Softpanorama

May the source be with you, but remember the KISS principle ;-)
Home Switchboard Unix Administration Red Hat TCP/IP Networks Neoliberalism Toxic Managers
(slightly skeptical) Educational society promoting "Back to basics" movement against IT overcomplexity and  bastardization of classic Unix

Financial Sector Induced Systemic Instability bulletin, 2016

Home 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008

For the list of top articles see Recommended Links section


Top Visited
Switchboard
Latest
Past week
Past month

NEWS CONTENTS

Old News ;-)

[Dec 31, 2016] Milton Friedman was intellectual prostitute of financial oligarchy most of his long life, starting from his days in Mont Pelerin Society

Dec 31, 2016 | economistsview.typepad.com
JohnH : December 31, 2016 at 04:38 PM
Ironic isn't it? "Why didn't ... exhibit the same restraint in his role as a public intellectual?

The answer, I suspect, is that he got caught up in an essentially political role. Milton Friedman the great economist could and did acknowledge ambiguity. But Milton Friedman the great champion of free markets was expected to preach the true faith, not give voice to doubts. And he ended up playing the role his followers expected. As a result, over time the refreshing iconoclasm of his early career hardened into a rigid defense of what had become the new orthodoxy."

Krugman should have stuck to economics...

likbez -> JohnH...
Yes, this is pretty nasty verdict for Krugman too.

But, in reality, Milton Friedman was an intellectual prostitute of financial oligarchy most of his long life, starting from his days in Mont Pelerin Society ( https://en.wikipedia.org/wiki/Mont_Pelerin_Society) , where he was one of the founders.

So, if the period when he was a good econometrician exists it is limited to pre-war and war years. As he was born in 1912, he was just 33 in 1945. His "A Theory of the Consumption Function" was published in 1957. And "A Monetary History of the United States, 1867–1960" in 1963, when he was already completely crooked.

Mont Pelerin Society was founded in 1947 with the explicit political goal of being hatching place for neoliberal ideology as alternative to communist ideology. He served as a President of this Society from 1970 to 1972.

Capitalism and Freedom that many consider to be neoliberal manifesto similar to Marx and Engels "Manifesto of the Communist Party" was published in 1962.

So what Krugnam is saying is a myth. And he is not an impartial observer. He is a neoliberal himself. I still remember Krugman despicable attacks on John Kenneth Galbraith and his unhealthy fascination with the usage of differential equations in economic modeling, the epitome of mathiness.

[Dec 31, 2016] Problems with Krugman as an economist is that he, as a neoliberal, believes that profit motive is superior to the mutual benefit motive all the time.

Notable quotes:
"... My criticism of Krugman is far more fundamental. I do not believe the profit motive is superior to the mutual benefit motive when it comes to organizing economies. ..."
Dec 31, 2016 | economistsview.typepad.com
Paul Mathis -> anne... , December 31, 2016 at 06:48 PM
I have two problems with Prof. K:

1. His refusal to acknowledge the central role of consumption in our economy. As Keynes said, ""Consumption - to repeat the obvious - is the sole end and object of all economic activity." The General Theory, p. 104.

And Adam Smith agreed: "Consumption is the sole end and purpose of all production." The Wealth of Nations, Book IV Chapter VIII, v. ii, p. 660, para. 49.

2. Krugman's refusal to endorse fiscal stimulus unless the economy is at ZLB. That is not only anti-Keynesian, it plays directly into the hands of the debt fear mongers. (Krugman is also worried about the debt.)

yuan -> Paul Mathis... , December 31, 2016 at 06:56 PM
"Krugman's refusal to endorse fiscal stimulus unless the economy is at ZLB."

That is a strawman, and a bad one.

PS: My criticism of Krugman is far more fundamental. I do not believe the profit motive is superior to the mutual benefit motive when it comes to organizing economies.

anne -> Paul Mathis... , December 31, 2016 at 06:57 PM
Important criticisms.
anne -> Paul Mathis... , December 31, 2016 at 07:00 PM
https://www.marxists.org/reference/archive/smith-adam/works/wealth-of-nations/book04/ch08.htm

1776

An Inquiry into the Nature and Causes of The Wealth of Nations
By Adam Smith

On Systems of Political Economy

Conclusion of the Mercantile System

Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer. The maxim is so perfectly self evident that it would be absurd to attempt to prove it. But in the mercantile system the interest of the consumer is almost constantly sacrificed to that of the producer; and it seems to consider production, and not consumption, as the ultimate end and object of all industry and commerce.

anne -> Paul Mathis... , December 31, 2016 at 07:07 PM
https://www.marxists.org/reference/subject/economics/keynes/general-theory/ch08.htm

1935

The General Theory of Employment, Interest and Money
By John Maynard Keynes

The Propensity to Consume: The Objective Factors

Consumption - to repeat the obvious - is the sole end and object of all economic activity. Opportunities for employment are necessarily limited by the extent of aggregate demand. Aggregate demand can be derived only from present consumption or from present provision for future consumption. The consumption for which we can profitably provide in advance cannot be pushed indefinitely into the future. We cannot, as a community, provide for future consumption by financial expedients but only by current physical output. In so far as our social and business organisation separates financial provision for the future from physical provision for the future so that efforts to secure the former do not necessarily carry the latter with them, financial prudence will be liable to diminish aggregate demand and thus impair well-being, as there are many examples to testify. The greater, moreover, the consumption for which we have provided in advance, the more difficult it is to find something further to provide for in advance, and the greater our dependence on present consumption as a source of demand. Yet the larger our incomes, the greater, unfortunately, is the margin between our incomes and our consumption. So, failing some novel expedient, there is, as we shall see, no answer to the riddle, except that there must be sufficient unemployment to keep us so poor that our consumption falls short of our income by no more than the equivalent of the physical provision for future consumption which it pays to produce to-day.

anne -> Paul Mathis... , -1
Krugman's refusal to endorse fiscal stimulus unless the economy is at zero lower bound. That is not only anti-Keynesian, it plays directly into the hands of the debt fear mongers. (Krugman is also worried about the debt.)

[ Only correct to a degree, economic weakness is recognized. ]

[Dec 31, 2016] Economists View 2007 Krugman on Milton Friedman

Dec 31, 2016 | economistsview.typepad.com
Mathew Kahn:
2007 Krugman on Milton Friedman : As you read this direct Paul Krugman quote, do y ou hear this song in the background.

"What's odd about Friedman's absolutism on the virtues of markets and the vices of government is that in his work as an economist's economist he was actually a model of restraint. As I pointed out earlier, he made great contributions to economic theory by emphasizing the role of individual rationality-but unlike some of his colleagues, he knew where to stop. Why didn't he exhibit the same restraint in his role as a public intellectual?

The answer, I suspect, is that he got caught up in an essentially political role. Milton Friedman the great economist could and did acknowledge ambiguity. But Milton Friedman the great champion of free markets was expected to preach the true faith, not give voice to doubts. And he ended up playing the role his followers expected. As a result, over time the refreshing iconoclasm of his early career hardened into a rigid defense of what had become the new orthodoxy.

In the long run, great men are remembered for their strengths, not their weaknesses, and Milton Friedman was a very great man indeed-a man of intellectual courage who was one of the most important economic thinkers of all time, and possibly the most brilliant communicator of economic ideas to the general public that ever lived. But there's a good case for arguing that Friedmanism, in the end, went too far, both as a doctrine and in its practical applications. When Friedman was beginning his career as a public intellectual, the times were ripe for a counterreformation against Keynesianism and all that went with it. But what the world needs now, I'd argue, is a counter-counterreformation."

Paul Mathis : , December 31, 2016 at 02:26 PM

Counter-reformation? Not exactly.

In an interview with Public Broadcasting System on Oct. 1, 2000, Dr. Milton Friedman said, "Let me emphasize [that] I think Keynes was a great economist. I think his particular theory in The General Theory of Employment, Interest, and Money is a fascinating theory. It's a right kind of a theory. It's one which says a lot by using only a little. So it's a theory that has great potentiality."

Brilliant economist? Not exactly. For monetarists who believe as Dr. Friedman did that "inflation is always and everywhere a monetary phenomenon," the nearly $4 trillion added to the money supply by the Fed since 2008 should have produced raging hyper-inflation. For Friedman, the answer was not debatable: "A steady rate of monetary growth at a moderate level can provide a framework under which a country can have little inflation and much growth." The Counter-Revolution in Monetary Theory (1970).

Dan Berg -> Paul Mathis... , December 31, 2016 at 02:38 PM
$4 T was not "added to the money supply"

https://fred.stlouisfed.org/graph/?g=2VX3

For Krugman, this is called being hoisted by one's own petard.

anne -> Dan Berg ... , December 31, 2016 at 03:35 PM
https://fred.stlouisfed.org/graph/?g=2VX3 :

this graph, which should have been labelled but was not, depicts the monetary base from October 2012 to December 2015 for reasons that are a mystery to me.

anne -> Paul Mathis... , December 31, 2016 at 02:44 PM
https://fred.stlouisfed.org/graph/?g=cfmn

January 15, 2016

Adjusted Monetary Base, 2000-2016


https://fred.stlouisfed.org/graph/?g=cfmq

January 15, 2016

Adjusted Monetary Base, 2008-2016

anne -> anne... , December 31, 2016 at 02:47 PM
About $3 trillion was added to the monetary base between 2008 and the beginning of 2015.
Dan Berg -> anne... , December 31, 2016 at 05:05 PM
so why are you depicting the monetary base if they are such a mystery; and without labels?
anne -> anne... , December 31, 2016 at 05:18 PM
Perfectly described and drawn graphs depicting more than a $3 trillion increase in the monetary base between 2008 and 2015. Nice and simple as that:

https://fred.stlouisfed.org/graph/?g=cfmn

January 15, 2016

Adjusted Monetary Base, 2000-2016

https://fred.stlouisfed.org/graph/?g=cfmq

January 15, 2016

Adjusted Monetary Base, 2008-2016

Tra la, tra la.

anne -> Paul Mathis... , December 31, 2016 at 03:44 PM
http://krugman.blogs.nytimes.com/2013/08/08/milton-friedman-unperson/

August 8, 2013

Milton Friedman, Unperson
By Paul Krugman

So Friedman has vanished from the policy scene - so much so that I suspect that a few decades from now, historians of economic thought will regard him as little more than an extended footnote.

anne -> Paul Mathis... , December 31, 2016 at 05:26 PM
Do write further on this matter when possible.
anne : , December 31, 2016 at 02:39 PM
http://www.nybooks.com/articles/19857

February 15, 2007

Who Was Milton Friedman?
By Paul Krugman - New York Review of Books

1.

The history of economic thought in the twentieth century is a bit like the history of Christianity in the sixteenth century. Until John Maynard Keynes published The General Theory of Employment, Interest, and Money in 1936, economics-at least in the English-speaking world-was completely dominated by free-market orthodoxy. Heresies would occasionally pop up, but they were always suppressed. Classical economics, wrote Keynes in 1936, "conquered England as completely as the Holy Inquisition conquered Spain." And classical economics said that the answer to almost all problems was to let the forces of supply and demand do their job.

But classical economics offered neither explanations nor solutions for the Great Depression. By the middle of the 1930s, the challenges to orthodoxy could no longer be contained. Keynes played the role of Martin Luther, providing the intellectual rigor needed to make heresy respectable. Although Keynes was by no means a leftist-he came to save capitalism, not to bury it-his theory said that free markets could not be counted on to provide full employment, creating a new rationale for large-scale government intervention in the economy.

Keynesianism was a great reformation of economic thought. It was followed, inevitably, by a counter-reformation. A number of economists played important roles in the great revival of classical economics between 1950 and 2000, but none was as influential as Milton Friedman. If Keynes was Luther, Friedman was Ignatius of Loyola, founder of the Jesuits. And like the Jesuits, Friedman's followers have acted as a sort of disciplined army of the faithful, spearheading a broad, but incomplete, rollback of Keynesian heresy. By the century's end, classical economics had regained much though by no means all of its former dominion, and Friedman deserves much of the credit.

I don't want to push the religious analogy too far. Economic theory at least aspires to be science, not theology; it is concerned with earth, not heaven. Keynesian theory initially prevailed because it did a far better job than classical orthodoxy of making sense of the world around us, and Friedman's critique of Keynes became so influential largely because he correctly identified Keynesianism's weak points. And just to be clear: although this essay argues that Friedman was wrong on some issues, and sometimes seemed less than honest with his readers, I regard him as a great economist and a great man....

anne -> anne... , December 31, 2016 at 03:00 PM
http://krugman.blogs.nytimes.com/2009/03/02/friedman-and-schwartz-were-wrong/

March 2, 2009

Friedman and Schwartz Were Wrong
By Paul Krugman

It's one of Ben Bernanke's most memorable quotes: at a conference honoring Milton Friedman on his 90th birthday, he said: *

"Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again."

He was referring to the Friedman-Schwartz argument that the Fed could have prevented the Great Depression if only it has been more aggressive in countering the fall in the money supply. This argument later mutated into the claim that the Fed caused the Depression, but its original version still packed a strong punch. Basically, it implied that no fundamental reforms of the economy were necessary; all it takes to avoid depressions is for central banks to do their job.

But can we say that recent events appear to disprove that claim? (So did Japan's experience in the 1990s, but that lesson failed to sink in.) What we have now is a Fed that is determined not to "do it again." It has been very aggressive about monetary expansion. Here's one measure of that aggressiveness, banks' excess reserves:

[Bank excess reserves, 1990-2009]

And yet the world economy is still falling off a cliff.

Preventing depressions, it turns out, is a lot harder than we were taught.

* http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021108/default.htm

anne -> anne... , December 31, 2016 at 03:17 PM
https://fred.stlouisfed.org/graph/?g=cfmx

January 30, 2016

Excess Reserves of Depository Institutions, 1990-2009

[Dec 31, 2016] Greed Springs Eternal

Notable quotes:
"... You can't go all Ayn Rand/Gordon Gekko on the importance of greed as a motivator while claiming that wealth insulates ... from temptation. ... ..."
"... And this is telling us something significant: namely, that supply-side economic theory is and always was a sham. It was never about the incentives; it was just another excuse to make the rich richer. ..."
"... "The modern conservative is engaged in one of man's oldest exercises in moral philosophy: that is, the search for a superior moral justification for selfishness." ..."
"... choosing a cabinet of billionaires, because rich men are incorruptible"...kind of like showering ZIRP on the Wall Street banking cartel and letting them how to ration credit to the rest of economy...mostly their wealthy clientele, who use it for stock buy-backs and asset speculation. ..."
"... Of course, 'liberal' economists see nothing wrong with trickle down, supply side economics, as long as it's the Wall Street banking cartel who's in charge of it... ..."
"... Stiglitz: "I've always said that current monetary policy is not going to work because quantitative easing is based on a variant of trickle-down economics. The lower interest rates have led to a stock-market bubble – to increases in stock-market prices and huge increases in wealth. But relatively little of that's been translated into increased and broad consumer spending." ..."
"... But pgl and many other '[neo[liberal' economists just can't get enough of the trickle down monetary policy...all the while they vehemently condemn trickle down tax policy. ..."
"... You all think Trump can do worse than the sitting cabal adding $660B from Sep 2015 to the federal debt quietly keeping the economy going for the incumbent party? ..."
"... The losers think the winners are as crooked as they! ..."
Dec 31, 2016 | economistsview.typepad.com

To belabor what should be obvious: either the wealthy care about having more money or they don't. If lower marginal tax rates are an incentive to produce more, the prospect of personal gain is an incentive to engage in corrupt practices. You can't go all Ayn Rand/Gordon Gekko on the importance of greed as a motivator while claiming that wealth insulates ... from temptation. ...

And this is telling us something significant: namely, that supply-side economic theory is and always was a sham. It was never about the incentives; it was just another excuse to make the rich richer.

Anomalous Cowherd : December 29, 2016 at 11:35 AM
In one sentence, you still can't beat John Kenneth Galbraith's assessment: "The modern conservative is engaged in one of man's oldest exercises in moral philosophy: that is, the search for a superior moral justification for selfishness."

Nothing is more admirable than the fortitude with which millionaires tolerate the disadvantages of their wealth. -- Nero Wolfe

DrDick -> Anomalous Cowherd... , December 29, 2016 at 12:31 PM
You need to know nothing else to understand the entirety of the conservative edifice.
JohnH :
"choosing a cabinet of billionaires, because rich men are incorruptible"...kind of like showering ZIRP on the Wall Street banking cartel and letting them how to ration credit to the rest of economy...mostly their wealthy clientele, who use it for stock buy-backs and asset speculation.

Of course, 'liberal' economists see nothing wrong with trickle down, supply side economics, as long as it's the Wall Street banking cartel who's in charge of it...

Gibbon1 : , December 29, 2016 at 12:29 PM
Why do we need Krugman to tell us this?
DrDick -> Gibbon1... , -1
*We* do not, but our pandering press does and I think that is Krugman's intended target.
JohnH -> pgl...
Stiglitz: "I've always said that current monetary policy is not going to work because quantitative easing is based on a variant of trickle-down economics. The lower interest rates have led to a stock-market bubble – to increases in stock-market prices and huge increases in wealth. But relatively little of that's been translated into increased and broad consumer spending."
http://www.theglobeandmail.com/opinion/munk-debates/joseph-stiglitz-current-monetary-policy-is-not-going-to-work/article24346548/

But pgl and many other '[neo[liberal' economists just can't get enough of the trickle down monetary policy...all the while they vehemently condemn trickle down tax policy.

yuan -> JohnH...
and few liberal economists have been more skeptical of QE's economic impact than Krugman.

http://www.marketwatch.com/story/krugman-meh-is-grade-fed-gets-on-qe-2015-11-09

PS: bernie, please save me from your bros.

ilsm :
You all think Trump can do worse than the sitting cabal adding $660B from Sep 2015 to the federal debt quietly keeping the economy going for the incumbent party?

The losers think the winners are as crooked as they!

yuan -> ilsm...
when we can borrow over the long-term at 3% and have truly massive infrastructure and clean energy needs we should be borrowing like military Keynesian republicans...

[Dec 29, 2016] Krugman was clearly a neoliberal propagandist on payroll. His columns are clearly partisan.

Dec 29, 2016 | economistsview.typepad.com
Peter K. :

All of the Democratic primary voters somehow believed Hillary Clinton would make a better candidate against Trump than Sanders would.

And now we're stuck with Trump for at least 4 years.

Good job.

As Saul Bellow once said, "a great deal of intelligence can be invested in ignorance when the need for illusion is strong". Reply Wednesday, December 28, 2016 at 07:09 PM Peter K. -> Peter K.... , December 28, 2016 at 07:11 PM

Seriously why should we ever believe these neoliberal centrist Democrats again?

Why when they were so very, very wrong!

Krugman ASSURED us Clinton was a great candidate who would easily win.

likbez -> Peter K.... , December 28, 2016 at 10:09 PM
Krugman was clearly a neoliberal propagandist on payroll. He should not be even discussed in this context because his columns were so clearly partisan.

As for "Centrist Democrats" (aka Clinton wing of the party) their power is that you have nowhere to go: they rule the Democratic Party and the two party system guarantees that any third party will be either squashed or assimilated.

In no way they need that you believe them: being nowhere to go is enough.

Remember what happened with Sanders supporters during the convention? They were silenced. And then eliminated. That's how this system works.

Cal -> likbez... , -1
Krugman is a polarizing agent here in RiverCity...to our collective loss IMHO...as you know I don't have the Nobel.
But you might be giving him some hope with that "was"? Clearly he does not need $.

He is writing for our....yes, American, maybe even Global citizenship, which he thinks is in peril. It is. Otherwise I'd be out fishing.

And you? What's in it for you? Are you familiar with the history of political party systems that transition in and out of 2 parties? Is this little forum an example of the 2 party system: pro/con Krugman?

Egmont Kakarot-Handtke : , -1
Americans believe crazy things, yet they are outdone by economists
Comment on Catherine Rampell on 'Americans - especially but not exclusively Trump voters - believe crazy, wrong things'#1

Americans are NOT special. Since more than 5000 years people believe things JUST BECAUSE they are absurd - in accordance with Tertullian's famous dictum "credo quia absurdum".#2

As a matter of principle, almost everybody has the right to his own opinion no matter how stupid, crazy, wrong, or absurd; the only exception are scientists. The ancient Greeks started science with the distinction between doxa (= opinion) and episteme (= knowledge). Scientific knowledge is well-defined by material and formal consistency. Knowledge is established by proof, belief or opinion counts for nothing.

Opinion is the currency in the political sphere, knowledge is the currency is the scientific sphere. It is extremely important to keep both spheres separate. Since the founding fathers, though, economists have not emancipated themselves from politics. They claim to do science but they have never risen above the level of opinion, belief, wish-wash, storytelling, soap box propaganda, and sitcom gossip.

The orthodox majority still believes in these Walrasian hard core absurdities: "HC1 economic agents have preferences over outcomes; HC2 agents individually optimize subject to constraints; HC3 agent choice is manifest in interrelated markets; HC4 agents have full relevant knowledge; HC5 observable outcomes are coordinated, and must be discussed with reference to equilibrium states." (Weintraub)

To be clear: HC2, HC4, HC5 are NONENTITIES like angels, Spiderman, or the Easter Bunny.

The heterodox minority still believes in these ill-defined Keynesian relationships: "Income = value of output = consumption + investment. Saving = income - consumption. Therefore saving = investment."

Until this day, Walrasians, Keynesians, Marxians, Austrians hold to their provable false beliefs and claim to do science. This is absurdity on stilts but it is swallowed hook, line and sinker by every new generation of economics students. Compared to the representative economist the average political sucker is a genius.

Egmont Kakarot-Handtke

#1 The Washington Post
https://www.washingtonpost.com/news/rampage/wp/2016/12/28/americans-especially-but-not-exclusively-trump-voters-believe-crazy-wrong-things/?utm_term=.3b8eabe9eb3d
#2 Wikipedia
https://en.wikipedia.org/wiki/Credo_quia_absurdum

[Dec 29, 2016] MSM has a nerve to critize ordinary American for believing in wrong things.

Did not William Casey (CIA Director) say, "We'll know our disinformation program is complete when everything the American public believes is false."?
Notable quotes:
"... The media should certainly shoulder some blame for parroting militarist propaganda but ordinary USAnians who continue to reward these scoundrels with their votes. And with Trump ordinary USAnians appear to have elected someone even more willing to shamelessly lie and loot than his predecessors. ..."
Dec 29, 2016 | economistsview.typepad.com

Catherine Rampell:

American Believe Crazy, Wrong Things : Many Americans believe a lot of dumb, crazy, destructive, provably wrong stuff.

JohnH, December 28, 2016 at 03:23 PM

Americans are also led to believe a lot of crazy, wrong things, such as Saddam had WMDs, or Iran had a nuclear weapons program, to cite only the most outrageous lies dutifully propagated by the mainstream media.

Before Catherine Rampell criticizes ordinary Americans, she should have the Washington Post engage in a little serious introspection and self-criticism...

yuan -> JohnH... , December 28, 2016 at 03:50 PM
The media should certainly shoulder some blame for parroting militarist propaganda but ordinary USAnians who continue to reward these scoundrels with their votes. And with Trump ordinary USAnians appear to have elected someone even more willing to shamelessly lie and loot than his predecessors.

It is time for ordinary USAnians to engage in a lot of serious introspection and self-criticism. I doubt this will happen until it's too late. (Very thankful that I am not tied to this nation!)

Chris G -> yuan... , -1
>It is time for ordinary USAnians to engage in a lot of serious introspection and self-criticism.

Don't hold your breath. Introspection and self-criticism aren't our strong suits. They run counter to that whole "American exceptionalism" thing.

> I doubt this will happen until it's too late.

I doubt that it will ever happen but, if it does, I have no doubt that it will happen until after its too late to salvage what currently passes for civilization in these parts.

"There's a big difference between the task of trying to sustain "civilisation" in its current form... and the task of holding open a space for the things which make life worth living. I'd suggest that it's this second task, in its many forms, which remains, after we've given up on false hopes." ( http://dark-mountain.net/blog/what-do-you-do-after-you-stop-pretending/)

Time to let go of false hopes.

[Dec 28, 2016] Neoliberalism consists of several eclectic parts such as neoclassic economics, mixture of Nietzscheanism (often in the form of Ann Rand philosophy; with the replacement of concept of Ubermench with creative class concept)) with corporatism.

Notable quotes:
"... But there are other flavors too. For example Trump introduced another flavor which I called "bastard neoliberalism". Which is the neoliberalism without neoliberal globalization and without "Permanent revolution" mantra -- efforts for enlargement of the US led global neoliberal empire. Somewhat similar to Eduard Bernstein "revisionism" in Marxism. Or Putinism - which is also a flavor of neoliberalism with added "strong state" part and "resource nationalism" bent, which upset so much the US neoliberal establishment, as it complicates looting of the country by transnational corporations. ..."
"... Neoliberalism also can be viewed as a modern mutation of corporatism, favoring multinationals (under disguise of "free trade"), privatization of state assets, minimal government intervention in business (with financial oligarchy being like Soviet nomenklatura above the law), reduced public expenditures on social services, and decimation of New Deal, strong anti trade unionism stance and attempt to atomize work force (perma temps as preferred mode of employment giving employers "maximum flexibility") , neocolonialism and militarism in foreign relations (might makes right). ..."
"... The word "elite" in the context of neoliberalism has the same meaning as the Russian word nomenklatura. https://en.wikipedia.org/wiki/Nomenklatura, -- the political establishment holding or controlling both public and private power centers such as media, finance, academia, culture, trade, industry, state and international institutions. ..."
Dec 28, 2016 | economistsview.typepad.com
sanjait -> Peter K.... December 28, 2016 at 05:02 PM , 2016 at 05:02 PM
At this point, when I hear people use the words "neoliberal," "elites" and "the media" in unspecified or highly generalized terms to make broad characterizations ... I know I'm dealing with an unserious person.

sanjait -> sanjait... , December 28, 2016 at 05:05 PM
It's a lot like when someone says "structural reform" without specification in an economic discussion: An almost perfect indicator of vacuity.
likbez -> sanjait... , -1
Let's define the terms.

Neoliberals are those who adhere to the doctrine of Neoliberalism (the "prohibited" word you should not ever see in the US MSM ;-)

In this sense the term is very similar to Marxists (with the replacement of the slogan of "proletarians of all nations unite" with the "financial oligarchy of all countries unite"). Or more correctly they are the "latter day Trotskyites".

Neoliberalism consists of several eclectic parts such as neoclassic economics, mixture of Nietzscheanism (often in the form of Ann Rand philosophy; with the replacement of concept of Ubermench with "creative class" concept)) with corporatism. Like with Marxism there are different flavors of neoliberalism and different factions like "soft neoliberalism" (Clinton third way) which is the modern Democratic Party doctrine, and hard neoliberalism (Republican party version), often hostile to each other.

But there are other flavors too. For example Trump introduced another flavor which I called "bastard neoliberalism". Which is the neoliberalism without neoliberal globalization and without "Permanent revolution" mantra -- efforts for enlargement of the US led global neoliberal empire. Somewhat similar to Eduard Bernstein "revisionism" in Marxism. Or Putinism - which is also a flavor of neoliberalism with added "strong state" part and "resource nationalism" bent, which upset so much the US neoliberal establishment, as it complicates looting of the country by transnational corporations.

Neoliberalism also can be viewed as a modern mutation of corporatism, favoring multinationals (under disguise of "free trade"), privatization of state assets, minimal government intervention in business (with financial oligarchy being like Soviet nomenklatura above the law), reduced public expenditures on social services, and decimation of New Deal, strong anti trade unionism stance and attempt to atomize work force (perma temps as preferred mode of employment giving employers "maximum flexibility") , neocolonialism and militarism in foreign relations (might makes right).

Like for any corporatist thinkers the real goals are often hidden under thick smoke screen of propaganda.

The word "elite" in the context of neoliberalism has the same meaning as the Russian word nomenklatura. https://en.wikipedia.org/wiki/Nomenklatura, -- the political establishment holding or controlling both public and private power centers such as media, finance, academia, culture, trade, industry, state and international institutions.

[Dec 28, 2016] Free trade is a delicate instrument, much like tennis racket.

Dec 28, 2016 | economistsview.typepad.com
Economists believe crazy things: December 28, 2016 at 06:05 PM

[As if] protectionist Japan is now backward and poverty stricken; free trade Africa is soaring on the wings of giant trade deficits :

Economists lead the way in silly beliefs that defy empirical reality and common sense. The most glaring example of this is the view that free trade is beneficial. All evidence points in the opposite direction, but no matter - our fake economists are happy to say/believe whatever so long as their foreign government paymasters and banks write the ten thousand dollar checks for "consulting" and "academic reports".

likbez -> Economists believe crazy things.. December 28, 2016 at 07:31 PM

You are probably wrong. Free trade is a delicate instrument, much like tennis racket. If you hold it too tightly you can't play well. If you hold it too loose you can't play well either.

Neoliberals promote "free trade" (note "free" not "fair") as the universal cure for all nations problems in all circumstances. This is a typical neoliberal Three-card Monte.

The real effect in many cases is opening market for transnationals who dictate nations the rules of the game and loot the country.

But isolationism has its own perils. So some middle ground should be fought against excessive demands of neoliberal institutions like IMF and World Bank. For example, any country that take loans from them (usually on pretty harsh conditions; with string attached), has a great danger that money will be looted via local fifth column. And will return in no time back into Western Banks leaving the country in the role of the debt slave.

The latter is the preferred role neoliberals want to see each and every third world country (and not only third world countries -- see Greece and Cyprus). Essentially in their "secret" book this is the role those counties should be driven into.

Recent looting of Ukraine is the textbook example of this process. The majority of population now will live on less then $2 a day for many, many years.

At the same time, balancing free trade and isolationism is tricky process also. Because at some point, the subversion starts and three letter agencies come into the play. You risk getting color revolution as a free present for your refusal to play the game.

Neoliberals usually do not take NO for the answer.

That's when the word "neoliberal" becomes yet another dirty word.

[Dec 28, 2016] MSm pressutute has a nerve to critize ordinary American for beleaving in wrong things.

Dec 28, 2016 | economistsview.typepad.com
Did William Casey (CIA Director) really say, "We'll know our disinformation program is complete when everything the American public believes is false."?

Catherine Rampell:

American Believe Crazy, Wrong Things : Many Americans believe a lot of dumb, crazy, destructive, provably wrong stuff.

JohnH : , December 28, 2016 at 03:23 PM

Americans are also led to believe a lot of crazy, wrong things, such as Saddam had WMDs, or Iran had a nuclear weapons program, to cite only the most outrageous lies dutifully propagated by the mainstream media.

Before Catherine Rampell criticizes ordinary Americans, she should have the Washington Post engage in a little serious introspection and self-criticism...

yuan -> JohnH... , December 28, 2016 at 03:50 PM
The media should certainly shoulder some blame for parroting militarist propaganda but ordinary USAnians who continue to reward these scoundrels with their votes. And with Trump ordinary USAnians appear to have elected someone even more willing to shamelessly lie and loot than his predecessors.

It is time for ordinary USAnians to engage in a lot of serious introspection and self-criticism. I doubt this will happen until it's too late. (Very thankful that I am not tied to this nation!)

yuan -> yuan... , December 28, 2016 at 03:50 PM
"but it is ordinary"

[Dec 27, 2016] Class Struggle In The USA

Notable quotes:
"... Rich individuals (who are willing to be interviewed) also express concern about inequality but generally oppose using higher taxes on the rich to fight it. Scheiber is very willing to bluntly state his guess (and everyone's) that candidates are eager to please the rich, because they spend much of their time begging the rich for contributions. ..."
"... Of course another way to reduce inequality is to raise wages. Buried way down around paragraph 9 I found this gem: "Forty percent of the wealthy, versus 78 percent of the public, said the government should make the minimum wage "high enough so that no family with a full-time worker falls below the official poverty line." ..."
"... The current foundational rules embedded in tax law, intellectual property law, corporate construction law, and other elements of our legal and regulatory system result in distributions that favor those with capital or in a position to seek rents. This isn't a situation that calls for a Robin Hood who takes from the rich and gives to the poor. It is more a question of how elites have rigged the system to work primarily for them. ..."
"... the problem is incomes and demand, and the first and best answer for creating demand for workers and higher wages to compete for those workers is full employment. ..."
"... if you are proposing raising taxes on the rich SO THAT you can cut taxes on the non rich you are simply proposing theft. ..."
"... what we are looking at here is simple old fashioned greed just as stupid and ugly among the "non rich" as it is among the rich. ..."
"... you play into the hands of the Petersons who want to "cut taxes" and leave the poor elderly to die on the streets, and the poor non-elderly to spend their lives in anxiety and fear-driven greed trying to provide against desperate poverty in old age absent any reliable security for their savings.) ..."
"... made by the ayn rand faithful. it is wearisome. ..."
"... The only cure for organized greed is organized labor. ..."
"... A typical voice of American politics is the avoidance of saying anything real on real issues" ..."
Mar 29, 2015 | Angry Bear

Noam Scheiber has a hard hitting article on the front page of www.nytimes.com "2016 Candidates and Wealthy Are Aligned on Inequality"

The content should be familiar to AngryBear readers. A majority of Americans are alarmed by high and increasing inequality and support government action to reduce inequality. However, none of the important 2016 candidates has expressed any willingness to raise taxes on the rich. The Republicans want to cut them and Clinton (and a spokesperson) dodge the question.

Rich individuals (who are willing to be interviewed) also express concern about inequality but generally oppose using higher taxes on the rich to fight it. Scheiber is very willing to bluntly state his guess (and everyone's) that candidates are eager to please the rich, because they spend much of their time begging the rich for contributions.

No suprise to anyone who has been paying attention except for the fact that it is on the front page of www.nytimes.com and the article is printed in the business section not the opinion section. Do click the link - it is brief, to the point, solid, alarming and a must read.

I clicked one of the links and found weaker evidence than I expected for Scheiber's view (which of course I share

"By contrast, more than half of Americans and three-quarters of Democrats believe the "government should redistribute wealth by heavy taxes on the rich," according to a Gallup poll of about 1,000 adults in April 2013."

It is a small majority 52% favor and 47% oppose. This 52 % is noticeably smaller than the solid majorities who have been telling Gallup that high income individuals pay less than their fair share of taxes (click and search for Gallup on the page).

I guess this isn't really surprising - the word "heavy" is heavy maaaan and "redistribute" evokes the dreaded welfare (and conservatives have devoted gigantic effort to giving it pejorative connotations). The 52% majority is remarkable given the phrasing of the question. But it isn't enough to win elections, since it is 52% of adults which corresponds to well under 52% of actual voters.

My reading is that it is important for egalitarians to stress the tax cuts for the non rich and that higher taxes on the rich are, unfortunately, necessary if we are to have lower taxes on the non rich without huge budget deficits. This is exactly Obama's approach.

Comments (87)

Jerry Critter

March 29, 2015 10:40 pm

Get rid of tax breaks that only the wealthy can take advantage of and perhaps everyone will pay their fair share. The same goes for corporations.

amateur socialist

March 30, 2015 11:42 am

Of course another way to reduce inequality is to raise wages. Buried way down around paragraph 9 I found this gem: "Forty percent of the wealthy, versus 78 percent of the public, said the government should make the minimum wage "high enough so that no family with a full-time worker falls below the official poverty line."

I'm fine with raising people's taxes by increasing their wages. A story I heard on NPR recently indicated that a single person needs to make about $17-19 an hour to cover most basic necessities nowadays (the story went on to say that most people in that situation are working 2 or more jobs to get enough income, a "solution" that creates more problems with health/stress etc.). A full time worker supporting kids needs more than $20.

You double the minimum wage and strengthen people's rights to organize union representation. Tax revenues go up (including SS contributions btw) and we add significant growth to the economy with the increased purchasing power of workers. People can go back to working 40-50 hours a week and cut back on moonlighting which creates new job opportunities for the younger folks decimated by this so called recovery.

Win Win Win Win. And the poor overburdened millionaires don't have to have their poor tax fee fees hurt.

Mark Jamison, March 30, 2015 8:09 pm

How about if we get rid of the "re" and call it what it is "distribution". The current foundational rules embedded in tax law, intellectual property law, corporate construction law, and other elements of our legal and regulatory system result in distributions that favor those with capital or in a position to seek rents.

This isn't a situation that calls for a Robin Hood who takes from the rich and gives to the poor. It is more a question of how elites have rigged the system to work primarily for them. Democrats cede the rhetoric to the Right when they allow the discussion to be about redistribution. Even talk of inequality without reference to the basic legal constructs that are rigged to create slanted outcomes tend to accepted premises that are in and of themselves false.

The issue shouldn't be rejiggering things after the the initial distribution but creating a system with basic rules that level the opportunity playing field.

coberly, March 30, 2015 11:03 pm

Thank You Mark Jamison!

An elegant, informed writer who says it better than I can.

But here is how I would say it:

Addressing "inequality" by "tax the rich" is the wrong answer and a political loser.

Address inequality by re-criminalizing the criminal practices of the criminal rich. Address inequality by creating well paying jobs with government jobs if necessary (and there is necessary work to be done by the government), with government protection for unions, with government policies that make it less profitable to off shore

etc. the direction to take is to make the economy more fair . actually more "free" though you'll never get the free enterprise fundamentalists to admit that's what it is. You WILL get the honest rich on your side. They don't like being robbed any more than you do.

But you will not, in America, get even poor people to vote to "take from the rich to give to the poor." It has something to do with the "story" Americans have been telling themselves since 1776. A story heard round the world.

That said, there is nothing wrong with raising taxes on the rich to pay for the government THEY need as well as you. But don't raise taxes to give the money to the poor. They won't do it, and even the poor don't want it except as a last resort, which we hope we are not at yet.

urban legend, March 31, 2015 2:07 am

Coberly, you are dead-on. Right now, taxation is the least issue. Listen to Jared Bernstein and Dean Baker: the problem is incomes and demand, and the first and best answer for creating demand for workers and higher wages to compete for those workers is full employment. Minimum wage will help at the margins to push incomes up, and it's the easiest initial legislative sell, but the public will support policies - mainly big-big infrastructure modernization in a country that has neglected its infrastructure for a generation - that signal a firm commitment to full employment.

It's laying right there for the Democrats to pick it up. Will they? Having policies that are traditional Democratic policies will not do the job. For believability - for convincing voters they actually have a handle on what has been wrong and how to fix it - they need to have a story for why we have seem unable to generate enough jobs for over a decade. The neglect of infrastructure - the unfilled millions of jobs that should have gone to keeping it up to date and up to major-country standards - should be a big part of that story. Trade and manufacturing, to be sure, is the other big element that will connect with voters. Many Democrats (including you know who) are severely compromised on trade, but they need to find a way to come own on the right side with the voters.

coberly, March 31, 2015 10:52 am

Robert

i wish you'd give some thought to the other comments on this post.

if you are proposing raising taxes on the rich SO THAT you can cut taxes on the non rich you are simply proposing theft. if you were proposing raising taxes on the rich to provide reasonable welfare to those who need it you would be asking the rich to contribute to the strength of their own country and ultimately their own wealth.

i hope you can see the difference.

it is especially irritating to me because many of the "non rich" who want their taxes cut make more than twice as much as i do. what we are looking at here is simple old fashioned greed just as stupid and ugly among the "non rich" as it is among the rich.

"the poor" in this country do not pay a significant amount of taxes (Social Security and Medicare are not "taxes," merely an efficient way for us to pay for our own direct needs . as long as you call them taxes you play into the hands of the Petersons who want to "cut taxes" and leave the poor elderly to die on the streets, and the poor non-elderly to spend their lives in anxiety and fear-driven greed trying to provide against desperate poverty in old age absent any reliable security for their savings.)

Kai-HK, April 4, 2015 12:23 am

coberly,

Thanks for your well-reasoned response.

You state, 'i personally am not much interested in the "poor capitalist will flee the country if you tax him too much." in fact i'd say good riddance, and by the way watch out for that tarriff when you try to sell your stuff here.'

(a) What happens after thy leave? Sure you can get one-time 'exit tax' but you lose all the intellectual capital (think of Bill Gates, Warren Buffet, or Steve Jobs leaving and taking their intellectual property and human capital with them). These guys are great jobs creators it will not only be the 'bad capitalists' that leave but also many of the 'job creating' good ones.

(b) I am less worried about existing job creating capitalists in America; what about the future ones? The ones that either flee overseas and make their wealth there or are already overseas and then have a plethora of places they can invest but why bother investing in the US if all they are going to do is call me a predator and then seize my assets and or penalise me for investing there? Right? It is the future investment that gets impacted not current wealth per se.

You also make a great point, 'the poor are in the worst position with respect to shifting their tax burden on to others. the rich do it as a matter of course. it would be simpler just to tax the rich there are fewer of them, and they know what is at stake, and they can afford accountants. the rest of us would pay our "taxes" in the form of higher prices for what we buy.'

Investment capital will go where it is best treated and to attract investment capital a market must provide a competitive return (profit margin or return on investment). Those companies and investment that stay will do so because they are able to maintain that margin .and they will do so by either reducing wages or increasing prices. Where they can do neither, their will exit the market.

That is why, according to research, a bulk of the corporate taxation falls on workers and consumers as a pass-on effect. The optimum corporate tax is 0. This will be the case as taxation increases on the owners of businesses and capital .workers, the middle class, and the poor pay it. The margins stay competitive for the owners of capital since capital is highly mobile and fungible.Workers and the poor less so.

But thanks again for the tone and content of your response. I often get attacked personally for my views instead of people focusing on the issue. I appreciate the respite.

K

coberly, April 4, 2015 12:34 pm

kai

yes, but you missed the point.

i am sick of the whining about taxes. it takes so much money to run the country (including the kind of pernicious poverty that will turn the US into sub-saharan africa. and then who will buy their products.

i can't do much about the poor whining about taxes. they are just people with limited understanding, except for their own pressing needs. the rich know what the taxes are needed for, they are just stupid about paying them. of course they would pass the taxes through to their customers. the customers would still buy what they need/want at the new price. leaving everyone pretty much where they are today financially. but the rich would be forced to be grownup about "paying" the taxes, and maybe the politics of "don't tax me tax the other guy" would go away.

as for the sainted bill gates. there are plenty of other people in this country as smart as he is and would be happy to sell us computer operating systems and pay the taxes on their billion dollars a year profits.

nothing breaks my heart more than a whining millionaire.

Kai-HK

April 4, 2015 11:32 pm

Sure I got YOUR point, it just didn't address MY points as put forth in MY original post. And it still doesn't.

More importantly, you have failed to defend YOUR point against even a rudimentary challenge.

K

coberly, April 5, 2015 12:45 pm

kai,

rudimentary is right.

i have read your "points" about sixteen hundred times in the last year alone. made by the ayn rand faithful. it is wearisome.

and i have learned there is no point in trying to talk to true believers.

William Ryan, May 13, 2015 4:43 pm

Thanks again Coberly for your and K's very thoughtful insight. You guys really made me think hard today and I do see your points about perverted capitalism being a big problem in US. I still do like the progressive tax structure and balanced trade agenda better.

I realize as you say that we cannot compare US to Hong Kong just on size and scale alone. Without all the obfuscation going Lean by building cultures that makes people want to take ownership and sharing learning and growing together is a big part of the solution Ford once said "you cannot learn in school what the world is going to do next".

Also never argue with an idiot. They will bring you down to their level then beat you with experience. The only cure for organized greed is organized labor. It's because no matter what they do nothing get done about it. With all this manure around there must be a pony somewhere! "

Last one.

coberly , May 16, 2015 9:57 pm

kai

as a matter of fact i disagree with the current "equality" fad at least insofar as it implies taking from the rich and giving to the poor directly.

i don't believe people are "equal" in terms of their economic potential. i do beleive they are equal in terms of being due the respect of human beings.

i also believe your simple view of "equality" is a closet way of guarantee that the rich can prey upon the poor without interruption.

humans made their first big step in evolution when they learned to cooperate with each other against the big predators.

Jerry Critter, May 17, 2015 12:10 am

it is mildly progressive up to about $75,000 per year where the rate hits 30%. But from there up to $1.542 million the rate only increases to 33.3%.

I call that very flat!

Jerry Critter, May 17, 2015 11:20 am

"i assume there are people in this country who are truly poor. as far as i know they don't pay taxes."

