thus, by manipulation of the media, the mass minority is made to appear to be much larger than it really is. ..."
Over the past three decades, large parts of our culture here in the US have internalized the lessons of the new Social Darwinism,
with a significant body of literature to explain and justify it. Many of us have internalized, without even realizing it,
the ideas of "dog eat dog", "every man for himself", "society should be structured like the animal kingdom, where the weak and
sick simply die because they cannot compete, and this is healthy", and "everything that happens to you is your own fault. There
is no such thing as circumstance that cannot be overcome, and certainly no birth lottery."
The levers pulled by politicians and the Fed put these things into practice, but even if we managed get different (better)
politicians or Fed chairmen, ones who weren't steeped in this culture and ideology, we'd still be left with the culture in the
population at large, and things like the "unemployed stigma" are likely to die very, very hard. Acceptance of the "just-world
phenomenon" here in the US runs deep.
perfect stranger:
"Religion is just as vulnerable to corporate capture as is the government or the academy."
This is rather rhetorical statement, and wrong one. One need to discern spiritual aspect of religion from the religion as a
tool.
Religion, as is structured, is complicit: in empoverishment, obedience, people's preconditioning, and legislative enabler in
the institutions such as Supreme – and non-supreme – Court(s). It is a form of PR of the ruling class for the governing class.
DownSouth:
perfect stranger,
Religion, just like human nature, is not that easy to put in a box.
For every example you can cite where religion "is complicit: in empoverishment, obedience, people's preconditioning, and legislative
enabler in the institution," I can point to an example of where religion engendered a liberating, emancipatory and revolutionary
spirit.
Examples:
•Early Christianity •Nominalism •Early Protestantism •Gandhi •Martin Luther King
Now granted, there don't seem to be any recent examples of this of any note, unless we consider Chris Hedges a religionist,
which I'm not sure we can do. Would it be appropriate to consider Hedges a religionist?
perfect stranger:
Yes, that maybe, just maybe be the case in early stages of forming new religion(s). In case of Christianity old rulers from
Rome were trying to save own head/throne and the S.P.Q.R. imperia by adopting new religion.
You use examples of Gandhi and MLK which is highly questionable both were fighters for independence and the second, civil rights.
In a word: not members of establishment just as I said there were (probably) seeing the religion as spiritual force not tool of
enslavement.
In particular, there seems to be an extremely popular variant of the above where the starting proposition "God makes moral
people rich" is improperly converted to "Rich people are more moral" which is then readily negated to "Poor people are immoral"
and then expanded to "Poor people are immoral, thus they DESERVE to suffer for it". It's essentially the theological equivalent
of dividing by zero
DownSouth:
Rex,
I agree.
Poll after poll after poll has shown that a majority of Americans, and a rather significant majority, reject the values, attitudes,
beliefs and opinions proselytized by the stealth religion we call "neoclassical economics."
That said, the ranks of the neoliberals are not small. They constitute what Jonathan Schell calls a "mass minority." I
suspect the neoliberals have about the same level of popular support that the Nazis did at the time of their takeover of Germany
in 1932, or the Bolsheviks had in Russia at the time of their takeover in 1917, which is about 20 or 25% of the total population.
The ranks of the neoliberals are made to appear far greater than they really are because they have all but exclusive access
to the nation's megaphone. The Tea Party can muster a handful of people to disrupt a town hall meeting and it gets coast to coast,
primetime coverage. But let a million people protest against bank bailouts, and it is ignored. Thus, by manipulation of the media,
the mass minority is made to appear to be much larger than it really is.
The politicians love this, because as they carry water for their pet corporations, they can point to the Tea Partiers and say:
"See what a huge upwelling of popular support I am responding to."
JTFaraday:
Well, if that's true, then the unemployed are employable but the mass mediated mentality would like them to believe they
are literally and inherently unemployable so that they underestimate and under-sell themselves.
This is as much to the benefit of those who would like to pick up "damaged goods" on the cheap as those who promote the unemployment
problem as one that inheres in prospective employees rather than one that is a byproduct of a bad job market lest someone be tempted
to think we should address it politically.
That's where I see this blame the unemployed finger pointing really getting traction these days.
attempter:
I apologize for the fact that I only read the first few paragraphs of this before quitting in disgust.
I just can no longer abide the notion that "labor" can ever be seen by human beings as a "cost" at all. We really need to refuse
to even tolerate that way of phrasing things. Workers create all wealth. Parasites have no right to exist. These are facts, and
we should refuse to let argument range beyond them.
The only purpose of civilization is to provide a better way of living and for all people. This includes the right and full
opportunity to work and manage for oneself and/or as a cooperative group. If civilization doesn't do that, we're better off without
it.
psychohistorian:
I am one of those long term unemployed.
I suppose my biggest employment claim would be as some sort of IT techie, with numerous supply chain systems and component
design, development, implementation, interfaces with other systems and ongoing support. CCNP certification and a history of techiedom
going back to WEYCOS.
I have a patent (6,209,954) in my name and 12+ years of beating my head against the wall in an industry that buys compliance
with the "there is no problem here, move on now" approach.
Hell, I was a junior woodchuck program administrator back in the early 70's working for the Office of the Governor of the state
of Washington on CETA PSE or Public Service Employment. The office of the Governor ran the PSE program for 32 of the 39 counties
in the state that were not big enough to run their own. I helped organize the project approval process in all those counties to
hire folk at ( if memory serves me max of $833/mo.) to fix and expand parks and provide social and other government services as
defined projects with end dates. If we didn't have the anti-public congress and other government leadership we have this could
be a current component in a rational labor policy but I digress.
I have experience in the construction trades mostly as carpenter but some electrical, plumbing, HVAC, etc. also.
So, of course there is some sort of character flaw that is keeping me and all those others from employment ..right. I may have
more of an excuse than others, have paid into SS for 45 years but still would work if it was available ..taking work away from
other who may need it more .why set up a society where we have to compete as such for mere existence???????
One more face to this rant. We need government by the people and for the people which we do not have now. Good, public focused,
not corporate focused government is bigger than any entities that exist under its jurisdiction and is kept updated by required
public participation in elections and potentially other things like military, peace corps, etc. in exchange for advanced education.
I say this as someone who has worked at various levels in both the public and private sectors there are ignorant and misguided
folks everywhere. At least with ongoing active participation there is a chance that government would, once constructed, be able
to evolve as needed within public focus .IMO.
Ishmael:
Some people would say I have been unemployed for 10 years. In 2000 after losing the last of my four CFO gigs for public companies
I found it necessary to start consulting. This has lead to two of my three biggest winning years. I am usually consulting on cutting
edge area of my profession and many times have large staffs reporting to me that I bring on board to get jobs done. For several
years I subcontacted to a large international consulting firm to clean up projects which went wrong. Let me give some insight
here.
First, most good positions have gate keepers who are professional recruiters. It is near impossible to get
by them and if you are unemployed they will hardly talk to you. One time talking to a recruiter at Korn Fery I was interviewing
for a job I have done several times in an industry I have worked in several times. She made a statement that I had never worked
at a well known company. I just about fell out of my chair laughing. At one time I was a senior level executive for the largest
consulting firm in the world and lived on three continents and worked with companies on six. In addition, I had held senior
positions for 2 fortune 500 firms and was the CFO for a company with $4.5 billion in revenue. I am well known at several PE
firms and the founder of one of the largest mentioned in a meeting that one of his great mistakes was not investing in a very
successful LBO (return of in excess of 20 multiple to investors in 18 months) I was the CFO for. In a word most recruiters
are incompetent.
Second, most CEO's any more are just insecure politicians. One time during an interview I had a CEO asked
me to talk about some accomplishments. I was not paying to much attention as I rattled off accomplishments and the CEO went
nuclear and started yelling at me that he did not know where I thought I was going with this job but the only position above
the CFO job was his and he was not going anywhere. I assured him I was only interested in the CFO position and not his, but
I knew the job was over. Twice feed back that I got from recruiters which they took at criticism was the "client said I seemed
very assured of myself."
Third, government, banking, business and the top MBA schools are based upon lying to move forward. I remember
a top human resource executive telling me right before Enron, MCI and Sarbanes Oxley that I needed to learn to be more flexible.
My response was that flexibility would get me an orange jump suit. Don't get me wrong, I have a wide grey zone, but it use
to be in business the looked for people who could identify problems early and resolve them. Now days I see far more of a demand
for people who can come up with PR spins to hide them. An attorney/treasurer consultant who partnered with me on a number of
consulting jobs told me some one called me "not very charming." He said he asked what that meant, and the person who said that
said, "Ish walks into a meeting and within 10 minutes he is asking about the 10,000 pound guerilla sitting in the room that
no one wants to talk about." CEO do not want any challenges in their organization.
Fourth, three above has lead to the hiring of very young and inexperienced people at senior levels. These
people are insecure and do not want more senior and experienced people above them and than has resulted in people older than
45 not finding positions.
Fifth, people are considered expendable and are fired for the lamest reasons anymore. A partner at one of
the larger and more prestigious recruiting firms one time told me, "If you have a good consulting business, just stick
with it. Our average placement does not last 18 months any more." Another well known recruiter in S. Cal. one time
commented to me, "Your average consulting gig runs longer than our average placement."
With all of that said, I have a hard time understanding such statements as "@attempter "Workers create all wealth. Parasites
have no right to exist." What does that mean? Every worker creates wealth. There is no difference in people. Sounds like communism
to me. I make a good living and my net worth has grown working for myself. I have never had a consulting gig terminated by the
client but I have terminated several. Usually, I am brought in to fix what several other people have failed at. I deliver basically
intellectual properties to companies. Does that mean I am not a worker. I do not usually lift anything heavy or move equipment
but I tell people what and where to do it so does that make me a parasite.
Those people who think everyone is equal and everyone deserves equal pay are fools or lazy. My rate is high, but what usually
starts as short term projects usually run 6 months or more because companies find I can do so much more than what most of their
staff can do and I am not a threat.
I would again like to have a senior challenging role at a decent size company but due to the reasons above will probably never
get one. However, you can never tell. I am currently consulting for a midsize very profitable company (grew 400% last year) where
I am twice the age of most people there, but everyone speaks to me with respect so you can never tell.
Lidia:
Ishmael, you're quite right. When I showed my Italian husband's resume to try and "network" in the US, my IT friends assumed
he was lying about his skills and work history.
Contemporaneously, in Italy it is impossible to get a job because of incentives to hire "youth". Age discrimination is
not illegal, so it's quite common to see ads that ask for a programmer under 30 with 5 years of experience in COBOL (the purple
squirrel).
Hosswire
Some good points about the foolishness of recruiters, but a great deal of that foolishness is forced by the clients themselves.
I used to be a recruiter myself, including at Korn Ferry in Southern California. I described the recruiting industry as "yet more
proof that God hates poor people" because my job was to ignore resumes from people seeking jobs and instead "source" aka "poach"
people who already had good jobs by dangling a higher salary in front of them. I didn't do it because I disparaged the unemployed,
or because I could not do the basic analysis to show that a candidate had analogous or transferrable skills to the opening.
I did it because the client, as Yves said, wanted people who were literally in the same job description already.
My theory is that the client wanted to have their ass covered in case the hire didn't work out, by being able to say that they
looked perfect "on paper." The lesson I learned for myself and my friends looking for jobs was simple, if morally dubious.
Basically, that if prospective employers are going to judge you based on a single piece of paper take full advantage of the fact
that you get to write that piece of paper yourself.
Ishmael:
Hosswire - I agree with your comment. There are poor recruiters like the one I sited but in general it is the clients fault.
Fear of failure. All hires have at least a 50% chance of going sideways on you. Most companies do not even have the ability to
look at a resume nor to interview. I did not mean to same nasty things about recruiters, and I even do it sometimes but mine.
I look at failure in a different light than most companies. You need to be continually experimenting and changing to survive
as a company and there will be some failures. The goal is to control the cost of failures while looking for the big pay off on
a winner.
Mannwich:
As a former recruiter and HR "professional" (I use that term very loosely for obvious reasons), I can honestly say that you
nailed it. Most big companies looking for mid to high level white collar "talent" will almost always take the perceived
safest route by hiring those who look the best ON PAPER and in a suit and lack any real interviewing skills to find the real stars.
What's almost comical is that companies almost always want to see the most linear resume possible because they want to see "job
stability" (e.g. a CYA document in case the person fails in that job) when in many cases nobody cares about the long range view
of the company anyway. My question was why should the candidate or employee care about the long range view if the employer clearly
doesn't?
Ishmael:
Manwhich another on point comment. Sometimes either interviewing for a job or consulting with a CEO it starts getting to the
absurd. I see all the time the requirement for stability in a persons background. Hello, where have they been the last 15 years.
In addition, the higher up you go the more likely you will be terminated sometime and that is especially true if you are hired
from outside the orgnanization. Companies want loyalty from an employee but offer none in return.
The average tenure for a CFO anymore is something around 18 months. I have been a first party participant (more than once)
where I went through an endless recruiting process for a company (lasting more than 6 months) they final hire some one and that
person is with the company for 3 months and then resigns (of course we all know it is through mutual agreement).
Ishmael:
Birch:
The real problem has become and maybe this is what you are referring to is the "Crony Capitalism." We have lost control of
our financial situation. Basically, PE is not the gods of the universe that everyone thinks they are. However, every bankers
secret wet dream is to become a private equity guy. Accordingly, bankers make ridiculous loans to PE because if you say no to
them then you can not play in their sand box any more. Since the govt will not let the banks go bankrupt like they should then
this charade continues inslaving everyone.
This country as well as many others has a large percentage of its assets tied up in over priced deals that the bankers/governments
will not let collapse while the blood sucking vampires suck the life out of the assets.
On the other hand, govt is not the answer. Govt is too large and accomplishes too little.
kevin de bruxelles:
The harsh reality is that, at least in the first few rounds, companies kick to the curb their weakest links and perceived
slackers. Therefore when it comes time to hire again, they are loath to go sloppy seconds on what they perceive to be
some other company's rejects. They would much rather hire someone who survived the layoffs working in a similar position in a
similar company. Of course the hiring company is going to have to pay for this privilege. Although not totally reliable, the fact
that someone survived the layoffs provides a form social proof for their workplace abilities.
On the macro level, labor has been under attack for thirty years by off shoring and third world immigration. It is no surprise
that since the working classes have been severely undermined that the middle classes would start to feel some pressure. By mass
immigration and off-shoring are strongly supported by both parties. Only when the pain gets strong enough will enough people rebel
and these two policies will be overturned. We still have a few years to go before this happens.
davver:
Let's say I run a factory. I produce cars and it requires very skilled work. Skilled welding, skilled machinists. Now I introduce
some robotic welders and an assembly line system. The plants productivity improves and the jobs actually get easier. They require
less skill, in fact I've simplified each task to something any idiot can do. Would wages go up or down? Are the workers really
contributing to that increase in productivity or is it the machines and methods I created?
Lets say you think laying off or cutting the wages of my existing workers is wrong. What happens when a new entrant into the
business employs a smaller workforce and lower wages, which they can do using the same technology? The new workers don't feel
like they were cut down in any way, they are just happy to have a job. Before they couldn't get a job at the old plant because
they lacked the skill, but now they can work in the new plant because the work is genuinely easier. Won't I go out of business?
Escariot:
I am 54 and have a ton of peers who are former white collar workers and professionals (project managers, architects, lighting
designers, wholesalers and sales reps for industrial and construction materials and equipment) now out of work going on three
years. Now I say out of work, I mean out of our trained and experienced fields.
We now work two or three gigs (waiting tables, mowing lawns, doing free lance, working in tourism, truck driving, moving company
and fedex ups workers) and work HARD, for much much less than we did, and we are seeing the few jobs that are coming back on line
going to younger workers. It is just the reality. And for most of us the descent has not been graceful, so our credit is a wreck,
which also breeds a whole other level of issues as now it is common for the credit record to be a deal breaker for employment,
housing, etc.
Strangely I don't sense a lot of anger or bitterness as much as humility. And gratitude for ANY work that comes our way. Health
insurance? Retirement accounts? not so much.
Mickey Marzick:
Yves and I have disagreed on how extensive the postwar "pact" between management and labor was in this country. But if you
drew a line from say, Trenton-Patterson, NJ to Cincinatti, OH to Minneapolis, MN, north and east of it where blue collar manufacturing
in steel, rubber, auto, machinery, etc., predominated, this "pact" may have existed but ONLY because physical plant and
production were concentrated there and workers could STOP production.
Outside of these heavy industrial pockets, unions were not always viewed favorably. As one moved into the rural hinterlands
surrounding them there was jealously and/or outright hostility. Elsewhere, especially in the South "unions" were the exception
not the rule. The differences between NE Ohio before 1975 – line from Youngstown to Toledo – and the rest of the state exemplified
this pattern. Even today, the NE counties of Ohio are traditional Democratic strongholds with the rest of the state largely Republican.
And I suspect this pattern existed elsewhere. But it is changing too
In any case, the demonization of the unemployed is just one notch above the vicious demonization of the poor that has
always existed in this country. It's a constant reminder for those still working that you could be next – cast out into
the darkness – because you "failed" or worse yet, SINNED. This internalization of the "inner cop" reinforces the dominant ideology
in two ways. First, it makes any resistance by individuals still employed less likely. Second, it pits those still working against
those who aren't, both of which work against the formation of any significant class consciousness amongst working people. The
"oppressed" very often internalize the value system of the oppressor.
As a nation of immigrants ETHNICITY may have more explanatory power than CLASS. For increasingly, it would appear that
the dominant ethnic group – suburban, white, European Americans – have thrown their lot in with corporate America. Scared of the
prospect of downward social mobility and constantly reminded of URBAN America – the other America – this group is trapped with
nowhere to else to go.
It's the divide and conquer strategy employed by ruling elites in this country since its founding [Federalist #10] with the
Know Nothings, blaming the Irish [NINA - no Irish need apply] and playing off each successive wave of immigrants against
the next. Only when the forces of production became concentrated in the urban industrial enclaves of the North was this
strategy less effective. And even then internal immigration by Blacks to the North in search of employment blunted the formation
of class consciousness among white ethnic industrial workers.
Wherever the postwar "pact of domination" between unions and management held sway, once physical plant was relocated elsewhere
[SOUTH] and eventually offshored, unemployment began to trend upwards. First it was the "rustbelt" now it's a nationwide
phenomenon. Needless to say, the "pact" between labor and management has been consigned to the dustbin of history.
White, suburban America has hitched its wagon to that of the corporate horse. Demonization of the unemployed coupled with demonization
of the poor only serve to terrorize this ethnic group into acquiescence. And as the workplace becomes a multicultural matrix this
ethnic group is constantly reminded of its perilous state. Until this increasingly atomized ethnic group breaks with corporate
America once and for all, it's unlikely that the most debilitating scourge of all working people – UNEMPLOYMENT – will be addressed.
Make no mistake about it, involuntary UNEMPLOYMENT/UNDEREMPLYEMT is a form of terrorism and its demonization is terrorism in
action. This "quiet violence" is psychological and the intimidation wrought by unemployment and/or the threat of it is intended
to dehumanize individuals subjected to it. Much like spousal abuse, the emotional and psychological effects are experienced way
before any physical violence. It's the inner cop that makes overt repression unnecessary. We terrorize ourselves into submission
without even knowing it because we accept it or come to tolerate it. So long as we accept "unemployment" as an inevitable consequence
of progress, as something unfortunate but inevitable, we will continue to travel down the road to serfdom where ARBEIT MACHT FREI!
FULL and GAINFUL EMPLOYMENT are the ultimate labor power.
Eric:
It's delicate since direct age discrimination is illegal, but when circumstances permit separating older workers they have
a very tough time getting back into the workforce in an era of high health care inflation. Older folks consume more health
care and if you are hiring from a huge surplus of available workers it isn't hard to steer around the more experienced. And nobody
gets younger, so when you don't get job A and go for job B 2 weeks later you, you're older still!
James:
Yves said- "This overly narrow hiring spec then leads to absurd, widespread complaint that companies can't find people
with the right skills"
In the IT job markets such postings are often called purple squirrels. The HR departments require the applicant to be expert
in a dozen programming languages. This is an excuse to hire a foreigner on a temp h1-b or other visa.
Most people aren't aware that this model dominates the sciences. Politicians scream we have a shortage of scientists, yet it
seems we only have a shortage of cheap easily exploitable labor. The economist recently pointed out the glut of scientists that
currently exists in the USA.
This understates the problem. The majority of PhD recipients wander through years of postdocs only to end up eventually changing
fields. My observation is that the top ten schools in biochem/chemistry/physics/ biology produce enough scientists to satisfy
the national demand.
The exemption from h1-b visa caps for academic institutions exacerbates the problem, providing academics with almost unlimited
access to labor.
The pharmaceutical sector has been decimated over the last ten years with tens of thousands of scientists/ factory workers
looking for re-training in a dwindling pool of jobs (most of which will deem you overqualified.)
I wonder how the demonization of the unemployed can be so strong even in the face of close to 10% unemployment/20% underemployment.
It's easy and tempting to demonize an abstract young buck or Cadillac-driving welfare queen, but when a family member
or a close friend loses a job, or your kids are stuck at your place because they can't find one, shouldn't that alter your perceptions?
Of course the tendency will be to blame it all on the government, but there has to be a limit to that in hard-hit places like
Ohio, Colorado, or Arizona. And yet, the dynamics aren't changing or even getting worse. Maybe Wisconsin marks a turning point,
I certainly hope it does
damien:
It's more than just stupid recruiting, this stigma. Having got out when the getting was good, years ago, I know
that any corporate functionary would be insane to hire me now. Socialization wears off, the deformation process reverses, and
the ritual and shibboleths become a joke. Even before I bailed I became a huge pain in the ass as economic exigency receded, every
bosses nightmare. I suffered fools less gladly and did the right thing out of sheer anarchic malice.
You really can't maintain corporate culture without existential fear – not just, "Uh oh, I'm gonna get fired,"
fear, but a visceral feeling that you do not exist without a job. In properly indoctrinated workers that feeling is divorced
from economic necessity. So anyone who's survived outside a while is bound to be suspect. That's a sign of economic security,
and security of any sort undermines social control.
youniquelikeme:
You hit the proverbial nail with that reply. (Although, sorry, doing the right thing should not be done out of malice) The real fit has to be in the corporate yes-man culture (malleable ass kisser) to be suited for any executive position
and beyond that it is the willingness to be manipulated and drained to be able to keep a job in lower echelon.
This is the new age of evolution in the work place. The class wars will make it more of an eventual revolution, but it is coming.
The unemployment rate (the actual one, not the Government one) globalization and off shore hiring are not sustainable for much
longer.
Something has to give, but it is more likely to snap then to come easily. People who are made to be repressed and down and
out eventually find the courage to fight back and by then, it is usually not with words.
down and out in Slicon Valley:
This is the response I got from a recruiter:
"I'm going to be overly honest with you. My firm doesn't allow me to submit any candidate who hasn't worked in 6-12
months or more. Recruiting brokers are probably all similar in that way . You are going to have to go through a connection/relationship
you have with a colleague, co-worker, past manager or friend to get your next job .that's my advice for you. Best of luck "
I'm 56 years old with MSEE. Gained 20+ years of experience at the best of the best (TRW, Nortel, Microsoft), have been issued
a patent. Where do I sign up to gain skills required to find a job now?
Litton Graft :
"Best of the Best?" I know you're down now, but looking back at these Gov'mint contractors you've enjoyed the best socialism
money can by.
Nortel/TRW bills/(ed) the Guvmint at 2x, 3x your salary, you can ride this for decades. At the same time the
Inc is attached to the Guvmint ATM localities/counties are giving them a red carpet of total freedom from taxation. Double subsidies.
I've worked many years at the big boy bandits, and there is no delusion in my mind that almost anyone, can do what I do and
get paid 100K+. I've never understood the mindset of some folks who work in the Wermacht Inc: "Well, someone has to do this work"
or worse "What we do, no one else can do" The reason no one else "can do it" is that they are not allowed to. So, we steal from
the poor to build fighter jets, write code or network an agency.
Hosswire:
I used to work as a recruiter and can tell you that I only parroted the things my clients told me. I wanted to
get you hired, because I was lazy and didn't want to have to talk to someone else next.
So what do you do? To place you that recruiter needs to see on a piece of paper that you are currently working? Maybe get an
email or phone call from someone who will vouch for your employment history. That should not be that hard to make happen.
Francois T :
The "bizarre way that companies now spec jobs" is essentially a coded way for mediocre managers to say without saying so explicitly
that "we can afford to be extremely picky, and by God, we shall do so no matter what, because we can!"
Of course, when comes the time to hire back because, oh disaster! business is picking up again, (I'm barely caricaturing here;
some managers become despondent when they realize that workers regain a bit of the higher ground; loss of power does that to lesser
beings) the same idiots who designed those "overly narrow hiring spec then leads to absurd, widespread complaint that companies
can't find people with the right skills" are thrown into a tailspin of despair and misery. Instead of figuring out something as
simple as "if demand is better, so will our business", they can't see anything else than the (eeeek!) cost of hiring workers.
Unable to break their mental corset of penny-pincher, they fail to realize that lack of qualified workers will prevent them to
execute well to begin with.
And guess what: qualified workers cost money, qualified workers urgently needed cost much more.
This managerial attitude must be another factor that explain why entrepreneurship and the formation of small businesses is
on the decline in the US (contrary to the confabulations of the US officialdumb and the chattering class) while rising in Europe
and India/China.
Kit:
If you are 55-60, worked as a professional (i.e., engineering say) and are now unemployed you are dead meat. Sorry to be blunt
but thats the way it is in the US today. Let me repeat that : Dead Meat.
I was terminated at age 59, found absolutely NOTHING even though my qualifications were outstanding. Fortunately, my company
had an old style pension plan which I was able to qualify for (at age 62 without reduced benefits). So for the next 2+ years my
wife and I survived on unemployment insurance, severance, accumulated vacation pay and odd jobs. Not nice – actually, a living
hell.
At age 62, I applied for my pension, early social security, sold our old house (at a good profit) just before the RE crash,
moved back to our home state. Then my wife qualified for social security also. Our total income is now well above the US median.
Today, someone looking at us would think we were the typical corporate retiree. We surely don't let on any differently but
the experience (to get to this point) almost killed us.
I sympathize very strongly with the millions caught in this unemployment death spiral. I wish I had an answer but I just don't.
We were very lucky to survive intact.
Ming:
Thank you Yves for your excellent post, and for bringing to light this crucial issue.
Thank you to all the bloggers, who add to the richness of the this discussion.
I wonder if you could comment on this Yves, and correct me if I am wrong I believe that the power of labor was sapped by the
massive available supply of global labor. The favorable economic policies enacted by China (both official and unofficial), and
trade negotiations between the US government and the Chinese government were critical to creating the massive supply of labor.
Thank you. No rush of course.
Nexus:
There are some odd comments and notions here that are used to support dogma and positions of prejudice. The world can be viewed
in a number of ways. Firstly from a highly individualised and personal perspective – that is what has happened to me and here
are my experiences. Or alternatively the world can be viewed from a broader societal perspective.
In the context of labour there has always been an unequal confrontation between those that control capital and those that offer
their labour, contrary to some of the views exposed here – Marx was a first and foremost a political economist. The political
economist seeks to understand the interplay of production, supply, the state and institutions like the media. Modern day economics
branched off from political economy and has little value in explaining the real world as the complexity of the world has been
reduced to a simplistic rationalistic model of human behaviour underpinned by other equally simplistic notions of 'supply and
demand', which are in turn represented by mathematical models, which in themselves are complex but merely represent what is a
simplistic view of the way the world operates. This dogmatic thinking has avoided the need to create an underpinning epistemology.
This in turn underpins the notion of free choice and individualism which in itself is an illusion as it ignores the operation
of the modern state and the exercise of power and influence within society.
It was stated in one of the comments that the use of capital (machines, robotics, CAD design, etc.) de-skills. This is hardly
the case as skills rise for those that remain and support highly automated/continuous production factories. This is symptomatic
of the owners of capital wanting to extract the maximum value for labour and this is done via the substitution of labour for capital
making the labour that remains to run factories highly productive thus eliminating low skill jobs that have been picked up via
services (people move into non productive low skilled occupations warehousing and retail distribution, fast food outlets,
etc). Of course the worker does not realise the additional value of his or her labour as this is expropriated for the shareholders
(including management as shareholders).
The issue of the US is that since the end of WW2 it is not the industrialists that have called the shots and made investments
it is the financial calculus of the investment banker (Finance Capital). Other comments have tried to ignore the existence of
the elites in society – I would suggest that you read C.W.Mills – The Power Elites as an analysis of how power is exercised
in the US – it is not through the will of the people.
For Finance capital investments are not made on the basis of value add, or contribution through product innovation and the
exchange of goods but on basis of the lowest cost inputs. Consequently, the 'elites' that make investment decisions, as
they control all forms of capital seek to gain access to the cheapest cost inputs. The reality is that the US worker (a
pool of 150m) is now part of a global labour pool of a couple of billion that now includes India and China. This means that the
elites, US transnational corporations for instance, can access both cheaper labour pools, relocate capital and avoid worker protection
(health and safety is not a concern). The strategies of moving factories via off-shoring (over 40,000 US factories closed or relocated)
and out-sourcing/in-sourcing labour is also a representations of this.
The consequence for the US is that the need for domestic labour has diminished and been substituted by cheap labour to
extract the arbitrage between US labour rates and those of Chinese and Indians. Ironically, in this context capital has
become too successful as the mode of consumption in the US shifted from workers that were notionally the people that created the
goods, earned wages and then purchased the goods they created to a new model where the worker was substituted by the consumer
underpinned by cheap debt and low cost imports – it is illustrative to note that real wages have not increased in the US since
the early 1970's while at the same time debt has steadily increased to underpin the illusion of wealth – the 'borrow today and
pay tomorrow' mode of capitalist operation. This model of operation is now broken. The labour force is now being demonized as
there is a now surplus of labour and a need to drive down labour rates through changes in legislation and austerity programs to
meet those of the emerging Chinese and Indian middle class so workers rights need to be broken. Once this is done a process of
in-source may take place as US labour costs will be on par with overseas labour pools.
It is ironic that during the Regan administration a number of strategic thinkers saw the threat from emerging economies and
the danger of Finance Capital and created 'Project Socrates' that would have sought to re-orientate the US economy from one that
was based on the rationale of Finance Capital to one that focused in productive innovation which entailed an alignment of capital
investment, research and training to product innovative goods. Of course this was ignored and the rest is history. The race to
the lowest input cost is ultimately self defeating as it is clear that the economy de-industrialises through labour and capital
changes and living standards collapse. The elites – bankers, US transnational corporations, media, industrial military complex
and the politicians don't care as they make money either way and this way you get other people overseas to work cheap for you.
S P:
Neoliberal orthodoxy treats unemployment as well as wage supression as a necessary means to fight "inflation." If there was
too much power in the hands of organized labor, inflationary pressures would spiral out of control as supply of goods cannot keep
up with demand.
It also treats the printing press as a necessary means to fight "deflation."
So our present scenario: widespread unemployment along with QE to infinity, food stamps for all, is exactly what you'd expect.
The problem with this orthodoxy is that it assumes unlimited growth on a planet with finite resources, particularly oil
and energy. Growth is not going to solve unemployment or wages, because we are bumping up against limits to growth.
There are only two solutions. One is tax the rich and capital gains, slow growth, and reinvest the surplus into jobs/skills
programs, mostly to maintain existing infrastructure or build new energy infrastructure. Even liberals like Krugman skirt around
this, because they aren't willing to accept that we have the reached the end of growth and we need radical redistribution
measures.
The other solution is genuine classical liberalism / libertarianism, along the lines of Austrian thought. Return to sound money,
and let the deflation naturally take care of the imbalances. Yes, it would be wrenching, but it would likely be wrenching for
everybody, making it fair in a universal sense.
Neither of these options is palatable to the elite classes, the financiers of Wall Street, or the leeches and bureaucrats of
D.C.
So this whole experiment called America will fail.
"This overly narrow hiring spec then leads to absurd, widespread complaint that companies can't find people with the right skills"
. In the IT job markets such postings are often called purple squirrels
Notable quotes:
"... In particular, there seems to be an extremely popular variant of the above where the starting proposition "God makes moral people rich" is improperly converted to "Rich people are more moral" which is then readily negated to "Poor people are immoral" and then expanded to "Poor people are immoral, thus they DESERVE to suffer for it". It's essentially the theological equivalent of dividing by zero ..."
"... That said, the ranks of the neoliberals are not small. They constitute what Jonathan Schell calls a "mass minority." I suspect the neoliberals have about the same level of popular support that the Nazis did at the time of their takeover of Germany in 1932, or the Bolsheviks had in Russia at the time of their takeover in 1917, which is about 20 or 25% of the total population. ..."
"... The ranks of the neoliberals are made to appear far greater than they really are because they have all but exclusive access to the nation's megaphone. The Tea Party can muster a handful of people to disrupt a town hall meeting and it gets coast to coast, primetime coverage. But let a million people protest against bank bailouts, and it is ignored. Thus, by manipulation of the media, the mass minority is made to appear to be much larger than it really is. ..."
Over the past three decades, large parts of our culture here in the US have internalized the lessons of the new Social Darwinism,
with a significant body of literature to explain and justify it. Many of us have internalized, without even realizing it,
the ideas of "dog eat dog", "every man for himself", "society should be structured like the animal kingdom, where the weak and
sick simply die because they cannot compete, and this is healthy", and "everything that happens to you is your own fault. There
is no such thing as circumstance that cannot be overcome, and certainly no birth lottery."
The levers pulled by politicians and the Fed put these things into practice, but even if we managed get different (better)
politicians or Fed chairmen, ones who weren't steeped in this culture and ideology, we'd still be left with the culture in the
population at large, and things like the "unemployed stigma" are likely to die very, very hard. Acceptance of the "just-world
phenomenon" here in the US runs deep.
perfect stranger:
"Religion is just as vulnerable to corporate capture as is the government or the academy."
This is rather rhetorical statement, and wrong one. One need to discern spiritual aspect of religion from the religion as a
tool.
Religion, as is structured, is complicit: in empoverishment, obedience, people's preconditioning, and legislative enabler in
the institutions such as Supreme – and non-supreme – Court(s). It is a form of PR of the ruling class for the governing class.
DownSouth:
perfect stranger,
Religion, just like human nature, is not that easy to put in a box.
For every example you can cite where religion "is complicit: in empoverishment, obedience, people's preconditioning, and legislative
enabler in the institution," I can point to an example of where religion engendered a liberating, emancipatory and revolutionary
spirit.
Examples:
•Early Christianity •Nominalism •Early Protestantism •Gandhi •Martin Luther King
Now granted, there don't seem to be any recent examples of this of any note, unless we consider Chris Hedges a religionist,
which I'm not sure we can do. Would it be appropriate to consider Hedges a religionist?
perfect stranger:
Yes, that maybe, just maybe be the case in early stages of forming new religion(s). In case of Christianity old rulers from
Rome were trying to save own head/throne and the S.P.Q.R. imperia by adopting new religion.
You use examples of Gandhi and MLK which is highly questionable both were fighters for independence and the second, civil rights.
In a word: not members of establishment just as I said there were (probably) seeing the religion as spiritual force not tool of
enslavement.
In particular, there seems to be an extremely popular variant of the above where the starting proposition "God makes moral
people rich" is improperly converted to "Rich people are more moral" which is then readily negated to "Poor people are immoral"
and then expanded to "Poor people are immoral, thus they DESERVE to suffer for it". It's essentially the theological equivalent
of dividing by zero
DownSouth:
Rex,
I agree.
Poll after poll after poll has shown that a majority of Americans, and a rather significant majority, reject the values, attitudes,
beliefs and opinions proselytized by the stealth religion we call "neoclassical economics."
That said, the ranks of the neoliberals are not small. They constitute what Jonathan Schell calls a "mass minority." I
suspect the neoliberals have about the same level of popular support that the Nazis did at the time of their takeover of Germany
in 1932, or the Bolsheviks had in Russia at the time of their takeover in 1917, which is about 20 or 25% of the total population.
The ranks of the neoliberals are made to appear far greater than they really are because they have all but exclusive access
to the nation's megaphone. The Tea Party can muster a handful of people to disrupt a town hall meeting and it gets coast to coast,
primetime coverage. But let a million people protest against bank bailouts, and it is ignored. Thus, by manipulation of the media,
the mass minority is made to appear to be much larger than it really is.
The politicians love this, because as they carry water for their pet corporations, they can point to the Tea Partiers and say:
"See what a huge upwelling of popular support I am responding to."
JTFaraday:
Well, if that's true, then the unemployed are employable but the mass mediated mentality would like them to believe they
are literally and inherently unemployable so that they underestimate and under-sell themselves.
This is as much to the benefit of those who would like to pick up "damaged goods" on the cheap as those who promote the unemployment
problem as one that inheres in prospective employees rather than one that is a byproduct of a bad job market lest someone be tempted
to think we should address it politically.
That's where I see this blame the unemployed finger pointing really getting traction these days.
attempter:
I apologize for the fact that I only read the first few paragraphs of this before quitting in disgust.
I just can no longer abide the notion that "labor" can ever be seen by human beings as a "cost" at all. We really need to refuse
to even tolerate that way of phrasing things. Workers create all wealth. Parasites have no right to exist. These are facts, and
we should refuse to let argument range beyond them.
The only purpose of civilization is to provide a better way of living and for all people. This includes the right and full
opportunity to work and manage for oneself and/or as a cooperative group. If civilization doesn't do that, we're better off without
it.
psychohistorian:
I am one of those long term unemployed.
I suppose my biggest employment claim would be as some sort of IT techie, with numerous supply chain systems and component
design, development, implementation, interfaces with other systems and ongoing support. CCNP certification and a history of techiedom
going back to WEYCOS.
I have a patent (6,209,954) in my name and 12+ years of beating my head against the wall in an industry that buys compliance
with the "there is no problem here, move on now" approach.
Hell, I was a junior woodchuck program administrator back in the early 70's working for the Office of the Governor of the state
of Washington on CETA PSE or Public Service Employment. The office of the Governor ran the PSE program for 32 of the 39 counties
in the state that were not big enough to run their own. I helped organize the project approval process in all those counties to
hire folk at ( if memory serves me max of $833/mo.) to fix and expand parks and provide social and other government services as
defined projects with end dates. If we didn't have the anti-public congress and other government leadership we have this could
be a current component in a rational labor policy but I digress.
I have experience in the construction trades mostly as carpenter but some electrical, plumbing, HVAC, etc. also.
So, of course there is some sort of character flaw that is keeping me and all those others from employment ..right. I may have
more of an excuse than others, have paid into SS for 45 years but still would work if it was available ..taking work away from
other who may need it more .why set up a society where we have to compete as such for mere existence???????
One more face to this rant. We need government by the people and for the people which we do not have now. Good, public focused,
not corporate focused government is bigger than any entities that exist under its jurisdiction and is kept updated by required
public participation in elections and potentially other things like military, peace corps, etc. in exchange for advanced education.
I say this as someone who has worked at various levels in both the public and private sectors there are ignorant and misguided
folks everywhere. At least with ongoing active participation there is a chance that government would, once constructed, be able
to evolve as needed within public focus .IMO.
Ishmael:
Some people would say I have been unemployed for 10 years. In 2000 after losing the last of my four CFO gigs for public companies
I found it necessary to start consulting. This has lead to two of my three biggest winning years. I am usually consulting on cutting
edge area of my profession and many times have large staffs reporting to me that I bring on board to get jobs done. For several
years I subcontacted to a large international consulting firm to clean up projects which went wrong. Let me give some insight
here.
First, most good positions have gate keepers who are professional recruiters. It is near impossible to get
by them and if you are unemployed they will hardly talk to you. One time talking to a recruiter at Korn Fery I was interviewing
for a job I have done several times in an industry I have worked in several times. She made a statement that I had never worked
at a well known company. I just about fell out of my chair laughing. At one time I was a senior level executive for the largest
consulting firm in the world and lived on three continents and worked with companies on six. In addition, I had held senior
positions for 2 fortune 500 firms and was the CFO for a company with $4.5 billion in revenue. I am well known at several PE
firms and the founder of one of the largest mentioned in a meeting that one of his great mistakes was not investing in a very
successful LBO (return of in excess of 20 multiple to investors in 18 months) I was the CFO for. In a word most recruiters
are incompetent.
Second, most CEO's any more are just insecure politicians. One time during an interview I had a CEO asked
me to talk about some accomplishments. I was not paying to much attention as I rattled off accomplishments and the CEO went
nuclear and started yelling at me that he did not know where I thought I was going with this job but the only position above
the CFO job was his and he was not going anywhere. I assured him I was only interested in the CFO position and not his, but
I knew the job was over. Twice feed back that I got from recruiters which they took at criticism was the "client said I seemed
very assured of myself."
Third, government, banking, business and the top MBA schools are based upon lying to move forward. I remember
a top human resource executive telling me right before Enron, MCI and Sarbanes Oxley that I needed to learn to be more flexible.
My response was that flexibility would get me an orange jump suit. Don't get me wrong, I have a wide grey zone, but it use
to be in business the looked for people who could identify problems early and resolve them. Now days I see far more of a demand
for people who can come up with PR spins to hide them. An attorney/treasurer consultant who partnered with me on a number of
consulting jobs told me some one called me "not very charming." He said he asked what that meant, and the person who said that
said, "Ish walks into a meeting and within 10 minutes he is asking about the 10,000 pound guerilla sitting in the room that
no one wants to talk about." CEO do not want any challenges in their organization.
Fourth, three above has lead to the hiring of very young and inexperienced people at senior levels. These
people are insecure and do not want more senior and experienced people above them and than has resulted in people older than
45 not finding positions.
Fifth, people are considered expendable and are fired for the lamest reasons anymore. A partner at one of
the larger and more prestigious recruiting firms one time told me, "If you have a good consulting business, just stick
with it. Our average placement does not last 18 months any more." Another well known recruiter in S. Cal. one time
commented to me, "Your average consulting gig runs longer than our average placement."
With all of that said, I have a hard time understanding such statements as "@attempter "Workers create all wealth. Parasites
have no right to exist." What does that mean? Every worker creates wealth. There is no difference in people. Sounds like communism
to me. I make a good living and my net worth has grown working for myself. I have never had a consulting gig terminated by the
client but I have terminated several. Usually, I am brought in to fix what several other people have failed at. I deliver basically
intellectual properties to companies. Does that mean I am not a worker. I do not usually lift anything heavy or move equipment
but I tell people what and where to do it so does that make me a parasite.
Those people who think everyone is equal and everyone deserves equal pay are fools or lazy. My rate is high, but what usually
starts as short term projects usually run 6 months or more because companies find I can do so much more than what most of their
staff can do and I am not a threat.
I would again like to have a senior challenging role at a decent size company but due to the reasons above will probably never
get one. However, you can never tell. I am currently consulting for a midsize very profitable company (grew 400% last year) where
I am twice the age of most people there, but everyone speaks to me with respect so you can never tell.
Lidia:
Ishmael, you're quite right. When I showed my Italian husband's resume to try and "network" in the US, my IT friends assumed
he was lying about his skills and work history.
Contemporaneously, in Italy it is impossible to get a job because of incentives to hire "youth". Age discrimination is
not illegal, so it's quite common to see ads that ask for a programmer under 30 with 5 years of experience in COBOL (the purple
squirrel).
Hosswire
Some good points about the foolishness of recruiters, but a great deal of that foolishness is forced by the clients themselves.
I used to be a recruiter myself, including at Korn Ferry in Southern California. I described the recruiting industry as "yet more
proof that God hates poor people" because my job was to ignore resumes from people seeking jobs and instead "source" aka "poach"
people who already had good jobs by dangling a higher salary in front of them. I didn't do it because I disparaged the unemployed,
or because I could not do the basic analysis to show that a candidate had analogous or transferrable skills to the opening.
I did it because the client, as Yves said, wanted people who were literally in the same job description already.
My theory is that the client wanted to have their ass covered in case the hire didn't work out, by being able to say that they
looked perfect "on paper." The lesson I learned for myself and my friends looking for jobs was simple, if morally dubious.
Basically, that if prospective employers are going to judge you based on a single piece of paper take full advantage of the fact
that you get to write that piece of paper yourself.
Ishmael:
Hosswire - I agree with your comment. There are poor recruiters like the one I sited but in general it is the clients fault.
Fear of failure. All hires have at least a 50% chance of going sideways on you. Most companies do not even have the ability to
look at a resume nor to interview. I did not mean to same nasty things about recruiters, and I even do it sometimes but mine.
I look at failure in a different light than most companies. You need to be continually experimenting and changing to survive
as a company and there will be some failures. The goal is to control the cost of failures while looking for the big pay off on
a winner.
Mannwich:
As a former recruiter and HR "professional" (I use that term very loosely for obvious reasons), I can honestly say that you
nailed it. Most big companies looking for mid to high level white collar "talent" will almost always take the perceived
safest route by hiring those who look the best ON PAPER and in a suit and lack any real interviewing skills to find the real stars.
What's almost comical is that companies almost always want to see the most linear resume possible because they want to see "job
stability" (e.g. a CYA document in case the person fails in that job) when in many cases nobody cares about the long range view
of the company anyway. My question was why should the candidate or employee care about the long range view if the employer clearly
doesn't?
Ishmael:
Manwhich another on point comment. Sometimes either interviewing for a job or consulting with a CEO it starts getting to the
absurd. I see all the time the requirement for stability in a persons background. Hello, where have they been the last 15 years.
In addition, the higher up you go the more likely you will be terminated sometime and that is especially true if you are hired
from outside the orgnanization. Companies want loyalty from an employee but offer none in return.
The average tenure for a CFO anymore is something around 18 months. I have been a first party participant (more than once)
where I went through an endless recruiting process for a company (lasting more than 6 months) they final hire some one and that
person is with the company for 3 months and then resigns (of course we all know it is through mutual agreement).
Ishmael:
Birch:
The real problem has become and maybe this is what you are referring to is the "Crony Capitalism." We have lost control of
our financial situation. Basically, PE is not the gods of the universe that everyone thinks they are. However, every bankers
secret wet dream is to become a private equity guy. Accordingly, bankers make ridiculous loans to PE because if you say no to
them then you can not play in their sand box any more. Since the govt will not let the banks go bankrupt like they should then
this charade continues inslaving everyone.
This country as well as many others has a large percentage of its assets tied up in over priced deals that the bankers/governments
will not let collapse while the blood sucking vampires suck the life out of the assets.
On the other hand, govt is not the answer. Govt is too large and accomplishes too little.
kevin de bruxelles:
The harsh reality is that, at least in the first few rounds, companies kick to the curb their weakest links and perceived
slackers. Therefore when it comes time to hire again, they are loath to go sloppy seconds on what they perceive to be
some other company's rejects. They would much rather hire someone who survived the layoffs working in a similar position in a
similar company. Of course the hiring company is going to have to pay for this privilege. Although not totally reliable, the fact
that someone survived the layoffs provides a form social proof for their workplace abilities.
On the macro level, labor has been under attack for thirty years by off shoring and third world immigration. It is no surprise
that since the working classes have been severely undermined that the middle classes would start to feel some pressure. By mass
immigration and off-shoring are strongly supported by both parties. Only when the pain gets strong enough will enough people rebel
and these two policies will be overturned. We still have a few years to go before this happens.
davver:
Let's say I run a factory. I produce cars and it requires very skilled work. Skilled welding, skilled machinists. Now I introduce
some robotic welders and an assembly line system. The plants productivity improves and the jobs actually get easier. They require
less skill, in fact I've simplified each task to something any idiot can do. Would wages go up or down? Are the workers really
contributing to that increase in productivity or is it the machines and methods I created?
Lets say you think laying off or cutting the wages of my existing workers is wrong. What happens when a new entrant into the
business employs a smaller workforce and lower wages, which they can do using the same technology? The new workers don't feel
like they were cut down in any way, they are just happy to have a job. Before they couldn't get a job at the old plant because
they lacked the skill, but now they can work in the new plant because the work is genuinely easier. Won't I go out of business?
Escariot:
I am 54 and have a ton of peers who are former white collar workers and professionals (project managers, architects, lighting
designers, wholesalers and sales reps for industrial and construction materials and equipment) now out of work going on three
years. Now I say out of work, I mean out of our trained and experienced fields.
We now work two or three gigs (waiting tables, mowing lawns, doing free lance, working in tourism, truck driving, moving company
and fedex ups workers) and work HARD, for much much less than we did, and we are seeing the few jobs that are coming back on line
going to younger workers. It is just the reality. And for most of us the descent has not been graceful, so our credit is a wreck,
which also breeds a whole other level of issues as now it is common for the credit record to be a deal breaker for employment,
housing, etc.
Strangely I don't sense a lot of anger or bitterness as much as humility. And gratitude for ANY work that comes our way. Health
insurance? Retirement accounts? not so much.
Mickey Marzick:
Yves and I have disagreed on how extensive the postwar "pact" between management and labor was in this country. But if you
drew a line from say, Trenton-Patterson, NJ to Cincinatti, OH to Minneapolis, MN, north and east of it where blue collar manufacturing
in steel, rubber, auto, machinery, etc., predominated, this "pact" may have existed but ONLY because physical plant and
production were concentrated there and workers could STOP production.
Outside of these heavy industrial pockets, unions were not always viewed favorably. As one moved into the rural hinterlands
surrounding them there was jealously and/or outright hostility. Elsewhere, especially in the South "unions" were the exception
not the rule. The differences between NE Ohio before 1975 – line from Youngstown to Toledo – and the rest of the state exemplified
this pattern. Even today, the NE counties of Ohio are traditional Democratic strongholds with the rest of the state largely Republican.
And I suspect this pattern existed elsewhere. But it is changing too
In any case, the demonization of the unemployed is just one notch above the vicious demonization of the poor that has
always existed in this country. It's a constant reminder for those still working that you could be next – cast out into
the darkness – because you "failed" or worse yet, SINNED. This internalization of the "inner cop" reinforces the dominant ideology
in two ways. First, it makes any resistance by individuals still employed less likely. Second, it pits those still working against
those who aren't, both of which work against the formation of any significant class consciousness amongst working people. The
"oppressed" very often internalize the value system of the oppressor.
As a nation of immigrants ETHNICITY may have more explanatory power than CLASS. For increasingly, it would appear that
the dominant ethnic group – suburban, white, European Americans – have thrown their lot in with corporate America. Scared of the
prospect of downward social mobility and constantly reminded of URBAN America – the other America – this group is trapped with
nowhere to else to go.
It's the divide and conquer strategy employed by ruling elites in this country since its founding [Federalist #10] with the
Know Nothings, blaming the Irish [NINA - no Irish need apply] and playing off each successive wave of immigrants against
the next. Only when the forces of production became concentrated in the urban industrial enclaves of the North was this
strategy less effective. And even then internal immigration by Blacks to the North in search of employment blunted the formation
of class consciousness among white ethnic industrial workers.
Wherever the postwar "pact of domination" between unions and management held sway, once physical plant was relocated elsewhere
[SOUTH] and eventually offshored, unemployment began to trend upwards. First it was the "rustbelt" now it's a nationwide
phenomenon. Needless to say, the "pact" between labor and management has been consigned to the dustbin of history.
White, suburban America has hitched its wagon to that of the corporate horse. Demonization of the unemployed coupled with demonization
of the poor only serve to terrorize this ethnic group into acquiescence. And as the workplace becomes a multicultural matrix this
ethnic group is constantly reminded of its perilous state. Until this increasingly atomized ethnic group breaks with corporate
America once and for all, it's unlikely that the most debilitating scourge of all working people – UNEMPLOYMENT – will be addressed.
Make no mistake about it, involuntary UNEMPLOYMENT/UNDEREMPLYEMT is a form of terrorism and its demonization is terrorism in
action. This "quiet violence" is psychological and the intimidation wrought by unemployment and/or the threat of it is intended
to dehumanize individuals subjected to it. Much like spousal abuse, the emotional and psychological effects are experienced way
before any physical violence. It's the inner cop that makes overt repression unnecessary. We terrorize ourselves into submission
without even knowing it because we accept it or come to tolerate it. So long as we accept "unemployment" as an inevitable consequence
of progress, as something unfortunate but inevitable, we will continue to travel down the road to serfdom where ARBEIT MACHT FREI!
FULL and GAINFUL EMPLOYMENT are the ultimate labor power.
Eric:
It's delicate since direct age discrimination is illegal, but when circumstances permit separating older workers they have
a very tough time getting back into the workforce in an era of high health care inflation. Older folks consume more health
care and if you are hiring from a huge surplus of available workers it isn't hard to steer around the more experienced. And nobody
gets younger, so when you don't get job A and go for job B 2 weeks later you, you're older still!
James:
Yves said- "This overly narrow hiring spec then leads to absurd, widespread complaint that companies can't find people
with the right skills"
In the IT job markets such postings are often called purple squirrels. The HR departments require the applicant to be expert
in a dozen programming languages. This is an excuse to hire a foreigner on a temp h1-b or other visa.
Most people aren't aware that this model dominates the sciences. Politicians scream we have a shortage of scientists, yet it
seems we only have a shortage of cheap easily exploitable labor. The economist recently pointed out the glut of scientists that
currently exists in the USA.
This understates the problem. The majority of PhD recipients wander through years of postdocs only to end up eventually changing
fields. My observation is that the top ten schools in biochem/chemistry/physics/ biology produce enough scientists to satisfy
the national demand.
The exemption from h1-b visa caps for academic institutions exacerbates the problem, providing academics with almost unlimited
access to labor.
The pharmaceutical sector has been decimated over the last ten years with tens of thousands of scientists/ factory workers
looking for re-training in a dwindling pool of jobs (most of which will deem you overqualified.)
I wonder how the demonization of the unemployed can be so strong even in the face of close to 10% unemployment/20% underemployment.
It's easy and tempting to demonize an abstract young buck or Cadillac-driving welfare queen, but when a family member
or a close friend loses a job, or your kids are stuck at your place because they can't find one, shouldn't that alter your perceptions?
Of course the tendency will be to blame it all on the government, but there has to be a limit to that in hard-hit places like
Ohio, Colorado, or Arizona. And yet, the dynamics aren't changing or even getting worse. Maybe Wisconsin marks a turning point,
I certainly hope it does
damien:
It's more than just stupid recruiting, this stigma. Having got out when the getting was good, years ago, I know
that any corporate functionary would be insane to hire me now. Socialization wears off, the deformation process reverses, and
the ritual and shibboleths become a joke. Even before I bailed I became a huge pain in the ass as economic exigency receded, every
bosses nightmare. I suffered fools less gladly and did the right thing out of sheer anarchic malice.
You really can't maintain corporate culture without existential fear – not just, "Uh oh, I'm gonna get fired,"
fear, but a visceral feeling that you do not exist without a job. In properly indoctrinated workers that feeling is divorced
from economic necessity. So anyone who's survived outside a while is bound to be suspect. That's a sign of economic security,
and security of any sort undermines social control.
youniquelikeme:
You hit the proverbial nail with that reply. (Although, sorry, doing the right thing should not be done out of malice) The real fit has to be in the corporate yes-man culture (malleable ass kisser) to be suited for any executive position
and beyond that it is the willingness to be manipulated and drained to be able to keep a job in lower echelon.
This is the new age of evolution in the work place. The class wars will make it more of an eventual revolution, but it is coming.
The unemployment rate (the actual one, not the Government one) globalization and off shore hiring are not sustainable for much
longer.
Something has to give, but it is more likely to snap then to come easily. People who are made to be repressed and down and
out eventually find the courage to fight back and by then, it is usually not with words.
down and out in Slicon Valley:
This is the response I got from a recruiter:
"I'm going to be overly honest with you. My firm doesn't allow me to submit any candidate who hasn't worked in 6-12
months or more. Recruiting brokers are probably all similar in that way . You are going to have to go through a connection/relationship
you have with a colleague, co-worker, past manager or friend to get your next job .that's my advice for you. Best of luck "
I'm 56 years old with MSEE. Gained 20+ years of experience at the best of the best (TRW, Nortel, Microsoft), have been issued
a patent. Where do I sign up to gain skills required to find a job now?
Litton Graft :
"Best of the Best?" I know you're down now, but looking back at these Gov'mint contractors you've enjoyed the best socialism
money can by.
Nortel/TRW bills/(ed) the Guvmint at 2x, 3x your salary, you can ride this for decades. At the same time the
Inc is attached to the Guvmint ATM localities/counties are giving them a red carpet of total freedom from taxation. Double subsidies.
I've worked many years at the big boy bandits, and there is no delusion in my mind that almost anyone, can do what I do and
get paid 100K+. I've never understood the mindset of some folks who work in the Wermacht Inc: "Well, someone has to do this work"
or worse "What we do, no one else can do" The reason no one else "can do it" is that they are not allowed to. So, we steal from
the poor to build fighter jets, write code or network an agency.
Hosswire:
I used to work as a recruiter and can tell you that I only parroted the things my clients told me. I wanted to
get you hired, because I was lazy and didn't want to have to talk to someone else next.
So what do you do? To place you that recruiter needs to see on a piece of paper that you are currently working? Maybe get an
email or phone call from someone who will vouch for your employment history. That should not be that hard to make happen.
Francois T :
The "bizarre way that companies now spec jobs" is essentially a coded way for mediocre managers to say without saying so explicitly
that "we can afford to be extremely picky, and by God, we shall do so no matter what, because we can!"
Of course, when comes the time to hire back because, oh disaster! business is picking up again, (I'm barely caricaturing here;
some managers become despondent when they realize that workers regain a bit of the higher ground; loss of power does that to lesser
beings) the same idiots who designed those "overly narrow hiring spec then leads to absurd, widespread complaint that companies
can't find people with the right skills" are thrown into a tailspin of despair and misery. Instead of figuring out something as
simple as "if demand is better, so will our business", they can't see anything else than the (eeeek!) cost of hiring workers.
Unable to break their mental corset of penny-pincher, they fail to realize that lack of qualified workers will prevent them to
execute well to begin with.
And guess what: qualified workers cost money, qualified workers urgently needed cost much more.
This managerial attitude must be another factor that explain why entrepreneurship and the formation of small businesses is
on the decline in the US (contrary to the confabulations of the US officialdumb and the chattering class) while rising in Europe
and India/China.
Kit:
If you are 55-60, worked as a professional (i.e., engineering say) and are now unemployed you are dead meat. Sorry to be blunt
but thats the way it is in the US today. Let me repeat that : Dead Meat.
I was terminated at age 59, found absolutely NOTHING even though my qualifications were outstanding. Fortunately, my company
had an old style pension plan which I was able to qualify for (at age 62 without reduced benefits). So for the next 2+ years my
wife and I survived on unemployment insurance, severance, accumulated vacation pay and odd jobs. Not nice – actually, a living
hell.
At age 62, I applied for my pension, early social security, sold our old house (at a good profit) just before the RE crash,
moved back to our home state. Then my wife qualified for social security also. Our total income is now well above the US median.
Today, someone looking at us would think we were the typical corporate retiree. We surely don't let on any differently but
the experience (to get to this point) almost killed us.
I sympathize very strongly with the millions caught in this unemployment death spiral. I wish I had an answer but I just don't.
We were very lucky to survive intact.
Ming:
Thank you Yves for your excellent post, and for bringing to light this crucial issue.
Thank you to all the bloggers, who add to the richness of the this discussion.
I wonder if you could comment on this Yves, and correct me if I am wrong I believe that the power of labor was sapped by the
massive available supply of global labor. The favorable economic policies enacted by China (both official and unofficial), and
trade negotiations between the US government and the Chinese government were critical to creating the massive supply of labor.
Thank you. No rush of course.
Nexus:
There are some odd comments and notions here that are used to support dogma and positions of prejudice. The world can be viewed
in a number of ways. Firstly from a highly individualised and personal perspective – that is what has happened to me and here
are my experiences. Or alternatively the world can be viewed from a broader societal perspective.
In the context of labour there has always been an unequal confrontation between those that control capital and those that offer
their labour, contrary to some of the views exposed here – Marx was a first and foremost a political economist. The political
economist seeks to understand the interplay of production, supply, the state and institutions like the media. Modern day economics
branched off from political economy and has little value in explaining the real world as the complexity of the world has been
reduced to a simplistic rationalistic model of human behaviour underpinned by other equally simplistic notions of 'supply and
demand', which are in turn represented by mathematical models, which in themselves are complex but merely represent what is a
simplistic view of the way the world operates. This dogmatic thinking has avoided the need to create an underpinning epistemology.
This in turn underpins the notion of free choice and individualism which in itself is an illusion as it ignores the operation
of the modern state and the exercise of power and influence within society.
It was stated in one of the comments that the use of capital (machines, robotics, CAD design, etc.) de-skills. This is hardly
the case as skills rise for those that remain and support highly automated/continuous production factories. This is symptomatic
of the owners of capital wanting to extract the maximum value for labour and this is done via the substitution of labour for capital
making the labour that remains to run factories highly productive thus eliminating low skill jobs that have been picked up via
services (people move into non productive low skilled occupations warehousing and retail distribution, fast food outlets,
etc). Of course the worker does not realise the additional value of his or her labour as this is expropriated for the shareholders
(including management as shareholders).
The issue of the US is that since the end of WW2 it is not the industrialists that have called the shots and made investments
it is the financial calculus of the investment banker (Finance Capital). Other comments have tried to ignore the existence of
the elites in society – I would suggest that you read C.W.Mills – The Power Elites as an analysis of how power is exercised
in the US – it is not through the will of the people.
For Finance capital investments are not made on the basis of value add, or contribution through product innovation and the
exchange of goods but on basis of the lowest cost inputs. Consequently, the 'elites' that make investment decisions, as
they control all forms of capital seek to gain access to the cheapest cost inputs. The reality is that the US worker (a
pool of 150m) is now part of a global labour pool of a couple of billion that now includes India and China. This means that the
elites, US transnational corporations for instance, can access both cheaper labour pools, relocate capital and avoid worker protection
(health and safety is not a concern). The strategies of moving factories via off-shoring (over 40,000 US factories closed or relocated)
and out-sourcing/in-sourcing labour is also a representations of this.
The consequence for the US is that the need for domestic labour has diminished and been substituted by cheap labour to
extract the arbitrage between US labour rates and those of Chinese and Indians. Ironically, in this context capital has
become too successful as the mode of consumption in the US shifted from workers that were notionally the people that created the
goods, earned wages and then purchased the goods they created to a new model where the worker was substituted by the consumer
underpinned by cheap debt and low cost imports – it is illustrative to note that real wages have not increased in the US since
the early 1970's while at the same time debt has steadily increased to underpin the illusion of wealth – the 'borrow today and
pay tomorrow' mode of capitalist operation. This model of operation is now broken. The labour force is now being demonized as
there is a now surplus of labour and a need to drive down labour rates through changes in legislation and austerity programs to
meet those of the emerging Chinese and Indian middle class so workers rights need to be broken. Once this is done a process of
in-source may take place as US labour costs will be on par with overseas labour pools.
It is ironic that during the Regan administration a number of strategic thinkers saw the threat from emerging economies and
the danger of Finance Capital and created 'Project Socrates' that would have sought to re-orientate the US economy from one that
was based on the rationale of Finance Capital to one that focused in productive innovation which entailed an alignment of capital
investment, research and training to product innovative goods. Of course this was ignored and the rest is history. The race to
the lowest input cost is ultimately self defeating as it is clear that the economy de-industrialises through labour and capital
changes and living standards collapse. The elites – bankers, US transnational corporations, media, industrial military complex
and the politicians don't care as they make money either way and this way you get other people overseas to work cheap for you.
S P:
Neoliberal orthodoxy treats unemployment as well as wage supression as a necessary means to fight "inflation." If there was
too much power in the hands of organized labor, inflationary pressures would spiral out of control as supply of goods cannot keep
up with demand.
It also treats the printing press as a necessary means to fight "deflation."
So our present scenario: widespread unemployment along with QE to infinity, food stamps for all, is exactly what you'd expect.
The problem with this orthodoxy is that it assumes unlimited growth on a planet with finite resources, particularly oil
and energy. Growth is not going to solve unemployment or wages, because we are bumping up against limits to growth.
There are only two solutions. One is tax the rich and capital gains, slow growth, and reinvest the surplus into jobs/skills
programs, mostly to maintain existing infrastructure or build new energy infrastructure. Even liberals like Krugman skirt around
this, because they aren't willing to accept that we have the reached the end of growth and we need radical redistribution
measures.
The other solution is genuine classical liberalism / libertarianism, along the lines of Austrian thought. Return to sound money,
and let the deflation naturally take care of the imbalances. Yes, it would be wrenching, but it would likely be wrenching for
everybody, making it fair in a universal sense.
Neither of these options is palatable to the elite classes, the financiers of Wall Street, or the leeches and bureaucrats of
D.C.
So this whole experiment called America will fail.
"... "President Trump instructed [his generals] in a very open way that the YPG will no longer be given weapons. He openly said
that this absurdity should have ended much earlier ," Foreign Minister Mevlüt Çavuşoğlu told reporters after the phone call. ..."
"... The YPG is the Syrian sister organization of the Turkish-Kurdish terror group PKK. Some weapons the U.S. had delivered to the
YPK in Syria to fight the Islamic State have been recovered from PKK fighters in Turkey who were out to kill Turkish security personal.
Despite that, supply for the YPG continued. In total over 3,500 truckloads were provided to it by the U.S. military. Only recently the
YPK received some 120 armored Humvees , mine clearance vehicles and other equipment. ..."
"... The generals in the White House and other parts of the administration were caught flat-footed by the promise Trump has made.
The Washington Post writes : "Initially, the administration's national security team appeared surprised by the Turks' announcement and
uncertain what to say about it. The State Department referred questions to the White House, and hours passed with no confirmation from
the National Security Council." ..."
"... The U.S. military uses the YPG as proxy power in Syria to justify and support its occupation of north-east Syria, The intent
of the occupation is , for now, to press the Syrian government into agreeing to a U.S. controlled "regime change": ..."
"... When in 2014 the U.S. started to use Kurds in Syria as its foot-soldiers, it put the YPG under the mantle of the so called
Syrian Democratic Forces and paid some Syrian Arabs to join and keep up the subterfuge. This helped to counter the Turkish argument
that the U.S. was arming and supporting terrorists. But in May 2017 the U.S. announced to arm the YPG directly without the cover of
the SDF. The alleged purpose was to eliminate the Islamic State from the city of Raqqa. ..."
"... A spokesperson of the SDF, the ethnic Turkman Talaf Silo, recently defected and went over to the Turkish side. The Turkish
government is certainly well informed about the SDF and knows that its political and command structure is dominated by the YPK. The
whole concept is a sham. ..."
"... Sometimes it's hard to see if Trump actually believed what he was saying about foreign policy on the campaign trail -- but
either way it doesn't matter much as he seems incapable of navigating the labyrinth of the Deep State even if he had in independent
thought in his head. I don't expect US weapons to stop making their way into Kurdish hands as they try to extend their mini-Israel-with-oil
foothold in Syria. But it would certainly be a welcome sight if the US left Syria alone for once! ..."
"... Trump personally sent General Flynn to recruit back Erdogan and the Turks right before the election. Flynn wrote his now infamous
editorial "Our ally Turkey is in crisis and needs our support" and published in "The Hill". http://thehill.com/blogs/pundits-blog/foreign-policy/305021-our-ally-turkey-is-in-crisis-and-needs-our-support
..."
"... But if you know the role he played for Trump in the campaign and then the post-election role as soon to be NSC advisor, you
will see that Trump was sending him to bring Turkey back into the fold after the coup attempt by CIA, Gulen and Turkey's AF and US State
Dept failed. ..."
"... Trump wanted to prevent the Turkish Stream. It was a huge rival to his LNG strategy. All these are why Flynn did what he did
for Trump. Now Trump has to battle CIA and State, as well as the CENTCOM-Israeli plans for insurgencies in Syria. It's not just the
Kurd issue or the other needs of NATO to hold the bases in Turkey. It's the whole southwest containment of Russian gas and Russian naval
power, and the reality of sharing the Mediterranean as well as MENA with the Bear. ..."
"... Furthermore, I've always been suspicious of Erdogan's 'turn' toward Russia. Many have suspected that the attempted coup was
staged by Erdogan (with CIA help?) so as to enable Erdogan to remain in office. IMO Erdogan joined the 'Assad must go!' effort not just
because he benefited from the oil trade but because he leans toward Sunnis (Surely he was aware of the thinking that: the road to Tehran
runs through Damascus .) ..."
President Trump is attempting to calm down the U.S.
conflict with Turkey . The
military junta in the White House has different
plans. It now attempts to circumvent the decision the president communicated to his Turkish counterpart. The result will be more
Turkish-U.S. acrimony.
Yesterday the Turkish foreign minister surprisingly
announced a phone call
President Trump had held with President Erdogan of Turkey.
United States President Donald Trump and Turkish President Recep Tayyip Erdoğan spoke on the phone on Nov. 24 only days after
a Russia-Turkey-Iran summit on Syria, with Ankara saying that Washington has pledged not to send weapons to the People's Protection
Units (YPG) any more .
"President Trump instructed [his generals] in a very open way that the YPG will no longer be given weapons. He openly said
that this absurdity should have ended much earlier ," Foreign Minister Mevlüt Çavuşoğlu told reporters after the phone call.
Will be speaking to President Recep Tayyip Erdogan of Turkey this morning about bringing peace to the mess that I inherited
in the Middle East. I will get it all done, but what a mistake, in lives and dollars (6 trillion), to be there in the first place!
12:04 PM - 24 Nov 2017
During the phone call Trump must have escaped his minders for a moment and promptly tried to make, as announced, peace with Erdogan.
The issue of arming the YPG is really difficult for Turkey to swallow. Ending that would probably make up for the
recent NATO blunder of presenting the founder of modern Turkey Kemal Atatürk and Erdogan himself as enemies.
The YPG is the Syrian sister organization of the Turkish-Kurdish terror group PKK. Some weapons the U.S. had delivered to
the YPK in Syria to fight the Islamic State have been
recovered from PKK fighters in Turkey who were out to kill Turkish security personal. Despite that, supply for the YPG continued.
In total over
3,500 truckloads
were provided to it by the U.S. military. Only recently the YPK received
some 120 armored Humvees ,
mine clearance vehicles and other equipment.
The generals in the White House and other parts of the administration were caught flat-footed by the promise Trump has made.
The Washington Post
writes : "Initially, the administration's national security team appeared surprised by the Turks' announcement and uncertain
what to say about it. The State Department referred questions to the White House, and hours passed with no confirmation from the
National Security Council."
The White House finally released what the Associated Presscalled :
a cryptic statement about the phone call that said Trump had informed the Turk of "pending adjustments to the military support
provided to our partners on the ground in Syria."
Neither a read-out of the call nor the statement AP refers to are currently available on the White House website.
The U.S. military uses the YPG as proxy power in Syria to justify and support
its
occupation of north-east Syria, The intent of the occupation is , for now,
to press the Syrian government into agreeing to a U.S. controlled "regime change":
U.S. officials have said they plan to keep American troops in northern Syria -- and continue working with Kurdish fighters --
to pressure Assad to make concessions during peace talks brokered by the United Nations in Geneva, stalemated for three years
now. "We're not going to just walk away right now," Defense Secretary Jim Mattis said last week.
To solidify its position the U.S. needs to further build up and strengthen its YPG mercenary forces.
When in 2014 the U.S. started to use Kurds in Syria as its foot-soldiers, it put the YPG under the mantle of the so called
Syrian Democratic Forces and paid some Syrian Arabs to join and keep up the subterfuge. This helped to counter the Turkish argument
that the U.S. was arming and supporting terrorists. But in May 2017 the U.S.
announced
to arm the YPG directly without the cover of the SDF. The alleged purpose was to eliminate the Islamic State from the city of Raqqa.
The YPG had been unwilling to fight for the Arab city unless the U.S. would provide it with more money, military supplies and
support. All were provided. The U.S. special forces, who control the YPG fighters, directed an immense amount of aerial and artillery
ammunition against the city. Any potential enemy position was destroyed by large ammunition and intense bombing before the YPG infantry
proceeded. In the end few YPG fighters died in the fight. The Islamic State was let go or eliminated from the city but
so was the city of Raqqa . The intensity
of the bombardment of the medium size city was at times ten
times greater than the bombing in all of Afghanistan. Airwarsreported :
Since June, an estimated 20,000 munitions were fired in support of Coalition operations at Raqqa . Images captured by journalists
in the final days of the assault show a city in ruins
Several thousand civilians were killed in the indiscriminate onslaught.
The Islamic State in Syria and Iraq is defeated. It no longer holds any ground. There is no longer any justification to further
arm and supply the YPG or the dummy organization SDF.
But the generals want to continue to do so to further their larger plans. They are laying grounds to circumvent their president's
promise. The Wall Street Journal seems to be the only outlet to
pick up on the subterfuge:
President Donald Trump's administration is preparing to stop sending weapons directly to Kurdish militants battling Islamic State
in Syria, dealing a political blow to the U.S.'s most reliable ally in the civil war, officials said Friday.
...
The Turkish announcement came as a surprise in Washington, where military and political officials in Mr. Trump's administration
appeared to be caught off-guard. U.S. military officials said they had received no new guidance about supplying weapons to the
Kurdish forces. But they said there were no immediate plans to deliver any new weapons to the group. And the U.S. can continue
to provide the Kurdish forces with arms via the umbrella Syrian militant coalition
The "military officials" talking to the WSJ have found a way to negate Trump's promise. A spokesperson of the SDF, the ethnic
Turkman Talaf Silo, recently
defected and went over to the Turkish side. The Turkish government is certainly well informed about the SDF and knows that its
political and command structure is dominated by the YPK. The whole concept is a sham.
But the U.S. needs the YPG to keep control of north-east Syria. It has to continue to provide whatever the YPG demands, or it
will have to give up its larger scheme against Syria.
The Turkish government will soon find out that the U.S. again tried to pull wool over its eyes. Erdogan will be furious when he
discovers that the U.S. continues to supply war material to the YPG, even when those deliveries are covered up as supplies for the
SDF.
The Turkish government released
a photograph showing
Erdogan and five of his aids taking Trump's phonecall. Such a release and the announcement of the call by the Turkish foreign minister
are very unusual. Erdogan is taking prestige from the call and the public announcement is to make sure that Trump sticks to his promise.
This wide publication will also increase Erdogan's wrath when he finds out that he was again deceived.
Posted by b on November 25, 2017 at 12:14 PM |
Permalink
Sometimes it's hard to see if Trump actually believed what he was saying about foreign policy on the campaign trail -- but
either way it doesn't matter much as he seems incapable of navigating the labyrinth of the Deep State even if he had in independent
thought in his head. I don't expect US weapons to stop making their way into Kurdish hands as they try to extend their mini-Israel-with-oil
foothold in Syria. But it would certainly be a welcome sight if the US left Syria alone for once!
Some
interpret this act on Election eve as a pecuniary fulfillment by Flynn of a lobbying contract (which existed).
But if you know the role he played for Trump in the campaign and then the post-election role as soon to be NSC advisor,
you will see that Trump was sending him to bring Turkey back into the fold after the coup attempt by CIA, Gulen and Turkey's AF
and US State Dept failed.
Flynn understood the crucial need for US and NATO to hold Turkey and prevent the Russians from getting Erdogan as an ally for
Syria and the Black Sea, the Balkans and Mediterranean as well as Iran, Qatar and Eurasia. Look at what has transpired between
Turkey and Russia since. Gas will be flowing through the Turkish Stream and Erdogan conforms to Putin's wishes.
Trump wanted to prevent the Turkish Stream. It was a huge rival to his LNG strategy. All these are why Flynn did what he
did for Trump. Now Trump has to battle CIA and State, as well as the CENTCOM-Israeli plans for insurgencies in Syria. It's not
just the Kurd issue or the other needs of NATO to hold the bases in Turkey. It's the whole southwest containment of Russian gas
and Russian naval power, and the reality of sharing the Mediterranean as well as MENA with the Bear.
Flynn was on it for Trump. And the IC and State want him prosecuted for defying their efforts to replace Erdogan with a stooge
like Gulen. It looks like Mueller is pursuing that against the General.
Its not a problem for US to drop Kurds if they are no longer needed, BUT for now they are essential for US/Israel/Saudi goals,
therefore you can bet 100% Kurds support will continue. Trump's order (he hasn't made it official either) will be easily circumvented.
The real question is, what Resistance will do with the backstabbing Kurds? It wont be easy to make a deal while Kurds
maintain absurd demands and as long as they have full Axis of Terror support.
Go Iraq's way like they reclaimed Kirkuk? US might have sitten out that one, I doubt they'll allow this to happen in Syria
as well, unless they get something in return.
While America's standard duplicity of saying one thing while doing the opposite has been known for decades, they have been able
to play games mainly because of the weakness of the other actors in the region.
The tables have turned now, but America still thinks it holds top dog position.
Wordplay, semantics and legal loopholes wont be tolerated for very long, and when hundreds of US boots return home in body bags
a choice will have to be made - escalate, or run away.
Previous behavior dictates run away, but times have changed.
A cornered enemy is the most dangerous, and the USA has painted itself into a very small corner...
Gee. While reading B's article what got to my mind is: "Turkey is testing the ground". Whatever Trump said to Erdogan on the phone,
it seems to me that the Turks are playing a card to see how the different actors in the US that seems to follow different agendas
will react. If Turkey concludes that the US will continue to back YPG, it's split from the US and will be definitive.
Erdogan is shifting away from US/NATO. He even hinted today that he might talk to Assad. That's huge! I wouldn't be surprised
if Turkey leaves NATO sooner than later. And if it's the case, it will be a major move of a tectonic amplitude.
Trump.. "Will be speaking to President Recep Tayyip Erdogan of Turkey this morning about bringing peace to the mess that I inherited
in the Middle East. I will get it all done, but what a mistake, in lives and dollars (6 trillion), to be there in the first place!"
Surely by now Erdogan must realise that whatever the US President says and promises will be circumvented by the State Department,
the Pentagon, the 17 US intel agencies (including the CIA and the NSA) and rogue individuals in these and other US government
departments and agencies, and in Congress as well (Insane McCain comes to mind)? Not to mention the fact that the Israeli government
and the pro-Israeli lobby on Capitol Hill exercise huge influence over sections of the US government.
If Erdogan hasn't figured out the schizoid behaviour of the US from past Turkish experience and the recent experience of Turkey's
neighbours (and the Ukraine is one such neighbour), he must not be receiving good information.
Though as Jean says, perhaps Erdogan is giving the US one last chance to demonstrate that it has a coherent and reliable policy
towards the Middle East.
Well, the US policy has been coherent and reliable in the last years. It enhanced local conflicts, supported both sides at
the same time but with different intensities. Whoever wins would be "our man". Old stuff since the Byzantine period. It always
takes a lot of time to prove the single actions that were done. In most cases we learn about it years later. The delay is so big
and unpleasant that quite a number of folks escapes to stupid narratives that explain everything in one step, and therefore nothing.
By the way: is the interest of Kurds to remain under the umbrella of the Syrian state but not be governed by Baath type of Arabic
nationalism illegitimate?
The Kurds (PKK basically) are only necessary to give a "face" to the force the US is trying to align in E. Syria. The "fighting"
against ISIS (if there really was any) is coming to a close. The Chiefs of ISIS have been airlifted to somewhere nearby, and the
foreign mercenary forces sent elsewhere by convoy. ALL the valuable personnel have now become "HTS2" with reversible vests. These,
plus the US special forces are the basis of a new armed anti-Syrian force. (Note that one general let slip that there are 5'000
US forces in E-Syria - not the 500 spoken of in the MSM).
So Trump may well be correct in saying that the Kurds (specifically) will not get any more arms - because they have other demands
and might make peace with the Syrian Government, to keep at least some part of their territorial gains. The ISIS "bretheren" and
foreign mercenaries do not want any peaceful solution because it would mean their elimination.. So The CIA and Pentagon will probably
continue arms supplies to "HTS2" - but not the Kurds.
(ex-ISIS members; Some are from Saudi Arabia, Qatar - the EU and the US, as well as parts of Russia and China. They are not
farming types but will find themselves with some of the best arable land in Syria. Which belonged to Syrian-arabs-christians-Druzes-Yadzis
etc. Who wil want their properties back.)
Note that the US forces at Tanf are deliberately not letting humanitarian help reach the nearby refugee camp. Starvation and
deprivation will force many of the younger members to become US paid terrorists.
thanks b.. i tend to agree with @4 jean and @5 jen... the way i see it, there is either a real disconnect inside the usa where
the president gets to say one thing, but another part of the establishment can do another, or trump has made his last lie to turkey
here and turkey is going to say good bye to it's involvement with the usa in any way that can be trusted.. seems like some kind
of internal usa conflict to me at this point, but maybe it is all smoke and mirrors to continue on with the same charade.. i mostly
think internal usa conflict at this point..
Odd that no one has mentioned the fact the US was behind the attempted coup, where Erdogan was on a plane with two rogue Syrian
jets that stood down rather than execute the kill shot. I have read opinion that the fighter pilots were "lit up" by Russian missile
batteries and informed by radio they would not survive unless they shut down their weapons targeting immediately. This is probably
a favour Putin reminds Erdogan of on a regular basis, whenever Erdo tries to play Sultan. The attempted coup/asassination also
shows Erdogan exactly how much he can trust the US/Zionists at any level.
And Edrogan must also know Syria was once at least partly in the US-orbit, as Syria was the destination for many well-documented
US-ordered rendition/torture cases. It is probable Mossad (or their proxy thugs) killed Assad's father and older brother, so Erdo
knows he's better relying on Putin than Trumpty Dumbdy.
Erdogan is about to make a u-turn toward Syria. He is furious at Saudi Arabia for boycotting its ally Qatar, for talking about
owning Sunni Islam and by the continuous support of Islamists and Sunni Kurds in Syria.
Erdogan is preparing the turkish public opinion to a shift away from the USA-Israeli axis. This may get him many points in the
2019 election if the war in Syria is stopped, most Syrian refugees are back, Turkish companies are involved in the reconstruction
and the YPG neutralized. Erdogan has 1 year and half to make this to happen. For that he badly needs Bashar al Assad and his army
on his side.
Therefore he is evaluating what is the next move and he needs to know where the USA is standing about Turkey and Syria. Until
now the messages from the USA are contradictory yet Erdogan keeps telling his supporters that the USA is plotting against Turkey
and against Islam. Erdogan's reputation also is been threatened by the outcome of Reza Zarrab's trial in the US where the corruption
of his party may be exposed.
That is why Erdogan is making another check about the US intentions before Erdogan he starts the irreversible shift toward
the Iran-Russia (+Qatar and Syria) axis.
missing in this analysis is oil gas ... producers, refiners, slavers, middle crooks, and the LNG crowd :Israel, Fracking, LNG
and wall street... these are the underlying directing forces that will ultimately dictate when the outsiders have had enough fight
against Assad over Assad's oil and Assad's refusal to allow outsiders to install their pipelines. Until then, gangland intelligence
agencies will continue the divide, destroy and conquer strategies sufficient to keep the profits flowing. The politicians cannot
move until the underlying corruptions resolve..
The word 'byzantine' has been used for centuries to describe the intricate and multi-leveled forms of agreement, betrayal, treachery
and achievement among the shifting power brokers in the region. The US alone has three major and another three minor players at
work - often fighting each other. If however, it thinks it can outplay people whose lives are steeped in such a living tradition,
it is sadly deluded and will one day be in for a very rude surprise. Even the Russians have had difficulty navigating that maze.
When confronted with such a 'Gordian knot' of treachery and shifting alliances, Alexander the Great drew his sword and cut
through it with a vision informed by the sage Socrates as taught by Aristotle.
Despite claiming to represent such a western heritage, the US has no such Socratic wisdom, no Aristotelian logic, and no visionary
leadership that could enable it to do what Alexander did. Lacking this, it is destined to get lost in its' own hubris, and be
consumed by our current version of that region's gordian knot.
'...By the way: is the interest of Kurds to remain under the umbrella of the Syrian state but not be governed by Baath type
of Arabic nationalism illegitimate?..'
...showing that he either knows only the crap spouted by wikipedia...or nothing at all about the Baath party...
...which happens to be a socialist and secular party interested in pan-Arab unity...not nationalism...[an obvious oxymoron
to be pan-national and 'nationalist' at the same time...]
Of course there is always a 'better way'...right Hausmaus...?
The Baath socialism under Saddam in Iraq was no good for anyone we recall...especially women, students, sick people etc...
A 'better way' has since been installed and it is working beautifully...all can agree...
Same thing in Libya...where the Great Socialist People's Libyan Arab Jamahiriya was no good for anyone...
Of course everyone wanted the 'Better Way'...all those doctoral graduates with free education and guaranteed jobs...a standard
of living better than some European countries...etc...
Again...removing the 'socialist' Kadafi has worked out wonderfully...
We now have black African slaves sold in open air markets...where before they did all the broom pushing that was beneath the
dignity of the Libyan Arabs...
...and were quite happy to stay there and have a job and paycheck...instead of now flooding the shores of Italy in anything
that can float...
Oh yes...why would anyone in Syria want to be governed by the socialist Baath party...?
...especially the Kurds...who just over the border in Turkey are not even recognized as humans...never mind speaking their
own language...
I'd really hoped that Donald Trump® would be the "outsider" that both the MSM and he have been insisting he is for the past couple
of years. Other than the Reality TV Show faux conflicts with which the MSM entertains us nightly, I see no such "rogue" Administration.
This say one thing, and do the other has been US foreign policy forever.
Recall, for instance that on February 21, 2014, Obama's State Department issued a statement hailing Ukrainian President Yanukovych
for signing an agreement with the "pro-democracy Maidan Protest" leaders in which he acquiesced to all of their demands.
Then, on February 22, 2014, the US State Department cheered the "peaceful and Constitutional" coup after neo-nazis stormed
the Parliament.
A few months later, Secretary of State Kerry hailed the Minsk Treaty to end the war in Ukraine. Later that day, Vickie Nuland
said there was no way her Ukies would stop shelling civilians, and sure enough they didn't (until they'd been on the retreat for
weeks, and came whimpering back to the negotiations table).
A couple years later, Kerry announced that the US and Russia would coordinate aerial assaults in Syria. The next day, "Defense"
Secretary Carter said, "no way," and within a week or so, we "accidentally" bombed Syrian forces at Deir ez Zoir for over an hour.
From my perspective, they keep us chasing the next squirrel, while bickering amongst each other about each squirrel. But the
wolves are still devouring the lambs, with only the Bear preventing a complete extinction.
What we know with at least some level of confidence...
Dump is not the 'decider'...the junta is...he's just a cardboard cutout sitting behind the oval office desk...
And he's got no one to blame but himself...he came in talking a big game about cleaning house and got himself cleaned out of
being an actual president...
This was inevitable from the moment he caved on Flynn...the only person he didn't need to vet with the senate...and a position
that wields a lot of power...
This was his undoing on many levels...not only because he faced a hostile deep state and even his own party in congress with
no one by his side [other than Flynn]...
...but because it showed that he had no balls and would not stand by his man...
This is not the stuff leaders are made of...
The same BS we see with Turkey is playing out with Russia on the Ukraine issue...
Now the junta and their enablers in congress want to start sending offensive arms to Ukraine...Dump and his platitudes to Putin...no
matter how much he may mean it...mean nothing...he's not in charge...
I think that Jean @4 has the best take on this: Erdoğan went very public on Trump's "promise" in a classic put-up-or-shut-up challenge
to the USA.
Either the word of a POTUS means something or it doesn't, and if it doesn't then Turkey is going to join Russia in concluding
that the USA as simply not-agreement-capable.
Erdoğan will then say "enough!!!", give the USA the two-finger-salute, and then take Turkey out of NATO.
And the best thing about it will be that McMaster, Kelly and Mathis will be so obsessed with playing their petty little games
that they won't see it coming.
It's hard to tell what Erdoğan is doing or intending other than that he is navigating something - objective TBD. It'll be interesting
to see if he constrains the use of Incirlik airbase should the US keep arming the YPG/PKK forces. Airpower is the enabler (sole
enabler, IMO) of the/any Kurdish overreach inside Syria. Seems like Erdoğan holds the ace card in this muddle but has yet to play
it.
Seems like Turkey has more than one card to play. A commenter on another site mentioned recently that the US really doesn't
want Erdogan to have that S-400 system from Russia. Got me thinking, could Russia have deliberately loaded Erdogan's hand with
that additional card to help him negotiate with the US?
Turkey may well leave NATO and as others have pointed out, this would be a game changer far beyond the matter of the US's illegal
presence in NE Syria. This possibility brings immense existential gravitas to Erdogan's position right now. He could ask
for many concessions at this point, not to leave. And from the Eurasian point of view, it doesn't matter if he leaves or stays,
while from the western view, it matters greatly.
Would the US give up Syria, in order to keep Turkey in NATO? It's a western dichotomy, not one that affects Asia. It would
be simple to throw S-400 at that dynamic to watch it squirm.
The plays the thing wherein I'll catch the conscience of the King.
- Hamlet
As the endgame plays out, Erdogan's conscience may be revealed.
b has made the point that the partition that US-led proxy forces have carved out is unsustainable. But it would be sustainable
if Erdogan can be convinced to allow trade via Turkey.
For that reason, I thought Trump's ceasing direct military aid to the Kurds made sense as it provided Erdogan with an excuse
to allow land routes for trade/supply. Erdogan can argue that he wants to encourage such good behavior and doesn't want to make
US an enemy (Turkey is still a NATO country).
Furthermore, I've always been suspicious of Erdogan's 'turn' toward Russia. Many have suspected that the attempted coup
was staged by Erdogan (with CIA help?) so as to enable Erdogan to remain in office. IMO Erdogan joined the 'Assad must go!' effort
not just because he benefited from the oil trade but because he leans toward Sunnis (Surely he was aware of the thinking that:
the road to Tehran runs through Damascus .)
Hasn't Erdogan's vehement anti-Kurdish stance done R+6 a disservice? It seems to me that it has helped USA to convince
Kurds to fight for them and has also been a convenient excuse for Erdogan to hold onto Idlib where al Queda forces have refuge.
If Erdogan was really soooo angry with Washington, and soooo dependent on Moscow, then why not relax his anti-Kurdish
stance so as to bring Kurds back into the Syrian orbit?
Jackrabbit @20:
Erdogan may feel that if he relaxed his stance against the Syrian Kurds, it could embolden Turkish Kurds to further pursue their
agenda. It would also make him appear weak towards his supporters.
Erdogan is NOT going to leave NATO. Why should he? It would be the stupidest chess move ever? He's in the club and they can't
kick him out. He can cause all the trouble he wants and hobble that huge machine that is the western alliance. He will not get
EU membership, but he has his NATO ID CARD and that ain't bad. Erdo now knows that the poor bastard Trumps is WORTHLESS that he
is a toothless executive in name only. This is a wake up call, if I were Erdo, I would be very afraid of the USA and it's Syria,
MENA policy. It is being run by LUNATICS and is a slow moving train wreak. So for now, Erdo must be looking at Moscow, admiring
Putin for this is a man who has his shit together and truly knows how to run a country. Maybe even a sense of admiration and more
respect for Putin is even present. If I were Erdo, I'd double down in my support for Russia's Syria policy.
You do not get it:
„...which happens to be a socialist and secular party interested in pan-Arab unity...not nationalism..."
According to this ideology the coherence of a society comes from where? And who is excluded if one applies it?
So your contribution is just a rant using rancidic rhetoric tools. But I will not call you „flunkerbandit". My advice is to move
to this area and have a look into such a society from a more close position. Armchair type of vocal leadership does not help.
@23 "Erdogan is NOT going to leave NATO. Why should he?"
I guess one possible reason would be this: as long as Turkey remains in NATO then he is obliged to allow a US military presence
in his country, and that's just asking for another attempt at a military coup.
After all, wasn't Incirlik airbase a hotbed of coup-plotters during the last coup attempt?
"when the Syrian settlement is achieved, Syria's democratic forces will join the Syrian army." "When the Syrian state stabilizes, we can say that the Americans did what they said, then withdraw as they did in Iraq and
set a date for their departure and leave."
Nothing new here, nothing good either. Kurds so far are keeping up their demands of de-facto independence under fig-leaf of
"we are part of federalised Syria" with weak central government and autonomous Kurds. Thats how US plan to castrate Syria. Russia
offered cultural autonomy, Kurds rejected.
As for Americans "withdrawing" willfully, it never happened. Iraq had to kick them out, and then US used ISIS and Kurds to
get back in.
As for Syria's stabilization part, US is doing everything in its power to prevent it.
@Yeah Right #26
Turkey is not obliged to keep foreign troops in their country to remain in NATO. De Gaulle invited the US to leave France in 1967
but is still a member of NATO
@31 France actually withdrew from NATO in 1966. It remained "committed" to the collective defence of western Europe, without being,
you know, "committed" to it.
So, yeah, France kicked all the foreign troops out of France in 1967, precisely because its withdrawal from NATO's Integrated
Military Command meant that the French were no longer under any obligation to allow NATO troops on its soil.
But France had to formally withdraw from that Command first, and the reason that de Gaulle gave for withdrawing were exactly
that: remaining meant ceding sovereignty to a supra-national organization i.e. NATO Integrated Military Command.
That France retained "membership" of NATO's political organizations even after that withdrawal was little more than a fig-leaf.
After all, NATO's purpose isn't "political", it is "military".
"The Decider" is Trump's apparent self image. He can't be enjoying the Presidency and the controls exerted upon him by others
among the "Deep State" (whom I suppose have effectively cowed him into behaving via serious threats).
If he already had money and power, as it appears that he had, he gained little by taking the crown. He has less power because
he is now controlled by a number of forces (CIA, NSA, Media, MIC and etc.) as he remains under constant assault by his natural
opposition.
Big mistake dumping Flynn.
Now you take another kind of asshole in the person of Obama - a guy that had nothing - you have a malleable character who enjoys
the pomp and circumstance. Really didn't need any persuading to do anything required of him.
Here is a recent report from the Turkish Prime Minister supporting Trump's "lie" about ending support for the Kurds....what will
history show occured?