Read my reference and you will see that the "poor" indeed pay taxes, just not much income tax because they don't have much income. You are fixated on income when we should be considering all forms of taxation.

Jerry Critter, May 17, 2015 9:25 pm

Oh Kai, cut the crap. Paying taxes Is nothing like slavery. My oh my, how did we ever survive with a top tax rate of around 90%, nearly 3 times the current rate? Some people would even say that the economy then was pretty great and the middle class was doing terrific. So stop the deflection and redirection. I think you just like to see how many words you can write. Sorry, but history is not on your side.

[Dec 27, 2016] Income inequality has increased in many developed countries over the last several decades.

Dec 27, 2016 | economistsview.typepad.com
anne :

http://gabriel-zucman.eu/files/PSZ2016.pdf

December, 2016

Distributional National Accounts: Methods and Estimates for the United States
By Thomas Piketty, Emmanuel Saez, and Gabriel Zucman

Abstract

This paper combines tax, survey, and national accounts data to estimate the distribution of national income in the United States since 1913. Our distributional national accounts capture 100% of national income, allowing us to compute growth rates for each quantile of the income distribution consistent with macroeconomic growth. We estimate the distribution of both pre-tax and post-tax income, making it possible to provide a comprehensive view of how government redistribution affects inequality.

The government has offset only a small fraction of the increase in inequality. The reduction of the gender gap in earnings has mitigated the increase in inequality among adults. The share of women, however, falls steeply as one moves up the labor income distribution, and is only 11% in the top 0.1% today.

Reply Tuesday, December 27, 2016 at 01:09 PM anne -> anne... , December 27, 2016 at 01:13 PM
http://gabriel-zucman.eu/files/PSZ2016.pdf

December, 2016

Distributional National Accounts: Methods and Estimates for the United States
By Thomas Piketty, Emmanuel Saez, and Gabriel Zucman

Introduction Income inequality has increased in many developed countries over the last several decades. This trend has attracted considerable interest among academics, policy-makers, and the general public. In recent years, following up on Kuznets' (1953) pioneering attempt, a number of authors have used administrative tax records to construct long-run series of top income shares (Alvaredo et al., 2011-2016). Yet despite this endeavor, we still face three important limitations when measuring income inequality. First and most important, there is a large gap between national accounts-which focus on macro totals and growth-and inequality studies-which focus on distributions using survey and tax data, usually without trying to be fully consistent with macro totals. This gap makes it hard to address questions such as: What fraction of economic growth accrues to the bottom 50%, the middle 40%, and the top 10% of the distribution? How much of the rise in income inequality owes to changes in the share of labor and capital in national income, and how much to changes in the dispersion of labor earnings, capital ownership, and returns to capital? Second, about a third of U.S. national income is redistributed through taxes, transfers, and public good spending. Yet we do not have a good measure of how the distribution of pre-tax income differs from the distribution of post-tax income, making it hard to assess how government redistribution affects inequality. Third, existing income inequality statistics use the tax unit or the household as unit of observation, adding up the income of men and women. As a result, we do not have a clear view of how long-run trends in income concentration are shaped by the major changes in women labor force participation-and gender inequality generally-that have occurred over the last century.

This paper attempts to compute inequality statistics for the United States that overcome the limits of existing series by creating distributional national accounts. We combine tax, survey, and national accounts data to build new series on the distribution of national income since 1913. In contrast to previous attempts that capture less than 60% of US national income- such as Census bureau estimates (US Census Bureau 2016) and top income shares (Piketty and Saez, 2003)-our estimates capture 100% of the national income recorded in the national accounts. This enables us to provide decompositions of growth by income groups consistent with macroeconomic growth. We compute the distribution of both pre-tax and post-tax income. Post-tax series deduct all taxes and add back all transfers and public spending, so that both pre-tax and post-tax incomes add up to national income. This allows us to provide the first comprehensive view of how government redistribution affects inequality. Our benchmark series uses the adult individual as the unit of observation and splits income equally among spouses. We also report series in which each spouse is assigned her or his own labor income, enabling us to study how long-run changes in gender inequality shape the distribution of income.

Distributional national accounts provide information on the dynamic of income across the entire spectrum-from the bottom decile to the top 0.001%-that, we believe, is more accurate than existing inequality data. Our estimates capture employee fringe benefits, a growing source of income for the middle-class that is overlooked by both Census bureau estimates and tax data. They capture all capital income, which is large-about 30% of total national income- and concentrated, yet is very imperfectly covered by surveys-due to small sample and top coding issues-and by tax data-as a large fraction of capital income goes to pension funds and is retained in corporations. They make it possible to produce long-run inequality statistics that control for socio-demographic changes-such as the rise in the fraction of retired individuals and the decline in household size-contrary to the currently available tax-based series.

Methodologically, our contribution is to construct micro-files of pre-tax and post-tax income consistent with macro aggregates. These micro-files contain all the variables of the national accounts and synthetic individual observations that we obtain by statistically matching tax and survey data and making explicit assumptions about the distribution of income categories for which there is no directly available source of information. By construction, the totals in these micro-files add up to the national accounts totals, while the distributions are consistent with those seen in tax and survey data. These files can be used to compute a wide array of distributional statistics-labor and capital income earned, taxes paid, transfers received, wealth owned, etc.-by age groups, gender, and marital status. Our objective, in the years ahead, is to construct similar micro-files in as many countries as possible in order to better compare inequality across countries. Just like we use GDP or national income to compare the macroeconomic performances of countries today, so could distributional national accounts be used to compare inequality across countries tomorrow.

We stress at the outset that there are numerous data issues involved in distributing national income, discussed in the text and the online appendix. First, we take the national accounts as a given starting point, although we are well aware that the national accounts themselves are imperfect (e.g., Zucman 2013). They are, however, the most reasonable starting point, because they aggregate all the available information from surveys, tax data, corporate income statements, and balance sheets, etc., in an standardized, internationally-agreed-upon and regularly improved upon accounting framework. Second, imputing all national income, taxes, transfers, and public goods spending requires making assumptions on a number of complex issues, such as the economic incidence of taxes and who benefits from government spending. Our goal is not to provide definitive answers to these questions, but rather to be comprehensive, consistent, and explicit about what assumptions we are making and why. We view our paper as attempting to construct prototype distributional national accounts, a prototype that could be improved upon as more data become available, new knowledge emerges on who pays taxes and benefits from government spending, and refined estimation techniques are developed-just as today's national accounts are regularly improved....

[Dec 27, 2016] Low oil prices and an increasingly costly war in Yemen have torn a yawning hole in the Saudi budget

Dec 27, 2016 | economistsview.typepad.com

December 27, 2016 at 04:40 AM

Low oil prices and an increasingly costly war in Yemen have torn a yawning hole in the Saudi budget and created a crisis that has led to cuts in public spending, reductions in take-home pay and benefits for government workers and a host of new fees and fines. Huge subsidies for fuel, water and electricity that encourage overconsumption are being curtailed. ...

[Dec 27, 2016] Is Trump just another globalists shill?

Dec 27, 2016 | economistsview.typepad.com
John San Vant... Tuesday, December 27, 2016 at 08:07 AM , December 27, 2016 at 08:07 AM
John,

I wonder what facts you have to label Trump's team "globalist shills".

Robert W. Merry in his National Interest article disagrees with you
http://nationalinterest.org/feature/trump-vs-hillary-nationalism-vs-globalism-2016-16041
=== start of the quote ===
Globalists captured much of American society long ago by capturing the bulk of the nation's elite institutions -- the media, academia, big corporations, big finance, Hollywood, think tanks, NGOs, charitable foundations. So powerful are these institutions -- in themselves and, even more so, collectively -- that the elites running them thought that their political victories were complete and final. That's why we have witnessed in recent years a quantum expansion of social and political arrogance on the part of these high-flyers.

Then along comes Donald Trump and upends the whole thing. Just about every major issue that this super-rich political neophyte has thrown at the elites turns out to be anti-globalist and pro-nationalist. And that is the single most significant factor in his unprecedented and totally unanticipated rise. Consider some examples:

Immigration: Nationalists believe that any true nation must have clearly delineated and protected borders, otherwise it isn't really a nation. They also believe that their nation's cultural heritage is sacred and needs to be protected, whereas mass immigration from far-flung lands could undermine the national commitment to that heritage.

Globalists don't care about borders. They believe the nation-state is obsolete, a relic of the 1648 Peace of Westphalia, which codified the recognition of co-existing nation states.

Globalists reject Westphalia in favor of an integrated world with information, money, goods and people traversing the globe at accelerating speeds without much regard to traditional concepts of nationhood or borders.
=== end of the quote ===

I wonder how "globalist shills" mantra correlates with the following Trump's statements:

http://www.usatoday.com/story/news/politics/elections/2016/06/28/donald-trump-globalization-trade-pennsylvania-ohio/86431376/

=== start of quote ===
"Globalization has made the financial elite who donate to politicians very, very wealthy ... but it has left millions of our workers with nothing but poverty and heartache," Trump told supporters during a prepared speech targeting free trade in a nearly-shuttered former steel town in Pennsylvania.

In a speech devoted to what he called "How To Make America Wealthy Again," Trump offered a series of familiar plans designed to deal with what he called [Obama] "failed trade policies" - including rejection of the proposed Trans-Pacific Partnership (TPP) with Pacific Rim nations and re-negotiation of the North American Free Trade Agreement (NAFTA) with Canada and Mexico, withdrawing from it if necessary.

The presumptive Republican presidential nominee also said he would pursue bilateral trade agreements rather than multi-national deals like TPP and NAFTA.

In addition to appointing better trade negotiators and stepping up punishment of countries that violate trade rules, Trump's plans would also target one specific economic competitor: China. He vowed to label China a currency manipulator, bring it before the World Trade Organization and consider slapping tariffs on Chinese imports coming into the U.S.

[Dec 27, 2016] Suicide rates rise after jobs move overseas, study finds

Notable quotes:
"... In Bristol County, which includes Fall River, New Bedford, and Taunton, manufacturing employed nearly a quarter of the workforce in 2000; now it provides jobs for only one in 10 workers. ..."
"... Most of the manufacturing jobs lost since 2000 are unlikely to return, economists said. Automation has made manufacturing much more specialized, requiring more education and fewer workers, leaving parts of the country struggling to figure out how to reinvent their economies. ..."
"... "We will probably never have as many manufacturing jobs as we had in 1960," Dunn said. "The question is how do we train workers and provide them opportunities to feel productive. What's clear from the election is an increasing number of people don't have those opportunities or don't feel that those opportunities will be available." ..."
"... Characteristics of people dying by suicide after job loss, financial difficulties and other economic stressors during a period of recession (2010–2011): A review of coroners׳ records ..."
Dec 27, 2016 | economistsview.typepad.com
Fred C. Dobbs : December 27, 2016 at 03:37 AM

Suicide rates rise after jobs move overseas, study finds
http://www.bostonglobe.com/business/2016/12/26/suicide-rates-rise-after-jobs-move-overseas-new-study-funds/yVhFkZOslgnODKEjTfcDTK/story.html?event=event25
via @BostonGlobe - Deirdre Fernandes - December 27, 2016

FALL RIVER - In this struggling industrial city, changes in trade policy are being measured not only in jobs lost, but also in lives lost - to suicide.

The jobs went first, the result of trade deals that sent them overseas. Once-humming factories that dressed office workers and soldiers, and made goods to furnish their homes, stand abandoned, overtaken by weeds and graffiti.

And now there is research on how the US job exodus parallels an increase in suicides. A one percentage point increase in unemployment correlated with an 11 percent increase in suicides, according to Peter Schott, a Yale University economist who coauthored the report with Justin Pierce, a researcher at the Federal Reserve Board.

The research doesn't prove a definitive link between lost jobs and suicide; it simply notes that as jobs left, suicides rose. Workers who lost their jobs may have been pushed over the edge and turned to suicide or drug addiction, lacking financial resources or community connections to get help, the authors suggest.

The research contributes to a growing body of work that shows the dark side of global trade: the dislocation, anger, and despair in some parts of the country that came with the United States' easing of trade with China in 2000. The impact of job losses was greatest in places such as Fall River and other cities in Bristol County, along with rural manufacturing counties in New Hampshire and Maine, vast stretches of the South, and portions of the Rust Belt.

"There are winners and losers in trade," Schott said. "If you go to these communities, you can see the disruptions."

The unemployment rate in Fall River remains persistently high and at 5.5 percent in September was a good two points above the Massachusetts average. Nearly one in three households gets some sort of public assistance.

Opposition to global trade policies became a rallying cry in Donald Trump's campaign, propelling him into the White House with strategic wins in the industrial Midwest and the South. Trump has threatened to impose tariffs on Chinese goods and has bashed recent US trade pacts. ...

Fred C. Dobbs -> Fred C. Dobbs... , December 27, 2016 at 03:41 AM

... Previous trade deals, including the 1994 North American Free Trade Agreement with Canada and Mexico, chipped away at US manufacturing towns. But economists say the decision to normalize relations with China was far more disruptive. Some economists have estimated the United States may have lost at least 1 million manufacturing jobs from 2000 to 2007 due to freer trade with China.

In Bristol County, which includes Fall River, New Bedford, and Taunton, manufacturing employed nearly a quarter of the workforce in 2000; now it provides jobs for only one in 10 workers.

Most of the manufacturing jobs lost since 2000 are unlikely to return, economists said. Automation has made manufacturing much more specialized, requiring more education and fewer workers, leaving parts of the country struggling to figure out how to reinvent their economies.

"We will probably never have as many manufacturing jobs as we had in 1960," Dunn said. "The question is how do we train workers and provide them opportunities to feel productive. What's clear from the election is an increasing number of people don't have those opportunities or don't feel that those opportunities will be available."

Officials in Fall River and Bristol County said they are trying to provide appropriate training, including computer programming, a prerequisite for many manufacturing jobs.

They also point out there have been recent victories.

Mayor Tom Hoye said Taunton has also been more active in recent years, holding community meetings and expanding social services for residents facing distress and drug addiction.

Despite the hits the city and its residents have taken, there is reason to be optimistic about the future, he said.

Jobs are returning, and the county's suicide rate dropped from 13 per 100,000 people in 2014 to 12 per 100,000 in 2015.

"We're reinventing ourselves," Hoye said on a recent morning as he sat in an old elementary school classroom that has served as the temporary mayor's office for several years.

"It's tough to lift yourself out of the hole sometimes. But we're much better off than we were 10 years ago."

Fred C. Dobbs -> Fred C. Dobbs... , December 27, 2016 at 03:55 AM
'The research doesn't prove a definitive
link between lost jobs and suicide; it
simply notes that as jobs left,
suicides rose.'

Pierce, Justin R., and Peter K. Schott (2016). "Trade Liberalization and Mortality:
Evidence from U.S. Counties," Finance and Economics Discussion Series
2016-094. Washington: Board of Governors of the Federal Reserve System

https://www.federalreserve.gov/econresdata/feds/2016/files/2016094pap.pdf

http://faculty.som.yale.edu/peterschott/files/research/papers/pierce_schott_pntr_20150301.pdf

Fred C. Dobbs -> Fred C. Dobbs... , December 27, 2016 at 04:00 AM
(Note: The 2nd link is to a
different paper, same authors.)

'The Surprisingly Swift Decline
of US Manufacturing Employment'

Fred C. Dobbs -> Fred C. Dobbs... , December 27, 2016 at 04:27 AM
Understanding vulnerability to self-
harm in times of economic hardship
and austerity: a qualitative study
M C Barnes, et al.

'This is the first UK study of self-harm
among people experiencing economic or
austerity-related difficulties.'

December 2015

http://bmjopen.bmj.com/content/6/2/e010131.full.pdf

---

Characteristics of people dying by suicide after job loss, financial difficulties and other economic stressors during a period of recession (2010–2011): A review of coroners׳ records
Caroline Coope, et al

Journal of Affective Disorders
Volume 183, 1 - September 2015

http://www.sciencedirect.com/science/article/pii/S0165032715002694/pdfft?md5=bebc4ce035acbeeee6cb0b9bd586a5e3&pid=1-s2.0-S0165032715002694-main.pdf

Chris G -> Fred C. Dobbs... , -1
Suicide rates rise after jobs move overseas, study finds

That's consistent with the GOP's notion of how to most effectively cover health problems: shoveled dirt.

[Dec 27, 2016] Guriev mising on the Russian economy and President Putin

Economist was always adamantly anti-Russian and, especially, anti-Putin. The use of people like Sergey Guriev (recent emigrant to Paris, who excape to avoid the danger of criminal procecution for skolkovao machinations) is just an icing on the cake.
Notable quotes:
"... During the 2015-16 recession, GDP. fell by more than 4 percent and real incomes declined by 10 percent. That is significant, but much less serious than, say, the 40 percent drop in GDP that Russia experienced during the first half of the 1990s. Despite a dramatic decline in oil prices and the burden of sanctions imposed by Western governments after the Crimea crisis, the Putin administration has managed to avert economic disaster by pursuing competent macroeconomic policies. ..."
"... As the sanctions cut off Russia's access to global financial markets, the government set out to cover the budget deficit by undertaking major austerity measures and tapping its substantial sovereign funds. In early 2014, the Reserve Fund (created to mitigate fiscal shocks caused by drops in oil prices) and the National Welfare Fund (set up to address shortfalls in the pension system) together held the equivalent of 8 percent of GDP. ..."
Dec 27, 2016 | economistsview.typepad.com
Fred C. Dobbs :

In Russia, It's Not the Economy,
Stupid http://nyti.ms/2hlLRNx
NYT - SERGEI GURIEV - Dec 25

LONDON - The Russian economy is in trouble - "in tatters," President Obama has said - so why aren't Russians more upset with their leaders? The country underwent a major recession recently. The ruble lost half of its value. And yet, according to a leading independent pollster in Russia, President Vladimir V. Putin's approval ratings have consistently exceeded 80 percent during the past couple of years.

One reason is that while the Russian economy is struggling, it is not falling apart, and many Russians remember times when it was in a much worse state. Another, perhaps more important, explanation is that Mr. Putin has convinced them that it's not the economy, stupid, anymore.

Thanks largely to the government's extensive control over information, Mr. Putin has rewritten the social contract in Russia. Long based on economic performance, it is now about geopolitical status. If economic pain is the price Russians have to pay so that Russia can stand up to the West, so be it.

It wasn't like this in the 1990s and 2000s. Back then the approval ratings of Russian leaders were closely correlated with economic performance, as the political scientist Daniel Treisman has demonstrated. When the economy began to recover from the 1998 financial crisis, Mr. Putin's popularity increased. It dipped when growth stalled. It climbed again in 2005, after the global price of oil - Russia' main export commodity - rose, foreign investment flowed in and domestic consumption boomed. And it fell substantially after growth rates slowed in 2012-13.

Russia's intervention in Crimea in early 2014 changed everything. Within two months, Mr. Putin's popularity jumped back to more than 80 percent, where it has stayed until now, despite the recession.

One might argue that these figures are misleading: Given the pressures faced by the Kremlin's political opponents, aren't respondents in polls too afraid to answer questions honestly? Hardly, according to a recent study co-written by the political scientist Tim Frye, based on an innovative method known as "list experiments." It found that, even after adjusting for respondents' reluctance to openly acknowledge any misgivings about specific leaders, Mr. Putin's popularity really is very high: around 70 percent.

During the 2015-16 recession, GDP. fell by more than 4 percent and real incomes declined by 10 percent. That is significant, but much less serious than, say, the 40 percent drop in GDP that Russia experienced during the first half of the 1990s. Despite a dramatic decline in oil prices and the burden of sanctions imposed by Western governments after the Crimea crisis, the Putin administration has managed to avert economic disaster by pursuing competent macroeconomic policies.

As the sanctions cut off Russia's access to global financial markets, the government set out to cover the budget deficit by undertaking major austerity measures and tapping its substantial sovereign funds. In early 2014, the Reserve Fund (created to mitigate fiscal shocks caused by drops in oil prices) and the National Welfare Fund (set up to address shortfalls in the pension system) together held the equivalent of 8 percent of GDP.

The government also adopted sound monetary policy, including the decision to fully float the ruble in 2014. Because of the decline in oil prices and large net capital outflows - caused by the need to repay external corporate debt and limited foreign investment in Russia - the currency depreciated by 50 percent within a year. Although a weaker ruble hurt the living standards of ordinary Russians, it boosted the competitiveness of Russia's companies. The Russian economy is now beginning to grow again, if very modestly - at a projected 1 to 1.5 percent per year over the next few years.

This performance comes nowhere near meeting Mr. Putin's election-campaign promises of 2012, when he projected GDP. growth at 6 percent per year for 2011-18. But it isn't catastrophic either, and the government has managed to explain it away.

Thanks partly to its near-complete control of the press, television and the internet, the government has developed a grand narrative about Russia's role in the world - essentially promoting the view that Russians may need to tighten their belts for the good of the nation. The story has several subplots. Russian speakers in Ukraine need to be defended against neo-Nazis. Russia supports President Bashar al-Assad of Syria because he is a rampart against the Islamic State, and it has helped liberate Aleppo from terrorists. Why would the Kremlin hack the Democratic Party in the United States? And who believes what the CIA says anyway?

The Russian people seem to accept much of this or not to care one way or the other. This should come as no surprise. In a recent paper based on data for 128 countries over 10 years, Professor Treisman and I developed an econometric model to assess which factors affect a government's approval ratings and by how much. We concluded that fully removing internet controls in a country like Russia today would cause the government's popularity ratings to drop by about 35 percentage points. ...

What Makes Governments Popular
Sergei M. Guriev (CEPR), Daniel Treisman (UCLA)
November 11, 2016
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2882915

[Dec 27, 2016] The technocrats lied about how globalization would be great for everyone. Peoples actual experience in their lives has been different.

Notable quotes:
"... We have a dollar democracy that protects the economic interest of the elite class while more than willing to let working class families lose their homes and jobs on the back end of wide scale mortgage fraud. Then the fraud was perpetuated in the mortgage default process just to add insult to injury. ..."
"... One thing that Trump certainly got wrong that no one ever points out is that there is a lot more murder than rape crossing the Mexican-American border in the drug cartel operations ..."
"... The technocrats lied about how globalization would be great for everyone. People's actual experience in their lives has been different. ..."
"... Centrist Democrat partisans with their increasinly ineffectual defenses of the establishment say it's only about racism and xenophobia, but it's more than that. ..."
Dec 27, 2016 | economistsview.typepad.com
RC AKA Darryl, Ron
RE: Democracy Is Dying as Technocrats Watch - William Easterly

Assaults on democracy are working because our current political elites have no idea how to defend it.

[There are certainly good points to this article, but the basic assumption that our electorally representative form of republican government is the ideal incarnation of the democratic value set is obviously incorrect. We have a dollar democracy that protects the economic interest of the elite class while more than willing to let working class families lose their homes and jobs on the back end of wide scale mortgage fraud. Then the fraud was perpetuated in the mortgage default process just to add insult to injury.

One thing that Trump certainly got wrong that no one ever points out is that there is a lot more murder than rape crossing the Mexican-American border in the drug cartel operations:<) ]

Peter K. -> RC AKA Darryl, Ron... December 27, 2016 at 06:39 AM

The author fails to mention the Sanders campaign. An elderly socialist Jew from Brooklyn was able to win 23 primaries and caucuses and approximately 43% of pledged delegates to Clinton's 55%.

This despite a nasty, hostile campaign against him and his supporters by the Clinton campaign and corporate media.

There's also Jeremy Corbyn in the UK. Podemos, Syriza, etc.

Italy's 5 Star movement demonstrates a hostility to technocrats as well.

The author doesn't really focus on how the technocrats have failed.

The technocrats lied about how globalization would be great for everyone. People's actual experience in their lives has been different.

Trump scapegoated immigrants and trade, as did Brexit, but what he really did was channel hostility and hatred at the elites and technocrats running the country.

Centrist Democrat partisans with their increasinly ineffectual defenses of the establishment say it's only about racism and xenophobia, but it's more than that.

RC AKA Darryl, Ron said in reply to Peter K.... , -1
Yes sir.

[Dec 27, 2016] Donald Trump targets globalization and free trade as job-killers

Dec 27, 2016 | www.usatoday.com

"Globalization has made the financial elite who donate to politicians very, very wealthy ... but it has left millions of our workers with nothing but poverty and heartache," Trump told supporters during a prepared speech targeting free trade in a nearly-shuttered former steel town in Pennsylvania.

In a speech devoted to what he called "How To Make America Wealthy Again," Trump offered a series of familiar plans designed to deal with what he called "failed trade policies" - including rejection of the proposed Trans-Pacific Partnership (TPP) with Pacific Rim nations and re-negotiation of the North American Free Trade Agreement (NAFTA) with Canada and Mexico, withdrawing from it if necessary.

The presumptive Republican presidential nominee also said he would pursue bilateral trade agreements rather than multi-national deals like TPP and NAFTA.

In addition to appointing better trade negotiators and stepping up punishment of countries that violate trade rules, Trump's plans would also target one specific economic competitor: China. He vowed to label China a currency manipulator, bring it before the World Trade Organization and consider slapping tariffs on Chinese imports coming into the U.S.

[Dec 27, 2016] On Krugman And The Working Class - Tim Duys Fed Watch

Notable quotes:
"... Excellent critique. Establishment Democrats are tone-deaf right now; the state of denial they live in is stunning. I'd like to think they can learn after the shock of defeat is over, but identity politics for non-white, non-male, non-heterosexual is what the Democratic party is about today and has been the last decade or so. ..."
"... That's the effect of incessant Dem propaganda pitting races and sexes against each other. ..."
"... And Democrats' labeling of every Republican president/candidate as a Nazi - including Trump - is desensitizing the public to the real danger created by discriminatory policies that punish [white] children and young adults, particularly boys. ..."
"... So, to make up for the alleged screw job that women and minorities have supposedly received, the plan will be screwing white/hetro/males for the forseeable future. My former employer is doing this very plan, as we speak. Passed over 100 plus males, who have been turning wrenches on airplanes for years, and installed a female shop manager who doesn't know jack-$##t about fixing airplanes. No experience, no certificate......but she has a management degree. But I guess you don't know how to do the job to manage it. ..."
"... Bernie Sanders was that standard bearer, but Krugman and the Neoliberal establishment Democrats (ie. Super Delegates) decided that they wanted to coronate Clinton. ..."
"... Evolution of political parties happens organically, through evolution (punctuated equilibrium - like species and technology - parties have periods of stability with some sudden jumps in differentiation). ..."
"... If Nancy Pelosi is re-elected (highly likely), it will be the best thing to happen to Republicans since Lincoln. They will lose even more seats. ..."
"... The Coastal Pelosi/Schumer wing is still in power, and it will take decimation at the ballot box to change the party. The same way the "Tea Party" revolution decimated the Republicans and led to Trump. Natural selection at work. ..."
"... The central fact of the election is that Hillary has always been extraordinarily unlikable, and it turned out that she was Nixonianly corrupt ..."
"... I'm from Dallas. Three of my closest friends growing up (and to this day), as well as my brother in law, are hispanic. They, and their families, all vote Republican, even for Trump. Generally speaking, the longer hispanics are in the US, the more likely they tend to vote Republican. ..."
"... The Democratic Establishment and their acolytes are caught in a credibility trap. ..."
"... I also think many Trump voters know they are voting against their own economic interest. The New York Times interviewed a number who acknowledge that they rely on insurance subsidies from Obamacare and that Trump has vowed to repeal it. I know one such person myself. She doesn't know what she will do if Obamacare is repealed but is quite happy with her vote. ..."
"... Krugman won his Nobel for arcane economic theory. So it isn't terribly surprising that he spectacularly fails whenever he applies his brain to anything remotely dealing with mainstream thought. He is the poster boy for condescending, smarter by half, elite liberals. In other words, he is an over educated, political hack who has yet to learn to keep his overtly bias opinions to himself. ..."
"... Funny how there's all this concern for the people whose jobs and security and money have vanished, leaving them at the mercy of faceless banks and turning to drugs and crime. Sad. Well, let's bash some more on those lazy, shiftless urban poors who lack moral strength and good, Protestant work ethic, shall we? ..."
"... Clinton slammed half the Trump supporters as deplorables, not half the public. She was correct; about half of them are various sorts of supremacists. The other half (she said this, too) made common cause with the deplorables for economic reasons even though it was a devil's bargain. ..."
"... I have never commented here but I will now because of the number of absurd statements. I happen to work with black and Hispanic youth and have also worked with undocumented immigrants. To pretend that trump and the Republican Party has their interest in mind is completely absurd. As for the white working class, please tell me what programs either trump or the republican have put forward to benefit them? I have lost a lot of respect for Duy ..."
"... The keys of the election were race, immigration and trade. Trump won on these points. What dems can do is to de-emphasize multiculturalism, racial equality, political correctness etc. Instead, emphasize economic equality and security, for all working class. ..."
"... Krugman more or less blames media, FBI, Russia entirely for Hillary's loss, which I think is wrong. As Tim said, Dems have long ceased to be the party of the working class, at least in public opinion, for legitimate reasons. ..."
"... All Mr. Krugman and the Democratic establishment need to do is to listen, with open ears and mind, to what Thomas Frank has been saying, and they will know where they went wrong and most likely what to do about it, if they can release themselves from their fatal embrace with Big Money covered up by identity politics. ..."
"... Pretty sad commentary by neoliberal left screaming at neoliberal right and vice versa. ..."
"... The neoliberals with their multi-culti/love them all front men have had it good for a while, now there's a reaction. Deal with it. ..."
Dec 27, 2016 | economistsview.typepad.com
Jason Nordsell : , November 27, 2016 at 08:02 AM
Excellent critique. Establishment Democrats are tone-deaf right now; the state of denial they live in is stunning. I'd like to think they can learn after the shock of defeat is over, but identity politics for non-white, non-male, non-heterosexual is what the Democratic party is about today and has been the last decade or so.

The only way Dems can make any headway by the midterms is if Trump really screws up, which is a tall order even for him. He will pick the low-hanging fruit (e.g., tax reform, Obamacare reform, etc), the economy will continue to recover (which will be attributed to Trump), and Dems will lose even more seats in Congress. And why? Because they refuse to recognize that whites from the middle-class and below are just as disadvantaged as minorities from the same social class.

If white privilege exists at all (its about as silly as the "Jews control the banks and media" conspiracy theories), it exists for the upper classes. Poor whites need help too. And young men in/out of college today are being displaced by women - not because the women have superior academic qualification, but because they are women. I've seen it multiple times firsthand in some of the country's largest companies and universities (as a lawyer, when an investigation or litigation takes place, I get to see everyone's emails, all the way to CEO/board). There is a concerted effort to hire only women and minorities, especially for executive/managerial positions. That's not equality.

That's the effect of incessant Dem propaganda pitting races and sexes against each other. This election exposed the media's role, but its not over. Fortunately, Krugman et al. are showing the Dems are too dumb to figure out why they lost. Hopefully they keep up their stupidity so identity politics can fade into history and we can get back to pursuing equality.

bob -> Jason Nordsell... , November 28, 2016 at 03:02 PM
"There is a concerted effort to hire only women and minorities, especially for executive/managerial positions."

Goooooolllllllllllllly, gee. Now why would that be? I hope you're not saying there shouldn't be such an effort. This is a good thing. It exactly and precisely IS equality. It may be a bit harsh, but if certain folks continually find ways to crap of women and minorities, then public policies would seem warranted.

Are you seriously telling us that pursuing public policies to curb racial and sexual discrimination are a waste of time?

How, exactly, does your vision of "pursuit of equality" ameliorate the historical fact of discrimination?

Jason Nordsell -> bob... , November 29, 2016 at 10:17 AM
You don't make up for past discrimination with discrimination. You make up for it by equal application of the law. Today's young white men are not the cause of discrimination of the 20th century, or of slavery. If you discriminate against them because of the harm caused by other people, you're sowing the seeds of a REAL white nationalist movement. And Democrats' labeling of every Republican president/candidate as a Nazi - including Trump - is desensitizing the public to the real danger created by discriminatory policies that punish [white] children and young adults, particularly boys.

Displacement of white men by lesser-qualified women and minorities is NOT equality.

Paid Minion -> bob... , December 26, 2016 at 01:29 PM
So, to make up for the alleged screw job that women and minorities have supposedly received, the plan will be screwing white/hetro/males for the forseeable future. My former employer is doing this very plan, as we speak. Passed over 100 plus males, who have been turning wrenches on airplanes for years, and installed a female shop manager who doesn't know jack-$##t about fixing airplanes. No experience, no certificate......but she has a management degree. But I guess you don't know how to do the job to manage it.

God forbid somebody have to "pay some dues" before setting them loose as suit trash.

This will not end well.

Richard -> Jason Nordsell... , November 30, 2016 at 03:45 PM
You had me nodding until the last part.

Back when cultural conservatives ruled the roost (not that long ago), they didn't pursue equality either. Rather, they favored (hetero Christian) white men. So hoping for Dem stupidity isn't going to lead to equality. Most likely it would go back to favoring hetero Christian white men.

Todd : , November 27, 2016 at 08:46 AM
"...should they find a new standard bearer that can win the Sunbelt states and bridge the divide with the white working class? I tend to think the latter strategy has the higher likelihood of success."

Easy to say. What would that standard bearer or that strategy look like?

Bill -> Todd... , November 27, 2016 at 08:59 AM
Bernie Sanders was that standard bearer, but Krugman and the Neoliberal establishment Democrats (ie. Super Delegates) decided that they wanted to coronate Clinton. Big mistake that we are now paying for...
Bob Salsa -> Bill... , November 28, 2016 at 12:56 PM
Basic political math - Sanders would have been eaten alive with his tax proposals by the GOP anti-tax propaganda machine on Trump steroids.

His call to raise the payroll tax to send more White working class hard-earn money to Washington would have made election night completely different - Trump would have still won, it just wouldn't have been a surprise but rather a known certainty weeks ahead.

dwb : , November 27, 2016 at 10:47 AM
Evolution of political parties happens organically, through evolution (punctuated equilibrium - like species and technology - parties have periods of stability with some sudden jumps in differentiation).

Old politicians are defeated, new ones take over. The old guard, having been successful in the past in their own niche rarely change.

If Nancy Pelosi is re-elected (highly likely), it will be the best thing to happen to Republicans since Lincoln. They will lose even more seats.

The Coastal Pelosi/Schumer wing is still in power, and it will take decimation at the ballot box to change the party. The same way the "Tea Party" revolution decimated the Republicans and led to Trump. Natural selection at work.

In 1991, Republicans thought they would always win, Democrats thought the country was relegated to Republican Presidents forever. Then along came a new genotype- Clinton. In 2012, Democrats thought that they would always win, and Republicans were thought to be locked out of the electoral college. Then along came a new genotype, Trump.

A new genotype of Democrat will have to emerge, but it will start with someone who can win in flyover country and Texas. Hint: They will have to drop their hubris, disdain and lecturing, some of their anti-growth energy policies, hate for the 2nd amendment, and become more fiscally conservative. They have to realize that *no one* will vote for an increase in the labor supply (aka immigration) when wages are stagnant and growth is anemic. And they also have to appreciate people would rather be free to choose than have decisions made for them. Freedom means nothing unless you are free to make mistakes.

But it won't happen until coastal elites like Krugman and Pelosi have retired.


swampwiz -> dwb... , November 28, 2016 at 12:59 AM
My vote for the Democratic Tiktaalik is the extraordinarily Honorable John Bel Edwards, governor of Louisiana. The central fact of the election is that Hillary has always been extraordinarily unlikable, and it turned out that she was Nixonianly corrupt (i.e., deleted E-mails on her illegal private server) as well - and she still only lost by 1% in the tipping point state (i.e., according to the current count, which could very well change).
bob -> dwb... , November 28, 2016 at 03:09 PM
You know what will win Texas? Demographic change. Economic growth. And it is looking pretty inevitable on both counts.

I'm also pretty damned tired of being dismissed as "elitist", "smug" and condescending. I grew up in a red state. I know their hate. I know their condescension (they're going to heaven, libruls are not).

It cuts both ways. The Dems are going into a fetal crouch about this defeat. Did the GOP do that after 2008? Nope. They dug in deeper.

Could be a lesson there for us.

Smugly your,

dwb -> bob... , November 28, 2016 at 06:27 PM
Ahh yes, all Texas needs is demographic change, because all [Hispanics, Blacks, insert minority here] will always and forever vote Democrat. Even though the Democrats take their votes for granted and Chicago/Baltimore etc. are crappy places to live with no school choice, high taxes, fleeing jobs, and crime. Even though Trump outperformed Romney among minorities.

Clinton was supposed to be swept up in the winds of demographics and the Democrats were supposed to win the White House until 2083.

Funny things happen when you take votes for granted. Many urban areas are being crushed by structural deficits and need some Detroit type relief. I predict that some time in the next 30 years, poles reverse, and urban areas are run by Republicans.

If you are tired of being dismissed as "elitist", "smug" and condescending, don't be those things. Don't assume people will vote for your party because they have always voted that way, or they are a certain color. Respect the voters and work to earn it.

Jason Nordsell -> bob... , November 29, 2016 at 10:27 AM
The notion that hispanic=democrat that liberals like bob have is hopelessly ignorrant.

I'm from Dallas. Three of my closest friends growing up (and to this day), as well as my brother in law, are hispanic. They, and their families, all vote Republican, even for Trump. Generally speaking, the longer hispanics are in the US, the more likely they tend to vote Republican.

The Democratic Party's plan to wait out the Republicans and let demographics take over is ignorant, racist and shortsighted, cooked up by coastal liberals that haven't got a clue, and will ultimately fail.

In addition to losing hispanics, Democrats will also start losing the African American vote they've been taking for granted the last several decades. Good riddance to the Democratic party, they are simply unwilling to listen to what the people want.

RJ -> bob... , December 06, 2016 at 11:20 PM
You might be tired of it, but clearly you are elitist, smug, and condescending.

Own it. Fly your freak flag proudly,

Tom : , November 27, 2016 at 11:42 AM
This is a really shoddy piece that repeats the medias pulling of Clintons quote out of context. She also said "that other basket of people are people who feel that the government has let them down, the economy has let them down, nobody cares about them, nobody worries about what happens to their lives and their futures, and they're just desperate for change. It doesn't really even matter where it comes from. They don't buy everything he says, but he seems to hold out some hope that their lives will be different. They won't wake up and see their jobs disappear, lose a kid to heroin, feel like they're in a dead-end. Those are people we have to understand and empathize with as well."

Now maybe it is okay to make gnore this part of the quote because you think calling racism "deplorable" is patently offensive. But when the ignored context makes the same points that Duy says she should have been making, that is shoddy.

dwb -> Tom... , November 27, 2016 at 12:07 PM
There are zero electoral college votes in the State of Denial. Hopefully you understand a)the difference between calling people deplorable and calling *behavior* deplorable; b) Godwin's Law: when you resort to comparing people to Hitler you've lost the argument. Trump supporters were not racist, homophobic, xenophobic, or any other phobic. As a moderate, educated, female Trump supporter counseled: He was an a-hole, but I liked his policies.

Even my uber liberal friends cannot tell me what Clinton's economic plan was. Only that they are anti-Trump.

Trump flanked Clinton on the most popular policies (the left used to be the anti-trade party of union Democrats): Lower regulation, lower taxes, pro-2nd amendment, trade deals more weighted in favor of US workers, and lower foreign labor supply. Turn's out, those policies are sufficiently popular that people will vote for them, even when packaged into an a-hole. Trump's anti-trade platform was preached for decades by rust belt unions.

The coastal Democrats have become hostages to pro-big-government municipal unions crushing cities under structural deficits, high taxes, poorly run schools, and overbearing regulations. The best thing that can happen for the Democrats is for the Republicans to push for reforms of public pensions, school choice, and break municipal unions. Many areas see the disaster in Chicago and Baltimore, run by Democrats for decades, and say no thank you. Freed of the need to cater to urban municipal unions, Democrats may be able to appeal to people elsewhere.

Nick : , November 27, 2016 at 01:16 PM
Where can you move to for a job when wages are so low compared to rents?
The young generations are not happy with house prices or rents as well.
Giant_galveston -> Tim C.... , December 05, 2016 at 08:43 PM
Tim, I believe you've missed the point: by straightforward measures, Democratic voters in USA are substantially under-represented. The problem is likely to get much worse, as the party whose policies abet minority rule now controls all three branches of the federal government and a substantial majority of state governments.
Tim C. : , November 27, 2016 at 02:50 PM
This is an outstanding takedown on what has been a never-ending series of garbage from Krugman.

I used to hang on every post he'd made for years after the 2008 crisis hit. But once the Clinton coronation arose this year, the arrogant, condescending screed hit 11 - and has not slowed down since. Threads of circular and illogical arguments have woven together pathetic - and often non-liberal - editorials that have driven me away permanently.

Since he's chosen to ride it all on political commentary, Krugman's credibility is right there with luminaries such as Nial Ferguson and Greg Mankiw.

Seems that everyone who chooses to hitch their wagon to the Clintons ends up covered in bilge..... funny thing about that persistent coincidence...

dazed and confused : , November 27, 2016 at 02:58 PM
"And it is an especially difficult pill given that the decline was forced upon the white working class.... The tsunami of globalization washed over them....in many ways it was inevitable, just as was the march of technology that had been eating away at manufacturing jobs for decades. But the damage was intensified by trade deals.... Then came the housing crash and the ensuing humiliation of the foreclosure crisis."

All the more amazing then that Trump pulled out such a squeaker of an election beating Clinton by less than 2% in swing states and losing the popular vote overall. In the shine of Duy's lights above, I would have imagined a true landslide for Trump... Just amazing.

Jesse : , November 27, 2016 at 04:29 PM

The Democratic Establishment and their acolytes are caught in a credibility trap.

dimknight : , November 27, 2016 at 11:48 PM
"I don't know that the white working class voted against their economic interest".

I think you're pushing too hard here. Democrats have been for, and Republicans against many policies that benefit the white working class: expansionary monetary policy, Obamacare, housing refinance, higher minimum wage, tighter worker safety regulation, stricter tax collection, and a host of others.

I also think many Trump voters know they are voting against their own economic interest. The New York Times interviewed a number who acknowledge that they rely on insurance subsidies from Obamacare and that Trump has vowed to repeal it. I know one such person myself. She doesn't know what she will do if Obamacare is repealed but is quite happy with her vote.

Doug Rife : , November 28, 2016 at 07:17 AM
There is zero evidence for this theory. It ignores the fact that Trump lied his way to the White House with the help of a media unwilling to confront and expose his mendacity. And there was the media's obsession with Clinton's Emails and the WikiLeaks daily release of stolen DNC documents. And finally the Comey letter which came in the middle of early voting keeping the nation in suspense for 11 days and which was probably a violation of the hatch act. Comey was advised against his unjustified action by higher up DOJ officials but did it anyway. All of these factors loomed much larger than the deplorables comment. Besides, the strong dollar fostered by the FOMC's obsession with "normalization" helped Trump win because the strong dollar hurts exporters like farmers who make up much of the rural vote as well as hurting US manufacturing located in the midwest states. The FOMC was objectively pro Trump.
Nate F : , November 28, 2016 at 07:57 AM
I was surrounded by Trump voters this past election. Trust me, an awful lot of them are deplorable. My father is extremely anti semetic and once warned me not to go to Minneapolis because of there being "too many Muslims." One of our neighbors thinks all Muslims are terrorists and want to do horrible things to all Christians.

I know, its not a scientific study. But I've had enough one on one conversations with Trump supporters (not just GOP voters, Trump supporters) to say that yes, as a group they have some pretty horrible views.

Giant_galveston -> Nate F... , December 05, 2016 at 08:38 PM
Yep. I've got plenty of stories myself. From the fact that there are snooty liberals it does NOT follow that the resentment fueling Trump's support is justified.
Denis Drew : , November 28, 2016 at 08:41 AM
One should note that the "The racist, sexist, homophobic, xenophobic, Islamaphobic - you name it ... " voted for Obama last time around.

When the blue collar voter (for lack of a better class) figures out that the Republicans (Trump) are not going to help them anymore than the Dems did -- it will be time for them to understand they can only rely on themselves, namely: through rebuilding labor union density, which can be done AT THE STATE BY PROGRESSIVE STATE LEVEL.

To keep it simple states may add to federal protections like the minimum wage or safety regs -- just not subtract. At present the NLRB has zero (no) enforcement power to prevent union busting (see Trump in Vegas) -- so illegal labor market muscling, firing of organizers and union joiners go completely undeterred and unrecoursed.

Recourse, once we get Congress back might include mandating certification elections on finding of union busting. Nothing too alien: Wisconsin, for instance, mandates RE-certification of all public employee unions annually.

Progressive states first step should be making union busting a felony -- taking the power playing in our most important and politically impacting market as seriously as taking a movie in the movies (get you a couple of winters). For a more expansive look (including a look at the First Amendment and the fed cannot preempt something with nothing, click here):
http://ontodayspage.blogspot.com/2016/11/first-100-days-progressive-states-agenda.html

Labor unions -- returned to high density -- can act as the economic cop on every corner -- our everywhere advocates squelching such a variety of unhealthy practices as financialization, big pharam gouging, for profit college fraud (Trump U. -- that's where we came into this movie). 6% private union density is like 20/10 bp; it starves every other healthy process (listening blue collar?).

Don't panic if today's Repub Congress passes national right-to-work legislation. Germany, which has the platinum standard labor institutions, does not have one majority union (mostly freeloaders!), but is almost universally union or covered by union contracts (centralized bargaining -- look it up) and that's what counts.

Gary Anderson : , November 28, 2016 at 09:47 AM
Trump took both sides of every issue. He wants high and low interest rates. He wants a depression first, (Bannonomics) and inflation first, (Trumponomics), he wants people to make more and make less. He is nasty and so he projected that his opponent was nasty.

Now he has to act instead of just talk out of both sides of his mouth. That should not be as easy to do.

C Jones : , November 28, 2016 at 10:31 AM
Hi Tim, nice post, and I particularly liked your last paragraph. The relevant question today if you have accepted where we are is effectively: 'What would you prefer - a Trump victory now? Or a Trump type election victory in a decade or so? (with todays corresponding social/economic/political trends continuing).
I'm a Brit so I was just an observer to the US election but the same point is relevant here in the UK - Would I rather leave the EU now with a (half sensible) Tory government? Or would I rather leave later on with many more years of upheaval and a (probably by then quite nutty) UKIP government?
I know which one I prefer - recognise the protest vote sooner, rather than later.
Bob Salsa : , November 28, 2016 at 12:48 PM
Sure they're angry, and their plight makes that anger valid.

However, not so much their belief as to who and what caused their plight, and more importantly, who can and how their plight would be successfully reversed.

Most people have had enough personal experiences to know that it is when we are most angry that we do the stupidest of things.

Lars : , November 28, 2016 at 05:58 PM
Krugman won his Nobel for arcane economic theory. So it isn't terribly surprising that he spectacularly fails whenever he applies his brain to anything remotely dealing with mainstream thought. He is the poster boy for condescending, smarter by half, elite liberals. In other words, he is an over educated, political hack who has yet to learn to keep his overtly bias opinions to himself.
Douglas P Anthony : , November 29, 2016 at 08:16 AM
Tim's narrative felt like a cold shower. I was apprehensive that I found it too agreeable on one level but were the building blocks stable and accurate?

Somewhat like finding a meal that is satisfying, but wondering later about the ingredients.

But, like Tim's posts on the Fed, they prompt that I move forward to ponder the presentation and offer it to others for their comment. At this time, five-stars on a 1-5 system for bringing a fresh approach to the discussion. Thanks, Professor Duy. This to me is Piketty-level pushing us onto new ground.

JohnR : , November 29, 2016 at 12:07 PM
Funny how there's all this concern for the people whose jobs and security and money have vanished, leaving them at the mercy of faceless banks and turning to drugs and crime. Sad. Well, let's bash some more on those lazy, shiftless urban poors who lack moral strength and good, Protestant work ethic, shall we?
Raven Onthill : , November 29, 2016 at 04:12 PM
Clinton slammed half the Trump supporters as deplorables, not half the public. She was correct; about half of them are various sorts of supremacists. The other half (she said this, too) made common cause with the deplorables for economic reasons even though it was a devil's bargain.

Now, there's a problem with maternalism here; it's embarrassing to find out that the leader of your political opponents knows you better than you know yourself, like your mother catching you out in a lie. It was impolitic for Clinton to have said this But above all remember that when push came to shove, the other basket made common cause with the Nazis, the Klan, and so on and voted for a rapey fascist.

Rick McGahey : , November 30, 2016 at 02:44 PM
"Economic development" isn't (and can't) be the same thing as bringing back lost manufacturing (or mining) jobs. We have had 30 years of shifting power between labor and capital. Restoring labor market institutions (both unions and government regulation) and raising the floor through higher minimum wages, single payer health care, fair wages for women and more support for child and elder care, trade policies that care about working families, better safe retirement plans and strengthened Social Security, etc. is key here, along with running a real full employment economy, with a significant green component. See Bob Polllin's excellent program in https://mitpress.mit.edu/books/back-full-employment

That program runs up against racism, sexism, division, and fear of government and taxation, and those are powerful forces. But we don't need all Trump supporters. We do need a real, positive economic program that can attract those who care about the economics more than the cultural stuff.

Sandra Williams : , December 01, 2016 at 12:20 AM
How about people of color drop the democrats and their hand wringing about white people when they do nothing about voter suppression!! White fragility is nauseating and I'm planning to arm myself and tell all the people of color I know to do the same. I expect nothing from the democrats going forward.
Robert Hurley : , December 01, 2016 at 11:04 AM
I have never commented here but I will now because of the number of absurd statements. I happen to work with black and Hispanic youth and have also worked with undocumented immigrants. To pretend that trump and the Republican Party has their interest in mind is completely absurd. As for the white working class, please tell me what programs either trump or the republican have put forward to benefit them? I have lost a lot of respect for Duy
Giant_galveston -> Robert Hurley... , December 05, 2016 at 08:32 PM
Couldn't agree more.
RJ -> Robert Hurley... , December 06, 2016 at 11:26 PM
No one should advocate illegal immigration. If you care about being a nation of laws.
[email protected] : , December 01, 2016 at 06:13 PM
I think much of appeal of DJT was in his political incorrectness. PC marginalises. Very. Of white working class specifically. it tells one, one cannot rely on one's ideas any more. In no uncertain terms. My brother, who voted for Trump, lost his job to PC without offending on purpose, but the woman in question felt free to accuse him of violating her, with no regard to his fate. He was never close enough to do that. Is that not some kind of McCarthyism?
Eclectic Observer : , December 05, 2016 at 10:55 AM
Just to be correct. Clinton was saying that half (and that was a terrible error-should have said "some") were people that were unreachable, but that they had to communicate effectively with the other part of his support. People who echo the media dumb-ing down of complex statements are part of the problem.

Still, I believe that if enough younger people and african-americans had come out in the numbers they did for Obama in some of those states, Clinton would have won. Certainly, the media managed to paint her in more negative light than she objectively deserved-- even if she deserved some negatives.

I am in no way a fan of HRC. Still, the nature of the choice was blurred to an egregious degree.

Procopius : , December 05, 2016 at 08:40 PM
"The tough reality of economic development is that it will always be easier to move people to jobs than the jobs to people."

This is indisputable, but I have never seen any discussion of the point that moving is not cost-free. Back in the '90s I had a discussion with a very smart person, a systems analyst, who insisted that poor people moved to wherever the welfare benefits were highest.

I tried to point out that moving from one town to another costs more than a bus ticket. You have to pay to have your possessions transported. You have to have enough cash to pay at least two months' rent and maybe an additional security deposit.

You have to have enough cash to pay for food for at least one month or however long it takes for your first paycheck or welfare check to come in. There may be other costs like relocating your kids to a new school system and maybe changing your health insurance provider.

There probably are other costs I'm not aware of, and the emotional cost of leaving your family and your roots. The fact that some people succeed in moving is a great achievement. I'm amazed it works at all in Europe where you also have the different languages to cope with.

Kim Kaufman : , December 07, 2016 at 10:03 PM
I'm not sure the Hillary non-voters - which also include poor black neighborhoods - were voting against their economic interests. Under Obama, they didn't do well. Many of them were foreclosed on while Obama was giving the money to the banks. Jobs haven't improved, unless you want to work at an Amazon warehouse or for Uber and still be broke. Obama tried to cut social security. He made permanent Bush's tax cuts for the rich. Wars and more wars. Health premiums went up - right before the election. The most Obama could say in campaigning for Hillary was "if you care about my legacy, vote for Hillary." He's the only one that cares about his legacy. I don't know that it's about resentment but about just having some hope for economic improvement - which Trump offered (no matter how shallow and deceptive) and Hillary offered nothing but "Trump's an idiot and I'm not."

I believe Bernie would have beat Trump's ass if 1) the DNC hadn't put their fingers on the scale for Hillary and 2) same with the media for Hillary and Trump. The Dems need more than some better campaign slogans. They really need a plan for serious economic equality. And the unions need to get their shit together and stop thinking that supporting corrupt corporate Dems is working. Or perhaps the rank and file need to get their shit together and get rid of union bosses.

IHiddenDragon : , December 10, 2016 at 09:01 AM
The keys of the election were race, immigration and trade. Trump won on these points. What dems can do is to de-emphasize multiculturalism, racial equality, political correctness etc. Instead, emphasize economic equality and security, for all working class.

Lincoln billed the civil war as a war to preserve the union, to gain wide support, instead of war to free slaves. Of course, the slaves were freed when the union won the war. Dems can benefit from a similar strategy

IHiddenDragon : , December 10, 2016 at 09:05 AM
Krugman more or less blames media, FBI, Russia entirely for Hillary's loss, which I think is wrong. As Tim said, Dems have long ceased to be the party of the working class, at least in public opinion, for legitimate reasons.

Besides, a lot voters are tired of stale faces and stale ideas. They yearn something new, especially the voters in deep economic trouble.

Maybe it's time to try some old fashioned mercantilism, protectionism? America first is an appealing idea, in this age of mindless globalization.

Jesse : , December 26, 2016 at 11:08 AM
All Mr. Krugman and the Democratic establishment need to do is to listen, with open ears and mind, to what Thomas Frank has been saying, and they will know where they went wrong and most likely what to do about it, if they can release themselves from their fatal embrace with Big Money covered up by identity politics.

But they cannot bring themselves to admit their error, and to give up their very personally profitable current arrangement. And so they are caught up in a credibility trap which is painfully obvious to the objective observer.

c1ue : , December 26, 2016 at 12:11 PM
Pretty sad commentary by neoliberal left screaming at neoliberal right and vice versa.

It seems quite clear that the vast majority of commenters live as much in the ivory tower/bubble as is claimed for their ideological opponent.

It is also quite interesting that most of these same commenters don't seem to get that the voting public gets what the majority of it wants - not what every single group within the overall population wants.

The neoliberals with their multi-culti/love them all front men have had it good for a while, now there's a reaction. Deal with it.

[Dec 27, 2016] This Russian hacking thing is being discussed entirely out of realistic context.

Notable quotes:
"... This Russian hacking thing is being discussed entirely out of realistic context. ..."
"... Voting machines are public and for Federal elections then tampering with them is elevated to a Federal crime. ..."
economistsview.typepad.com

RC AKA Darryl, Ron : , December 18, 2016 at 07:18 AM

This Russian hacking thing is being discussed entirely out of realistic context.

Cyber security is a serious risk management operation that firms and governments spend outrageous sums of money on because hacking attempts, especially from sources in China and Russia, occur in vast numbers against every remotely desirable target corporate or government each and every day. At my former employer, the State of Virginia, the data center repelled over two million hacking attempts from sources in China each day. Northrop Grumman, the infrastructure management outsourcer for the State of Virginia's IT infrastructure, has had no known intrusions into any Commonwealth of Virginia servers that had been migrated to their standard security infrastructure thus far since the inception of their contract in July 2006. That is almost the one good thing that I have to say about NG. Some state servers, notably the Virginia Department of Health Professions, not under protection of the NG standard network security were hacked and had private information such as client SSNs stolen. Retail store servers are hacked almost routinely, but large banks and similarly well protected corporations are not. Security costs and it costs a lot.

Even working in a data center with an excellent intrusion protection program as part of that program I had to take an annual "securing the human" computer based training class. Despite all of the technical precautions we were retrained each year to among other things NEVER put anything in an E-Mail that we did not want to be available for everyone to read; i.e., to never assume privacy is protected in an E-Mail. Embarrassing E-Mails need a source. We should assume that there will always be a hacker to take advantage of our mistakes.

RGC -> RC AKA Darryl, Ron... , December 18, 2016 at 07:57 AM
Can you spell "diversion"?

Sanders: "Break up the banks!"

Trump: "The elites are screwing you over!"

Supporters of the status quo:

"It's racism"

"It's Russian hackers"

Whatever it takes to change the subject.

RC AKA Darryl, Ron -> RGC... , December 18, 2016 at 08:09 AM
Maybe it is diversion, but it is definitely uninformed if not just plain stupid.
sglover -> RC AKA Darryl, Ron... , December 18, 2016 at 06:11 PM
Absolutely. What does that suggest about Team Dem?
DrDick -> EMichael... , December 18, 2016 at 08:34 AM
The reality is that all the major world powers (and some minor ones), including us, do this routinely and always have. While it is entirely appropriate to be outraged that it may have materially determined the election (which I think is impossible to know, though it did have some impact), we should not be shocked or surprised by this.
RC AKA Darryl, Ron -> EMichael... , December 18, 2016 at 09:55 AM
"...I would suggest attacks on Putin's personal business holdings all over the world..."

[My guess is that has been being done a long time ago considering the direction of US/Russian foreign relations over NATO expansion, the Ukraine, and Syria.

Long before TCP/IP the best way to prevent dirty secrets from getting out was not to have dirty secrets. It still works.

The jabbering heads will not have much effect on the political opinions of ordinary citizens because 40 million or more US adults had their credit information compromised by the Target hackers three years ago. Target had been saving credit card numbers instead of deleting them as soon as they obtained authorizations for transfers, so that the 40 million were certainly exposed while more than twice that were probably exposed. Establishment politicians having their embarrassing E-mails hacked is more like good fun family entertainment than something to get all riled up about.]

http://money.cnn.com/2014/01/10/news/companies/target-hacking/

Target: Hacking hit up to 110 million customers

RC AKA Darryl, Ron -> EMichael... , December 18, 2016 at 10:22 AM
Voting machines are public and for Federal elections then tampering with them is elevated to a Federal crime. Political parties are private. The Federal government did not protect Target or Northrop Grumman's managed infrastructure for the Commonwealth of Virginia although either one can take forensic information to the FBI that will obtain warrants for prosecution. Foreign criminal operations go beyond the immediate domestic reach of the FBI. Not even Interpol interdicts foreign leaders unless they are guilty of genocide, crimes against humanity or war crimes.

The Federal government can do what it will as there are not hard guidelines for such clandestine operations and responses. Moreover, there are none to realistically enforce against them, which inevitably leads to war given sufficient cycles of escalation. Certainly our own government has done worse (political assassinations and supporting coups with money and guns) with impunity merely because of its size, reach, and power.

RC AKA Darryl, Ron -> EMichael... , December 18, 2016 at 10:43 AM
BTW, "the burglar that just ransacked your house" can be arrested and prosecuted by a established regulated legal system with absolutely zero concerns of escalating into a nuclear war, trade war, or any other global hostility. So, not the same thing at all. Odds are good though that the burglar will get away without any of that because when he does finally get caught it will be an accident and probably only after dozen if not hundreds of B&E's.

There is a line. The US has crossed that line, but always in less developed countries that had no recourse against us. Putin knows where the line is with the US. He will dance around it and lean over it, but not cross it. We have him outgunned and he knows it. Putin did not tamper with an election, a government function. Putin tampered with private data exposing incriminating information against a political party, which is a private entity rather than government entity. Whatever we do should probably stay within the rule of law as it gets messy fast once outside those boundaries.

RC AKA Darryl, Ron -> RC AKA Darryl, Ron... , December 18, 2016 at 11:01 AM
As far as burglars go I live in a particular working class zip code that has very few burglaries. It is a bad risk/reward deal unless you are just out to steal guns and then you better make sure that no one is home. Most people with children still living at home also have a gun safe. Most people have dogs.

There are plenty burglaries in a lower income zip code nearby and lots more in higher income zip codes further away, the former being targets of opportunity with less security and possible drug stashes, which has a faster turnover than fencing big screen TV's. High income neighborhoods are natural targets with jewelry, cash, credit cards, and high end electronics, but far better security systems. I don't know much about their actual crime stats because they are on the opposite side of the City of Richmond VA from me, but I used to know a couple of burglars when I lived in the inner city. They liked the upscale homes near the University of Richmond on River Road.

Peter K. -> DrDick... , December 18, 2016 at 09:21 AM
Putin was mad b/c Clinton interfered in Russia's election using the bully-pulpit.

She may have been complete correct in what she was saying, but it's not surprising she pissed Putin off.

The Democratic establishment would rather discuss this than do a post-mortem on Hillary's campaign.

They kept telling us the e-mail didn't reveal anything and now they say the e-mail determined the election.

DeDude -> Peter K.... , December 18, 2016 at 09:43 AM
"They kept telling us the e-mail didn't reveal anything and now they say the e-mail determined the election"

And those two statement are not in conflict unless you are a brain dead Fox bot. Big nothing-burgers like Bhengazi or trivial emails can easily be blown up and affect a few hundred thousand voters. When the heck are you going to grow up and get past your 5 stages of Sanders grief?

Peter K. -> DeDude... , December 18, 2016 at 09:54 AM
"Big nothing-burgers like Bhengazi or trivial emails can easily be blown up and affect a few hundred thousand voters. "

There is already an audience for those faux scandals, the Fox viewers.

They don't create new Voters.

You're nothing but a brainwashed partisan Democrat, a mirror-image of these brainwashed Fox viewers.

You're told what you're supposed to think by the Party leadership and you eat it up.

No critical thinking skills.

EMichael -> DeDude... , December 18, 2016 at 09:55 AM
He's barely over Nader.
DeDude -> EMichael... , December 18, 2016 at 10:07 AM
I know - and there used to be some signs of a functional brain. Now it is all "they are all the same" ism and Hillary derangement syndrome on steroids. Someone who cares need to do an intervention before it becomes he get gobbled up by "ilsm" ism.
Peter K. -> EMichael... , December 18, 2016 at 01:08 PM
Nader's critique was correct.

The Democrats moved to the right and created more Trump voters.

im1dc -> RC AKA Darryl, Ron... , December 18, 2016 at 08:56 AM
ABC video interview by Martha Raddatz of Donna Brazile 2:43

Adding the following FACTS, not opinion, to the Russian Hacking debate at the DNC

Russian hacks of the DNC began at least as early as April, the FBI informed the DNC in May of the hacks, NO ONE in the FedGovt offered to HELP the DNC at anytime (allowed it to continue), and Russia's Putin DID NOT stop after President Obama told Putin in September to "Cut it Out", despite Obama's belief otherwise

http://www.huffingtonpost.com/entry/dnc-chair-says-committee-was-attacked-by-russian-hackers-through-election-day_us_5856acb6e4b08debb78992e4

"DNC Chair Says Russian Hackers Attacked The Committee Through Election Day"

'That goes against Obama's statement that the attacks ended after he spoke to Putin in September'

by Dave Jamieson Labor Reporter...The Huffington Post...12/18/2016...10:59 am ET

"The chair of the Democratic National Committee said Sunday that the DNC was under constant cyber attack by Russian hackers right through the election in November. Her claim contradicts President Barack Obama's statement Friday that the attacks ended in September after he issued a personal warning to Russian President Vladimir Putin.

"No, they did not stop," Donna Brazile told Martha Raddatz on ABC's "This Week." "They came after us absolutely every day until the end of the election. They tried to hack into our system repeatedly. We put up the very best cyber security but they constantly [attacked]."

Brazile said the DNC was outgunned in its efforts to fend off the hacks, and suggested the committee received insufficient protection from U.S. intelligence agencies. The CIA and FBI have reportedly concluded that Russians carried out the attacks in an effort to help Donald Trump defeat Hillary Clinton.

"I think the Obama administration ― the FBI, the various other federal agencies ― they informed us, they told us what was happening. We knew as of May," Brazile said. "But in terms of helping us to fight, we were fighting a foreign adversary in the cyberspace. The Democratic National Committee, we were not a match. And yet we fought constantly."

In a surprising analogy, Brazile compared the FBI's help to the DNC to that of the Geek Squad, the tech service provided at retailer Best Buy ― which is to say well-meaning, but limited.

"They reached out ― it's like going to Best Buy," Brazile said. "You get the Geek Squad, and they're great people, by the way. They reached out to our IT vendors. But they reached us, meaning senior Democratic officials, by then it was, you know, the Russians had been involved for a long time."..."

im1dc -> im1dc... , December 18, 2016 at 08:59 AM
This new perspective and set of facts is more than distressing it details a clear pattern of Executive Branch incompetence, malfeasance, and ineptitude (perhaps worse if you are conspiratorially inclined)
im1dc -> im1dc... , -1
The information above puts in bold relief President Obama's denial of an Electoral College briefing on the Russian Hacks

There is now no reason not to brief the Electors to the extent and degree of Putin's help for demagogue Donald

[Dec 27, 2016] Neopopulism

Dec 27, 2016 | economistsview.typepad.com

Fred C. Dobbs -> Peter K.... December 26, 2016 at 07:15 AM neopopulism: A cultural and political movement, mainly in Latin American countries, distinct from twentieth-century populism in radically combining classically opposed left-wing and right-wing attitudes and using electronic media as a means of dissemination. (Wiktionary)

[Dec 26, 2016] Someone needs to buy Paul Krugman a one way ticket to Camden and have him hang around the devastated post-industrial hell scape his policies helped create.

Notable quotes:
"... Someone needs to buy Paul Krugman a one way ticket to Camden and have him hang around the devastated post-industrial hell scape his policies helped create. ..."
"... Krugman should be temporarily barred from public discourse until he apologizes for pushing NAFTA and all the rest. Hundreds of millions of people were thrust into dire poverty because of the horrible free trade policies he and 99.9% of US economists pushed. ..."
"... Extremes meet: extreme protectionism is close to extreme neoliberal globalization in the level of devastation, that can occur. ..."
"... But please do not forget that Krugman is a neoliberal stooge and this is much worse then being protectionist. This is close to betrayal of the nation you live it, people you live with, if you ask me. ..."
"... To me academic neoliberals after 2008 are real "deplorables". And should be treated as such, despite his intellect. There not much honor in being an intellectual prostitute of financial oligarchy that rules the country. ..."
Dec 26, 2016 | economistsview.typepad.com
Lincoln / McKinley tariffs...
Economists are still oblivious to the devastation created by 40 years of free trade.

Someone needs to buy Paul Krugman a one way ticket to Camden and have him hang around the devastated post-industrial hell scape his policies helped create.

Krugman should be temporarily barred from public discourse until he apologizes for pushing NAFTA and all the rest. Hundreds of millions of people were thrust into dire poverty because of the horrible free trade policies he and 99.9% of US economists pushed.

They have learned nothing and they have forgotten much.

pgl -> Lincoln / McKinley tariffs ... , December 26, 2016 at 11:25 AM
Oh yea - bring on the tariffs which will lead to a massive appreciation of the dollar. Which in turn will lead to massive reductions in US exports. I guess our new troll is short selling Boeing.
likbez -> pgl, -1
I tend to agree with you. Extremes meet: extreme protectionism is close to extreme neoliberal globalization in the level of devastation, that can occur.

But please do not forget that Krugman is a neoliberal stooge and this is much worse then being protectionist. This is close to betrayal of the nation you live it, people you live with, if you ask me.

To me academic neoliberals after 2008 are real "deplorables". And should be treated as such, despite his intellect. There not much honor in being an intellectual prostitute of financial oligarchy that rules the country.

[Dec 26, 2016] Neoliberals as closet Trotskyites are adamant neo-McCarthyists eager to supress any dissent, as soon as they feel it starts to influence public opinion

"You control the message, and the facts do not matter. "
Notable quotes:
"... That's funny. Neoliberals are closet Trotskyites and they will let you talk only is specially designated reservations, which are irrelevant (or, more correctly, as long as they are irrelevant) for swaying the public opinion. ..."
"... If you think they are for freedom of the press, you are simply delusional. They are for freedom of the press for those who own it. ..."
"... Try to get dissenting views to MSM or academic magazines. Yes, they will not send you to GULAG, but the problem is that ostracism works no less effectively. That the essence of "inverted totalitarism" (another nickname for neoliberalism). You can substitute physical repression used in classic totalitarism with indirect suppression of dissenting opinions with the same, or even better results. Note that even the term "neoliberalism" is effectively censored and not used by MSM. ..."
"... And the resulting level of suppressing of opposition (which is the essence of censorship) is on the level that would make the USSR censors blush. And if EconomistView gets too close to anti-neoliberal platform it will instantly find itself in the lists like PropOrNot ..."
Dec 26, 2016 | economistsview.typepad.com
likbez -> EMichael... December 26, 2016 at 04:20 PM
"Then of course, it is easy to attack the neoliberals, they'll actually let you talk."

That's funny. Neoliberals are closet Trotskyites and they will let you talk only is specially designated reservations, which are irrelevant (or, more correctly, as long as they are irrelevant) for swaying the public opinion.

They are all adamant neo-McCarthyists, if you wish and will label you Putin stooge in no time [, if you try to escape the reservation].

If you think they are for freedom of the press, you are simply delusional. They are for freedom of the press for those who own it.

Try to get dissenting views to MSM or academic magazines. Yes, they will not send you to GULAG, but the problem is that ostracism works no less effectively. That the essence of "inverted totalitarism" (another nickname for neoliberalism). You can substitute physical repression used in classic totalitarism with indirect suppression of dissenting opinions with the same, or even better results. Note that even the term "neoliberalism" is effectively censored and not used by MSM.

See Sheldon Wolin writings about this.

And the resulting level of suppressing of opposition (which is the essence of censorship) is on the level that would make the USSR censors blush. And if EconomistView gets too close to anti-neoliberal platform it will instantly find itself in the lists like PropOrNot

http://www.propornot.com/p/the-list.html

[Dec 26, 2016] The Democratic Party as a Party (Sanders was an outlier) has nothing to do with fair and equal play for all. This is a party of soft neoliberals and it adheres to Washington

Notable quotes:
"... The Democratic Party as a Party (Sanders was an outlier) has nothing to do with "fair and equal play for all". This is a party of soft neoliberals and it adheres to Washington consensus no less then Republicans. https://en.wikipedia.org/wiki/Washington_Consensus ..."
"... If you read the key postulates it is clear that that they essentially behaved like an occupier in this country. In this sense "Occupy Wall street" movement should actually be called "Liberation from Wall Street occupation" movement. ..."
"... Bill Clinton realized that he can betray working class with impunity as "they have nowhere to go" and will vote for Democrat anyway. In this sense Bill Clinton is a godfather of the right wing nationalism in the USA. He sowed the "Teeth's of Dragon" and now we have, what we have. ..."
Dec 26, 2016 | economistsview.typepad.com
EMichael : December 26, 2016 at 12:47 PM , 2016 at 12:47 PM
You guys should wake up and smell what country you live in. Here is a good place to start.

"Campaigning for president in 1980, Ronald Reagan told stories of Cadillac-driving "welfare queens" and "strapping young bucks" buying T-bone steaks with food stamps. In trumpeting these tales of welfare run amok, Reagan never needed to mention race, because he was blowing a dog whistle: sending a message about racial minorities inaudible on one level, but clearly heard on another. In doing so, he tapped into a long political tradition that started with George Wallace and Richard Nixon, and is more relevant than ever in the age of the Tea Party and the first black president.

In Dog Whistle Politics, Ian Haney L?pez offers a sweeping account of how politicians and plutocrats deploy veiled racial appeals to persuade white voters to support policies that favor the extremely rich yet threaten their own interests. Dog whistle appeals generate middle-class enthusiasm for political candidates who promise to crack down on crime, curb undocumented immigration, and protect the heartland against Islamic infiltration, but ultimately vote to slash taxes for the rich, give corporations regulatory control over industry and financial markets, and aggressively curtail social services. White voters, convinced by powerful interests that minorities are their true enemies, fail to see the connection between the political agendas they support and the surging wealth inequality that takes an increasing toll on their lives. The tactic continues at full force, with the Republican Party using racial provocations to drum up enthusiasm for weakening unions and public pensions, defunding public schools, and opposing health care reform.

Rejecting any simple story of malevolent and obvious racism, Haney L?pez links as never before the two central themes that dominate American politics today: the decline of the middle class and the Republican Party's increasing reliance on white voters. Dog Whistle Politics will generate a lively and much-needed debate about how racial politics has destabilized the American middle class -- white and nonwhite members alike."

https://www.amazon.com/Dog-Whistle-Politics-Appeals-Reinvented-ebook/dp/B00GHJNSMU

im1dc : , December 26, 2016 at 01:51 PM
Reading the above posts I am reminded that in November there was ONE Election with TWO Results:

Electoral Vote for Donald Trump by the margin of 3 formerly Democratic Voting states Michigan, Ohio, and Pennsylvania

Popular Vote for Hillary Clinton by over 2.8 Million

The Democratic Party and its Candidates OBVIOUSLY need to get more votes in the Electoral States that they lost in 2016, not change what they stand for, the principles of fair and equal play for all.

And, in the 3 States that turned the Electoral Vote in Trump's favor and against Hillary, all that is needed are 125,000 or more votes, probably fewer, and the DEMS win the Electoral vote big too.

It is not any more complex than that.

So how does the Democratic Party get more votes in those States?

PANDER to their voters by delivering on KISS, not talking about it.

That is create living wage jobs and not taking them away as the Republican Party of 'Free Trade' and the Clinton Democratic Party 'Free Trade' Elites did.

Understand this: It is not the responsibility of the USA, or in its best interests, to create jobs in other nations (Mexico, Japan, China, Canada, Israel, etc.) that do not create jobs in the USA equivalently, especially if the gain is offset by costly overseas confrontations and involvements that would not otherwise exist.

likbez : December 26, 2016 at 02:49 PM , 2016 at 02:49 PM
You are dreaming:

"The Democratic Party and its Candidates OBVIOUSLY need to get more votes in the Electoral States that they lost in 2016, not change what they stand for, the principles of fair and equal play for all. "

The Democratic Party as a Party (Sanders was an outlier) has nothing to do with "fair and equal play for all". This is a party of soft neoliberals and it adheres to Washington consensus no less then Republicans. https://en.wikipedia.org/wiki/Washington_Consensus

If you read the key postulates it is clear that that they essentially behaved like an occupier in this country. In this sense "Occupy Wall street" movement should actually be called "Liberation from Wall Street occupation" movement.

Bill Clinton realized that he can betray working class with impunity as "they have nowhere to go" and will vote for Democrat anyway. In this sense Bill Clinton is a godfather of the right wing nationalism in the USA. He sowed the "Teeth's of Dragon" and now we have, what we have.

[Dec 26, 2016] How could the US exist with no neoliberals and neocons pandering corporate war for Wall Street?

Notable quotes:
"... Do you think Trump will shutter those star wars bases in Poland and Rumania? ..."
Dec 26, 2016 | economistsview.typepad.com
ilsm -> A Boy Named Sue... , December 26, 2016 at 05:20 AM
Dreadful!

How could the US exist with no neoliberal, neocons pandering corporate war for wall st?

Do you think Trump will shutter those star wars bases in Poland and Rumania?

[Dec 24, 2016] If the 2018 elections will not be converted to verified paper ballots, accompanied by random auditing of all close elections, then it is clear that the accusations of Russian hacking were blatant lies

Notable quotes:
"... Another thing: it will be clear how serious they take the allegations of Russian hacking, by how they address the problem of auditing electronic voting machines. ..."
"... If the 2018 elections aren't all with voter verified paper ballots, accompanied by random auditing and auditing all close elections, we know the accusations of Russian hacking were blatant lies. ..."
Dec 24, 2016 | economistsview.typepad.com

John M -> John M ... December 23, 2016 at 07:17 PM

Another thing: it will be clear how serious they take the allegations of Russian hacking, by how they address the problem of auditing electronic voting machines.

If the 2018 elections aren't all with voter verified paper ballots, accompanied by random auditing and auditing all close elections, we know the accusations of Russian hacking were blatant lies.

[Dec 23, 2016] This is the time for stronger, more interventionist in internal policy state and the suppression of financial oligarchy

Notable quotes:
"... Democratic party under Bill Clinton became yet another neoliberal party (soft neoliberals) and betrayed both organized labour and middle class in favour of financial oligarchy. ..."
"... The cynical calculation was that "they have nowhere to go" and will vote for Democrats anyway. And that was true up to and including election of "change we can believe in" guy. After this attempt of yet another Clinton-style "bait and switch" trick failed. ..."
"... Now it is clear that far right picked up large part of those votes. So in a way Bill Clinton is the godfather of the US far right renaissances. The same is true for Hillary: her "kick the can down the road" stance made victory of Trump possible (although it surprised me; I expected that neoliberals were still strong enough to push their candidate down the US people throat) ..."
"... Under "democrat" Obama the USA pursued imperial policy of creating global neoliberal empire. The foreign policy remained essentially unchanged. Neocons were partially replaced with "liberal interventionists" which is the same staff in a different bottle. This policy costs the US tremendous amount of money and it is probable that the US is going the way British empire went -- overextending itself. ..."
"... Regional currency blocks are now a reality and arrangements bypass the usage of US dollar if international trade are common. They are now in place between several large countries such as Russia and China and absolutely nothing can reverse this trend. So dollar became virtualized -- a kind of "conversion gauge" but without profits for real conversion national currency to dollars for major TBTF banks. ..."
Dec 23, 2016 | economistsview.typepad.com
Fed C. Dobbs : , December 23, 2016 at 02:16 PM
(So, how long will the
post-inaugural honeymoon last?
I'd give it no more than a month.
Then what? I dunno, but nothing good.)

Reality TV Populism
http://nyti.ms/2i72Rol
NYT - Paul Krugman - Dec 23

This Washington Post article on Poland - where a right-wing, anti-intellectual, nativist party now rules, and has garnered a lot of public support - is chilling for those of us who worry that Trump_vs_deep_state may really be the end of the road for US democracy. The supporters of Law and Justice clearly looked a lot like Trump's white working class enthusiasts; so are we headed down the same path?

(In Poland, a window on what happens when
populists come to power http://wpo.st/aHJO2
Washington Post - Anthony Faiola - December 18)

Well, there's an important difference - a bit of American exceptionalism, if you like. Europe's populist parties are actually populist; they pursue policies that really do help workers, as long as those workers are the right color and ethnicity. As someone put it, they're selling a herrenvolk welfare state. Law and Justice has raised minimum wages and reduced the retirement age; France's National Front advocates the same things.

Trump, however, is different. He said lots of things on the campaign trail, but his personnel choices indicate that in practice he's going to be a standard hard-line economic-right Republican. His Congressional allies are revving up to dismantle Obamacare, privatize Medicare, and raise the retirement age. His pick for Labor Secretary is a fast-food tycoon who loathes minimum wage hikes. And his pick for top economic advisor is the king of trickle-down.

So in what sense is Trump a populist? Basically, he plays one on TV - he claims to stand for the common man, disparages elites, trashes political correctness; but it's all for show. When it comes to substance, he's pro-elite all the way.

It's infuriating and dismaying that he managed to get away with this in the election. But that was all big talk. What happens when reality begins to hit? Repealing Obamacare will inflict huge harm on precisely the people who were most enthusiastic Trump supporters - people who somehow believed that their benefits would be left intact. What happens when they realize their mistake?

I wish I were confident in a coming moment of truth. I'm not. Given history, what we can count on is a massive effort to spin the coming working-class devastation as somehow being the fault of liberals, and for all I know it might work. (Think of how Britain's Tories managed to shift blame for austerity onto Labour's mythical fiscal irresponsibility.) But there is certainly an opportunity for Democrats coming.

And the indicated political strategy is clear: make Trump and company own all the hardship they're about to inflict. No cooperation in devising an Obamacare replacement; no votes for Medicare privatization and increasing the retirement age. No bipartisan cover for the end of the TV illusion and the coming of plain old, ugly reality.

anne -> Fed C. Dobbs... , December 23, 2016 at 02:23 PM
Correcting the date:

http://krugman.blogs.nytimes.com/2016/12/19/reality-tv-populism/

December 19, 2016

Reality TV Populism
By Paul Krugman

likbez : , -1
Two points:

Point 1:

Democratic party under Bill Clinton became yet another neoliberal party (soft neoliberals) and betrayed both organized labour and middle class in favour of financial oligarchy.

The cynical calculation was that "they have nowhere to go" and will vote for Democrats anyway. And that was true up to and including election of "change we can believe in" guy. After this attempt of yet another Clinton-style "bait and switch" trick failed.

Now it is clear that far right picked up large part of those votes. So in a way Bill Clinton is the godfather of the US far right renaissances. The same is true for Hillary: her "kick the can down the road" stance made victory of Trump possible (although it surprised me; I expected that neoliberals were still strong enough to push their candidate down the US people throat)

Point 2:

Under "democrat" Obama the USA pursued imperial policy of creating global neoliberal empire. The foreign policy remained essentially unchanged. Neocons were partially replaced with "liberal interventionists" which is the same staff in a different bottle. This policy costs the US tremendous amount of money and it is probable that the US is going the way British empire went -- overextending itself.

Regional currency blocks are now a reality and arrangements bypass the usage of US dollar if international trade are common. They are now in place between several large countries such as Russia and China and absolutely nothing can reverse this trend. So dollar became virtualized -- a kind of "conversion gauge" but without profits for real conversion national currency to dollars for major TBTF banks.

So if we think about Iraq war as the way to prevent to use euro as alternative to dollar in oil sales that goal was not achieved and all blood and treasure were wasted.

In this sense it would be difficult to Trump to continue with "bastard neoliberalism" both in foreign policy and domestically and betray his election promises because they reflected real problems facing the USA and are the cornerstone of his political support.

Also in this case neocons establishment will simply get rid of him one way or the other. I hope that he understand this danger and will avoid trimming Social Security.

Returning to Democratic Party betrayal of interests of labour, Krugman hissy fit signifies that he does not understand the current political situation. Neoliberal wing of Democratic Party is now bankrupt both morally and politically. Trump election was the last nail into Bill Clinton political legacy coffin.

Now we returned to essentially the same political process that took place after the Great Depression, with much weaker political leaders, this time. So this is the time for stronger, more interventionist in internal policy state and the suppression of financial oligarchy. If Trump does not understand this he is probably doomed and will not last long.

That's why I think Trump inspired far right renaissance will continue and the political role of military might dramatically increase. And politically Trump is the hostage of this renaissance. Flint appointment in this sense is just the first swallow of increased role of military leaders in government.

[Dec 23, 2016] The Case for Protecting Infant Industries

Notable quotes:
"... The fact remains, however, that every single developed country got there by using protectionist policies to nurture the develop local industries. Protectionism in developed countries does have strongly negative consequences, but it is beneficial for developing economies. ..."
"... You are exactly right about Japan and I lived through that period. Please name one advanced economy which did not rely on protectionist laws to support domestic industries. All of the European industrial countries did it. The US did it. Japan and Korea did it. China is currently doing it and India has done it. ..."
"... Nobody cared about US labor or about hollowing out the US economy. Krugman frequently noted that the benefits to investors and 'strategic' considerations for free trade were more important that job losses. ..."
"... This extra demand for dollars as a commodity is what drives the price of the dollar higher, leading to the strategic benefits and economic hollowing out that I noted above. ..."
"... There really is no "post-industrialization era", no matter what fantasies the FIRE sector wants to sell. To the extent there is, the existing global trade agreements (including the WTO, World Bank, IMF, and related organization) accomplish that as well by privileging the position of first world capital. ..."
"... "Over the long haul, clearly automation's been much more important - it's not even close," said Lawrence Katz, an economics professor at Harvard who studies labor and technological change. No candidate talked much about automation on the campaign trail. Technology is not as convenient a villain as China or Mexico, there is no clear way to stop it, and many of the technology companies are in the United States and benefit the country in many ways. ..."
"... Globalization is clearly responsible for some of the job losses, particularly trade with China during the 2000s, which led to the rapid loss of 2 million to 2.4 million net jobs, according to research by economists including Daron Acemoglu and David Autor of M.I.T. ..."
"... People who work in parts of the country most affected by imports generally have greater unemployment and reduced income for the rest of their lives, Mr. Autor found in a paper published in January. Still, over time, automation has had a far bigger effect than globalization, and would have eventually eliminated those jobs anyway, he said in an interview. "Some of it is globalization, but a lot of it is we require many fewer workers to do the same amount of work," he said. "Workers are basically supervisors of machines." ..."
"... Clarification of 3: that is, infant industry protection as traditionally done, i.e. "picking winners", won't help. What would help is structural changes that make things relatively easier for small enterprises and relatively harder for large ones. ..."
"... Making direct lobbying of state and federal politicians by industry groups and companies a crime punishable by 110% taxation of net income on all the participants would be a start. ..."
"... "Over time, automation has generally had a happy ending: As it has displaced jobs, it has created new ones. But some experts are beginning to worry that this time could be different. Even as the economy has improved, jobs and wages for a large segment of workers - particularly men without college degrees doing manual labor - have not recovered." ..."
"... So why have manufacturing jobs plummeted since 2000? One answer is that the current account deficit is the wrong figure, since it also includes our surplus in trade in services. If you just look at goods, the deficit is closer to 4.2% of GDP. ..."
"... trade interacts with automation. Not only do we lose jobs in manufacturing to automation, but trade leads us to re-orient our production toward goods that use relatively less labor (tech, aircraft, chemicals, farm produces, etc.), while we import goods like clothing, furniture and autos. ..."
"... There are industries that are closely connected with the sovereignty of the country. That's what neoliberals tend to ignore as they, being closet Trotskyites ("Financial oligarchy of all countries unite!" instead of "Proletarian of all countries unite!" ;-) do not value sovereignty and are hell bent on the Permanent Neoliberal Revolution to bring other countries into neoliberal fold (in the form of color revolutions, or for smaller countries, direct invasions like in Iraq and Libya ). ..."
"... Neoliberal commenters here demonstrate complete detachment from the fact that like war is an extension of politics, while politics is an extension of economics. For example, denying imports can and is often used for political pressure. ..."
"... Now Trump want to play this game selectively designating China as "evil empire" and providing a carrot for Russia. Will it works, or Russia can be wiser then donkeys, I do not know. ..."
"... The US propagandists usually call counties on which they impose sanction authoritarian dictatorships to make such actions more politically correct, but the fact remains: The USA as a global hegemon enjoys using economic pressure to crush dissidents and put vassals in line. ..."
"... Neoliberalism as a social system is past it pinnacle and that creates some problems for the USA as the central player in the neoliberal world. The triumphal march of neoliberalism over the globe ended almost a decade ago. ..."
Dec 23, 2016 | economistsview.typepad.com
Noah Smith:
The Case for Protecting Infant Industries : I must say, it's been almost breathtaking to see how fast the acceptable terms of debate have shifted on the subject of trade. Thanks partly to President-elect Donald Trump's populism and partly to academic research showing that the costs of free trade could be higher than anyone predicted, economics commentators are now happy to lambast the entire idea of trade. I don't want to do that -- I think a nuanced middle ground is best. But I do think it's worth reevaluating one idea that the era of economic dogmatism had seemingly consigned to the junk pile -- the notion of infant-industry protectionism. ...
DrDick -> pgl...

The fact remains, however, that every single developed country got there by using protectionist policies to nurture the develop local industries. Protectionism in developed countries does have strongly negative consequences, but it is beneficial for developing economies.

DrDick -> sanjait... , December 22, 2016 at 04:52 PM
You are exactly right about Japan and I lived through that period. Please name one advanced economy which did not rely on protectionist laws to support domestic industries. All of the European industrial countries did it. The US did it. Japan and Korea did it. China is currently doing it and India has done it.
JohnH -> pgl... , -1
Japan and other developed countries took advantage of the strong dollar/reserve currency, which provided their industries de facto protection from US exports along with a price umbrella that allowed them export by undercutting prices on US domestic products. The strong dollar was viewed as a strategic benefit to the US, since it allowed former rivals to develop their economies while making them dependent on the US consumer market, the largest in the world. The strong dollar also allowed the US to establish bases and fight foreign wars on the cheap, while allowing Wall Street to buy foreign economies' crown jewels on the cheap.