ISTANBUL, Nov. 26 (Xinhua) -- Turkish Prime Minister Binali Yildirim said on Sunday that his country is expecting the United
States to end its partnership with the Syrian Kurdish Democratic Union Party (PYD) and its military wing, the People's Protection
Units (YPG).
"Since the very beginning, we have said that it is wrong for the U.S. to partner with PKK's cousin PYD and YPG in the fight
against Daesh (Islamic State) terrorist group," Yildirim told the press in Istanbul prior to his departure for Britain.
Ankara sees the Kurdish groups as an offshoot of the Kurdistan Workers' Party (PKK) fighting against the Turkish government
for over 30 years, while Washington regards them as a reliable ground force against the Islamic State (IS), also known as Daesh.
U.S. President Donald Trump on Friday spoke to his Turkish counterpart Recep Tayyip Erdogan over the phone, pledging not to
provide weapons to the YPG any more, an irritant that has hurt bilateral ties, according to the Turkish side.
Yildirim noted that Washington has described it as an obligation rather than an option to support the Kurdish groups on the
ground. "But since Daesh (IS) is now eliminated then this obligation has disappeared," he added.
It would be nice if Erdogan when withdrawing from NATO (Assuming he does this in the next 12-18 months) would say something like.
"We really like President Trump - and we trust his word implicitly. The problem is, although we trust his word, we know
he is not in control so his word is useless and best ignored. Though of course - we still trust he means well."
That would be a nice backhander to hear from Erdopig.
Speculation about Turkey leaving NATO seems farfetched. Turkey has NATO over a barrel. It has been a member for decades and what
would it gain by leaving? Nothing. By staying it continues to influence and needle at the same time. Turkey will only leave when
NATO throws it out, which isn't going to happen.
"... The market is cherished as a power-reducing tool, in particular to contain influential special interests, within the framework of a competitive order and the rule of law. This is in obvious contrast to the Chicago School liberalism which "celebrates the ascendancy of private market forces (and) strives for a lean state )". ..."
"... Ordo takes the backseat when national self-interest calls for: " Teutonomik trumps Ordnungsökonomik ", as Michael Burda points out. ..."
"... This is, as Peter Praet stresses, perfectly in line with Eucken's emphasis on the "primacy of monetary policy". The ECB's lexicographic ordering of its objectives – an unrivalled priority for price stability – also fits, hand-in-glove, with ordoliberalism's insistence on a rule-based policy with a narrow mandate. Principles, however, do not suffice to develop the instruments needed to achieve the ultimate objective. ..."
"... Relentlessly predicting doomsday (hyper-inflation, vanishing foundations of wealth and political instability), this has sapped support for the ECB significantly (Adalbert Winkler). What matters for ordoliberals are principles – not the outcome (Wyplosz 2012). In this view, asymmetric information or market imperfections have no place. This, of course, also lays bare the limitations of a principles-based policy approach which, regardless of circumstances, prohibits any discretion. ..."
"... Discretion, inexorably, comes with the temptation to re-optimise or to postpone, i.e. 'kicking the can down the road'. It thus undermines the "liability principle" and ultimately the competitive system itself. If rules don't rule, arbitrariness reigns supreme and gaming the system becomes the default option. This argument holds a fortiori in a federal system, as Harold James stresses: "The more federal a country is, the more it has to insist on rules." But, by force of nature, rules cannot but remain incomplete, so the real issue is to negotiate "sustainable flexibility". ..."
"... Clearly, international policy coordination becomes difficult when views about how the world works diverge. However, such discrepancies are particularly problematic when they exist within a monetary union: forcefully insisting on a principled, rule-based approach is – as a rule – opposed by more pragmatic orientations, regularly defended by France and Italy. In fact, when push comes to shove, consider the response to the banking crisis, German politics can also become very pragmatic (Thorsten Beck and Hans-Helmut Kotz). ..."
"... Ordoliberals regard current-account surpluses from the viewpoint of small open economies, which Germany might have been at some point, but the Eurozone certainly is not. ..."
"... In modern terms, the focus of ordoliberalism has been on microeconomic issues. Macro (stabilisation) policies, other than the stabilisation of the value of money, were seen of not much avail, if at all. In this regard, ordoliberalism shares a quite unconditional faith in the self-stabilising capacity of a market economy with the US freshwater schools of macroeconomics. ..."
A distinctive trait – an idiosyncrasy – of German economics post-1945 is its reference to Ordo , an economic policy approach
developed by Walter Eucken (1952/1990) and colleagues at Freiburg University, in response to the malfunctioning, highly cartelised
economy of the Weimar Republic as well as in opposition to the statist, authoritarian interventionism of the Nazi regime. Of chief
concern was the protection of individual freedom. Competitive markets were seen as most effective in assuring the conditions for
individual liberty, including the reining in of private market power.
In international debates, on the other hand, ordoliberalism is alluded to mainly with negative connotations, at times as an even
more malicious version of the often-decried neoliberalism (Brunnermeier et al. 2016). However, ordoliberalism comes in a number
of varieties. In its purest version, it stresses political or government failures and largely (almost completely) disregards market
failures. Coordination issues are, however, in mainstream economics of course the reason for why "eschewing demand management policies"
is seen as flawed. And, somewhat puzzlingly, ordoliberalism calls for a strong state, mainly to contain market power which
in a pure "laissez-faire [environment ends up] distorting the market mechanism by crippling the price mechanism through private interventions".
The market is cherished as a power-reducing tool, in particular to contain influential special interests, within the framework
of a competitive order and the rule of law. This is in obvious contrast to the Chicago School liberalism which "celebrates the ascendancy
of private market forces (and) strives for a lean state )".
Traces of this Ordo philosophy can be detected in EMU's "framework of rules to ensure a sound fiscal policy and sound money".
But, then of course, those rules were honored in the breach, beginning with Germany (in 2003). Hence, ordoliberals hold that their
principles were, in fact, never properly applied (Feld et al .) – probably rightly so. Alternatively, one can argue that the
reference to ordoliberal principles is nothing but a mechanism to defend German interests as largest creditor in the recent sovereign
debt and banking crises, as Charles Wyplosz holds. Ordo takes the backseat when national self-interest calls for: " Teutonomik
trumps Ordnungsökonomik ", as Michael Burda points out.
The remaining chapters of the book focus on three different policy areas where the discrepancy between ordoliberalism and Anglo-Saxon-Latin
pragmatism has become especially clear and relevant.
Principled monetary and financial policy: Underwriting stability
The ECB aims for a rate of increase of the harmonised consumer price index of below but close to 2%. This is, as Peter Praet stresses,
perfectly in line with Eucken's emphasis on the "primacy of monetary policy". The ECB's lexicographic ordering of its objectives
– an unrivalled priority for price stability – also fits, hand-in-glove, with ordoliberalism's insistence on a rule-based policy
with a narrow mandate. Principles, however, do not suffice to develop the instruments needed to achieve the ultimate objective.
For ten years now, ever since the crisis broke, German media, but for rare exceptions, have treated its public with a highly skeptical
assessment of ECB policy, based "on opinions expressed by many ordoliberal German economists". Relentlessly predicting doomsday (hyper-inflation,
vanishing foundations of wealth and political instability), this has sapped support for the ECB significantly (Adalbert Winkler).
What matters for ordoliberals are principles – not the outcome (Wyplosz 2012). In this view, asymmetric information or market imperfections
have no place. This, of course, also lays bare the limitations of a principles-based policy approach which, regardless of circumstances,
prohibits any discretion.
What's wrong with Eurozone?
Whereas the Global Crisis led to a similar hit to the Eurozone's economy as to the US economy, recovery in the US case was much
swifter. In addition, net exports were the major drivers of the EZ's mediocre performance – remarkable for such a big and rather
closed economic area, and certainly not an approach which could be mimicked by everybody (Oliver Landmann). Further, the crisis opened
"new asymmetries", challenging the EZ going forward. It is here that "conflicting narratives" about the appropriate design of policies
come in.
On the one hand, the danger of excessive deficits, potentially "exacerbated by moral hazard from the anticipated likelihood of
bailouts" was correctly acknowledged by ordos. But "rules that are too stringent to be credible can be worse than no rules at all"
(Jeffrey Frankel). While explicit rules of the game are important, the EZ's "management of discretion is a key weakness".
On the other hand, largely ignoring demand-side effects has created larger, self-reinforcing output gaps in the EZ, deeper than
was indicated, as correctly pointed out by the pragmatists (Ball 2014). And the fiscal straightjacket imposed by the Germans and
other Nordic creditor governments on the EZ periphery left most of the macro-stabilisation task, i.e. demand-side macro management,
at the ECB's door.
Discretion, inexorably, comes with the temptation to re-optimise or to postpone, i.e. 'kicking the can down the road'. It
thus undermines the "liability principle" and ultimately the competitive system itself. If rules don't rule, arbitrariness reigns
supreme and gaming the system becomes the default option. This argument holds a fortiori in a federal system, as Harold James
stresses: "The more federal a country is, the more it has to insist on rules." But, by force of nature, rules cannot but remain incomplete,
so the real issue is to negotiate "sustainable flexibility".
Clearly, international policy coordination becomes difficult when views about how the world works diverge. However, such discrepancies
are particularly problematic when they exist within a monetary union: forcefully insisting on a principled, rule-based approach
is – as a rule – opposed by more pragmatic orientations, regularly defended by France and Italy. In fact, when push comes to shove,
consider the response to the banking crisis, German politics can also become very pragmatic (Thorsten Beck and Hans-Helmut Kotz).
Global imbalances – coordinating with different script books
Ordoliberals regard current-account surpluses from the viewpoint of small open economies, which Germany might have been at
some point, but the Eurozone certainly is not. In any case, for some, their quasi-permanent current-account surpluses make the
Germans "bad, really bad". However, as German observers (Clemens Fuest et al ., Christoph Schmidt) point out, the surplus
is driven by fundamentals (ageing society) or temporary factors (cheap domestic currency, low commodity prices). Almost half of the
surplus, in accounting terms, can thus be explained by fundamentals (Philipp Steinberg). However, "competing over net exports is
a zero-sum game". For the same "reasons" of accounting a current-account surplus comes with net capital outflows (Richard Cooper).
Within the EA, this implies adjustment without the security valve of a change in nominal exchange rates. Instead, migration, fiscal
transfers or adjustment of relative prices – in particular real wages – have to do the job. A more expansionary fiscal policy as
well as a stronger growth of wages, however, were anathemas in Germany (Jeromin Zettelmeyer, Agnès Bénassy-Quére). Instead, internal
devaluation was asked from Germany's partners (Christopher Smart).
Beyond the economic analysis, however, protectionist threats, uncertainty about a too large net creditor position as well as the
EZ rules in the "macroeconomic imbalances procedure" should Germany lead to being more perceptive in terms of accepting calls for
capping its surplus.
Where do we go from here?
In modern terms, the focus of ordoliberalism has been on microeconomic issues. Macro (stabilisation) policies, other than the
stabilisation of the value of money, were seen of not much avail, if at all. In this regard, ordoliberalism shares a quite unconditional
faith in the self-stabilising capacity of a market economy with the US freshwater schools of macroeconomics.
The Ordo school was – is – highly influential in German economics as well as, possibly more important, in politics and the public
discourse. The post-WWII Wirtschaftswunder of the 1950s and 60s was understood as corroborating its analysis. Ordo philosophy
also had a decisive impact on the institutional design of Europe's economic community (in particular competition policy and prohibition
of state aid) as well subsequently on its monetary union (think of the ECB's mandate as well as the rule-based Stability and Growth
Pact).
But in our second- (or third-) best world, markets are imperfect and fallible (as are public authorities, obviously). Contracts
remain by necessity incomplete. Therefore, under certain circumstances, reasoned public intervention – discretionary judgment –
is called for. This is, obviously, not a particularly German philosophy or American pragmatism. More plausibly, the Greeks – cf.
Aristotle's Nicomachean Ethics – can claim copyright on this.
References
Ball, Laurence (2014), 'Long-Term Damage from the Great Recession in OECD Countries', NBER Working Paper 20185, May.
Brunnermeier, Markus K., Harold James, Jean-Pierre Landau (2016), The Euro and the Battle of Ideas , Princeton: Princeton
University Press.
Eucken, Walter (1952/1990) Grundsätze der Wirtschaftspolitik , 6th Edition. Mohr Siebeck: Tübingen
Wyplosz, Charles (2012) 'Fiscal Rules: Theoretical Issues and Historical Experiences', in: A. Alesina and F. Giavazzi (eds)
Fiscal Policy After the Crisis , Chicago University Press, 2012.
"... By David Masciotra, the author of Mellencamp: American Troubadour (University Press of Kentucky). He has also written for Salon, the Atlantic and the Los Angeles Review of Books. For more information visit www.davidmasciotra.com. Originally published at Alternet ..."
"... Robert Reich, in his book Supercapitalism, explains that in the past 30 years the two industries with the most excessive increases in prices are health care and higher education. ..."
"... Using student loan loot and tax subsidies backed by its $3.5 billion endowment, New York University has created a new administrative class of aristocratic compensation. The school not only continues to hire more administrators – many of whom the professors indict as having no visible value in improving the education for students bankrupting themselves to register for classes – but shamelessly increases the salaries of the academic administrative class. The top 21 administrators earn a combined total of $23,590,794 per year. The NYU portfolio includes many multi-million-dollar mansions and luxury condos, where deans and vice presidents live rent-free. ..."
"... As the managerial class grows, in size and salary, so does the full time faculty registry shrink. Use of part time instructors has soared to stratospheric heights at NYU. Adjunct instructors, despite having a minimum of a master's degree and often having a Ph.D., receive only miserly pay-per-course compensation for their work, and do not receive benefits. Many part-time college instructors must transform their lives into daily marathons, running from one school to the next, barely able to breathe between commutes and courses. Adjunct pay varies from school to school, but the average rate is $2,900 per course. ..."
"... New York Times ..."
"... to the people making decisions ..."
"... it's the executives and management generally. Just like Wall Street, many of these top administrators have perfected the art of failing upwards. ..."
"... What is the benefit? What are the risks? ..."
"... Sophomore Noell Conley lives there, too. She shows off the hotel-like room she shares with a roommate . ..."
"... "As you walk in, to the right you see our granite countertops with two sinks, one for each of the residents," she says. A partial wall separates the beds. Rather than trek down the hall to shower, they share a bathroom with the room next door. "That's really nice compared to community bathrooms that I lived in last year," Conley says. To be fair, granite countertops last longer. Tempur-Pedic is a local company - and gave a big discount. The amenities include classrooms and study space that are part of the dorm. Many of the residents are in the university's Honors program. But do student really need Apple TV in the lounges, or a smartphone app that lets them check their laundry status from afar? "Demand has been very high," says the university's Penny Cox, who is overseeing the construction of several new residence halls on campus. Before Central Hall's debut in August, the average dorm was almost half a century old, she says. That made it harder to recruit. " If you visit places like Ohio State, Michigan, Alabama," Cox says, "and you compare what we had with what they have available to offer, we were very far behind." Today colleges are competing for a more discerning consumer. Students grew up with fewer siblings, in larger homes, Cox says. They expect more privacy than previous generations - and more comforts. "These days we seem to be bringing kids up to expect a lot of material plenty," says Jean Twenge, a psychology professor at San Diego State University and author of the book "Generation Me." Those students could be in for some disappointment when they graduate , she says. "When some of these students have all these luxuries and then they get an entry-level job and they can't afford the enormous flat screen and the granite countertops," Twenge says, "then that's going to be a rude awakening." Some on campus also worry about the divide between students who can afford such luxuries and those who can't. The so-called premium dorms cost about $1,000 more per semester. Freshman Josh Johnson, who grew up in a low-income family and lives in one of the university's 1960s-era buildings, says the traditional dorm is good enough for him. ..."
"... "I wouldn't pay more just to live in a luxury dorm," he says. "It seems like I could just pay the flat rate and get the dorm I'm in. It's perfectly fine." In the near future students who want to live on campus won't have a choice. Eventually the university plans to upgrade all of its residence halls. ..."
"... Competition for students who have more sophisticated tastes than in past years is creating the perfect environment for schools to try to outdo each other with ever-more posh on-campus housing. Keeping up in the luxury dorm race is increasingly critical to a school's bottom line: A 2006 study published by the Association of Higher Education Facilities Officers found that "poorly maintained or inadequate residential facilities" was the number-one reason students rejected enrolling at institutions. PHOTO GALLERY: Click Here to See the 10 Schools with Luxury Dorms ..."
"... Private universities get most of the mentions on lists of schools with great dorms, as recent ratings by the Princeton Review, College Prowler, and Campus Splash make clear. But a few state schools that have invested in brand-new facilities are starting to show up on those reviews, too. ..."
"... While many schools offer first dibs on the nicest digs to upperclassmen on campus, as the war for student dollars ratchets up even first-year students at public colleges are living in style. Here are 10 on-campus dormitories at state schools that offer students resort-like amenities. ..."
"... Perhaps some students are afraid to protest for fear of being photographed or videographed and having their face and identity given to every prospective employer throughout America. Perhaps those students are afraid of being blackballed throughout the Great American Workplace if they are caught protesting anything on camera. ..."
"... Mao was perfectly content to promote technical education in the new China. What he deprecated (and fought to suppress) was the typical liberal arts notion of critical thinking. We're witnessing something comparable in the U.S. We're witnessing something comparable in the U.S. ..."
"... Many of the best students feel enormous pressure to succeed and have some inkling that their job prospects are growing narrower, but they almost universally accept this as the natural order of things. Their outlook: if there are 10 or 100 applicants for every available job, well, by golly, I just have to work that much harder and be the exceptional one who gets the job. ..."
"... I read things like this and think about Louis Althusser and his ideas about "Ideological State Apparatuses." While in liberal ideology the education is usually considered to be the space where opportunity to improve one's situation is founded, Althusser reached the complete opposite conclusion. For him, universities are the definitive bourgeois institution, the ideological state apparatus of the modern capitalist state par excellance . The real purpose of the university was not to level the playing field of opportunity but to preserve the advantages of the bourgeoisie and their children, allowing the class system to perpetuate/reproduce itself. ..."
"... My nephew asked me to help him with his college introductory courses in macroeconomics and accounting. I was disappointed to find out what was going on: no lectures by professors, no discussion sessions with teaching assistants; no team projects–just two automated correspondence courses, with automated computer graded problem sets objective tests – either multiple choice, fill in the blank with a number, or fill in the blank with a form answer. This from a public university that is charging tuition for attendance just as though it were really teaching something. All they're really certifying is that the student can perform exercises is correctly reporting what a couple of textbooks said about subjects of marginal relevance to his degree. My nephew understands exactly that this is going on, but still . ..."
"... The reason students accept this has to be the absolutely demobilized political culture of the United States combined with what college represents structurally to students from the middle classes: the only possibility – however remote – of achieving any kind of middle class income. ..."
"... Straight bullshit, but remember our school was just following the national (Neoliberal) model. ..."
Yves here. In May, we wrote up and embedded the report on how NYU exploits students and adjuncts in
"The Art of the Gouge": NYU as a Model for Predatory Higher Education. This article below uses that study as a point of departure
for for its discussion of how higher education has become extractive.
By David Masciotra, the author of Mellencamp: American Troubadour (University Press of Kentucky). He has also written
for Salon, the Atlantic and the Los Angeles Review of Books. For more information visit www.davidmasciotra.com. Originally published
at Alternet
Higher education wears the cloak of liberalism, but in policy and practice, it can be a corrupt and cutthroat system of power
and exploitation. It benefits immensely from right-wing McCarthy wannabes, who in an effort to restrict academic freedom and silence
political dissent, depict universities as left-wing indoctrination centers.
But the reality is that while college administrators might affix "down with the man" stickers on their office doors, many prop
up a system that is severely unfair to American students and professors, a shocking number of whom struggle to make ends meet. Even
the most elementary level of political science instructs that politics is about power. Power, in America, is about money: who has
it? Who does not have it? Who is accumulating it? Who is losing it? Where is it going?
Four hundred faculty members at New York University, one of the nation's most expensive schools, recently released a report on
how their own place of employment, legally a nonprofit institution, has become a predatory business, hardly any different in ethical
practice or economic procedure than a sleazy storefront payday loan operator. Its title succinctly summarizes the new intellectual
discipline deans and regents have learned to master: "The
Art of The Gouge."
The result of their investigation reads as if Charles Dickens and Franz Kafka collaborated on notes for a novel. Administrators
not only continue to raise tuition at staggering rates, but they burden their students with inexplicable fees, high cost burdens
and expensive requirements like mandatory study abroad programs. When students question the basis of their charges, much of them
hidden during the enrollment and registration phases, they find themselves lost in a tornadic swirl of forms, automated answering
services and other bureaucratic debris.
Often the additional fees add up to thousands of dollars, and that comes on top of the already hefty tuition, currently $46,000
per academic year, which is more than double its rate of 2001. Tuition at NYU is higher than most colleges, but a bachelor's degree,
nearly anywhere else, still comes with a punitive price tag. According to the College Board, the average cost of tuition and fees
for the 2014–2015 school year was $31,231 at private colleges, $9,139 for state residents at public colleges, and $22,958 for out-of-state
residents attending public universities.
Robert Reich, in his book Supercapitalism, explains that in the past 30 years the two industries with the most excessive increases
in prices are health care and higher education. Lack of affordable health care is a crime, Reich argues, but at least new medicines,
medical technologies, surgeries, surgery techs, and specialists can partially account for inflation. Higher education can claim no
costly infrastructural or operational developments to defend its sophisticated swindle of American families. It is a high-tech, multifaceted,
but old fashioned transfer of wealth from the poor, working- and middle-classes to the rich.
Using student loan loot and tax subsidies backed by its $3.5 billion endowment, New York University has created a new administrative
class of aristocratic compensation. The school not only continues to hire more administrators – many of whom the professors indict
as having no visible value in improving the education for students bankrupting themselves to register for classes – but shamelessly
increases the salaries of the academic administrative class. The top 21 administrators earn a combined total of $23,590,794 per year.
The NYU portfolio includes many multi-million-dollar mansions and luxury condos, where deans and vice presidents live rent-free.
Meanwhile, NYU has spent billions, over the past 20 years, on largely unnecessary real estate projects, buying property and renovating
buildings throughout New York. The professors' analysis, NYU's US News and World Report Ranking, and student reviews demonstrate
that few of these extravagant projects, aimed mostly at pleasing wealthy donors, attracting media attention, and giving administrators
opulent quarters, had any impact on overall educational quality.
As the managerial class grows, in size and salary, so does the full time faculty registry shrink. Use of part time instructors
has soared to stratospheric heights at NYU. Adjunct instructors, despite having a minimum of a master's degree and often having a
Ph.D., receive only miserly pay-per-course compensation for their work, and do not receive benefits. Many part-time college instructors
must transform their lives into daily marathons, running from one school to the next, barely able to breathe between commutes and
courses. Adjunct pay varies from school to school, but the average rate is $2,900 per course.
Many schools offer rates far below the average, most especially community colleges paying only $1,000 to $1,500. Even at the best
paying schools, adjuncts, as part time employees, are rarely eligible for health insurance and other benefits. Many universities
place strict limits on how many courses an instructor can teach. According to a recent study, 25 percent of adjuncts
receive government assistance.
The actual scandal of "The Art of the Gouge" is that even if NYU is a particularly egregious offender of basic decency and honesty,
most of the report's indictments could apply equally to nearly any American university. From 2003-2013, college tuition increased
by a crushing
80 percent. That far outpaces all other inflation. The closest competitor was the cost of medical care, which in the same time
period, increased by a rate of 49 percent. On average, tuition in America rises eight percent on an annual basis, placing it far
outside the moral universe. Most European universities
charge only marginal fees for attendance, and many of them are free. Senator Bernie Sanders recently introduced a bill proposing
all public universities offer free education. It received little political support, and almost no media coverage.
In order to obtain an education, students accept the paralytic weight of student debt, the only form of debt not dischargeable
in bankruptcy. Before a young person can even think about buying a car, house or starting a family, she leaves college with thousands
of dollars in debt: an average of $29,400 in 2012. As colleges continue to suck their students dry of every dime, the US government
profits at $41.3 billion per year by
collecting interest
on that debt. Congress recently cut funding for Pell Grants, yet increased the budget for hiring debt collectors to target delinquent
student borrowers.
The university, once an incubator of ideas and entrance into opportunity, has mutated into a tabletop model of America's economic
architecture, where the top one percent of income earners now owns 40 percent of the wealth.
"The One Percent at State U," an Institute for Policy Studies report, found that at the 25 public universities with the highest
paid presidents, student debt and adjunct faculty increased at dramatically higher rates than at the average state university. Marjorie
Wood, the study's co-author, explained told the New York Times that extravagant executive pay is the "tip of a very large
iceberg, with universities that have top-heavy executive spending also having more adjuncts, more tuition increases and more administrative
spending.
Unfortunately, students seem like passive participants in their own liquidation. An American student protest timeline for 2014-'15,
compiled by historian Angus Johnston, reveals that most demonstrations and rallies focused on police violence, and sexism. Those
issues should inspire vigilance and activism, but only 10 out of 160 protests targeted tuition hikes for attack, and only two of
those 10 events took place
outside the state
of California.
Class consciousness and solidarity actually exist in Chile, where in 2011 a student movement began to organize, making demands
for free college. More than mere theater, high school and college students, along with many of their parental allies, engaged the
political system and made specific demands for inexpensive education. The Chilean government announced that in March 2016, it will
eliminate all tuition from public universities. Chile's victory for participatory democracy, equality of opportunity and social justice
should instruct and inspire Americans. Triumph over extortion and embezzlement is possible.
This seems unlikely to happen in a culture, however, where even most poor Americans view themselves, in the words of John Steinbeck,
as "temporarily embarrassed millionaires." The political, educational and economic ruling class of America is comfortable selling
out its progeny. In the words of one student quoted in "The Art of the Gouge," "they see me as nothing more than $200,000."
At a basic level, I think the answer is yes, because on balance, college still provides a lot of privatized value to the individual.
Being an exploited student with the College Credential Seal of Approval remains relatively much better than being an exploited
non student lacking that all important seal. A college degree, for example, is practically a guarantee of avoiding the
more unseemly parts of the US "justice" system.
But I think this is changing. The pressure is building from the bottom as academia loses credibility as an institution capable
of, never mind interested in, serving the public good rather than simply being another profit center for connected workers. It's
actually a pretty exciting time. The kiddos are getting pretty fed up, and the authoritarians at the top of the hierarchy are
running out of money with which to buy off younger technocratic enablers and thought leaders and other Serious People.
P.S., the author in this post demonstrates the very answer to the question. He assumes as true, without any need for support,
that the very act of possessing a college degree makes one worthy of a better place in society. That mindset is why colleges can
prey upon students. They hold a monopoly on access to resources in American society. My bold:
Adjunct instructors, despite having a minimum of a master's degree and often having a Ph.D., receive only
miserly pay-per-course compensation for their work, and do not receive benefits.
What does having a masters degree or PhD have to do with the moral claim of all human beings to a life of dignity and purpose?
There are so many more job seekers per job opening now than, say, 20 or thirty years ago that a degree is used to sort out
applications. Now a job that formerly listed a high school degree as a requirement may now list a college degree as a requirement,
just to cut down on the number of applications.
So, no, a B.A. or B.S. doesn't confer moral worth, but it does open more job doors than a high school diploma, even if the
actual work only requires high school level math, reading, science or technology.
I agree a phd often makes someone no more useful in society. However the behaviour of the kids is rational *because* employers
demand a masters / phd.
Students are then caught in a trap. Employers demand the paper, often from an expensive institution. The credit is abundant
thanks to govt backed loans. They are caught in a situation where as a collective it makes no sense to join in, but as an individual
if they opt out they get hurt also.
Same deal for housing. It's a mad world my masters.
What can we do about this? The weak link in the chain seems to me to be employers. Why are they hurting themselves by selecting
people who want higher pay but may offer little to no extra value? I work as a programmer and I often think " if we could just
'see' the non-graduate diamonds in the rough".
If employers had perfect knowledge of prospective employees *and* if they saw that a degree would make no difference to their
performance universities would crumble overnight.
The state will never stop printing money via student loans. If we can fix recruitment then universities are dead.
Why are they hurting themselves by selecting people who want higher pay but may offer little to no extra value?
Yeah, I have thought a lot about that particular question of organizational behavior. It does make sense, conceptually, that
somebody would disrupt the system and take people based on ability rather than credentials. Yet we are moving in the opposite
direction, toward more rigidity in educational requirements for employment.
For my two cents, I think the bulk of the answer lies in how hiring specifically, and management philosophy more generally,
works in practice. The people who make decisions are themselves also subject to someone else's decisions. This is true all up
and down the hierarchical ladder, from board members and senior executives to the most junior managers and professionals.
It's true that someone without a degree may offer the same (or better) performance to the company. But they do not offer the
same performance to the people making decisions, because those individual people also depend upon their own college degrees
to sell their own labor services. To hire significant numbers of employees without degrees into important roles is to sabotage
their own personal value.
Very few people are willing to be that kind of martyr. And generally speaking, they tend to self-select away from occupations
where they can meaningfully influence decision-making processes in large organizations.
Absolutely, individual business owners can call BS on the whole scam. It is a way that individual people can take action against
systemic oppression. Hire workers based upon their fit for the job, not their educational credentials or criminal background or
skin color or sexual orientation or all of the other tests we have used. But that's not a systemic solution because the incentives
created by public policy are overwhelming at large organizations to restrict who is 'qualified' to fill the good jobs (and increasingly,
even the crappy jobs).
I am not so sure that this is so. So many jobs are now crapified. When I was made redundant in 2009, I could not find many
jobs that fit my level of experience (just experience! I have no college degree), so I applied for anything that fit my skill
set, pretty much regardless of level. I was called Overqualified. I have heard that in the past as well, but never more so during
that stretch of job hunting. Remember that's with no degree. Maybe younger people don't hear it as much. But I also think life
experience has something to do with it, you need to have something to compare it to. How many times did our parents tell us how
different things were when they were kids, how much easier? I didn't take that on board, did y'all?
For various reasons, people seeking work these days, especially younger job applicants, might not possess the habits of mind
and behavior that would make them good employees – i.e., punctuality, the willingness to come to work every day (even when something
more fun or interesting comes up, or when one has partied hard the night before), the ability to meet deadlines rather than make
excuses for not meeting them, the ability to write competently at a basic level, the ability to read instructions, diagrams, charts,
or any other sort of necessary background material, the ability to handle basic computation, the ability to FOLLOW instructions
rather than deciding that one will pick and choose which rules and instructions to follow and which to ignore, trainability, etc.
Even if a job applicant's degree is in a totally unrelated field, the fact that he or she has managed to complete an undergraduate
degree–or, if relevant, a master's or a doctorate – is often accepted by employers as a sign that the applicant has a sense of
personal responsibility, a certain amount of diligence and educability, and a certain level of basic competence in reading, writing,
and math.
By the same token, employers often assume that an applicant who didn't bother going to college or who couldn't complete a college
degree program is probably not someone to be counted on to be a responsible, trainable, competent employee.
Obviously those who don't go to college, or who go but drop out or flunk out, end up disadvantaged when competing for jobs,
which might not be fair at all in individual cases, especially now that college has been priced so far out of the range of so
many bright, diligent students from among the poor and and working classes, and now even those from the middle class.
Nevertheless, in general an individual's ability to complete a college degree is not an unreasonable stand-in as evidence of
that person's suitability for employment.
Students are first caught in a trap of "credentials inflation" needed to obtain jobs, then caught by inflation in education
costs, then stuck with undischargeable debt. And the more of them who get the credentials, the worse the credentials inflation–a
spiral.
It's all fuelled by loose credit. The only beneficiaries are a managerial elite who enjoy palatial facilities.
As for the employers, they're not so bad off. Wages are coming down for credentialled employees due to all the competition.
There is such a huge stock of degreed applicants that they can afford to ignore anyone who isn't. The credentials don't cost the
employer–they're not spending the money, nor are they lending the money.
Modern money makes it possible for the central authorities to keep this racket going all the way up to the point of general
systemic collapse. Why should they stop? Who's going to make them stop?
The only reason the universities can get away with it is easy money. When the time comes that students actually need to pay
tuition with real money, money they or their parents have actually saved, then college tuition rates will crash back down to earth.
Don't blame the universities. This is the natural and inevitable outcome of easy money.
Yes, college education in the US is a classic example of the effects of subsidies. Eliminate the subsidies and the whole education
bubble would rapidly implode.
I'm very curious if anyone will disagree with that assessment.
An obvious commonality across higher education, healthcare, housing, criminal justice, and national security is that we spend
huge quantities of public money yet hold the workers receiving that money to extremely low standards of accountability for what
they do with it.
Correct, it's not the universities, it's the culture that contains the universities, but the universities are training grounds
for the culture so it is the universities just not only the universities Been remembering the song from my college days "my futures
so bright i gotta wear shades". getting rich was the end in itself, and people who didn't make it didn't deserve anything but
a whole lot of student debt,creating perverse incentives. And now we all know what the A in type a stands for at least among those
who self identify as such, so yes it is the universities
I don't understand why the ability to accept guaranteed loan money doesn't come with an obligation by the school to cap tuition
at a certain percentage over maximum loan amount? Would that be so hard to institute?
Student loans are debt issuance. Western states are desperate to issue debt as it's fungible with money and marked down as
growth.
Borrow 120K over 3 years and it all gets paid into university coffers and reappears as "profit" now. Let some other president
deal with low disposable income due to loan repayments. It's in a different electoral cycle – perfect.
You can try to argue, but it will be hard to refute. If you give mortgages at teaser rates to anybody who can fog a mirror,
you get a housing bubble. If you give student loans to any student without regard to the prospects of that student paying back
the loan, you get a higher education bubble. Which will include private equity trying to catch as much of this money as they possibly
can by investing in for profit educational institutions just barely adequate to benefit from federal student loan funds.
A lot of background conditions help. It helps to pump a housing bubble if there's nothing else worth investing in (including
saving money at zero interest rates). It helps pump an education bubble if most of the jobs have been outsourced so people are
competing more and more for fewer and fewer.
I don't disagree with the statement that easy money has played the biggest role in jacking up tuition. I do strongly disagree
that we shouldn't "blame" the universities. The universities are exactly where we should place the blame. The universities have
become job training grounds, and yet continue to droll on and on about the importance of noble things like liberal education,
the pursuit of knowledge, the importance of ideas, etc. They cannot have it both ways. Years ago, when tuition rates started escalating
faster than inflation, the universities should have been the loudest critics – pointing out the cultural problems that would accompany
sending the next generation into the future deeply indebted – namely that all the noble ideas learned at the university would
get thrown out the window when financial reality forced recent graduates to chose between noble ideas and survival. If universities
truly believed that a liberal education was important; that the pursuit of knowledge benefitted humanity – they should have led
the charge to hold down tuition.
I took it to mean blame as in what allows the system to function. I heartily agree that highly paid workers at universities
bear blame for what they do (and don't do) at a granular level.
It's just that they couldn't do those things without the system handing them gobs of resources, from tax deductability of charitable
contributions to ignoring anti-competitive behavior in local real estate ownership to research grants and other direct funding
to student loans and other indirect funding.
Regarding blaming "highly paid workers at universities" – If a society creates incentives for dysfunctional behavior such a
society will have a lot of dysfunction. Eliminate the subsidies and see how quicly the educational bubble pops.
You are ignoring the way that the rich bid up the cost of everything. 2% of the population will pay whatever the top dozen
or so schools will charge so that little Billy or Sue can go to Harvard or Stanford. This leads to cost creep as the next tier
ratchet up their prices in lock step with those above them, etc. The same dynamic happens with housing, at least around wealthy
metropolitan areas.
A European perspective on this: yep, that's true on an international perspective. I belong to the ugly list of those readers
of this blog who do not fully share the liberal values of most of you hear. However, may I say that I can agree on a lot of stuff.
US education and health-care are outrageously costly. Every European citizen moving to the states has a question: will he or
she be sick whilst there. Every European parent with kids in higher education is aware that having their kids for one closing
year in the US is the more they can afford (except if are a banquier d'affaires ). Is the value of the US education good? No doubt!
Is is good value for money, of course not. Is the return on the money ok? It will prove disastrous, except if the USD crashed.
The main reason? Easy money. As for any kind of investment. Remember that this is indeed a investment plan
Check the level of revenues of "public sector" teaching staff on both sides of the ponds. The figure for US professionals in
these area are available on the Web. They are indeed much more costly than, say, North-of-Europe counterparts, "public sector"
professionals in those area. Is higher education in the Netherlands sub-par when compared to the US? Of course not.
Yep financing education via the Fed (directly or not) is not only insanely costly. Just insane. The only decent solution: set
up public institutions staffed with service-minded professionals that did not have to pay an insane sum to build up the curriculum
themselves.
Are "public services" less efficient than private ones here in those area, health-care and higher education. Yep, most certainly.
But, sure, having the fed indirectly finance the educational system just destroy any competitive savings made in building a competitive
market-orientated educational system and is one of the worst way to handle your educational system.
Yep, you can do a worst use of the money, subprime or China buildings But that's all about it.
US should forget about exceptionnalism and pay attention to what North of Europe is doing in this area. Mind you, I am Southerner
(of Europe). But of course I understand that trying to run these services on a federal basis is indeed "mission impossible".
Way to big! Hence the indirect Washington-decided Wall-Street-intermediated Fed-and-deficit-driven financing of higher education.
Mind you: we have more and more of this bankers meddling in education in Europe and I do not like what I see.
@washunate – 6/26/15, 11:03 am. I know I'm late to the party, but I disagree. It's not the workers, it's the executives
and management generally. Just like Wall Street, many of these top administrators have perfected the art of failing upwards.
IMNSHO everyone needs to stop blaming labor and/or the labor unions. It's not the front line workers, teachers, retail clerks,
adjunct instructors, all those people who do the actual work rather than managing other people. Those workers have no bargaining
power, and the unions have lost most of theirs, in part due to the horrible labor market, as well as other important reasons.
We have demonized virtually all of the government workers who actually do the work that enables us to even have a government
(all levels) and to provide the services we demand, such as public safety, education, and infrastructure. These people are our
neighbors, relatives and friends; we owe them better than this.
Unionized support staff at Canadian universities have had sub-inflation wage increases for nearly 20 years, while tuition has
been rising at triple the rate of inflation.
So obviously one can't blame the unions for rising education costs.
Omitted from this account: Federal funding for education has declined 55% since 1972. Part of the Powell memo's agenda.
It's understandable too; one can hardly blame legislators for punishing the educational establishment given the protests of
the '60s and early '70s After all, they were one reason Nixon and Reagan rose to power. How dare they propose real democracy!
Harumph!
To add to students' burden, there's the recent revision of bankruptcy law: student loans can no longer be retired by bankruptcy
(Thanks Hillary!) It'll be interesting to see whether Hillary's vote on that bankruptcy revision becomes a campaign issue.
I also wonder whether employers will start to look for people without degrees as an indication they were intelligent enough
to sidestep this extractive scam.
I'd be curious what you count as federal funding. Pell grants, for example, have expanded both in terms of the number of recipients
and the amount of spending over the past 3 – 4 decades.
More generally, federal support for higher ed comes in a variety of forms. The bankruptcy law you mention is itself a form
of federal funding. Tax exemption is another. Tax deductabiliity of contributions is another. So are research grants and exemptions
from anti-competitive laws and so forth. There are a range of individual tax credits and deductions. The federal government also
does not intervene in a lot of state supports, such as licensing practices in law and medicine that make higher ed gatekeepers
to various fiefdoms and allowing universities to take fees for administering (sponsoring) charter schools. The Federal Work-Study
program is probably one of the clearest specific examples of a program that offers both largely meaningless busy work and terrible
wages.
As far as large employers seeking intelligence, I'm not sure that's an issue in the US? Generally speaking, the point of putting
a college credential in a job requirement is precisely to find people participating in the 'scam'. If an employer is genuinely
looking for intelligence, they don't have minimum educational requirements.
Why would tuition rates come down when students need to pay with "real money, money they or their parents have actually saved.
. . " ? Didn't tuition at state universities begin climbing when state governments began boycotting state universities in terms
of embargoing former rates of taxpayer support to them? Leaving the state universities to try making up the difference by raising
tuition? If people want to limit or reduce the tuition charged to in-state students of state universities, people will have to
resume paying former rates of taxes and elect people to state government to re-target those taxes back to state universities the
way they used to do before the reductions in state support to state universities.
Protest against exploitation and risk being black-listed by exploitative employers -> Only employers left are the ones who
actually do want (not pretend to want) ethical people willing to stand up for what they believe in. Not many of those kind of
employers around . What is the benefit? What are the risks?
The author misrepresents the nature and demands of Chile's student movement.
Over the past few decades, university enrollment rates for Chileans expanded dramatically in part due to the creation of many
private universities. In Chile, public universities lead the pack in terms of academic reputation and entrance is determined via
competitive exams. As a result, students from poorer households who attended low-quality secondary schools generally need to look
at private universities to get a degree. And these are the students to which the newly created colleges catered to.
According to Chilean legislation, universities can only function as non-profit entities. However, many of these new institutions
were only nominally non-profit entities (for example, the owners of the university would also set up a real estate company that
would rent the facilities to the college at above market prices) and they were very much lacking in quality. After a series of
high-profile cases of universities that were open and shut within a few years leaving its students in limbo and debt, anger mounted
over for-profit education.
The widespread support of the student movement was due to generalized anger about and education system that is dearly lacking
in quality and to the violation of the spirit of the law regulating education. Once the student movement's demands became more
specific and morphed from opposing for profit institutions to demanding free tuition for everyone, the widespread support waned
quickly.
And while the government announced free tuition in public universities, there is a widespread consensus that this is a pretty
terrible idea as it is regressive and involves large fiscal costs. In particular because most of the students that attend public
universities come from relatively wealthy households that can afford tuition. The students that need the tuition assistance will
not benefit under the new rules.
I personally benefited from the fantastically generous financial aid systems that some private American universities have set
up which award grants and scholarships based on financial need only. And I believe that it is desirable for the State to guarantee
that any qualified student has access to college regardless of his or her wealth I think that by romanticizing the Chilean student
movement the author reveals himself to be either is dishonest or, at best, ignorant.
Students aren't protesting because they don't feel the consequences until they graduate.
One thing that struck me when I applied for a student loan a few years back to help me get through my last year of graduate
school – the living expense allocation was surprisingly high. Not "student sharing an apartment with five random dudes while eating
ramen and riding the bus", but more "living alone in a nice one-bedroom apartment while eating takeout and driving a car". Apocryphal
stories of students using their student loans to buy new cars or take extravagant vacations were not impossible to believe.
The living expense portion of student loans is often so generous that students can live relatively well while going to school,
which makes it that much easier for them to push to the backs of their minds the consequences that will come from so much debt
when they graduate. Consequently, it isn't the students who are complaining – it's the former students. But by the time
they are out of school and the university has their money in its pocket, it's too late for them to try and change the system.
Sophomore Noell Conley lives there, too. She shows off the hotel-like room she shares with a roommate.
"As you walk in, to the right you see our granite countertops with two sinks, one for each of the residents," she says.
A partial wall separates the beds. Rather than trek down the hall to shower, they share a bathroom with the room next door.
"That's really nice compared to community bathrooms that I lived in last year," Conley says.
To be fair, granite countertops last longer. Tempur-Pedic is a local company - and gave a big discount. The amenities include
classrooms and study space that are part of the dorm. Many of the residents are in the university's Honors program. But do student
really need Apple TV in the lounges, or a smartphone app that lets them check their laundry status from afar?
"Demand has been very high," says the university's Penny Cox, who is overseeing the construction of several new residence halls
on campus. Before Central Hall's debut in August, the average dorm was almost half a century old, she says. That made it harder
to recruit.
"If you visit places like Ohio State, Michigan, Alabama," Cox says, "and you compare what we had with what they have
available to offer, we were very far behind."
Today colleges are competing for a more discerning consumer. Students grew up with fewer siblings, in larger homes, Cox says.
They expect more privacy than previous generations - and more comforts.
"These days we seem to be bringing kids up to expect a lot of material plenty," says Jean Twenge, a psychology professor at
San Diego State University and author of the book "Generation Me."
Those students could be in for some disappointment when they graduate, she says.
"When some of these students have all these luxuries and then they get an entry-level job and they can't afford the enormous
flat screen and the granite countertops," Twenge says, "then that's going to be a rude awakening."
Some on campus also worry about the divide between students who can afford such luxuries and those who can't. The so-called
premium dorms cost about $1,000 more per semester. Freshman Josh Johnson, who grew up in a low-income family and lives
in one of the university's 1960s-era buildings, says the traditional dorm is good enough for him.
"I wouldn't pay more just to live in a luxury dorm," he says. "It seems like I could just pay the flat rate and
get the dorm I'm in. It's perfectly fine."
In the near future students who want to live on campus won't have a choice. Eventually the university plans to upgrade all of
its residence halls.
So I wonder who on average will fair better navigating the post-college lifestyle/job market reality check, Noell or Josh?
Personally, I would bet on the Joshes living in the 60's vintage enamel painted ciderblock dorm rooms.
Competition for students who have more sophisticated tastes than in past years is creating the perfect environment for
schools to try to outdo each other with ever-more posh on-campus housing. Keeping up in the luxury dorm race is increasingly critical
to a school's bottom line: A 2006 study published by the Association of Higher Education Facilities Officers found that
"poorly maintained or inadequate residential facilities" was the number-one reason students rejected enrolling at institutions.
PHOTO GALLERY: Click Here to See the 10 Schools with Luxury Dorms
Private universities get most of the mentions on lists of schools with great dorms, as recent ratings by the Princeton Review,
College Prowler, and Campus Splash make clear. But a few state schools that have invested in brand-new facilities are starting
to show up on those reviews, too.
While many schools offer first dibs on the nicest digs to upperclassmen on campus, as the war for student dollars ratchets
up even first-year students at public colleges are living in style. Here are 10 on-campus dormitories at state schools that offer
students resort-like amenities.
Bingo! They don't get really mad until they're in their early thirties and they are still stuck doing some menial job with
no vacation time, no health insurance and a monstrous mountain of debt. Up until that point they're still working hard waiting
for their ship to come in and blaming themselves for any lack of success like Steinbeck's 'embarrassed millionaires.' Then one
day maybe a decade after they graduate they realize they've been conned but they've got bills to pay and other problems to worry
about so they solider on. 18 year-olds are told by their high school guidance councilors, their parents and all of the adults
they trust that college while expensive is a good investment and the only way to succeed. Why should they argue? They don't know
any better yet.
Perhaps some students are afraid to protest for fear of being photographed or videographed and having their face and identity
given to every prospective employer throughout America. Perhaps those students are afraid of being blackballed throughout the
Great American Workplace if they are caught protesting anything on camera.
Today isn't like the sixties when you could drop out in the confidence that you could always drop back in again. Nowadays there
are ten limpets for every scar on the rock.
the average is such a worthless number. The Data we need, and which all these parasitic professional managerial types won't
provide –
x axis would be family income, by $5000 increments.
y axis would be the median debt level
we could get fancy, and also throw in how many kids are in school in each of those income increments.
BTW – this 55 yr. old troglodyte believes that 1 of the roles (note – I did NOT say "The Role") of education is preparing people
to useful to society. 300++ million Americans, 7 billion humans – we ALL need shelter, reliable and safe food, reliable and safe
water, sewage disposal, clothing, transportation, education, sick care, power, leisure, we should ALL have access to family wage
jobs and time for BBQs with our various communities several times a year. I know plenty of techno-dweebs here in Seattle who need
to learn some of the lessons of 1984, The Prince, and Shakespeare. I know plenty of fuzzies who could be a bit more useful with
some rudimentary skills in engineering, or accounting, or finance, or stats, or bio, or chem
I don't know what the current education system is providing, other than some accidental good things for society at large, and
mainly mechanisms for the para$ite cla$$e$ to stay parasites.
Mao was perfectly content to promote technical education in the new China. What he deprecated (and fought to suppress) was
the typical liberal arts notion of critical thinking. We're witnessing something comparable in the U.S.
This suppression in China led to an increase in Mao's authority (obviously), but kept him delusional. For example, because
China relied on Mao's agricultural advice, an estimated 70 million Chinese died during peacetime. But who else was to be relied
upon as an authority?
Back the the U.S.S.A. (the United StateS of America): One Australian says of the American system: "You Yanks don't consult
the wisdom of democracy; you enable mobs."
Mao was perfectly content to promote technical education in the new China. What he deprecated (and fought to suppress)
was the typical liberal arts notion of critical thinking. We're witnessing something comparable in the U.S. We're witnessing
something comparable in the U.S.
Mao liked chaos because he believed in continuous revolution. I would argue what we're experiencing is nothing comparable to
what China experienced. (I hope I've understood you correctly.)
I am pretty sure a tradition of protest to affect political change in the US is a rather rare bird. Most people "protest" by
changing their behavior. As an example, by questioning the value of the 46,000 local private college tuition as opposed the the
15k and 9k tiered state college options. My daughter is entering the freshman class next year, we opted for the cheaper state
option because, in the end, a private school degree adds nothing, unless it is to a high name recognition institution.
I think, like housing, a downstream consequence of "the gouge" is not to question - much less understand - class relations,
but to assess the value of the lifetyle choice once you are stuck with the price of paying for that lifestyle in the form of inflated
debt repayments. Eventually "the folk" figure it out and encourage cheaper alternatives toward the same goal.
There's probably little point in engaging in political protest. Most people maximise their chances of success by focusing on
variables over which they have some degree of control. The ability of most people to have much effect on the overall political-economic
system is slight and any returns from political activity are highly uncertain.
How does anyone even expect to maintain cheap available state options without political activity? By wishful thinking I suppose?
The value of a private school might be graduating sooner, state schools are pretty overcrowded, but that may not at all be
worth the debt (I doubt it almost ever is on a purely economic basis).
Maybe if we just elect the right people with cool posters and a hopey changey slogan, they'll take care of everything for us
and we won't have to be politically active.
Of course refusal to engage politically because the returns to oneself by doing so are small really IS the tragedy of the commons.
Thus one might say it's ethical to engage politically in order to avoid it. Some ethical action focuses on overcoming tragedy
of the commons dilemmas. Of course the U.S. system being what it is I have a hard time blaming anyone for giving up.
The middle class, working class and poor have no voice in politics or policy at all, and they don't know what's going on until
it's too late. They've been pushed by all their high school staff that college is the only acceptable option - and often it is.
What else are they going to do out of high school, work a 30 hour a week minimum wage retail job? The upper middle class and rich,
who entirely monopolize the media, don't have any reason to care about skyrocketing college tuition - their parents are paying
for it anyway. They'd rather write about the hip and trendy issues of the day, like trigger warnings.
Speaking as one of these college students, I think that a large part of the reason that the vast majority of students are just
accepting the tuition rates is because it has become the societal norm. Growing up I can remember people saying "You need to go
to college to find a good job." Because a higher education is seen as a necessity for most people, students think of tuition as
just another form of taxes, acceptable and inevitable, which we will expect to get a refund on later in life.
I teach at a "good" private university. Most of my students don't have a clue as to how they're being exploited. Many of
the best students feel enormous pressure to succeed and have some inkling that their job prospects are growing narrower, but they
almost universally accept this as the natural order of things. Their outlook: if there are 10 or 100 applicants for every available
job, well, by golly, I just have to work that much harder and be the exceptional one who gets the job.
Incoming freshmen were born in the late 90s - they've never known anything but widespread corruption, financial and corporate
oligarchy, i-Pads and the Long Recession.
But as other posters note, the moment of realization usually comes after four years of prolonged adolescence, luxury dorm living
and excessive debt accumulation.
Most Ph.D.'s don't either. I'd argue there have been times they have attempted to debate that exploitation is a good–for their
employer and himself/herself–with linguistic games. Mind numbing . To be fair, they have a job.
I have watched the tuition double–double!–at my alma mater in the last eleven years. During this period, administrators have
set a goal of increasing enrollment by a third, and from what I hear, they've done so. My question is always this: where is the
additional tuition money going? Because as I walk through the campus, I don't really see that many improvements–yes, a new building,
but that was supposedly paid for by donations and endowments. I don't see new offices for these high-priced admin people that
colleges are hiring, and in fact, what I do see is an increase in the number of part-time faculty and adjuncts. The tenured faculty
is not prospering from all this increased revenue, either.
I suspect the tuition is increasing so rapidly simply because the college can get away with it. And that means they are exploiting
the students.
While still a student, I once calculated that it cost me $27.00/hour to be in class. (15 weeks x 20 "contact hours" per week
=
300 hours/semester, $8000/semester divided by 300 hours = $27.00/hour). A crude calculation, certainly, but a starting point.
I did this because I had an instructor who was consistently late to class, and often cancelled class, so much that he wiped out
at least $300.00 worth of instruction. I had the gall to ask for a refund of that amount. I'm full of gall. Of course, I was laughed
at, not just by the administrators, but also by some students.
Just like medical care, education pricing is "soft," that is, the price is what you are willing to pay. Desirable students
get scholarships and stipends, which other students subsidize; similarly, some pre-ACA patients in hospitals were often treated
gratis.
Students AND hospital patients alike seem powerless to affect the contract with the provider. Reform will not likely be forthcoming,
as students, like patients, are "just passing through."
The tuition at most public universities has quadrupled or more over the last 15 to 20 years precisely BECAUSE state government
subsidies have been
slashed in the meantime. I was told around 2005 that quadrupled tuition at the University of Minnesota made up for about half
of the state money that the legislature had slashed from the university budget over the previous 15 years.
It is on top of that situation that university administrators are building themselves little aristocratic empires, very much
modeled on the kingdoms of corporate CEOs
where reducing expenses (cutting faculty) and services to customers (fewer classes, more adjuncts) is seen as the height of responsibility
and accountability, perhaps
even the definition of propriety.
Everyone should read the introductory chapter to David Graeber's " The Utopia of Rules: On Technology, Stupidity and the Secret
Joys of Bureaucracy."
In Chapter One of this book entitled "The Iron law of Liberalism and the Era of Total Bureaucratization" Graeber notes that
the US has become the most rigidly credentialised society in the world where
" in field after field from nurses to art teachers, physical therapists, to foreign policy consultants, careers which used
to be considered an art (best learned through doing) now require formal professional training and a certificate of completion."
Graeber, in that same chapter, makes another extremely important point. when he notes that career advancement in may large
bureaucratic organizations demands a willingness to play along with the fiction that advancement is based on merit, even though
most everyone know that this isn't true.
The structure of modern power in the U.S., in both the merging public and private sectors, is built around the false ideology
of a giant credentialized meritorcracy rather than the reality of arbitrary extraction by predatory bureaucratic networks.
Anecdote: I was speaking to someone who recently started working at as a law school administrator at my alma mater. Enrollment
is actually down at law schools (I believe), because word has spread about the lame legal job market. So, the school administration
is watching its pennies, and the new administrator says the administrators aren't getting to go on so many of the all expense
paid conferences and junkets that they used to back in the heyday. As I hear this, I am thinking about how many of these awesome
conferences in San Diego, New Orleans and New York that I'm paying back. Whatever happened to the metaphorical phrase: "when a
pig becomes a hog, it goes to slaughter"?
Another anecdote: I see my undergrad alma mater has demolished the Cold War era dorms on one part of campus and replaced it
with tons of slick new student housing.
No doubt those Cold War era dorms had outlived their planned life. Time for replacement. Hell, they had probably become inhabitable
and unsafe.
Meanwhile, has your undergraduate school replaced any of its lecture courses with courses presented same model as on-line traffic
school? I have a pending comment below about how my nephew's public university "taught" him introductory courses in accounting
and macroeconomics that way. Please be assured that the content of those courses was on a par with best practices in the on-line
traffic school industry. It would be hilarious if it weren't so desperately sad.
I read things like this and think about Louis Althusser and his ideas about "Ideological State Apparatuses." While in liberal
ideology the education is usually considered to be the space where opportunity to improve one's situation is founded, Althusser
reached the complete opposite conclusion. For him, universities are the definitive bourgeois institution, the ideological state
apparatus of the modern capitalist state par excellance. The real purpose of the university was not to level the playing
field of opportunity but to preserve the advantages of the bourgeoisie and their children, allowing the class system to perpetuate/reproduce
itself.
It certainly would explain a lot. It would explain why trying to send everyone to college won't solve this, because not everyone
can have a bourgeois job. Some people actually have to do the work. The whole point of the university as an institution was to
act as a sorting/distribution hub for human beings, placing them at certain points within the division of labor. A college degree
used to mean more because getting it was like a golden ticket, guaranteeing someone who got it at least a petit-bourgeois lifestyle.
The thing is, there are only so many slots in corporate America for this kind of employment. That number is getting smaller too.
You could hand every man, woman, and child in America a BS and it wouldn't change this in the slightest.
What has happened instead, for college to preserve its role as the sorting mechanism/preservation of class advantage is what
I like to call degree inflation and/or an elite formed within degrees themselves. Now a BS or BA isn't enough, one needs an Master's
or PhD to really be distinguished. Now a degree from just any institution won't do, it has to be an Ivy or a Tier 1 school. Until
we learn to think realistically about what higher education is as an institution little or nothing will change.
Any credential is worthless if everybody has it. All information depends on contrast. It's impossible for everybody to "stand
out" from the masses. The more people have college degrees the less value a college degree has.
When I was half-grown, I heard it said that religion is no longer the opiate of the masses, in that no one believes in God
anymore, at least not enough for it to change actual behavior.
Instead, buying on credit is the opiate of the masses.
My nephew asked me to help him with his college introductory courses in macroeconomics and accounting. I was disappointed
to find out what was going on: no lectures by professors, no discussion sessions with teaching assistants; no team projects–just
two automated correspondence courses, with automated computer graded problem sets objective tests – either multiple choice, fill
in the blank with a number, or fill in the blank with a form answer. This from a public university that is charging tuition for
attendance just as though it were really teaching something. All they're really certifying is that the student can perform exercises
is correctly reporting what a couple of textbooks said about subjects of marginal relevance to his degree. My nephew understands
exactly that this is going on, but still .
This is how 21st century America treats its young people: it takes people who are poor, in the sense that they have no assets,
and makes them poorer, loading them up with student debt, which they incur in order to finance a falsely-so-called course of university
study that can't be a good deal, even for the best students among them.
I am not suggesting the correspondence courses have no worth at all. But they do not have the worth that is being charged for
them in this bait-and-switch exercise by Ed Business.
After further thought, I'd compare my nephew's two courses to on-line traffic school: Mechanized "learning" – forget it all
as soon as the test is over – Critical thinking not required. Except for the kind of "test preparation" critical thinking that
teaches one to spot and eliminate the obviously wrong choices in objective answers–that kind of thinking saves time and so is
very helpful.
Not only is he paying full tuition to receive this treatment, but his family and mine are paying taxes to support it, too.
Very useful preparation for later life, where we can all expect to attend traffic school a few times. But no preparation for
any activity of conceivable use or benefit to any other person.
I read recently that the business establishment viewed the most important contribution of colleges was that they warehoused
young people for four years to allow maturing.
Where are the young people in all this? Is anyone going to start organizing to change things? Any ideas? Any interest? Are
we going to have some frustrated, emotional person attempt to kill a university president once every ten years? Then education
can appeal for support from the government to beef up security. Meanwhile the same old practices will prevail and the rich get
richer and the rest of us get screwed.
The reason students accept this has to be the absolutely demobilized political culture of the United States combined with
what college represents structurally to students from the middle classes: the only possibility – however remote – of achieving
any kind of middle class income.
Really your choices in the United States are, in terms of jobs, to go into the military (and this is really for working class
kids, Southern families with a military history and college-educated officer-class material) or to go to college.
The rest, who have no interest in the military, attend college, much like those who wanted to achieve despite of their class
background went into the priesthood in the medieval period. There hasn't been a revolt due to the lack of any idea it could function
differently and that American families are still somehow willing to pay the exorbitant rates to give their children a piece of
paper that still enables them to claim middle class status though fewer and fewer find jobs. $100k in debt seems preferable to
no job prospects at all.
Colleges have become a way for the ruling class to launder money into supposed non-profits and use endowments to purchase stocks,
bonds, and real estate. College administrators and their lackeys (the extended school bureaucracy) are propping up another part
of the financial sector – just take a look at Harvard's $30+ billion endowment, or Yale's $17 billion – these are just the top
of a very large heap. They're all deep into the financial sector. Professors and students are simply there as an excuse for the
alumni money machine and real estate scams to keep running, but there's less and less of a reason for them to employ professors,
and I say this as a PhD with ten years of teaching experience who has seen the market dry up even more than it was when I entered
grad school in the early 2000s.
"Colleges have become a way for the ruling class to launder money into supposed non-profits and use endowments to purchase
stocks, bonds, and real estate. "
Unorthodoxmarxist, I thought I was the only person who was coming to that conclusion. I think there's data out there that could
support our thesis that college tuition inflation may be affecting real estate prices. After all, justification a college grad
gave to someone who was questioning the value of a college degree was that by obtaining a "a degree" and a professional job, an
adult could afford to buy a home in major metropolitan hubs. I'm not sure if he was that ignorant, (business majors, despite the
math requirement are highly ideological people. They're no where near as objective as they like to portray themselves as) or if
he hasn't been in contact with anyone with a degree trying to buy a home in a metropolitan area.
Anyways, if our thesis is true, then if home prices declined in 2009, then college tuition should have declined as well, but
it didn't at most trustworthy schools. Prospective students kept lining up to pay more for education that many insiders believe
is "getting worse" because of widespread propaganda and a lack of alternatives, especially for "middle class" women.
It's hard to say, but there ought to be a power keg of students here primed to blow. And Bernie Sanders' proposal for free
college could be the fuse.
But first he'd have the light the fuse, and maybe he can. He's getting huge audiences and a lot of interest these days. And
here's a timely issue. What would happen if Sanders toured colleges and called for an angry, mass and extended student strike
across the country to launch on a certain date this fall or next spring to protest these obscene tuitions and maybe call for something
else concrete, like a maximum ratio of administrators to faculty for colleges to receive accreditation?
It could ignite not only a long-overdue movement on campuses but also give a big boost to his campaign. He'd have millions
of motivated and even furious students on his side as well as a lot of motivated and furious parents of students (my wife and
I would be among them) - and these are just the types of people likely to get out and vote in the primaries and general election.
Sanders' consistent message about the middle class is a strong one. But here's a solid, specific but very wide-ranging issue
that could bring that message into very sharp relief and really get a broad class of politically engaged people fired up.
I'm not one of those who think Sanders can't win but applaud his candidacy because it will nudge Hillary Clinton. I don't give
a fig about Clinton. I think there's a real chance Sanders can win not just the nomination but also the presidency. This country
is primed for a sharp political turn. Sanders could well be the right man in the right place and time. And this glaring and ongoing
tuition ripoff that EVERYONE agrees on could be the single issue that puts him front-and-center rather than on the sidelines.
I finished graduate school about three years ago. During the pre-graduate terms that I paid out of pocket (2005-2009) I saw
a near 70 percent increase in tuition (look up KY college tuition 1987-2009 for proof).
Straight bullshit, but remember our school was just following the national (Neoliberal) model.
Though, realize that I was 19-23 years old. Very immature (still immature) and feeling forces beyond my control. I did not
protest out of a) fear [?] (I don't know, maybe, just threw that in there) b) the sheepskin be the path to salvation (include
social/cultural pressures from parent, etc.).
I was more affected by b). This is the incredible power of our current Capitalist culture. It trains us well. We are always
speaking its language, as if a Classic. Appraising its world through its values.
I wished to protest (i.e. Occupy, etc.) but to which master? All of its targets are post modern, all of it, to me, nonsense,
and, because of this undead (unable to be destroyed). This coming from a young man, as I said, still immature, though I fear this
misdirection, and alienation is affecting us all.
This is about neoliberalism, not about the structure of the university education and the amount of social courses required
to get an STEM degree. The article is a baloney in this sense. And because neoliberalism defy regulation Google and
Facebook were able to built " amazingly sophisticated, computer-driven engines for extracting users' personal information
and data trails, refining them for sale to advertisers in high-speed data-trading auctions that are entirely unregulated and
opaque to everyone except the companies themselves."
Notable quotes:
"... Put simply, what Google and Facebook have built is a pair of amazingly sophisticated, computer-driven engines for extracting users' personal information and data trails, refining them for sale to advertisers in high-speed data-trading auctions that are entirely unregulated and opaque to everyone except the companies themselves. ..."
"... Democracy in America ..."
"... All of which brings to mind CP Snow's famous Two Cultures lecture, delivered in Cambridge in 1959, in which he lamented the fact that the intellectual life of the whole of western society was scarred by the gap between the opposing cultures of science and engineering on the one hand, and the humanities on the other – with the latter holding the upper hand among contemporary ruling elites. Snow thought that this perverse dominance would deprive Britain of the intellectual capacity to thrive in the postwar world and he clearly longed to reverse it. ..."
"... Lack of education in the humanities is not the reason for misuse of the tech giant's products, as the author so emphatically states. It simply comes down to greed. That human drive to make more, more and more leads them to overlook things for the sake of making more. A class in political science or sociology is not going to change that. ..."
"... Zuckerberg and similar folks are guilty of the same thing that most people are - greed. Monetary greed is just one part. ..."
"... As for education, it's not easy to get an engineering or comp sci degree. But while you are getting hammered in classes that are far more complex than most other things taught on the campus, you do indeed have to take a variety of other non-technical electives outside of your technical major to complete the overall curriculum. ..."
"... This likely has been pointed out already, but the American University system requires all students to take a core of humanities classes regardless of major. SO they actually have been exposed to, most likely, a fair number of Western Civ, History, and Literature courses. Their deficiency I think lays more in the utopian roots of the internet and technology development of the 1990s. They have been strangely naive and ruthless at the same time, and its changing human interactions and society sometimes for the better and sometimes for the worse. ..."
"... Wow, if there ever was an example of why Trump won, the utter and complete self righteousness of the American liberal, this post is it. Congratulations. ..."
"... If you've every hung out in Silicon Valley with techies you'd know that mild sociopathy is indeed likely part of the problem. ..."
"... Capitalists will do what capitalists do. So ignoring social consequences in the pursuit of money is baked-in. Doesn't matter what your education is. In fact, class has more to do with their blindness than the lack of a liberal arts education. ..."
"... It ties in with what many of the fake-news-complainers are reluctant to discuss: there is an ocean of sociological/economic 'facts' that exist somewhere between 'easily-provable lie' and 'this may be a lie to the elite, but it is a true fact for the unwashed masses'. and in tandem with that: the uneasy questions about censorship that come with *any* attempt at regulating the press. ..."
"... This is too simple. The development of critical thought is the key thing and it isn't monopolized by any discipline. People without any qualifications and without much education can - and do - exercise critical ability. The problem is a cultural one. Consumerism and the pretend world in which people 'think' they can be what they want and live in make believe soaps is the problem. ..."
"... "If you have an issue with tech giants messing around with your personal data, don't give them your personal data." They'll take your personal data, regardless. Because they make money from selling it. ..."
One of the biggest puzzles about our current predicament with fake news and the weaponisation of social media is why the folks
who built this technology are so taken aback by what has happened. Exhibit A is the founder of Facebook,
Mark Zuckerberg
, whose political education
I recently chronicled . But he's not alone. In fact I'd say he is quite representative of many of the biggest movers and shakers
in the tech world. We have a burgeoning genre of "
OMG, what
have we done? " angst coming from former Facebook and Google employees who have begun to realize that the cool stuff they worked
on might have had, well, antisocial consequences.
Put simply, what Google and Facebook have built is a pair of amazingly sophisticated, computer-driven engines for extracting
users' personal information and data trails, refining them for sale to advertisers in high-speed data-trading auctions that are entirely
unregulated and opaque to everyone except the
companies themselves.
The purpose of this infrastructure was to enable companies to target people with carefully customised commercial messages and,
as far as we know, they are pretty good at that. (Though
some advertisers
are beginning to wonder if these systems are quite as good as Google and Facebook claim.) And in doing this, Zuckerberg, Google co-founders
Larry Page and Sergey Brin
and
co wrote themselves licenses to print money and build insanely profitable companies.
It never seems to have occurred to them that their engines could be used to deliver ideological and political messages
It never seems to have occurred to them that their advertising engines could also be used to deliver precisely targeted ideological
and political messages to voters. Hence the obvious question: how could such smart people be so stupid? The cynical answer is they
knew about the potential dark side all along and didn't care, because to acknowledge it might have undermined the aforementioned
licenses to print money. Which is another way of saying that most tech leaders are sociopaths. Personally I think that's unlikely,
although among their number are some very peculiar characters: one thinks, for example, of Paypal co-founder
Peter Thiel – Trump's favourite techie; and Travis Kalanick, the founder of Uber.
So what else could explain the astonishing naivety of the tech crowd? My hunch is it has something to do with their educational
backgrounds. Take the Google co-founders. Sergey Brin
studied mathematics and computer science. His partner, Larry Page, studied engineering and computer science. Zuckerberg dropped out
of Harvard, where he was studying psychology and computer science, but seems to have been more interested in the latter.
sWhy Facebook is in a hole over data mining | John Naughton
Now mathematics, engineering and computer science are wonderful disciplines – intellectually demanding and fulfilling. And they
are economically vital for any advanced society. But mastering them teaches students very little about society or history – or indeed
about human nature. As a consequence, the new masters of our universe are people who are essentially only half-educated. They have
had no exposure to the humanities or the social sciences, the academic disciplines that aim to provide some understanding of how
society works, of history and of the roles that beliefs, philosophies, laws, norms, religion and customs play in the evolution of
human culture.
We are now beginning to see the consequences of the dominance of this half-educated elite. As one perceptive observer
Bob O'Donnell puts it, "a liberal arts major familiar
with works like Alexis de Tocqueville's Democracy in America , John Stuart Mill's
On Liberty , or even the work of ancient
Greek historians, might have been able to recognise much sooner the potential for the 'tyranny of the majority' or other disconcerting
sociological phenomena that are embedded into the very nature of today's social media platforms. While seemingly democratic at a
superficial level, a system in which the lack of structure means that all voices carry equal weight, and yet popularity, not experience
or intelligence, actually drives influence, is clearly in need of more refinement and thought than it was first given."
All of which brings to mind CP Snow's famous
Two Cultures lecture, delivered in Cambridge in 1959, in which he lamented the fact that the intellectual life of the whole of
western society was scarred by the gap between the opposing cultures of science and engineering on the one hand, and the humanities
on the other – with the latter holding the upper hand among contemporary ruling elites. Snow thought that this perverse dominance
would deprive Britain of the intellectual capacity to thrive in the postwar world and he clearly longed to reverse it.
Snow passed away in 1980, but one wonders what he would have made of the new masters of our universe. One hopes that he might
see it as a reminder of the old adage: be careful what you wish for – you might just get it.
Lack of education in the humanities is not the reason for misuse of the tech giant's products, as the author so emphatically
states. It simply comes down to greed. That human drive to make more, more and more leads them to overlook things for the sake
of making more. A class in political science or sociology is not going to change that.
Middle and high school in the US need to tackle more philosophy, history and other humanities instead of force feeding kids test
material for them to simply memorize. Then, lo and behold, by the time kids get into university, they may already have grasped
the basics of human analytical skills. Why wait till further education?
Wtf? All this hue and cry that Facebook has "ruined" democracy ... and I see you've actually bought into it. Holy cow, who knew
a few hundred thousand $$ gets Brexit and Trump done while $1 billion in actual adverts cannot elect Clinton?
Goodness, that's some powerful analytica, no? You guys should really hear yourselves ... you sound utterly deranged by this
Trump thing!
If we are all concerned, we can remedy 'the problem'. Chuck Cable, ( I did 7 years ago), get off facebook, twitter and the like.
We are all subject to the marketing, the allure of 'like' thinking, etc. Yet we need to 'grow up' mature, and be concerned about
this path. Our youth is our hope, but if they are indoctrinated and sucked into the social network mess, I do not see a future
or much hope. Yes, it is all about marketing, greed, and ego. Pretty difficult to overcome. Soul searching, integrity, and sincere
concern for democracy is crucial.
It never seems to have occurred to them that their advertising engines could also be used to deliver precisely targeted
ideological and political messages to voters. Hence the obvious question: how could such smart people be so stupid?
So stupid? Is the author claiming to have known this in advance of it happening?
A yes...science. "Once they go up, who cares where they come down, that's not my department, says Werner Von Braun" (Tom Leher)
Man kind has always been willing to subjugate it's essential humanity for the elusive goal of "progress". The computer age is
no different.
Well, actually , they did. Slaves were not allowed to vote in the UK either. And, one must remember, it was the UK that introduced
slavery to North America which was, after all, a British colony ruled by British courts and British jurisprudence at that juncture.
Anyone who finishes engineering cannot be classified as a dim bulb. It's only understood by those that go through it how difficult
it is in comparison to other things. The complexity is hard to explain to anyone outside of it. Most people fail out or quit,
literally, and those are the ones that at least gave it a try. I watched many such people go on to the business or other schools
and rush a frat and barely study and ace their courses. They said straight up that it wasn't even close.
Zuckerberg and similar folks are guilty of the same thing that most people are - greed. Monetary greed is just one part.
Additionally, there's a ton of ego there to want to do things others haven't done or can't do or aren't doing, but ego is not
exclusive to the tech industry. They were negligent in looking the other way while their products were exploited and they hid
under freedom of speech, providing a functionality that isn't necessarily tied with or promotes nefarious conduct so they aren't
responsible when it does. There's no shortage of this through years - radio, TV, nuclear power, guns, drug paraphernalia, chemicals,
photo copiers, MP3 players and file copying services like Napster, on and on. It's not just technical items.
It's all about making money. Twitter is sitting back absolutely loving every Trump tweet, while individually at least some
or many of the people there hate the actual tweets themselves or at least think the POTUS should be communicating in a better
manner and put this ad hoc approach aside. I don't know of too many that think he's doing good things for the country or world
or even his self image and reputation with it and should continue. But for Twitter it promotes their product and service and stock
and pay check and bonus and livelihood. So the greed wins out.
As for education, it's not easy to get an engineering or comp sci degree. But while you are getting hammered in classes
that are far more complex than most other things taught on the campus, you do indeed have to take a variety of other non-technical
electives outside of your technical major to complete the overall curriculum. But there's only so much you can do, only so
much time and interest. You can't necessarily expect each and everyone to be incredibly well rounded without at least sacrificing
their ability to focus and specialize in their strength and interest. Pretty much every doctor I've met is aloof to some degree.
Accountants have trouble thinking outside the strict confines of the accounting box. I know plenty of lawyers who aren't great
with technology or computers. And few people in those professions that are also incredibly versed in the things the author mentions.
Few have time to be once life and family kicks in.
This likely has been pointed out already, but the American University system requires all students to take a core of humanities
classes regardless of major. SO they actually have been exposed to, most likely, a fair number of Western Civ, History, and Literature
courses. Their deficiency I think lays more in the utopian roots of the internet and technology development of the 1990s. They
have been strangely naive and ruthless at the same time, and its changing human interactions and society sometimes for the better
and sometimes for the worse.
He said he was "half educated" not because he finished only half of his comp sci degree (or even psychology) but because he wasn't
educated in other subjects that may have given him insight into human behavior and sociology. There may be some truth to that
but it seems kind of a stretch since pretty much most people are as he describes; he just seems to be picking on Zuckerberg since
he developed something with such huge influence and is now on the hot seat for being at least naive if not deliberately looking
the other way while his platform was used in ways he probably didn't envision or want but made them a ton of money. Most people
aren't really that educated or versed in the things the author mentions, and that includes many people outside of the tech industry
who could never accomplish what Zuckerberg or others have accomplished.
A 4-year engineering degree already takes 5 years to complete (at least for a dim bulb like myself). We already have to take a
bunch of non-technical social science, history, and English "core" classes.
Way to miss the point. Zuckerberg is poorly educated in understanding human behavior. I could've told these tech yokels exactly
what was becoming of their practices.
It's no coincidence that the people I know who eschew things like Twitter and Facebook are the techy people who can remember
the internet in the good ol' days when the maxim was "don't tell anyone anything about anything".
God, I remember that feeling. Still on a modem and proudly watching people excitedly get into the Internet. And then I watched
on in utter horror as they give away their real names. I didn't understand why people didn't understand. You can discard a mask
- you can't discard your face!
And you fail to realize that your existence is not, never has and never will be an island that removes you from the rest of humanity.
It is irrelevant to the rest of us if you volunteer to be ignorant of the rest of us, and yet you think that only if everyone
else was like you the problem would be solved.
Sorry but, our existence is inherently governed by the fact that we are social animals and part of an Earth based biosphere
and politically that requires we show more than smug diffidence. I realise that religions have spent the last 2000 years or so
trying to separate us from each other and nature, by pretending we have individual souls far more important than our collective
being, but that's not an excuse either.
"While seemingly democratic at a superficial level, a system in which the lack of structure means that all voices carry
equal weight, and yet popularity, not experience or intelligence, actually drives influence, is clearly in need of more refinement
and thought than it was first given"
Erm. The inevitable effect of connection-seeking in a low friction environment is called The Singularity and people have
been warning about it for at least the last couple of decades now.
Congratulations. You've recognized the Problem. Now, if you really want to look smart, explain why nobody involved wants to
implement the Solution...
I have a feeling your poor friends get the Big picture while you dont. Trumps get elected while you are offline. Brexit happens
while you are offline cause Cambridge Analytica and Farage .. well they work hard at protecting certain interests. And so on..
is about information wars and power. And their consequences on democracy. And you might not be immediately affected If you are
white male and from an OK bakground. If you are privileged and well off maybe even your children will make it in the offline bubble.
But what about the rest?
The UK history on democracy isn't exactly a roll call of enlightened thinking either. The only gains were made by often violent
demonstrations by The Chartists and Suffragettes. But at least the UK never banned black people from voting.
You are not a nice person. Thinking that people you imagine aren't as intelligent or don't see the world the way you see it deserve
dieing from poverty or opioid overdoses is quite unpleasant.
Sure, pick on the engineers. They make more money than you do. But if your half-courage took a leap forward, you'd target the
quarter-educated people who are driving this because they control the spending. But then, they're also the people you're asking
for a job aren't they?
Wow, if there ever was an example of why Trump won, the utter and complete self righteousness of the American liberal, this
post is it. Congratulations.
You never had a "democracy" ... or if you had one, it was in the very dim past and limited to propertied men ... in recent
times, you've had a two-party oligarchy managed by military-tech corporations. Oh, those good old days of limited choice and Vietnam,
how can we ever go back to those, amirite?
Gosh, I guess they were not joking when they talked about the "global village" ... and anyone knows a village is full of gossip
and half-truths.
I feel like almost every other day i need to point out to my hyperventilating Russia-fearing friends that you all do realize
that all of this online-ness is voluntary, right? That a person can have a complete and real existence with no Facebook profile,
not Tweet, none of that? I'm one such person, and I work in tech.
Are media companies prevented by regulation from reporting "fake news". In any supermarket you'll spot newspapers with headlines
to the effect that "My Mother-in-Law is a Space Alien". Now, while I'd guess that is true some of the time, I have a hard time
believing that there are really that many space aliens around harassing their earthling inlaws. I'm not aware that that reporting
is regulated. Are you saying it is?
The vow claimed by Brin and other Google founders, "Do No Evil," should have been a warning. In a New Yorker piece on tech's influence
on the election last summer, a Facebook employee was quoted as saying, "We joke about who we should give the election to." It
has recently come out that as Apple, the most traitorous of all the giant tech corporations that are a product of the American
educational system (before it was strangled by Republicans like Trump and Betsy DeVos), traitorous because they pay no corporate
taxes in the U.S., had an opportunity to choose between making phones and PDAs addictive pleasure machines or responsible news
devices. They chose addictive pleasures, because it's obviously more profitable, like McDonald's supersizing its French fries
and sugary drinks.
They've created a generation of Americans who will swallow anything that's fed to them ("It must be true. I read it on the
Internet."). These are the people who love Trump, who don't understand or care about the Constitution or the Bill of Rights and
would probably vote against them in a referendum (which some Republicans have promoted as a new Constitutional Convention). Their
minds have become morbidly obese, filled with Angry Birds and empty Twitter posts that leave them unable to comprehend ideas that
take more than 140 characters to express.
Such people deserve their fate (poverty, death by opioids), but it's tragic and evil that they are wrecking the planet with
climate change denial (which, of course, justifies unregulated pollution), science denial (in which Evangelical Christians commit
the child abuse of denying evolution and trying to prohibit its teaching.Such Fake Christians also reject most of Jesus' liberal
teachings.)
Here in the SF Bay Area it's hard to avoid knowing some of these techies. They aren't all clueless about social interaction,
arrogant, selfish, and contemptuous of other people--only 90% of them. The remainder scratch their heads, smile, cash their paychecks
and stock options, and retire to multimillion dollar ranches to write cookbooks and make wine.
So now we have a population of tech geeks who don't know much but think they know everything, who spout "Do No Evil," while
doing the ultimate evil--making a world unsafe for democracy but a pleasure palace for the rich, using a technology that is a
uniquely American product of an educational system that was once a shining example and is now in shambles to destroy the dream
of democracy that America used to champion, but does no longer.
It makes the coming Chinese domination of the world seem like cosmic justice, doesn't it?
More degrees in the humanities is no antidote to or remedy for amoral/harmful tech and those who create and market it. Nor is
this a problem of white privilege and lack of inclusiveness -- minorities run after tech goodies with the same glee as everyone
else.
Schools and just about everyone are promoting STEM degrees as the way to a good job and prosperity, and I don't foresee
anybody creating jobs for philosophers to warn us against new tech developments.
This is one of those dangers that people don't foresee. They only see it when it's happened. Now it has; depending on how bad
the fallout, the pushback and regulation will follow. Not sure if it will be sufficient, though. Especially under an Administration
with little respect for facts or truth while it pursues the maximum dollar gain from the government before skedaddling.
If you've every hung out in Silicon Valley with techies you'd know that mild sociopathy is indeed likely part of the problem.
But the argument that it's because their education lacked learning about history or society is a bit silly when you consider
the bulk of the population has probably not studied such disciplines beyond high school and some of the greatest engineers who
invented or built some of the most important creations in history lacked a degree in the humanities.
What differentiates past engineering eras from present is political and societal will to ensure inventions are used for the
good of humanity. In short, a lack of regulation in the face of rampant neo-liberal capitalism that has enthralled the politicians
who should be looking out for the public, not themselves and their cronies.
Facebook et al should long ago have been classified as media companies and regulated as such. Start hitting Zuckerburg with
billions in fines and/or the threat of regulating him out of business and you'd very quickly see those much vaunted algorithms
and engineering prowess spring into action to tackle the fake news and propaganda epidemic.
Ahh, yeah Aruler...thanks for that....I think....!
If you read this article and his former article on the subject(a big if), then you would be able to enlighten us on exactly
what Laughton means by such comments as below. I actually completed my degree and so am 'fully educated but still struggle with
the logic:-
"the hero's education rendered him incapable of understanding the world into which he was born. For although he was supposed
to be majoring in psychology at Harvard, the young Zuckerberg mostly took computer science classes until he started Facebook
and dropped out
Your post referenced economics, not social issues.
It seems that once the State expands to the size it is now (~43% of GDP is directly spent by government) then virtually everything
becomes political: economics, politics, social.
(ps if i've got this horribly wrong and libertarianism as a word has just been coopted to mean 'minarchist' i apologise)
I suppose it depends on how you define "libertarian". I, and most of the theorists I read, see it as a quite broad label which
stretches from anarchism at one (extreme) end, to small-state minarchism at the other.
And yes, I am "right-wing" in terms of economics (though fascism, typically described as a "far-right" movement, is actually
quite far-left in terms of economics, which is why I try to avoid debating these matters in terms of left/right. But when people
self-describe that way, one doesn't have much choice).
So, yes, I prefer no (or minimal) State involvement in areas of the economy that it is possible to have private suppliers compete
against each other. So that includes healthcare (but not all healthcare; the time-critical nature of A&E services means
they are not amenable to real competition), education, and various other things most people are used to having provided by their
governments.
But the "natural monopolies" (things like roads/railways/pipelines/sewers) can't really be provided by competing suppliers,
so it's reasonable that they are owned (but not necessarily run) by the State. So taxes need to be raised to pay for those things.
Unlike most minarchists, though, I see outright, allodial land ownership as unjustifiable (it's a capital good that no one
created, and thus no-one can claim rightful ownership). So in that regard also I'm quite left-wing.
Capitalists will do what capitalists do. So ignoring social consequences in the pursuit of money is baked-in. Doesn't matter
what your education is. In fact, class has more to do with their blindness than the lack of a liberal arts education.
yeah, but if you read this article (big if) he's calling him 'half-educated' because he has a shoddy background in social systems
that has left him ignorant of a vast body of historical knowledge and political theory, not because he didn't finish his degree.
maybe you should try reading the article and/or writing comments relevant to it...
If it were the Iate 15th century there would be a similar article decrying the printing press and if the 19th, the postage stamp.
Newspapers have been targeting a partisan readership long before social media came along and all controlled & managed by humanities
graduates. Conrad Black & Boris Johnson hardly exemplars of a solid grounding in humanities leading to informed decision making
overcoming self interest.
this half-baked education has left him bewildered and rudderless
He is now claiming that Zuckerberg is 'half-educated'. Just because he did not complete his degree?! This surely does not make
him half-educated? Does that mean that those who do not have a degree are not educated? This smells a little of scholastic snobbery
from our former Cambridge University graduate and Vice President !
What's so appalling is that I don't even think they have the slightest inkling that what you've just posted is the absolute reality
of these types.
They are so convinced they're right, and that everything they think must prevail, that they simply ignore democracy and anything
else that shows that they're actually completely wrong.
You mean you're not economically right wing? Minimal taxes, less state intervention in the economy (including health), etc? Your
post referenced economics, not social issues. Socially we agree on a lot, probably nearly everything to be honest - I'm all for
legalising based on harm caused by drugs, less military, anti snooper's charter/surveillance, etc, but I like taxes and I like
the NHS, and that is where I think you're right wing and I am left! (ps if i've got this horribly wrong and libertarianism as
a word has just been coopted to mean 'minarchist' i apologise)
....Yes, to a certain extent that can happen via reading, but the biggest check on privilege and self-satisfaction is actually
engaging with actual other people who don't share that privilege. And that just isn't happening at Stanford and Harvard....
As someone who grew up both first-world-poor and a nerd i cannot expres in words how much i hate that 'the elite' keeps insisting
that *the truth* about life and love and everything can only be found in a mixture of greec classics and trips to india. You are
only 'enlightened' if you have the time and money to read those books and make those trips and most importantly: if you come home
from all that with the right opinions about detesting money, detesting xenophobia, etc.
they pat themselves on the back any time they listen to what they insist is 'an outsider' but is just someone of a different gender/color
parroting back their own believes.
It ties in with what many of the fake-news-complainers are reluctant to discuss: there is an ocean of sociological/economic
'facts' that exist somewhere between 'easily-provable lie' and 'this may be a lie to the elite, but it is a true fact for the
unwashed masses'. and in tandem with that: the uneasy questions about censorship that come with *any* attempt at regulating the
press.
This is too simple. The development of critical thought is the key thing and it isn't monopolized by any discipline. People
without any qualifications and without much education can - and do - exercise critical ability. The problem is a cultural one.
Consumerism and the pretend world in which people 'think' they can be what they want and live in make believe soaps is the problem.
"If you have an issue with tech giants messing around with your personal data, don't give them your personal data."
They'll take your personal data, regardless. Because they make money from selling it.
"A "liberal arts" education is now a selling point in some schools." Presumably schools from families so wealthy, the children
will never have to worry about competing with 6 billion other people for a job someday.
"... To render credible analysis of the future of unconventional shale resources in America one must have had actual first hand experience in the actual business of oil extraction. In other words, one must have had to write checks to drill wells, write checks to pay operating costs, write checks to the Federal government for taxes, write check after check, etc, etc., and watch their net revenue drop like a rock every month. Ignoring debt and economics to simply say there is 40GBO of recoverable shale oil in America is, forgive me, not in the least bit credible. ..."
"... The EIA, the IEA, almost every predictor of the future ignores the economics of shale extraction and it's debt. Those predictions are therefore meaningless. Hoping for higher oil prices to make the future work out like you want it to is not a tactic, it is not a plan. It is a disservice to people searching for knowledge. ..."
"... So, ignore the Million Dollar Way thing, and Michael Filloon, the self serving dribble in investor presentations, the "we are going to unleash America's oil 'might' on the rest of the world" Perry/Trump bullshit and listen instead to Shallow Sand. He has written some checks in his day. Best not run him off. ..."
In the interest of those few oily readers you have left on POB, Dennis (I see you ran Guy, a knowledgeable royalty owner from
Texas, off with that stupid comment about the Texas Railroad Commission), lets NOT say what you said.
Instead lets say that at $50 dollar hedged oil prices the net back, take home pay for a Bakken operator is actually $20 a barrel.
And it is. Costs are not going down, they are going up, and longer laterals and enormous frac's make true well costs actually
closer to $9M. Such a well would therefore require 450,000 BO to payout.
Some very learned people on this site, actually knowledgeable about the oil industry, who are now also gone, have proven it
will take $85 dollar plus oil prices, sustained, for the unconventional shale oil industry to pay back its debt and simply be
able to replace reserves. The days of all this enormous 'growth' crap are over.
To render credible analysis of the future of unconventional shale resources in America one must have had actual first hand
experience in the actual business of oil extraction. In other words, one must have had to write checks to drill wells, write checks
to pay operating costs, write checks to the Federal government for taxes, write check after check, etc, etc., and watch their
net revenue drop like a rock every month. Ignoring debt and economics to simply say there is 40GBO of recoverable shale oil in
America is, forgive me, not in the least bit credible.
The EIA, the IEA, almost every predictor of the future ignores the economics of shale extraction and it's debt. Those predictions
are therefore meaningless. Hoping for higher oil prices to make the future work out like you want it to is not a tactic, it is
not a plan. It is a disservice to people searching for knowledge.
So, ignore the Million Dollar Way thing, and Michael Filloon, the self serving dribble in investor presentations, the "we
are going to unleash America's oil 'might' on the rest of the world" Perry/Trump bullshit and listen instead to Shallow Sand.
He has written some checks in his day. Best not run him off.
"... "In many ways the effect of the crash on embezzlement was more significant than on suicide. To the economist embezzlement is
the most interesting of crimes. Alone among the various forms of larceny it has a time parameter. Weeks, months or years may elapse
between the commission of the crime and its discovery. (This is a period, incidentally, when the embezzler has his gain and the man
who has been embezzled, oddly enough, feels no loss. There is a net increase in psychic wealth.) ..."
"... At any given time there exists an inventory of undiscovered embezzlement in – or more precisely not in – the country's business
and banks. ..."
"... This inventory – it should perhaps be called the bezzle – amounts at any moment to many millions [trillions!] of dollars. It
also varies in size with the business cycle. ..."
"... In good times people are relaxed, trusting, and money is plentiful. But even though money is plentiful, there are always many
people who need more. Under these circumstances the rate of embezzlement grows, the rate of discovery falls off, and the bezzle increases
rapidly. ..."
"... In depression all this is reversed. Money is watched with a narrow, suspicious eye. The man who handles it is assumed to be
dishonest until he proves himself otherwise. Audits are penetrating and meticulous. Commercial morality is enormously improved. The
bezzle shrinks ..."
John Kenneth Galbraith, from "The Great Crash 1929":
"In many ways the effect of the crash on embezzlement was more significant than on suicide. To the economist embezzlement
is the most interesting of crimes. Alone among the various forms of larceny it has a time parameter. Weeks, months or years
may elapse between the commission of the crime and its discovery. (This is a period, incidentally, when the embezzler has his
gain and the man who has been embezzled, oddly enough, feels no loss. There is a net increase in psychic wealth.)
At any given time there exists an inventory of undiscovered embezzlement in – or more precisely not in – the country's
business and banks.
This inventory – it should perhaps be called the bezzle – amounts at any moment to many millions [trillions!] of dollars.
It also varies in size with the business cycle.
In good times people are relaxed, trusting, and money is plentiful. But even though money is plentiful, there are always
many people who need more. Under these circumstances the rate of embezzlement grows, the rate of discovery falls off, and the
bezzle increases rapidly.
In depression all this is reversed. Money is watched with a narrow, suspicious eye. The man who handles it is assumed
to be dishonest until he proves himself otherwise. Audits are penetrating and meticulous. Commercial morality is enormously
improved. The bezzle shrinks."
For nearly a half a century, from 1947 to 1996, real GDP and real Net Worth of Households and Non-profit Organizations (in
2009 dollars) both increased at a compound annual rate of a bit over 3.5%. GDP growth, in fact, was just a smidgen faster -- 0.016%
-- than growth of Net Household Worth.
From 1996 to 2015, GDP grew at a compound annual rate of 2.3% while Net Worth increased at the rate of 3.6%....
The real home price index extends from 1890. From 1890 to 1996, the index increased slightly faster than inflation so that
the index was 100 in 1890 and 113 in 1996. However from 1996 the index advanced to levels far beyond any previously experienced,
reaching a high above 194 in 2006. Previously the index high had been just above 130.
Though the index fell from 2006, the level in 2016 is above 161, a level only reached when the housing bubble had formed in
late 2003-early 2004.
The Shiller 10-year price-earnings ratio is currently 29.34, so the inverse or the earnings rate is 3.41%. The dividend yield
is 1.93. So an expected yearly return over the coming 10 years would be 3.41 + 1.93 or 5.34% provided the price-earnings ratio
stays the same and before investment costs.
Against the 5.34% yearly expected return on stock over the coming 10 years, the current 10-year Treasury bond yield is 2.32%.
The risk premium for stocks is 5.34 - 2.32 or 3.02%:
What the robot-productivity paradox is puzzles me, other than since 2005 for all the focus on the productivity of robots and
on robots replacing labor there has been a dramatic, broad-spread slowing in productivity growth.