Nobody cared about US labor or about hollowing out the US economy. Krugman frequently noted that the benefits to investors and 'strategic' considerations for free trade were more important that job losses.

JohnH -> anne... , December 22, 2016 at 05:06 PM
Even pgl's guy, Milton Friedman, recognized that "overseas demand for dollars allows the United States to maintain persistent trade deficits without causing the value of the currency to depreciate or the flow of trade to re-adjust."
https://en.wikipedia.org/wiki/International_use_of_the_U.S._dollar

This extra demand for dollars as a commodity is what drives the price of the dollar higher, leading to the strategic benefits and economic hollowing out that I noted above.

John San Vant -> JohnH... , -1
That is because you get a persistent trade surplus in services, which offsets the "Goods" trade deficit. The currency depreciated in the 2000's because said surplus in services began to decline creating a real trade deficit.
DrDick -> Mike Sparrow... , December 22, 2016 at 04:57 PM
"What about the post-industrialization era?"

There really is no "post-industrialization era", no matter what fantasies the FIRE sector wants to sell. To the extent there is, the existing global trade agreements (including the WTO, World Bank, IMF, and related organization) accomplish that as well by privileging the position of first world capital.

anne -> DrDick... , -1
There really is no "post-industrialization era", no matter what fantasies the Finance, Insurance, and Real Estate sectors want to sell....

[ Interesting assertion. Do develop this further. ]

Greg : , -1
The Long-Term Jobs Killer Is Not China. It's Automation.
( http://www.nytimes.com/2016/12/21/upshot/the-long-term-jobs-killer-is-not-china-its-automation.html?ref=economy&_r=0 )

1. I'm moderately surprised that this piece hasn't shown up in Links.

2. The Lump of Labor Fallacy is exposed as a fallacy - Sandwichman has been right all along.

3. Infant industry protection won't help in this environment

anne -> Greg... , December 22, 2016 at 01:08 PM
http://www.nytimes.com/2016/12/21/upshot/the-long-term-jobs-killer-is-not-china-its-automation.html

December 21, 2016

The Long-Term Jobs Killer Is Not China. It's Automation.

By Claire Cain Miller

The first job that Sherry Johnson, 56, lost to automation was at the local newspaper in Marietta, Ga., where she fed paper into the printing machines and laid out pages. Later, she watched machines learn to do her jobs on a factory floor making breathing machines, and in inventory and filing.

"It actually kind of ticked me off because it's like, How are we supposed to make a living?" she said. She took a computer class at Goodwill, but it was too little too late. "The 20- and 30-year-olds are more up to date on that stuff than we are because we didn't have that when we were growing up," said Ms. Johnson, who is now on disability and lives in a housing project in Jefferson City, Tenn.

Donald J. Trump told workers like Ms. Johnson that he would bring back their jobs by clamping down on trade, offshoring and immigration. But economists say the bigger threat to their jobs has been something else: automation.

"Over the long haul, clearly automation's been much more important - it's not even close," said Lawrence Katz, an economics professor at Harvard who studies labor and technological change. No candidate talked much about automation on the campaign trail. Technology is not as convenient a villain as China or Mexico, there is no clear way to stop it, and many of the technology companies are in the United States and benefit the country in many ways.

Mr. Trump told a group of tech company leaders last Wednesday: "We want you to keep going with the incredible innovation. Anything we can do to help this go along, we're going to be there for you."

Andrew F. Puzder, Mr. Trump's pick for labor secretary and chief executive of CKE Restaurants, extolled the virtues of robot employees over the human kind in an interview with Business Insider in March. "They're always polite, they always upsell, they never take a vacation, they never show up late, there's never a slip-and-fall, or an age, sex or race discrimination case," he said.

Globalization is clearly responsible for some of the job losses, particularly trade with China during the 2000s, which led to the rapid loss of 2 million to 2.4 million net jobs, according to research by economists including Daron Acemoglu and David Autor of M.I.T.

People who work in parts of the country most affected by imports generally have greater unemployment and reduced income for the rest of their lives, Mr. Autor found in a paper published in January. Still, over time, automation has had a far bigger effect than globalization, and would have eventually eliminated those jobs anyway, he said in an interview. "Some of it is globalization, but a lot of it is we require many fewer workers to do the same amount of work," he said. "Workers are basically supervisors of machines."

When Greg Hayes, the chief executive of United Technologies, agreed to invest $16 million in one of its Carrier factories as part of a Trump deal to keep some jobs in Indiana instead of moving them to Mexico, he said the money would go toward automation.

"What that ultimately means is there will be fewer jobs," he said on CNBC....

Greg -> Greg... , December 22, 2016 at 01:08 PM
Clarification of 3: that is, infant industry protection as traditionally done, i.e. "picking winners", won't help. What would help is structural changes that make things relatively easier for small enterprises and relatively harder for large ones.

Making direct lobbying of state and federal politicians by industry groups and companies a crime punishable by 110% taxation of net income on all the participants would be a start.

anne -> Greg... , December 22, 2016 at 01:09 PM
http://cepr.net/blogs/beat-the-press/what-s-different-about-stagnating-wages-for-workers-without-college-degrees

December 21, 2016

What's Different About Stagnating Wages for Workers Without College Degrees

There seems to be a great effort to convince people that the displacement due to the trade deficit over the last fifteen years didn't really happen. The New York Times contributed to this effort with a piece * telling readers that over the long-run job loss has been primarily due to automation not trade.

While the impact of automation over a long enough period of time certainly swamps the impact of trade, over the last 20 years there is little doubt that the impact of the exploding trade deficit has had more of an impact on employment. To make this one as simple as possible, we currently have a trade deficit of roughly $460 billion (@ 2.6 percent of GDP). Suppose we had balanced trade instead, making up this gap with increased manufacturing output.

Does the NYT want to tell us that we could increase our output of manufactured goods by $460 billion, or just under 30 percent, without employing more workers in manufacturing? That would be pretty impressive. We currently employ more than 12 million workers in manufacturing, if moving to balanced trade increase employment by just 15 percent we would be talking about 1.8 million jobs. That is not trivial.

But this is not the only part of the story that is strange. We are getting hyped up fears over automation even at a time when productivity growth (i.e. automation) has slowed to a crawl, averaging just 1.0 percent annually over the last decade. The NYT tells readers:

"Over time, automation has generally had a happy ending: As it has displaced jobs, it has created new ones. But some experts are beginning to worry that this time could be different. Even as the economy has improved, jobs and wages for a large segment of workers - particularly men without college degrees doing manual labor - have not recovered."

Hmmm, this time could be different? How so? The average hourly wage of men with just a high school degree was 13 percent less in 2000 than in 1973. ** For workers with some college it was down by more than 2.0 percent. In fact, stagnating wages for men without college degrees is not something new and different, it has been going on for more than forty years. Hasn't this news gotten to the NYT yet?

* http://www.nytimes.com/2016/12/21/upshot/the-long-term-jobs-killer-is-not-china-its-automation.html

** http://www.stateofworkingamerica.org/chart/swa-wages-table-4-15-hourly-wages-men-education/

-- Dean Baker

Peter K. : , -1
http://jaredbernsteinblog.com/inequality-technology-globalization-and-the-false-assumptions-that-sustain-current-inequities/

Inequality, technology, globalization, and the false assumptions that sustain current inequities

by Jared Bernstein

December 22nd, 2016 at 3:24 pm

Here's a great interview* with inequality scholar Branko Milanovic wherein he brings a much-needed historical and international perspective to the debate (h/t: C. Marr). Many of Branko's points are familiar to my readers: yes, increased trade has upsides, for both advanced and emerging economies. But it's not hard to find significant swaths hurt by globalization, particularly workers in rich economies who've been placed into competition with those in poorer countries. The fact that little has been done to help them is one reason for president-elect Trump.

As Milanovic puts it:

"The problems with globalization arise from the fact that gains from it are not (and can never be) evenly distributed. There would be always those who gain less than some others, or those who lose even in absolute terms. But to whom can they "appeal" for redress? Only to their national governments because this is how the world is politically organized. Thus national governments have to engage in "mop up" operations to fix the negative effects of globalization. And this they have not done well, led as they were by the belief that the trickle-down economics will take care of it. We know it did not."

But I'd like to focus on a related point from Branko's interview, one that gets less attention: the question of whether it was really exposure to global trade or to labor-saving technology that is most responsible for displacing workers. What's the real problem here: is it the trade deficit or the robots?

Branko cogently argues that "both technological change and economic polices responded to globalization. The nature of recent technological progress would have been different if you could not employ labor 10,000 miles away from your home base." Their interaction makes their relative contributions hard to pull apart.

I'd argue that the rise of trade with China, from the 1990s to the 2007 crash, played a significant role in moving US manufacturing employment from its steady average of around 17 million factory jobs from around 1970 to 2000, to an average today that's about 5 million less (see figure below; of course, manufacturing employment was falling as a share of total jobs over this entire period).

....

* https://newrepublic.com/article/139432/understand-2016s-politics-look-winners-losers-globalization

Peter K. : , -1
market monetarist Scott Sumner makes a good point about the post-war years.

http://www.themoneyillusion.com/?p=32214

Do current account deficits cost jobs

Over at Econlog I have a post that suggests the answer is no, CA deficits do not cost jobs.

But suppose I'm wrong, and suppose they do cost jobs. In that case, trade has been a major net contributor to American jobs during the 21st century, as our deficit was about 4% of GDP during the 2000 tech boom, and as large as 6% of GDP during the 2006 housing boom. Today it is only 2.6% of GDP. So if you really believe that rising trade deficits cost jobs, you'd be forced to believe that the shrinking deficits since 2000 have created jobs.

So why have manufacturing jobs plummeted since 2000? One answer is that the current account deficit is the wrong figure, since it also includes our surplus in trade in services. If you just look at goods, the deficit is closer to 4.2% of GDP.

But even that doesn't really explain very much, because it's slightly lower than the 4.35% of GDP trade deficit in goods back in 2000. So again, the big loss of manufacturing jobs is something of a mystery. Yes, we import more goods than we used to, but exports of goods have risen at about the same rate since 2000. So why does it seem like trade has devastated our manufacturing sector?

Perhaps because trade interacts with automation. Not only do we lose jobs in manufacturing to automation, but trade leads us to re-orient our production toward goods that use relatively less labor (tech, aircraft, chemicals, farm produces, etc.), while we import goods like clothing, furniture and autos.

So trade and automation are both parts of a bigger trend, Schumpeterian creative destruction, which is transforming big areas of our economy. It's especially painful as during the earlier period of automation (say 1950-2000) the physical output of goods was still rising fast. So the blow of automation was partly cushioned by a rise in output. (Although not in the coal and steel industries!) Since 2000, however, we've seen slower growth in physical output for a number of reasons, including slower workforce growth, a shift to a service economy, and a home building recession (which normally absorbs manufactured goods like home appliances, carpet, etc.) We are producing more goods than ever, but with dramatically fewer workers.

Update: Steve Cicala sent me a very interesting piece on coal that he had published in Forbes. Ironically, environmental regulations actually helped West Virginia miners, by forcing utilities to install scrubbers that cleaned up emissions from the dirtier West Virginia coal. (Wyoming coal has less sulfur.) He also discusses the issue of competition from natural gas.

If Economists hadn't ignored US and World Economic History they would have had a clue : , December 22, 2016 at 07:53 PM
The historical record is totally unambiguous. Protectionism always leads to wealth and industrial development. Free trade leads you to the third world. This was true four hundred years ago with mercantilist England and the navigation acts; it was true with Lincoln's tariffs in the 1860's, it was true of East Asia post 1945.

Economists better abandon silly free trade if they want to have any credibility and not be seen as quacks.

Peter K. : , -1
http://www.cnn.com/2016/12/21/politics/donald-trump-tariffs/

Trump team floats a 10% tariff on imports

By John King and Jeremy Diamond, CNN

Updated 3:57 PM ET, Thu December 22, 2016

Washington (CNN)President-elect Donald Trump's transition team is discussing a proposal to impose tariffs as high as 10% on imports, according to multiple sources.

A senior Trump transition official said Thursday the team is mulling up to a 10% tariff aimed at spurring US manufacturing, which could be implemented via executive action or as part of a sweeping tax reform package they would push through Congress.

Incoming White House Chief of Staff Reince Priebus floated a 5% tariff on imports in meetings with key Washington players last week, according to two sources who represent business interests in Washington. But the senior transition official who spoke to CNN Thursday on the condition of anonymity said the higher figure is now in play.

Such a move would deliver on Trump's "America First" campaign theme, but risks drawing the US into a trade war with other countries and driving up the cost of consumer goods in the US. And it's causing alarm among business interests and the pro-trade Republican establishment.

The senior transition official said the transition team is beginning to find "common ground" with House Speaker Paul Ryan and Ways and Means Committee Chairman Kevin Brady, pointing in particular to the border adjustment tax measure included in House Republicans' "Better Way" tax reform proposal, which would disincentivize imports through tax policy.

Aides to Ryan and Brady declined to say they had "common ground" with Trump, but acknowledged they are in deep discussions with transition staffers on the issue.

Curbing free trade was a central element of Trump's campaign. He promised to rip up the North American Free Trade Agreement with Mexico and Canada. He also vowed to take a tougher line against other international trading partners, almost always speaking harshly of China but often including traditional US allies such as Japan in his complaint that American workers get the short end of the stick under current trade practices.

Gulf with GOP establishment

It is an area where there is a huge gulf between Trump's stated positions and traditional GOP orthodoxy. Business groups and GOP establishment figures -- including Ryan and Senate Majority Leader Mitch McConnell -- have been hoping the transition from the campaign to governing would bring a different approach.

Ryan did signal in a CNBC interview earlier this month that Trump's goals of spurring US manufacturing could be accomplished through "comprehensive tax reform."

"I'll tell him what I've been saying all along, which is we can get at what he's trying to get at better through comprehensive tax reform," Ryan said.

The pro-business GOP establishment says the new Trump administration could make clear it would withdraw from NAFTA unless Canada and Mexico entered new talks to modernize the agreement to reflect today's economy. That would allow Trump to say he kept a promise to make the agreement fairer to American workers without starting a trade war and exacerbating tensions with America's neighbors and vital economic partners.

But there remain establishment jitters that Trump, who views his tough trade message as critical to his election victory, will look for ways to make an early statement that he is serious about reshaping the trade playing field.

And when Priebus told key Washington players that the transition is mulling a 5% tariff on imports, the reaction was one of fierce opposition, according to two sources who represent business interests in Washington and spoke on condition of anonymity because the conversations with the Trump team were confidential.

Priebus, the sources said, was warned such a move could start trade wars, anger allies, and also hurt the new administration's effort to boost the rate of economic growth right out of the gate.

Role of Wilbur Ross

One of the sources said he viewed the idea as a trial balloon when first raised, and considered it dead on arrival given the strong reaction in the business community -- and the known opposition to such protectionist ideas among the GOP congressional leadership.

But this source voiced new alarm Tuesday after being told by allies within the Trump transition that defending new tariffs was part of the confirmation "murder board" practice of Wilbur Ross, the President-elect's choice for commerce secretary.

At least one business community organization is worried enough about the prospect of the tariff it already has prepared talking points, obtained by CNN Wednesday night.

"This $100 billion tax on American consumers and industry would impose heavy costs on the US economy, particularly for the manufacturing sector and American workers, with highly negative political repercussions," according to the talking points. "Rather than using a trade policy sledgehammer that would inflict serious collateral damage, the Trump administration should use the scalpel of US trade remedy law to achieve its goals."

The talking points also claim the tariffs would lead to American job loss and result in a tax to consumers, both of which would harm the US economy.

Trump aides have signaled that Ross is likely to be a more influential player in trade negotiations than recent Commerce secretaries. Given that, the aides know his confirmation hearings are likely to include tough questioning -- from both Democrats and Republicans -- about Trump's trade-related campaign promises.

"The way it was cast to me was that (Trump) and Ross are all over it," said one source. "It is serious."

The second source was less certain about whether the tariff idea was serious or just part of a vigorous debate about policy options. But this source said the unpredictability of Trump and his team had the business interests nervous.

The business lobbying community is confident the GOP leadership would push back on any legislative effort to impose tariffs, which organizations like the Chamber of Commerce, the Business Roundtable, the National Association of Manufactures and others, including groups representing farmers, believe would lead to retaliation against US industries heavily dependent on exports.

But the sources aligned with those interests told CNN the conversation within the Trump transition includes using executive authority allowed under existing trade laws. Different trade laws enacted over the course of the past century allow the president to impose tariffs if he issues a determination the United States is being subjected to unfair trade practices or faces an economic or national security threat because of trade practices.

likbez : , December 23, 2016 at 08:25 AM
There are industries that are closely connected with the sovereignty of the country. That's what neoliberals tend to ignore as they, being closet Trotskyites ("Financial oligarchy of all countries unite!" instead of "Proletarian of all countries unite!" ;-) do not value sovereignty and are hell bent on the Permanent Neoliberal Revolution to bring other countries into neoliberal fold (in the form of color revolutions, or for smaller countries, direct invasions like in Iraq and Libya ).

For example, if you depends of chips produced outside the country for your military or space exploration, then sabotage is possible (or just pure fraud -- selling regular ships instead of special tolerant to cosmic radiation or harsh conditions variant; actually can be done with the support of internal neoliberal fifth column).

The same is probably true for cars and auto engines. If you do not produce domestically a variety at least some domestic brans of cars and trucks, your military trucks and engines will be foreign and that will cost you tremendous amount of money and you might depend for spare parts on you future adversary. Also such goods are overprices to the heaven. KAS is a clear example of this as they burn their money in the war with Yemen as there is no tomorrow making the US MIC really happy.

So large countries with say over 100 million people probably need to think twice before jumping into neoliberal globalization bandwagon and relying in imports for strategically important industries.

Neoliberal commenters here demonstrate complete detachment from the fact that like war is an extension of politics, while politics is an extension of economics. For example, denying imports can and is often used for political pressure.

That was one of factors that doomed the USSR. Not that the system has any chance -- it was doomed after 1945 as did not provide for higher productivity then advanced capitalist economies.

But this just demonstrates the power of the US sanctions mechanism. Economic sanctions works and works really well. The target country is essentially put against the ropes and if you unprepared you can be knocked down.

For example now there are sanctions against Russia that deny them advanced oil exploration equipment. And oil is an important source of Russia export revenue. So the effect of those narrow prohibitions multiples by factor of ten by denying Russia export revenue.

That's how an alliance between Russia and China was forged by Obama administration. because China does produce some of this equipment now. And Russia paid dearly for that signing huge multi-year deals with China on favorable for China terms.

Now Trump want to play this game selectively designating China as "evil empire" and providing a carrot for Russia. Will it works, or Russia can be wiser then donkeys, I do not know.

And look what countries are on the USA economic sanctions list: many entries are countries that are somewhat less excited about the creation of the global neoliberal empire led by the USA. KAS and Gulf monarchies are not on the list. So much about "spreading democracy".

The US propagandists usually call counties on which they impose sanction authoritarian dictatorships to make such actions more politically correct, but the fact remains: The USA as a global hegemon enjoys using economic pressure to crush dissidents and put vassals in line.

The problem with tariffs on China is an interesting reversion of the trend: manufacturing is already in China and to reverse this process now is an expensive proposition. So alienating Chinese theoretically means that some of USA imports might became endangered, despite huge geopolitical weight of the USA. They denied export of rare metals to Japan in the past. They can do this for Apple and without batteries Apple can just fold.

Also it is very easy to prohibit Apple sales in China of national security grounds (any US manufacturer by definition needs to cooperate with NSA and other agencies). I think some countries already prohibit the use of the USA companies produced cell phones for government officials.

So if Trump administration does something really damaging, for Chinese there are multiple ways to skin the cat. Neoliberalism as a social system is past it pinnacle and that creates some problems for the USA as the central player in the neoliberal world. The triumphal march of neoliberalism over the globe ended almost a decade ago.

[Dec 22, 2016] Regulatory Capture 101

It's not regulation per se is deficient, it is regulation under neoliberal regime, were government is captured by financial oligarchy ;-). But that understanding is foreign to WSJ with its neoliberal agenda :-(.
Notable quotes:
"... Impressionable journalists finally meet George Stigler. ..."
"... The secret recordings were made by Carmen Segarra, who went to work as an examiner at the New York Fed in 2011 but was fired less than seven months later in 2012. She has filed a wrongful termination lawsuit against the regulator and says Fed officials sought to bury her claim that Goldman had no firm-wide policy on conflicts-of-interest. Goldman says it has had such policies for years, though on the same day Ms. Segarra's revelations were broadcast, the firm added new restrictions on employees trading for their own accounts. ..."
"... On the recordings, regulators can be heard doing what regulators do-revealing the limits of their knowledge and demonstrating their reluctance to challenge the firms they regulate. At one point Fed officials suspect a Goldman deal with Banco Santander may have been "legal but shady" in the words of one regulator, and should have required Fed approval. But the regulators basically accept Goldman's explanations without a fight. ..."
"... The journalists have also found evidence in Ms. Segarra's recordings that even after the financial crisis and the supposed reforms of the Dodd-Frank law, the New York Fed remained a bureaucratic agency resistant to new ideas and hostile to strong-willed, independent-minded employees. In government? ..."
"... "as a rule, regulation is acquired by the industry and is designed and operated primarily for its benefit." ..."
"... Once one understands the inevitability of regulatory capture, the logical policy response is to enact simple laws that can't be gamed by the biggest firms and their captive bureaucrats. ..."
"... And it means considering economist Charles Calomiris's plan to automatically convert a portion of a bank's debt into equity if the bank's market value falls below a healthy level. ..."
Oct 05, 2014 | Casino Capitalism and Crapshoot Politics
Regulatory Capture 101

Impressionable journalists finally meet George Stigler.

The financial scandal du jour involves leaked audio recordings that purport to show that regulators at the Federal Reserve Bank of New York were soft on Goldman Sachs . Say it ain't so.

... ... ...

The secret recordings were made by Carmen Segarra, who went to work as an examiner at the New York Fed in 2011 but was fired less than seven months later in 2012. She has filed a wrongful termination lawsuit against the regulator and says Fed officials sought to bury her claim that Goldman had no firm-wide policy on conflicts-of-interest. Goldman says it has had such policies for years, though on the same day Ms. Segarra's revelations were broadcast, the firm added new restrictions on employees trading for their own accounts.

The New York Fed won against Ms. Segarra in district court, though the case is on appeal. The regulator also notes that Ms. Segarra "demanded $7 million to settle her complaint." And last week New York Fed President William Dudley said, "We are going to keep striving to improve, but I don't think anyone should question our motives or what we are trying to accomplish."

On the recordings, regulators can be heard doing what regulators do-revealing the limits of their knowledge and demonstrating their reluctance to challenge the firms they regulate. At one point Fed officials suspect a Goldman deal with Banco Santander may have been "legal but shady" in the words of one regulator, and should have required Fed approval. But the regulators basically accept Goldman's explanations without a fight.

The sleuths at the ProPublica website, working with a crack team of investigators from public radio, also seem to think they have another smoking gun in one of Ms. Segarra's conversations that was not recorded but was confirmed by another regulator. Ms. Seest means. For example, a company offering securities is exempt from some registration requirements if it is only selling to accredited investors, such as people with more than $1 million in net worth, excluding the value of primary residences.

The journalists have also found evidence in Ms. Segarra's recordings that even after the financial crisis and the supposed reforms of the Dodd-Frank law, the New York Fed remained a bureaucratic agency resistant to new ideas and hostile to strong-willed, independent-minded employees. In government?

***

Enter George Stigler, who published his famous essay "The Theory of Economic Regulation" in the spring 1971 issue of the Bell Journal of Economics and Management Science. The University of Chicago economist reported empirical data from various markets and concluded that "as a rule, regulation is acquired by the industry and is designed and operated primarily for its benefit."

Stigler knew he was fighting an uphill battle trying to persuade his fellow academics. "The idealistic view of public regulation is deeply imbedded in professional economic thought," he wrote. But thanks to Stigler, who would go on to win a Nobel prize, many economists have studied the operation and effects of regulation and found similar results.

A classic example was the New York Fed's decision to let Citigroup stash $1.2 trillion of assets-including more than $600 billion of mortgage-related securities-in off-balance-sheet vehicles before the financial crisis. That's when Tim Geithner ran the New York Fed and Jack Lew was at Citigroup.

Once one understands the inevitability of regulatory capture, the logical policy response is to enact simple laws that can't be gamed by the biggest firms and their captive bureaucrats. This means repealing most of Dodd-Frank and the so-called Basel rules and replacing them with a simple requirement for more bank capital-an equity-to-asset ratio of perhaps 15%. It means bringing back bankruptcy for giant firms instead of resolution at the discretion of political appointees. And it means considering economist Charles Calomiris's plan to automatically convert a portion of a bank's debt into equity if the bank's market value falls below a healthy level.

GS4

[Dec 21, 2016] The widespread belief of neoliberals that they are entitled to a good hand in the market economy casino. This is reflected in the more or less universal belief of the affluent that

Krugman is a neoliberal stooge. Since when Social Security is an entitlement program. If you start contributing at 25 and retire at 67 (40 years of monthly contributions), you actually get less then you contribute, unless you live more then 80 years. It just protects you from "free market casino".
Notable quotes:
"... A "contribution" theory of what a proper distribution of income might be can only be made coherent if there are constant returns to scale in the scarce, priced, owned factors of production. Only then can you divide the pile of resources by giving to each the marginal societal product of their work and of the resources that they own. ..."
"... n a world--like the one we live in--of mammoth increasing returns to unowned knowledge and to networks, no individual and no community is especially valuable. Those who receive good livings are those who are lucky -- as Carrier's workers in Indiana have been lucky in living near Carrier's initial location. It's not that their contribution to society is large or that their luck is replicable: if it were, they would not care (much) about the departure of Carrier because there would be another productive network that they could fit into a slot in. ..."
"... If not about people, what is an economy about? ..."
"... I hadn't realized that Democrats now view Social Security and Medicare as "government handouts". ..."
"... Some Democrats like Krugman are Social Darwinists. ..."
"... PK is an ignorant vicious SOB. Many of those "dependent hillbillies" PK despises paid SS and Medicare taxes for many decades, most I know have never been on foos stamps, and if they are on disability it is because they did honest hard work, something PK knows nothing about. What an ignorant jerk. ..."
"... What is a very highly subsidized industry that benefits Delong and Krugman? Higher education. Damn welfare queens! :) ..."
"... No Krugman is echoing the tribalism of Johnny Bakho. These people won't move or educate themselves or "skill up" so they deserve what they get. Social darwinism. ..."
"... People like Bakho are probably anti-union as well. They're seen as relics of an earlier age and economically "uncompetitve." See Fred Dobbs below. That's the dog whistle about the "rust belt." ..."
"... Paul Krugman's reputation, formerly that of a a noted economic, succumbed after a brief struggle to Trump Derangement Syndrome. Friends said Mr Krugman's condition had been further aggravated by cognitive dissonance from a severely challenged worldview. ..."
"... He is survived by the New York Times, also said to be in failing health. ..."
"... For a long time DeLong was mocking the notion of "economic anxiety" amongst the voters. Does this blog post mean he's rethinking that idea? ..."
"... The GOP has a long history of benefitting from the disconnect where a lot of their voters are convinced that when government money goes to others (sometimes even within their own white congregations), then it is not deserved. ..."
Dec 21, 2016 | economistsview.typepad.com

anne : December 18, 2016 at 05:13 AM , 2016 at 05:13 AM

http://krugman.blogs.nytimes.com/2016/12/17/what-do-trump-voters-want/

December 17, 2016

What Do Trump Voters Want?
By Paul Krugman

Brad DeLong has an interesting meditation * on markets and political demands - inspired by a note from Noah Smith ** - that offers food for thought. I wonder, however, if Brad's discussion is too abstract; and I also wonder whether it fully recognizes the disconnect between what Trump voters think they want and reality. So, an entry of my own.

What Brad is getting at is the widespread belief by, well, almost everyone that they are entitled to - have earned - whatever good hand they have been dealt by the market economy. This is reflected in the more or less universal belief of the affluent that they deserve what they have; you could see this in the rage of rentiers at low interest rates, because it's the Federal Reserve's job to reward savers, right? In this terrible political year, the story was in part one of people in Appalachia angrily demanding a return of the good jobs they used to have mining coal - even though the world doesn't want more coal given fracking, and it can get the coal it still wants from strip mines and mountaintop removal, which don't employ many people.

And what Brad is saying, I think, is that what those longing for the return to coal want is those jobs they deserve, where they earn their money - not government handouts, no sir.

A fact-constrained candidate wouldn't have been able to promise such people what they want; Trump, of course, had no problem.

But is that really all there is? Working-class Trump voters do, in fact, receive a lot of government handouts - they're almost totally dependent on Social Security for retirement, Medicare for health care when old, are quite dependent on food stamps, and many have recently received coverage from Obamacare. Quite a few receive disability payments too. They don't want those benefits to go away. But they managed to convince themselves (with a lot of help from Fox News etc) that they aren't really beneficiaries of government programs, or that they're not getting the "good welfare", which only goes to Those People.

And you can really see this in the regional patterns. California is an affluent state, a heavy net contributor to the federal budget; it went 2-1 Clinton. West Virginia is poor and a huge net recipient of federal aid; it went 2 1/2-1 Trump.

I don't think any kind of economic analysis can explain this. It has to be about culture and, as always, race.

* http://www.bradford-delong.com/2016/12/is-the-problem-one-of-insufficient-market-wages-inadequate-social-insurance-polanyian-disruption-of-patterns-of-life-.html

** https://www.bloomberg.com/view/articles/2016-12-16/four-ways-to-help-the-midwest

anne -> anne... , December 18, 2016 at 05:18 AM
http://www.bradford-delong.com/2016/12/is-the-problem-one-of-insufficient-market-wages-inadequate-social-insurance-polanyian-disruption-of-patterns-of-life-.html

December 17, 2016

Regional Policy and Distributional Policy in a World Where People Want to Ignore the Value and Contribution of Knowledge- and Network-Based Increasing Returns

Pascal Lamy: "When the wise man points at the moon, the fool looks at the finger..."

Perhaps in the end the problem is that people want to pretend that they are filling a valuable role in the societal division of labor, and are receiving no more than they earn--than they contribute.

But that is not the case. The value--the societal dividend--is in the accumulated knowledge of humanity and in the painfully constructed networks that make up our value chains.

A "contribution" theory of what a proper distribution of income might be can only be made coherent if there are constant returns to scale in the scarce, priced, owned factors of production. Only then can you divide the pile of resources by giving to each the marginal societal product of their work and of the resources that they own.

That, however, is not the world we live in.

In a world--like the one we live in--of mammoth increasing returns to unowned knowledge and to networks, no individual and no community is especially valuable. Those who receive good livings are those who are lucky -- as Carrier's workers in Indiana have been lucky in living near Carrier's initial location. It's not that their contribution to society is large or that their luck is replicable: if it were, they would not care (much) about the departure of Carrier because there would be another productive network that they could fit into a slot in.

All of this "what you deserve" language is tied up with some vague idea that you deserve what you contribute--that what your work adds to the pool of society's resources is what you deserve.

This illusion is punctured by any recognition that there is a large societal dividend to be distributed, and that the government can distribute it by supplementing (inadequate) market wages determined by your (low) societal marginal product, or by explicitly providing income support or services unconnected with work via social insurance. Instead, the government is supposed to, somehow, via clever redistribution, rearrange the pattern of market power in the economy so that the increasing-returns knowledge- and network-based societal dividend is predistributed in a relatively egalitarian way so that everybody can pretend that their income is just "to each according to his work", and that they are not heirs and heiresses coupon clipping off of the societal capital of our predecessors' accumulated knowledge and networks.

On top of this we add: Polanyian disruption of patterns of life--local communities, income levels, industrial specialization--that you believed you had a right to obtain or maintain, and a right to believe that you deserve. But in a market capitalist society, nobody has a right to the preservation of their local communities, to their income levels, or to an occupation in their industrial specialization. In a market capitalist society, those survive only if they pass a market profitability test. And so the only rights that matter are those property rights that at the moment carry with them market power--the combination of the (almost inevitably low) marginal societal products of your skills and the resources you own, plus the (sometimes high) market power that those resources grant to you.

This wish to believe that you are not a moocher is what keeps people from seeing issues of distribution and allocation clearly--and generates hostility to social insurance and to wage supplement policies, for they rip the veil off of the idea that you deserve to be highly paid because you are worth it. You aren't.

And this ties itself up with regional issues: regional decline can come very quickly whenever a region finds that its key industries have, for whatever reason, lost the market power that diverted its previously substantial share of the knowledge- and network-based societal dividend into the coffers of its firms. The resources cannot be simply redeployed in other industries unless those two have market power to control the direction of a share of the knowledge- and network-based societal dividend. And so communities decline and die. And the social contract--which was supposed to have given you a right to a healthy community--is broken.

As I have said before, humans are, at a very deep and basic level, gift-exchange animals. We create and reinforce our social bonds by establishing patterns of "owing" other people and by "being owed". We want to enter into reciprocal gift-exchange relationships. We create and reinforce social bonds by giving each other presents. We like to give. We like to receive. We like neither to feel like cheaters nor to feel cheated. We like, instead, to feel embedded in networks of mutual reciprocal obligation. We don't like being too much on the downside of the gift exchange: to have received much more than we have given in return makes us feel very small. We don't like being too much on the upside of the gift exchange either: to give and give and give and never receive makes us feel like suckers.

We want to be neither cheaters nor saps....

ken melvin -> anne... , December 18, 2016 at 05:32 AM
If not about people, what is an economy about?
Observer -> anne... , December 18, 2016 at 05:59 AM
I hadn't realized that Democrats now view Social Security and Medicare as "government handouts".
Peter K. -> Observer... , December 18, 2016 at 09:25 AM
Some Democrats like Krugman are Social Darwinists. They're the "center-left" versus Bernie Sanders's leftwing supporters.
Tom aka Rusty -> anne... , December 18, 2016 at 06:06 AM
PK is an ignorant vicious SOB. Many of those "dependent hillbillies" PK despises paid SS and Medicare taxes for many decades, most I know have never been on foos stamps, and if they are on disability it is because they did honest hard work, something PK knows nothing about. What an ignorant jerk.
Tom aka Rusty -> Tom aka Rusty... , December 18, 2016 at 06:31 AM
What is a very highly subsidized industry that benefits Delong and Krugman? Higher education. Damn welfare queens! :)
RC AKA Darryl, Ron -> Tom aka Rusty... , December 18, 2016 at 06:37 AM
Not LOL worthy, but still a good solid :<)
anne -> Tom aka Rusty... , December 18, 2016 at 06:53 AM

Education from elementary through college and professional levels is of course publicly supported in every reasonably advanced country in the world.

EMichael -> Tom aka Rusty... , December 18, 2016 at 07:18 AM
What is a very highly subsidized industry that benefits Rusty?

Healthcare.

Damn welfare queen!

Peter K. -> EMichael... , December 18, 2016 at 09:33 AM
Or Krugman's textbook industry.
BenIsNotYoda -> Tom aka Rusty... , December 18, 2016 at 10:49 AM
PK's rhetoric, together with shills like pgl and emichael, has deteriorated quite a bit. Nicely done Rusty.
anne -> Tom aka Rusty... , December 18, 2016 at 06:34 AM
"dependent hillbillies"

[ This is a false quote. A writer should never be falsely quoted. There is no such expression used in this or any other essay by Paul Krugman. ]

pgl -> anne... , December 18, 2016 at 09:34 AM
It must be really cold where Rusty lives and he woke up in one foul mood.
DeDude -> Tom aka Rusty... , December 18, 2016 at 08:58 AM
Exactly the same could be said about many of those inner city minorities that the "dependent hillbillies" look down on as "welfare queens". That may be one of the reasons they take special issues with "food stamps", because in contrast to the hillbillies, inner city poor people cannot grow their own food. What Krugman is pointing out is the hypocrisy of their tribalism - and also the idiocy, because the dismantling of society would ultimately hurt the morons that voted GOP into power this round.
Peter K. -> DeDude... , December 18, 2016 at 09:31 AM
"What Krugman is pointing out is the hypocrisy of their tribalism "

No Krugman is echoing the tribalism of Johnny Bakho. These people won't move or educate themselves or "skill up" so they deserve what they get. Social darwinism.

Peter K. -> Peter K.... , December 18, 2016 at 09:58 AM
People like Bakho are probably anti-union as well. They're seen as relics of an earlier age and economically "uncompetitve." See Fred Dobbs below. That's the dog whistle about the "rust belt."
Julio -> Tom aka Rusty... , December 18, 2016 at 10:53 AM
His tone is supercilious and offensive. But your argument is that they are not "dependent" because they earned every benefit they get from the government. I think his point is that "dependent" is not offensive -- the term jus reflects how we all depend on government services. DeLong makes the point much better in the article quoted by anne above.
Observer -> anne... , December 18, 2016 at 06:07 AM
In Memorium

Paul Krugman's reputation, formerly that of a a noted economic, succumbed after a brief struggle to Trump Derangement Syndrome. Friends said Mr Krugman's condition had been further aggravated by cognitive dissonance from a severely challenged worldview.

He is survived by the New York Times, also said to be in failing health.

RC AKA Darryl, Ron -> Observer... , December 18, 2016 at 06:38 AM
:<)
kthomas -> anne... , December 18, 2016 at 06:52 AM
Judith Miller. Dowd. Doh!at. Broder. Brooks.

BS

anne -> anne... , December 18, 2016 at 06:55 AM
The New York Times is easily the finest newspaper in the world, is broadly recognized as such and is of course flourishing. Such an institution will always have sections or editors and writers of relative strength but these relative strengths change over time as the newspaper continually changes.
Observer -> anne... , December 18, 2016 at 07:36 AM
Flourishing?

NYT Co. to revamp HQ, vacate eight floors in consolidation

"In an SEC filing, New York Times Co. discloses a staff communication it provided today to employees about a revamp of its headquarters -- including consolidating floors.

The company will vacate at least eight floors, consolidating workspaces and allowing for "significant" rental income, the memo says."

http://seekingalpha.com/news/3231232-nyt-co-revamp-hq-vacate-eight-floors-consolidation

anne -> Dan Kervick... , December 18, 2016 at 07:17 AM
Brad DeLong's piece was thoughtful.

[ Importantly so, worth a couple of close readings. ]

Peter K. -> Dan Kervick... , December 18, 2016 at 09:30 AM
For a long time DeLong was mocking the notion of "economic anxiety" amongst the voters. Does this blog post mean he's rethinking that idea?
Peter K. -> Peter K.... , December 18, 2016 at 09:57 AM
Technocratic Democrats like DeLong and Krugman (or neoliberal centrists) are notoriously against economic democracy and unions and the like.

Maybe that's a factor here.

Dan Kervick -> Peter K.... , December 18, 2016 at 01:13 PM
I think he and others have finally reached a point where denial is not an option.
DeDude -> anne... , December 18, 2016 at 08:37 AM
The GOP has a long history of benefitting from the disconnect where a lot of their voters are convinced that when government money goes to others (sometimes even within their own white congregations), then it is not deserved. But if that same government money goes to themselves (or their real close relatives), then it is a hard earned and well-deserved payback for their sacrifices and tax payments. So the GOP leadership has always called it "saving social security" and "cracking down on fraud" rather than admitting to their attempts to dismantle those programs. The Dems better be on the ball and call it what it is. If you want to save those programs you just have to prevent rich people from wiggling out of paying for them (don't repeal the Obamacare medicare taxes on the rich).
rjs -> anne... , December 18, 2016 at 10:12 AM
What Do Trump Voters Want? for starters, they'd probably want people like Krugman to stop looking down their noses at them like they're lepers..
DeDude -> rjs ... , December 18, 2016 at 01:49 PM
Can we at least call those with the pointy white hats, despicable?
rjs -> DeDude... , December 18, 2016 at 02:29 PM

depends on how many of those people who voted for Obama in 2012 you figure to have joined the pointy white hat club since...


http://peakwatch.typepad.com/.a/6a00d83452403c69e201bb0960723f970d-pi

DeDude -> rjs ... , December 18, 2016 at 03:45 PM
Would they not be despicable regardless of what kind of wood they previously enjoyed burning?
RC AKA Darryl, Ron : , December 18, 2016 at 06:15 AM
Excellent post election commentary from Bloom County (comic).

http://www.gocomics.com/bloom-county/2016/11/27

David : , December 18, 2016 at 07:16 AM
On the Pk piece. I think it is really about human dignity, and the need for it. There were a lot of factors in this horrific election, but just as urban blacks need to be spared police brutality, rural whites need a dignified path in their lives. Everyone, united, deserves such a path.

This is a real challenge for economists; how do we rebuild the rust belt (which applies to areas beyond the literal rust belt).

If we do not, we risk Trump 2.0, which could be very scary indeed.

EMichael -> David... , December 18, 2016 at 07:36 AM
I agree to a point, but what the piece is about is that in search of a solution to the problems of the rustbelt (whatever the definition is),people voted for Trump who had absolutely no plan to solve such a problem, other than going back to the future and redoing Nafta and getting rid of regulations.

Meanwhile, that vote also meant that the safety net that helps all Americans in trouble was being placed in severe risk.

Those voters were fixed on his rhetoric and right arm extended while his left hand was grabbing them by the (in deference to Anne I will not say the words, but Trump himself has said one of them and the other is the male version).

Peter K. -> EMichael... , December 18, 2016 at 08:48 AM
"I agree to a point,"

Really? You didn't seem to before. You'd say what Duy or Noah Smith or DeLong were mulling about was off-limits. You'd ban them from the comment section if you could. "This is a real challenge for economists; how do we rebuild the rust belt (which applies to areas beyond the literal rust belt).

If we do not, we risk Trump 2.0, which could be very scary indeed." I don't see why this is such a controversial point for centrist like Krugman. How do we appeal to the white working class without contradicting our principles?

By promoting policies that raise living standards. By delivering, which mean left-wing policies not centrist tinkering. It's the Clinton vs. Sanders primary. Hillary could have nominated Elizabeth Warren as her VP candidate but her corporate masters wouldn't let her.

sglover -> EMichael... , December 18, 2016 at 06:08 PM
"Meanwhile, that vote also meant that the safety net that helps all Americans in trouble was being placed in severe risk."

That safety net is an improvement over 1930. But it's been fraying so badly over the last 20-30 years that it's almost lost all meaning. It's something people turn to before total destitution, but for rebuilding a life? A sick joke, filled with petty hassles and frustrations.

And the fraying has been a solidly bipartisan project. Who can forget welfare "reform"?

So maybe the yokels you're blaming for the 10,000-th time might not buy your logic or your intentions.

Fred C. Dobbs -> David... , December 18, 2016 at 08:07 AM
In the rustbelt, Dems are accustomed to
dealing with their supporters who are
union members. (Why the auto industry
was bailed out, dontchaknow.)

That obviously doesn't work so well
any more. In that region, recovery
was 'less than robust', no?

In New England, where unions are much
less of a factor, recovery has been
relatively successful. Dems remain
pretty strong here.

Why can't the rustbelt be more
like the northeast?

The ongoing new industrial revolution
would seem to have much to do
with such matters.

Peter K. -> Fred C. Dobbs... , December 18, 2016 at 08:49 AM
"In New England, where unions are much less of a factor, recovery has been relatively successful. Dems remain pretty strong here."

Is that accurate?

Fred C. Dobbs -> Peter K.... , December 18, 2016 at 09:30 AM
unions don't have much to celebrate (in MA) http://www.bostonglobe.com/metro/2014/08/29/labor-day-but-there-little-for-labor-celebrate/e4MOhMsc5lf6rJkZdCPbKM/story.html?event=event25
via @BostonGlobe - August 2014

... At the height of their influence in the 1950s, labor unions could claim to represent about 1 of every 3 American workers. Today, it's 1 in 9 - and falling.

Some have seen the shrinking size and waning influence of labor unions as a sign that the US economy is growing more flexible and dynamic, but there's mounting evidence that it is also contributing to slow wage growth and the rise in inequality. ...