However what the changing relationship between the growth of GDP and net worth since 1996 show, is that asset valuations have
been increasing relative to GDP. Valuations of stocks and homes are at sustained levels that are higher than at any time in the
last 120 years. Bear markets in stocks and home prices have still left asset valuations at historically high levels. I have no
idea why this should be.
The paradox is that productivity statistics can't tell us anything about the effects of robots on employment because both the
numerator and the denominator are distorted by the effects of colossal Ponzi bubbles.
John Kenneth Galbraith used to call it "the bezzle." It is "that increment to wealth that occurs during the magic interval
when a confidence trickster knows he has the money he has appropriated but the victim does not yet understand that he has lost
it." The current size of the gross national bezzle (GNB) is approximately $24 trillion.
Ponzilocks and the Twenty-Four Trillion Dollar Question
Twenty-three and a half trillion, actually. But what's a few hundred billion? Here today, gone tomorrow, as they say.
At the beginning of 2007, net worth of households and non-profit organizations exceeded its 1947-1996 historical average, relative
to GDP, by some $16 trillion. It took 24 months to wipe out eighty percent, or $13 trillion, of that colossal but ephemeral slush
fund. In mid-2016, net worth stood at a multiple of 4.83 times GDP, compared with the multiple of 4.72 on the eve of the Great
Unworthing.
When I look at the ragged end of the chart I posted yesterday, it screams "Ponzi!" "Ponzi!" "Ponz..."
To make a long story short, let's think of wealth as capital. The value of capital is determined by the present value of an
expected future income stream. The value of capital fluctuates with changing expectations but when the nominal value of capital
diverges persistently and significantly from net revenues, something's got to give. Either economic growth is going to suddenly
gush forth "like nobody has ever seen before" or net worth is going to have to come back down to earth.
Somewhere between 20 and 30 TRILLION dollars of net worth will evaporate within the span of perhaps two years.
When will that happen? Who knows? There is one notable regularity in the data, though -- the one that screams "Ponzi!"
When the net worth bubble stops going up...
...it goes down.
"... But the economy does not feel like one undergoing a technology-driven productivity boom. In the late 1990s, tech optimism was everywhere. At the same time, wages and productivity were rocketing upward. The situation now is completely different. The most recent jobs reports in America and Britain tell the tale. Employment is growing, month after month after month. But wage growth is abysmal. So is productivity growth: not surprising in economies where there are lots of people on the job working for low pay. ..."
"... Increasing labour costs by making the minimum wage a living wage would increase the incentives to boost productivity growth? No, the neoliberals and corporate Democrats would never go for it. They're trying to appeal to the business community and their campaign contributors wouldn't like it. ..."
People are worried about robots taking jobs. Driverless cars are around the corner. Restaurants and shops increasingly carry the
option to order by touchscreen. Google's clever algorithms provide instant translations that are remarkably good.
But the economy does not feel like one undergoing a technology-driven productivity boom. In the late 1990s, tech optimism
was everywhere. At the same time, wages and productivity were rocketing upward. The situation now is completely different. The most
recent jobs reports in America and Britain tell the tale. Employment is growing, month after month after month. But wage growth is
abysmal. So is productivity growth: not surprising in economies where there are lots of people on the job working for low pay.
The obvious conclusion, the one lots of people are drawing, is that the robot threat is totally overblown: the fantasy, perhaps,
of a bubble-mad Silicon Valley - or an effort to distract from workers' real problems, trade and excessive corporate power. Generally
speaking, the problem is not that we've got too much amazing new technology but too little.
This is not a strawman of my own invention. Robert Gordon makes this case. You can see Matt Yglesias make it here. Duncan Weldon,
for his part, writes:
We are debating a problem we don't have, rather than facing a real crisis that is the polar opposite. Productivity growth has
slowed to a crawl over the last 15 or so years, business investment has fallen and wage growth has been weak. If the robot revolution
truly was under way, we would see surging capital expenditure and soaring productivity. Right now, that would be a nice "problem"
to have. Instead we have the reality of weak growth and stagnant pay. The real and pressing concern when it comes to the jobs
market and automation is that the robots aren't taking our jobs fast enough.
And in a recent blog post Paul Krugman concluded:
I'd note, however, that it remains peculiar how we're simultaneously worrying that robots will take all our jobs and bemoaning
the stalling out of productivity growth. What is the story, really?
What is the story, indeed. Let me see if I can tell one. Last fall I published a book: "The Wealth of Humans". In it I set out
how rapid technological progress can coincide with lousy growth in pay and productivity. Start with this:
Low labour costs discourage investments in labour-saving technology, potentially reducing productivity growth.
Increasing labour costs by making the minimum wage a living wage would increase the incentives to boost productivity growth?
No, the neoliberals and corporate Democrats would never go for it. They're trying to appeal to the business community and their
campaign contributors wouldn't like it.
Capital-biased Technological Progress: An Example (Wonkish)
By Paul Krugman
Ever since I posted about robots and the distribution of income, * I've had queries from readers about what capital-biased
technological change – the kind of change that could make society richer but workers poorer – really means. And it occurred to
me that it might be useful to offer a simple conceptual example – the kind of thing easily turned into a numerical example as
well – to clarify the possibility. So here goes.
Imagine that there are only two ways to produce output. One is a labor-intensive method – say, armies of scribes equipped only
with quill pens. The other is a capital-intensive method – say, a handful of technicians maintaining vast server farms. (I'm thinking
in terms of office work, which is the dominant occupation in the modern economy).
We can represent these two techniques in terms of unit inputs – the amount of each factor of production required to produce
one unit of output. In the figure below I've assumed that initially the capital-intensive technique requires 0.2 units of labor
and 0.8 units of capital per unit of output, while the labor-intensive technique requires 0.8 units of labor and 0.2 units of
capital.
[Diagram]
The economy as a whole can make use of both techniques – in fact, it will have to unless it has either a very large amount
of capital per worker or a very small amount. No problem: we can just use a mix of the two techniques to achieve any input combination
along the blue line in the figure. For economists reading this, yes, that's the unit isoquant in this example; obviously if we
had a bunch more techniques it would start to look like the convex curve of textbooks, but I want to stay simple here.
What will the distribution of income be in this case? Assuming perfect competition (yes, I know, but let's deal with that case
for now), the real wage rate w and the cost of capital r – both measured in terms of output – have to be such that the cost of
producing one unit is 1 whichever technique you use. In this example, that means w=r=1. Graphically, by the way, w/r is equal
to minus the slope of the blue line.
Oh, and if you're worried, yes, workers and machines are both paid their marginal product.
But now suppose that technology improves – specifically, that production using the capital-intensive technique gets more efficient,
although the labor-intensive technique doesn't. Scribes with quill pens are the same as they ever were; server farms can do more
than ever before. In the figure, I've assumed that the unit inputs for the capital-intensive technique are cut in half. The red
line shows the economy's new choices.
So what happens? It's obvious from the figure that wages fall relative to the cost of capital; it's less obvious, maybe, but
nonetheless true that real wages must fall in absolute terms as well. In this specific example, technological progress reduces
the real wage by a third, to 0.667, while the cost of capital rises to 2.33.
OK, it's obvious how stylized and oversimplified all this is. But it does, I think, give you some sense of what it would mean
to have capital-biased technological progress, and how this could actually hurt workers.
Catherine Rampell and Nick Wingfield write about the growing evidence * for "reshoring" of manufacturing to the United States.
* They cite several reasons: rising wages in Asia; lower energy costs here; higher transportation costs. In a followup piece,
** however, Rampell cites another factor: robots.
"The most valuable part of each computer, a motherboard loaded with microprocessors and memory, is already largely made with
robots, according to my colleague Quentin Hardy. People do things like fitting in batteries and snapping on screens.
"As more robots are built, largely by other robots, 'assembly can be done here as well as anywhere else,' said Rob Enderle,
an analyst based in San Jose, California, who has been following the computer electronics industry for a quarter-century. 'That
will replace most of the workers, though you will need a few people to manage the robots.' "
Robots mean that labor costs don't matter much, so you might as well locate in advanced countries with large markets and good
infrastructure (which may soon not include us, but that's another issue). On the other hand, it's not good news for workers!
This is an old concern in economics; it's "capital-biased technological change," which tends to shift the distribution of income
away from workers to the owners of capital.
Twenty years ago, when I was writing about globalization and inequality, capital bias didn't look like a big issue; the major
changes in income distribution had been among workers (when you include hedge fund managers and CEOs among the workers), rather
than between labor and capital. So the academic literature focused almost exclusively on "skill bias", supposedly explaining the
rising college premium.
But the college premium hasn't risen for a while. What has happened, on the other hand, is a notable shift in income away from
labor:
[Graph]
If this is the wave of the future, it makes nonsense of just about all the conventional wisdom on reducing inequality. Better
education won't do much to reduce inequality if the big rewards simply go to those with the most assets. Creating an "opportunity
society," or whatever it is the likes of Paul Ryan etc. are selling this week, won't do much if the most important asset you can
have in life is, well, lots of assets inherited from your parents. And so on.
I think our eyes have been averted from the capital/labor dimension of inequality, for several reasons. It didn't seem crucial
back in the 1990s, and not enough people (me included!) have looked up to notice that things have changed. It has echoes of old-fashioned
Marxism - which shouldn't be a reason to ignore facts, but too often is. And it has really uncomfortable implications.
But I think we'd better start paying attention to those implications.
John Kenneth Galbraith, from "The Great Crash 1929":
"In many ways the effect of the crash on embezzlement was more significant than on suicide. To the economist embezzlement
is the most interesting of crimes. Alone among the various forms of larceny it has a time parameter. Weeks, months or years
may elapse between the commission of the crime and its discovery. (This is a period, incidentally, when the embezzler has his
gain and the man who has been embezzled, oddly enough, feels no loss. There is a net increase in psychic wealth.)
At any given time there exists an inventory of undiscovered embezzlement in – or more precisely not in – the country's business
and banks.
This inventory – it should perhaps be called the bezzle – amounts at any moment to many millions [trillions!] of dollars.
It also varies in size with the business cycle.
In good times people are relaxed, trusting, and money is plentiful. But even though money is plentiful, there are always
many people who need more. Under these circumstances the rate of embezzlement grows, the rate of discovery falls off, and the
bezzle increases rapidly.
In depression all this is reversed. Money is watched with a narrow, suspicious eye.
The man who handles it is assumed to be dishonest until he proves himself otherwise. Audits are penetrating and meticulous.
Commercial morality is enormously improved. The bezzle shrinks."
For nearly a half a century, from 1947 to 1996, real GDP and real Net Worth of Households and Non-profit Organizations (in
2009 dollars) both increased at a compound annual rate of a bit over 3.5%. GDP growth, in fact, was just a smidgen faster -- 0.016%
-- than growth of Net Household Worth.
From 1996 to 2015, GDP grew at a compound annual rate of 2.3% while Net Worth increased at the rate of 3.6%....
The real home price index extends from 1890. From 1890 to 1996, the index increased slightly faster than inflation so that
the index was 100 in 1890 and 113 in 1996. However from 1996 the index advanced to levels far beyond any previously experienced,
reaching a high above 194 in 2006. Previously the index high had been just above 130.
Though the index fell from 2006, the level in 2016 is above 161, a level only reached when the housing bubble had formed in
late 2003-early 2004.
The Shiller 10-year price-earnings ratio is currently 29.34, so the inverse or the earnings rate is 3.41%. The dividend yield
is 1.93. So an expected yearly return over the coming 10 years would be 3.41 + 1.93 or 5.34% provided the price-earnings ratio
stays the same and before investment costs.
Against the 5.34% yearly expected return on stock over the coming 10 years, the current 10-year Treasury bond yield is 2.32%.
The risk premium for stocks is 5.34 - 2.32 or 3.02%:
What the robot-productivity paradox is puzzles me, other than since 2005 for all the focus on the productivity of robots and
on robots replacing labor there has been a dramatic, broad-spread slowing in productivity growth.
However what the changing relationship between the growth of GDP and net worth since 1996 show, is that asset valuations have
been increasing relative to GDP. Valuations of stocks and homes are at sustained levels that are higher than at any time in the
last 120 years. Bear markets in stocks and home prices have still left asset valuations at historically high levels. I have no
idea why this should be.
The paradox is that productivity statistics can't tell us anything about the effects of robots on employment because both the
numerator and the denominator are distorted by the effects of colossal Ponzi bubbles.
John Kenneth Galbraith used to call it "the bezzle." It is "that increment to wealth that occurs during the magic interval
when a confidence trickster knows he has the money he has appropriated but the victim does not yet understand that he has lost
it." The current size of the gross national bezzle (GNB) is approximately $24 trillion.
Ponzilocks and the Twenty-Four Trillion Dollar Question
Twenty-three and a half trillion, actually. But what's a few hundred billion? Here today, gone tomorrow, as they say.
At the beginning of 2007, net worth of households and non-profit organizations exceeded its 1947-1996 historical average, relative
to GDP, by some $16 trillion. It took 24 months to wipe out eighty percent, or $13 trillion, of that colossal but ephemeral slush
fund. In mid-2016, net worth stood at a multiple of 4.83 times GDP, compared with the multiple of 4.72 on the eve of the Great
Unworthing.
When I look at the ragged end of the chart I posted yesterday, it screams "Ponzi!" "Ponzi!" "Ponz..."
To make a long story short, let's think of wealth as capital. The value of capital is determined by the present value of an
expected future income stream. The value of capital fluctuates with changing expectations but when the nominal value of capital
diverges persistently and significantly from net revenues, something's got to give. Either economic growth is going to suddenly
gush forth "like nobody has ever seen before" or net worth is going to have to come back down to earth.
Somewhere between 20 and 30 TRILLION dollars of net worth will evaporate within the span of perhaps two years.
When will that happen? Who knows? There is one notable regularity in the data, though -- the one that screams "Ponzi!"
When the net worth bubble stops going up...
...it goes down.
"... I have mentioned this before, but SERIOUS TROUBLE will come down hard on the Bakken. Looks like someone hasn't been honest about its production figures. ..."
"... Fireworks will arrive shortly .. hehehe. ..."
I have mentioned this before, but SERIOUS TROUBLE will come down hard on the Bakken. Looks like someone hasn't been honest
about its production figures.
active wells increased by 158 from August to Sept and output increased by 19 kb/d for the Bakken Three Forks to 1055 kb/d.
Only 77 new wells were completed in the North Dakota in August 2017 and output increased that month by 23 kb/d.
They have added over 1,100 Bakken and/or Three Forks wells to boost production back to where it was in March, 2016.
So, conservatively $8 billion spent just to climb back up.
The amount of capital being burned on energy in the USA is truly remarkable.
Dennis, I have seen data that shows the total cost of all "shale" oil and gas wells from maybe 2003 forward, and then the gross
proceeds from same. Very interesting how far from payout the USA wells are, in aggregate.
So about 48 Gb of proved reserves plus undiscovered resources (F50).
I agree higher oil prices ($85/b or more) will be needed.
I expect by 2020 this is likely to be correct (oil prices above $85/b), but maybe there is more cheap oil out there than I
realize. I expect 400-500 kb/d of tight oil increases each year over the 2017-2021 period, not enough to take care of increased
oil demand, OPEC, Russia, Brazil, and Canada will probably not be able to make up the shortfall so stocks will continue to fall
and oil prices will rise.
Timing unknown, but my WAG is $75/b by Sept 2018.
I based my $30 net on an example given by shallow sand, but you are correct I remembered incorrectly. His example was $45/b
wellhead and $15/b net. Sorry I got it wrong.
Divide my 60 month net income by 2 so $3.3 million for a well that cost $7.3 million (in shallow sand's example), so in the
red by $4.4 billion for those 1100 wells.
Using shallow sands $7.3 million well cost (8000/1100) and $15/b net, it's 487 kb over 5 years for payout, for the average
2014 well my estimate is about 250 kb over 5 years.
So $29.20/b net is needed for payout and an increase of $14.20 per barrel in the well price (with no increase in costs) would
do it. That would be about $70/b WTI, to take care of debt would require higher prices, though perhaps not another $15/b.
If your estimate of $9 million per well is correct, we would need $36/b net for payout and $77/b WTI, perhaps $8/b extra is
needed to cover interest costs, but that would imply about $58 billion in debt if interest is 5% on the debt (assuming Bakken
output of about 1000 kb/d).
Rune Likvern estimates cumulative debt at about $35 billion, at 5% interest and 1000 kb/d this implies an extra $5/b in interest
cost so about $82/b WTI would be needed if well cost is indeed $9 million per well.
Bottom line, higher oil prices are needed for profits somewhere from $75/b to $82/b WTI, and Rune Likvern's estimate is about
$84/b, but for a point forward estimate breakeven (7% return) is as low as $63/b (for the average 2016 well).
This May 20, 2016 post was probably two years early ;-) I remember looking back on the IEA's 2005 World Energy Outlook and being perplexed that
anyone still takes their price or production forecasts with any seriousness whatsoever. Their 2003 WEO is even more hilarious.
Notable quotes:
"... Eventually market sentiment focused on the recency bias of a 2 year glut is going to shift into the realization that disruptions, depletion, and growing demand have thrown the global balance into a dearth where inventories are being drawn to meet demand – such as the news about Saudi's relying on inventory to meet demand, the "missing" 800,000,000 barrels of OECD inventory from Q1 2016, or next weeks inevitable U.S. inventory draw. ..."
"... Suddenly, an extra outage (like say if anything happens to Venezuela) will cause meaningful rallies instead of being mostly written off. ..."
"... The best, live, interactive charts I am most fond of are here: https://www.dailyfx.com/crude-oil ..."
"... I expect one last fight around $50, a few day consolidation move lower. Then market realities will push WTI past $50, and shorts will have to cover pushing it even higher. ..."
"... Next thing you know were range bound in the mid-$50s at the end of June as everyone questions if shale production will magically skyrocket overnight. Maybe the rig count will go up by 3 or 4, and it'll spark a sell-off back to or below $50 because of the psychological recency bias of a "repeat of 2015". ..."
"... I remember looking back on the IEA's 2005 World Energy Outlook and being perplexed that anyone still takes their price or production forecasts with any seriousness whatsoever. Their 2003 WEO is even more hilarious. ..."
"... Most people are simply incapable of seeing a bigger picture, and they'll simply never understand the relationship between depletion, economic and population growth, and the long-term fact that this equals higher prices (and probably also, in the long run, higher poverty and unemployment). ..."
"... It is for that exact same reason that so many people we know will simply never get it. Physics doesn't have agency, it cannot be avoided, cajoled, or "blamed". It simply is, and that is so unsettling to our psyche that most people have a strong, unconscious drive to negate and ignore that conclusion even if they will acknowledge it is a sound and true explanation of how economics, growth, employment, wealth, energy (physics and thermodynamics), and depletion are woven of the same fabric. ..."
"... Brian – I think you are closer to reality than EIA or USGS, it will be interesting to see how it plays out against your scenario. ..."
"... There doesn't necessarily have to be more social breakdown in Venezuela to have an impact – Haliburton and Schlumberger are pulling out and will have immediate effect as the extra heavy oil production needs continuous attention to the wells. I'm surprised Angola and Algeria haven't seen disruptions yet either. ..."
"The joint-venture Syncrude project told customers to expect no further crude shipments for May, trading sources said on Thursday,
extending a force majeure on crude production from earlier in the month."
Eventually market sentiment focused on the recency bias of a 2 year glut is going to shift into the realization that disruptions,
depletion, and growing demand have thrown the global balance into a dearth where inventories are being drawn to meet demand –
such as the news about Saudi's relying on inventory to meet demand, the "missing" 800,000,000 barrels of OECD inventory from Q1
2016, or next weeks inevitable U.S. inventory draw.
Suddenly, an extra outage (like say if anything happens to Venezuela) will cause meaningful rallies instead of being mostly
written off.
In fact, judging by the price action on oil over the last 24 hours, I'd say that sentiment is very close to a shift. From 11
AM forward crude oil marched higher relentlessly, even in opposition to dollar strength. Most every single commodity was down,
as we're most every stock market except oil.
I expect one last fight around $50, a few day consolidation move lower. Then market realities will push WTI past $50, and
shorts will have to cover pushing it even higher.
Next thing you know were range bound in the mid-$50s at the end of June as everyone questions if shale production will
magically skyrocket overnight. Maybe the rig count will go up by 3 or 4, and it'll spark a sell-off back to or below $50 because
of the psychological recency bias of a "repeat of 2015".
That is, until rational minds, or the market itself pushes prices back up as it becomes obvious that a slowdown in U.S. production
declines will mean little in the face of mounting production declines around the globe, and "surprisingly" strong demand – because
apparently predicting that lower prices will cause stronger than average demand growth is beyond the economic capability of the
EIA or IEA, and markets tend to take their word as gospel.
I remember looking back on the IEA's 2005 World Energy Outlook and being perplexed that anyone still takes their price
or production forecasts with any seriousness whatsoever. Their 2003 WEO is even more hilarious.
Every step of the way analysts and talking heads will be confused that prices aren't dropping back to $30 just like they were
for 5 straight years from 2003 to 2008. They'll predict Saudi's will raise production to 12 mbpd any day now, or that shale will
magically take off overnight.
They'll never even realize that they don't understand the history of Saudi production, or the logistical and financial complexities
of shale production rising as fast as it did before. Instead they'll blame the banks, or speculators, or Big Oil for artificially
making oil prices rise (without questioning why they let them fall for 2 years in the first place)
But then again if gas is cheap, which average people are fond of, their brain says "I like this, so it must be right". If gas
is expensive their brain says "I don't like this, it must be wrong, what evil force made this happen?!?"
Most people are simply incapable of seeing a bigger picture, and they'll simply never understand the relationship between
depletion, economic and population growth, and the long-term fact that this equals higher prices (and probably also, in the long
run, higher poverty and unemployment).
Their lives will have ups and down, growth and recession, but they'll know and feel it is generally getting harder. They'll
never be aware that this is the "fault" of nothing but physics and thermodynamics, even if told directly and shown all the rather
clear evidence (I know every one of you has experienced this as I have). Instead, they'll blame those dang immigrants, or the
Chinese, or the Congress, or regulations.
They'll blame anything that fits their paradigm enough to allow cohesiveness so their fragile lives can at least MAKE SENSE.
You can't blame physics, and, frankly, I think that is a large psychological barrier for people comprehending what is happening.
We need to have some agent to blame for things, and physics has no agency. Blaming something for a problem is settling because
it gives us something to focus on to solve the problem, or, at the very least, avoid it. The evolutionarily beneficial need to
assign agents as the cause of events is what pre-disposes us to believing that events we cannot easily assign agency to are, nonetheless,
the will of a greater, invisible, omnipresent agent.
It is for that exact same reason that so many people we know will simply never get it. Physics doesn't have agency, it
cannot be avoided, cajoled, or "blamed". It simply is, and that is so unsettling to our psyche that most people have a strong,
unconscious drive to negate and ignore that conclusion even if they will acknowledge it is a sound and true explanation of how
economics, growth, employment, wealth, energy (physics and thermodynamics), and depletion are woven of the same fabric.
Brian – I think you are closer to reality than EIA or USGS, it will be interesting to see how it plays out against your scenario.
A couple of other impacts are summer maintenance season in North Sea (Buzzard and, I think, Ekofisk have major turnarounds),
Alaska and Canada (maybe Russia as well) and increased demand from driving season in USA and AC use in Middle East.
There doesn't necessarily have to be more social breakdown in Venezuela to have an impact – Haliburton and Schlumberger
are pulling out and will have immediate effect as the extra heavy oil production needs continuous attention to the wells. I'm
surprised Angola and Algeria haven't seen disruptions yet either.
The author concerns are naive and misplaced (although he probably advocated the interests of the group to which he belongs).
MBA, Master of Business Administration gradates are indoctrinated neoliberals. This is about neoliberalism, not about the structure
of the university education and the amount of social coursers required to get an STEM degree.
Notable quotes:
"... First off, full disclosure: I'm in tech, so I'm an insider. I also absolutely agree that tech has a huge, huge problem with understanding the consequences of our actions. But it's a little bit naïve to act as though taking another year or two of humanities classes would magically prevent tech leaders from making antisocial products. ..."
"... Trump is the quintessential Exceptional American, weaponized. The Trump Organization constructed more than 180 skyscrapers and major properties worldwide within every cesspool of political, military, religious, organized crime, and civil corruption. Trump is the toughest SOB on the planet - and the most experienced. And he's ours. I stand with Trump. ..."
"... "It never seems to have occurred to them that their advertising engines could also be used to deliver precisely targeted ideological and political messages to voters." That was supposed to be reserved for exclusive use of the Democratic Party. ..."
"... The writer clearly does not know much about the US higher education system where engineers and scientists cannot get away without taking humanities courses, unlike the UK. ..."
Power and influence are not just a battle between STEM and Humanities, though. You've missed the MBA, Master of Business Admistration.
They are the ones who control everything now.
It may have been the case some decades ago, but now it is Managerialism, in the guise of a whole ideology that has sprung from
MBA's, that rules over both the STEM and Humanities workers.
From mid- and large- private companies, to the public sector, they all speak the same language and it is the language of the
MBA. Corporate visions of embracing customer focused cost control while empowering our core mission values.
Time for an article on Managerialism, as it is the air we breathe these days.
Your username rather contradicts the assertions you make about your political orientation..
Well let's have a look at some typical libertarian policies. Recreational drugs decriminalised. The dismantling of the surveillance
State. Stop covering for Israel's crimes in the UN. A much-reduced military that was for purely defensive purposes. How're they
"right-wing", exactly?
My recent example is saying "It's like Quixote tiltiing at windmills" only to find the others, 6 or 7 people all with Firsts in
STEM had no idea what I was on about. Also saying "It's far too Heath-Robinson" had the same effect.
It does dismay me how clever many of my colleagues are, but how painfully narrow their knowledge is. They study their subject
(and I suspect most of that is just for career development i.e. love of money rather than knowledge) but little else.
Our culture has a bad attitude to wisdom in general. Each generation is taught to disregard the old timers, what can they possibly
know about anything?
I guess it's all how the plutocracy like it. Their media can tell us that the Crusades were a defensive war and nobody knows
enough to disagree. They can continually role out nonsense about the "good guys and the evil guys" to explain world problems and
again, nobody knows anything other than that.
Democracy is a political philosophy. Socialism is an economic theory.
Socialism is not an "economic" theory. Socialism (and I use the term in its original, Marxist sense: State ownership & control
of the means of production, distribution, and exchange) has absolutely no economic theory behind it. Nowhere did Marx tell his
followers how to run their economies; after they'd won, the Bolsheviks and Maoists were on their own. No wonder millions starved.
It's impossible to make rational economic calculations in a socialist commonwealth because there is no price signal mechanism.
Hence communist countries' famous gluts and shortages.
At its height, despite the fact its economy was much simpler than any here in the West's, economists of the USSR were setting
the prices of more than 5 million items, and even they admitted it would have been impossible without knowing (and copying) the
prices that arose in our (relatively) free-market economies.
In fact, they joked that once "the revolution" was complete and communism had taken over the world, they'd be required to have
some small country remain free-market capitalist so they could have some clue about what prices should be.
And I have no idea of who concocted the "famous quote".
Lulz. You walked into that one: Alexis de Tocqueville
I can't up-vote this enough. MIT, for example, requires eight semesters of humanities for all undergraduates, regardless of major.
If you talk to the faculty in the humanities dept, they'll tell you how much they enjoy teaching there, because they get really
intelligent students who can think rigorously. (And also because they're almost all tenured professors -- not underpaid "adjuncts".)
Yes, there are a certain percentage of students who meet the stereotype of being socially awkward and not very interested in
thinking about things outside of their science and technology focus, but they're not the majority and are more than balanced by
the bulk of the student body who could hold their own in any liberal arts program in the world.
We live in a plutocracy and we get the tech that the plutocrats want us to have. Drives on diversity aren't working because
those non-white-upper-middle-class-males who get the roles, are those who behave exactly the same as the white-upper-middle-class
elite. So the changes are literally skin deep.
Sadly, most of the women I've encountered at the top of the corporate tree have either been there through nepotism (e.g. MD's
daughter or mistress) or been promoted way beyond their level of competence and have compensated for that with drink, drugs or
appalling bullying.
The educated, savvy women all seem to baled out long before they reach that level!
Harvard required class of 1964 freshmen to read the published version "The Two Cultures" the summer before they matriculated.
The general knowledge of college friends who were scientists and mathematicians (and went on to become university professors)
was at least equal to other friends specializing in social sciences and humanities, because suburban American high schools in
wealthy communities provide a good general education up to age 18, not 16 as in British public, comprehensive and grammar schools,
and because American university courses require a large fraction of a student's course work lie outside their department of specialization.
Snow wrote about the British system. He deplored the willful scientific ignorance of many members of the British Civil Service
of this acquaintance. His comments were not intended for or relevant to the American experience. A bright American student, as
these computer tech executives' work histories show they must have been, will have gained familiarity with both "cultures" by
the time they started their college courses. Their college experiences will have built upon this familiarity.
In my opinion It is inappropriate to blame the failure to regulate internet speech properly upon the education of American
tech leaders. Corbyn and whoever replaces Trump will remedy theunderlying issues because they know unregulated capitalism cannot
be trusted to act responsibly.
But often the customers don't know exactly what they want and constantly want to make changes.
True. "It's just what we asked for, but it's not what we want!", viz. Nimrod. And sometimes a supplier provides a system that
they say is perfect for the task required, yet once it's installed it clearly is nothing of the sort. The customer's ex-MD retires
to the sun, counting his backhander and giggling hysterically. I've encountered that more than once during my career, too.
So what about those teaching and learning 'digital humanities', is this subject then a contradiction in terms? Surly these divides
are redundant as subjects become multi disciplinary in our digital age, each will influence the other in new and interesting ways.
There is no uninventing available to us here only the effort in rebalancing in how we value what it is to be human.
First off, full disclosure: I'm in tech, so I'm an insider. I also absolutely agree that tech has a huge, huge problem
with understanding the consequences of our actions. But it's a little bit naïve to act as though taking another year or two of
humanities classes would magically prevent tech leaders from making antisocial products.
For one thing, more people in tech have humanities backgrounds than you might think (I do--I'm a software developer and educator
with a BA from Stanford and am finishing an MSEE, and I have a fair number of colleagues with similarly mixed educational backgrounds).
For another, Mark Zuckerberg founded Facebook when he was was what, 20? It's foolish to act like you can turn a 20-year-old, *any*
20-year-old, into a wise and thoughtful human who can understand all the consequences of their actions by sticking them in a classroom
for another year or two. I certainly was a moron when I was 20. Shockingly, I was also a moron when I was 22. College kids just
still have a lot of growing up to do.
Don't get me wrong, I work a lot with high schoolers and university students, and I'm a very big proponent of education. But
the thing that makes the biggest difference in knocking adolescent heads is exposing kids to people that aren't like them. Yes,
to a certain extent that can happen via reading, but the biggest check on privilege and self-satisfaction is actually engaging
with actual other people who don't share that privilege. And that just isn't happening at Stanford and Harvard.
I'm white and the child of college-educated parents; at Stanford I still felt out of place, weird, and poor. I was surrounded
by people who went to skiing in Switzerland at Christmas and had boats; it wasn't a world I was familiar with or understood. That
effect is only magnified for kids of color or from more marginalized backgrounds, sprinkled lightly across classrooms that are
overwhelmingly white and privileged. The idea that a white, middle-class kid -- even a gay female kid like me -- would be right
near the bottom of the privilege scale I think tells you just about everything about that university culture that you need to
know.
What's happening in tech is part of the sickness of our entire social and economic system; it's a toxic mixture of privilege
perpetuating privilege, in terms of race and class and gender and money and access. Tech doesn't create antisocial products by
itself. Having a lot of rich white kids sitting around discussing Plato in a classroom might make them more well-rounded on paper,
but if you then still funnel them then into a money sea dominated by bro culture and VCs, with no necessity or encouragement to
engage with people who live outside that bubble, you're still going to get people who are shocked, shocked!! to learn that their
products have negative consequences for the lives of the people on the other side of the screen. Lots of *workers* in tech do
partially bridge that gap, in one way or another. But the people at the top, making the decisions, are selected overwhelmingly
by being white dudes who fit the "poorly socialized iconoclast" mold that VCs understand and then massively isolated by the enormous
*heaps of cash* that investors have thrown at them to make something the investors think will get them the best return on their
investment. *No part* of that is good for society writ large, beginning to end, in very large part because investors have no reason
to care what happens to anyone else.
Here's an example! At this stage, anyone in tech who doesn't think that they're working on making every worker in the world,
*including themselves*, obsolete, is deluding themselves. But most of us *do* know that and keep showing up for work, because
we don't know any other way of paying our bills. We know that social and political action is needed, a lot of us are agitating
for precisely that, but we can't do it on our own, and we have a pretty realistic idea about what kind of future lies for us and
our families if we just decide to walk away from the industry. I'm a little too old to really be a millennial, but this is the
rock and the hard place, for people even 3 years younger than I am, who graduated from college just in time for the crash: if
you're in tech, you're keeping your head above water, barely. If you're not, you're working constantly with no benefits or security,
just so you can live with your parents and form a punchline about avocados.
If you want to check tech, you need *political will.* You have to check the money, because it's never going to check itself.
And if you want to make Silicon Valley actually become capable of making the utopian tech it likes to believe it can produce,
it also wouldn't hurt to check the *overwhelming* bias in tech hiring and in elite education towards people who are white, privileged,
and just like everybody else who's already there.
I once met a man in a Texas prison who was incarcerated for programming a banks software to divert small fractions of (rounded
off) pennies to his personal account. Those added up fast enough to get noticed.
Trump is the quintessential Exceptional American, weaponized. The Trump Organization constructed more than 180 skyscrapers
and major properties worldwide within every cesspool of political, military, religious, organized crime, and civil corruption.
Trump is the toughest SOB on the planet - and the most experienced. And he's ours. I stand with Trump.
Democracy is a political philosophy. Socialism is an economic theory. The two are not mutually exclusive. And I have no idea of
who concocted the "famous quote".
When you refer to someone as "Machiavellian" does an engineer understand? In the US there used to be a required college course
entitled "The History of Western Civilization". It formed a common bond somewhat like serving in the military.
"a liberal arts major familiar with works like Alexis de Tocqueville's Democracy in America, John Stuart Mill's On Liberty,
or even the work of ancient Greek historians, might have been able to recognise much sooner the potential for the 'tyranny
of the majority' or other disconcerting sociological phenomena that are embedded into the very nature of today's social media
platforms..."
Such a person would most have likely held their nose and voted for Trump, knowing the appalling damage Hillary had done during
her tenure in the State department.
The usual Graun assumption that it's only ignorance or selfishness that makes people eschew Leftists and their policies.
Sorry. Progressives are actually more ignorant about politics, economics and history, in my experience. I'm not "right-wing"
myself but far more of my right-leaning friends are likely to know who de Tocqueville was and what he wrote than my Lefty friends.
And most of them will know this rather famous quote:
"Democracy extends the sphere of individual freedom, socialism restricts it. Democracy attaches all possible value to each
man; socialism makes each man a mere agent, a mere number. Democracy and socialism have nothing in common but one word: equality.
But notice the difference: while democracy seeks equality in liberty, socialism seeks equality in restraint and servitude."
The old "two cultures debate", which in my student days was conducted between FR Leavis and CP Snow, has not advanced very
far. There is certainly something in it, but I suspect that the intellectuals of the sixteenth century, most of whom could be
found in monasteries, complained that Gutenberg would never have pressed ahead so carelessly with printing using moveable type
if he had had a proper grounding in Rhetoric and in Theology, instead of blacksmithing and goldsmithing...
After all... we went from Gutenberg printing in Strasbourg in 1445 to Martin Luther printing his 95 Theses in 1522...
I think we are seeing a similar democratisation of information today.
We can no more put the genie back in the bottle than could Sir Thomas More. If Zuckerberg, Page and Brin had not invented their
money machines, someone else might have done so.
The only political leader who is actively trying to control the genie is Xi Jinping, and he may not be entirely successful
in keeping up the Great Firewall of China.
I think we have to ride the wave, and keep in mind that political power itself is a matter of technology, as I am sure Marshal
McLuhan would point out.
The Great Dictators of the last century were creatures of the radio and the cinema, which allowed them a one sided conversation
with every household and made them bestride the silver screen.
Television replaced radio and cinema and with its more domestic scale it cut the monsters down to size and promoted democracy.
The social media have galvanised authoritarianism at the moment, but the wheels will continue to turn..
New Model: People who disagree with me are stupid.
Oh, and a column in The Guardian defending Mill's On Liberty ? Priceless.
By the way, the entire premise of the column is flawed. Harvard, like all US colleges, has requirements that students take
classes outside their major, including humanities. My
tech prowess allowed
to me find that out. :)
Translation/TL;DR version:
> Trump won despite the amount of shameless fear-mongering and short-selling we in the MSM did for Hillary and Dems.
> Tech companies did not do their part in preventing Trump victory by actively censoring everyone WE disagree with.
> We need OUR (SJW/Humanities/Marxist/LiberalArts) people to MANAGE/WATCHOVER these tech guys.
> Guys like Zucker/Brin/Page are not essentially evil, they are just not educate ENOUGH in SJW/Marxist agenda.
> Guys like Thiel are pure evil.
> WE KNOW BEST, hence, we must be allowed to control and manipulate what people think and how they act.
So what else could explain the astonishing naivety of the tech crowd? My hunch is it has something to do with their educational
backgrounds. Take the Google co-founders. Sergey Brin studied mathematics and computer science. His partner, Larry Page, studied
engineering and computer science. Zuckerberg dropped out of Harvard, where he was studying psychology and computer science,
but seems to have been more interested in the latter.
Science should left in the hands of the political elite, who know what's best for the people.
People need not be good at math to know when a politician is lying. By the humanities, they know a politician is lying because
their lips are moving. lol
Said this before in a reply: Isn't there some responsibility on the part of the Humanities to give a more accurate portrayal of
history and society? For example, shouldn't we all be well aware that the success of these tech giants is built on state-funded
innovation? Shouldn't we all be less blind to how markets work? A stronger left might provide a clearer vision of how power works,
but we have been silencing that hard left for years.
Agree. But how about the fact that many educated people do not know that much of the technology and innovation behind this wealth
was state-funded and not "sexy" Isn't it the job of the liberal arts - history, sociology, government classes to address the role
of the state in innovation? We are blinded by a worshipful attitude toward the market. Without a strong left it seems we have
lost sight of reality. Isn't this partially the fault of Humanities departments?
Normally I don't single out greedy business leaders to take the blame for society's woes. It is the fault of our political leaders
for allowing them to damage society in their chase for the almighty dollar (or billions of them)...Libertarians, conservatives
and centrist Dems to be exact.
But in this case I think the criticism is spot on since these tech nerds keep on claiming their products will make the country
and world a better place. Time to kill the meme that capitalists and business people are bested suited morally to lead the world
in the 21st Century.
"It never seems to have occurred to them that their advertising engines could also be used to deliver precisely targeted
ideological and political messages to voters." That was supposed to be reserved for exclusive use of the Democratic Party.
One of the changes (still happening) in literature, psychology, sociology, and philosophy departments is a focus on privilege,
"the other", subjugation, the power of elites . . . So studying the humanities may involve a critique - at least a consciousness
- of one's privilege. Not familiar with Snow but there is plenty of lit crit and theory to dismantle or at least challenge the
canon.
I guess the problem being referred to in this article that there are negative implications for all of us because many people's
opinions are shaped by what they read on social media. What all of us read is biased in ways that it is difficult to trace the
source of that bias. In "the good old days" at least most people tended to know the biases of the newspapers and TV news that
you consumed, but now you can be biased by what your friends share with you on social media, or what google choses to show you
in search results but there is no way of knowing the source of those biases. The problem therefore goes far beyond the risks of
sharing personal data.
Yes, I agree and I wasn't disparaging the STEM subjects at all or equating them in some way with capitalist interests. Both can
have that criticism applied to them - for instance, historians can definitely twist facts and more or less propagandise events.
Both are necessary, but I was thinking that both need to have at least a grasp of the influence and range of the other and be
better educated to do that.
Ditto bankers, doctors, lawyers and journalists.... The world (and particularly the US) is full of specialists. The author's assertions
are naive and half-educated.
Nonsense! You were just filling your word count with provocative poo.
Every technology has a good side and a bad one - including and especially the medical arts. Consider the recent news regarding
successful head transplants and face transplants; where will that takes us when humanitarian uses fail to pay the bills???
One book does not make the man. The point is many private and public schools focus on STEM to the detriment of humanities. A "liberal
arts" education is now a selling point in some schools.
Totally understand your point. As a non-tech individual who has been hostile to this massive organization of information and its
consequent requirements to alter human thought and social patterns to use systems, it is certainly expected that designers would
demand compliance from all parties for their own purposes. Even in the SF Chronicle, i often read quips about programmers disguising
coding for their own private use. In SF some loose canon but brilliant guy was asked to redesign the city's computer systems.
He had total mental breakdown and was jailed for some sort of bizarre infraction that had something to do with unauthorized personal
use. I can't quite remember details. The Chron offered to the public that the City may never know what this guy designed into
the systems. Bottom line was the city employees were totally delighted about their new programs and the programmer wouldn't talk.
If i remember correctly he was this eccentric, well liked gay guy.
Horseshit! I read De Toqueville in high school. There are required humanities courses at good universities. And anyone can read
a book on one's own time.
I agree with your overall assessment of the tech owners. However, blaming their academic discipline is short sighted. I suggest
you get to know some math and computer science majors. Many are well versed in the humanities. Not everyone needs a degree in
liberal arts to understand the human race.
Perhaps you are referring to the culture of technology that bred a lack of insight into human behavior.
There are also people with degrees in the liberal arts who go into technological fields. I agree with your views on the naïveté
of the tech leaders, but blaming a college degree strikes me as looking for a parallel that doesn't exist.
The writer clearly does not know much about the US higher education system where engineers and scientists cannot get away
without taking humanities courses, unlike the UK.
I would say that a deep study of the humanities can impart the kind of pessimism about human nature that animated Madison, Jefferson
and the other Framers of the Constitution. Their pessimism, unlike the unrestrained optimism of their counterparts in France,
is what enabled this country to be one of the few to survive a revolution without descending into mass murder and tyranny. But
given their fundamental pessimism, the founders of this country would probably be surprised that the governmental structure they
designed had endured this long.
Many of today's 'tech-elite' are sons of rich, establishment types who only have one interest: making more money. By the time
reports leek this appear, they already have a private island and a few billion in the bank. If you have an issue with tech giants
messing around with your personal data, don't give them your personal data.
I would like to congratulate the vast majority of the people posting here on producing possibly the most thoughtful and considered
set of comments I have read on a Guardian Article.
I will give the Article credit for stimulating the debate but I do think the discussion BTL has been far more interesting than
the original.
Alison I agree, but because the number of arts and sciences students is declining, arts and sciences faculty try to isolate integrated
studies (often called general studies or, at my university, the core curriculum) from professional studies. They do this to try
to save their jobs so it's understandable. The end results are sporadic, half-hearted attempts at integration that don't exactly
foster aha moments. Rather they cultivate thinking such as we see in this article.
The original backers of the "wired" world (such as Stewart Brand and Kevin Kelly who founded Wired, but one could list dozens
of tech legends) were utopian thinkers who were very well versed in history and philosophy. Unfortunately but probably inevitably,
the whole thing was corrupted by corporations as it became part of mainstream consumer society.
"... By Bill Mitchell, Professor in Economics and Director of the Centre of Full Employment and Equity at the University of Newcastle, NSW, Australia. Originally published at billy blog ..."
"... The overwhelming importance of having a job for happiness is evident throughout the analysis, and holds across all of the world's regions. ..."
"... The pattern of human concerns ..."
"... The pattern of human concerns ..."
"... Journal of Happiness Studies ..."
"... The results show the differences between having a job and being unemployed are "very large indeed" on the three well-being measures (life evaluation, positive and negative affective states). ..."
"... Psychological Bulletin ..."
"... 1. "unemployment tends to make people more emotionally unstable than they were previous to unemployment". ..."
"... 2. The unemployed experience feelings of "personal threat"; "fear"; "sense of proportion is shattered"; loss of "common sense of values"; "prestige lost in own eyes and as he imagines, in the eyes of his fellow men"; "feelings of inferiority"; loss of "self-confidence" and a general loss of "morale". ..."
"... in the light of the structure of our society where the job one holds is the prime indicator of status and prestige. ..."
"... Psychological Bulletin ..."
"... Related studies found that the "unemployed become so apathetic that they rarely read anything". Other activities, such as attending movies etc were seen as being motivated by the need to "kill time" – "a minimal indication of the increased desire for such attendance". ..."
"... In spite of hopeless attempts the unemployed continually look for work, often going back again and again to their last place of work. Other writers reiterate this point. ..."
"... The non-pecuniary effects of not having a job are significant in terms of lost status, social alienation, abandonment of daily structure etc, and that has not changed much over history. ..."
"... I think what is missing from this article is the term "identity." If you meet new people, often the conversation starts with what you do for a living. Your identity, in part, is what you do. You can call yourself a plumber, a writer, a banker, a consultant, a reporter but the point is this is part of your identity. When you lose your job long term, your identity here loses one of its main anchor points. ..."
"... This is a crucial point that UBI advocates often ignore. There is a deeply entrenched cultural bias towards associating our work status with our general status and prestige and feelings of these standings. ..."
"... When unemployed, the stress of worry about money may suppress the creative juices. Speaking from experience. People may well 'keep looking for jobs' because they know ultimately they need a job with steady income. The great experience of some freelancers notwithstanding, not all are cut out for it. ..."
"... When considering the world's population as a whole, people with a job evaluate the quality of their lives much more favorably than those who are unemployed. ..."
"... Data like that provided by Mitchell is important to demolishing the horrid "economic anxiety" frame much beloved by liberals, especially wonkish Democrats.* It's not (a) just feelings , to be solved by scented candles or training (the liberal version of rugged individualism) and (b) the effects are real and measurable. It's not surprising, when you think about it, that the working class is about work . ..."
Posted on
November 21, 2017 by Yves Smith Yves here. Reader
UserFriendly sent this post with the message, "I can confirm this." I can too. And before you
try to attribute our reactions to being Americans, note that the study very clearly points out
that its finding have been confirmed in "all of the world's regions".
By Bill Mitchell, Professor in Economics and Director of the Centre of Full Employment
and Equity at the University of Newcastle, NSW, Australia. Originally published at billy blog
Here is a summary of another interesting study I read last week (published March 30, 2017)
– Happiness at Work
– from academic researchers Jan‐Emmanuel De Neve and George Ward. It explores the
relationship between happiness and labour force status, including whether an individual is
employed or not and the types of jobs they are doing. The results reinforce a long literature,
which emphatically concludes that people are devastated when they lose their jobs and do not
adapt to unemployment as its duration increases. The unemployed are miserable and remain so
even as they become entrenched in long-term unemployment. Further, they do not seem to sense
(or exploit) a freedom to release some inner sense of creativity and purpose. The overwhelming
proportion continually seek work – and relate their social status and life happiness to
gaining a job, rather than living without a job on income support. The overwhelming conclusion
is that "work makes up such an important part of our lives" and that result is robust across
different countries and cultures. Being employed leads to much higher evaluations of the
quality of life relative to being unemployed. And, nothing much has changed in this regard over
the last 80 or so years. These results were well-known in the 1930s, for example. They have a
strong bearing on the debate between income guarantees versus employment guarantees. The UBI
proponents have produced no robust literature to refute these long-held findings.
While the 'Happiness Study' notes that "the relationship between happiness and employment is
a complex and dynamic interaction that runs in both directions" the authors are
unequivocal:
The overwhelming importance of having a job for happiness is evident throughout the
analysis, and holds across all of the world's regions. When considering the world's
population as a whole, people with a job evaluate the quality of their lives much more
favorably than those who are unemployed. The importance of having a job extends far beyond
the salary attached to it, with non-pecuniary aspects of employment such as social status,
social relations, daily structure, and goals all exerting a strong influence on people's
happiness.
And, the inverse:
The importance of employment for people's subjective wellbeing shines a spotlight on the
misery and unhappiness associated with being unemployed.
There is a burgeoning literature on 'happiness', which the authors aim to contribute to.
They define happiness as "subjective well-being", which is "measured along multiple
dimensions":
life evaluation (by way of the Cantril "ladder of life"), positive and negative affect to
measure respondents' experienced positive and negative wellbeing, as well as the more
domain-specific items of job satisfaction and employee engagement. We find that these diverse
measures of subjective wellbeing correlate strongly with each other
Cantril's 'Ladder of Life Scale' (or "Cantril Ladder") is used by polling organisations to
assess well-being. It was developed by social researcher Hadley Cantril (1965) and documented
in his book The pattern of human concerns .
You can learn more about the use of the 'Cantril Ladder' HERE
.
As we read, the "Cantril Self-Anchoring Scale consists of the following":
Please imagine a ladder with steps numbered from zero at the bottom to 10 at the top. The
top of the ladder represents the best possible life for you and the bottom of the ladder
represents the worst possible life for you. On which step of the ladder would you say you
personally feel you stand at this time? (ladder-present) On which step do you think you
will stand about five years from now? (ladder-future)
[Reference: Cantril, H. (1965) The pattern of human concerns , New Brunswick,
Rutgers University Press.]
[Reference: Bjørnskov, C. (2010) 'How Comparable are the Gallup World Poll Life
Satisfaction Data?', Journal of Happiness Studies , 11 (1), 41-60.]
The Cantril scale is usually reported as values between 0 and 10.
The authors in the happiness study use poll data from 150 nations which they say "is
representative of 98% of the world's population". This survey data is available on a mostly
annual basis since 2006.
The following graph (Figure 1 from the Study) shows "the self-reported wellbeing of
individuals around the world according to whether or not they are employed."
The "bars measure the subjective wellbeing of individuals of working age" by employment
status .
The results show the differences between having a job and being unemployed are "very large
indeed" on the three well-being measures (life evaluation, positive and negative affective
states).
People employed "evaluate the quality of their lives around 0.6 points higher on average as
compared to the unemployed on a scale from 0 to 10."
The authors also conduct more sophisticated (and searching) statistical analysis
(multivariate regression) which control for a range of characteristics (gender, age, education,
marital status, composition of household) as well as to "account for the many political,
economic, and cultural differences between countries as well as year-to-year variation".
The conclusion they reach is simple:
the unemployed evaluate the overall state of their lives less highly on the Cantril ladder
and experience more negative emotions in their day-to-day lives as well as fewer positive
ones. These are among the most widely accepted and replicated findings in the science of
happiness Here, income is being held constant along with a number of other relevant
covariates, showing that these unemployment effects go well beyond the income loss associated
with losing one's job.
These results are not surprising. The earliest study of this sort of outcome was from the famous study published by Philip
Eisenberg and Paul Lazersfeld in 1938. [Reference: Eisenberg, P. and Lazarsfeld, P. (1938) 'The psychological effects of
unemployment', Psychological Bulletin , 35(6), 358-390.]
They explore four dimensions of unemployment:
I. The Effects of Unemployment on Personality.
II. Socio-Political Attitudes Affected by Unemployment.
III. Differing Attitudes Produced by Unemployment and Related Factors.
IV. The Effects of Unemployment on Children and Youth.
On the first dimension, they conclude that:
1. "unemployment tends to make people more emotionally unstable than they were previous to
unemployment".
2. The unemployed experience feelings of "personal threat"; "fear"; "sense of proportion is
shattered"; loss of "common sense of values"; "prestige lost in own eyes and as he imagines, in
the eyes of his fellow men"; "feelings of inferiority"; loss of "self-confidence" and a general
loss of "morale".
Devastation, in other words. They were not surprised because they note that:
in the light of the structure of our society where the job one holds is the prime
indicator of status and prestige.
This is a crucial point that UBI advocates often ignore. There is a deeply entrenched
cultural bias towards associating our work status with our general status and prestige and
feelings of these standings. That hasn't changed since Eisenberg and Lazersfeld wrote up the findings of their study in
1938.
It might change over time but that will take a long process of re-education and cultural
shift. Trying to dump a set of new cultural values that only a small minority might currently
hold to onto a society that clearly still values work is only going to create major social
tensions. Eisenberg and Lazarsfeld also considered an earlier 1937 study by Cantril who explored
whether "the unemployed tend to evolve more imaginative schemes than the employed".
[Reference: Cantril, H. (1934) 'The Social Psychology of Everyday Life', Psychological
Bulletin , 31, 297-330.]
The proposition was (is) that once unemployed, do people then explore new options that were
not possible while working, which deliver them with the satisfaction that they lose when they
become jobless. The specific question asked in the research was: "Have there been any changes of interests
and habits among the unemployed?" Related studies found that the "unemployed become so apathetic that they rarely read
anything". Other activities, such as attending movies etc were seen as being motivated by the
need to "kill time" – "a minimal indication of the increased desire for such
attendance".
On the third dimension, Eisenberg and Lazersfeld examine the questions – "Are there
unemployed who don't want to work? Is the relief situation likely to increase this number?",
which are still a central issue today – the bludger being subsidized by income
support.
They concluded that:
the number is few. In spite of hopeless attempts the unemployed continually look for work,
often going back again and again to their last place of work. Other writers reiterate this
point.
So for decades, researchers in this area, as opposed to bloggers who wax lyrical on their
own opinions, have known that the importance of work in our lives goes well beyond the income
we earn. The non-pecuniary effects of not having a job are significant in terms of lost status,
social alienation, abandonment of daily structure etc, and that has not changed much over
history. The happiness paper did explore "how short-lived is the misery associated with being out of
work" in the current cultural settings.
The proposition examined was that:
If the pain is only fleeting and people quickly get used to being unemployed, then we
might see joblessness as less of a key public policy priority in terms of happiness.
They conclude that:
a number of studies have demonstrated that people do not adapt much, if at all, to being
unemployed there is a large initial shock to becoming unemployed, and then as people stay
unemployed over time their levels of life satisfaction remain low . several studies have
shown that even once a person becomes re-employed, the prior experience of unemployment
leaves a mark on his or her happiness.
So there is no sudden or even medium-term realisation that being jobless endows the
individual with a new sense of freedom to become their creative selves, freed from the yoke of
work. To bloom into musicians, artists, or whatever.
The reality is that there is an on-going malaise – a deeply entrenched sense of
failure is overwhelming, which stifles happiness and creativity, even after the individual is
able to return to work.
This negativity, borne heavily by the individual, however, also impacts on society in
general.
The paper recognises that:
A further canonical finding in the literature on unemployment and subjective wellbeing is
that there are so-called "spillover" effects.
High levels of unemployment "increase fear and heighten the sense of job insecurity". Who
will lose their job next type questions?
The researchers found in their data that the higher is the unemployment rate the greater the
anxiety among those who remain employed.
Conclusion
The overwhelming conclusion is that "work makes up such an important part of our lives" and
that result is robust across different countries and cultures.
Being employed leads to much higher evaluations of the quality of life relative to being
unemployed.
The unemployed are miserable and remain so even as they become entrenched in long-term
unemployment. They do not seem to sense (or exploit) a freedom to release some inner sense of
creativity and purpose.
The overwhelming proportion continually seek work – and relate their social status and
life happiness to gaining a job, rather than living without a job on income support.
Modern Monetary Theory (MMT) allows us to understand that it is the government that chooses
the unemployment rate – it is a political choice.
For currency-issuing governments it means their deficits are too low relative to the
spending and saving decisions of the non-government sector.
For Eurozone-type nations, it means that in surrendering their currencies and adopting a
foreign currency, they are unable to guarantee sufficient work in the face of negative shifts
in non-government spending. Again, a political choice.
The Job
Guarantee can be used as a vehicle to not only ensure their are sufficient jobs available
at all times but also to start a process of wiping out the worst jobs in the non-government
sector.
That can be done by using the JG wage to ensure low-paid private employers have to
restructure their workplaces and pay higher wages and achieve higher productivity in order to
attract labour from the Job Guarantee pool.
The Series So Far
This is a further part of a series I am writing as background to my next book with Joan
Muysken analysing the Future of Work . More instalments will come as the research
process unfolds.
The blogs in these series should be considered working notes rather than self-contained
topics. Ultimately, they will be edited into the final manuscript of my next book due in 2018.
The book will likely be published by Edward Elgar (UK).
Perhaps I'm utterly depressed but I haven't had a job job for over 5 years. Plenty of
work, however, more than I can handle and it requires priorisation. But I am deliberately not part of the organized herd. I stay away from big cities –
it's scary how managed the herd is in large groups – and I suppose that unemployment
for a herd animal is rather distressing as it is effectively being kicked out of the
herd.
Anyway my advice, worth what you pay for it but let he who has ears, etc. – is to go
local, very local, grow your own food, be part of a community, manage your own work, and
renounce the energy feast herd dynamics. "Unemployment", like "recession", is a mechanism of
control. Not very practical advice for most, I realize, trapped in the herd as they are in
car payments and mortgages, but perhaps aspirational?
I think what is missing from this article is the term "identity." If you meet new people,
often the conversation starts with what you do for a living. Your identity, in part, is what
you do. You can call yourself a plumber, a writer, a banker, a consultant, a reporter but the
point is this is part of your identity. When you lose your job long term, your identity here
loses one of its main anchor points.
Worse, there is a deliberate stigma attached with being long term unemployed. In that article
you have seen the word bludger being used. In parts of the US I have read of the shame of
'living off the county'. And yes, I have been there, seen that, and got the t-shirt. It's
going to be interesting as mechanization and computers turn large portions of the population
from workers to 'gig' workers. Expect mass demoralization.
yes the lives many of us have lived, no longer exist though we appear not notice, as we
"can" live in many of same "ways" ..rather well known psychologist defined some 40 years ago, best to "drop through
cracks"
Well, you also lose money, maybe you become homeless etc. as you have nowhere else to turn
(if there are kids involved to support it gets even scarier though there are some programs).
Or maybe you become dependent on another person(s) to support you which is of course
degrading as you know you must rely on them to live, whether it's a spouse or lover when you
want to work and bring in money, or mom and dads basement, or the kindest friend ever who
lets you sleep on their couch. I mean these are the things that really matter.
Privileged people whose main worry in unemployment would be losing identity, wow out of
touch much? Who cares about some identity for parties, but the ability to have a stable
decent life (gig work hardly counts) is what is needed.
I normally wouldn't comment like this, but you have brought up some extremely important
points about identity that I would like to address.
Recently I had the most intense mushroom experience of my entire life–so intense
that my identity had been completely stripped and I was left in a formless state, at the
level of seeing my bare, unvarnished animal neural circuitry in operation. Suddenly with a
flash of inspiration I realized that the identity of everyone, all of us, is inextricably
tied up in what we do and what we do for other people.
Following from that, I understood that if we passively rely on others for survival,
whether it be relying on friends, family, or government, then we do not have an identity or
reason for existing. And the inner self, the animal core of who we are, will realise this
lack of identity (even if the concious mind denies it), and will continually generate
feelings of profound depression and intense nihilism that will inevitably destroy us if the
root cause is not addressed.
Before this experience I was somewhat ambivalent about my politics, but immediately after
I knew that the political right was correct on everything important, from attitudes on sex to
economic philosophy. People need a core of cultural stability and hard work to grow and
become actualized. The alternative is rudderless dissatisfaction and envy that leads
nowhere.
On the topic of giving "out of kindnes and goodwill", giving without demanding anything in
return is a form of abuse, as it deprives those who receive our feel-good generosity the
motivation to form a coherent identity. If the parents of a basement-dweller were truly good
people, instead of supporting said dweller they'd drag her out by the ear and make her grow
food in the yard or some such. Likewise, those who have supported you without also giving
concrete demands and expecations in return have been unkind, and for your own good I hope
that you will immediately remove yourself from their support. On the other hand, if you have
been thoughtlessly giving because it warms the cockles of your heart, then stop it now. You
are ruining other people this way, and if your voting habits are informed by this kind of
malevolence I'd encourage you to change those as well.
Anyway the original poster is right about everything. Working and having a purpose in life
is an entirely different animal from making money and being "successful" in the
government-sponsored commercial economy. Society and government deliberately try to conflate
the two for various reasons, primarily graft of labor and genius, but that is only a
deliberate mis-framing that needlessly harms people when the mainstream economic system is in
catastrophic decline, as ours is today. You should try to clear up this misconception within
yourself as a way of getting better.
Well, I hope this message can give you a few different thoughts and help you find your way
out of the existential angst you're caught in. Don't wallow in helplessness. Think of
something useful to do, anything, whether it earns you money or not, and go out and start
doing it. You'll be surprised at how much better you feel about yourself in no time.
The problem is you said – I – had an extreme experience [burning bush], the
truth was reviled to – I – and I alone during this extreme chemically altered
state. Which by the way just happens to conform to a heap of environmental biases I
collected. This is why sound methodology demands peer review. disheveled some people think Mister Toads Wild ride at Disneyland on psychotropics is an
excellent adventure too.
I think your observation about the importance of work to identity is most perceptive. This
post makes too little distinction between work and a job and glosses over the place of work
in defining who we are to ourselves and to others. I recall the scene in the movie "About a
Boy" when the hero meets someone he cares about and she asks him what he does for a
living.
I believe there's another aspect of work -- related to identity -- missing in the analysis
of this post. Work can offer a sense of mission -- of acting as part of an effort toward a
larger goal no individual could achieve alone. However you may regard the value in putting
man on the moon there is no mistaking the sense of mission deeply felt by the engineers and
technicians working on the project. What jobs today can claim service to a mission someone
might value?
Agreed on your points. Wage slavery is nothing to aspire to. Self-determination within a
context of an interdependent community is a much better way to live. We do our thing in the city, however.
Finding that "interdependent community" is the hard part. My experience has been that this
endeavour is almost chance based; Serendipity if you will.
Here Down South, the churches still seem to have a stranglehold on small and mid scale social
organization. One of the big effects of 'churching' is the requirement that the individual
gave up personal critical thinking. Thus, the status quo is reinforced. One big happy 'Holy
Circlejerk.'
This is a crucial point that UBI advocates often ignore. There is a deeply entrenched
cultural bias towards associating our work status with our general status and prestige and
feelings of these standings.
That hasn't changed since Eisenberg and Lazersfeld wrote up the findings of their study
in 1938.
It might change over time but that will take a long process of re-education and cultural
shift. Trying to dump a set of new cultural values that only a small minority might
currently hold to onto a society that clearly still values work is only going to create
major social tensions.
I would agree about the entenched cultural norms, etc. But not the pessimism and timeline
for change. An individual can communicate a complex idea to millions in seconds, things move
fast these days.
For me, it seems that what we (we being UBI/radical change proponents) are lacking is a
compelling easily accessible story. Not just regarding UBI (as that is but one part of the
trully revolutionary transformations that must occur) but encompassing everything.
We have countless think pieces, bits of academic writing, books, etc that focus on
individual pieces and changes in isolation. But we've largely abandoned the all-encompassing
narrative, which at their heart is precisely what religion offers and why it can be so
seductive, successful, and resilient for so long.
The status quo has this type of story, it's not all that compelling but given the fact
that it is the status quo and has inertia and tradition on its side (along with the news
media, political, entertainment, etc) it doesn't have to be.
We need to abandon the single narrow issue activism that has become so prominent over the
years and get back to engaging with issues as unseparable and intimately interconnected.
Tinkering around the edges will do nothing, a new political religion is what is
required.
Sorry, I disagree vehemently. Deeply held cultural attitudes are very slow to change and
the study found that work being critical to happiness examined a large number of
societies.
Look at feminism. I was a half-generation after the time when women were starting to get a
shot at real jobs. IIRC, the first class that accepted women at Harvard Law School was in the
1950 and at Harvard Business School, 1965. And the number of first attendees was puny. The
1965 class at HBS had 10 8 women out of a graduating class of over 800; my class in 1981 had
only 11% women.
In the 1980s, you saw a shift from the belief that women could do what men could do to
promotion of the idea that women could/should be feminine as well as successful. This looked
like seriously mixed messages, in that IMHO the earlier tendency to de-emphasize gender roles
in the workplace looked like a positive development.
Women make less than 80% of what men do in the US. Even female doctors in the same
specialities make 80% of their male peers.
The Speenhamland in the UK had what amounted to an income guarantee from the 1790s to
1832. Most people didn't want to be on it and preferred to work. Two generations and being on
the support of local governments was still seen as carrying a stigma.
More generally, social animals have strongly ingrained tendencies to resent situations
they see as unfair. Having someone who is capable of working not work elicits resentment from
many, which is why most people don't want to be in that position. You aren't going to change
that.
And people need a sense of purpose. There are tons of cases of rich heirs falling into
drug addiction or alcoholism and despair because they have no sense of purpose in life. Work
provides that, even if it's mundane work to support a family. That is one of the great
dissservices the Democrats have done to the citizenry at large: sneering at ordinary work
when blue-collar men were the anchors of families and able to take pride in that.
Regarding the large number of societies, we often like to think we're more different than
we actually are focusing on a few glaringly obvious differences and generalizing from there.
Even going back a few hundred years when ideas travelled slower we were still (especially the
"west" though the "east" wasn't all that much more different either) quite similar. So I'm
less inclined to see the large number of societies as evidence.
Generally on societal changes and movements: The issue here is that the leadership has not
changed, they may soften some edges here or there (only to resharpen them again when we're
looking elsewhere) but their underlying ideologies are largely unchanged. A good mass of any
population will go along to survive, whether they agree or not (and we find increasing
evidence that many do not agree, though certainly that they do not agree on a single
alternative).
It may be impossible to implement such changes in who controls the levers of power in a
democratic fashion but it also may be immoral not implement such changes. Of course this is
also clearly a similar path to that walked by many a demonized (in most cases rightfully so)
dictator and despot. 'Tread carefully' are wise words to keep in mind.
Today we have a situation which reflects your example re: social animals and resentment of
unfairness: the elite (who falls into this category is of course debatable, some individuals
moreso than others). But they have intelligently, for their benefit, redirected that
resentment towards those that have little. Is there really any logical connection between not
engaging in wage labor (note: NOT equivalent to not working) and unfairness? Or is it a myth
crafted by those who currently benefit the most?
That resentment is also precisely why it is key that a Basic income be universal with no
means testing, everyone gets the same.
I think we should not extrapolate too much from the relatively small segment of the
population falling into the the inherited money category. Correlation is not causation and
all that.
It also seems that so often individuals jump to the hollywood crafted image of the
layabout stoner sitting on the couch giggling at cartoons (or something similarly negative)
when the concept of less wage labor is brought up. A reduction of wage labor does not equate
to lack of work being done, it simply means doing much of that work for different reasons and
rewards and incentives.
As I said in the Links thread today, we produce too much, we consume too much, we grow too
much. More wage labor overall as a requirement for survival is certainly not the solution to
any real problem that we face, its a massively inefficient use of resources and a massive
strain on the ecosystems.
I am really gobsmacked at the sense of entitlement on display here. Why are people
entitled to an income with no work? Being an adult means toil: cleaning up after yourself,
cleaning up after your kids if you have them, if you are subsistence farmer, tending your
crops and livestock, if you are a modern society denizen, paying your bills and your taxes on
time. The idea that people are entitled to a life of leisure is bollocks. Yet you promote
that.
Society means we have obligations to each other. That means work. In rejecting work you
reject society.
And the touting of "creativity" is a top 10% trope that Thomas Frank called out in Listen,
Liberal. It's a way of devaluing what the bottom 90% do.
My argument with the article is that, to me, it smacks of Taylorism. A follow-on study
would analyze how many hours a laborer must work before the acquired sense of purpose and
dignity and associated happiness began to decline. Would it be 30 hours a week of
backbreaking labor before dignity found itself eroded? 40? 50? 60? When does the worker
break? Just how far can we push the mule before it collapses?
The author alludes to this: "The overwhelming proportion relate their social status and
life happiness to gaining a job"
Work equals happiness. Got it.
But, as a former robotics instructor, and as one who watches the industry (and former
students), I see an automated future as damn near inevitable. Massive job displacement is
coming, life as a minimum wage burger flipper will cease, with no future employment prospects
short of government intervention (WPA and CCC for all, I say). I'm not a Luddite, obviously,
but there are going to be a lot of people, billions, worldwide, with no prospect of
employment. Saying, "You're lazy and entitled" is a bit presumptuous, Yves. Not everyone has
your ability, not everyone has my ability. When the burger flipping jobs are gone, where do
they go? When roombas mop the floors, where do the floor moppers go?
We could use a new Civilian Conservation Corps and and a Works Progress Administration.
There's lots of work that needs doing that isn't getting done by private corporations.
The outrage at non-work wealth and income would be more convincing if it were aimed also
at owners of capital. About 30% of national income is passive -- interest, rents, dividends.
Why are the owners of capital "entitled to an income with no work?" It's all about the
morality that underlies the returns to capital while sugaring over a devaluation of labor. As
a moral issue, everyone should share the returns on capital or we should tax away the
interest, rents, and dividends. If it's an economic issue, berating people for their beliefs
isn't a reason.
The overwhelming majority do work. The top 0.1% is almost entirely private equity managers
who are able to classify labor income as capital gains through the carried interest loophole.
Go look at the Forbes 400.
The 1% are mainly CEOs, plus elite professionals, like partners at top law and consulting
firms and specialty surgeons (heart, brain, oncology). The CEOs similarly should be seen as
getting labor income but have a lot of stock incentive pay (that is how they get seriously
rich) which again gets capital gains treatment.
You are mistaking clever taking advantage of the tax code for where the income actually
comes from. Even the kids of rich people are under pressure to act like entrepreneurs from
their families and peers. Look at Paris Hilton and Ivanka as examples. They both could have
sat back and enjoyed their inheritance, but both went and launched businesses. I'm not saying
the kids of the rich succeed, or would have succeed to the extent they do without parental
string-pulling, but the point is very few hand their fortune over to a money manager and go
sailing or play the cello.
What's your take on Rutger Bergman's ted talk? i think most jobs aren't real jobs at all,
like marketing and ceo's. why can't we do 20 hour work weeks so we don't have huge amounts of unemployment? Note, I was "unemployed" for years since "markets" decide not to fund science in the US.
Yay Germany At least I was fortunate enough to not be forced to work at Walmart or McDonalds
like the majority of people with absolutely no life choices. Ah the sweet coercion of
capitalism.
Your hopes for a UBI are undone by some of the real world observations I've made over many
years, with regard to how a guaranteed income increase, of any measure, for a whole
population of an area, affects prices. Shorter: income going up means prices are raised by
merchants to capture the new income.
Examples: A single industry town raises wages for all employees by 2% for the new calendar
year. Within the first 2 weeks of the new year, all stores and restaurants and service
providers in the town raise their prices by 2%. This happens every year there is a general
wage increase.
Example: Medicare part D passes and within 2 years, Pharma now having new captive
customers whose insurance will pay for drugs, raise prices higher and higher, even on generic
drugs.
A more recent example: ACA passes with no drug price ceilings. Again, as with the passage
of Medicare part D, Pharma raises drug prices to unheard of levels, even older and cheap but
life saving drugs, in the knowledge that a new, large group will have insurance that will pay
for the drugs – a new source of money.
Your assumption that any UBI would not be instantly captured by raised prices is naive, at
best. It's also naive to assume companies would continue to pay wages at the same level to
people still employed, instead of reducing wages and letting UBI fill in the rest. Some
corporations already underpay their workers, then encourage the workers to apply for food
stamps and other public supports to make up for the reduced wage.
The point of the paper is the importance of paid employment to a person's sense of well
being. I agree with the paper.
For the vast majority, a UBI would be income-neutral – it would have to be, to avoid
massive inflation. So people would receive a UBI, but pay more tax to compensate. The effect
on prices would be zero.
The advantage of a UBI is mostly felt at the lower end, where insecure/seasonal work does
now pay. At the moment, a person who went from farm labourer to Christmas work to summer
resort work in the UK would certainly be working hard, but also relentlessly hounded by the
DWP over universal credit. A UBI would make this sort of lifestyle possible.
Davidab,
Good for you, but your perspicacity is not scalable. People are social animals and your attitude toward "the herd", at least as expressed here,
is that of a predator, even if your taste doesn't run toward predation. Social solutions will necessarily be scalable or they won't be solutions for long.
> the organized herd a herd animal trapped in the herd
I don't think throwing 80% to 90% of the population into the "prey" bucket is especially
perspicacious politically (except, of course, for predators or parasites). I also don't think it's especially perspicacious morally. You write:
Not very practical advice for most, I realize, trapped in the herd as they are in car
payments and mortgages, but perhaps aspirational?
Let me translate that: "Trapped in the herd as many are to support spouses and children."
In other words, taking the cares of the world on themselves in order to care for others.
Unemployed stay at home dad here. My children are now old enough to no longer need a stay
at home dad. Things I have done: picked up two musical instruments and last year dug a
natural swimming pond by hand. Further, one would need to refute all the increased happiness
in retirement (NBER). Why social security but not UBI? I get being part of the precariat is
painful and this is a reality for most the unemployed no matter where you live in the world.
A UBI is unworkable because it will never be large enough to make people's lives
unprecarious. Having said that, I am almost positive if you gave every unemployed person 24 k
a year and health benefits, there would be a mass of non working happy creative folks.
UBI seems to me to encourage non-virtuous behavior – sloth, irresponsibility,
fecklessness, and spendthriftness. I like the Finnish model – unemployment insurance is
not limited – except if you refuse work provided by the local job center. Lots of work
is not being done all over America – we could guarantee honest work to all with some
imagination. Start with not spraying roundup and rather using human labor to control weeds
and invasive species.
I do agree that universal health insurance is necessary and sadly Obamacare is not
that.
The crux of this problem is the definition used for "non-virtuous behaviour."
A new CCC is a good place to start though. (Your Tax Dollars At Work! [For some definition of
tax dollars.])
As for BJ above, I would suppose that child rearing was his "employment" for years. good so
far, but his follow-up is untypical. The 'Empty Nester' mother is a well known meme.
Spendthriftness on 24K a year? Seriously? If we are disgorging unprofessional opinions, I will add my own: sloth and
irresponsibility are more signs of depression rather than freedom from having to work. In
fact, I believe (and I think much of the stuff here) supports the idea that people want to be
seen as useful in some way. Doesn't include me! :) .. unfortunately, I have the charmingly named "dependents" so there
you have it.
I lived 6 years as a grad student on 24k a year and would say it was easy. Only thing I
would have to had worried about was awful health insurance. A two household each with 24k
would be even easier, especially if you could do it in a low cost area. So I am not sure what
you mean by spendthrift. But again it will never happen, so we will be stuck with what we
have or most likely an even more sinister system. I guess I am advocating for a JG with
unlimited number of home makers per household.
except if you refuse work provided by the local job center
And who's to say that the local "job center" has work that would be appropriate for every
person's specific talents and interests? This is no better than saying that you should be
willing to go work for some minimum-wage retail job with unpredictable scheduling and other
forms of employer abuses after you lose a high-paying job requiring special talents. I have
to call bullshit on this model. I went through a two-year stretch if unemployment in no small
part because the vast majority of the available jobs for my skill set were associated with
the MIC, surveillance state or the parasitic FIRE sector. I was able to do this because I had
saved up enough FY money and had no debts or family to support.
I can also attest to the negative aspects of unemployment that the post describes. Its all
true and I can't really say that I'e recovered even now, 2.5 years after finding another
suitable job.
The job center in the neighbouring Sweden had the same function. Had is the important
word. My guess is that the last time someone lost their unemployment insurance payout due to
not accepting a job was in the early 1980s. Prior to that companies might, maybe, possibly
have considered hiring someone assigned to them – full employment forced companies to
accept what was offered. Companies did not like the situation and the situation has since
changed.
Now, when full employment is a thing of the past, the way to lose unemployment insurance
payouts is by not applying to enough jobs. An easily gamed system by people not wanting to
work: just apply to completely unsuitable positions and the number of applications will be
high. Many companies are therefore overwhelmed by applications and are therefore often forced
to hire more people in HR to filter out the unsuitable candidates.
People in HR tend not to know much about qualifications and or personalities for the job so
they tend to filter out too many. We're all familiar with the skills-shortage .
Next step of this is that the companies who do want to hire have to use recruitment agencies.
Basically outsourcing the HR to another company whose people are working on commission.
Recruiters sometimes know how to find 'talent', often they are the same kind of people with
the same skills and backgrounds as people working in HR.
To even get to the hiring manager a candidate has to go through two almost identical and
often meaningless interviews. Recruiter and then HR. Good for the GDP I suppose, not sure if
it is good for anything else.
But back on topic again, there is a second way of losing unemployment insurance payout:
Time. Once the period covered has passed there is no more payouts of insurance. After that it
it is time to live on savings, then sell all assets, and then once that is done finally go to
the welfare office and prove that savings are gone and all assets are sold and maybe welfare
might be paid out. People on welfare in Sweden are poor and the indignities they are being
put through are many. Forget about hobbies and forget about volunteering as the money for
either of those activities simply aren't available. Am I surprised by a report saying
unemployed in Sweden are unhappy? Nope.
meanwhile NYTimes testimonials Friday, show average family of 4 healthprofit costs
(tripled, due to trump demise ACA) to be $30,000. per year, with around $10,000. deductible
end of any semblance of affordable access, "murKa"
Where does a character like Bertie Wooster in "Jeeves" fit in your notions of virtuous
behavior? Would you consider him more virtuous working in the management of a firm,
controlling the lives and labor of others -- and humorously helped by his his brilliant
valet, Jeeves, getting him out of trouble?
For contrast -- in class and social status -- take a beer-soaked trailer trash gentleman
of leisure -- and for sake of argument blessed with less than average intelligence -- where
would you put him to work where you'd feel pleased with his product or his service? Would you
feel better about this fellow enjoying a six-pack after working 8 hours a day 5 days a week
virtuously digging and then filling a hole in the ground while carefully watched and goaded
by an overseer? [Actually -- how different is that from "using human labor to control weeds
and invasive species"? I take it you're a fan of chain-gangs and making the poor pick up
trash on the highways?]
What about some of our engineers and scientists virtuously serving the MIC? Is their
behavior virtuous because they're not guilty of sloth, irresponsibility [in executing their
work], fecklessness, and spendthriftness? On this last quality how do you feel about our
government who pay the salaries for all these jobs building better ways to kill and maim?
It is a design by David Pagan Butler. It is his plunge pool design, deepend is 14 by 8 by
7 deep. I used the dirt to make swales around some trees. Win win all around.
The answer is yes my spouse works. So I do have a schedule of waking up to make her lunch
everyday, meeting her at lunch to walk, and making dinner when she gets home, but we do all
those things on her days off so .
But again we would need to explain away, why people who are retired are happier? Just
because they think they payed into social security? Try explaining to someone on the SS dole
how the government spends money into existence and is not paid by taxes or that the
government never saved their tax money, so there are not entitled to this money.
I hated working for other people and doing what they wanted. I began to feel some
happiness when I had a half acre on which I could create my own projects. Things improved
even more when I could assure myself of some small guaranteed income by claiming Social
Security at age 62. To arise in the morning when I feel rested, with interesting projects
like gardens, fences, small buildings ahead and work at my own pace is the essence of delight
for me. I've been following your arguments against UBI for years and disagree vehemently.
I feel I would behave the same as you, if I had the chance. *But* no statements about
human beings are absolute, and because UBI would work for either of us does not mean it would
work for the majority. Nothing devised by man is perfect.
first you had to buy the half acre in a suitable location, then you had to work many years
to qualify for social security, the availability of which you paid for and feel you deserve.
You also have to buy stuff for fences gardens and small buildings. At most that rhymes with a
ubi but is significantly different in it's make up.
> when I had a half acre on which I could create my own projects
That is, when you acquired the half acre, which not everyone can do. It seems to
me there's a good deal of projecting going on with this thread from people who are, in
essence, statistical outliers. But Mitchell summarizes the literature:
So for decades, researchers in this area, as opposed to bloggers who wax lyrical on
their own opinions, have known that the importance of work in our lives goes well beyond
the income we earn.
If the solution that works for you is going to scale, that implies that millions more will
have to own land. If UBI depends on that, how does that happen? (Of course, in a
post-collapse scenario, the land might be taken , but that same scenario makes the
existence of institutions required to convey the UBI highly unlikely. )
Very glad to hear that Bill Mitchell is working on the "Future of Work" book, and to have
this post, and the links to the other segments. Thank you, Yves!
I don't agree with this statement. Never will. I'm the complete opposite. Give me more
leisure time and you'll find me painting, writing, playing instruments and doing things that
I enjoy. I recall back to when I was a student, I relished in the free time I got (believe me
University gave me a lot of free time) between lectures, meaning I could enjoy this time
pursuing creative activities. Sure I might be different than most people but I know countless
people who are the same.
My own opinion is that root problem lies in the pathology of the working mentality, that
'work' and having a 'job' is so engrained into our society and mindset that once you give
most people the time to enjoy other things, they simply can't. They don't know what to do
with themselves and they eventually become unhappy, watching daytime TV sat on the sofa.
I recall back to a conversation with my mother about my father, she said to me, 'I don't
know how your father is going to cope once he retires and has nothing to do' and it's that
very example of where work for so many people becomes so engrained in their mindset, that
they are almost scared of having 'nothing to do' as they say. It's a shame, it's this
systemic working mentality that has led to this mindset. I'm glad I'm the opposite of this
and proud by mother brought me up to be this way. Work, and job are not in my vocabulary. I
work to live, not live to work.
I agree with Andrew. I think this data on the negative effects says more about how being
employed fundamentally breaks the human psyche and turns them into chattel, incapable of
thinking for themselves and destroying their natural creativity. The more a human is molded
into a "good worker" the less they become a full fledged human being. The happiest people are
those that have never placed importance on work, that have always lived by the maxim "work to
live, not live to work". From my own experience every assertion in this article is the
opposite of reality. It is working that makes me apathethic, uncreative, and miserable. The
constant knowing that you're wasting your life, day after day, engaged in an activity merely
to build revenue streams for the rich, instead of doing things that help society or that
please you on a personal level, is what I find misery inducing.
I agree. If financial insecurity is removed from the equation -- free time can be used creatively
for self-actualization, whatever form that may take: cultivating the arts, hobbies, community
activities, worthy causes and projects. The ideology wafting from Mitchell's post smells to me like a rationale for wage slavery
(market driven living, neo-liberalism, etc.)
Besides how are people supposed to spend their time "exploring other opportunities" when
unemployed anyway? To collect unemployment which isn't exactly paying that much anyway, they
have to show they are applying to jobs. To go to the movies the example given costs money,
which one may tend to be short on when unemployed. They probably are looking for work
regardless (for the income). There may still be some free time. But they could go back to
school? Uh in case one just woke up from a rock they were under for 100 years, that costs
money, which one may tend to be short on when unemployed, plus there is no guarantee the new
career will pan out either, no guarantee someone is just chomping at the bit to hire a newly
trained 50 year old or something. I have always taken classes when unemployed, and paid for
it and it's not cheap.
Yes to use one's time wisely in unemployment in the existing system requires a kind of
deep psychological maturity that few have, a kind of Surrender To Fate, to the uncertainty of
whether one will have an income again or not (either that or a sugar daddy or a trust fund).
Because it's not easy to deal with that uncertainty. And uncertainty is the name of the game
in unemployment, that and not having an income may be the pain in it's entirety.
Sadly this breaking down into a "good worker" begins for most shortly after they begin
school. This type of education harms society in a myriad of ways including instilling a
dislike of learning, deference to authority (no matter how irrational and unjust), and a
destruction of a child's natural curiosity.
I don't buy your premise that people are "creative". The overwhelming majority do not have
creative projects they'd be pursuing if they had leisure and income. Go look at retirees,
ones that have just retired, are healthy, and have money.
You are really misconstruing what the studies have found and misapplied it to your
situation. Leisure time when you have a job or a role (being a student) is not at all the
same as having time when you are unemployed, with or without a social safety net.
Work: that can be me hiring someone to cut my yard, or another type of one-off thing
filled with precariousness.
Job: that less temporary work, but by no means permanent. Just a step up from the
precariousness of work.
Career: that is work in the same field over a long period of time and it is more likely
that someone will develop an identity through performing the work. Still precarious, but
maybe more fulfilling.
Sense of purpose: I was always under the impression that is something you have to give
yourself. If it can be taken away by someone what was the purpose?
one often has a role when unemployed: finding work. But it's not a very fulfilling one!
But if one is trying to find work, it's not exactly the absence of a role either even if it
still leaves significantly more free time than otherwise, maybe winning the lottery is the
absence of a role.
But then it's also not like we give people a UBI even for a few years (at any time in
adult life) to get an education. Only if they take out a student loan approaching the size of
a mortgage or have parents willing to pony up are they allowed that (to pay not just for the
education but to live because having a roof over one's head etc. is never free, a UBI via
debt it might be called).
> Give me more leisure time and you'll find me painting, writing, playing instruments
and doing things that I enjoy.
Nothing to breed resentment of "the creative class" here! Blowback from Speenhamland
brought on the workhouses, so be careful what you wish for.
UBI won't happen and JG has been tried (and failed).
The argument that JG would allow the public sector to hire more people is demeaning to
people already employed in the public sector and demonstrably false – people are hired
into the public sector without there being a JG. It is most certainly possible to be against
a JG while wanting more people working in the public sector.
The way forward is to have a government acting for people instead of for corporations.
Increase the amount of paid vacations, reduce the pension age and stop with the Soviet style
worship of work: While some people are apparently proud of their friends and relatives who
died while at work it is also possible to feel sad about that.
The JG was tried in Communist countries in Europe, Asia and Americas. The arguments then
and there were the same as here and now, made by the same type of social 'scientists'
(economists).
Would a JG be different here and now as the Republicans and Democrats are representing the
best interests of the people? Or are they representing the same kind of interests as the
Communist parties did?
Data, please. The USSR fell because it was spending on its military to keep up with the
US, a much larger economy. Countering your assertion we have this:
As long as people argue that "it's not fair" to fix the inequality issue and employ things
like debt jubilee or student loan forgiveness, or if we fix the ridiculous cost of health
care what will all those insurance agents do then we will wind up with the real kind of class
warfare, rather than the current punching from the top down, the punching will come from the
bottom, because the situation is not fair now, it's just TINA according to those who profit
from it. In my own life there is a balance of creativity and work, and I find work enables my
creativity by putting some pressure on my time, i.e., I get up earlier, I practice at 8:30 am
instead of sleeping til 10 and winding up with S.A..D., I go to bed rather than watch tv or
drink to excess.. in other words i have some kind of weird schedule, I have days off sort of
When I've been unemployed I feel the way s described in the article. I find the arguments in
favor of ubi tend to come from people who already have assets, or jobs, or family who they
take care of which is actually a job although uncommonly described as such. The only truth I
see in real life is that the unemployed I am intimately familiar with first are mentally
oppressed by the notion that to repair their situation will require they work every waking
hour at substandard wages for the rest of their life and that is a major barrier to getting
started, and that is a policy choice the gov't and elite classes purposefully made which
created the precariat and will be their undoing if they are unable to see this.
Interesting point. I read a science fiction story in which the protagonist arrives for
work at his full time job at 10:00 AM, and he's finished for the day at 4:00 PM. I can't
remember the name of the story or novel, unfortunately.
Agreed. And they already have it in places like Denmark. Why don't we talk about that? It
actually exists unlike utopian schemes for either total UBI or total work guarantee
(government job creation is not utopian, but imagining it will employ everyone is, and I
would like the UBI to be more widely tried, but in this country we are nowhere close). Funny
how utopia becomes more interesting to people than actual existing arrangements, even though
of course those could be improved on too.
The Danish work arrangement is less than a 40 hour week, and mothers especially often work
part-time but both sexes can. It's here in this country where work is either impossibly
grueling or you are not working. No other choice. In countries with more flexible work
arrangements more women actually work, but it's flexible and flexible for men who choose to
do the parenting as well. I'm not saying this should be for parents only of course.
My own situation is that I am unhappy in my well-paying job and would like nothing more
than to devote myself to other interests. I'm thirty years on in a relationship with someone
who grew up in bad financial circumstances and panics whenever I talk about leaving my job. I
tell her that we have 2 years of living expenses in the bank but I can't guarantee making the
same amount of money if I do leave my job. She has a job that she loves and is important and
pays barely 1/2 of my own income. So she worries about her future with me. She worries about
losing her home. I suppose that makes me the definition of a wage slave. And it makes for an
increasingly unhappy marriage. I admire those who have faced similar circumstances and found
a way through this. Sorry to vent, but this topic and the comments hit a nerve with me and
I'm still trying to figure this out.
Otis;
We are presently going through a period where that "two year cushion" has evaporated, for
various reasons. We are seeing our way through this, straight into penury and privation.
Take nothing for granted in todays' economy.
yes find the lower paying job that you like more first. If you just quit for nothing in
the hopes of finding one it might not happen. Of course unemployment also happens sometimes,
whether we want it or not.
The newer generations are worse when it comes to lifestyle. Those of that are older can at
least remember a time without cellphones internet streaming services leasing a new car every
2 years etc.
What about the young? My niece and her husband should be all set , his mom sunk money into
a home on the condition she moved into a mother in law apartment. So far so good right? 2
years in they are imploding even with the free child care she provides. Combined their
wireless bill a month is over $300. The sit on the couch side by side and stream netflix
shows to dueling iphones in front of a 65 inch tv that is not even turned on. Wearing
headphones in silence.
Both driving new vehicles , both have gym memberships they don't use . They buy lattes 3
or 4 times a day which is probably another 500 a month.
My uncle passed away recently and my niece asked if she was in the will. It was literally
her only communication on the subject. They are going under and could easily trim a few
thousand a month from the budget but simply won't. No one in the family is going to lift a
finger for them at this point they burned every possible bridge already. I have seen people
living in cars plenty lately but I think these will be the first I see to living in brand new
cars .
Somewhere along the line they got the impression that the american dream was a leased car
a starbucks in one hand and an iphone in the other .
Confront them with the concept of living within a paycheck and they react like a patient
hearing he has 3 months to live.
Yeah being poor, never mind growing up poor, just well and truly sucks and it can really
@@@@ you up. Gives people all sorts of issues. I'm rather like her, but I have had the joy of
multi-hour commutes to unexciting soul crushing work. Happy, happy, joy, joy! However don't
forget that with the current political economy things are likely to go bad in all sorts of
ways. This whole site is devoted to that. My suggestion is to keep the job unless you have
something lined up. Not being able to rent has it own stresses too. Take my word for it.
I may be engaging in semantics but I think conflating work and jobs makes this article a
bit of a mixed bag. I know plenty of people who are terribly unhappy in their jobs, but
nonetheless extract a sense of wellbeing from having a stable source of INCOME to pay their
bills (anecdotally speaking, acute stress from recent job losses is closely linked to
uncertainty about how bills are going to be paid, that's why those with a safety net of
accumulated savings report less stress than those without). Loss of status, social standing
and identity and the chronic stress borne from these become evident much later I.e. when the
unemployment is prolonged, accompanied of course by the still unresolved top-of-mind concern
of "how to pay the bills".
As such, acute stress for the recently unemployed is driven by financial/income
uncertainty (I.e. how am I going to pay the bills) whereas chronic stress from prolonged
unemployment brings into play the more identity driven aspects like loss of social standing
and status. For policy interventions to have any effects, policy makers would have to
delineate the primary drivers of stress (or lack of wellbeing as the author calls it) during
the various phases of the unemployment lifecycle. An Unemployment Insurance Fund (UIF) like
we have here in South Africa appears to address the early stages of unemployment, and the
accompanying acute stress, quite well by providing the income guarantee (for six months) that
cushions the shock of losing a job. What's still missing of course are interventions that
promote the quick return to employment for those on UIF, so maybe a middle of the road
solution between UBI and a jobs guarantee scheme is how policy makers should be framing this,
instead of the binary either/or we currently have.
Lots' of people think they're unhappy with their jobs. Let them sit unemployed for 9
months and ask them if they want that job back. The usual parade of anecdata is on display here in the comments. Mitchell's real data and
analysis in the article above still stand.
If you'd read through my comment, and not rushed through it with a view of dishing out a
flippant response, you'd have seen that nowhere do I question the validity of his data, I
merely question how the argument is presented in some areas (NC discourages unquestioning
deference to the views of experts no??). By the way, anecdotes do add to richer understanding
of a nuanced and layered topic (as this one is) so your dismissal of them in your haste to
invalidate people's observations is hardly helpful.
Yes people many not like their jobs but prefer the security of having them to not. Yes
even if the boss sexually harasses one (as we are seeing is very common). Yes even if there
is other workplace abuse. Yes even when it causes depression or PTSD (but if one stays with
such a job long term it ruins the self confidence that is one prerequisite to get another
job!). Yes even if one is in therapy because of job stress, sexual harassment or you name it.
The job allows the having health insurance, allows the therapy, allows the complaining about
the job in therapy to make it through another week.
When unemployed, the stress of worry about money may suppress the creative juices.
Speaking from experience. People may well 'keep looking for jobs' because they know ultimately they need a job with
steady income. The great experience of some freelancers notwithstanding, not all are cut out
for it.
I would love to see some more about happiness or its lack in retirement–referenced
by stay-at-home dad BJ , above.
I wonder, too, about the impact of *how* one loses one's job. Getting laid off vs fired vs
quitting vs involuntary retirement vs voluntary, etc feel very different. Speaking from
experience on that, too. I will search on these points and post anything of interest.
There are also other things that are degrading about the very process of being unemployed
not mentioned here. What about the constant rejection that it can entail? One is unemployed
and looking for work, one sends out resumes, many of them will never be answered, that's
rejection. Then if one is lucky they get interviews, many will never lead to jobs, yet more
rejection. Does the process of constant rejection itself have a negative effect on a human
being whether it's looking for jobs or dates or whatever? Isn't it learned helplessness to if
one keeps trying for something and keeps failing. Isn't that itself demoralizing entirely
independent of any doubtful innate demoralizing quality of leisure.
I am not so sure if I agree with this article. I think it really depends on whether or not
you have income to support yourself, hate or love your job, and the amount of outside
interests you have, among other things. Almost everyone I know who lives in the NYC area and
commutes into the city .doesn't like their job and finds the whole situation "soul-crushing".