(Union membership) NY 24.7%, MA 12.4%, SC 2.1%

... Are unions faring any better here in Massachusetts?

While Massachusetts's unions are stronger than average, it's not among the most heavily unionized states. That honor goes to New York, where 1 in every 4 workers belongs to a union. After New York, there are 11 other states with higher union membership rates then Massachusetts.

Here too, though, the decline in union membership over time has been steep.

(From 1983 to 2013) US -42%, MA -44%

Fred C. Dobbs -> Peter K.... , December 18, 2016 at 09:44 AM
Union Members Summary - BLS - Jan 2016 https://www.bls.gov/news.release/union2.nr0.htm

... In 2015, 30 states and the District of Columbia had union membership rates below
that of the U.S. average, 11.1 percent, and 20 states had rates above it. All states
in the East South Central and West South Central divisions had union membership rates
below the national average, and all states in the Middle Atlantic and Pacific divisions
had rates above it. Union membership rates increased over the year in 24 states and
the District of Columbia, declined in 23 states, and were unchanged in 3 states.
(See table 5.)

Five states had union membership rates below 5.0 percent in 2015: South Carolina
(2.1 percent), North Carolina (3.0 percent), Utah (3.9 percent), Georgia (4.0 percent),
and Texas (4.5 percent).

Two states had union membership rates over 20.0 percent in
2015: New York (24.7 percent) and Hawaii (20.4 percent).

State union membership levels depend on both the employment level and the union
membership rate. The largest numbers of union members lived in California (2.5 million)
and New York (2.0 million).

Roughly half of the 14.8 million union members in the
U.S. lived in just seven states (California, 2.5 million; New York, 2.0 million;
Illinois, 0.8 million; Pennsylvania, 0.7 million; and Michigan, Ohio, and New Jersey,
0.6 million each), though these states accounted for only about one-third of wage and
salary employment nationally.

(It appears that New England union participation
lags in the northeast, and also in the rest of
the US not in the Red Zone.)

Table 5. Union affiliation of employed wage and salary workers by state https://www.bls.gov/news.release/union2.t05.htm

Peter K. -> Fred C. Dobbs... , December 18, 2016 at 09:56 AM
"In New England, where unions are much
less of a factor, recovery has been
relatively successful. Dems remain
pretty strong here."

I'm questionning the causation. B/c New England has fewer unions, they're doing better?

My bet is that most of these centrists like Krugman don't like unions and think they're ancient relics which hurt the economies "competitiveness."

Fred C. Dobbs -> Peter K.... , December 18, 2016 at 10:12 AM
I have noted before that New England
is doing better 'than average' (IMO)
because of high-tech industry & education.

Not necessarily because of a lack of
unionization, which is prevalent here
in public education & among service
workers. Note that in higher ed,
much here is private.

Private industry here traditionally
is not heavily unionized, although
that is probably not the case
among defense corps.

Fred C. Dobbs -> Peter K.... , December 18, 2016 at 10:21 AM
As to causation, I think the
implication is that 'Dems dealing
with unions' has not been working
all that well, recovery-wise,
particularly in the rust belt.

That must have as much to do with
industrial management as it does
with labor, and the ubiquitous
on-going industrial revolution.

Fred C. Dobbs -> Fred C. Dobbs... , December 18, 2016 at 10:24 AM
It may well be that in the
rust belt, corps are doing
reasonably well, but not as
much with labor. That is an
industrial revolution problem.
sglover -> Fred C. Dobbs... , December 18, 2016 at 06:10 PM
"In the rustbelt, Dems are accustomed to dealing with their supporters who are union members. (Why the auto industry was bailed out, dontchaknow.)"

Uh huh. Sure.

Know how many times HRC visited UAW groups during her "campaign" in Michigan?

Zero.

Those autoworkers are real ingrates.

DeDude -> David... , December 18, 2016 at 09:35 AM
Everybody needs, and desperately crave, self-confidence and dignity. In white rural culture that has always been connected to the old settler mentality and values of personal "freedom" and "independence". It is unfortunate that this freedom/independence mythology has been what attracted all the immigrants from Europe over here. So it is as strongly engrained (both in culture and individual values) as it is outdated and counterproductive in the world of the future. I am not sure that society can help a community where people find themselves humiliated by being helped (especially by bad government). Maybe somehow try to get them to think of the government help as an earned benefit?
Fred C. Dobbs -> DeDude... , December 18, 2016 at 10:22 AM
Ok, that seems very quaint.

[Dec 21, 2016] The essence of voting the lesser of two evils: To comfortable centrists like pgl, the Democrats should be graded on a curve. As long as theyre better than the awful Republicans, then theyre good enough and beyond criticism.

Notable quotes:
"... The essence of voting the lesser of two evils: "To comfortable centrists like pgl, the Democrats should be graded on a curve. As long as they're better than the awful Republicans, then they're good enough and beyond criticism." ..."
"... These Wall Street Democrats can rest assured that Democrats will surely get their turn in power in 4-8 years...after Trump thoroughly screws things up. And then Democrats will proceed to screw things up themselves...as we learned from Obama and Hillary's love of austerity and total disinterest in the economic welfare of the vast majority. ..."
"... In case you didn't notice, Democrats did nothing about the minimum wage 2009-2010. ..."
"... Many Democratic candidates won't even endorse minimum wage increase in states where increases win via initiative. They preferred to lose elections to standing up for minimum wage increases. ..."
Dec 20, 2016 | economistsview.typepad.com
December 20, 2016 at 07:59 AM

Peter K.... The essence of voting the lesser of two evils: "To comfortable centrists like pgl, the Democrats should be graded on a curve. As long as they're better than the awful Republicans, then they're good enough and beyond criticism."

These Wall Street Democrats can rest assured that Democrats will surely get their turn in power in 4-8 years...after Trump thoroughly screws things up. And then Democrats will proceed to screw things up themselves...as we learned from Obama and Hillary's love of austerity and total disinterest in the economic welfare of the vast majority.

To pgl and his ilk, Obama was great as long as he said the right things...regardless of what he actually did. Hillary didn't even have to say the right things...she only had to be a Wall Street Democrat for pgl to be enthusiastic about her.

JohnH -> jonny bakho... , December 20, 2016 at 12:39 PM
In case you didn't notice, Democrats did nothing about the minimum wage 2009-2010. At a minimum, they could have taken their dominance then to enact increases for 2010-2016 or to index increases to inflation. Instead, Pelosi, Reid and Obama preferred to do nothing.

Many Democratic candidates won't even endorse minimum wage increase in states where increases win via initiative. They preferred to lose elections to standing up for minimum wage increases.

[Dec 21, 2016] The reason Trump won the GOP nomination was exactly because he claimed to reject traditional GOP policies and approaches

Notable quotes:
"... At some point the GOP has to decide how much of Trump's populist agenda they can stuff in the toilet without inducing an uncontrollable backlash. ..."
"... The reason Trump won the GOP nomination was exactly because he claimed to reject traditional GOP policies and approaches. ..."
"... If the GOP just go ahead with a traditional "rule for the rich" policy (because they won) there could be serious fireworks ahead - provided the Dems can pull out a populist alternative policy by the the next election. ..."
"... I have no idea what's going to happen, but my guess is that Trump and the Republicans are going to completely sell out the "Trump voters." ..."
"... But they still tried to push through Social Security privatization even though everyone is against it. ..."
"... If recent history is any guide, incumbents get a second term regardless of how bad the economy is. Clinton, Bush, and Obama were all reelected despite a lousy economy. The only exception in recent memory was Bush 41. ..."
"... Upper class tax cuts were central to his policies. Anybody who believed he was anything other than an standard issue Republican would buy shares in Arizona swampland. ..."
"... trump did indeed state that he would give bigger tax cuts to the rich, repeatedly. the genius of trump's performance is that by never having a clear position his gullible followers were able to fill in the gaps using their own hopes and desires. ..."
"... That is correct, but also the weakness in his support. They will almost certainly be disappointed as the exact interpretations and choices between incompatible promises turns out to be different from the individuals hopes and desires. ..."
"... And consider how dysfunction from laissez faire healthcare policy readoption leads to rising prices/costs above current trend to limit disposable income even more, it will be amazing if we do not have stagnation and worse for the bulk of society. ..."
"... Bush implemented and expanded a community health clinic system, that reallnwoukd be a nice infrastructure play for the US, but this Congress is more likely to disinvest here. They certainly don't want these do-gooder nonprofits competing against the doctor establishment. ..."
"... The question is first of all whether Trump can bully the Fed away from their current and traditional course (which would not allow much of a stimulus, before they cancelled it out with rate hikes). ..."
"... Second whether the Fed itself having been traditionally prone to support GOP presidents (see inconsistencies in Greenspan's policies during Clinton vs. Bush) will change its policies and allow higher inflation and wage growth than they have under any Dem president. ..."
"... The little people go to the credit channels to help finance the purchase of durables and higher education too. The Fed's actions themselves will see these credit prices ratchet, so nit good fir basic demand. Veblen goods will see more price rises as the buyers will have lots of rentier/lobbying gathered money to burn. ..."
Dec 21, 2016 | economistsview.typepad.com
DeDude -> jonny bakho... December 20, 2016 at 07:40 AM
At some point the GOP has to decide how much of Trump's populist agenda they can stuff in the toilet without inducing an uncontrollable backlash.

The reason Trump won the GOP nomination was exactly because he claimed to reject traditional GOP policies and approaches. It was the old tea-partiers insisting that their anti-rich/Anti-Wall street sentiments be inserted into the GOP.

If the GOP just go ahead with a traditional "rule for the rich" policy (because they won) there could be serious fireworks ahead - provided the Dems can pull out a populist alternative policy by the the next election.

Peter K. -> DeDude... , December 20, 2016 at 07:56 AM

hey, a good comment!

I have no idea what's going to happen, but my guess is that Trump and the Republicans are going to completely sell out the "Trump voters."

George W. Bush wasn't completely horrible (besides Iraq, John Roberts, tax cuts for the rich, the Patriot act and the surveillance state, Katrina, etc. etc. etc.). He was good on immigration, world AIDS prevention, expensive Medicare drug expansion, etc.

But they still tried to push through Social Security privatization even though everyone is against it.

To some extent Bush demoralized the Republican base and they didn't turn out in 2008.

JohnH -> DeDude... , December 20, 2016 at 08:04 AM
If recent history is any guide, incumbents get a second term regardless of how bad the economy is. Clinton, Bush, and Obama were all reelected despite a lousy economy. The only exception in recent memory was Bush 41.

About the only thing that can derail Trump is a big recession in 2019.

DrDick -> DeDude... , December 20, 2016 at 08:18 AM
"The reason Trump won the GOP nomination was exactly because he claimed to reject traditional GOP policies and approaches."

While generally enthusiastically embracing them. Upper class tax cuts were central to his policies. Anybody who believed he was anything other than an standard issue Republican would buy shares in Arizona swampland.

DeDude -> DrDick... , December 20, 2016 at 08:35 AM
He never came out directly saying or tweeting that he would give bigger tax cuts to the rich than anybody else - he said he would give bigger tax cuts. It is true that people with a college education had an easy time figuring him out even before the election. But the populist messages he campaigned on were anti-establishment including suggesting that the "hedge-fund guys" were making a killing by being taxed at a lower rate.
yuan -> DeDude... , December 20, 2016 at 10:00 AM
trump did indeed state that he would give bigger tax cuts to the rich, repeatedly. the genius of trump's performance is that by never having a clear position his gullible followers were able to fill in the gaps using their own hopes and desires.
DeDude -> yuan... , December 20, 2016 at 11:19 AM
"his gullible followers were able to fill in the gaps using their own hopes and desires"

That is correct, but also the weakness in his support. They will almost certainly be disappointed as the exact interpretations and choices between incompatible promises turns out to be different from the individuals hopes and desires. The reason Trump was able to beat even a Tea party darling, was the backlash against big money having taken over the Tea party. The backlash against Trump_vs_deep_state being "taken over by big money" interest will be interesting to observe, especially if the Dems find the right way to play it.

yuan -> DeDude... , December 20, 2016 at 11:36 AM
i hope you are right! however, history shows that a political movement can remain irrational longer than your government can remain democratic.
DrDick -> jonny bakho... , December 20, 2016 at 08:14 AM
And that is the least of the damage they will inflict.
New Deal democrat said in reply to pgl... , December 20, 2016 at 05:10 AM
Following up on Johnny Bakho's comment below, let's assume that average wage growth YoY for nonsupervisory workers never reaches 3% before the next recession hits. Wage growth rates always decline in recessions, usually by over 2%.

If in the next recession, we see actual slight nominal wage decreases, is a debt-deflationary wage-price spiral inevitable? Or could there be a small decline of less than -1% without triggering such a spiral.

Got any opinion? Is there any research on this?

pgl -> New Deal democrat... , December 20, 2016 at 06:04 AM
"is a debt-deflationary wage-price spiral inevitable?"

Good question. It all depends on the response of policy makers. If we continue with the stupid fiscal austerity that began in 2011, it may be inevitable. Which is why doing public infrastructure investment is a very good idea.

New Deal democrat said in reply to pgl... , December 20, 2016 at 06:28 AM
We're doomed.
DrDick -> New Deal democrat... , December 20, 2016 at 08:19 AM
I knew that immediately after the election.
JF -> DrDick... , December 20, 2016 at 01:07 PM
And consider how dysfunction from laissez faire healthcare policy readoption leads to rising prices/costs above current trend to limit disposable income even more, it will be amazing if we do not have stagnation and worse for the bulk of society.
Peter K. -> pgl... , December 20, 2016 at 07:08 AM
"Which is why doing public infrastructure investment is a very good idea."

If Hillary Clinton was so progressive according to people like you and Krugman, then why was her infrastructure plan so meager?

Alan Blinder said it would be small small that it wouldn't effect the Fed's thinking on its rate hike schedule.

JF -> Peter K.... , December 20, 2016 at 01:10 PM
Bush implemented and expanded a community health clinic system, that reallnwoukd be a nice infrastructure play for the US, but this Congress is more likely to disinvest here. They certainly don't want these do-gooder nonprofits competing against the doctor establishment.
ilsm -> Peter K.... , December 20, 2016 at 03:52 PM
EMike said it about Bernie..... no soup for you!

For Clinton dems, the ones the wiki revealed are con artists, doing for the peeps [like Bernie stood for] is too far ideologically for the faux centrists.

They are neoliberals market monetarists who keep the bankers green and everyone else takes the back seats.

DeDude -> pgl... , December 20, 2016 at 07:49 AM
At this point in time pretty much anything the policy makers do will be countered by the Fed. The question is first of all whether Trump can bully the Fed away from their current and traditional course (which would not allow much of a stimulus, before they cancelled it out with rate hikes).

Second whether the Fed itself having been traditionally prone to support GOP presidents (see inconsistencies in Greenspan's policies during Clinton vs. Bush) will change its policies and allow higher inflation and wage growth than they have under any Dem president.

pgl -> DeDude... , December 20, 2016 at 07:55 AM
As long as the FED thinks the natural rate of the employment to population ratio is only 60% - you'd be right. But then the FED is not thinking clearly.
yuan -> Peter K.... , December 20, 2016 at 10:59 AM
like many of my fellow socialists, i fulminated about bernanke's coddling of banks and asset holders. i was somewhat wrong. bernanke was a evidently a strong voice for banking regulation and an end to the moral hazard of TBTF. it is a pity that obama did not listen to him.

https://www.brookings.edu/blog/ben-bernanke/2016/05/13/ending-too-big-to-fail-whats-the-right-approach/

JF -> yuan... , -1
The little people go to the credit channels to help finance the purchase of durables and higher education too. The Fed's actions themselves will see these credit prices ratchet, so nit good fir basic demand. Veblen goods will see more price rises as the buyers will have lots of rentier/lobbying gathered money to burn.

Will the Fed use rulemaking to control bubbling in the financial asset marketplaces as they wont want to rause rates too much. I hope they are paying attention

[Dec 21, 2016] Globalization and Sovietization of America by Vladimir Brovkin

Notable quotes:
"... Democracy is inevitably going to clash with the demands of Globalization as they are opposite. Globalization requires entrepreneurs to search cheaper means of production worldwide. ..."
"... In practice, this means moving capital out of the USA. ..."
"... To put it in Marxist terms the interests of American society to survive and prosper came into contradiction with the interests of capitalism as a system of production and with the capitalists as a class who has no homeland, and for whom homeland is where it is easier to make money. ..."
"... American capitalism from its very beginning was based on the assumption that what was good for business was good for America. Until 1929 it more or less worked. The robber barons were robbing other entrepreneurs and workers but at least they reinvested their ill gained profits in America. The crash of 1929 showed that the interests of Big Banks clashed with the interest of American society with devastating results. ..."
"... The decades after WWII have seen a slow and steady erosion of American superiority in technology and productivity and slow and steady flight of capital from the USA. Globalization has been undermining America. From the point of view of Global prosperity if it is cheaper to produce in China, production should relocate to China. From the point of view of American worker, this is treason, a policy destroying the United States as an industrial power, as a nation, and as a community of citizens. Donald Trump is the first top ranking politician who has realized this simple fact. The vote for Donald Trump has been a protest against Globalization, immigration, open borders, capital flight, multiculturalism, liberalism and all the values American Liberal establishment has been preaching for 60 years that are killing the USA. ..."
"... Donald Trump wants to arrest the assault of Globalization on America. He promised to reduce taxes, and to attract business back to the USA. However, reduced taxes are only one ingredient in incentives. For businesses to stay or come back to the US, companies must have educated labor force, steady supply of talented, well-educated young people, excellent schools, and safe neighborhoods, among other things. As of now most of these preconditions are missing. ..."
"... Dr. Brovkin is a historian, formerly a Harvard Professor of History. He has published several books and numerous articles on Russian History and Politics. Currently, Dr. Brovkin works and lives in Marrakech, Morocco. ..."
"... This is an interesting question: is it possible to contain neoliberal globalization by building walls, rejecting 'trade' agreement, and so on. I get the feeling that a direct attack may not work. Water will find a way, as they say. With a direct attack against globalization, what you're likely to face is major capital flight. ..."
Dec 21, 2016 | www.unz.com
In his election campaign Donald Trump has identified several key themes that defined American malaise. He pointed to capital flight, bad trade deals, illegal immigration, and corruption of the government and of the press. What is missing in Trump's diagnosis though is an explanation of this crisis. What are the causes of American decline or as Ross Pero used to say: Let's look under the hood.

Most of the challenges America faces today have to do with two processes we call Globalization and Sovietization. By Globalization we mean a process of externalizing American business thanks to the doctrine of Free trade which has been up to now the Gospel of the establishment. By Sovietization we mean a process of slow expansion of the role of the government in economy, education, business, military, press, virtually any and every aspect of politics and society.

Let us start with Globalization.

Dani Rodrick ( The Globalization Paradox: Democracy and the Future of the World Economy) has argued that it is impossible to have democracy and globalization at the same time. Democracy is inevitably going to clash with the demands of Globalization as they are opposite. Globalization requires entrepreneurs to search cheaper means of production worldwide.

In practice, this means moving capital out of the USA. For fifty years economists have been preaching Free trade, meaning that free unimpeded, no tariffs trade is good for America. And it was in the 1950s, 60s and 1970s that American products were cheaper or better than those overseas. Beginning with the 1970s, the process reversed. Globalization enriched the capitalists and impoverished the rest of Americans. To put it in Marxist terms the interests of American society to survive and prosper came into contradiction with the interests of capitalism as a system of production and with the capitalists as a class who has no homeland, and for whom homeland is where it is easier to make money.

American capitalism from its very beginning was based on the assumption that what was good for business was good for America. Until 1929 it more or less worked. The robber barons were robbing other entrepreneurs and workers but at least they reinvested their ill gained profits in America. The crash of 1929 showed that the interests of Big Banks clashed with the interest of American society with devastating results.

The decades after WWII have seen a slow and steady erosion of American superiority in technology and productivity and slow and steady flight of capital from the USA. Globalization has been undermining America. From the point of view of Global prosperity if it is cheaper to produce in China, production should relocate to China. From the point of view of American worker, this is treason, a policy destroying the United States as an industrial power, as a nation, and as a community of citizens. Donald Trump is the first top ranking politician who has realized this simple fact. The vote for Donald Trump has been a protest against Globalization, immigration, open borders, capital flight, multiculturalism, liberalism and all the values American Liberal establishment has been preaching for 60 years that are killing the USA.

Donald Trump wants to arrest the assault of Globalization on America. He promised to reduce taxes, and to attract business back to the USA. However, reduced taxes are only one ingredient in incentives. For businesses to stay or come back to the US, companies must have educated labor force, steady supply of talented, well-educated young people, excellent schools, and safe neighborhoods, among other things. As of now most of these preconditions are missing.

To fight Globalization Donald Trump announced in his agenda to drop or renegotiate NAFTA and TPP. That is a step in the right direction. However, this will not be easy. There are powerful vested interests in making money overseas that will put up great resistance to America first policy. They have powerful lobbies and votes in the Congress and it is by far not certain if Trump will succeed in overcoming their opposition.

Another step along these lines of fighting Globalization is the proposed building of the Wall on Mexican border. That too may or may not work. Powerful agricultural interests in California have a vested interest in easy and cheap labor force made up of illegal migrants. If their supply is cut off they are going to hike up the prices on agricultural goods that may lead to inflation or higher consumer prices for the American workers.

... ... ...

The Military: Americans are told they have a best military in the world. In fact, it is not the best but the most expensive one in the world. According to the National priorities Project, in fiscal 2015 the military spending amounted to 54% of the discretionary spending in the amount of 598.5 billion dollars . Of those almost 200 billion dollars goes for operations and maintenance, 135 billion for military personnel and 90 billion for procurement (see Here is How the US Military Spends its Billions )

American military industrial complex spends more that the next seven runners up combined. It is a Sovietized, bureaucratic structure that exists and thrives on internal deals behind closed doors, procurement process closed to public scrutiny, wasted funds on consultants, kickbacks, and outrageous prices for military hardware. Specific investigations of fraud do not surface too often. Yet for example, DoD Inspector General reported:

material internal control weakness that affect the safeguarding of assets, proper use of funds, and impair the prevention of and identification of fraud, waste and abuse. Source: "FY 2010 DoD Agencywide Agency Financial Report (vid. p.32)" (PDF). US Department of Defense. Retrieved 7 January 2011, cited in: https://en.wikipedia.org/wiki/Military_budget_of_the_United_States#cite_note-20

Why is it that an F35 fighter jet should cost 135 million apiece and the Russian SU 35 that can do similar things is sold for 35 million dollars and produced for 15 million? The answer is that the Congress operates on a principle that any price the military asks is good enough. The entire system of military procurement has to be scrapped. It is a source of billions of stolen and wasted dollars. The Pentagon budget of half a trillion a year is a drain on the economy that is unsustainable, and what you get is not worth the money. The military industrial complex in America does not deliver the best equipment or security it is supposed to.(on this see: http://nationalinterest.org/blog/the-skeptics/cutting-waste-isnt-enough-curb-pentagon-spending-18640 )

Donald Trump was the first to his credit who raised the issue: Do we need all these bases overseas? Do they really enhance American security? Or are they a waste of money for the benefit of other countries who take America for a free ride. Why indeed should the US pay for the defense of Japan? Is Japan a poor country that cannot afford to defend itself? Defense commitments like those expose America to unnecessary confrontations and risk of war over issues that have nothing to do with America's interests. Is it worth it to fight China over some uninhabitable islands that Japan claims? (See discussion: http://nationalinterest.org/blog/the-skeptics/should-the-us-continue-guarantee-the-security-wealthy-states-17720 )

Similarly, Trump is the first one to raise the question: What is the purpose of NATO? ( see discussion of NATO utility: http://nationalinterest.org/blog/the-buzz/will-president-trump-renegotiate-the-nato-treaty-18647 ) Yes the Liberal pro-Clinton media answer is: to defend Europe from Russian aggression. But really what aggression? If the Russians wanted to they could have taken Kiev in a day two years ago. Instead, they put up with the most virulently hostile regime in Kiev. Let us ask ourselves would we have put up with a virulently anti-American regime in Mexico, a regime that would have announced its intention to conclude a military alliance with China or Russia? Were we not ready to go to nuclear war over Soviet missiles in Cuba? If we would not have accepted such a regime in Mexico, why do we complain that the Russians took action against the new regime in Ukraine. Oh yes, they took Crimea. But the population there is Russian, and until 1954 it was Russian territory and after Ukrainian independence the Russians did not raise the issue of Crimea as Ukrainian territory and paid rent for their naval base there The Russians took it over only when a hostile regime clamoring for NATO membership settled in Kiev. Does that constitute Russian aggression or actually Russian limited response to a hostile act? (see on this Steven Cohen: http://eastwestaccord.com/podcast-stephen-f-cohen-talks-russia-israel-middle-east-diplomacy-steele-unger/ ) As I have argued elsewhere Putin has been under tremendous pressure to act more decisively against the neo-Nazis in Kiev. (see Vlad Brovkin: On Russian Assertiveness in Foreign Policy. ( http://eastwestaccord.com/?s=brovkin&submit=Search )

With a little bit of patience and good will a compromise is possible on Ukraine through Minsk accords. Moreover, Ukraine is not in NATO and as long as it is not admitted to NATO, a deal with the Russians on Ukraine is feasible. Just like so many other pro-American governments, Ukraine wants to milk Uncle Sam for what it is worth. They expect to be paid for being anti/Russian. (See discussion on need of enemy: http://nationalinterest.org/feature/does-america-need-enemy-18106 ) Would it not be a better policy to let Ukraine know that they are on their own: no more subsidies, no more payments? Mend your relations with Russia yourselves. Then peace would immediately prevail.

If we admit that there is no Russian aggression and that this myth was propagated by the Neo/Cons with the specific purpose to return to the paradigm of the cold war, i.e. more money for the military industrial complex, if we start thinking boldly as Trump has begun, we should say to the Europeans: go ahead, build your own European army to allay your fears of the Russians. Europe is strong enough, rich enough and united enough to take care of its defense without American assistance. (See discussion of Trumps agenda: http://nationalinterest.org/feature/course-correction-18062 )

So, if Trump restructures procurement mess, reduces the number of military bases overseas, and invests in high tech research and development for the military on the basis of real competition, hundreds of billions of dollars could be saved and the defense capability of the country would increase.

... ... ...

Dr. Brovkin is a historian, formerly a Harvard Professor of History. He has published several books and numerous articles on Russian History and Politics. Currently, Dr. Brovkin works and lives in Marrakech, Morocco.

Mao Cheng Ji says: December 21, 2016 at 8:43 am GMT • 200 Words

This is a bit too much, Volodya. Maybe you should've taken one subject – globalization, for example – and stop there.

This is an interesting question: is it possible to contain neoliberal globalization by building walls, rejecting 'trade' agreement, and so on. I get the feeling that a direct attack may not work. Water will find a way, as they say. With a direct attack against globalization, what you're likely to face is major capital flight.

You might be able to make neoliberal globalization work for you (for your population, that is), like Germany and the Scandinavians do, but that's a struggle, constant struggle. And it's a competition; it will have to be done at the expense of other nations (see Greece, Portugal, Central (eastern) Europe). And having an anti-neoliberal president is not enough; this would require a major change, almost a U turn, in the whole governing philosophy. Forget the sanctity of 'free market', start worshiping the new god: national interest

animalogic says: December 21, 2016 at 10:14 am GMT • 400 Words

What an INTERESTING article -- So much that is right, so much that is wrong. An article you can get your teeth into.
On globalisation: pretty spot-on (although I believe he exaggerates the US weakness in what he calls "preconditions": there are still many well educated Americans, still good neighborhoods (yes, sure it could be a lot better). He's against NAFTA & other neoliberal Trade self indulgences.
But then we come to his concept of "Sovietization" of the US. Perhaps it's mere semantics, but I find the concept incoherent & suspiciously adapted to deliberately agitate US conservatives.

Example: "huge sectors of American economy are not private at all, that in fact they have been slowly taken over by an ever growing state ownership and control"

This is nonsense on its face: the government spews out trillions to private actors to provide goods & services. It does so, in part, because it has systematically privatized every government function capable of returning a profit. The author can't see the actor behind the mask: how much legislation is now written by & for the benefit of private interests ? (Obama care, Bush pharmaceutical laws ?)

Of course, the author is correct on the US military-industrial complex: it is a sump of crime & corruption. Yet he seems not to grasp that the problem is regulative capture. How is the Fiasco of the F35 & MacDonald Douglas merely an issue for the Legislature alone & how does this circus resemble the Soviet Union, beyond the fact that BOTH systems (like most systems) are capable of gross negligence & corruption ?

I like what the author says about NATO, Japan, bases etc. Although he's a little naive if he thinks NATO for instance is about "protecting" Europe. Yes, that's a part of it: but primarily NATO etc exist as a tool/mask behind which the US can exert it's imperial ambitions against friend & for alike.

The author does go off against welfare well that's to be expected: sadly I don't think he quite gets the connection between globalisation & welfare .He also legitimately goes after tertiary education, but seems to be (again) confused as to cause & effect.

The author is completely spot on with his sovietization analogy when he comes to the US security state. Only difference between the Soviets & the US on security totalitarianism ? The US is much better at it (of course the US has technological advantages unimaginable to the Soviets)

• Replies: @Randal I agree with you that it's a fascinating piece, and I also agree with many of the points you agree with.
But then we come to his concept of "Sovietization" of the US. Perhaps it's mere semantics, but I find the concept incoherent & suspiciously adapted to deliberately agitate US conservatives.

Example: "huge sectors of American economy are not private at all, that in fact they have been slowly taken over by an ever growing state ownership and control"

This is nonsense on its face: the government spews out trillions to private actors to provide goods & services. It does so, in part, because it has systematically privatized every government function capable of returning a profit. The author can't see the actor behind the mask: how much legislation is now written by & for the benefit of private interests ? (Obama care, Bush pharmaceutical laws ?)

I think part of the problem here might be a mistaken focus on "the government" as an independent actor, when in reality it is just a mechanism whereby the rulers (whether they are a dictator, a political party or an oligarchy or whatever), and those with sufficient clout to influence them, get things done the way they want to see them done.

As such there is really not much difference between the government directly employing the people who do things (state socialism), and the government paying money to companies to get the same things done. Either way, those who use the government to get things done, get to say what gets done and how. There are differences of nuance, in terms of organizational strengths and weaknesses, degrees of corruption and of efficiency, but fundamentally it's all big government.

A more interesting question might be - how really different are these big government variants from the small government systems, in which the rulers pay people directly to get things done the way they want them to be done?

Miro23 says: December 21, 2016 at 11:06 am GMT • 300 Words

An excellent article. The points that resonated the most were:

For businesses to stay or come back to the US, companies must have educated labor force, steady supply of talented, well-educated young people, excellent schools, and safe neighborhoods, among other things. As of now most of these preconditions are missing.

This is an enormously difficult problem that will take years to resolve, and it will need a rethink of education from the ground up + the political will to fight the heart of Cultural Bolshevism and the inevitable 24/7 Media assault.

Drain the swamp in Washington: ban the lobbyists, make it a crime to lobby for private interest in a public place, restructure procurement, introduce real competition, restore capitalism, phase out any government subsidies to Universities, force them to compete for students, force hospitals to compete for patients. Cut cut cut expenditure everywhere possible, including welfare.

Banning lobbyists should be possible but draining the rest of the swamp looks really complicated. Each area would need to be examined from the ground up from a value for money – efficiency viewpoint. It doesn't matter which philosophy each one is run on – good value healthcare is desirable whichever system produces it.

Could we have ever imagined in our worst dreams that a system of mass surveillance would be created and perfected in the USA. (see discussion on this in: Surveillance State, in http://www.americamagazine.org/issue/surveillance-state

This one should be easy. The Constitution guarantees a right to privacy so just shut down the NSA. Also shut down the vast CIA mafia (it didn't exist prior to 1947) and the expensive and useless FED (controlling the money supply isn't the business of a group of private banks – an office in the Treasury could easily match the money supply to economic activity).

• Replies: @Daniel Chieh
This one should be easy. The Constitution guarantees a right to privacy so just shut down the NSA. Also shut down the vast CIA mafia (it didn't exist prior to 1947) and the expensive and useless FED (controlling the money supply isn't the business of a group of private banks – an office in the Treasury could easily match the money supply to economic activity).

From Unz, I have learned that the US actually has a four-part government: the "Deep State" part which has no clear oversight from any of the other three branches.

anonymous says: December 21, 2016 at 5:22 pm GMT • 300 Words

To put it in Marxist terms the interests of American society to survive and prosper came into contradiction with the interests of capitalism as a system of production and with the capitalists as a class who has no homeland, and for whom homeland is where it is easier to make money.

Another add-on contradiction, comrade, is that the selfsame capitalist class expect their host nation to defend their interests whenever threatened abroad. This entails using the resources derived from the masses to enforce this protection including using the little people as cannon fodder when deemed useful.

Donald Trump is the first top ranking politician who has realized this simple fact.

Come now, do you really believe that all these politicians who have gone to these world-class schools don't know this? They simply don't care. They're working on behalf of the .1% who are their benefactors and who will make them rich. They did not go into politics to take vows of poverty. They just realize the need to placate the masses with speeches written by professional speechwriters, that's all.

Insofar as Social Security/Medicare/Medicaid goes, those are the most democratic institutions of all. It's money spent on ourselves, internally, with money being cycled in and out at the grassroots level. Doctors, nurses, home-care providers, etc etc, all local people get a piece of the action unlike military spending which siphons money upwards to the upper classes.

I'd rather be employed in a government job than unemployed in the private sector. That's not the kind of "freedom" I'm searching for comrade.

Randal says: December 21, 2016 at 6:29 pm GMT • 300 Words

@animalogic What an INTERESTING article -- So much that is right, so much that is wrong. An article you can get your teeth into.

On globalisation: pretty spot-on (although I believe he exaggerates the US weakness in what he calls "preconditions": there are still many well educated Americans, still good neighborhoods (yes, sure it could be a lot better). He's against NAFTA & other neoliberal Trade self indulgences.
But then we come to his concept of "Sovietization" of the US. Perhaps it's mere semantics, but I find the concept... incoherent...& suspiciously adapted to deliberately agitate US conservatives.

Example: "huge sectors of American economy are not private at all, that in fact they have been slowly taken over by an ever growing state ownership and control"

This is nonsense on its face: the government spews out trillions to private actors to provide goods & services. It does so, in part, because it has systematically privatized every government function capable of returning a profit. The author can't see the actor behind the mask: how much legislation is now written by & for the benefit of private interests ? (Obama care, Bush pharmaceutical laws ?)

Of course, the author is correct on the US military-industrial complex: it is a sump of crime & corruption. Yet he seems not to grasp that the problem is regulative capture. How is the Fiasco of the F35 & MacDonald Douglas merely an issue for the Legislature alone...& how does this circus resemble the Soviet Union, beyond the fact that BOTH systems (like most systems) are capable of gross negligence & corruption ?

I like what the author says about NATO, Japan, bases etc. Although he's a little naive if he thinks NATO for instance is about "protecting" Europe. Yes, that's a part of it: but primarily NATO etc exist as a tool/mask behind which the US can exert it's imperial ambitions ...against friend & for alike.
The author does go off against welfare...well that's to be expected: sadly I don't think he quite gets the connection between globalisation & welfare....He also legitimately goes after tertiary education, but seems to be (again) confused as to cause & effect.

The author is completely spot on with his sovietization analogy when he comes to the US security state. Only difference between the Soviets & the US on security totalitarianism ? The US is much better at it (of course the US has technological advantages unimaginable to the Soviets)

I agree with you that it's a fascinating piece, and I also agree with many of the points you agree with.

But then we come to his concept of "Sovietization" of the US. Perhaps it's mere semantics, but I find the concept incoherent & suspiciously adapted to deliberately agitate US conservatives.
Example: "huge sectors of American economy are not private at all, that in fact they have been slowly taken over by an ever growing state ownership and control"
This is nonsense on its face: the government spews out trillions to private actors to provide goods & services. It does so, in part, because it has systematically privatized every government function capable of returning a profit. The author can't see the actor behind the mask: how much legislation is now written by & for the benefit of private interests ? (Obama care, Bush pharmaceutical laws ?)

I think part of the problem here might be a mistaken focus on "the government" as an independent actor, when in reality it is just a mechanism whereby the rulers (whether they are a dictator, a political party or an oligarchy or whatever), and those with sufficient clout to influence them, get things done the way they want to see them done.

As such there is really not much difference between the government directly employing the people who do things (state socialism), and the government paying money to companies to get the same things done. Either way, those who use the government to get things done, get to say what gets done and how. There are differences of nuance, in terms of organisational strengths and weaknesses, degrees of corruption and of efficiency, but fundamentally it's all big government.

A more interesting question might be – how really different are these big government variants from the small government systems, in which the rulers pay people directly to get things done the way they want them to be done?

[Dec 18, 2016] US companies are addicted to stock buybacks

Notable quotes:
"... Harvard Business Review ..."
"... Buyback Quarterly ..."
"... Brother Feltner is right. Corporations are moving offshore to cut their wage bills. But they are not using that money to reinvest in their companies to improve the product and train the workforce. Instead, they are offshoring to gain cash flow to finance their fix. They want more stock buybacks which in turn enrich top executives and Wall Street investors. Automation and technology have nothing to do with this perilous addiction. ..."
"... emissions ..."
"... "The Anti-Corn Law League was a successful political movement in Great Britain aimed at the abolition of the unpopular Corn Laws, which protected landowners' interests by levying taxes on imported wheat, thus raising the price of bread at a time when factory-owners were trying to cut wages to be internationally competitive." ..."
"... Our backwards free fall from stable middle class growth and access and attainment to higher education has been precipitated and pushed by a broadcasting system and cyber platforms that have excluded the VOICE OF WORKERS ever since the first newspaper carried a BUSINESS section with no ..."
"... from being forced to compete against cheaper off-shore or south-of-the-border slave labor that formed the same COMPETITIVE ADVANTAGE now taken for granted when a subsidized start-up like NIKE decides to pursue a business model that relentlessly exploits North American running shoe and sports wear market needs by cheaply manufacturing such products off-shore via contracting agents exploiting captive Indonesian (substitute other Latin American, African or Asian ENTERPRISE aka FREE TRADE ZONES) slave laborers. ..."
"... If we aren't worth hiring at a sustainable SOCIALLY CONTRACTED WAGE aimed at developing our national resources, we should reject buying from such nationally suicidal business models and corporate LLC fictions even if they can pay-2-play legislation that removes the PROTECTIONS. We vow to never sacrifice NATIONAL SECURITY, so why have we allowed the PRIVATIZATION of our NATIONAL SECURITY STATE by corporate legal fictions? A revealing if not all-encompassing historical answer to that question is another corporate-captured and regulatory-captured Mass Media Taboo discussed one time to my knowledge on the PEOPLE'S AIRWAVES. Search Bill Moyers panel discussing the LEWIS POWELL MEMO TO THE NATIONAL CHAMBER OF COMMERCE and the Nixon appointment of LEWIS POWELL to the Supreme Court, despite his total lack of judicial experience. ..."
"... {Creative Commons Copyright} Mitch Ritter Paradigm Shifters Lay-Low Studios, Ore-Wa Media Discussion List ..."
Dec 18, 2016 | www.nakedcapitalism.com

American manufacturers have chosen a different path. Their CEOs grow wealthy by financially strip-mining their own companies, aided and abetted by elite financiers who have only one goal: extracting as much wealth as possible from the company while putting back as little as possible into production and workers.

The heroin driving their addiction is stock buybacks-a company using its own profits (or borrowed money) to buy back the company's own shares. This directly adds more wealth to the super-rich because stock buybacks inevitably increase the value of the shares owned by top executives and rich investors. Since top executives receive the vast majority of their income (often up to 95%) through stock incentives, stock buybacks are pure gold. The stock price goes up and the CEOs get richer. In this they are in harmony with top Wall Street private equity/hedge fund investors who incessantly clamor for more stock buybacks, impatient for their next fix.

For the few, this addiction is the path to vast riches. It also is the path to annihilating the manufacturing sector. (For a definitive yet accessible account see " Profits without Prosperity " by William Lazonick in the Harvard Business Review .)

Wait, wait, isn't this stock manipulation? Well, before the Reagan administration deregulated them in 1982, stock buybacks indeed were considered stock manipulation and one of the causes of the 1929 crash. Now they are so ubiquitous that upwards of 75% of all corporate profits go to stock buybacks. Over the last year, 37 companies in the S&P 500 actually spent more on buybacks than they generated in profits, according to Buyback Quarterly .

Little wonder that stock buybacks are a major driver of runaway inequality . In 1980 before the stock buyback era, the ratio of compensation between the top 100 CEOs and the average worker was 45 to 1. Today it is a whopping 844 to 1. (The German CEO gap is closer to 150 to 1.)

Germany holds down its wage gap, in part, by discouraging stock buybacks. Through its system of co-determination, workers and their unions have seats on the boards of directors and make sure profits are used to invest in productive employment. As a result, in Germany stock buybacks account for a much smaller percentage of corporate profits.

Between 2000 and 2015, 419 U.S. companies (on the S&P 500 index) spent a total of $4.7 trillion on stock buybacks (annual average of $701 million per firm). During the same period, only 33 German firms in the S&P350 Europe index conducted buybacks for a total of $111 billion (annual average of $211 million per firm). (Many thanks to Mustafa Erdem Sakinç from the Academic-Industry Research Network for providing this excellent data.)

Let's do the math: U.S. firms as a whole spent 42 times more on stock buybacks than German firms!

Little wonder that our manufacturing sector is a withering appendage of Wall Street, while German manufacturing leads the global economy.

So why does the media consistently use automation/technology to explain the loss of well-paying manufacturing jobs?

To be fair, Poppy is not alone. Virtually every elite broadcaster, journalist, pundit and columnist claims that the loss of good-paying, blue-collar jobs is somehow connected to new technologies. How can they ignore the fact that in Germany advanced technologies and good-paying jobs go hand in hand?

Part of the answer is that it is reassuring for elites to believe that job loss stems from complex "forces of production" that are far removed from human control. The inevitability of broad economic trends makes a pundit sound more sophisticated than the unschooled factory worker who thinks the company is moving to Mexico just because labor costs one-tenth as much.

Technological inevitability also fits neatly into the idea that runaway inequality in our economy is akin to an act of God, that globalization and technology move forward and no one can stop the process from anointing winners and losers. The winners-the richest of the rich-are those who have the skills needed to succeed in the international technological race. The losers-most of the rest of us without the new skills-see our jobs vaporized by technology and automation.

Too bad. Nothing to be done about it. Stop whining. Move on.

In other words, rising inequality can't be fundamentally altered.

Sinclair's Law of Human Nature

Or maybe there's another explanation suggested by Upton Sinclair's famous adage: "It is difficult to get a man to understand something, when his salary depends on his not understanding it."

The newscasters, the pundits, the top columnists and recidivist TV commentators-nearly all of them are doing very well. They may not be billionaires, but they live in a rarefied world far removed form the worries felt by Mr. Feltner and his brothers and sisters at Rexnord. From their elite vantage point, the status quo may have problems, but it is treating them remarkably well. So quite naturally they are drawn to narratives that justify their elite positions; that altering runaway inequality and its privileges would be futile at best and even harmful to society as a whole. How convenient.

Then again, American media firms are no strangers to stock buybacks. Time Warner, which owns CNN, Poppy's employer, instituted a $5 billion stock buyback in 2016. That's $5 billion that, for example, didn't go to news investigations about the perils of stock buybacks. We don't know if Poppy Harlow receives stock incentives, but her top bosses certainly do.

What about NBC/MSNBC? Comcast is the parent company which also instituted a $5 billion stock buyback in 2016.

Brother Feltner is right. Corporations are moving offshore to cut their wage bills. But they are not using that money to reinvest in their companies to improve the product and train the workforce. Instead, they are offshoring to gain cash flow to finance their fix. They want more stock buybacks which in turn enrich top executives and Wall Street investors. Automation and technology have nothing to do with this perilous addiction.

So, I'll stop yelling at Poppy, once she starts covering stock buybacks.