Those that live in Manhattan proper are (feel) a bit better off. I for one stopped working
somewhat voluntarily last year. I write somewhat because I began to dislike my job so much
that it was interfering with my state of well being, however, if I had been allowed to work
remotely I probably would have stuck it out for another couple of years.
I am close enough to
62 that I can make do before SS kicks in although I have completely changed my lifestyle
– i.e. I've given up a materialistic lifestyle and live very frugally.
Additionally I
saved for many years once I decided to embark on this path. I do not find myself depressed at
all and the path this year has been very enriching and exciting (and scary) as I reflect on
what I want for the future. I'm pretty sure I will end up moving and buying a property so
that I can become as self sufficient as possible. Also, I probably will get a job down the
line – but if I can't get one because I am deemed too old that will be ok as well. The
biggest unknown for me is how much health insurance will cost in the future .
The article made clear that the studies included "unemployed but with income" from
government support. It is amazing the degree to which readers ignore that and want to make
the findings about "unemployed with no income".
That's because we Americans all have work=good=worthy=blessed by God while
workless=scum=worthless=accursed by God engraved into our collective soul. Our politics, our
beliefs, are just overlays to that.
Even when we agree that the whole situation just crushes people into paste, and for which
they have no defense regardless of how hard they work, how carefully they plan, or what they
do, that underlay makes use feel that this is their/our fault. Any suggestions that at least
some support can be decoupled from work, and that maybe work, and how much you earn, should
not determine their value, brings the atavistic fear of being the "undeserving poor,"
parasites and therefore reprobated scum.
So we don't hear what you are saying without extra effort because it's bypassing our
conscious thoughts.
Add my voice to those above who feel that forced labor is the bane of existence, not the
wellspring. All this study says to me is that refusing to employ someone in capitalist
society does not make them happy. It makes them outcasts.
So, I say yes to a JG, because anyone who wants work should be offered work. But at the
same time, a proper JG is not forced labor. And the only way to ensure that it is not forced
labor, is to decouple basic needs from wage slavery.
I am critical of those who distinguish between the job and the income. Of course the
income is critical to the dignity of the job. For many jobs, it is the primary source of that
dignity. The notion that all jobs should provide some intrinsic dignity unrelated to the
income, or that people whose dignity is primarily based on the income they earn rather than
the work they do are deluded, is to buy in to the propaganda of "passion" being a requirement
for your work and to really be blind to what is required to make a society function. Someone
has to change the diapers, and wipe the butts of old people. (yes, I've done both.) It
doesn't require passion and any sense of satisfaction is gone by about the second day. But if
you could make a middle class living doing it, there would be a lot fewer unhappy people in
the world.
It is well known that auto factory jobs were not perceived as good jobs until the UAW was
able to make them middle class jobs. The nature of the actual work itself hasn't changed all
that much over the years – mostly it is still very repetitive work that requires little
specialized training, even if the machine technology is much improved. Indeed, I would guess
that more intrinsic satisfaction came from bashing metal than pushing buttons on a CNC
machine, and so the jobs may even be less self-actualizing than they used to be.
The capitalist myth is that the private sector economy generates all the wealth and the
public sector is a claim on that wealth. Yet human development proves to us that this is not
true – a substantial portion of "human capital" is developed outside the paid economy,
government investment in R&D generates productivity growth, etc. And MMT demonstrates
that we do not require private sector savings to fund public investment.
We are still a ways from having the math to demonstrate that government investment in
caring and nurturing is always socially productive – first we need productivity numbers
that reflect more than just private sector "product." But I think we are moving in that
direction. Rather than prioritize a minimum wage JG of make-work, we should first simply pay
people good wages to raise their own children or look after their elderly and disabled
relatives. The MMT JG, as I understand it, would still require people to leave their kids
with others to look after them in order to perform some minimum wage task. That is just
dumb.
Maybe it's dumb, it's certainly dumb in a system like the U.S. where work is brutal and
often low paid and paid childcare is not well remunerated either. But caretakers also working
seems to work in countries with greater income equality, good job protections, flexible work
arrangements, and a decent amount of paid parental leave – yea Denmark, they think
their children should be raised by professionals, but also work-life balance is still pretty
good.
My take is that capitalism has made the benefits and malus of having a job so ingrained
into culture and so reinforced. Having a job is so closely linked to happiness because it
gives you the money needed to pursue it.
A job affords you the ability to pursue whatever goals you want within a capitalist
framework. "Everything" costs money and so having a job gives you the money to pay for those
costs and go on to fulfill your pursuit of happiness.
Analyzing whether people are happy or not under these conditions seem apparent that it is
going to lead to results heavily biased towards finding happiness through employment.
The unemployed are often living off someone else's income and feel like an undeserving
parasite. Adults are generally ingrained with the culture that they have to grow up and be
independent and be able to provide for a new family that they will start up. Becoming
unemployed is like being emasculated and infantile, the opposite of what is expected of
adults.
There's also that not having a job is increasingly being punished especially in the case
of America. American wages have stayed either largely static or have worsened, making being
unemployed that much more of a burden on family or friends. Unemployment has been demonized
by Reaganism and has become systematically punishable for the long term unemployed. If you
are unemployed for too long, you start losing government support. This compounds the frantic
rush to get out of unemployment once unemployed.
There is little luxury to enjoy while unemployed. Life while unemployed is a frustrating
and often disappointing hell of constant job applications and having many of them lead to
nothing. The people providing support often start to become less so over time and become more
convinced of laziness or some kind of lack of character or willpower or education or ability
or whatever. Any sense of systemic failure is transplanted into a sense of personal failure,
especially under neoliberalism.
I am not so sure about the case of Europe and otherwise. I am sure that the third world
often has little or no social safety nets so having work (in exploitative conditions in many
cases) is a must for survival.
Anyways, I wonder about the exact methodologies of these studies and I think they often
take the current feelings about unemployment and then attempt to extrapolate talking points
for UBI/JG from them. Yes, UBI wouldn't change culture overnight and it would take a very,
very long time for people to let down their guard and adjust if UBI is to be implemented in a
manner that would warrant trust. This article seems to understand the potential for that, but
decides against it being a significant factor due to the studies emphasizing the malus of
unemployment.
I wonder how different the results would be if there were studies that asked people how
they would feel if they were unemployed under a UBI system versus the current system. I know
a good number of young people (mostly under 30) who would love to drop out and just play
video games all day. Though the significance of such a drastic demographic shift would
probably lead to great political consequences. It would probably prove the anti-UBI crowd
right in that under a capitalist framework, the capitalists and the employed wouldn't
tolerate the unemployed and would seek to turn them into an underclass.
Personally I think a combination of UBI and JG should be pursued. JG would work better
within the current capitalist framework. I don't think it is without its pitfalls due to
similar possible issues (with the similar policy of full employment) either under
Keynesianism (e.g. Milton Friedman sees it as inefficient) or in the USSR (e.g. bullshit
jobs). There is the possibility of UBI having benefits (not having the unemployed be a burden
but a subsidized contributer to the economy) so I personally don't think it should be fully
disregarded until it is understood better. I would like it if there were better scientific
studies to expand upon the implications of UBI and better measure if it would work or not.
The upcoming studies testing an actual UBI system should help to end the debates once and for
all.
My $0.02:
I have a creative pursuit (no money) and a engineering/physical science technical career
(income!). I am proficient in and passionate about both. Over the last few years, the
technical career became tenuous due to consolidation of regional consulting firms (endemic to
this era)- wages flat to declining, higher work stress, less time off, conversation to
contact employment, etc.- which has resulted in two layoffs.
During the time of tenuous employment, my art took on a darker tone. During unemployment the
art stopped altogether.
I'm recently re-employed in a field that I'm not proficient. Both the peter principle and
imposter syndrome apply. My art has resumed, but the topics are singular about despair and
work, to the point that I feel like I'm constantly reworking the same one piece over and over
again. And the quality has plummeted too.
In some fields (e.g. engineering), being a wage slave is the only realistic option due to
the dominance of a small number of large firms. The big players crowd out independents and
free lancers, while pressuring their own employees through just-high-enough wages and
limiting time off. Engineering services is a relationship- based field, and the big boys (and
they are nearly all boys) have vastly bigger networks to draw work from than a small firm
unless that small firm has a big contact to feed them work (until they get gobbled up). The
big firms also have more areas of expertise which limits how useful a boutique firm is to a
client pool, except under very narrow circumstances. And if you are an introvert like most
engineering people, there's no way to compete with big firms and their marketing staff to
expand a network enough to compete.
In that way, consulting is a lot like art. To make a living at it you need either contacts or
a sponsor. Or an inheritance.
I would be interested to know what the definition of unemployment was for the purpose of
this study (I couldn't find it in the supplied links). If it's simply "people who don't have
a job," for example, then it would include the likes of the idle rich, retirees, wards of the
state, and so on. Binary statements like this one do make it sound like the broad definition
is the one in use:
When considering the world's population as a whole, people with a job evaluate the
quality of their lives much more favorably than those who are unemployed.
The conclusion seems at odds with results I've seen for some of those groups – for
example, I thought it was fairly well accepted that retirees who are supported by a
government plan that is sufficient for them to live on were generally at least as happy as
they had been during their working life.
If, on the other hand, the study uses a narrow definition (e.g. people who are of working
age, want a job or need one to support themselves financially, but can't find one) then the
conclusion seems a lot more reasonable. But that's a heavily loaded definition in economic
and cultural terms. In that case, the conclusion (people are happier if they have a job) only
holds true in the current prevailing model of society. It doesn't rule out the possibility of
structuring society or the economy differently in such a way that people can be non-working
and happy. The existence of one such population already (retirees) strongly suggests that
outcomes like this are possible. A UBI would be an example of just such a restructuring of
society, and therefore I don't think that this study and its result are necessarily a valid
argument against it.
Which makes a person happier -- being considered worthless by one's society or valuable?
How many studies do we need to answer that question? Apparently, a lot, because studies like
this one keep on going. The underlying assumption is that jobs make one valuable. So if you
don't have a job you're worthless. Now, who's happier on the whole, people with jobs or the
unemployed? That's surely good for a few more studies. Did you know that members of socially
devalued groups (minorities, non-heteros, and the like) have higher rates of dysfunction,
rather like the unemployed? Hmm, I wonder if there's maybe a similar principle at work. And
my solution is not to turn all the people of color white nor to change all the women to men
nor to "cure" gays. Well, maybe a few more conclusive studies of this kind will convince me
that we must all be the same, toeing the line for those whom it has pleased God to dictate
our values to us.
I am convinced that we shouldn't outlaw jobs, because I believe the tons of stories about
happy people in their jobs However, I also believe we shouldn't force everyone into jobs,
because I know tons of stories about happy people without jobs. You know, the stories that
the JG people explain away: parents caring for their children (JG -- "oh, we'll make that a
job!"), volunteers working on local planning issues (JG -- "oh, we'll make that a job, too.
In fact, we'll make everything worth doing a job. The important thing is to be able to force
people to work schedules and bosses, because otherwise, they'll all lie around doing nothing
and be miserable"), the retired (JG -- "that's not really the same, but they'd be better off
staying in a job"). And this is all before we get to those who can't really hold a job
because of disability or geography or other responsibilities.
I support the JG over the current situation, but as to what we should be working for, the
more I read the JG arguments, the more paternalistic and just plain narrow minded judgmental
they seem.
Data like that provided by Mitchell is important to demolishing the horrid "economic
anxiety" frame much beloved by liberals, especially wonkish Democrats.* It's not (a) just feelings , to be solved by scented candles or training (the liberal version of
rugged individualism) and (b) the effects are real and measurable. It's not surprising, when
you think about it, that the working class is about work .
* To put this another way, anybody who has really suffered the crawling
inwardness of anxiety, in the clinical sense, knows that it affects every aspect of one's
being. Anxiety is not something deplorables deploy as cover for less than creditable
motives.
"... By Bill Mitchell, Professor in Economics and Director of the Centre of Full Employment and Equity at the University of Newcastle, NSW, Australia. Originally published at billy blog ..."
"... The overwhelming importance of having a job for happiness is evident throughout the analysis, and holds across all of the world's regions. ..."
"... The pattern of human concerns ..."
"... The pattern of human concerns ..."
"... Journal of Happiness Studies ..."
"... The results show the differences between having a job and being unemployed are "very large indeed" on the three well-being measures (life evaluation, positive and negative affective states). ..."
"... Psychological Bulletin ..."
"... 1. "unemployment tends to make people more emotionally unstable than they were previous to unemployment". ..."
"... 2. The unemployed experience feelings of "personal threat"; "fear"; "sense of proportion is shattered"; loss of "common sense of values"; "prestige lost in own eyes and as he imagines, in the eyes of his fellow men"; "feelings of inferiority"; loss of "self-confidence" and a general loss of "morale". ..."
"... in the light of the structure of our society where the job one holds is the prime indicator of status and prestige. ..."
"... Psychological Bulletin ..."
"... Related studies found that the "unemployed become so apathetic that they rarely read anything". Other activities, such as attending movies etc were seen as being motivated by the need to "kill time" – "a minimal indication of the increased desire for such attendance". ..."
"... In spite of hopeless attempts the unemployed continually look for work, often going back again and again to their last place of work. Other writers reiterate this point. ..."
"... The non-pecuniary effects of not having a job are significant in terms of lost status, social alienation, abandonment of daily structure etc, and that has not changed much over history. ..."
"... I think what is missing from this article is the term "identity." If you meet new people, often the conversation starts with what you do for a living. Your identity, in part, is what you do. You can call yourself a plumber, a writer, a banker, a consultant, a reporter but the point is this is part of your identity. When you lose your job long term, your identity here loses one of its main anchor points. ..."
"... This is a crucial point that UBI advocates often ignore. There is a deeply entrenched cultural bias towards associating our work status with our general status and prestige and feelings of these standings. ..."
"... When unemployed, the stress of worry about money may suppress the creative juices. Speaking from experience. People may well 'keep looking for jobs' because they know ultimately they need a job with steady income. The great experience of some freelancers notwithstanding, not all are cut out for it. ..."
"... When considering the world's population as a whole, people with a job evaluate the quality of their lives much more favorably than those who are unemployed. ..."
"... Data like that provided by Mitchell is important to demolishing the horrid "economic anxiety" frame much beloved by liberals, especially wonkish Democrats.* It's not (a) just feelings , to be solved by scented candles or training (the liberal version of rugged individualism) and (b) the effects are real and measurable. It's not surprising, when you think about it, that the working class is about work . ..."
Posted on
November 21, 2017 by Yves Smith Yves here. Reader
UserFriendly sent this post with the message, "I can confirm this." I can too. And before you
try to attribute our reactions to being Americans, note that the study very clearly points out
that its finding have been confirmed in "all of the world's regions".
By Bill Mitchell, Professor in Economics and Director of the Centre of Full Employment
and Equity at the University of Newcastle, NSW, Australia. Originally published at billy blog
Here is a summary of another interesting study I read last week (published March 30, 2017)
– Happiness at Work
– from academic researchers Jan‐Emmanuel De Neve and George Ward. It explores the
relationship between happiness and labour force status, including whether an individual is
employed or not and the types of jobs they are doing. The results reinforce a long literature,
which emphatically concludes that people are devastated when they lose their jobs and do not
adapt to unemployment as its duration increases. The unemployed are miserable and remain so
even as they become entrenched in long-term unemployment. Further, they do not seem to sense
(or exploit) a freedom to release some inner sense of creativity and purpose. The overwhelming
proportion continually seek work – and relate their social status and life happiness to
gaining a job, rather than living without a job on income support. The overwhelming conclusion
is that "work makes up such an important part of our lives" and that result is robust across
different countries and cultures. Being employed leads to much higher evaluations of the
quality of life relative to being unemployed. And, nothing much has changed in this regard over
the last 80 or so years. These results were well-known in the 1930s, for example. They have a
strong bearing on the debate between income guarantees versus employment guarantees. The UBI
proponents have produced no robust literature to refute these long-held findings.
While the 'Happiness Study' notes that "the relationship between happiness and employment is
a complex and dynamic interaction that runs in both directions" the authors are
unequivocal:
The overwhelming importance of having a job for happiness is evident throughout the
analysis, and holds across all of the world's regions. When considering the world's
population as a whole, people with a job evaluate the quality of their lives much more
favorably than those who are unemployed. The importance of having a job extends far beyond
the salary attached to it, with non-pecuniary aspects of employment such as social status,
social relations, daily structure, and goals all exerting a strong influence on people's
happiness.
And, the inverse:
The importance of employment for people's subjective wellbeing shines a spotlight on the
misery and unhappiness associated with being unemployed.
There is a burgeoning literature on 'happiness', which the authors aim to contribute to.
They define happiness as "subjective well-being", which is "measured along multiple
dimensions":
life evaluation (by way of the Cantril "ladder of life"), positive and negative affect to
measure respondents' experienced positive and negative wellbeing, as well as the more
domain-specific items of job satisfaction and employee engagement. We find that these diverse
measures of subjective wellbeing correlate strongly with each other
Cantril's 'Ladder of Life Scale' (or "Cantril Ladder") is used by polling organisations to
assess well-being. It was developed by social researcher Hadley Cantril (1965) and documented
in his book The pattern of human concerns .
You can learn more about the use of the 'Cantril Ladder' HERE
.
As we read, the "Cantril Self-Anchoring Scale consists of the following":
Please imagine a ladder with steps numbered from zero at the bottom to 10 at the top. The
top of the ladder represents the best possible life for you and the bottom of the ladder
represents the worst possible life for you. On which step of the ladder would you say you
personally feel you stand at this time? (ladder-present) On which step do you think you
will stand about five years from now? (ladder-future)
[Reference: Cantril, H. (1965) The pattern of human concerns , New Brunswick,
Rutgers University Press.]
[Reference: Bjørnskov, C. (2010) 'How Comparable are the Gallup World Poll Life
Satisfaction Data?', Journal of Happiness Studies , 11 (1), 41-60.]
The Cantril scale is usually reported as values between 0 and 10.
The authors in the happiness study use poll data from 150 nations which they say "is
representative of 98% of the world's population". This survey data is available on a mostly
annual basis since 2006.
The following graph (Figure 1 from the Study) shows "the self-reported wellbeing of
individuals around the world according to whether or not they are employed."
The "bars measure the subjective wellbeing of individuals of working age" by employment
status .
The results show the differences between having a job and being unemployed are "very large
indeed" on the three well-being measures (life evaluation, positive and negative affective
states).
People employed "evaluate the quality of their lives around 0.6 points higher on average as
compared to the unemployed on a scale from 0 to 10."
The authors also conduct more sophisticated (and searching) statistical analysis
(multivariate regression) which control for a range of characteristics (gender, age, education,
marital status, composition of household) as well as to "account for the many political,
economic, and cultural differences between countries as well as year-to-year variation".
The conclusion they reach is simple:
the unemployed evaluate the overall state of their lives less highly on the Cantril ladder
and experience more negative emotions in their day-to-day lives as well as fewer positive
ones. These are among the most widely accepted and replicated findings in the science of
happiness Here, income is being held constant along with a number of other relevant
covariates, showing that these unemployment effects go well beyond the income loss associated
with losing one's job.
These results are not surprising. The earliest study of this sort of outcome was from the famous study published by Philip
Eisenberg and Paul Lazersfeld in 1938. [Reference: Eisenberg, P. and Lazarsfeld, P. (1938) 'The psychological effects of
unemployment', Psychological Bulletin , 35(6), 358-390.]
They explore four dimensions of unemployment:
I. The Effects of Unemployment on Personality.
II. Socio-Political Attitudes Affected by Unemployment.
III. Differing Attitudes Produced by Unemployment and Related Factors.
IV. The Effects of Unemployment on Children and Youth.
On the first dimension, they conclude that:
1. "unemployment tends to make people more emotionally unstable than they were previous to
unemployment".
2. The unemployed experience feelings of "personal threat"; "fear"; "sense of proportion is
shattered"; loss of "common sense of values"; "prestige lost in own eyes and as he imagines, in
the eyes of his fellow men"; "feelings of inferiority"; loss of "self-confidence" and a general
loss of "morale".
Devastation, in other words. They were not surprised because they note that:
in the light of the structure of our society where the job one holds is the prime
indicator of status and prestige.
This is a crucial point that UBI advocates often ignore. There is a deeply entrenched
cultural bias towards associating our work status with our general status and prestige and
feelings of these standings. That hasn't changed since Eisenberg and Lazersfeld wrote up the findings of their study in
1938.
It might change over time but that will take a long process of re-education and cultural
shift. Trying to dump a set of new cultural values that only a small minority might currently
hold to onto a society that clearly still values work is only going to create major social
tensions. Eisenberg and Lazarsfeld also considered an earlier 1937 study by Cantril who explored
whether "the unemployed tend to evolve more imaginative schemes than the employed".
[Reference: Cantril, H. (1934) 'The Social Psychology of Everyday Life', Psychological
Bulletin , 31, 297-330.]
The proposition was (is) that once unemployed, do people then explore new options that were
not possible while working, which deliver them with the satisfaction that they lose when they
become jobless. The specific question asked in the research was: "Have there been any changes of interests
and habits among the unemployed?" Related studies found that the "unemployed become so apathetic that they rarely read
anything". Other activities, such as attending movies etc were seen as being motivated by the
need to "kill time" – "a minimal indication of the increased desire for such
attendance".
On the third dimension, Eisenberg and Lazersfeld examine the questions – "Are there
unemployed who don't want to work? Is the relief situation likely to increase this number?",
which are still a central issue today – the bludger being subsidized by income
support.
They concluded that:
the number is few. In spite of hopeless attempts the unemployed continually look for work,
often going back again and again to their last place of work. Other writers reiterate this
point.
So for decades, researchers in this area, as opposed to bloggers who wax lyrical on their
own opinions, have known that the importance of work in our lives goes well beyond the income
we earn. The non-pecuniary effects of not having a job are significant in terms of lost status,
social alienation, abandonment of daily structure etc, and that has not changed much over
history. The happiness paper did explore "how short-lived is the misery associated with being out of
work" in the current cultural settings.
The proposition examined was that:
If the pain is only fleeting and people quickly get used to being unemployed, then we
might see joblessness as less of a key public policy priority in terms of happiness.
They conclude that:
a number of studies have demonstrated that people do not adapt much, if at all, to being
unemployed there is a large initial shock to becoming unemployed, and then as people stay
unemployed over time their levels of life satisfaction remain low . several studies have
shown that even once a person becomes re-employed, the prior experience of unemployment
leaves a mark on his or her happiness.
So there is no sudden or even medium-term realisation that being jobless endows the
individual with a new sense of freedom to become their creative selves, freed from the yoke of
work. To bloom into musicians, artists, or whatever.
The reality is that there is an on-going malaise – a deeply entrenched sense of
failure is overwhelming, which stifles happiness and creativity, even after the individual is
able to return to work.
This negativity, borne heavily by the individual, however, also impacts on society in
general.
The paper recognises that:
A further canonical finding in the literature on unemployment and subjective wellbeing is
that there are so-called "spillover" effects.
High levels of unemployment "increase fear and heighten the sense of job insecurity". Who
will lose their job next type questions?
The researchers found in their data that the higher is the unemployment rate the greater the
anxiety among those who remain employed.
Conclusion
The overwhelming conclusion is that "work makes up such an important part of our lives" and
that result is robust across different countries and cultures.
Being employed leads to much higher evaluations of the quality of life relative to being
unemployed.
The unemployed are miserable and remain so even as they become entrenched in long-term
unemployment. They do not seem to sense (or exploit) a freedom to release some inner sense of
creativity and purpose.
The overwhelming proportion continually seek work – and relate their social status and
life happiness to gaining a job, rather than living without a job on income support.
Modern Monetary Theory (MMT) allows us to understand that it is the government that chooses
the unemployment rate – it is a political choice.
For currency-issuing governments it means their deficits are too low relative to the
spending and saving decisions of the non-government sector.
For Eurozone-type nations, it means that in surrendering their currencies and adopting a
foreign currency, they are unable to guarantee sufficient work in the face of negative shifts
in non-government spending. Again, a political choice.
The Job
Guarantee can be used as a vehicle to not only ensure their are sufficient jobs available
at all times but also to start a process of wiping out the worst jobs in the non-government
sector.
That can be done by using the JG wage to ensure low-paid private employers have to
restructure their workplaces and pay higher wages and achieve higher productivity in order to
attract labour from the Job Guarantee pool.
The Series So Far
This is a further part of a series I am writing as background to my next book with Joan
Muysken analysing the Future of Work . More instalments will come as the research
process unfolds.
The blogs in these series should be considered working notes rather than self-contained
topics. Ultimately, they will be edited into the final manuscript of my next book due in 2018.
The book will likely be published by Edward Elgar (UK).
Perhaps I'm utterly depressed but I haven't had a job job for over 5 years. Plenty of
work, however, more than I can handle and it requires priorisation. But I am deliberately not part of the organized herd. I stay away from big cities –
it's scary how managed the herd is in large groups – and I suppose that unemployment
for a herd animal is rather distressing as it is effectively being kicked out of the
herd.
Anyway my advice, worth what you pay for it but let he who has ears, etc. – is to go
local, very local, grow your own food, be part of a community, manage your own work, and
renounce the energy feast herd dynamics. "Unemployment", like "recession", is a mechanism of
control. Not very practical advice for most, I realize, trapped in the herd as they are in
car payments and mortgages, but perhaps aspirational?
I think what is missing from this article is the term "identity." If you meet new people,
often the conversation starts with what you do for a living. Your identity, in part, is what
you do. You can call yourself a plumber, a writer, a banker, a consultant, a reporter but the
point is this is part of your identity. When you lose your job long term, your identity here
loses one of its main anchor points.
Worse, there is a deliberate stigma attached with being long term unemployed. In that article
you have seen the word bludger being used. In parts of the US I have read of the shame of
'living off the county'. And yes, I have been there, seen that, and got the t-shirt. It's
going to be interesting as mechanization and computers turn large portions of the population
from workers to 'gig' workers. Expect mass demoralization.
yes the lives many of us have lived, no longer exist though we appear not notice, as we
"can" live in many of same "ways" ..rather well known psychologist defined some 40 years ago, best to "drop through
cracks"
Well, you also lose money, maybe you become homeless etc. as you have nowhere else to turn
(if there are kids involved to support it gets even scarier though there are some programs).
Or maybe you become dependent on another person(s) to support you which is of course
degrading as you know you must rely on them to live, whether it's a spouse or lover when you
want to work and bring in money, or mom and dads basement, or the kindest friend ever who
lets you sleep on their couch. I mean these are the things that really matter.
Privileged people whose main worry in unemployment would be losing identity, wow out of
touch much? Who cares about some identity for parties, but the ability to have a stable
decent life (gig work hardly counts) is what is needed.
I normally wouldn't comment like this, but you have brought up some extremely important
points about identity that I would like to address.
Recently I had the most intense mushroom experience of my entire life–so intense
that my identity had been completely stripped and I was left in a formless state, at the
level of seeing my bare, unvarnished animal neural circuitry in operation. Suddenly with a
flash of inspiration I realized that the identity of everyone, all of us, is inextricably
tied up in what we do and what we do for other people.
Following from that, I understood that if we passively rely on others for survival,
whether it be relying on friends, family, or government, then we do not have an identity or
reason for existing. And the inner self, the animal core of who we are, will realise this
lack of identity (even if the concious mind denies it), and will continually generate
feelings of profound depression and intense nihilism that will inevitably destroy us if the
root cause is not addressed.
Before this experience I was somewhat ambivalent about my politics, but immediately after
I knew that the political right was correct on everything important, from attitudes on sex to
economic philosophy. People need a core of cultural stability and hard work to grow and
become actualized. The alternative is rudderless dissatisfaction and envy that leads
nowhere.
On the topic of giving "out of kindnes and goodwill", giving without demanding anything in
return is a form of abuse, as it deprives those who receive our feel-good generosity the
motivation to form a coherent identity. If the parents of a basement-dweller were truly good
people, instead of supporting said dweller they'd drag her out by the ear and make her grow
food in the yard or some such. Likewise, those who have supported you without also giving
concrete demands and expecations in return have been unkind, and for your own good I hope
that you will immediately remove yourself from their support. On the other hand, if you have
been thoughtlessly giving because it warms the cockles of your heart, then stop it now. You
are ruining other people this way, and if your voting habits are informed by this kind of
malevolence I'd encourage you to change those as well.
Anyway the original poster is right about everything. Working and having a purpose in life
is an entirely different animal from making money and being "successful" in the
government-sponsored commercial economy. Society and government deliberately try to conflate
the two for various reasons, primarily graft of labor and genius, but that is only a
deliberate mis-framing that needlessly harms people when the mainstream economic system is in
catastrophic decline, as ours is today. You should try to clear up this misconception within
yourself as a way of getting better.
Well, I hope this message can give you a few different thoughts and help you find your way
out of the existential angst you're caught in. Don't wallow in helplessness. Think of
something useful to do, anything, whether it earns you money or not, and go out and start
doing it. You'll be surprised at how much better you feel about yourself in no time.
The problem is you said – I – had an extreme experience [burning bush], the
truth was reviled to – I – and I alone during this extreme chemically altered
state. Which by the way just happens to conform to a heap of environmental biases I
collected. This is why sound methodology demands peer review. disheveled some people think Mister Toads Wild ride at Disneyland on psychotropics is an
excellent adventure too.
I think your observation about the importance of work to identity is most perceptive. This
post makes too little distinction between work and a job and glosses over the place of work
in defining who we are to ourselves and to others. I recall the scene in the movie "About a
Boy" when the hero meets someone he cares about and she asks him what he does for a
living.
I believe there's another aspect of work -- related to identity -- missing in the analysis
of this post. Work can offer a sense of mission -- of acting as part of an effort toward a
larger goal no individual could achieve alone. However you may regard the value in putting
man on the moon there is no mistaking the sense of mission deeply felt by the engineers and
technicians working on the project. What jobs today can claim service to a mission someone
might value?
Agreed on your points. Wage slavery is nothing to aspire to. Self-determination within a
context of an interdependent community is a much better way to live. We do our thing in the city, however.
Finding that "interdependent community" is the hard part. My experience has been that this
endeavour is almost chance based; Serendipity if you will.
Here Down South, the churches still seem to have a stranglehold on small and mid scale social
organization. One of the big effects of 'churching' is the requirement that the individual
gave up personal critical thinking. Thus, the status quo is reinforced. One big happy 'Holy
Circlejerk.'
This is a crucial point that UBI advocates often ignore. There is a deeply entrenched
cultural bias towards associating our work status with our general status and prestige and
feelings of these standings.
That hasn't changed since Eisenberg and Lazersfeld wrote up the findings of their study
in 1938.
It might change over time but that will take a long process of re-education and cultural
shift. Trying to dump a set of new cultural values that only a small minority might
currently hold to onto a society that clearly still values work is only going to create
major social tensions.
I would agree about the entenched cultural norms, etc. But not the pessimism and timeline
for change. An individual can communicate a complex idea to millions in seconds, things move
fast these days.
For me, it seems that what we (we being UBI/radical change proponents) are lacking is a
compelling easily accessible story. Not just regarding UBI (as that is but one part of the
trully revolutionary transformations that must occur) but encompassing everything.
We have countless think pieces, bits of academic writing, books, etc that focus on
individual pieces and changes in isolation. But we've largely abandoned the all-encompassing
narrative, which at their heart is precisely what religion offers and why it can be so
seductive, successful, and resilient for so long.
The status quo has this type of story, it's not all that compelling but given the fact
that it is the status quo and has inertia and tradition on its side (along with the news
media, political, entertainment, etc) it doesn't have to be.
We need to abandon the single narrow issue activism that has become so prominent over the
years and get back to engaging with issues as unseparable and intimately interconnected.
Tinkering around the edges will do nothing, a new political religion is what is
required.
Sorry, I disagree vehemently. Deeply held cultural attitudes are very slow to change and
the study found that work being critical to happiness examined a large number of
societies.
Look at feminism. I was a half-generation after the time when women were starting to get a
shot at real jobs. IIRC, the first class that accepted women at Harvard Law School was in the
1950 and at Harvard Business School, 1965. And the number of first attendees was puny. The
1965 class at HBS had 10 8 women out of a graduating class of over 800; my class in 1981 had
only 11% women.
In the 1980s, you saw a shift from the belief that women could do what men could do to
promotion of the idea that women could/should be feminine as well as successful. This looked
like seriously mixed messages, in that IMHO the earlier tendency to de-emphasize gender roles
in the workplace looked like a positive development.
Women make less than 80% of what men do in the US. Even female doctors in the same
specialities make 80% of their male peers.
The Speenhamland in the UK had what amounted to an income guarantee from the 1790s to
1832. Most people didn't want to be on it and preferred to work. Two generations and being on
the support of local governments was still seen as carrying a stigma.
More generally, social animals have strongly ingrained tendencies to resent situations
they see as unfair. Having someone who is capable of working not work elicits resentment from
many, which is why most people don't want to be in that position. You aren't going to change
that.
And people need a sense of purpose. There are tons of cases of rich heirs falling into
drug addiction or alcoholism and despair because they have no sense of purpose in life. Work
provides that, even if it's mundane work to support a family. That is one of the great
dissservices the Democrats have done to the citizenry at large: sneering at ordinary work
when blue-collar men were the anchors of families and able to take pride in that.
Regarding the large number of societies, we often like to think we're more different than
we actually are focusing on a few glaringly obvious differences and generalizing from there.
Even going back a few hundred years when ideas travelled slower we were still (especially the
"west" though the "east" wasn't all that much more different either) quite similar. So I'm
less inclined to see the large number of societies as evidence.
Generally on societal changes and movements: The issue here is that the leadership has not
changed, they may soften some edges here or there (only to resharpen them again when we're
looking elsewhere) but their underlying ideologies are largely unchanged. A good mass of any
population will go along to survive, whether they agree or not (and we find increasing
evidence that many do not agree, though certainly that they do not agree on a single
alternative).
It may be impossible to implement such changes in who controls the levers of power in a
democratic fashion but it also may be immoral not implement such changes. Of course this is
also clearly a similar path to that walked by many a demonized (in most cases rightfully so)
dictator and despot. 'Tread carefully' are wise words to keep in mind.
Today we have a situation which reflects your example re: social animals and resentment of
unfairness: the elite (who falls into this category is of course debatable, some individuals
moreso than others). But they have intelligently, for their benefit, redirected that
resentment towards those that have little. Is there really any logical connection between not
engaging in wage labor (note: NOT equivalent to not working) and unfairness? Or is it a myth
crafted by those who currently benefit the most?
That resentment is also precisely why it is key that a Basic income be universal with no
means testing, everyone gets the same.
I think we should not extrapolate too much from the relatively small segment of the
population falling into the the inherited money category. Correlation is not causation and
all that.
It also seems that so often individuals jump to the hollywood crafted image of the
layabout stoner sitting on the couch giggling at cartoons (or something similarly negative)
when the concept of less wage labor is brought up. A reduction of wage labor does not equate
to lack of work being done, it simply means doing much of that work for different reasons and
rewards and incentives.
As I said in the Links thread today, we produce too much, we consume too much, we grow too
much. More wage labor overall as a requirement for survival is certainly not the solution to
any real problem that we face, its a massively inefficient use of resources and a massive
strain on the ecosystems.
I am really gobsmacked at the sense of entitlement on display here. Why are people
entitled to an income with no work? Being an adult means toil: cleaning up after yourself,
cleaning up after your kids if you have them, if you are subsistence farmer, tending your
crops and livestock, if you are a modern society denizen, paying your bills and your taxes on
time. The idea that people are entitled to a life of leisure is bollocks. Yet you promote
that.
Society means we have obligations to each other. That means work. In rejecting work you
reject society.
And the touting of "creativity" is a top 10% trope that Thomas Frank called out in Listen,
Liberal. It's a way of devaluing what the bottom 90% do.
My argument with the article is that, to me, it smacks of Taylorism. A follow-on study
would analyze how many hours a laborer must work before the acquired sense of purpose and
dignity and associated happiness began to decline. Would it be 30 hours a week of
backbreaking labor before dignity found itself eroded? 40? 50? 60? When does the worker
break? Just how far can we push the mule before it collapses?
The author alludes to this: "The overwhelming proportion relate their social status and
life happiness to gaining a job"
Work equals happiness. Got it.
But, as a former robotics instructor, and as one who watches the industry (and former
students), I see an automated future as damn near inevitable. Massive job displacement is
coming, life as a minimum wage burger flipper will cease, with no future employment prospects
short of government intervention (WPA and CCC for all, I say). I'm not a Luddite, obviously,
but there are going to be a lot of people, billions, worldwide, with no prospect of
employment. Saying, "You're lazy and entitled" is a bit presumptuous, Yves. Not everyone has
your ability, not everyone has my ability. When the burger flipping jobs are gone, where do
they go? When roombas mop the floors, where do the floor moppers go?
We could use a new Civilian Conservation Corps and and a Works Progress Administration.
There's lots of work that needs doing that isn't getting done by private corporations.
The outrage at non-work wealth and income would be more convincing if it were aimed also
at owners of capital. About 30% of national income is passive -- interest, rents, dividends.
Why are the owners of capital "entitled to an income with no work?" It's all about the
morality that underlies the returns to capital while sugaring over a devaluation of labor. As
a moral issue, everyone should share the returns on capital or we should tax away the
interest, rents, and dividends. If it's an economic issue, berating people for their beliefs
isn't a reason.
The overwhelming majority do work. The top 0.1% is almost entirely private equity managers
who are able to classify labor income as capital gains through the carried interest loophole.
Go look at the Forbes 400.
The 1% are mainly CEOs, plus elite professionals, like partners at top law and consulting
firms and specialty surgeons (heart, brain, oncology). The CEOs similarly should be seen as
getting labor income but have a lot of stock incentive pay (that is how they get seriously
rich) which again gets capital gains treatment.
You are mistaking clever taking advantage of the tax code for where the income actually
comes from. Even the kids of rich people are under pressure to act like entrepreneurs from
their families and peers. Look at Paris Hilton and Ivanka as examples. They both could have
sat back and enjoyed their inheritance, but both went and launched businesses. I'm not saying
the kids of the rich succeed, or would have succeed to the extent they do without parental
string-pulling, but the point is very few hand their fortune over to a money manager and go
sailing or play the cello.
What's your take on Rutger Bergman's ted talk? i think most jobs aren't real jobs at all,
like marketing and ceo's. why can't we do 20 hour work weeks so we don't have huge amounts of unemployment? Note, I was "unemployed" for years since "markets" decide not to fund science in the US.
Yay Germany At least I was fortunate enough to not be forced to work at Walmart or McDonalds
like the majority of people with absolutely no life choices. Ah the sweet coercion of
capitalism.
Your hopes for a UBI are undone by some of the real world observations I've made over many
years, with regard to how a guaranteed income increase, of any measure, for a whole
population of an area, affects prices. Shorter: income going up means prices are raised by
merchants to capture the new income.
Examples: A single industry town raises wages for all employees by 2% for the new calendar
year. Within the first 2 weeks of the new year, all stores and restaurants and service
providers in the town raise their prices by 2%. This happens every year there is a general
wage increase.
Example: Medicare part D passes and within 2 years, Pharma now having new captive
customers whose insurance will pay for drugs, raise prices higher and higher, even on generic
drugs.
A more recent example: ACA passes with no drug price ceilings. Again, as with the passage
of Medicare part D, Pharma raises drug prices to unheard of levels, even older and cheap but
life saving drugs, in the knowledge that a new, large group will have insurance that will pay
for the drugs – a new source of money.
Your assumption that any UBI would not be instantly captured by raised prices is naive, at
best. It's also naive to assume companies would continue to pay wages at the same level to
people still employed, instead of reducing wages and letting UBI fill in the rest. Some
corporations already underpay their workers, then encourage the workers to apply for food
stamps and other public supports to make up for the reduced wage.
The point of the paper is the importance of paid employment to a person's sense of well
being. I agree with the paper.
For the vast majority, a UBI would be income-neutral – it would have to be, to avoid
massive inflation. So people would receive a UBI, but pay more tax to compensate. The effect
on prices would be zero.
The advantage of a UBI is mostly felt at the lower end, where insecure/seasonal work does
now pay. At the moment, a person who went from farm labourer to Christmas work to summer
resort work in the UK would certainly be working hard, but also relentlessly hounded by the
DWP over universal credit. A UBI would make this sort of lifestyle possible.
Davidab,
Good for you, but your perspicacity is not scalable. People are social animals and your attitude toward "the herd", at least as expressed here,
is that of a predator, even if your taste doesn't run toward predation. Social solutions will necessarily be scalable or they won't be solutions for long.
> the organized herd a herd animal trapped in the herd
I don't think throwing 80% to 90% of the population into the "prey" bucket is especially
perspicacious politically (except, of course, for predators or parasites). I also don't think it's especially perspicacious morally. You write:
Not very practical advice for most, I realize, trapped in the herd as they are in car
payments and mortgages, but perhaps aspirational?
Let me translate that: "Trapped in the herd as many are to support spouses and children."
In other words, taking the cares of the world on themselves in order to care for others.
Unemployed stay at home dad here. My children are now old enough to no longer need a stay
at home dad. Things I have done: picked up two musical instruments and last year dug a
natural swimming pond by hand. Further, one would need to refute all the increased happiness
in retirement (NBER). Why social security but not UBI? I get being part of the precariat is
painful and this is a reality for most the unemployed no matter where you live in the world.
A UBI is unworkable because it will never be large enough to make people's lives
unprecarious. Having said that, I am almost positive if you gave every unemployed person 24 k
a year and health benefits, there would be a mass of non working happy creative folks.
UBI seems to me to encourage non-virtuous behavior – sloth, irresponsibility,
fecklessness, and spendthriftness. I like the Finnish model – unemployment insurance is
not limited – except if you refuse work provided by the local job center. Lots of work
is not being done all over America – we could guarantee honest work to all with some
imagination. Start with not spraying roundup and rather using human labor to control weeds
and invasive species.
I do agree that universal health insurance is necessary and sadly Obamacare is not
that.
The crux of this problem is the definition used for "non-virtuous behaviour."
A new CCC is a good place to start though. (Your Tax Dollars At Work! [For some definition of
tax dollars.])
As for BJ above, I would suppose that child rearing was his "employment" for years. good so
far, but his follow-up is untypical. The 'Empty Nester' mother is a well known meme.
Spendthriftness on 24K a year? Seriously? If we are disgorging unprofessional opinions, I will add my own: sloth and
irresponsibility are more signs of depression rather than freedom from having to work. In
fact, I believe (and I think much of the stuff here) supports the idea that people want to be
seen as useful in some way. Doesn't include me! :) .. unfortunately, I have the charmingly named "dependents" so there
you have it.
I lived 6 years as a grad student on 24k a year and would say it was easy. Only thing I
would have to had worried about was awful health insurance. A two household each with 24k
would be even easier, especially if you could do it in a low cost area. So I am not sure what
you mean by spendthrift. But again it will never happen, so we will be stuck with what we
have or most likely an even more sinister system. I guess I am advocating for a JG with
unlimited number of home makers per household.
except if you refuse work provided by the local job center
And who's to say that the local "job center" has work that would be appropriate for every
person's specific talents and interests? This is no better than saying that you should be
willing to go work for some minimum-wage retail job with unpredictable scheduling and other
forms of employer abuses after you lose a high-paying job requiring special talents. I have
to call bullshit on this model. I went through a two-year stretch if unemployment in no small
part because the vast majority of the available jobs for my skill set were associated with
the MIC, surveillance state or the parasitic FIRE sector. I was able to do this because I had
saved up enough FY money and had no debts or family to support.
I can also attest to the negative aspects of unemployment that the post describes. Its all
true and I can't really say that I'e recovered even now, 2.5 years after finding another
suitable job.
The job center in the neighbouring Sweden had the same function. Had is the important
word. My guess is that the last time someone lost their unemployment insurance payout due to
not accepting a job was in the early 1980s. Prior to that companies might, maybe, possibly
have considered hiring someone assigned to them – full employment forced companies to
accept what was offered. Companies did not like the situation and the situation has since
changed.
Now, when full employment is a thing of the past, the way to lose unemployment insurance
payouts is by not applying to enough jobs. An easily gamed system by people not wanting to
work: just apply to completely unsuitable positions and the number of applications will be
high. Many companies are therefore overwhelmed by applications and are therefore often forced
to hire more people in HR to filter out the unsuitable candidates.
People in HR tend not to know much about qualifications and or personalities for the job so
they tend to filter out too many. We're all familiar with the skills-shortage .
Next step of this is that the companies who do want to hire have to use recruitment agencies.
Basically outsourcing the HR to another company whose people are working on commission.
Recruiters sometimes know how to find 'talent', often they are the same kind of people with
the same skills and backgrounds as people working in HR.
To even get to the hiring manager a candidate has to go through two almost identical and
often meaningless interviews. Recruiter and then HR. Good for the GDP I suppose, not sure if
it is good for anything else.
But back on topic again, there is a second way of losing unemployment insurance payout:
Time. Once the period covered has passed there is no more payouts of insurance. After that it
it is time to live on savings, then sell all assets, and then once that is done finally go to
the welfare office and prove that savings are gone and all assets are sold and maybe welfare
might be paid out. People on welfare in Sweden are poor and the indignities they are being
put through are many. Forget about hobbies and forget about volunteering as the money for
either of those activities simply aren't available. Am I surprised by a report saying
unemployed in Sweden are unhappy? Nope.
meanwhile NYTimes testimonials Friday, show average family of 4 healthprofit costs
(tripled, due to trump demise ACA) to be $30,000. per year, with around $10,000. deductible
end of any semblance of affordable access, "murKa"
Where does a character like Bertie Wooster in "Jeeves" fit in your notions of virtuous
behavior? Would you consider him more virtuous working in the management of a firm,
controlling the lives and labor of others -- and humorously helped by his his brilliant
valet, Jeeves, getting him out of trouble?
For contrast -- in class and social status -- take a beer-soaked trailer trash gentleman
of leisure -- and for sake of argument blessed with less than average intelligence -- where
would you put him to work where you'd feel pleased with his product or his service? Would you
feel better about this fellow enjoying a six-pack after working 8 hours a day 5 days a week
virtuously digging and then filling a hole in the ground while carefully watched and goaded
by an overseer? [Actually -- how different is that from "using human labor to control weeds
and invasive species"? I take it you're a fan of chain-gangs and making the poor pick up
trash on the highways?]
What about some of our engineers and scientists virtuously serving the MIC? Is their
behavior virtuous because they're not guilty of sloth, irresponsibility [in executing their
work], fecklessness, and spendthriftness? On this last quality how do you feel about our
government who pay the salaries for all these jobs building better ways to kill and maim?
It is a design by David Pagan Butler. It is his plunge pool design, deepend is 14 by 8 by
7 deep. I used the dirt to make swales around some trees. Win win all around.
The answer is yes my spouse works. So I do have a schedule of waking up to make her lunch
everyday, meeting her at lunch to walk, and making dinner when she gets home, but we do all
those things on her days off so .
But again we would need to explain away, why people who are retired are happier? Just
because they think they payed into social security? Try explaining to someone on the SS dole
how the government spends money into existence and is not paid by taxes or that the
government never saved their tax money, so there are not entitled to this money.