Lambert Strether has been blogging, managing online communities, and doing system administration 24/7 since 2003, in Drupal and WordPress. Besides political economy and the political scene, he blogs about rhetoric, software engineering, permaculture, history, literature, local politics, international travel, food, and fixing stuff around the house. The nom de plume "Lambert Strether" comes from Henry James's The Ambassadors: "Live all you can. It's a mistake not to." You can follow him on Twitter at @lambertstrether. http://www.correntewire.com View all posts by Lambert Strether → John , December 18, 2016 at 6:33 am

Now I understand. Companies off-shore their manufacturing because Mexico, as an example, has the latest in automation and the highest of high technology. Another example of the "Move alone. Nothing to see here." mantra.

Minnie Mouse , December 18, 2016 at 10:14 am

Yes, does moving to Mexico, or China, somehow enable more automation? If you are going to automate, why not automate in place and forget unnecessary long supply chains.

Dave , December 18, 2016 at 1:01 pm

There's an endless supply of Mexicans that can work cheap, can be trained and who cost far less than complicated machinery. They also have another utilitarian value: driving down wages in America.

frosty zoom , December 18, 2016 at 3:14 pm

an "endless supply", huh?

sheesh.

fresno dan , December 18, 2016 at 7:10 am

I'm glad I'm not the only one yelling at the TV ..
;)

"HARLOW: But you agree it won't save all of them, because of automation, because of technology."

SO .does it occur to this reported to ask how many jobs are moving from the US to Mexico? If so many jobs are lost to automation at this factory, why is it worthwhile to move to Mexico. HOW MANY jobs lost in the US and HOW MANY jobs gained in Mexico from this plant??? I wouldn't be surprised that there is a gain in Mexico beyond the number directly moved from Carrier .(extra maintenance, etc.)

And its a bizarre thing – 99% of "news" is in fact "analysis" – and they are remarkably wrong – yet NONE of them are ever fired

Cry Shop , December 18, 2016 at 7:18 am

What Mexico offers for some segments of the steel industry is the ability to bypass emissions controls. This, much more than labour, is a primary attraction for process industries like steel/petrochemical, where the goods are all most never touched by human hand.

While it also offers proximity to market that building a similar, high emissions plant further south into Central/South America (or further west into Asia) can't compete, even with labour cheaper than Mexico's. Because NAFTA does not require economic impact equivalents, industries with high costs of compliance will go where there is nothing to comply too.

rd , December 18, 2016 at 4:28 pm

Environmental regulations in general are lower in the off-shore areas. Those countries are where we were 50 years ago with polluted air, water, and land. However, as the citizens have better and more stable lives. they will insist on improved conditions. We are already seeing some of that start in China and other countries. We had to invent many of the technologies in the 70s-90s, so those countries will be able to improve their lot much faster if they want to because they will be able to buy off the shelf technologies.

Countries like China are moving forward with renewable energy, as much because it means clean air and water, as it does reduced reliance on the cantankerous Middle East and greenhouse gas emissions. It will be interesting to see what happens when US voters figure out that the goal of the current Republican party is to return the US environmental condition to a Third World country. Keep in mind that nearly all of the major environmental laws were signed by Republican presidents.

Cry Shop , December 18, 2016 at 6:06 pm

+1

and NAFTA pretty much is associated with a Democratic President.

Dwayne , December 18, 2016 at 7:28 am

Every buyback returns cash to the investor – who then has to re-invest in something else to continue getting returns, so to some extent equity buybacks of one company result in new investment in some other company. To the extent that a company's growth prospects are dim, there are many many situations in which buybacks make complete sense – as that company simply needs less and less capital for a shrinking industry. So why should they be heavily capitalized with low growth prospects?

Jim Thomson , December 18, 2016 at 10:27 am

It is still stock manipulation, plain and simple. And the decision to do it is made by the executives who benefit the most from it. And it was illegal for a good reason, and it was made legal for another good reason.

If the executives have so much retained earnings that they do not know how to invest them properly then they are incompetent in their jobs and should be replaced. They should not be allowed to use corporate funds to manipulate the stock price up to their own benefit.
Even worse, in some cases the company borrows money, at today's low interest rates, to buy back stock.
When this occurs pervasively, as it has been for some time now in the US, it is a sign of stagnation of the corporate sector.

Charles Fasola , December 18, 2016 at 11:40 am

@ dwayne, In which class were you "accidentally" born into. Not hard to make a guess is it. Don't bother with your already anticipated tesponse. Since I know fairwell the answer. The child of a poor substistance farmer who was made to walk five miles in knee deep snow to learn all that you now do.

Benedict@Large , December 18, 2016 at 11:43 am

Buy backs are not manipulation any more than increasing the dividend is. In both cases, the corporation is saying it has more money than it needs, and that that money should be returned to the company's stockholders, allowing them to choose how that money will be invested instead of having corporate management do it for them.

The concern over stock buy backs is simply people focusing on part of a larger transaction instead of seeing the whole thing. It is the difference between micro thinking and macro thinking, otherwise known as failing to see the bigger picture.

Paid Minion , December 18, 2016 at 12:39 pm

Of course, none of this excess money is EVER returned to the company's employees, who generated the money to begin with.

Signed,

Former employee, who listened to this BS from the suits about keeping the cost of labor "competitive" to justify no raises or COLAs.

Code Name D , December 18, 2016 at 6:37 pm

Because markets

Dwayne , December 18, 2016 at 6:54 pm

Benedict – you are spot on. Sounds like a lot of the other responders are either bitter shorts that have been burned by buybacks just generally shallow thinkers. They will be giving their same economically baseless arguments for the rest of their lives unless they learn to open their minds.

Those who are arguing for a dividend instead of a buyback are making a foolish argument – as if a significant dividend increase wouldn't see a significant rise in the stock and hence a similar effect as a buyback. Of course a dividend increase would see a significant rise in the stock price just like the buyback.

As to those whining about workers at-risk and executives with pay tied to the stock price – they mention nothing about the fact that workers risked no capital and can head for the door whenever they like, and that executives risked having part of their pay go to $0 in the event of an industry or economic downturn, and locked them into staying at that company for a period of time (if they leave, their options get taken away). The risk profile of a salaried worker and an executive are far different – and hence their economic outcomes are rightfully different depending on the financial performance of a company.

cnchal , December 18, 2016 at 7:28 pm

. . . Of course a dividend increase would see a significant rise in the stock price just like the buyback.

Why is that almost never the option taken?

As to those whining about workers at-risk and executives with pay tied to the stock price – they mention nothing about the fact that workers risked no capital and can head for the door whenever they like, and that executives risked having part of their pay go to $0 in the event of an industry or economic downturn . . .

In the event of an industry or economic downturn those workers risk all of their pay going to $0

Your argument reminds me that a rich person has just as much right to sleep under the bridge on a freezing night as the poor person.

Executives of publicly traded companies are not the owners, but act with impunity as if they are, and they risked no capital either.

a different chris , December 18, 2016 at 7:31 pm

Do you guys live in the real world? The company hires (from among their friends) a CEO, COO, whatever. These people are "granted stock options" ok, those stocks don't even exist so basically they just dilute the holdings of everybody who was working there. After a few years they "cash out" where money comes from basically the worker's pockets.

How's that for "shallow thinking"?

> that executives risked having part of their pay go to $0 in the event of an industry or economic downturn, and locked them into staying at that company for a period of time (if they leave, their options get taken away).

Sigh. How many links can NakCap readers come up with that shows that this is exactly what *doesn't* happen. Lemme guess, Dwayne, economic major?

John Wright , December 18, 2016 at 10:28 am

Why do share buy backs if growth prospects are dim?

Why not return the money as a special dividend or pay down debt?

I'd like to see share buyback proposal prefaced with a statement such as:

"We scoured the world looking for a suitable investment for our excess cash, there was no additional business enhancing technology we could justify purchasing, no additional R&D into product development we could justify, no additional investment in plant or equipment upgrades we could justify, no additional training for our employees we could justify, no prepayment of debt we could justify, no funding of university research we could justify."

"We don't see a way to use our excess cash to grow/improve our business".

"Surprisingly, from the global list of corporate securities we could find no financial security that is at a more attractive price level than our own stock."

"So we are buying back our company's stock."

"Take our word for it, it will be a great investment for the future."

"Note: our senior executives will be exercising options but not holding onto their option purchased stock."

"Personal financial diversification is important to them."

Chris , December 18, 2016 at 11:43 am

Excuse me, but isn't one of the main factors driving the buybacks contractual executive bonus payouts?

As in, if the stock price increases by X%, the CEO gets a maximum bonus Y. The people in the finance wing of these companies are simply solving for how many stocks they need to buyback in order to achieve X. Because they can spend other people's money to meet that goal, there is no technical or legal barrier to them doing this.

So, since we can't mandate more ethical and longer term thinking people become CEO's, can't we put a rule into place that no one in the organization performing the buyback is allowed to benefit from a buyback directly? That would make a buyback more like an option of last resort. Which is what it should be, given how corrosive it is to future development of a company.

Jim Haygood , December 18, 2016 at 11:08 am

" Stock buybacks inevitably increase the value of the shares owned by top executives and rich investors. "

While this is true as far as it goes, buybacks increase the value of ALL shares - including the roughly one quarter of outstanding shares owned by pension plans.

Pension plans are an important asset of the middle class. Cut their investment returns, and real people take a hit.

Charles Fasola , December 18, 2016 at 11:44 am

Because so many workers have defined pension plans today; correct? C'mon.

Propertius , December 18, 2016 at 3:47 pm

Jim's argument also applies to 401k and other defined-contribution plans, of course. You do still have a point, though – a lot of people who are eligible for such plans can't contribute to them because they don't have any surplus income to stash away – which is, of course, because wages are too low .

John Wright , December 18, 2016 at 1:35 pm

So if Company A does a share buyback, Company B, which does not buyback their own stock, sees Company B's share price increase anyway?

This is a great deal for company B as they can keep their cash while benefiting from company A's buyback.

JTMcPhee , December 18, 2016 at 1:47 pm

It's called "talking one's book," and working whenever possible to keep the flow of discourse going in the direction that supports one's wealth and interests

Mike G , December 18, 2016 at 2:21 pm

Goosing investment returns in the short term with buybacks to benefit stock-option insiders, at the expense of underinvestment in productive measures like R&D and training, eventually leads to corporate decline which does no favors for the few middle class people who still have pensions.

Vatch , December 18, 2016 at 7:05 pm

Buybacks increase the price of shares of stock, not the value. If a pension plan owns stock which has been inflated by buy-backs, the dividends paid to the pension plan won't increase. The only way that the pension plan can benefit is by selling the stock. Then the pension plan will need to use the proceeds of the sale to buy something else. But if most companies are inflating the price of their stocks with buy-backs, how does the pension plan find an appropriate stock to buy? If they buy another inflated stock, the value of the pension plan is in the same place as it was before it sold the previous stock.

It seems to me that buy-backs just cause a bubble. Short term "investors" such as executives can benefit from the bubble, but long term investors such as pension plans aren't able to benefit in that way.

Altandmain , December 18, 2016 at 5:55 pm

Executives often cash in their stock options around the time of stock buybacks.

http://www.reuters.com/investigates/special-report/usa-buybacks-pay/

It's a huge problem of principle agent. The other is that every dollar used to buy back for the company is then one less available for capital costs, R&D, employee training, etc.

The overwhelming majority of the gains to investors will go to the wealthy as well. Workers get nothing and often worse than nothing when their job security is under attack.

Sound of the Suburbs , December 18, 2016 at 8:02 am

Things were a lot more straight forward in the 18th and 19th centuries and there was far less complication to obscure the reality. In 18th and 19th century they had small state, raw capitalism when there was little Government interference to cloud the issue.

The Corn Laws and Laissez-Faire, the requirements of free trade, a historical lesson:

"The Anti-Corn Law League was a successful political movement in Great Britain aimed at the abolition of the unpopular Corn Laws, which protected landowners' interests by levying taxes on imported wheat, thus raising the price of bread at a time when factory-owners were trying to cut wages to be internationally competitive."

The landowners wanted to maintain their profit, charging a high price for corn, but this posed a barrier to international free trade in making UK wage labour uncompetitive raising the cost of living for workers and as a consequence, wages.

The anti-corn law league had to fight the vested interests of the landowners to get the UK in a position where it could engage in free trade. They had to get the cost of living down to a point where they could pay their workers internationally competitive wages.

Opposing national interests, productive industry and landowner rentiers.

It's always been that way, we just forgot.

Workers have been priced out of international markets by the high cost of living in the West and now we try and tell them that is their fault. It is the elite who do not understand the first thing about free trade unlike their 19th century predecessors.

The US has probably been the most successful in making its labour force internationally uncompetitive with soaring costs of housing, healthcare and student loan repayments. These all have to be covered by wages and US businesses are now squealing about the high minimum wage.

US investors and companies have little interest in investing in the US due to its high labour costs caused by its own national rentier interests. There are opposing national interests within the US just as there were in the UK in the 19th Century.

Most of the UK now dreams of giving up work and living off the "unearned" income from a BTL portfolio, extracting the "earned" income of generation rent. The UK dream is to be like the idle rich, rentier, living off "unearned" income and doing nothing productive.

The UK is itself atrocious and has encouraged rentier interests which oppose the interests of those who want free trade. The UK is now ramping up student loans to make things worse. High housing costs and student loan repayments will have to be covered by wages pricing UK labour out of international markets.

Things were a lot more straight forward in the 18th and 19th centuries and there was far less complication to obscure the reality. In 18th and 19th century they had small state, raw capitalism when there was little Government interference to cloud the issue.

The Classical Economists observed the situation which was a lot more clear cut in those days. The Classical Economists thought the cost of living must be kept low with free or subsidised housing, education and healthcare funded through taxes on "unearned" income. "Earned" income shouldn't be taxed as this raises the cost of doing business, real productive business that earns real wealth.

Imaginary wealth can be produced by inflating the value of a nations housing stock until the bubble bursts and all the imaginary wealth disappears (e.g. US 2008, Japan 1989, Ireland, Spain, etc ..).

Ditto all other financial assets.

The Classical Economists realised capitalism has two sides, the productive side where "earned" income is generated the unproductive, parasitic side where "unearned" income is generated. The vested interests of the two sides are opposed to each other.

If you forget you can made fundamental mistakes, like today's ideas on free trade.

The UK and US have revelled in their ignorance.

Sound of the Suburbs , December 18, 2016 at 8:06 am

Wealth – real and imaginary.

Central Banks and the wealth effect.

Real wealth comes from the real economy where real products and services are traded. This involves hard work which is something the financial sector is not interested in.

The financial sector is interested in imaginary wealth – the wealth effect.

They look for some existing asset they can inflate the price of, like the national housing stock. They then pour money into this asset to create imaginary wealth, the bubble bursts and all the imaginary wealth disappears.

1929 – US (margin lending into US stocks)
1989 – Japan (real estate)
2008 – US (real estate bubble leveraged up with derivatives for global contagion)
2010 – Ireland (real estate)
2012 – Spain (real estate)
2015 – China (margin lending into Chinese stocks)

Central Banks have now got in on the act with QE and have gone for an "inflate all financial asset prices" strategy to generate a wealth effect (imaginary wealth). The bubble bursts and all the imaginary wealth disappears.

The wealth effect – it's like real wealth but it's only temporary.

The markets are high but there is a lot of imaginary wealth there after all that QE. Get ready for when the imaginary wealth starts to evaporate, its only temporary. Refer to the "fundamentals" to gauge the imaginary wealth in the markets; it's what "fundamentals" are for.

Canadian, Australian, Swedish and Norwegian housing markets are full of imaginary wealth. Get ready for when the imaginary wealth starts to evaporate, its only temporary. Refer to the "fundamentals" to gauge the imaginary wealth in these housing markets; it's what "fundamentals" are for.

Remember when we were panicking about the Chinese stock markets falling last year?

Have a look at it on any web-site with the scale set to max. you can see the ridiculous bubble as clear as day.

The Chinese stock markets were artificially inflated creating imaginary wealth in Chinese stocks, it was only temporary and it evaporated.

It's what happens.

Charles Fasola , December 18, 2016 at 11:46 am

Hoorah!

JTMcPhee , December 18, 2016 at 1:49 pm

Did the Chinese who used the "money" they got from inflation of stock prices to buy real estate and other tangible assets, with that "money," continue to have legal ownership of said assets after the market collapsed?

If they did, it's amazing how "wealth" gets created

Outis Philalithopoulos , December 18, 2016 at 9:22 am

FYI, Sound of the Suburbs, your comment contains a duplicated paragraph. This sort of thing tends to get flagged by the computer as spam.

johnnygl , December 18, 2016 at 8:04 am

Great headline, good article. It's hard to watch CNN and avoid yelling at it.

Arizona Slim , December 18, 2016 at 8:18 am

Welcome to the fellowship of TV yellers!

Marie Parham , December 18, 2016 at 8:38 am

The good news is that my son tells me only a few old people get their news from cable news shows.

linda amick , December 18, 2016 at 9:24 am

I gave up TV 6 years ago and I am old. TV is awful for so many reasons. One of them is the fact that it dictates lifestyle and values. I hate it for children.

hidflect , December 18, 2016 at 8:43 am

Harlow is just using what I call the 3-legged stool approach which is to blunt any argument by introducing rotating facets. You see it in arguments about the West Bank. If you mention Zionist, they rebut with Israeli. If you say Israeli, they introduce Jewish. Round and round you go until the point is lost.

Aside: I'd pay money to see Lambert yelling at a TV. The way he carves some people up on this site makes my toes curl. No matter how much they deserve it, I feel really sorry for them.

ambrit , December 18, 2016 at 8:45 am

Silver lining time. Without TV to emote to, my blood pressure is lower overall. This trade off is very beneficial to me.
Also germane is that a hundred years ago, the cheap labour was pouring into America from offshore. Now that population has stabilized, the labour is no longer as cheap, (it is still too cheap, but,) in America. Companies are generally about the "bottom line." Socially conscious corporate management is feted and lionized for a reason; it's rare.
Regulation and enforcement is the key. Buy local, shop local, govern local.

a different chris , December 18, 2016 at 7:44 pm

>Buy local, shop local, govern local.

Yup. Unfortunately that can't be applied to the environment, where everybody is downstream and downwind of everybody else. I don't believe in God, but if you do then you can claim that's why he made planets spherical. :)

Carolinian , December 18, 2016 at 8:49 am

While I do have a tv I don't get CNN. Thank gawd. In fact the indignity of paying for CNN with its inane announcers and endless commercial interruptions was a big motivator for "cutting the cord."

Carl , December 18, 2016 at 9:13 am

Count me as another who doesn't have tv. The Jimmy Dore Show and various online videos make up our viewing. In fact, it's difficult to read NC and other sites and then see the drivel that passes for tv news. But just keep it up, guys (MSM); you're one of the main reasons we have a huge alienated population of have-nots, and the unwashed masses are becoming restive.

Arizona Slim , December 18, 2016 at 12:23 pm

I second the Jimmy Dore nomination.

Aumua , December 18, 2016 at 2:15 pm

Jimmy Dore makes me want to yell at his stupid face. But I'm weird, so..

John Wright , December 18, 2016 at 9:40 am

The automation=job loss meme has been picked up in other places.

On the Saturday before the election, I visited the local Democratic headquarters in my Northern California town to get a Clinton-Kaine bumper sticker for my collection.

As they wanted $1, I wanted to get some entertainment value from the purchase, so I asked one of the elderly women "What has Hillary ever done?".

She responded with "Financial reform", apparently confusing HRC with Elizabeth Warren.

I mentioned that Hillary supported the TPP, until well into her campaign, and that trade bills had cost jobs.

Her immediate response was "More jobs have been lost to automation than trade bills".

I was surprised she had this explanation at the ready, perhaps it was given to HRC campaign workers as a talking point in case someone questioned HRC's commitment to stopping the TPP.

cnchal , December 18, 2016 at 9:51 am

There is a meme being told from the people at the top, to the peasants.

Part of the answer is that it is reassuring for elites to believe that job loss stems from complex "forces of production" that are far removed from human control. The inevitability of broad economic trends makes a pundit sound more sophisticated than the unschooled factory worker who thinks the company is moving to Mexico just because labor costs one-tenth as much.

The other day someone left a link to an article by an economist named Scott Sumner, where at the end of his article the same meme is put forth, with a twist.

Automation Destroyed 20 Million Manufacturing Jobs

So what's all this really about? Perhaps the "feminization" of America. When farm work was wiped out by automation, uneducated farmers generally found factory jobs in the city. Now factory workers are being asked to transition to service sector jobs that have been traditionally seen as "women's work". Even worse, the culture is pushing back against a lot of traditionally masculine character traits (especially on campuses). The alt-right is overtly anti-feminist, and Trump ran a consciously macho themed campaign. This all may seem to be about trade , but it's actually about automation and low-skilled men who feel emasculated .

Unschooled and low skilled are code words for stupid, and the meme is, men that make stuff are stupid.

Within his article is an interview of the CEO of United Technologies by Jim Cramer in Business Insider that he quotes as confirming his reasoning that automation is solely responsible for all the job loss and that offshoring and globalization caused zero manufacturing jobs to be lost in the US.

The result of keeping the plant in Indiana open is a $16 million investment to drive down the cost of production, so as to reduce the cost gap with operating in Mexico.

What does that mean? Automation. What does that mean? Fewer jobs, Hayes acknowledged.

From the transcript (emphasis added):

GREG HAYES: Right. Well, and again, if you think about what we talked about last week, we're going to make a $16 million investment in that factory in Indianapolis to automate to drive the cost down so that we can continue to be competitive. Now is it as cheap as moving to Mexico with lower cost of labor? No. But we will make that plant competitive just because we'll make the capital investments there.

JIM CRAMER: Right.

GREG HAYES: But what that ultimately means is there will be fewer jobs .

The general theme here is something we've been writing about a lot at Business Insider. Yes, low-skilled jobs are being lost to other countries, but they're also being lost to technology.

Everyone from liberal, Nobel-winning economist Paul Krugman to Republican Sen. Ben Sasse has noted that technological developments are a bigger threat to American workers than trade. Viktor Shvets, a strategist at Macquarie, has called it the "third industrial revolution."

Economists can't add. $16 million in investment, of real goods to improve productivity to the point where air conditioner production in Indianapolis can compete with Mexican production cost using existing technologies that are ripped off the shop floor and trucked to Mexico, itself creates jobs, and the improved more highly automated plant still retains jobs here, along with the technology.

That $16 million investment happened only because Donald Trump either threatened or promised something for United Technologies, but the number of jobs lost now are not solely due to moving all production to Mexico, which would have been what happened had he not used his power of persuasion to pry some money for investment out of the United Technologies bank account.

I wonder what Scott Sumner and the rest of the economists think of the women that work in manufacturing? Are they stupid too?

Propertius , December 18, 2016 at 4:28 pm

"Uneducated farmers", huh?

How far we have apparently fallen from Jefferson's day, when American farmers apparently were in the habit of reading Homer in Greek! ( http://www.let.rug.nl/usa/presidents/thomas-jefferson/letters-of-thomas-jefferson/jefl51.php ).

If only they were as edumacated as economists or talking heads on the teevee!

Dana , December 18, 2016 at 9:51 pm

I wonder when was the last time Sumner visited a farm. Or even the ag campus of his local university.

diptherio , December 18, 2016 at 10:00 am

In 1980 before the stock buyback era, the ratio of compensation between the top 100 CEOs and the average worker was 45 to 1. Today it is a whopping 844 to 1. (The German CEO gap is closer to 150 to 1.)

45 to 1, 150 to 1, 844 to 1 .it's all ridiculous. Just because you wear a suit and have your own office to work in does not somehow entitle you to make as much in a year (or a month or a week) as much as someone else does in a lifetime.

Paul Tioxon , December 18, 2016 at 10:08 am

Stock buybacks are a problem of such proportions, that it is a subject all by itself. To connect it to Germany's Industrial policy is a perfect example of ahistorical, faulty, unempirical analysis at its worst leading to the politics of simpletons. The stock buybacks reference here are recent, 21st Century. The de-industrialization of the US goes back to the immediate post WWII policies of corporate America as well as the US Government.

Germany's industrial policy has complex contributing factors which has a more important contributing factor in its military expenditures. This of course is directly related to Germany's history. It lost WWII and was an occupied territory, eventually split into an East And West Germany. For many years, even as a NATO member, West Germany spent almost ZERO on military expenditures. This comes with being an occupied nation that lost a war. Even today, the US Marine Corps alone has a budget that exceeds all of the re-united Germany's military budget. Germany, for obvious historical reasons has been deliberately suppressed as a military power, even in meager self defense, back when a Soviet doppleganger was on its border. Of course, when the US Government stations on your soil, almost 100,000 or more military personnel, armored tank divisions and US Air Force bases for decades, you can avoid the cost of national defense.

----------

"German Chancellor Angela Merkel said on Saturday that Europe's largest economy would significantly boost defense spending in the coming years to move towards the NATO target for member states to spend 2 percent of their economic output on defense.

But Merkel, addressing a conference of the youth wing of her conservatives, did not specify by how much defense spending would rise.

Merkel said U.S. President Barack Obama had told her it could no longer be the case that the U.S. spends 3.4 percent of its gross domestic product (GDP) on security while Germany – its close NATO ally – only spends 1.2 percent of GDP on that.

"To get from 1.2 percent to 2 percent, we need to increase it by a huge amount," Merkel said.

In 2016 Germany's budget for defense spending stands at 34.3 billion euros so it would need to be increased by more than 20 billion euros to reach the 2 percent target."

http://www.reuters.com/article/us-germany-merkel-defence-idUSKBN12F0JU?il=0

-----------------

And for decades, avoid the burden of military expenses it did, to the direct contribution to its industrial manufacturing center. Chalmers Johnson reviews this critical aspect of America's Hegemony since WWII in the course of several books. He was a CIA analyst as well academic economist expert on Japan and China. The US economy suffered disinvestment in its tool and die and metal working sector to the tune of over $7Trillion while building up the Pentagon into the Global Military Hegemon that it is today. The platform of the manufacturing center dependent on tool and die to make the parts of the machinery of factories and weapons of wars was in decline and overtaken by the Japanese and the Germans. We outspent the Soviet Union and now the rest of the world by staggering margins. But, to make and maintain the machinery of war, the Great American Killing Machine, global bases and global industrial skills and equipment replaced the domestic. The US Naval bases from Boston, Brooklyn, Philadelphia-founding locale of the US Navy and US Marine Corps, Baltimore, and on and on, all gone. Replacing the base closures, Guam, Okinawa, Rota, Spain, Naples, Italy Ramstein, Germany, and on and on. And Germany and Japan, played their roles to keep up American military might in exchange for our nuclear umbrella and military protection. This to the detriment of jobs in the US.

--------------------------
"After World War II, the US reduced defense spending to 7.2 percent of GDP by 1948, boosting it to nearly 15 percent during the Korean War. During the height of the Cold War with the Soviet Union US defense spending fluctuated at around 10 percent of GDP.
At the height of the Vietnam War in 1968 defense spending was 10 percent of GDP. But then it began a rapid decline to 6 percent of GDP in the mid 1970s and hit a low of 5.5 percent of GDP in 1979 before beginning a large increase to 6.8 percent in 1986.
Starting in 1986 defense spending resumed its decline, bottoming out at 3.5 percent of GDP in 2001. After 2001, the US increased defense spending to a peak of 5.7 percent of GDP in 2010. It is expected to reduce to 4.5 percent of GDP in 2015 and 3.8 percent by 2020."

http://www.usgovernmentspending.com/defense_spending

--------------------------–

For 20 years from the end of WWII, military expenses soaked up about 10% of the annual GNP. Those amounts dwarf stock buy backs. As you can see from the excerpt above, the military bill to the US is enormous and as a global military, much of this money is spent outside of the US, employing people outside of the US, many who are not US citizens. As bad and as large as financialized capitalism is, the jobs are lost more to wasteful military "Keynesianism". The 10s of $Trillions$ for most of the 2nd half of the 20th Century explains more than stock buybacks, which of course are more than statistically significant, just not in the same league as Imperial America.

Automation, deindustrialization and run away factories together formed the basis for weakening organized labor and reducing the amount of good paying working class jobs with their good benefits and security. Job security comes in the form of unemployment benefits due to the boom/bust business cycle that has factories operating on 2 or more shifts and then cut back due to saturation and or slack demand. Mexicans thrown out of work are easier to deal with than unemployed Americans, not only due to costs but also political fallout. Unemployed Americans can still vote congressmen out of office every 24 months if they are that unhappy with the economy. You don't need a job to vote. But alas, that is also another large scale problem, all by itself that deserves focused analysis and comments.

Ted , December 18, 2016 at 11:44 am

Soooo it's back to blame the gub'ment and give Capital a pass, eh? I see what you did there nice work. I particularly enjoyed your fantasy that unhappy workers can vote their congressperson out every two years ' cause that's empirically true of the US political system.

TG , December 18, 2016 at 10:39 am

Triple kudos! Well said!

All this stuff about 'automation' killing jobs is just a distraction. It's not happening, not overall. That's why productivity figures are going down – they should be skyrocketing if automation was to blame. The number of janitors and maids that have lost their jobs to a Roomba robotic vacuum cleaner is zero. The number of truck drivers that have lost their jobs to robotic trucks is zero. Shrimp are still flown to Malaysia, peeled by hand using slave labor, and then flown back, because it's cheaper than developing and building and maintaining automated shrimp peeling machines. And so on.

Why are the elites still so set on moving jobs to low wage countries? Why are they still so set on an open-borders immigration policy? Because they know what they aren't telling us: right now general robotics is still in its infancy, it's all about cheap labor.

So many otherwise rational and skeptical people have been distracted by the false 'robots are now making human workers obsolete' meme. Congrats again on such a clearly reasoned piece.

Brad , December 18, 2016 at 11:58 am

The difference between German and US industrial manufacturing is social, not technological. It only demonstrates that in the face of the displacement of labor with machines, social measures are required to address the fact that a smaller percentage of total available labor is required to produce the necessities of life. One way Germany has addressed this is by targeting high value-added manufactures. In addition, historically manufacturing exports have always played a more important part for Germany than for the US, never a big manufacturing exporter unlike (in the 19th C) Britain, Germany, Japan and now China. US manufacturing was always primarily oriented towards the home market, beginning with the Midwestern farmers and their McCormick reapers and Montgomery Wards catalogs in the 19th C. The US has always been a primary products (oil, agri, timber, minerals) exporter. Plus weapons. Kinda like Russia. Its two biggest trading partners are its continental neighbors, Mexico and Canada.

The debate over whether job loss is due to automation or offshoring tends to be short on facts. One almost never see a statistical breakdown that might tell us how much job losses are due to one factor or another. That includes John Smith's "Imperialism in the Twenty-First Century: Globalization, Super-exploitation and Capitalism's Final Crisis" (2016), quite big on off-shoring, but never giving a concrete measure of the relative importance of one or the other.

However I put up a BLS-based chart that shows the decline in manufacturing jobs in the US in a pretty diagonal straight line down beginning well before off-shoring became a thing, well before NAFTA. Basically the manufacturing workforce peaked in the 50's. So there is always some pressure through competition to displace labor with automation. Offshoring is merely a dependent alternative to automation – reduce the labor bill with cheaper labor, not displacement. It's not "one or the other".

Technological determinism aside, a fetish is made of automation in the media because they know there is no answer that doesn't conclude with the elimination of capitalism, and that answer is out of bounds. Hence it is deployed literally as a deus ex machina that ends social debate. But clearly the question of a living income has become separated from that of productive labor.

Paid Minion , December 18, 2016 at 12:57 pm

One might say that manufacturing employment started declining, when we allowed non-reciprocal "free-trade"; access to our markets, in order to enable some other geopolitical goal.

Going something like : "Sure, go ahead and let the Japanese and Germans export their cars to our market. It will help their economies, and we'll never notice the difference. Besides, even if they didn't have various ways of restricting our exports, the size of their markets aren't worth exporting to "

Then in the 70-80s, it was "Sure, lets help all of our Allies develop an aerospace industry, and build their own F-16s. "Offsets"? No problem. No sacrifice by US workers is too much in order to fight the "Red Menace", and promote "Free Markets" "Democracy", and improve the standard of living over there.."

Johnnu lunch Box , December 18, 2016 at 1:10 pm

Millions of jobs go to Mexico and millions of Mexicans come to usa and send their millions in wages home to support their families. Meanwhile Politicians continue with Rectal Crainial Inversion while drawing huge salaries. When will the revolution begin?

Sluggeaux , December 18, 2016 at 1:16 pm

Class-hatred has been simmering in the U.S. throughout its entire history, and it manifests itself today in the anti-Americanism of our greedy elites, who would prefer to profit from the exploitation of foreign labor over living in a just and equitable society. Germany and Japan benefitted from losing the War, from Cold War trade policies that allowed them to rebuild on exports to the U.S. (subsidized in many cases, such as by container ships returning from Vietnam via Yokohama), and the creation of a manufacturing culture that continued to value workers even as their wages rose. Americans in the credentialed classes became obsessed with rock-star lifestyles, epitomized by Slick Willie bragging that his first date with Hill in 1971 involved crossing a union picket line to scab at the Yale Art Museum in order to gaze at a bunch of vacuous Rothkos. But watch out - class-hatred is a two-way street

Chicken and egg, Lambert. Stock manipulation increases the power of the 1%. I also yell at the TV "news" - probably because I didn't have one either between the critical developmental ages of 18 and 23 - so "news" broadcasts are not allowed in my house.

TheMog , December 18, 2016 at 1:48 pm

It's not all roses and unicorns either in Germany. There is outsourcing going on as well – for example both BMW and VW manufacture cars for the US market in the Southeastern US (IIRC both in Spartanburg, SC).

Yes, Germany does have a better education system for apprentices etc plus it is still socially acceptable to become an apprentice in a trade and not go to college. BMW is trying to establish something similar around Spartanburg, but apparently with mixed success. Dan Rather did a segment on this effort a few years back and interviewed a bunch of parents who said something along the lines of "nice idea, but it's for other people's kids – ours have to go to college".

Another thing to keep in mind is that large German manufacturing companies still tend to have pretty strong union representation, which of course is sorely missing in the US.

Mitch Ritter , December 18, 2016 at 2:16 pm

Two words missing from Union Reps and Wage Slaves ourselves as we flail away while falling backwards, "SOCIAL CONTRACT." Our backwards free fall from stable middle class growth and access and attainment to higher education has been precipitated and pushed by a broadcasting system and cyber platforms that have excluded the VOICE OF WORKERS ever since the first newspaper carried a BUSINESS section with no LABOR section.

Through the various historical attempts to insulate some small sliver of broadcast spectrum from advertiser pressures and market forces. Those various historical attempts now the strictest taboo on content, even stricter than sexual predation and violent aberration which comprise much of the broadcast content. Yet when or where can we find a broadcaster in the U.S. addressing issues of structural media reform to insulate some national resources from the POLITICAL E-CON-o-my that grants them to the the highest bidder.

As media scholars Robert McChesney and John Nichols have pointed out in a number of their book-length studies on this taboo U.S. history of mass media: One of the first national radio networks was designated for LABOR, there were multiple EDUCATIONAL networks and this has nothing to do with IDENTITY LABELS used to divide U.S. like Conservative or Liberal, however these shifty terms are defined. A well-rounded human has both aspects and more within them depending on circumstance, context and situation being addressed.

Another designated non-commercial broadcaster was the CATHOLIC CHURCH whose leaders were actively concerned with the use of public airwaves by Advertising Agencies using sales tactics to habituate dangerous past-times (like alcohol and tobacco) and were driven by seasonal fashions rather than values and verities such as the bible and catechism's preponderant calls to address the needs of society's most disadvantaged. Or to beat weapons into plowshares and sit under a fig tree and reason together (Isaiah) rather than to use fear to keep subsidizing the worlds largest distributor of weapons and its stealthy and steely profiteers.

Sad day when the few token representatives of U.S. Wage Slaves cannot even be counted on to voice a DEMAND much less to insert the concept of SOCIAL CONTRACT that extended humane and practical DEMAND-DRIVEN\SUPPLY LINE insights into our materialistic society's wealthiest distributors of hate and divisiveness such as Henry Ford, who while stoking anti-Semitism and disparaging independently organized labor for his MASS PRODUCTION facilities, eventually realized that if his impoverished work-force was ever to constitute the potential internal markets that became the Post WW II envy of the world, those workers would have to be paid more than slave wages, be granted access to long-term capital to purchase big-ticket items and our growing internal markets within the lower 48 states would require careful regulation and controls like tariffs and capital-flight restrictions that would protect our enviable internal markets. Nowadays whenever PROTECTIONISM is demonized by both Fair & Balanced Journalists and their Golden Rolodex of E-CON and Bid-Net experts there is nobody to note how our own late-developing working middle classes grew from the Age of the Robber Barons in which the U.S. was as feudal a society as Europe's with simple substitution of the Captains of Industry for the monopolistic and conservative royal Anglo and Euro monarchs whose crown-chartered legal anti-trust fictions dba EAST INDIA TRADING COMPANY or HUDSON BAY TRADING CORPORATION.

Our founders rebelled against these Conservative Royal Feudal Monarchs and their Royally Chartered monopolistic Corporate Legal Fictions by dumping such product into every available cartel-controlled mercantile harbor. PROTECTIONISM was what allowed our states to form that most enviable of internal national markets and prevented our SOCIALLY CONTRACTED WORK FORCE from being forced to compete against cheaper off-shore or south-of-the-border slave labor that formed the same COMPETITIVE ADVANTAGE now taken for granted when a subsidized start-up like NIKE decides to pursue a business model that relentlessly exploits North American running shoe and sports wear market needs by cheaply manufacturing such products off-shore via contracting agents exploiting captive Indonesian (substitute other Latin American, African or Asian ENTERPRISE aka FREE TRADE ZONES) slave laborers.

If we aren't worth hiring at a sustainable SOCIALLY CONTRACTED WAGE aimed at developing our national resources, we should reject buying from such nationally suicidal business models and corporate LLC fictions even if they can pay-2-play legislation that removes the PROTECTIONS. We vow to never sacrifice NATIONAL SECURITY, so why have we allowed the PRIVATIZATION of our NATIONAL SECURITY STATE by corporate legal fictions? A revealing if not all-encompassing historical answer to that question is another corporate-captured and regulatory-captured Mass Media Taboo discussed one time to my knowledge on the PEOPLE'S AIRWAVES. Search Bill Moyers panel discussing the LEWIS POWELL MEMO TO THE NATIONAL CHAMBER OF COMMERCE and the Nixon appointment of LEWIS POWELL to the Supreme Court, despite his total lack of judicial experience.

{Creative Commons Copyright}
Mitch Ritter Paradigm Shifters
Lay-Low Studios, Ore-Wa
Media Discussion List

herkie1 , December 18, 2016 at 3:00 pm

FELTNER: These companies are leaving to exploit cheap labor. That's plain and simple. If he can change those trade policies to keep those jobs here in America, that's what we need. We need American jobs, not just union jobs.

And thus we circle back to finding a way to keep manufacturing jobs in the USA. The comment by Feltner is correct, but the solution of keep jobs in the USA using more expensive labor simply means more expensive products. That is fine if you are in the top 10% and can pay anything for your purchases, but I am on a fixed income and cannot afford to pay more for anything without a 1:1 drop in my living standards.

The real macroeconomic problem is all, I repeat – ALL – new income after inflation generated by the macro economy since Bush II took office has gone to the top 10% of households by wealth. Why does NOBODY else seem to understand that you cannot run an economy without money? And the Main Street economy is strapped with 10's of millions having fallen out of the middle class even as their paper assets like home equity were stolen by the financialization of the USA and the stockholders that own the Wall Street economy.

The data coming out of the government/fed is a work of total fiction, inflation has been galloping (at least here in Oregon) at double digits since Jan 2014, rents alone are up 75% since then. Food at least 40%, both auto and healthcare insurance at least 40%, just to name three items, even a sandwich at a fast food join is nearly 100% higher than start of 2014 here. Del Taco raised it's menu prices in July by over 100%. Companies do not do that in disinflationary eras such as we are assured have existed since 2010. My veteran's disability/SS had it's first COLA increase in a while for 2017, social security disability went up $3, that is not a typo, my rent has gone up from 725 in December 2013 to $1,250 in Jan 2017 while my benefit has risen for next year by THREE dollars.

I considered myself middle class, just barely but above working class/poor, as recently as 2014. Now I am leaving for Australia on a one way ticket in 3 weeks, if I had not been invited there by a friend I would have had to give notice at this place anyway in order to live in my vehicle. Inflation is so wildly out of control that anyone taking home less than 40k a year here now needs a roommate. Is this metro Portland? No, it is far southern semi rural Jackson county hundreds of miles from the nearest major hub.

So any analysis of economic conditions in the USA have got to start with recognition that the cost of living has risen OVERALL by as much as 40-50% just in the last very few years.

WHY DO YOU THINK POPULISM RAISED IT'S VIRULENT HEAD THIS ELECTION CYCLE?

People are angry, they are broke, living paycheck to paycheck, using payday loans to feed their kids, and the entire media and government refuse to recognize price increases because those increases do not fit the Feds or government's economic models that allowed for negative real interest rates and the historic borrowing by the congress. Inflation is as bad as it ever was in the 1970's but we are told there is no inflation and so if we are not making ends meet it simply has to be a personal failing, bad habits, or profligate spending when I know for my part I have cut back on absolutely every thing I can including heat. It is not a personal failing, it is being lied to by the powers that be.

Seriously, until the contributors at Naked Capitalism finally recognize the house on fire inflation for every item you must purchase (except gasoline and flat screens) there really is nothing here worth reading.

hunkerdown , December 18, 2016 at 8:07 pm

Drive-by herkie1, do you actually read sites befpre pasting diatribes against them, or are you a bourgeois liberal?

Altandmain , December 18, 2016 at 6:07 pm

The answer is that the very rich are waging class warfare and are looking for anything to absolve them of responsibility.

If automation were responsible for unemployment, then productivity figures would be soaring. Dean Baker notes that productivity has been rising at half the rate over the past decade at just 1.5% per year, compared to 3% between 1947 and 1973.
http://cepr.net/publications/op-eds-columns/the-job-killing-robot-myth

People need a restitution for the outright looting of society from the rich. That's about it.

Spencer , December 18, 2016 at 6:42 pm

Kudos. Uncommon, common sense.

Pete Prunskunas , December 18, 2016 at 9:13 pm

"Ever Hear of Germany?"

You missed some. German companies, but also those of other European countries, generally have a seat on the board for unions. The adversarial model of management versus unions is not so common.

China has stolen a great deal of technology from Germany because it has (had?) the most advanced industrial technology in the world. Read the below articles from Der Spiegel and you will understand. Essentially, Germany is what the U.S. was in the 1980s before the various presidents, both left and right, starting with Nixon, sold us down the river.
– "Product Piracy Goes High-Tech: Nabbing Know-How in China"
– "Harmony and Ambition: China's Cut-Throat Railway Revolution"
– "Beijing's High-Tech Ambitions: The Dangers of Germany's Dependence on China"

And the following is from CNN/Money, "How to save U.S. manufacturing jobs": "High wages can't be the culprit, because wages in U.S. manufacturing are not especially high by international standards. As of 2009, 12 European countries plus Australia had higher average manufacturing wages than the United States. Norway topped the list with an average manufacturing wage of $53.89 per hour, 60 percent above the U.S. average of $33.53 Moreover, the United States lost manufacturing jobs at a faster rate since 2000 than several countries that paid manufacturing workers even more. Among the 10 countries for which the Bureau of Labor Statistics tracks manufacturing employment, Australia, France, Germany, Italy, the Netherlands and Sweden both had higher manufacturing wages and lost smaller shares of their manufacturing employment than the United States between 2000 and 2010."

Not to mention Germany's apprentice system, which works really well.

Takara Kane , December 18, 2016 at 9:49 pm

What next in the technology field? Read it and weep or if a Technology CEO – get excited

https://futurism.com/80-of-it-jobs-can-be-replaced-by-automation-and-its-exciting/

[Dec 17, 2016] Paul Krugman Useful Idiots Galore

Notable quotes:
"... Shorter Paul Krugman: nobody acted more irresponsibly in the last election than the New York Times. ..."
"... Looks like Putin recruited the NYT, the FBI and the DNC. ..."
"... Dr. Krugman is feeding this "shoot first, ask questions later" mentality. He comes across as increasingly shrill and even unhinged - it's a slide he's been taking for years IMO, which is a big shame. ..."
"... It is downright irresponsible and dangerous for a major public intellectual with so little information to cast the shadow of legitimacy on a president ("And it means not acting as if this was a normal election whose result gives the winner any kind of a mandate, or indeed any legitimacy beyond the bare legal requirements.") This kind of behavior is EXACTLY what TRUMP and other authoritarians exhibit - using pieces of information to discredit institutions and individuals. Since foreign governments have and will continue to try to influence U.S. policy through increasingly sophisticated means, this opens the door for anyone to declare our elections and policies as illegitimate in the future. ..."
"... Any influence Russian hacking had was entirely a consequence of U.S. media obsession with celebrity, gotcha and horse race trivia and two-party red state/blue state tribalism. ..."
"... Without the preceding, neither Trump nor Clinton would have been contenders in the first place. Putin didn't invent super delegates, Citizens United, Fox News, talk radio, Goldman-Sachs, etc. etc. etc. If Putin exploited vulnerabilities, it is because preserving those vulnerabilities was more important to the elites than fostering a democratic political culture. ..."
"... It's not a "coup". It's an election result that didn't go the way a lot of people want. That's it. It's probably not optimal, but I'm pretty sure that democracy isn't supposed to produce optimal results. ..."
"... All this talk about "coups" and "illegitimacy" is nuts, and -- true to Dem practice -- incredibly short-sighted. For many, voting for Trump was an available way to say to those people, "We don't believe you any more. At all." Seen in that light, it is a profoundly democratic (small 'd') response to elites that have most consistently served only themselves. ..."
"... Post Truth is Pre-Fascism. The party that thinks your loyalty is suspect unless you wear a flag pin fuels itself on Post Truth. Isnt't this absurdity the gist of Obama's Russia comments today!?! ..."
"... Unless the Russians or someone else hacked the ballot box machines, it is our own damn fault. ..."
"... The ship of neo-liberal trade sailed in the mid-2000's. That you don't get that is sad. You can only milk that so far the cow had been milked. ..."
"... The people of the United States did not have much to choose between: Either a servant of the Plutocrats or a member of the Plutocratic class. The Dems brought this on us when they refused to play fair with Bernie. (Hillary would almost certainly have won the nomination anyway.) ..."
"... The Repubs brought this on, by refusing to govern. The media brought this on: I seem to remember Hillary's misfeasances, once nominated, festering in the media, while Trump's were mentioned, and then disappeared. (Correct me if I'm wrong in this.) Also, the media downplayed Bernie until he had no real chance. ..."
"... The government brought this on, by failing to pursue justice against the bankers, and failing to represent the people, especially the majority who have been screwed by trade and the plutocratic elite and their apologists. ..."
"... The educational system brought this on, by failing to educate the people to critical thought. For instance: 1) The wealthy run the country. 2) The wealthy have been doing very well. 3) Everybody else has not. It seems most people cannot draw the obvious conclusion. ..."
"... Krugman is himself one of those most useful idiots. I do not recall his clarion call to Democrats last spring that "FBI investigation" and "party Presidential nominee" was bound to be an ugly combination. Some did; right here as I recall. Or his part in the official "don't vote for third party" week in the Clinton media machine....thanks, hundreds of thousands of Trump votes got the message. ..."
"... It's too rich to complain about Russia and Wikileaks as if those elements in anyway justified Clinton becoming President. Leaks mess with our democracy? Then for darn sure do not vote for a former Sec. of State willing to use a home server for her official business. Russia is menacing? Just who has been managing US-Russia relations the past 8 years? I voted for her anyway, but the heck if I think some tragic fate has befell the nation here. Republicans picked a better candidate to win this thing than we Democrats did. ..."
"... The truth of the matter is that Clinton was a very weak candidate with nothing to offer but narcissism ("I'm with her"). It's notable that Clinton has still not accepted responsibility for her campaign, preferring to throw the blame for the loss anywhere but herself. Sociopathy much? ..."
Dec 17, 2016 | economistsview.typepad.com
Monetas Tuas Requiro -> kthomas... , December 16, 2016 at 05:10 PM
The secret story of how American advisers helped Yeltsin win

http://content.time.com/time/covers/0,16641,19960715,00.html

JohnH -> Dan Kervick... , December 16, 2016 at 11:46 AM
PK seems to be a bitter old man...
anne -> sanjait... , December 16, 2016 at 03:08 PM
Nothing to see here, say the useful idiots.

[ I find it terrifying, simply terrifying, to refer to people as "useful idiots" after all the personal destruction that has followed when the expression was specifically used in the past.

To me, using such an expression is an honored economist intent on becoming Joseph McCarthy. ]

anne -> anne... , December 16, 2016 at 03:15 PM
To demean a person as though the person were a communist or a fool of communists or the like, with all the personal harm that has historically brought in this country, is cruel beyond my understanding or imagining.

"Useful Idiots Galore," terrifying.

Necesito Dinero Tuyo -> anne... , December 16, 2016 at 05:25 PM
Dale : , December 16, 2016 at 10:51 AM
trouble is that his mind reflects an accurate perception of our common reality.
Procopius -> Dale... , December 17, 2016 at 02:37 AM
Well, not really. For example he referred to "the close relationship between Wikileaks and Russian intelligence." But Wikileaks is a channel. They don't seek out material. They rely on people to bring material to them. They supposedly make an effort to verify that the material is not a forgery, but aside from that what they release is what people bring to them. Incidentally, like so many people you seem to not care whether the material is accurate or not -- Podesta and the DNC have not claimed that any of the emails are different from what they sent.
Tom aka Rusty : , December 16, 2016 at 11:06 AM
PK's head explodes!

One thought....

When politicians and business executives and economists cuddle up to the totalitarian Chinese it is viewed as an act of enlightment and progress.

When someone cuddles up to the authoritarian thug Putin it is an act of evil.

Seems a bit of a double standard.

We are going to have to do "business" with both the Chinese and the Russians, whoever is president.

Ben Groves -> Tom aka Rusty... , December 16, 2016 at 11:07 AM
Your head should explode considering Trump's deal with the "establishment" in July was brokered by foreign agents.
ilsm -> Ben Groves... , December 16, 2016 at 04:11 PM
curiouser and curiouser! while Obama and administration arm jihadis and call its support for jihadis funded by al Qaeda a side in a civil war.

the looking glass you all went through.

Trump has more convictions than any democrat

... ... ...

Tom aka Rusty -> kthomas... , December 16, 2016 at 01:36 PM
In a theatre of the absurd sort of way.
dilbert dogbert -> Tom aka Rusty... , December 16, 2016 at 12:11 PM
One thought:
Only Nixon can go to China.
anne -> sanjait... , December 16, 2016 at 03:22 PM
Putin is a murderous thug...

http://www.nytimes.com/2014/09/23/opinion/david-brooks-snap-out-of-it.html

September 22, 2014

Snap Out of It
By David Brooks

President Vladimir Putin of Russia, a lone thug sitting atop a failing regime....

http://www.nytimes.com/2014/10/22/opinion/thomas-friedman-putin-and-the-pope.html

October 21, 2014

Putin and the Pope
By Thomas L. Friedman

One keeps surprising us with his capacity for empathy, the other by how much he has become a first-class jerk and thug....

http://www.nytimes.com/2014/12/21/opinion/sunday/thomas-l-friedman-whos-playing-marbles-now.html

December 20, 2014

Who's Playing Marbles Now?
By Thomas L. Friedman

Let us not mince words: Vladimir Putin is a delusional thug....

http://www.nytimes.com/2014/12/22/opinion/paul-krugman-putin-neocons-and-the-great-illusion.html

December 21, 2014

Conquest Is for Losers: Putin, Neocons and the Great Illusion
By Paul Krugman

Remember, he's an ex-K.G.B. man - which is to say, he spent his formative years as a professional thug....

http://www.nytimes.com/2015/01/28/opinion/thomas-friedman-czar-putins-next-moves.html

January 27, 2015

Czar Putin's Next Moves
By Thomas L. Friedman

ZURICH - If Putin the Thug gets away with crushing Ukraine's new democratic experiment and unilaterally redrawing the borders of Europe, every pro-Western country around Russia will be in danger....

anne -> anne... , December 16, 2016 at 03:23 PM
Putin is a murderous thug...

http://www.nytimes.com/2015/09/16/world/middleeast/white-house-split-on-opening-talks-with-putin.html

September 15, 2015

Obama Weighing Talks With Putin on Syrian Crisis
By PETER BAKER and ANDREW E. KRAMER

WASHINGTON - Mr. Obama views Mr. Putin as a thug, according to advisers and analysts....

http://www.nytimes.com/2015/09/21/opinion/mr-putins-mixed-messages-on-syria.html

September 20, 2015

Mr. Putin's Mixed Messages on Syria

Mr. Obama considers Mr. Putin a thug, his advisers say....

Gibbon1 -> anne... , December 16, 2016 at 07:15 PM
> By David Brooks
> By Thomas L. Friedman
> By Paul Krugman
> By Peter Baker and Andrew E. Kramer

I feel these authors have intentionally attempted to mislead in the past. They also studiously ignore the United States thuggish foreign policy.

Sandwichman : , December 16, 2016 at 11:06 AM
"...not acting as if this was a normal election..." The problem is that it WAS a "normal" U.S. election.
Ben Groves -> Sandwichman ... , December 16, 2016 at 11:09 AM
Yup, like the other elections, the bases stayed solvent and current events factored into the turnout and voting patterns which spurred the independent vote.
Gibbon1 -> Ben Groves... , December 16, 2016 at 11:57 AM
When people were claiming Clinton was going to win big, I thought no Republican and Democratic voters are going to pull the lever like a trained monkey as usual. Only difference in this election was Hillary's huge negatives due entirely by her and Bill Clinton's support for moving manufacturing jobs to Mexico and China in the 90s.
dilbert dogbert -> Sandwichman ... , December 16, 2016 at 12:13 PM
I would have thought in a "normal" murika and election, the drumpf would have gotten at most 10 million votes.
Sandwichman -> dilbert dogbert... , December 16, 2016 at 01:54 PM
The trouble with normal is it always gets worse.
Fred C. Dobbs : , December 16, 2016 at 11:08 AM
To Understand Trump, Learn Russian http://nyti.ms/2hLcrB1
NYT - Andrew Rosenthal - December 15

The Russian language has two words for truth - a linguistic quirk that seems relevant to our current political climate, especially because of all the disturbing ties between the newly elected president and the Kremlin.

The word for truth in Russian that most Americans know is "pravda" - the truth that seems evident on the surface. It's subjective and infinitely malleable, which is why the Soviet Communists called their party newspaper "Pravda." Despots, autocrats and other cynical politicians are adept at manipulating pravda to their own ends.

But the real truth, the underlying, cosmic, unshakable truth of things is called "istina" in Russian. You can fiddle with the pravda all you want, but you can't change the istina.

For the Trump team, the pravda of the 2016 election is that not all Trump voters are explicitly racist. But the istina of the 2016 campaign is that Trump's base was heavily dependent on racists and xenophobes, Trump basked in and stoked their anger and hatred, and all those who voted for him cast a ballot for a man they knew to be a racist, sexist xenophobe. That was an act of racism.

Trump's team took to Twitter with lightning speed recently to sneer at the conclusion by all 17 intelligence agencies that the Kremlin hacked Democratic Party emails for the specific purpose of helping Trump and hurting Hillary Clinton. Trump said the intelligence agencies got it wrong about Iraq, and that someone else could have been responsible for the hack and that the Democrats were just finding another excuse for losing.

The istina of this mess is that powerful evidence suggests that the Russians set out to interfere in American politics, and that Trump, with his rejection of Western European alliances and embrace of Russia's invasion of Ukraine, was their chosen candidate.

The pravda of Trump's selection of Rex Tillerson, head of Exxon Mobil, as secretary of state is that by choosing an oil baron who has made billions for his company by collaborating with Russia, Trump will make American foreign policy beholden to American corporate interests.

That's bad enough, but the istina is far worse. For one thing, American foreign policy has been in thrall to American corporate interests since, well, since there were American corporations. Just look at the mess this country created in Latin America, the Caribbean, Southeast Asia and the Middle East to serve American companies.

Yes, Tillerson has ignored American interests repeatedly, including in Russia and Iraq, and has been trying to remove sanctions imposed after Russia's seizure of Crimea because they interfered with one of his many business deals. But take him out of the equation in the Trump cabinet and nothing changes. Trump has made it plain, with every action he takes, that he is going to put every facet of policy, domestic and foreign, at the service of corporate America. The istina here is that Tillerson is just a symptom of a much bigger problem.

The pravda is that Trump was right in saying that the intelligence agencies got it wrong about Saddam Hussein and weapons of mass destruction.

But the istina is that Trump's contempt for the intelligence services is profound and dangerous. He's not getting daily intelligence briefings anymore, apparently because they are just too dull to hold his attention.

And now we know that Condoleezza Rice was instrumental in bringing Tillerson to Trump's attention. As national security adviser and then secretary of state for president George W. Bush, Rice was not just wrong about Iraq, she helped fabricate the story that Hussein had nuclear weapons.

Trump and Tillerson clearly think they are a match for the wily and infinitely dangerous Putin, but as they move foward with their plan to collaborate with Russia instead of opposing its imperialist tendencies, they might keep in mind another Russian saying, this one from Lenin.

"There are no morals in politics; there is only expedience," he wrote. "A scoundrel may be of use to us just because he is a scoundrel."

Putin has that philosophy hard-wired into his political soul. When it comes to using scoundrels to get what he wants, he is a professional, and Trump is only an amateur. That is the istina of the matter.

Fred C. Dobbs -> Fred C. Dobbs... , December 16, 2016 at 11:25 AM
If nothing else, Russia - with a notably un-free press - has shrewdly used our own 'free press' against US.

RUSSIA'S UNFREE PRESS

The Boston Globe - Marshall Goldman - January 29, 2001

AS THE BUSH ADMINISTRATION DEBATES ITS POLICY TOWARD RUSSIA, FREEDOM OF THE PRESS SHOULD BE ONE OF ITS MAJOR CONCERNS. UNDER PRESIDENT VLADIMIR PUTIN THE PRESS IS FREE ONLY AS LONG AS IT DOES NOT CRITICIZE PUTIN OR HIS POLICIES. WHEN NTV, THE TELEVISION NETWORK OF THE MEDIA GIANT MEDIA MOST, REFUSED TO PULL ITS PUNCHES, MEDIA MOST'S OWNER, VLADIMIR GUSINSKY, FOUND HIMSELF IN JAIL, AND GAZPROM, A COMPANY DOMINATED BY THE STATE, BEGAN TO CALL IN LOANS TO MEDIA MOST. Unfortunately, Putin's actions are applauded by more than 70 percent of the Russian people. They crave a strong and forceful leader; his KGB past and conditioned KGB responses are just what they seem to want after what many regard as the social, political, and economic chaos of the last decade.

But what to the Russians is law and order (the "dictatorship of the law," as Putin has so accurately put it) looks more and more like an old Soviet clampdown to many Western observers.

There is no complaint about Putin's promises. He tells everyone he wants freedom of the press. But in the context of his KGB heritage, his notion of freedom of the press is something very different. In an interview with the Toronto Globe and Mail, he said that that press freedom excludes the "hooliganism" or "uncivilized" reporting he has to deal with in Moscow. By that he means criticism, especially of his conduct of the war in Chechnya, his belated response to the sinking of the Kursk, and the heavy-handed way in which he has pushed aside candidates for governor in regional elections if they are not to Putin's liking.

He does not take well to criticism. When asked by the relatives of those lost in the Kursk why he seemed so unresponsive, Putin tried to shift the blame for the disaster onto the media barons, or at least those who had criticized him. They were the ones, he insisted, who had pressed for reduced funding for the Navy while they were building villas in Spain and France. As for their criticism of his behavior, They lie! They lie! They lie!

Our Western press has provided good coverage of the dogged way Putin and his aides have tried to muscle Gusinsky out of the Media Most press conglomerate he created. But those on the Putin enemies list now include even Boris Berezovsky, originally one of Putin's most enthusiastic promoters who after the sinking of the Kursk also became a critic and thus an opponent.

Gusinsky would have a hard time winning a merit badge for trustworthiness (Berezovsky shouldn't even apply), but in the late Yeltsin and Putin years, Gusinsky has earned enormous credit for his consistently objective news coverage, including a spotlight on malfeasance at the very top. More than that, he has supported his programmers when they have subjected Yeltsin and now Putin to bitter satire on Kukly, his Sunday evening prime-time puppet show.

What we hear less of, though, is what is happening to individual reporters, especially those engaged in investigative work. Almost monthly now there are cases of violence and intimidation. Among those brutalized since Putin assumed power are a reporter for Radio Liberty who dared to write negative reports about the Russian Army's role in Chechnia and four reporters for Novaya Gazeta. Two of them were investigating misdeeds by the FSB (today's equivalent of the KGB), including the possibility that it rather than Chechins had blown up a series of apartment buildings. Another was pursuing reports of money-laundering by Yeltsin family members and senior staff in Switzerland. Although these journalists were very much in the public eye, they were all physically assaulted.

Those working for provincial papers labor under even more pressure with less visibility. There are numerous instances where regional bosses such as the governor of Vladivostok operate as little dictators, and as a growing number of journalists have discovered, challenges are met with threats, physical intimidation, and, if need be, murder.

True, freedom of the press in Russia is still less than 15 years old, and not all the country's journalists or their bosses have always used that freedom responsibly. During the 1996 election campaign, for example, the media owners, including Gusinsky conspired to denigrate or ignore every viable candidate other than Yeltsin. But attempts to muffle if not silence criticism have multiplied since Putin and his fellow KGB veterans have come to power. Criticism from any source, be it an individual journalist or a corporate entity, invites retaliation.

When Media Most persisted in its criticism, Putin sat by approvingly as his subordinates sent in masked and armed tax police and prosecutors. When that didn't work, they jailed Gusinsky on charges that were later dropped, although they are seeking to extradite and jail him again. along with his treasurer, on a new set of charges. Yesterday the prosecutor general summoned Tatyana Mitkova, the anchor of NTV's evening news program, for questioning. Putin's aides are also doing all they can to prevent Gusinsky from refinancing his debt-ridden operation with Ted Turner or anyone else in or outside of the country.

According to one report, Putin told one official, You deal with the shares, debts, and management and I will deal with the journalists. His goal simply is to end to independent TV coverage in Russia. ...

(No link; from their archives.)

DeDude -> Fred C. Dobbs... , December 16, 2016 at 11:33 AM
"Unfortunately, Putin's actions are applauded by more than 70 percent of the Russian people"

Exactly; the majority of people are so stupid and/or lazy that they cannot be bothered understanding what is going on; and how their hard won democracy is being subjugated. But thank God that is in Russia not here in the US - right?

anne -> Fred C. Dobbs... , December 16, 2016 at 11:45 AM
https://www.gpo.gov/fdsys/pkg/CREC-2001-02-07/html/CREC-2001-02-07-pt1-PgE133-4.htm

February 7, 2001

Russia's Unfree Press
By Marshall I. Goldman

Watermelonpunch -> Fred C. Dobbs... , December 16, 2016 at 04:55 PM
"Infinitely dangerous" As in the event horizon of a black hole, for pity's sake?

Odd choice of words. Should there have been a "more" in between there? Was it a typo?

cm -> Fred C. Dobbs... , December 17, 2016 at 03:42 PM
"Pravda" is etymologically derived from "prav-" which means "right" (as opposed to "left", other connotations are "proper", "correct", "rightful", also legal right). It designates the social-construct aspect of "righteousness/truthfulness/correctness" as opposed to "objective reality" (conceptually independent of social standards, in reality anything but). In formal logic, "istina" is used to designate truth. Logical falsity is designated a "lie".

It is a feature common to most European languages that rightfulness, righteousness, correctness, and legal rights are identified with the designation for the right side. "Sinister" is Latin for "left".

Ben Groves : , December 16, 2016 at 11:18 AM
If you believe 911 was a Zionist conspiracy, so where the Paris attacks of November 2015, when Trump was failing in the polls as the race was moving toward as you would expect, toward other candidates. After the Paris attacks, his numbers reaccelerated.

If "ZOG" created the "false flag" of the Paris attacks to start a anti-Muslim fervor, they succeeded, much like 911. Bastille day attacks were likewise, a false flag. This is not new, this goes back to when the aristocracy merged with the merchant caste, creating the "bourgeois". They have been running a parallel government in the shadows to effect what is seen.

cm -> sanjait... , December 17, 2016 at 03:46 PM
There used to be something called Usenet News, where at the protocol level reader software could fetch meta data (headers containing author, (stated) origin, title, etc.) independently from comment bodies. This was largely owed to limited download bandwidth. Basically all readers had "kill files" i.e. filters where one could configure that comments with certain header parameters should not be downloaded, or even hidden.
cm -> cm... , December 17, 2016 at 03:48 PM
The main application was that the reader would download comments in the background when headers were already shown, or on demand when you open a comment.

Now you get the whole thing (or in units of 100) by the megabyte.

tew : , December 16, 2016 at 11:19 AM
A major problem is signal extraction out of the massive amounts of noise generated by the media, social media, parties, and pundits.

It's easy enough to highlight this thread of information here, but in real time people are being bombarded by so many other stories.

In particular, the Clinton Foundation was also regularly being highlighted for its questionable ties to foreign influence. And HRC's extravagant ties to Wall St. And so much more.

And there is outrage fatigue.

Ben Groves -> DeDude... , December 16, 2016 at 11:34 AM
The media's job was to sell Trump and denounce Clinton. The mistake a lot of people make is thinking the global elite are the "status quo". They are not. They are generally the ones that break the status quo more often than not.

The bulk of them wanted Trump/Republican President and made damn sure it was President. Buffering the campaign against criticism while overly focusing on Clinton's "crap". It took away from the issues which of course would have low key'd the election.

cm -> DeDude... , December 17, 2016 at 03:55 PM
Not much bullying has to be applied when there are "economic incentives". The media attention economy and ratings system thrive on controversy and emotional engagement. This was known a century ago as "only bad news is good news". As long as I have lived, the non-commercial media not subject (or not as much) to these dynamics have always been perceived as dry and boring.

I heard from a number of people that they followed the campaign "coverage" (in particular Trump) as gossip/entertainment, and those were people who had no sympathies for him. And even media coverage by outlets generally critical of Trump's unbelievable scandals and outrageous performances catered to this sentiment.

Jim Harrison : , December 16, 2016 at 11:24 AM
Shorter Paul Krugman: nobody acted more irresponsibly in the last election than the New York Times.
Sandwichman -> Jim Harrison ... , December 16, 2016 at 11:53 AM
Looks like Putin recruited the NYT, the FBI and the DNC.
DrDick -> Sandwichman ... , December 16, 2016 at 11:57 AM
Nah, Wall Street and the GOP recruited them to the effort.
Sandwichman -> DrDick... , December 16, 2016 at 01:57 PM
GOP included in FBI. Wall Street included in DNC, GOP. It's all just one big FBIDNCGOPCNNWSNYT.
sanjait -> Jim Harrison ... , December 16, 2016 at 03:06 PM
He can't say it out loud but you know he's including the NYT on his list of UIs.
tew : , December 16, 2016 at 11:26 AM
Let me also add some levelheaded thoughts:

First, let me disclose that I detest TRUMP and that the Russian meddling has me deeply concerned. Yet...

We only have assertions that the Russian hacking had some influence. We do not know whether it likely had *material* influence that could have reasonably led to a swing state(s) going to TRUMP that otherwise would have gone to HRC.

Dr. Krugman is feeding this "shoot first, ask questions later" mentality. He comes across as increasingly shrill and even unhinged - it's a slide he's been taking for years IMO, which is a big shame.

It is downright irresponsible and dangerous for a major public intellectual with so little information to cast the shadow of legitimacy on a president ("And it means not acting as if this was a normal election whose result gives the winner any kind of a mandate, or indeed any legitimacy beyond the bare legal requirements.") This kind of behavior is EXACTLY what TRUMP and other authoritarians exhibit - using pieces of information to discredit institutions and individuals. Since foreign governments have and will continue to try to influence U.S. policy through increasingly sophisticated means, this opens the door for anyone to declare our elections and policies as illegitimate in the future.

DrDick -> tew... , December 16, 2016 at 11:56 AM
It is quite clear that the Russians intervened on Trump's behalf and that this intervention had an impact. The problem is that we cannot actually quantify that impact.

https://www.washingtonpost.com/world/national-security/fbi-backs-cia-view-that-russia-intervened-to-help-trump-win-election/2016/12/16/05b42c0e-c3bf-11e6-9a51-cd56ea1c2bb7_story.html?pushid=breaking-news_1481916265&tid=notifi_push_breaking-news&utm_term=.25d35c017908

Sandwichman -> tew... , December 16, 2016 at 01:17 PM
"We only have assertions that the Russian hacking had some influence."

Any influence Russian hacking had was entirely a consequence of U.S. media obsession with celebrity, gotcha and horse race trivia and two-party red state/blue state tribalism.

Without the preceding, neither Trump nor Clinton would have been contenders in the first place. Putin didn't invent super delegates, Citizens United, Fox News, talk radio, Goldman-Sachs, etc. etc. etc. If Putin exploited vulnerabilities, it is because preserving those vulnerabilities was more important to the elites than fostering a democratic political culture.

cm -> Sandwichman ... , December 17, 2016 at 04:00 PM
But this is how influence is exerted - by using the dynamics of the adversary's/targets organization as an amplifier. Hierarchical organizations are approached through their management or oversight bodies, social networks through key influencers, etc.
David : , December 16, 2016 at 11:58 AM
I see this so much and it's so right wing cheap: I hate Trump, but assertions that Russia intervened are unproven.

First, Trump openly invited Russia to hack DNC emails. That is on its face treason and sedition. It's freaking on video. If HRC did that there would be calls of the right for her execution.

Second, a NYT story showed that the FBI knew about the hacking but did not alert the DNC properly - they didn't even show up, they sent a note to a help desk.

http://www.huffingtonpost.com/entry/fbi-probe-dnc-hacked-emails_us_57a19f22e4b08a8e8b601259

This was a serious national security breach that was not addressed properly. This is criminal negligence.

This was a hacked election by collusion of the FBI and the Russian hackers and it totally discredits the FBI as it throwed out chum and then denied at the last minute. Now the CIA comes in and says PUTIN, Trump's bff, was directly involved in manipulating the timetable that the hacked emails were released in drip drip form to cater to the media - creating story after story about emails.

It was a perfect storm for a coup. Putin played us. And he will play Trump. And God knows how it ends. But it doesn't matter b/c we're all screwed with climate change anyway.

sglover -> David... , December 16, 2016 at 02:50 PM
"It was a perfect storm for a coup. Putin played us. And he will play Trump. And God knows how it ends. But it doesn't matter b/c we're all screwed with climate change anyway."

It's not a "coup". It's an election result that didn't go the way a lot of people want. That's it. It's probably not optimal, but I'm pretty sure that democracy isn't supposed to produce optimal results.

All this talk about "coups" and "illegitimacy" is nuts, and -- true to Dem practice -- incredibly short-sighted. For many, voting for Trump was an available way to say to those people, "We don't believe you any more. At all." Seen in that light, it is a profoundly democratic (small 'd') response to elites that have most consistently served only themselves.

Trump and his gang will be deeply grateful if the left follows Krugman's "wisdom", and clings to his ever-changing excuses. (I thought it was the evil Greens who deprived Clinton of her due?)

100panthers : , December 16, 2016 at 02:17 PM
Post Truth is Pre-Fascism. The party that thinks your loyalty is suspect unless you wear a flag pin fuels itself on Post Truth. Isnt't this absurdity the gist of Obama's Russia comments today!?!
ilsm -> 100panthers... , December 16, 2016 at 04:29 PM
Obama and the Clintons are angered; Russia keeping US from giving Syria to al Qaeda. Like Clinton gave them Libya.
Jerry Brown -> sanjait... , December 16, 2016 at 04:46 PM
I agree. Unless the Russians or someone else hacked the ballot box machines, it is our own damn fault.
ilsm : , December 16, 2016 at 04:27 PM
the US media is angered putin is killing US' jihadis in Syria
Mr. Bill : , December 16, 2016 at 08:27 PM
"On Wednesday an editorial in The Times described Donald Trump as a "useful idiot" serving Russian interests." I think that is beyond the pale. Yes, I realize that Adolph Hitler was democratically elected. I agree that Trump seems like a scary monster under the bed. That doesn't mean we have too pee our pants, Paul. He's a bully, tough guy, maybe, the kind of kid that tortured you before you kicked the shit out of them with your brilliance. That's not what is needed now.
Mr. Bill -> Mr. Bill... , December 16, 2016 at 08:39 PM
What really is needed, is a watchdog, like Dean Baker, that alerts we dolts of pending bills and their ramifications. The ship of neo-liberal trade bullshit has sailed. Hell, you don't believe it yourself, you've said as much. Be gracious, and tell the truth. We can handle it.
Ben Groves -> Mr. Bill... , December 16, 2016 at 09:51 PM
The ship of neo-liberal trade sailed in the mid-2000's. That you don't get that is sad. You can only milk that so far the cow had been milked.

Trump was a coo, he was not supported by the voters. But by the global elite.

Mr. Bill : , December 16, 2016 at 10:28 PM
Hillary Clinton lost because she is truly an ugly aristocrat.
Mr. Bill -> Mr. Bill... , December 16, 2016 at 11:49 PM
The experience of voting for the Hill was painful, vs Donald Trump.

The Hill seemed like the least likely aristocrat, given two choices, to finish off all government focus on the folks that actually built this society. Two Titans of Hubris, Hillary vs Donald, each ridiculous in the concept of representing the interests of the common man.

At the end of the day. the American people decided that the struggle with the unknown monster Donald was worth deposing the great deplorable, Clinton.

Mr. Bill -> Mr. Bill... , December 17, 2016 at 12:11 AM
The real argument is whether the correct plan of action is the way of FDR, or the way of the industrialists, the Waltons, the Kochs, the Trumps, the Bushes and the outright cowards like the Cheneys and the Clintons, people that never spent a day defending this country in combat. What do they call it, the Commander in Chief.
Mr. Bill -> Mr. Bill... , December 17, 2016 at 12:29 AM
My father was awarded a silver and a bronze star for his efforts in battle during WW2. He was shot in the face while driving a tank destroyer by a German sniper in a place called Schmitten Germany.

He told me once, that he looked over at the guy next to him on the plane to the hospital in England, and his intestines were splayed on his chest. It was awful.

Mr. Bill -> Mr. Bill... , December 17, 2016 at 12:55 AM
What was he fighting for ? Freedom, America. Then the Republicans, Ronald Reagan, who spent the war stateside began the real war, garnering the wealth of the nation to the entitled like him. Ronald Reagan was a life guard.
btg : , December 16, 2016 at 11:09 PM
Other idiots...

Anthony Weiner
Podesta
Biden (for not running)
Tim Kaine (for accepting the nomination instead of deferring to a latino)
CNN and other TV news media (for giving trump so much coverage- even an empty podium)
Donna Brazile
etc.

greg : , December 16, 2016 at 11:57 PM
The people of the United States did not have much to choose between: Either a servant of the Plutocrats or a member of the Plutocratic class. The Dems brought this on us when they refused to play fair with Bernie. (Hillary would almost certainly have won the nomination anyway.)

The Repubs brought this on, by refusing to govern. The media brought this on: I seem to remember Hillary's misfeasances, once nominated, festering in the media, while Trump's were mentioned, and then disappeared. (Correct me if I'm wrong in this.) Also, the media downplayed Bernie until he had no real chance.

The government brought this on, by failing to pursue justice against the bankers, and failing to represent the people, especially the majority who have been screwed by trade and the plutocratic elite and their apologists.

The educational system brought this on, by failing to educate the people to critical thought. For instance: 1) The wealthy run the country. 2) The wealthy have been doing very well. 3) Everybody else has not. It seems most people cannot draw the obvious conclusion.

The wealthy brought this on. For 230 years they have, essentially run this country. They are too stupid to be satisfied with enough, but always want more.

The economics profession brought this on, by excusing treasonous behavior as efficient, and failing to understand the underlying principles of their profession, and the limits of their understanding. (They don't even know what money is, or how a trade deficit destroys productive capacity, and thus the very ability of a nation to pay back the debts it incurs.)

The people brought this on, by neglecting their duty to be informed, to be educated, and to be thoughtful.

Anybody else care for their share of blame? I myself deserve some, but for reasons I cannot say.

What amazes me now is, the bird having shown its feathers, there is no howl of outrage from the people who voted for him. Do they imagine that the Plutocrats who will soon monopolize the White House will take their interests to heart?

As far as I can tell, not one person of 'the people' has been appointed to his cabinet. Not one. But the oppressed masses who turned to Mr Trump seem to be OK with this.
I can only wonder, how much crap will have to be rubbed in their faces, before they awaken to the taste of what it is?

Eric377 : , -1
Krugman is himself one of those most useful idiots. I do not recall his clarion call to Democrats last spring that "FBI investigation" and "party Presidential nominee" was bound to be an ugly combination. Some did; right here as I recall. Or his part in the official "don't vote for third party" week in the Clinton media machine....thanks, hundreds of thousands of Trump votes got the message.

It's too rich to complain about Russia and Wikileaks as if those elements in anyway justified Clinton becoming President. Leaks mess with our democracy? Then for darn sure do not vote for a former Sec. of State willing to use a home server for her official business. Russia is menacing? Just who has been managing US-Russia relations the past 8 years? I voted for her anyway, but the heck if I think some tragic fate has befell the nation here. Republicans picked a better candidate to win this thing than we Democrats did.

Greg -> Eric377... , December 17, 2016 at 12:11 PM
Well said, Eric377.

The truth of the matter is that Clinton was a very weak candidate with nothing to offer but narcissism ("I'm with her"). It's notable that Clinton has still not accepted responsibility for her campaign, preferring to throw the blame for the loss anywhere but herself. Sociopathy much?

This has made me cynical. I used to think that at least *some* members of the US political elite had the best interests of ordinary households in mind, but now I see that it's just ego vs. ego, whatever the party.

As for democracy being on the edge: I believe Adam Smith over Krugman: "there is a lot of ruin in a nation". It takes more than this to overturn an entrenched institution.

I think American democracy will survive a decade of authoritarianism, and if it does not, then H. L. Mencken said it best: "The American people know what they want, and they deserve to get it -- good and hard."

[Dec 17, 2016] Responsibility for the current decline of middle class in the USA rests on neoliberals

Dec 17, 2016 | economistsview.typepad.com
Tim Duy:

Responsibility : I have been puzzling over this from Paul Krugman :

Donald Trump won the electoral college at least in part by promising to bring coal jobs back to Appalachia and manufacturing jobs back to the Rust Belt. Neither promise can be honored – for the most part we're talking about jobs lost, not to unfair foreign competition, but to technological change. But a funny thing happens when people like me try to point that out: we get enraged responses from economists who feel an affinity for the working people of the afflicted regions – responses that assume that trying to do the numbers must reflect contempt for regional cultures, or something.

Is this the right narrative? I am no longer comfortable with this line:

for the most part we're talking about jobs lost, not to unfair foreign competition, but to technological change.

Try to place that line in context with this from Noah Smith:

Then, in the 1990s and 2000s, the U.S opened its markets to Chinese goods, first with Most Favored Nation trading status, and then by supporting China's accession to the WTO. The resulting competition from cheap Chinese goods contributed to vast inequality in the United States, reversing many of the employment gains of the 1990s and holding down U.S. wages. But this sacrifice on the part of 90% of the American populace enabled China to lift its enormous population out of abject poverty and become a middle-income country.

Was this "fair" trade? I think not. Let me suggest this narrative: Sometime during the Clinton Administration, it was decided that an economically strong China was good for both the globe and the U.S. Fair enough. To enable that outcome, U.S. policy deliberately sacrificed manufacturing workers on the theory that a.) the marginal global benefit from the job gain to a Chinese worker exceeded the marginal global cost from a lost US manufacturing job, b.) the U.S. was shifting toward a service sector economy anyway and needed to reposition its workforce accordingly and c.) the transition costs of shifting workers across sectors in the U.S. were minimal.

As a consequence – and through a succession of administrations – the US tolerated implicit subsidies of Chinese industries, including national industrial policy designed to strip production from the US.

And then there was the currency manipulation. I am always shocked when international economists claim "fair trade," pretending that the financial side of the international accounts is irrelevant. As if that wasn't a big, fat thumb on the scale. Sure, "currency manipulation" is running the other way these days. After, of course, a portion of manufacturing was absorbed overseas. After the damage is done.

Yes, technological change is happening. But the impact, and the costs, were certainly accelerated by U.S. policy.

It was a great plan. On paper, at least. And I would argue that in fact points a and b above were correct.

But point c. Point c was a bad call. Point c was a disastrous call. Point c helped deliver Donald Trump to the Oval Office. To be sure, the FBI played its role, as did the Russians. But even allowing for the poor choice of Hilary Clinton as the Democratic nominee (the lack of contact with rural and semi-rural voters blinded the Democrats to the deep animosity toward their candidate), it should never have come to this.

The transition costs were not minimal.

Consider this from the New York Times :

As the opioid epidemic sweeps through rural America, an ever-greater number of drug-dependent newborns are straining hospital neonatal units and draining precious medical resources.

The problem has grown more quickly than realized and shows no signs of abating, researchers reported on Monday. Their study, published in JAMA Pediatrics, concludes for the first time that the increase in drug-dependent newborns has been disproportionately larger in rural areas.

The latest causalities in the opioid epidemic are newborns.

The transition costs were not minimal.

My take is that "fair trade" as practiced since the late 1990s created another disenfranchised class of citizens. As if we hadn't done enough of that already. Then we weaponized those newly disenfranchised citizens with the rhetoric of identity politics. That's coming back to bite us. We didn't really need a white nationalist movement, did we?

Now comes the big challenge: What can we do to make amends? Can we change the narrative? And here is where I agree with Paul Krugman:

Now, if we want to have a discussion of regional policies – an argument to the effect that my pessimism is unwarranted – fine. As someone who is generally a supporter of government activism, I'd actually like to be convinced that a judicious program of subsidies, relocating government departments, whatever, really can sustain communities whose traditional industry has eroded.

The damage done is largely irreversible. In medium-size regions, lower relative housing costs may help attract overflow from the east and west coast urban areas. And maybe a program of guaranteed jobs for small- to medium-size regions combined with relocation subsidies for very small-size regions could help. But it won't happen overnight, if ever. And even if you could reverse the patterns of trade – which wouldn't be easy given the intertwining of global supply chains – the winners wouldn't be the same current losers. Tough nut to crack.

Bottom Line: I don't know how to fix this either. But I don't absolve the policy community from their role in this disaster. I think you can easily tell a story that this was one big policy experiment gone terribly wrong.

[Dec 15, 2016] Putin Valday 2016 speeech

Dec 15, 2016 | marknesop.wordpress.com
Vladimir Putin's Valdai Speech at the XIII Meeting (Final Plenary Session) of the Valdai International Discussion Club (Sochi, 27 October 2016)

As is his usual custom, Russian President Vladimir Putin delivered a speech at the final session of the annual Valdai International Discussion Club's 13th meeting, held this year in Sochi, before an audience that included the President of Finland Tarja Halonen and former President of South Africa Thabo Mbeki. The theme for the 2016 meeting and its discussion forums was "The Future in Progress: Shaping the World of Tomorrow" which as Putin noted was very topical and relevant to current developments and trends in global politics, economic and social affairs.

Putin noted that the previous year's Valdai Club discussions centred on global problems and crises, in particular the ongoing wars in the Middle East; this fact gave him the opportunity to summarise global political developments over the past half-century, beginning with the United States' presumption of having won the Cold War and subsequently reshaping the international political, economic and social order to conform to its expectations based on neoliberal capitalist assumptions. To that end, the US and its allies across western Europe, North America and the western Pacific have co-operated in pressing economic and political restructuring including regime change in many parts of the world: in eastern Europe and the Balkans, in western Asia (particularly Afghanistan and Iraq) and in northern Africa (Libya). In achieving these goals, the West has either ignored at best or at worst exploited international political, military and economic structures, agencies and alliances to the detriment of these institutions' reputations and credibility around the world. The West also has not hesitated to dredge and drum up imaginary threats to the security of the world, most notably the threat of Russian aggression and desire to recreate the Soviet Union on former Soviet territories and beyond, the supposed Russian meddling in the US Presidential elections, and apparent Russian hacking and leaking of emails related to failed US Presidential candidate Hillary Rodham Clinton's conduct as US Secretary of State from 2008 to 2012.

After his observation of current world trends as they have developed since 1991, Putin queries what kind of future we face if political elites in Washington and elsewhere focus on non-existent problems and threats, or on problems of their own making, and ignore the very real issues and problems affecting ordinary people everywhere: issues of stability, security and sustainable economic development. The US alone has problems of police violence against minority groups, high levels of public and private debt measured in trillions of dollars, failing transport infrastructure across most states, massive unemployment that either goes undocumented or is deliberately under-reported, high prison incarceration rates and other problems and issues indicative of a highly dysfunctional society. In societies that are ostensibly liberal democracies where the public enjoys political freedoms, there is an ever-growing and vast gap between what people perceive as major problems needing solutions and the political establishment's perceptions of what the problems are, and all too often the public view and the elite view are at polar opposites. The result is that when referenda and elections are held, predictions and assurances of victory one way or another are smashed by actual results showing public preference for the other way, and polling organisations, corporate media with their self-styled "pundits" and "analysts" and governments are caught scrambling to make sense of what just happened.

Putin points out that the only way forward is for all countries to acknowledge and work together on the problems that challenge all humans today, the resolution of which should make the world more stable, more secure and more sustaining of human existence. Globalisation should not just benefit a small plutocratic elite but should be demonstrated in concrete ways to benefit all. Only by adhering to international law and legal arrangements, through the charter of the United Nations and its agencies, can all countries hope to achieve security and stability and achieve a better future for their peoples.

To this end, the sovereignty of Middle Eastern countries like Iraq, Syria and Yemen should be respected and the wars in those countries should be brought to an end, replaced by long-term plans and programs of economic and social reconstruction and development. Global economic development and progress that will reduce disparities between First World and Third World countries, eliminate notions of "winning" and "losing", and end grinding poverty and the problems that go with it should be a major priority. Economic co-operation should be mutually beneficial for all parties that engage in it.

Putin also briefly mentioned in passing the development of human potential and creativity, environmental protection and climate change, and global healthcare as important goals that all countries should strive for.

While there's not much in Putin's speech that he hasn't said before, what he says is typical of his worldview, the breadth and depth of his understanding of current world events (which very, very few Western politicians can match), and his preferred approach of nations working together on common problems and coming to solutions that benefit all and which don't advantage one party's interests to the detriment of others and their needs. Putin's approach is a typically pragmatic and cautious one, neutral with regards to political or economic ideology, but one focused on goals and results, and the best way and methods to achieve those goals.

One interesting aspect of Putin's speech comes near the end where he says that only a world with opportunities for everyone, with access to knowledge to all and many ways to realise creative potential, can be considered truly free. Putin's understanding of freedom would appear to be very different from what the West (and Americans in particular) understand to be "freedom", that is, being free of restraints on one's behaviour. Putin's understanding of freedom would be closer to what 20th-century Russian-born British philosopher Isaiah Berlin would consider to be "positive freedom", the freedom that comes with self-mastery, being able to think and behave freely and being able to choose the government of the society in which one lives.

The most outstanding point in Putin's speech, which unfortunately he does not elaborate on further, given the context of the venue, is the disconnect between the political establishment and the public in most developed countries, the role of the mass media industry in reducing or widening it, and the dangers that this disconnect poses to societies if it continues. If elites continue to pursue their own fantasies and lies, and neglect the needs of the public on whom they rely for support (yet abuse by diminishing their security through offshoring jobs, weakening and eliminating worker protection, privatising education, health and energy, and encouraging housing and other debt bubbles), the invisible bonds of society – what might collectively be called "the social contract" between the ruler and the ruled – will disintegrate and people may turn to violence or other extreme activities to get what they want.

An English-language transcript of the speech can be found at this link .