I hated working for other people and doing what they wanted. I began to feel some
happiness when I had a half acre on which I could create my own projects. Things improved
even more when I could assure myself of some small guaranteed income by claiming Social
Security at age 62. To arise in the morning when I feel rested, with interesting projects
like gardens, fences, small buildings ahead and work at my own pace is the essence of delight
for me. I've been following your arguments against UBI for years and disagree vehemently.
I feel I would behave the same as you, if I had the chance. *But* no statements about
human beings are absolute, and because UBI would work for either of us does not mean it would
work for the majority. Nothing devised by man is perfect.
first you had to buy the half acre in a suitable location, then you had to work many years
to qualify for social security, the availability of which you paid for and feel you deserve.
You also have to buy stuff for fences gardens and small buildings. At most that rhymes with a
ubi but is significantly different in it's make up.
> when I had a half acre on which I could create my own projects
That is, when you acquired the half acre, which not everyone can do. It seems to
me there's a good deal of projecting going on with this thread from people who are, in
essence, statistical outliers. But Mitchell summarizes the literature:
So for decades, researchers in this area, as opposed to bloggers who wax lyrical on
their own opinions, have known that the importance of work in our lives goes well beyond
the income we earn.
If the solution that works for you is going to scale, that implies that millions more will
have to own land. If UBI depends on that, how does that happen? (Of course, in a
post-collapse scenario, the land might be taken , but that same scenario makes the
existence of institutions required to convey the UBI highly unlikely. )
Very glad to hear that Bill Mitchell is working on the "Future of Work" book, and to have
this post, and the links to the other segments. Thank you, Yves!
I don't agree with this statement. Never will. I'm the complete opposite. Give me more
leisure time and you'll find me painting, writing, playing instruments and doing things that
I enjoy. I recall back to when I was a student, I relished in the free time I got (believe me
University gave me a lot of free time) between lectures, meaning I could enjoy this time
pursuing creative activities. Sure I might be different than most people but I know countless
people who are the same.
My own opinion is that root problem lies in the pathology of the working mentality, that
'work' and having a 'job' is so engrained into our society and mindset that once you give
most people the time to enjoy other things, they simply can't. They don't know what to do
with themselves and they eventually become unhappy, watching daytime TV sat on the sofa.
I recall back to a conversation with my mother about my father, she said to me, 'I don't
know how your father is going to cope once he retires and has nothing to do' and it's that
very example of where work for so many people becomes so engrained in their mindset, that
they are almost scared of having 'nothing to do' as they say. It's a shame, it's this
systemic working mentality that has led to this mindset. I'm glad I'm the opposite of this
and proud by mother brought me up to be this way. Work, and job are not in my vocabulary. I
work to live, not live to work.
I agree with Andrew. I think this data on the negative effects says more about how being
employed fundamentally breaks the human psyche and turns them into chattel, incapable of
thinking for themselves and destroying their natural creativity. The more a human is molded
into a "good worker" the less they become a full fledged human being. The happiest people are
those that have never placed importance on work, that have always lived by the maxim "work to
live, not live to work". From my own experience every assertion in this article is the
opposite of reality. It is working that makes me apathethic, uncreative, and miserable. The
constant knowing that you're wasting your life, day after day, engaged in an activity merely
to build revenue streams for the rich, instead of doing things that help society or that
please you on a personal level, is what I find misery inducing.
I agree. If financial insecurity is removed from the equation -- free time can be used creatively
for self-actualization, whatever form that may take: cultivating the arts, hobbies, community
activities, worthy causes and projects. The ideology wafting from Mitchell's post smells to me like a rationale for wage slavery
(market driven living, neo-liberalism, etc.)
Besides how are people supposed to spend their time "exploring other opportunities" when
unemployed anyway? To collect unemployment which isn't exactly paying that much anyway, they
have to show they are applying to jobs. To go to the movies the example given costs money,
which one may tend to be short on when unemployed. They probably are looking for work
regardless (for the income). There may still be some free time. But they could go back to
school? Uh in case one just woke up from a rock they were under for 100 years, that costs
money, which one may tend to be short on when unemployed, plus there is no guarantee the new
career will pan out either, no guarantee someone is just chomping at the bit to hire a newly
trained 50 year old or something. I have always taken classes when unemployed, and paid for
it and it's not cheap.
Yes to use one's time wisely in unemployment in the existing system requires a kind of
deep psychological maturity that few have, a kind of Surrender To Fate, to the uncertainty of
whether one will have an income again or not (either that or a sugar daddy or a trust fund).
Because it's not easy to deal with that uncertainty. And uncertainty is the name of the game
in unemployment, that and not having an income may be the pain in it's entirety.
Sadly this breaking down into a "good worker" begins for most shortly after they begin
school. This type of education harms society in a myriad of ways including instilling a
dislike of learning, deference to authority (no matter how irrational and unjust), and a
destruction of a child's natural curiosity.
I don't buy your premise that people are "creative". The overwhelming majority do not have
creative projects they'd be pursuing if they had leisure and income. Go look at retirees,
ones that have just retired, are healthy, and have money.
You are really misconstruing what the studies have found and misapplied it to your
situation. Leisure time when you have a job or a role (being a student) is not at all the
same as having time when you are unemployed, with or without a social safety net.
Work: that can be me hiring someone to cut my yard, or another type of one-off thing
filled with precariousness.
Job: that less temporary work, but by no means permanent. Just a step up from the
precariousness of work.
Career: that is work in the same field over a long period of time and it is more likely
that someone will develop an identity through performing the work. Still precarious, but
maybe more fulfilling.
Sense of purpose: I was always under the impression that is something you have to give
yourself. If it can be taken away by someone what was the purpose?
one often has a role when unemployed: finding work. But it's not a very fulfilling one!
But if one is trying to find work, it's not exactly the absence of a role either even if it
still leaves significantly more free time than otherwise, maybe winning the lottery is the
absence of a role.
But then it's also not like we give people a UBI even for a few years (at any time in
adult life) to get an education. Only if they take out a student loan approaching the size of
a mortgage or have parents willing to pony up are they allowed that (to pay not just for the
education but to live because having a roof over one's head etc. is never free, a UBI via
debt it might be called).
> Give me more leisure time and you'll find me painting, writing, playing instruments
and doing things that I enjoy.
Nothing to breed resentment of "the creative class" here! Blowback from Speenhamland
brought on the workhouses, so be careful what you wish for.
UBI won't happen and JG has been tried (and failed).
The argument that JG would allow the public sector to hire more people is demeaning to
people already employed in the public sector and demonstrably false – people are hired
into the public sector without there being a JG. It is most certainly possible to be against
a JG while wanting more people working in the public sector.
The way forward is to have a government acting for people instead of for corporations.
Increase the amount of paid vacations, reduce the pension age and stop with the Soviet style
worship of work: While some people are apparently proud of their friends and relatives who
died while at work it is also possible to feel sad about that.
The JG was tried in Communist countries in Europe, Asia and Americas. The arguments then
and there were the same as here and now, made by the same type of social 'scientists'
(economists).
Would a JG be different here and now as the Republicans and Democrats are representing the
best interests of the people? Or are they representing the same kind of interests as the
Communist parties did?
Data, please. The USSR fell because it was spending on its military to keep up with the
US, a much larger economy. Countering your assertion we have this:
As long as people argue that "it's not fair" to fix the inequality issue and employ things
like debt jubilee or student loan forgiveness, or if we fix the ridiculous cost of health
care what will all those insurance agents do then we will wind up with the real kind of class
warfare, rather than the current punching from the top down, the punching will come from the
bottom, because the situation is not fair now, it's just TINA according to those who profit
from it. In my own life there is a balance of creativity and work, and I find work enables my
creativity by putting some pressure on my time, i.e., I get up earlier, I practice at 8:30 am
instead of sleeping til 10 and winding up with S.A..D., I go to bed rather than watch tv or
drink to excess.. in other words i have some kind of weird schedule, I have days off sort of
When I've been unemployed I feel the way s described in the article. I find the arguments in
favor of ubi tend to come from people who already have assets, or jobs, or family who they
take care of which is actually a job although uncommonly described as such. The only truth I
see in real life is that the unemployed I am intimately familiar with first are mentally
oppressed by the notion that to repair their situation will require they work every waking
hour at substandard wages for the rest of their life and that is a major barrier to getting
started, and that is a policy choice the gov't and elite classes purposefully made which
created the precariat and will be their undoing if they are unable to see this.
Interesting point. I read a science fiction story in which the protagonist arrives for
work at his full time job at 10:00 AM, and he's finished for the day at 4:00 PM. I can't
remember the name of the story or novel, unfortunately.
Agreed. And they already have it in places like Denmark. Why don't we talk about that? It
actually exists unlike utopian schemes for either total UBI or total work guarantee
(government job creation is not utopian, but imagining it will employ everyone is, and I
would like the UBI to be more widely tried, but in this country we are nowhere close). Funny
how utopia becomes more interesting to people than actual existing arrangements, even though
of course those could be improved on too.
The Danish work arrangement is less than a 40 hour week, and mothers especially often work
part-time but both sexes can. It's here in this country where work is either impossibly
grueling or you are not working. No other choice. In countries with more flexible work
arrangements more women actually work, but it's flexible and flexible for men who choose to
do the parenting as well. I'm not saying this should be for parents only of course.
My own situation is that I am unhappy in my well-paying job and would like nothing more
than to devote myself to other interests. I'm thirty years on in a relationship with someone
who grew up in bad financial circumstances and panics whenever I talk about leaving my job. I
tell her that we have 2 years of living expenses in the bank but I can't guarantee making the
same amount of money if I do leave my job. She has a job that she loves and is important and
pays barely 1/2 of my own income. So she worries about her future with me. She worries about
losing her home. I suppose that makes me the definition of a wage slave. And it makes for an
increasingly unhappy marriage. I admire those who have faced similar circumstances and found
a way through this. Sorry to vent, but this topic and the comments hit a nerve with me and
I'm still trying to figure this out.
Otis;
We are presently going through a period where that "two year cushion" has evaporated, for
various reasons. We are seeing our way through this, straight into penury and privation.
Take nothing for granted in todays' economy.
yes find the lower paying job that you like more first. If you just quit for nothing in
the hopes of finding one it might not happen. Of course unemployment also happens sometimes,
whether we want it or not.
The newer generations are worse when it comes to lifestyle. Those of that are older can at
least remember a time without cellphones internet streaming services leasing a new car every
2 years etc.
What about the young? My niece and her husband should be all set , his mom sunk money into
a home on the condition she moved into a mother in law apartment. So far so good right? 2
years in they are imploding even with the free child care she provides. Combined their
wireless bill a month is over $300. The sit on the couch side by side and stream netflix
shows to dueling iphones in front of a 65 inch tv that is not even turned on. Wearing
headphones in silence.
Both driving new vehicles , both have gym memberships they don't use . They buy lattes 3
or 4 times a day which is probably another 500 a month.
My uncle passed away recently and my niece asked if she was in the will. It was literally
her only communication on the subject. They are going under and could easily trim a few
thousand a month from the budget but simply won't. No one in the family is going to lift a
finger for them at this point they burned every possible bridge already. I have seen people
living in cars plenty lately but I think these will be the first I see to living in brand new
cars .
Somewhere along the line they got the impression that the american dream was a leased car
a starbucks in one hand and an iphone in the other .
Confront them with the concept of living within a paycheck and they react like a patient
hearing he has 3 months to live.
Yeah being poor, never mind growing up poor, just well and truly sucks and it can really
@@@@ you up. Gives people all sorts of issues. I'm rather like her, but I have had the joy of
multi-hour commutes to unexciting soul crushing work. Happy, happy, joy, joy! However don't
forget that with the current political economy things are likely to go bad in all sorts of
ways. This whole site is devoted to that. My suggestion is to keep the job unless you have
something lined up. Not being able to rent has it own stresses too. Take my word for it.
I may be engaging in semantics but I think conflating work and jobs makes this article a
bit of a mixed bag. I know plenty of people who are terribly unhappy in their jobs, but
nonetheless extract a sense of wellbeing from having a stable source of INCOME to pay their
bills (anecdotally speaking, acute stress from recent job losses is closely linked to
uncertainty about how bills are going to be paid, that's why those with a safety net of
accumulated savings report less stress than those without). Loss of status, social standing
and identity and the chronic stress borne from these become evident much later I.e. when the
unemployment is prolonged, accompanied of course by the still unresolved top-of-mind concern
of "how to pay the bills".
As such, acute stress for the recently unemployed is driven by financial/income
uncertainty (I.e. how am I going to pay the bills) whereas chronic stress from prolonged
unemployment brings into play the more identity driven aspects like loss of social standing
and status. For policy interventions to have any effects, policy makers would have to
delineate the primary drivers of stress (or lack of wellbeing as the author calls it) during
the various phases of the unemployment lifecycle. An Unemployment Insurance Fund (UIF) like
we have here in South Africa appears to address the early stages of unemployment, and the
accompanying acute stress, quite well by providing the income guarantee (for six months) that
cushions the shock of losing a job. What's still missing of course are interventions that
promote the quick return to employment for those on UIF, so maybe a middle of the road
solution between UBI and a jobs guarantee scheme is how policy makers should be framing this,
instead of the binary either/or we currently have.
Lots' of people think they're unhappy with their jobs. Let them sit unemployed for 9
months and ask them if they want that job back. The usual parade of anecdata is on display here in the comments. Mitchell's real data and
analysis in the article above still stand.
If you'd read through my comment, and not rushed through it with a view of dishing out a
flippant response, you'd have seen that nowhere do I question the validity of his data, I
merely question how the argument is presented in some areas (NC discourages unquestioning
deference to the views of experts no??). By the way, anecdotes do add to richer understanding
of a nuanced and layered topic (as this one is) so your dismissal of them in your haste to
invalidate people's observations is hardly helpful.
Yes people many not like their jobs but prefer the security of having them to not. Yes
even if the boss sexually harasses one (as we are seeing is very common). Yes even if there
is other workplace abuse. Yes even when it causes depression or PTSD (but if one stays with
such a job long term it ruins the self confidence that is one prerequisite to get another
job!). Yes even if one is in therapy because of job stress, sexual harassment or you name it.
The job allows the having health insurance, allows the therapy, allows the complaining about
the job in therapy to make it through another week.
When unemployed, the stress of worry about money may suppress the creative juices.
Speaking from experience. People may well 'keep looking for jobs' because they know ultimately they need a job with
steady income. The great experience of some freelancers notwithstanding, not all are cut out
for it.
I would love to see some more about happiness or its lack in retirement–referenced
by stay-at-home dad BJ , above.
I wonder, too, about the impact of *how* one loses one's job. Getting laid off vs fired vs
quitting vs involuntary retirement vs voluntary, etc feel very different. Speaking from
experience on that, too. I will search on these points and post anything of interest.
There are also other things that are degrading about the very process of being unemployed
not mentioned here. What about the constant rejection that it can entail? One is unemployed
and looking for work, one sends out resumes, many of them will never be answered, that's
rejection. Then if one is lucky they get interviews, many will never lead to jobs, yet more
rejection. Does the process of constant rejection itself have a negative effect on a human
being whether it's looking for jobs or dates or whatever? Isn't it learned helplessness to if
one keeps trying for something and keeps failing. Isn't that itself demoralizing entirely
independent of any doubtful innate demoralizing quality of leisure.
I am not so sure if I agree with this article. I think it really depends on whether or not
you have income to support yourself, hate or love your job, and the amount of outside
interests you have, among other things. Almost everyone I know who lives in the NYC area and
commutes into the city .doesn't like their job and finds the whole situation "soul-crushing".
Those that live in Manhattan proper are (feel) a bit better off. I for one stopped working
somewhat voluntarily last year. I write somewhat because I began to dislike my job so much
that it was interfering with my state of well being, however, if I had been allowed to work
remotely I probably would have stuck it out for another couple of years.
I am close enough to
62 that I can make do before SS kicks in although I have completely changed my lifestyle
– i.e. I've given up a materialistic lifestyle and live very frugally.
Additionally I
saved for many years once I decided to embark on this path. I do not find myself depressed at
all and the path this year has been very enriching and exciting (and scary) as I reflect on
what I want for the future. I'm pretty sure I will end up moving and buying a property so
that I can become as self sufficient as possible. Also, I probably will get a job down the
line – but if I can't get one because I am deemed too old that will be ok as well. The
biggest unknown for me is how much health insurance will cost in the future .
The article made clear that the studies included "unemployed but with income" from
government support. It is amazing the degree to which readers ignore that and want to make
the findings about "unemployed with no income".
That's because we Americans all have work=good=worthy=blessed by God while
workless=scum=worthless=accursed by God engraved into our collective soul. Our politics, our
beliefs, are just overlays to that.
Even when we agree that the whole situation just crushes people into paste, and for which
they have no defense regardless of how hard they work, how carefully they plan, or what they
do, that underlay makes use feel that this is their/our fault. Any suggestions that at least
some support can be decoupled from work, and that maybe work, and how much you earn, should
not determine their value, brings the atavistic fear of being the "undeserving poor,"
parasites and therefore reprobated scum.
So we don't hear what you are saying without extra effort because it's bypassing our
conscious thoughts.
Add my voice to those above who feel that forced labor is the bane of existence, not the
wellspring. All this study says to me is that refusing to employ someone in capitalist
society does not make them happy. It makes them outcasts.
So, I say yes to a JG, because anyone who wants work should be offered work. But at the
same time, a proper JG is not forced labor. And the only way to ensure that it is not forced
labor, is to decouple basic needs from wage slavery.
I am critical of those who distinguish between the job and the income. Of course the
income is critical to the dignity of the job. For many jobs, it is the primary source of that
dignity. The notion that all jobs should provide some intrinsic dignity unrelated to the
income, or that people whose dignity is primarily based on the income they earn rather than
the work they do are deluded, is to buy in to the propaganda of "passion" being a requirement
for your work and to really be blind to what is required to make a society function. Someone
has to change the diapers, and wipe the butts of old people. (yes, I've done both.) It
doesn't require passion and any sense of satisfaction is gone by about the second day. But if
you could make a middle class living doing it, there would be a lot fewer unhappy people in
the world.
It is well known that auto factory jobs were not perceived as good jobs until the UAW was
able to make them middle class jobs. The nature of the actual work itself hasn't changed all
that much over the years – mostly it is still very repetitive work that requires little
specialized training, even if the machine technology is much improved. Indeed, I would guess
that more intrinsic satisfaction came from bashing metal than pushing buttons on a CNC
machine, and so the jobs may even be less self-actualizing than they used to be.
The capitalist myth is that the private sector economy generates all the wealth and the
public sector is a claim on that wealth. Yet human development proves to us that this is not
true – a substantial portion of "human capital" is developed outside the paid economy,
government investment in R&D generates productivity growth, etc. And MMT demonstrates
that we do not require private sector savings to fund public investment.
We are still a ways from having the math to demonstrate that government investment in
caring and nurturing is always socially productive – first we need productivity numbers
that reflect more than just private sector "product." But I think we are moving in that
direction. Rather than prioritize a minimum wage JG of make-work, we should first simply pay
people good wages to raise their own children or look after their elderly and disabled
relatives. The MMT JG, as I understand it, would still require people to leave their kids
with others to look after them in order to perform some minimum wage task. That is just
dumb.
Maybe it's dumb, it's certainly dumb in a system like the U.S. where work is brutal and
often low paid and paid childcare is not well remunerated either. But caretakers also working
seems to work in countries with greater income equality, good job protections, flexible work
arrangements, and a decent amount of paid parental leave – yea Denmark, they think
their children should be raised by professionals, but also work-life balance is still pretty
good.
My take is that capitalism has made the benefits and malus of having a job so ingrained
into culture and so reinforced. Having a job is so closely linked to happiness because it
gives you the money needed to pursue it.
A job affords you the ability to pursue whatever goals you want within a capitalist
framework. "Everything" costs money and so having a job gives you the money to pay for those
costs and go on to fulfill your pursuit of happiness.
Analyzing whether people are happy or not under these conditions seem apparent that it is
going to lead to results heavily biased towards finding happiness through employment.
The unemployed are often living off someone else's income and feel like an undeserving
parasite. Adults are generally ingrained with the culture that they have to grow up and be
independent and be able to provide for a new family that they will start up. Becoming
unemployed is like being emasculated and infantile, the opposite of what is expected of
adults.
There's also that not having a job is increasingly being punished especially in the case
of America. American wages have stayed either largely static or have worsened, making being
unemployed that much more of a burden on family or friends. Unemployment has been demonized
by Reaganism and has become systematically punishable for the long term unemployed. If you
are unemployed for too long, you start losing government support. This compounds the frantic
rush to get out of unemployment once unemployed.
There is little luxury to enjoy while unemployed. Life while unemployed is a frustrating
and often disappointing hell of constant job applications and having many of them lead to
nothing. The people providing support often start to become less so over time and become more
convinced of laziness or some kind of lack of character or willpower or education or ability
or whatever. Any sense of systemic failure is transplanted into a sense of personal failure,
especially under neoliberalism.
I am not so sure about the case of Europe and otherwise. I am sure that the third world
often has little or no social safety nets so having work (in exploitative conditions in many
cases) is a must for survival.
Anyways, I wonder about the exact methodologies of these studies and I think they often
take the current feelings about unemployment and then attempt to extrapolate talking points
for UBI/JG from them. Yes, UBI wouldn't change culture overnight and it would take a very,
very long time for people to let down their guard and adjust if UBI is to be implemented in a
manner that would warrant trust. This article seems to understand the potential for that, but
decides against it being a significant factor due to the studies emphasizing the malus of
unemployment.
I wonder how different the results would be if there were studies that asked people how
they would feel if they were unemployed under a UBI system versus the current system. I know
a good number of young people (mostly under 30) who would love to drop out and just play
video games all day. Though the significance of such a drastic demographic shift would
probably lead to great political consequences. It would probably prove the anti-UBI crowd
right in that under a capitalist framework, the capitalists and the employed wouldn't
tolerate the unemployed and would seek to turn them into an underclass.
Personally I think a combination of UBI and JG should be pursued. JG would work better
within the current capitalist framework. I don't think it is without its pitfalls due to
similar possible issues (with the similar policy of full employment) either under
Keynesianism (e.g. Milton Friedman sees it as inefficient) or in the USSR (e.g. bullshit
jobs). There is the possibility of UBI having benefits (not having the unemployed be a burden
but a subsidized contributer to the economy) so I personally don't think it should be fully
disregarded until it is understood better. I would like it if there were better scientific
studies to expand upon the implications of UBI and better measure if it would work or not.
The upcoming studies testing an actual UBI system should help to end the debates once and for
all.
My $0.02:
I have a creative pursuit (no money) and a engineering/physical science technical career
(income!). I am proficient in and passionate about both. Over the last few years, the
technical career became tenuous due to consolidation of regional consulting firms (endemic to
this era)- wages flat to declining, higher work stress, less time off, conversation to
contact employment, etc.- which has resulted in two layoffs.
During the time of tenuous employment, my art took on a darker tone. During unemployment the
art stopped altogether.
I'm recently re-employed in a field that I'm not proficient. Both the peter principle and
imposter syndrome apply. My art has resumed, but the topics are singular about despair and
work, to the point that I feel like I'm constantly reworking the same one piece over and over
again. And the quality has plummeted too.
In some fields (e.g. engineering), being a wage slave is the only realistic option due to
the dominance of a small number of large firms. The big players crowd out independents and
free lancers, while pressuring their own employees through just-high-enough wages and
limiting time off. Engineering services is a relationship- based field, and the big boys (and
they are nearly all boys) have vastly bigger networks to draw work from than a small firm
unless that small firm has a big contact to feed them work (until they get gobbled up). The
big firms also have more areas of expertise which limits how useful a boutique firm is to a
client pool, except under very narrow circumstances. And if you are an introvert like most
engineering people, there's no way to compete with big firms and their marketing staff to
expand a network enough to compete.
In that way, consulting is a lot like art. To make a living at it you need either contacts or
a sponsor. Or an inheritance.
I would be interested to know what the definition of unemployment was for the purpose of
this study (I couldn't find it in the supplied links). If it's simply "people who don't have
a job," for example, then it would include the likes of the idle rich, retirees, wards of the
state, and so on. Binary statements like this one do make it sound like the broad definition
is the one in use:
When considering the world's population as a whole, people with a job evaluate the
quality of their lives much more favorably than those who are unemployed.
The conclusion seems at odds with results I've seen for some of those groups – for
example, I thought it was fairly well accepted that retirees who are supported by a
government plan that is sufficient for them to live on were generally at least as happy as
they had been during their working life.
If, on the other hand, the study uses a narrow definition (e.g. people who are of working
age, want a job or need one to support themselves financially, but can't find one) then the
conclusion seems a lot more reasonable. But that's a heavily loaded definition in economic
and cultural terms. In that case, the conclusion (people are happier if they have a job) only
holds true in the current prevailing model of society. It doesn't rule out the possibility of
structuring society or the economy differently in such a way that people can be non-working
and happy. The existence of one such population already (retirees) strongly suggests that
outcomes like this are possible. A UBI would be an example of just such a restructuring of
society, and therefore I don't think that this study and its result are necessarily a valid
argument against it.
Which makes a person happier -- being considered worthless by one's society or valuable?
How many studies do we need to answer that question? Apparently, a lot, because studies like
this one keep on going. The underlying assumption is that jobs make one valuable. So if you
don't have a job you're worthless. Now, who's happier on the whole, people with jobs or the
unemployed? That's surely good for a few more studies. Did you know that members of socially
devalued groups (minorities, non-heteros, and the like) have higher rates of dysfunction,
rather like the unemployed? Hmm, I wonder if there's maybe a similar principle at work. And
my solution is not to turn all the people of color white nor to change all the women to men
nor to "cure" gays. Well, maybe a few more conclusive studies of this kind will convince me
that we must all be the same, toeing the line for those whom it has pleased God to dictate
our values to us.
I am convinced that we shouldn't outlaw jobs, because I believe the tons of stories about
happy people in their jobs However, I also believe we shouldn't force everyone into jobs,
because I know tons of stories about happy people without jobs. You know, the stories that
the JG people explain away: parents caring for their children (JG -- "oh, we'll make that a
job!"), volunteers working on local planning issues (JG -- "oh, we'll make that a job, too.
In fact, we'll make everything worth doing a job. The important thing is to be able to force
people to work schedules and bosses, because otherwise, they'll all lie around doing nothing
and be miserable"), the retired (JG -- "that's not really the same, but they'd be better off
staying in a job"). And this is all before we get to those who can't really hold a job
because of disability or geography or other responsibilities.
I support the JG over the current situation, but as to what we should be working for, the
more I read the JG arguments, the more paternalistic and just plain narrow minded judgmental
they seem.
Data like that provided by Mitchell is important to demolishing the horrid "economic
anxiety" frame much beloved by liberals, especially wonkish Democrats.* It's not (a) just feelings , to be solved by scented candles or training (the liberal version of
rugged individualism) and (b) the effects are real and measurable. It's not surprising, when
you think about it, that the working class is about work .
* To put this another way, anybody who has really suffered the crawling
inwardness of anxiety, in the clinical sense, knows that it affects every aspect of one's
being. Anxiety is not something deplorables deploy as cover for less than creditable
motives.
Financial ignorance of students is a big problem. Big fiancne in the USA is predatory and hunts for weaklings and incompetent
to exploit them. In a very sophisticated ways. So a reasonable assumption would be that the US students is a prey hunted by
large financial predators including neoliberal universities themselves.
Notable quotes:
"... They are financially ignorant; mere babes, being unmercifully exploited by the sophisticated (emphasis on Sophist) financialization culture extant across the western world; especially the U.S.. ..."
I am late to write up a research paper that has not gotten the attention it warrants.
As most readers know, the 2005 bankruptcy law reform included provisions that made it
virtually impossible to discharge student debt in bankruptcy. Yet borrowers who miss payments
wind up paying penalty interest rates, with the result that they will carry their student debt
with them to the grave.
But why do student borrowers get such harsh treatment? The justification for the bankruptcy
law change was that student borrowers were prone to abusing the bankruptcy code even though
they had the ability to make good on their loans. I've never bought the "strategic default"
meme, which is almost entirely creditor urban legend to justify squeezing more blood from the
stone of broke borrowers. Bankruptcy is a painful process that leaves your credit record
damaged for years. And why should anyone think that student loans were more prone to abuse? If
someone declared a Chapter 7 bankruptcy pre-2005, the court would take all the assets it could
lay its hands on, allocate the proceeds among the various debts, and wipe out the rest. It's
not as if student loans were treated worse than any other non-collateralized loans.
Nevertheless, the argument was that student borrowers were defaulting opportunistically. If
true, that higher default level would lead lenders to charge higher interest rates to cover for
the cost of abusive defaults.
The prototypical strategic defaulter would be someone with few assets but high actual or
expected income.
In a new Philadelphia Fed working paper, Rajeev Darolia and Dubravka Ritter constructed a
database of private student loan (PSL) borrowers to see if their behavior changed as a result
of the bankruptcy law reforms. We've embedded their article at the end of the post. Their
conclusion:
Our findings contribute to this debate by providing evidence on bankruptcy filing and
default behavior using a unique sample of anonymized credit bureau records. Although the 2005
bankruptcy reform reduced rates of Chapter 7 bankruptcy overall, the provisions making PSL
debt nondischargeable do not appear to have reduced the bankruptcy filing or default behavior
of PSL borrowers relative to other types of student loan borrowers at meaningful levels.
Therefore, our analysis does not reveal debtor responses to the 2005 bankruptcy reform that
would indicate widespread opportunistic behavior by PSL borrowers before the policy change.
We interpret these findings as a lack of evidence that the moral hazard associated with PSL
dischargeability pre-BAPCPA appreciably affected the behavior of student loan borrowers.
So why are default levels now so high? Lenders relaxed their standards and handed out more
credit as a result of the 2005 bankruptcy reforms. And rising higher education costs means
students are borrowing more than ever.
Having been a debt slave; I can understand what the children (they are children, not
adults) are going through. They are financially ignorant; mere babes, being unmercifully exploited by the sophisticated
(emphasis on Sophist) financialization culture extant across the western world; especially
the U.S..
No loan should be allowed (for children) without a course in basic finance, debt, credit,
and income realities. Now retired, debt free, and solvent; I know of what I speak. Critical
thinking skills are at an all time low in the U.S.; a very serious societal problem; not soon
solved
What about the time-worn argument in favor of all the extra money you're going to make
because you went to (genuflects) college? A lot of people have gone deeply into debt because
they've heard this one. And it's a lie.
Barrel traders recently pushed the price of West Texas Intermediate (WTI) oil above $55; the first time in over two years.
Scarcity doesn't really justify the upward price movement. There isn't a shortage of oil in the world. But there could be, in
the worst case, if missiles start flying between two of the world's largest oil players: Saudi Arabia and Iran.
Maybe it won't happen. But maybe it will. And that's what the "geopolitical risk premium" is all about. It's an anxiety
surcharge that's tacked onto every barrel of oil, in fear of supply disruption on a moment's notice. And the fear is back.
After three years of naivety we're back to acknowledging the known unknowns of the Middle East, the uncertainties that strap a
10-to-20 percent premium on the price of a barrel.
Paying a risk premium for oil is nothing new. It's been around for decades and has gone up and down with the hostility thermometer
of the Middle East.
Unusually, the pricing of risk dropped to zero around 2015. Three main reasons prompted a sense of world peace: the promise
of the Iranian nuclear deal; a feeling that booming oilfields in Texas could offset any disruption; and a growing surplus of oil
inventories in storage tanks around the world.
Of late, the notion of oil obsolescence has also perpetuated a feeling of nonchalance. "Who cares about the Middle East and
their oil?" has been a question driven by the utopian narrative: "I'm not worried, everyone will be driving electric cars
in a few years anyway."
But it's all been a false sense of security.
Electric cars are still rare. Oil remains vital to the world economy. Its geographic concentration is such that a large proportion
of the world's needs is produced from underneath layers of geopolitics, religious antagonism, authoritarianism, civil strife and
corruption.
Today was a stock options expiry.
Gold and silver rallied smartly, back up to the levels where they roughly were before they
were bushwhacked on the Comex into the FOMC meeting and Non-Farm Payrolls boogie woogie.
I guess the theory that this smackdown of gold to retest 1270 earlier this week was a gambit
ahead of stock option expiry was tradeable.
We are in a new era. I am hearing this on TV and in comments and on chat forums.
We are in an era where risk has been abolished by the central banks and their free money. So
there is little difference between prime and subprime, between 2 year and 10 year Treasuries,
and between stocks and bonds.
According to some of the Pied Piper pundits stocks are better than riskless cash, because
stocks are going to keep rallying forever after, and
cash is trash
. Buy buy buy, and
don't be left behind.
This is the kind of mantra that the sell-side and the wiseguys of the Street too often resort
to when they are taking profits from their pool after a big price run higher, and unloading
mispriced junk on mom and pop, through the funds and institutions.
Once the selling starts in earnest, and it will beyond any doubt at some point, by whatever
event that may happen to trigger it, this is going to get ugly very quickly. But this is the
system that we have today. This will be the third bubble and bust since the repeal of
Glass-Steagall, one of the highest funded PR and political campaigns in modern history.
"... Controlling inflation solely by focusing on workers wages since 1980 but allowing monopoly power and economic rents to skyrocket
since 1980 is the main reason for the extreme inequality that has developed ..."
"... Prima facie evidence of distorted labor market where buyers of labor have control. At the very least, the next democratic President
should use their weekly address to point out the metrics relating economic gains, net wealth gains, productivity gains, to wage gains.
The Presudent should remind employers to fairly share the gains. Once the metrics indicate distortion in the labor markets the President
will then introduce corrective legislation using the public communications weight behind this free market notion of a fair labor market,
using these metrics. Let us try this bully pulpit, public communications effort with the idea of building public momentum for correctives,
and maybe we will return to the 1960s future when gains were more proportionally shared. Perhaps we wont need much legislation at all,
afterall we had one generation comport with fairness, you know, rational expectations. ..."
"... if demand cannot be kept up by wages, then the only option is loans and we have seen in 2008 the catastrophic results of that
..."
non accelerating inflation rate of unemployment is a better term
there is nothing "natural" about that rate
there are many factors that play a role, but the most important are
1. monopoly power is the most important, without monopoly power, in a perfectly competitive market, excessive inflation is
not possible
2. factors that affect bargaining power OF workers
Controlling inflation solely by focusing on workers wages since 1980 but allowing monopoly power and economic rents to
skyrocket since 1980 is the main reason for the extreme inequality that has developed
Prima facie evidence of distorted labor market where buyers of labor have control.
At the very least, the next democratic President should use their weekly address to point out the metrics relating economic
gains, net wealth gains, productivity gains, to wage gains. The Presudent should remind employers to fairly share the gains.
Once the metrics indicate distortion in the labor markets the President will then introduce corrective legislation using the
public communications weight behind this free market notion of a fair labor market, using these metrics.
Let us try this bully pulpit, public communications effort with the idea of building public momentum for correctives, and
maybe we will return to the 1960s future when gains were more proportionally shared. Perhaps we wont need much legislation at
all, afterall we had one generation comport with fairness, you know, rational expectations.
We can expect to do that again, especially as all new economists will be trained on the why and on how to accomplish this metric
of shared gains. One can only hope.
if we don't allow median wages to go up to match production/productivity
and if economic rents continue to go up disproportionally then we need to do a redistribution, ideally by taxes, to get the
median wage to keep pace with production/productivity
otherwise demand for products will eventually falter, making us all poorer for it
if demand cannot be kept up by wages, then the only option is loans and we have seen in 2008 the catastrophic results of
that
Should
We Reject the Natural Rate Hypothesis?, by Olivier Blanchard, PIIE : Fifty years ago,
Milton Friedman articulated the natural rate hypothesis. It was composed of two
sub-hypotheses: First, the natural rate of unemployment is independent of monetary policy.
Second, there is no long-run tradeoff between the deviation of unemployment from the natural
rate and inflation. Both propositions have been challenged. Blanchard reviews the arguments
and the macro and micro evidence against each and concludes that, in each case, the evidence
is suggestive but not conclusive. Policymakers should keep the natural rate hypothesis as
their null hypothesis but keep an open mind and put some weight on the alternatives. [
paper ]
"there is a strong case, although not an overwhelming case, to allow U.S. output to exceed
potential for some time, so as to reintegrate some of the workers who left the labor force
during the last ten years."
Blanchard calls for exploring the unknown regions
of lower and lower unemployment
Lower UE rates
Instead of accelerating output price inflation
Or even wage inflation
Given possible productivity pick ups
We may discover
We get a return to higher and higher participation
Not an unhappy result after all
The parting of the ways with the likes of Blanchard and krugman might come
When at long last wage rates do begin to rise faster then
Say
labor productivity plus three percent
But if the acceleration of the expected rate of change
of the rate of output price change
accelerates slowly
We'll have plenty of policy means and time to moderate the expansion of demand
Given the political will
What is completely missed by looking at the impact of a slump on long run output capacity
Is the actual lost output out of existing capacity
And the misery this inflicts now
for many too many
Ten years of sub possible output
Contain How many weeks upon weeks
of reduced Welfare for too many souls ?
Blanchards uses the definition of potential output
That suggests over production has to be off set by under production
I.e. Potential output is not technical maximum output by any means
PO
Is more like a rate of output and consequent rate of existing factor utilization
That does not unduly
stress
the various institutional arrangements and practices
Or overly tax
the stability of existing social norms
Considered necessary
to sustaining the good of society
thru
It's gradual development over time
There is another set of conflicting visions
One of which
That any class pov might hatch
A vision
Perhaps too Faustian for most souls of that class
That is restless
to push faster
To Venture more
Face uncertainty with boldness even audacity
"... So should Mr Azar be confirmed as Secretary of DHHS, the fox guarding the hen house appears to be a reasonable analogy. ..."
"... In this post, I'd like to add two additional factors to our consideration of Azar. The first: Democrat credentialism makes it hard for them to oppose Azar. The second: The real ..."
Clearly, Alex Azar, nominated yesterday for the position of Secretary of Health and Human Services by the Trump Administration,
exemplifies the case of the "revolving door," through which
Flexians slither on their way to (or from) positions of public trust. Roy Poses (
cross-posted at NC ) wrote, when Azar was only Acting Secretary:
Last week we noted that Mr Trump famously promised to “drain the swamp” in Washington. Last week, despite his previous
pledges to not appoint lobbyists to powerful positions, he appointed a lobbyist to be acting DHHS Secretary. This week he is apparently
strongly considering Mr Alex Azar, a pharmaceutical executive to be permanent DHHS Secretary, even though the FDA, part of DHHS,
has direct regulatory authority over the pharmaceutical industry, and many other DHHS policies strongly affect the pharmaceutical
industry. (By the way, Mr Azar was also in charge of one lobbying effort.)
So should Mr Azar be confirmed as Secretary of DHHS, the fox guarding the hen house appears to be a reasonable analogy.
Moreover, several serious legal cases involving bad behavior by his company, and multiple other instances of apparently unethical
behavior occurred on Mr Azar’s watch at Eli Lilly. So the fox might be not the most reputable member of the species.
The literature makes clear that the revolving door process is a source of valuable political connections for private firms.
But it generates corruption risks and has strong distortionary effects on the economy , especially when this power is
concentrated within a few firms.
The ongoing parade of people transiting the revolving door from industry to the Trump administration once again suggests how
the revolving door may enable certain of those with private vested interests to have excess influence, way beyond that of ordinary
citizens, on how the government works, and that the country is still increasingly being run by a cozy group of insiders with ties
to both government and industry. This has been termed crony capitalism.
In this post, I'd like to add two additional factors to our consideration of Azar.
The first: Democrat credentialism makes it hard for them to oppose Azar. The second: The real damage Azar could do is on
the regulatory side.[1]
"I am glad to hear that you have worked hard, and brought fair-minded legal analysis to the department," Democratic
Sen. Max Baucus said at Azar's last confirmation hearing.
And:
Andy Slavitt, who ran the Affordable Care Act and the Centers for Medicare & Medicaid Services during the Obama administration,
said he has reason to hope Azar would be a good secretary.
"He is familiar with the high quality of the HHS staff, has real-world experience enough to be pragmatic, and will hopefully
avoid repeating the mistakes of his predecessor," Slavitt said.
So, if Democrats are saying Azar is "fair-minded" and "pragmatic" -- and heaven forfend that the word "corruption"[2] even be
mentioned -- how do they oppose him, even he's viscerally opposed to everything Democrats supposedly stand for? (Democrats do this
with judicial nominations, too.) Azar may be a fox, alright, but the chickens he's supposedly guarding are all clucking about how
impeccable his qualifications are!
Second, let's briefly look at Azar's bio. Let me excerpt salient detail from
USA Today :
1. Azar clerked for Supreme Court Justice Antonin Scalia .
2. Azar went to work for his mentor, Ken Starr , who was heading the independent counsel investigation into Bill
and Hillary Clinton's Whitewater land deal.
3. Azar had a significant role in another major political controversy when the outcome of the 2000 presidential election
hinged on a recount in Florida . Azar was on the Bush team of lawyers whose side ultimately prevailed [3]
For any Democrat with a memory, that bio provokes one of those "You shall know them by the trail of the dead" moments. And then
there's this:
When Leavitt replaced Thompson in 2005 and Azar became his deputy, Leavitt delegated a lot of the rule-making process to Azar.
So, a liberal Democrat might classify Azar as a smooth-talking reactionary thug with a terrible record and the most vile mentors
imaginable, and on top of it all, he's an effective bureaucratic fixer. What could the Trump Administration possibly see in such
a person? Former (Republican) HHS Secretary Mike Leavitt explains:
"Understanding the administrative rule process in the circumstance we're in today could be extraordinarily important because
a lot of the change in the health care system, given the fact that they've not succeeded legislatively, could come administratively."
1) Administratively, send ObamaCare into a death spiral by sabotaging it
2) Legislatively, gut Medicaid as part of the "tax refom" package in Congress
3) Through executive order, eliminate "essential health benefits" through "association health plans"
As a sidebar, it's interesting to see that although this do-list is strategically and ideologically coherent -- basically,
your ability to access health care will be directly dependent on your ability to pay -- it's institutionally incoherent, a bizarre
contraption screwed together out of legislation, regulations, and an Executive order. Of course, this incoherence mirrors to Rube
Goldberg structure of ObamaCare itself, itself a bizarre contraption, especially when compared to the simple, rugged, and proven
single payer system. ( Everything Obama did with regulations and executive orders, Trump can undo, with new regulations and
new executive orders . We might compare ObamaCare to a child born with no immune system, that could only have survived within
the liberal bubble within which it was created; in the real world, it's not surprising that it's succumbing to opportunistic infections.[2])
On #1, The administration has, despite its best efforts, not achieved a controlled flight into terrain with ObamaCare; enrollment
is up. On #2, the administration and its Congressional allies are still dickering with tax reform. And on #3 . That looks looks like
a job for Alex Azar, since both essential health benefits and association health plans are significantly affected by regulation.
So, yes, there are worse scenarios than the revolving door; it's what you leave behind you as the door revolves that matters.
It would be lovely if there were a good old-fashioned confirmation battle over Azar, but, as I've pointed out, the Democrats have
tied their own hands. Ideally, the Democrats would junk the Rube Goldberg device that is ObamaCare, rendering all of Azar's regulatory
expertise null and void, but that doesn't seem likely, given that they seem to be doing everything possible to avoid serious discussion
of policy in 2018 and 2020.
NOTES
[1] I'm leaving aside what will no doubt be the 2018 or even 2020 issue of drug prices, since for me that's subsumed under the
issue of single payer. If we look only at Azar's history in business, real price decreases seem unlikely.
Business Insider :
Over the 10-year period when Azar was at Lilly, the price of insulin notched a three-fold increase. It wasn't just Lilly's
insulin product, called Humalog. The price of a rival made by Novo Nordisk has also climbed, with the two rising in such lockstep
that you can barely see both trend lines below.
The gains came despite the fact that the insulin, which as a medication has an almost-century-long history, hasn't really changed
since it was first approved.
Nice business to be in, eh? Here's that chart:
It's almost like Lilly (Azar's firm) and Novo Nordisk are working together, isn't it?
[2] Anyhow,
as of the 2016 Clinton campaign , the Democrat standard -- not that of Poses,
nor
mine -- is that if there's no quid pro quo, there's no corruption.
[3] And, curiously, "[HHS head Tommy] Thompson said HHS was in the eye of the storm after the 2001 terrorist attacks, and Azar
had an important role in responding to the resulting public health challenges, as well as the subsequent anthrax attacks "
Oh please, stop quoting Andy Slavitt, the United Healthcare Ingenix algo man. That guy is the biggest crook that made his money
early on with RX discounts with his company that he and Senator Warren's daughter, Amelia sold to United Healthcare. He's out
there trying to do his own reputation restore routine. Go back to 2009 and read about the short paying of MDs by Ingenix, which
is now Optum Insights, he was the CEO and remember it was just around 3 years ago or so he sat there quarterly with United CEO
Hemsley at those quarterly meetings. Look him up, wants 40k to speak and he puts the perception out there he does this for free,
not so.
I think you're missing the context. Lambert is quoting him by way of showing that the sleazy establishment types are just fine
with him. Thanks for the extra background on that particular swamp-dweller, though.
Alex Azar is a Dartmouth grad (Gov't & Economics '88) just like Jeff Immelt (Applied Math & Economics '78). So much damage
to society from such a small department!
Since 2014, Ross has been the vice-chairman of the board of Bank of Cyprus PCL, the largest bank in Cyprus.
He served under U.S. President Bill Clinton on the board of the U.S.-Russia Investment Fund. Later, under New York City Mayor
Rudy Giuliani, Ross served as the Mayor's privatization advisor.
I don't believe that the President's "swamp" ever consisted of crooked officials, lobbyists, and cronies I think it has always
consisted of those regulators who tried sincerely to defend public interests.
It was in the sticky work of those good bureaucrats
that the projects of capitalists and speculators bogged down. It is against their efforts that the pickup-driving cohort of Trump_vs_deep_state
(with their Gadsden flag decals) relentlessly rails.
Trump has made much progress in draining the regulatory swamp (if indeed
that is the right way to identify it), and no doubt will make considerably more as time wears on, leaving America high and dry.
The kind of prevaricator Trump is may simply be the one who fails to define his terms.
I think we've moved past the revolving door. We hear members of the United States Senate publicly voice their concerns about
what will happen if they fail to do their employers' bidding (and I'm not talking about "the public" here). In the bureaucracy,
political appointees keep accruing more and more power even as they make it clearer and clearer that they work for "the donors"
and not the people. Nowhere is this more true than the locus through which passes most of the money: the Pentagon. The fact that
these beribboned heroes are, in fact, setting war policy on their own makes the knowledge that they serve Raytheon and Exxon rather
than Americans very, very troubling.
I suspect Azar's perception is that he is just moving from one post to another within the same company.
Big pharma indeed has so much defense from the supposed left. It combines their faith in technological progress, elite institutions,
and tugs on the heart strings with technology that can save people from a fate of ill health or premature death. Of course, the
aspect of the laws being written to line the pockets of corrupt executives is glossed over. While drug prices and medical costs
spiral ever higher, our overall longevity and national health in the US declines. That speaks volumes about what Democrats really
care about.