[Dec 11, 2016] TIPs and gold

www.nakedcapitalism.com

Jim Haygood December 10, 2016 at 8:47 am

Barron's investment weekly has published a "Get Ready for Dow 20,000" cover today. Is that a problem for stocks, from a contrarian point of view?

Not necessarily. Paul Macrae Montgomery, who first articulated the concept of fading the always-wrong MSM, stipulated that it's widely-circulated, general-interest publications that are the best mirrors of popular sentiment.

So far, they are largely silent on the twin asset bubbles - stocks and house prices - rising ominously beneath our feet. Looks like it's gonna be awhile before we reach the supreme silliness of Time magazine's fatuous June 2005 cover "Home $weet Home: Why We're Going Gaga Over Real Estate."

That one actually scored double points, for the MSM's presumptuous habit of invoking the cozy "we" formulation to tell readers what they think. (That's why "we" hate the MSM.)

With Time reportedly on the block, maybe a sensational "Dow 36,000" cover could goose the sale price up to five dollars instead of one. It's worth a try, lads!

Arizona Slim December 10, 2016 at 10:28 am

Summer 2005 was when Tucson's housing bubble started hissing air. After years of tight inventory, there was a proliferation of properties for sale.

Some of those properties stayed on the market for years and many of them ended up in foreclosure.

Pat December 10, 2016 at 10:57 am

Jim, odd snippet from something I heard last night struck me as being right up your alley. The guy who founded Princeton Review is now some kind of investment guru. He was talking about last years announced rate hikes, and that he told his clients they weren't going up but might reach record lows. He based that on metals traders (gold, silver etc). He says they have never been wrong about the direction of rates. (I got interrupted so if he explained the signals he was seeing from them I missed it). It should be part of a pod cast from Tim Ferriss if you want to check it out, but I really did think it was one of those things you would have in your arsenal for market prediction.

His other big advice was treat investing like a poker game, don't bet on the cards bet on the players – look for their tells. And he hasn't figured out that Uber has some real issues to deal with before its 'profits' are real, so take everything with a grain of salt.

Jim Haygood December 10, 2016 at 12:01 pm

Gold is anticorrelated to TIPS (Treasury Inflation Protected Securities) yields as shown in this chart:

https://marketrealist.imgix.net/uploads/2016/09/bondvsgold.png

TIPS didn't exist before 1997. But real Treasury yields (proxied by subtracting the trailing 12-month CPI change from nominal Treasury yields) went negative in 1974 and 1979 too, during the epic gold spikes of that era.

So this seems to be an enduring anticorrelation. However, I use the yield curve in my bond model rather than gold. The pronounced serial correlation in Fed-controlled short rates is highly non-random, signaling what the cockeyed commissars are up to.

griffen December 10, 2016 at 5:45 pm

It's DOW 40,000 or bust. I'm holding out for that Weyland-Yutani merger to be announced any week now.

[Dec 10, 2016] On Missing Minsky

Notable quotes:
"... existing official models do not sufficiently explain the Minsky period, the runup, how things got so fragile that they could collapse so badly. ..."
"... in effect Minsky provided a model and discussion of all three stages, although his model of the Keynes stage is not really all that distinctive and is really just Keynes. ..."
"... he probably did a better job of discussing the Bagehot stage than did Bagehot, and more detailed, if less formal, than Diamond and Dybvig. ..."
"... But the essentials of what go on in a panic and crash were well understood and discussed prior to 1873, with Minsky, and Kindlegerger drawing on Minsky in his 1978 Manias, Panics, and Crashes, quoting in particular a completely modern discussion from 1848 by John Stuart Mill ..."
"... Keep in mind, there are an infinite number of models that fit the data. Science requires more that a fit. It requires that the model correspond with reality in a way that it can fill in observable data before it is observed. ..."
"... Here's a theory (not a model): the true and revolutionary insights of Veblen, Keynes, and Minsky have all failed to significantly alter the trajectory of economic thought because the discipline expects "the truth" to do the impossible. ..."
Jun 02, 2015 | econospeak.blogspot.com

Yes, we miss the late Hy Minsky, especially those of us who knew him, although I cannot claim to be one who knew him very well. But I knew him well enough to have experienced his wry wit and unique perspective. Quite aside from that, it would have been great to have had him around these last few years to comment on what has gone on, with so many invoking his name, even as they have in the end largely ended up studiously ignoring him and relegating him back into an intellectual dustbin of history, or tried to.

So, Paul Krugman has a post entitled "The Case of the Missing Minsky," which in turn comments on comments by Mark Thoma on comments by Gavyn Davis on discussions at a recent IMF conference on macroeconomic policy in light of the events of recent years, with Mark link http://economistsview.typepad.com/economistsview/2015/06/the-case-of-the-missing-minsky.htmling to Krugman's post.

He notes that there seem to be three periods of note:

Krugman argues that, despite a lot of floundering by the IMF economists, we supposedly understand the second two, with his preferred neo-ISLM approach properly explaining the final Keynes period of insufficiently strong recovery due to insufficiently strong aggregate demand stimulus, especially relying on fiscal policy (and while I do not fully buy his neo-ISLM approach, I think he is mostly right about the policy bottom line on this, as would the missing Minsky, I think).

He also says that looking at 1960s Diamond-Dybvig models of bank panics sufficiently explain the Bagehot period, and they probably do, given the application to the shadow banking system. However, he grants that existing official models do not sufficiently explain the Minsky period, the runup, how things got so fragile that they could collapse so badly.

Now I do not strongly disagree with most of this, but I shall make a few further points. The first is that in effect Minsky provided a model and discussion of all three stages, although his model of the Keynes stage is not really all that distinctive and is really just Keynes.

But he probably did a better job of discussing the Bagehot stage than did Bagehot, and more detailed, if less formal, than Diamond and Dybvig. I suspect that Bagehot got dragged in by the IMF people because he is so respectable and influential regarding central bank policymaking, given his important 1873 Lombard Street, and I am certainly not going to dismiss the importance of that work.

But the essentials of what go on in a panic and crash were well understood and discussed prior to 1873, with Minsky, and Kindlegerger drawing on Minsky in his 1978 Manias, Panics, and Crashes, quoting in particular a completely modern discussion from 1848 by John Stuart Mill (I am tempted to produce the quotation here, but it is rather long; I do so on p. 59 of my 1991 From Catastrophe to Chaos: A General Theory of Economic Discontinuities), which clearly delineates the mechanics and patterns of the crash, using the colorful language of "panic" and "revulsion" along the way. Others preceding Bagehot include the inimitable MacKay in 1852 in his Madness of Crowds book and Marx in Vol. III of Capital, although admittedly that was not published until well after Bagehot's book.

One can even find such discussions in Cantillon early in the 1700s discussing what went on in the Mississippi and South Sea bubbles, from which he made a lot of money, and then, good old Adam Smith in 1776 in WoN (pp. 703-704), who in regard to the South Sea bubble and the managers of the South Sea company declared, "They had an immense capital dividend among an immense number of proprietors. It was naturally to be expected, therefore, that folly, negligence, and profusion should prevail in the whole management of their affairs. The knavery and extravagance of their stock-jobbing operations are sufficiently known [as are] the negligence, profusion and malversation of the servants of the company."

It must be admitted that this quote from Smith does not have the sort of detailed analysis of the crash itself that one finds in Mill or Bagehot, much less Minsky or Diamond and Dybvig. But there is another reason of interest now to note these inflammatory remarks by Smith. David Warsh in his Economic Principals has posted in the last few days on "Just before the lights went up," also linked to by the inimitable Mark Thoma. Warsh discusses recent work on Smith's role in the bailout of the Ayr Bank of Scotland, whose crash in 1772 created macroeconomic instability and layoffs, with Smith apparently playing a role in getting the British parliament to bail out the bank, with its main owners, Lord Buccleuch and the Duke of Queensbury, paying Smith off with a job as Commissioner of Customs afterwards. I had always thought that it was ironic that free trader Smith ended his career in this position, but had not previously known how he got it. As it is, Warsh points out that the debate over bubbles and what the role of government should be in dealing with them was a difference between Smith and his fellow Scottish rival, Sir James Steuart, whose earlier book provided an alternative overview of political economy, now largely forgotten by most (An Inquiry into the Principles of Political Oeconomy, 1767).

I conclude this by noting that part of the problem for Krugman and also the IMF crowd with Minsky is that it is indeed hard to fit his view into a nice formal model, with various folks (including Mark Thoma) wishing it were to be done and noting that it probably involves invoking the dread behavioral economics that does not provide nice neat models. I also suspect that some of these folks, including Krugman, do not like some of the purveyors of formal models based on Minsky, notably Steve Keen, who has been very noisy in his criticism of these folks, leading even such observers as Noah Smith, who might be open to such things, to denounce Keen for his general naughtiness and to dismiss his work while slapping his hands. But, aside from what Keen has done, I note that there are other ways to model the missing Minsky more formally, including using agent-based models, if one really wants to, these do not involve putting financial frictions into DSGE models, which indeed do not successfully model the missing Minsky.

Barkley Rosser

Update: Correction from comments is that the Ayr Bank was not bailed out. It failed. However, the two dukes who were its main owners were effectively bailed out, see comments or the original Warsh piece for details. It remains the case that Adam Smith helped out with that and was rewarded with the post of Commissioner of Customs in Scotland.

Thornton Hall said... June 2, 2015 at 6:21 PM

What, exactly, is the value added of formal (or even informal) "models" in all this? That is to say, if a historian were to describe the events and responses outlined above, what would he leave out that an economist would put in?

Keep in mind, there are an infinite number of models that fit the data. Science requires more that a fit. It requires that the model correspond with reality in a way that it can fill in observable data before it is observed.

Meanwhile, Simon Wren-Lewis dismisses the policy-maker who listens to the historian as using mere "intelligent guess work", strongly suggesting that economists clearly do better. But if trying to figure out whether the current moments is Minsky, Keynes or even Keen, isn't "guesswork" then I don't know what is. Put "intelligent guess work" policy next to model guided policy in your history above. Where's the value added from modeling? It has to be useful AND the policy maker must have a scientific reason for knowing it will be useful IN REAL TIME.

Krugman frequently defends "textbook" modeling with a "nobody else has come up with anything better" response. But that's a classic "when did you stop beating your wife".

What if the economy can't be modeled? Claiming to do the impossible is deluded, even if you can correctly say: "no one has ever improved upon my method of doing the impossible."

"But we have learned so much!" People say that, but what, exactly, are they talking about?

Thornton Hall said... June 2, 2015 at 6:42 PM

Here's a theory (not a model): the true and revolutionary insights of Veblen, Keynes, and Minsky have all failed to significantly alter the trajectory of economic thought because the discipline expects "the truth" to do the impossible.

Newton faced this when his theory of universal Gravity was criticized for failing to explain the distance of the planets from the sun. The Aristotelian tradition said that a proper theory of the heavens would do this.

And so Keynes has his Aristotelian interpreter Hicks and Minsky has his Keen. Requiring the revolution to succeed in doing the impossible means that the truth gets misinterpreted or ignored. Either way, no revolution despite every generation producing a revolutionary that sees the truth.

What is the value of this theory? If true, it explains how economics can be filled with smart people seeking the truth and yet make zero progress in more than a century.

chrismealy June 2, 2015 at 8:27 PM

I get the impression that mainstream economists are generally resistant to any kind of boom-and-bust models (at least while getting a BA in econ I was never taught any). Is this the case? It's too bad, because models like Lotka–Volterra are not that hard. Just from messing around with agent-based models it seems like anything with a lag or learning generates cycles. Is it because economists are fixated on optimization and equilibrium? Are they worried about models that are too sensitive to initial conditions?

[email protected] said... June 2, 2015 at 11:24 PM

Thornton,

Maybe they should not be, but the discussion among IMF economists, Davis, Thoma, and Krugman has involved models, and in particular, conventional models. So, Krugman declares that there are conventional models as noted above to cover two of the stages, the latter two, but not the first one identified with Minsky. I think there are better models for all this, but they are not the conventional ones.

chrismealy,

The DSGE and other conventional models are able to model booms and busts, although they generally do not use the Lotka-Volterra models that such people as the late Richard Goodwin (and even Paul Samuelson) have used for modeling business cycle dynamics. The big difference is that the conventional models involve exogenous shocks to set off their busts, with cyclical reverberations that decay then following the exogenous shock, with some of the lag mechanisms operating for that.

It is not really surprising that this sort of thing does not model Minsky or the Minsky moment, which involve endogenous dynamics, the very success of the boom as during the Great Moderation itself undermining the stability and even resilience of the system as essentially endogenous psychological (and hence behavioral) factors operate to loosen requirements for lending and to use Minksy language, lending and borrowing increasingly involves highly leveraged Ponzi schemes (and I note that some more conventional economists have emphasized leverage cycles, notably John Geanakoplis, although avoiding Minsky per se in doing so).

New Deal democrat said... June 3, 2015 at 10:52 AM

This is a good post and discussion so far. So here's my $.02:

1. Maybe the behaviorists like Thaler have already explored this, but it seems to me that economists still need to learn learning theory from psychologists. Most importantly, "bservational learning," { http://psychology.about.com/od/oindex/fl/What-Is-Observational-Learning.htm ), or more simply "monkey see, monkey do." We constantly learn by observing behavior in others: our parents, our older siblings, the cool kids at school, our favorite pop icons, our professors, our business mentors, and so on. As to which,

2. Some people are better at learning than others (duh!). Some learn right away, some more slowly, some never at all. And further,

3. Some people are more persceptive than others, recognizing the importance of something earlier or later. If you recognized how important the trend change was when Volcker broke the back of inflation in the early 1980s, and simply bought 30 year treasuries and held them to maturity, you made a killing. If you discovered that in the early 1990s, you made less. And so on.

All we need, to pick up on chrismealy's comment, are time periods and learning. Incorporate variations in skill and persceptiveness into the population, and you can get a nice boom and bust model. As more and more people, with various levels of skill, learn an economic behavior (flipping houses, using leverage), they will "push the edge of the envelope" more and more -- does 2x leverage work? Yes, then how about 4x? Yes, then how about 20x? -- until the system is overwhelmed.

4. But if you don't want to incorporate imitative learning models from psychology, how about just using appraisals of short term vs. long term risk and reward. Suppose it is the 1980s, and I think treasury yields are on a securlar downtrend. But this book called "Bankruptcy 1995" just came out, based on a blue ribbon panel Reagan created to look at budget deficits. That best selling book forecasts a "hockey stick" of exploding interest rates by the mid-1990s due to ever increasing US debt. So let's say I am 50% sure of my belief that treasury yields will continue to decline for another 20 years, and I can make 10% a year if I am right. But if I am wrong .....

Meanwhile, I calculate that there is an 80% chance I can make 10% a year for the next few years by investing in this new publicly traded company named "Microsoft."

Even leaving aside behavioral finance theories about loss aversion, it's pretty clear that most investors will plump for Microsoft over treasuries, given their relative confidence in short term outcomes.

Historically, once interest rates went close to zero at the outset of the Great Depression, they stayed there for 20 years, and then gradually rose for another 30. How confident are investors that the same scenario will play out this time?

Either or both of the learning theory or the short term-long term risk reward scenario are good explanations for why backwards induction ad absurdum isn't an accurate description of behavior.

----

BTW, a nice example of a failed "backwards induction" is the "taper tantrum" of 2013. Since investors knew that the Fed was going to be raising interest rates sooner or later, they piled on and raised interest rates immediately -- and made a nice intermediate term top at 3%.

reason said... June 3, 2015 at 11:19 AM

Barkley,

I think New Deal Democrat has it here. This surely, can be covered with a simple model of asynchronous adaptive expectations with stochastic (Taleb type - big tail) risks. I wouldn't think you would even need a sophisticated agent based model. There must be plenty of ratchet type models out there to chose from.

Sandwichman said... June 3, 2015 at 11:47 AM

Thornton,

"...the true and revolutionary insights of Veblen, Keynes, and Minsky have all failed to significantly alter the trajectory of economic thought because the discipline..." sacrifices to the God, Equilibrium.

New Deal Democrat,

WRT "monkey see, monkey do" see Andred Orlean's The Empire of Value which articulates his mimetic theory of value.

[email protected] said... June 3, 2015 at 2:14 PM

To New Deal Dem and reason,

Sorry, I am not on board with this at all. Sure, I am all for incorporating learning and lags. No problem. This is good old adaptive expectations, which I have no problem with.

The problem is back to what I said earlier, that Minsky's apparatus operates endogenously without any need for exogenous shocks, although it can certainly operate within those, as his quoting of Mill shows, although I did not provide that quote, but Mill starts his story of how bubbles happen with some exogenous initial supply/demand shock in a market.

Why is what you guys talk about an exogenous shock model? Look at the example: Volcker does something and then different people figure it out at different rates. But Volcker is the exogenous shocker. If he does nothing, nothing happens.

In Minsky world, there does not need to be an exogenous shock. The system may be in a total anf full equilibrium,, but that equilibrium will disequilibrate itself as psychological attitudes and expectations endogenously change due to it. This is what the standard modelers have sush a problem with and do not like. They have no problem wiht adaptive expectations models. This is all old hat stuff for them, with only the fact that one does not know for sure what all those lags are being the problem, and what opened the door to the victory of ratex because it said there are no lags and thus no problem. Agents now what will be on average.

csissoko said... June 3, 2015 at 3:14 PM

Warsh's history of the Ayr Bank has errors. The Bank of England offered it a "bailout" in 1772 but required the personal guarantees of the two Dukes which were not forthcoming. The Ayr Bank struggled on without lender of last resort support until August 1773, when it closed for good. (This is all in Clapham's history of the Bank of England.)

What Warsh is calling a "bailout" was not a bailout of the bank, but of its proprietors who had unlimited liability and were facing the possibility of putting their estates on the market (which would have affected land prices in Scotland).

As I understand Warsh's description, Parliament granted the two Dukes a charter for a limited liability company that would sell annuities. It is entirely possible that contemporary sources would describe such an action as "indemnifying" the promoters of the company. But what is meant by this use of the term is only that Parliament authorized the formation of corporation. The actual indemnity is provided in the event the corporation fails by the members of the public who are creditors of the corporation.

In short, it is an error to claim that there was a "bailout" of the Ayr Bank.

[email protected] said... June 3, 2015 at 3:30 PM

Point taken, csissoko. I accept your corrected version. Parliament bailed out the dukes, not the Ayr Bank, which indeed failed.

Thornton Hall said... June 3, 2015 at 4:42 PM

I still don't understand what information is added by "models". Krugman has a job he has created for himself where everything he does is with an eye toward policy.

So I'm a policy maker. Explain why I need a model. in the 1930s austerity caused recessions and WWII ended the Depression. A little history of Japan's lost decade and some thinking about the implications of fiat currency, and, voilia, Krugman's policy suggestions, with no models and therefore no need to listen to economists like Mankiw or the Germans currently destroying Europe (third times a charm).

Thornton Hall said... June 3, 2015 at 4:51 PM

By the by, I have thought this thru. The head of Duke's Philosophy Department agrees: Krugman's method for using models is empty hand-waving. However he comes to his conclusions, it is not logically possible that ISLM, or any other model, has anything to do with it.
http://thorntonhalldesign.com/philosophy/2014/7/1/credentialed-person-repeats-my-critique-of-krugman

AXEC / E.K-H said... June 3, 2015 at 5:04 PM

Sitcom economics

Comment on 'On Missing Minsky'

Since Adam Smith economists have told rather enthralling stories about speculations, manias, follies, frauds, and breakdowns. The audience likes this kind of stuff. However, when it comes to how all this fits into economic theory things become a bit awkward. Of course, we have some modls -- Minsky, Diamond-Dybvig, Keynes come to mind -- but we could also think of other modls -- more agent-based or equilibrium with friction perhaps. On closer inspection, though, economists have no clue at all.

Keynes messed up the basics of macro with this faulty syllogism: "Income = value of output = consumption + investment. Saving = income - consumption. Therefore saving = investment." (1973, p. 63)

From I=S all variants of IS-LM models are derived including Krugman's neo-ISLM which allegedly explains the post-crash Keynes period. Let there be no ambiguity, all these models have always been conceptually and formally defective (2011).

Minsky built upon Keynes but not on I=S.

"The simple equation 'profit equals investment' is the fundamental relation for a macroeconomics that aims to determine the behavior through time of a capitalist economy with a sophisticated, complex financial structure." (Minsky, 2008, p. 161)

Here profit comes in but neither Minsky, nor Keynes, nor Krugmann, nor Keen, nor the rest of the profession can tell the fundamental difference between income and profit (2014).

The fact of the matter is that the representative economist fails to capture the essence of the market economy. This does not matter much as long as he has models and stories about crashing Ponzi schemes and bank panics. Yes, eventually we will miss them all -- these inimitable proto-scientific storytellers.

To have any number of incoherent models is not such a good thing as most economists tend to think. What is needed is the true theory.

"In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion." (Stigum, 1991, p. 30)

The true theory of financial crises presupposes the correct profit theory which is missing since Adam Smith. After this disqualifying performance nobody should expect that some Walrasian or Keynesian bearer of hope will come up with the correct modl any time soon.

Egmont Kakarot-Handtke

References

  • Kakarot-Handtke, E. (2011). Why Post Keynesianism is Not Yet a Science. SSRN Working Paper Series, 1966438: 1–20. URL http://ssrn.com/abstract=1966438.
  • Kakarot-Handtke, E. (2014). The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. URL http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2489792.
  • Keynes, J. M. (1973). The General Theory of Employment Interest and Money. The Collected Writings of John Maynard Keynes Vol. VII. London, Basingstoke: Macmillan.
  • Minsky, H. P. (2008). Stabilizing an Unstable Economy. New York, NY, Chicago, IL, San Francisco, CA: McGraw Hill, 2nd edition.
  • Stigum, B. P. (1991). Toward a Formal Science of Economics: The Axiomatic Method in Economics and Econometrics. Cambridge, MA: MIT Press.

New Deal democrat said... June 3, 2015 at 5:28 PM

Prof. Rosser:

In addition to my hypo re Volcker and interest rates, I also mention flipping houses and leverage.

Person A flips a house, makes $100k. Person B learns of it, figures s/he can do just as well, and flips a house. Eventually enough people are doing it that news stories are written about it. By now 1000s of people are figuring, "if they can do it, I can do it.":

So long as the trend continues, the person using financial leverage to flip houses makes even more profit. Person B uses more leverage, and so on. And since 2x leverage worked, why not 4x leverage. And if that works, why not 10x leverage?

Both the number of people engaging in the behavior, and the financial leveraging of the behavior, are endogenous, unless you are going to hang your hat on existing trend (note, not necessarily a shock - of rising house prices0.

All you need is more and more people of various skill sets at various entry points of time engaging in the behavior, and testing increasing leverage the more the behavior works.

Secondly, as to stability breeding instability, stability itself is the existing trend. Increasingly over time, more and more leverage will be used to profit off the existing trend. All it takes is learning + risk-takers successfully testing the existing limits. The more stable the system, the more risk-takers can apply leverage without rupturing it -- for a while.

New Deal democrat said... June 3, 2015 at 5:59 PM,

Let me try to express my position as a series of axioms:
1. Assume that no system, no matter how stable, can withstand infinite leverage.
2. Assume that there is a certain non-zero percentage of risk-taking individuals.
3. Assume that risk-takers will use some amount of leverage to attempt to profit within a stable system.
4. Assume that risk-takers will use increasing leverage once any given lesser percentage of leverage succeeds in rendering a profit, in order to increase profits.
5. Assume that others will learn, over various time periods, at varying levels of skill, to imitate the successful behavior of risk-takers.

Under those circumstances, it is certain that any system, no matter how stable, will ultimately succumb to leverage. And the more stable, the more leverage will have been applied to reach that breaking point. I.e., stability breeds instability.

Bruce Wilder said... June 3, 2015 at 6:50 PM

Even using history as an analogy is implicitly introducing a model. You're saying, here's my model of this history and I crank my little model to show the behavior of the model simulates the historical record, then I adapt the model to present circumstances, and crank again arguing, again by analogy.

What I would object to is the reliance on "analytic models" as opposed to operational models of the actual institutions. Economists love their analytic models, particularly axiomatic deductive "nomological machines", DSGE being the current orthodox approach. Not that there is anything wrong about analysis. My objection would be to basing policy advice on a study of analytic models to the exclusion of all else -- Krugman's approach -- rather than an empirical study of institutions in operation (which would still involve models, because that's how people think, but they might be, for example, simulation models calibrated to observed operational mechanisms).

There are reasons why economists prefer analytic models, but few of those reasons are sound. In the end, it is a matter of bad judgment fostered by a defective education and corruption or weakmindedness. Among other things, reliance on analytic models give economics an esoteric quality that privileges its elite practitioners. Ordinary people can barely understand what Krugman is talking about in the referenced piece, and that's by design. He does his bit to protect the reputations of folks like Bernanke and Blanchard, obscuring their viewpoints and the consequences of their policies.

I am not sure what can be done about it. Economists like Krugman are as arrogant as they are ignorant -- there's not enough intellectual integrity to even acknowledge fundamental errors, and that lack of integrity keeps the "orthodoxy" going in the face of manifest failures. For the conservatives on some payroll, the problem is even worse.

I am not confident that shooing economists from the policy room and encouraging politicians to discuss these matters among themselves improves the situation. In doubt, people fall back on a moral fundamentalism of the kind that gets us to "austerity" and "sacrifice" and blames the victims -- pretty much what we have now.

Re-doing Minsky as an analytic model is an impossible task almost by definition. Minsky's approach was fundamentally about abstracting from careful observation of what financial firms did, operationally. It made him a hero with many financial sector denizens, who recognized themselves in his narratives, even when he cast them in the role of bad guys. (No one is ever going to recognize himself as a representative agent in a DSGE model.)

Perhaps the hardest thing to digest from Minsky is the insight that business cycles can not be entirely mastered. The economy is fundamentally a set of disequilibrium phenomena, the instability built-in (endogenous, as they say). The New Keynesian idea is that the economy is fundamentally an equilibrium phenomenon, that occasionally needs a helping hand to recover from exogenous disturbance. These are antagonistic world views, which cannot be reconciled with each other, and the New Keynesian view can be reconciled only minimally with the observable facts of the world, by a lot of ad hoc fuzzy thinking ("frictions").

It's very ugly.

Thornton Hall said... June 3, 2015 at 7:35 PM
Bruce, I disagree with your view of politicians. The current GOP crop are essentially following the moral philosophy that, in the end, is the only content generated by economics. But it was not always thus.

I once watched Senator Kit Bond of Missouri (very-R) try to round up a quorum in the Small Business Committee. It was quite clear that the man enjoyed people. He liked the company of just about everybody. Without the strong interference from economists, that's who ends up in politics. People like that are pragmatic. They try things. They aren't there for the purpose (contra Ted Cruz) of breaking things.

You're right, my problem really is with analytic "models" which aren't really models but rather metaphors or analogies. But I don't think that's the only way reasoning from history can work.

There are lots of areas of policy, some of which continue to resist conversion to economic religion. In education policy we try interventions and see what happens. It's inductive and mostly correlation, but thru trial and error we do progress toward better policy (although schools of education are only slowly moving away from their notoriously anti-scientific past).

Politicians don't have to think about the budget like a household and tighten belts. They know that business borrow money all the time. It's actually the language of the academy that leads to "tightening belts" instead of investing in the future. Economics is the science of claiming that if you need something, and you can afford that something, you still must consider "multipliers" or "the philosophers stone" or some other nonsense before you can decide to buy what you need.

Thornton Hall said... June 3, 2015 at 7:36 PM

Mark Buchanan's book "Forecast" describes just this process.

Thornton Hall said... June 3, 2015 at 7:44 PM

What I mean to say about history: don't confuse theories with models. I have a theory about what caused what in the Great Depression. But I don't model the economy.

reason said... June 4, 2015 at 9:36 AM

Barkley,

I think I should clarify, I think endogenous and exogenous are a little bit besides the point here. I think the exact trigger that starts a "state change" in the system has a stochastic component. But the increasing vulnerability of the system is endogenous, in a very Minsky sense. What I am saying is that increasing vulnerability could be modelled without using agent based modelling (a bit like modelling landslides or earthquakes if you like). I'm not saying that the model is just being driven by exogenous shocks.

Bruce,

I think there is a bit of tendency to mischaracterise what Paul Krugman is saying. He is the last person you should be accusing of mistaking the map for the territory. He is saying that EVEN relatively simple models can make sensible suggestions about policy in some circumstances.

Yes, though I tend to agree with you that general equilibrium is the original sin in macro-economic modelling and that the system is in fact a disequilibrium system. But that doesn't imply to me at all that you can't use analytical approaches.

Thornton Hall said... June 4, 2015 at 1:57 PM

Krugman has no map. My link above demonstrates this quite conclusively.

[Dec 09, 2016] Why Trade Deficits Matter

Dec 09, 2016 | economistsview.typepad.com
Jared Bernstein and Dean Baker:
Why Trade Deficits Matter, The Atlantic : However one feels about Donald Trump, it's fair to say he has usefully elevated a long-simmering issue in American political economy: the hardship faced by the families and communities who have lost out as jobs have shifted overseas. For decades, many politicians from both parties ignored the plight of these workers, offering them bromides about the benefits of free trade and yet another trade deal, this time with some "adjustment assistance."
One of Trump's economic goals is to lower the U.S.'s trade deficit-which is to say, shrink the discrepancy between the value of the country's imports and the value of its exports. Right now, the U.S. currently imports $460 billion more than it exports, meaning it has a trade deficit that works out to about 2.5 percent of GDP. Given that the job market is still not back to full strength and the U.S. has been losing manufacturing jobs-there are 60,000 fewer now than at the beginning of this year, according to the Bureau of Labor Statistics -economists would be wise to question their assumption that such a deficit is harmless. ...
Is the U.S. trade deficit a problem whose solution would help American workers? ...

anne -> sanjait... , December 08, 2016 at 06:10 PM
Looks to me like "global power" comes from a lot more than military spending, and if its jobs we want, then military spending is a decent short run stimulus but long run waste in terms of productive expenditure.

[ Very important argument. ]

anne -> anne... , December 08, 2016 at 06:38 PM
https://en.wikipedia.org/wiki/The_Great_Illusion

The Great Illusion is a book by Norman Angell, first published in the United Kingdom in 1909 under the title Europe's Optical Illusion and republished in 1910 and subsequently in various enlarged and revised editions under the title The Great Illusion.

Angell argued that war between industrial countries was futile because conquest did not pay. J.D.B. Miller writes: "The 'Great Illusion' was that nations gained by armed confrontation, militarism, war, or conquest." The economic interdependence between industrial countries meant that war would be economically harmful to all the countries involved. Moreover, if a conquering power confiscated property in the territory it seized, "the incentive to produce [of the local population] would be sapped and the conquered area be rendered worthless. Thus, the conquering power had to leave property in the hands of the local population while incurring the costs of conquest and occupation."

Angell said that arms build-up, for example the naval race that was happening as he wrote the book in the early 1910s, was not going to secure peace. Instead, it would lead to increased insecurity and thus increase the likelihood of war. Only respect for international law, a world court, in which issues would be dealt with logically and peaceably would be the route for peace.

A new edition of The Great Illusion was published in 1933; it added "the theme of collective defence." Angell was awarded the Nobel Peace Prize in 1933. He added his belief that if France, Britain, Poland, Czechoslovakia, etc. had bound themselves together to oppose all military aggression, including that of Hitler's, and to appeal to world justice for solution to countries' grievances, then the great mass of reasonable Germans would have stepped up and stopped Hitler from leading their country into an unwinnable war, and World War II would have been avoided.

New Deal democrat -> sanjait... , December 08, 2016 at 06:11 PM
Really, go screw yourself.

In 1909 a book was published saying that free trade would make the world prosperous forever. In the U.S. It was called "the Grand Illusion." Unfortunately Kaiser Wilhelm appeared not to get the message.

If China didn't have those $$$$trillions, they wouldn't feel empowered to change boundary lines by force. We wouldn't be worried about a new arms race.

As for solutions, a trade weighted tariff that kicked in after a certain period/percentage would work just fine, probably similar to the wage equalization tariff I suggested the other day. A VAT might accomplish a similar result.

But seriously, you and everyone who thinks like you can go screw yourselves. Your myopic elitism has gotten us here. I wish you nothing but pain.

DrDick -> sanjait... , December 08, 2016 at 07:06 PM
"then military spending is a decent short run stimulus"

No it is not. It is very ineffective and wasteful. You would get much better return on your investment by spending on repairing and upgrading civic infrastructure.

DrDick -> sanjait... , December 08, 2016 at 07:02 PM
Bull. What we need is enforceable labor and environmental standards and protections so that the corporate greed heads will have less incentive to outsource their production to places lacking any of those things. This is all about maximizing rents by ruthlessly exploiting vulnerable labor in the developing world and by being able to poison and devastate their countries at will.
Victory Lap Dancer : , December 08, 2016 at 05:27 PM

U.S. currently imports $460 billion more than it exports, meaning
"
~J B & D B~~

... meaning that We the People print up t-bonds valued at $460 then trade these bonds for Federal Reserve Notes printed up by FG-s worth $460 then use same notes to buy same amount of running shoes, shot glasses, etc.

We print up genuine t-bonds for their counterfeit products that look like the real thing. Huh! The question is :

How can we do more of this without those foreigner suckers catching on, getting wise to the scam?

For one, we can make sure that we don't print up more of our genuine paper than their demand for it. Get it? So long as their demand continues to be great enough to raise the price of our tiny slips of paper, we are cool.

When we are printing too much, the price of our paper falls, buys less, has less buying power. Less buying power is what we call inflation. More buying power is what we call deflation. Got it?

Print less thus keep popularity of our printed numbers up. Tell me something!

What happens when our workers lose jobs to foreigner suckers who dig our printed numbers?

Job loss to foreigners slows down the domestic development of robotics, artificial intelligence, and the singularity that will inevitably detonate all jobs globally. What will that detonation do to our life style of excessive overpopulation.

Don't ask, but don't
tell --

Donald A. Coffin : , -1
The usual response to a trade deficit is that the country running the deficit sees its currency decline in value. This lowers the effective price of its exports and raises the effective price of its imports. Assuming nothing peculiar about the price elasticities of demand for exports and import, this should lead to a shrinking trade deficit. From 1973 to 1998, the dollar appreciated steadily, and the (nominal) trade deficit expanded only slightly. From 1998 to 2005, the dollar continued to appreciate--but the (nominal) trade deficit exploded, increasing by a factor of (roughly) 10 by 2006. Then, as the dollar began depreciating (in 2002), the trade deficit began to shrink. Since about 2008, the dollar has been appreciating again.

What needs most to be explained is the explosion of the trade deficit between 1998 and 2006; about half of the increase in the trade deficit was between 1998 and 2002; the other half between 2002 and 2006.

[Dec 09, 2016] Understanding Evil From Globalism To Pizzagate Zero Hedge

Dec 09, 2016 | www.zerohedge.com
Submitted by Brandon Smith via Alt-Market.com,

I have spent the better part of the last 10 years working diligently to investigate and relate information on economics and geopolitical discourse for the liberty movement. However, long before I delved into these subjects my primary interests of study were the human mind and the human "soul" (yes, I'm using a spiritual term).

My fascination with economics and sociopolitical events has always been rooted in the human element. That is to say, while economics is often treated as a mathematical and statistical field, it is also driven by psychology. To know the behavior of man is to know the future of all his endeavors, good or evil.

Evil is what we are specifically here to discuss. I have touched on the issue in various articles in the past including Are Globalists Evil Or Just Misunderstood , but with extreme tensions taking shape this year in light of the U.S. election as well as the exploding online community investigation of "Pizzagate," I am compelled to examine it once again.

I will not be grappling with this issue from a particularly religious perspective. Evil applies to everyone regardless of their belief system, or even their lack of belief. Evil is secular in its influence.

The first and most important thing to understand is this - evil is NOT simply a social or religious construct, it is an inherent element of the human psyche. Carl Gustav Jung was one of the few psychologists in history to dare write extensively on the issue of evil from a scientific perspective as well as a metaphysical perspective. I highly recommend a book of his collected works on this subject titled 'Jung On Evil', edited by Murray Stein, for those who are interested in a deeper view.

To summarize, Jung found that much of the foundations of human behavior are rooted in inborn psychological contents or "archetypes." Contrary to the position of Sigmund Freud, Jung argued that while our environment may affect our behavior to a certain extent, it does not make us who we are. Rather, we are born with our own individual personality and grow into our inherent characteristics over time. Jung also found that there are universally present elements of human psychology. That is to say, almost every human being on the planet shares certain truths and certain natural predilections.

The concepts of good and evil, moral and immoral, are present in us from birth and are mostly the same regardless of where we are born, what time in history we are born and to what culture we are born. Good and evil are shared subjective experiences. It is this observable psychological fact (among others) that leads me to believe in the idea of a creative design - a god. Again, though, elaborating on god is beyond the scope of this article.

To me, this should be rather comforting to people, even atheists. For if there is observable evidence of creative design, then it would follow that there may every well be a reason for all the trials and horrors that we experience as a species. Our lives, our failures and our accomplishments are not random and meaningless. We are striving toward something, whether we recognize it or not. It may be beyond our comprehension at this time, but it is there.

Evil does not exist in a vacuum; with evil there is always good, if one looks for it in the right places.

Most people are readily equipped to recognize evil when they see it directly. What they are not equipped for and must learn from environment is how to recognize evil disguised as righteousness. The most heinous acts in history are almost always presented as a moral obligation - a path towards some "greater good." Inherent conscience, though, IS the greater good, and any ideology that steps away from the boundaries of conscience will inevitably lead to disaster.

The concept of globalism is one of these ideologies that crosses the line of conscience and pontificates to us about a "superior method" of living. It relies on taboo, rather than moral compass, and there is a big difference between the two.

When we pursue a "greater good" as individuals or as a society, the means are just as vital as the ends. The ends NEVER justify the means. Never. For if we abandon our core principles and commit atrocities in the name of "peace," safety or survival, then we have forsaken the very things which make us worthy of peace and safety and survival. A monster that devours in the name of peace is still a monster.

Globalism tells us that the collective is more important than the individual, that the individual owes society a debt and that fealty to society in every respect is the payment for that debt. But inherent archetypes and conscience tell us differently. They tell us that society is only ever as healthy as the individuals within it, that society is only as free and vibrant as the participants. As the individual is demeaned and enslaved, the collective crumbles into mediocrity.

Globalism also tells us that humanity's greatest potential cannot be reached without collectivism and centralization. The assertion is that the more single-minded a society is in its pursuits the more likely it is to effectively achieve its goals. To this end, globalism seeks to erase all sovereignty. For now its proponents claim they only wish to remove nations and borders from the social equation, but such collectivism never stops there. Eventually, they will tell us that individualism represents another nefarious "border" that prevents the group from becoming fully realized.

At the heart of collectivism is the idea that human beings are "blank slates;" that we are born empty and are completely dependent on our environment in order to learn what is right and wrong and how to be good people or good citizens. The environment becomes the arbiter of decency, rather than conscience, and whoever controls the environment, by extension, becomes god.

If the masses are convinced of this narrative then moral relativity is only a short step away. It is the abandonment of inborn conscience that ultimately results in evil. In my view, this is exactly why the so called "elites" are pressing for globalism in the first place. Their end game is not just centralization of all power into a one world edifice, but the suppression and eradication of conscience, and thus, all that is good.

To see where this leads we must look at the behaviors of the elites themselves, which brings us to "Pizzagate."

The exposure by Wikileaks during the election cycle of what appear to be coded emails sent between John Podesta and friends has created a burning undercurrent in the alternative media. The emails consistently use odd and out of context "pizza" references, and independent investigations have discovered a wide array connections between political elites like Hillary Clinton and John Podesta to James Alefantis, the owner of a pizza parlor in Washington D.C. called Comet Ping Pong. Alefantis, for reasons that make little sense to me, is listed as number 49 on GQ's Most Powerful People In Washington list .

The assertion according to circumstantial evidence including the disturbing child and cannibalism artwork collections of the Podestas has been that Comet Ping Pong is somehow at the center of a child pedophilia network serving the politically connected. Both Comet Ping Pong and a pizza establishment two doors down called Besta Pizza use symbols in their logos and menus that are listed on the FBI's unclassified documentation on pedophilia symbolism , which does not help matters.

Some of the best documentation of the Pizzagate scandal that I have seen so far has been done by David Seaman, a former mainstream journalist gone rogue. Here is his YouTube page .

I do recommend everyone at least look at the evidence he and others present. I went into the issue rather skeptical, but was surprised by the sheer amount of weirdness and evidence regarding Comet Pizza. There is a problem with Pizzagate that is difficult to overcome, however; namely the fact that to my knowledge no victims have come forward. This is not to say there has been no crime, but anyone hoping to convince the general public of wrong-doing in this kind of scenario is going to have a very hard time without a victim to reference.

The problem is doubly difficult now that an armed man was arrested on the premises of Comet Ping Pong while "researching" the claims of child trafficking. Undoubtedly, the mainstream media will declare the very investigation "dangerous conspiracy theory." Whether this will persuade the public to ignore it, or compel them to look into it, remains to be seen.

I fully realize the amount of confusion surrounding Pizzagate and the assertions by some that it is a "pysop" designed to undermine the alternative media. This is a foolish notion, in my view. The mainstream media is dying, this is unavoidable. The alternative media is a network of sources based on the power of choice and cemented in the concept of investigative research. The reader participates in the alternative media by learning all available information and positions and deciding for himself what is the most valid conclusion, if there is any conclusion to be had. The mainstream media simply tells its readers what to think and feel based on cherry picked data.

The elites will never be able to deconstruct that kind of movement with something like a faked "pizzagate"; rather, they would be more inclined to try to co-opt and direct the alternative media as they do most institutions. And, if elitists are using Pizzagate as fodder to trick the alternative media into looking ridiculous, then why allow elitist run social media outlets like Facebook and Reddit to shut down discussion on the issue?

The reason I am more convinced than skeptical at this stage is because this has happened before; and in past scandals of pedophilia in Washington and other political hotbeds, some victims DID come forward.

I would first reference the events of the Franklin Scandal between 1988 and 1991. The Discovery Channel even produced a documentary on it complete with interviews of alleged child victims peddled to Washington elites for the purpose of favors and blackmail. Meant to air in 1994, the documentary was quashed before it was ever shown to the public. The only reason it can now be found is because an original copy was released without permission by parties unknown.

I would also reference the highly evidenced Westminster Pedophile Ring in the U.K. , in which the U.K. government lost or destroyed at least 114 related files related to the investigation.

Finally, it is disconcerting to me that the criminal enterprises of former Bear Sterns financier and convicted pedophile Jeffrey Epstein and his "Lolita Express" are mainstream knowledge, yet the public remains largely oblivious. Bill Clinton is shown on flight logs to have flown on Epstein's private jet at least a 26 times; the same jet that he used to procure child victims as young as 12 to entertain celebrities and billionaires on his 72 acre island called "Little Saint James". The fact that Donald Trump was also close friends with Epstein should raise some eyebrows - funny how the mainstream media attacked Trump on every cosmetic issue under the sun but for some reason backed away from pursuing the Epstein angle.

Where is the vast federal investigation into the people who frequented Epstein's wretched parties? There is none, and Epstein, though convicted of molesting a 14 year old girl and selling her into prostitution, was only slapped on the wrist with a 13 month sentence.

Accusations of pedophilia seem to follow the globalists and elitist politicians wherever they go. This does not surprise me. They often exhibit characteristics of narcissism and psychopathy, but their ideology of moral relativity is what would lead to such horrible crimes.

Evil often stems from people who are empty. When one abandons conscience, one also in many respects abandons empathy and love. Without these elements of our psyche there is no happiness. Without them, there is nothing left but desire and gluttony.

Narcissists in particular are prone to use other people as forms of entertainment and fulfillment without concern for their humanity. They can be vicious in nature, and when taken to the level of psychopathy, they are prone to target and abuse the most helpless of victims in order to generate a feeling of personal power.

Add in sexual addiction and aggression and narcissists become predatory in the extreme. Nothing ever truly satisfies them. When they grow tired of the normal, they quickly turn to the abnormal and eventually the criminal. I would say that pedophilia is a natural progression of the elitist mindset; for children are the easiest and most innocent victim source, not to mention the most aberrant and forbidden, and thus the most desirable for a psychopathic deviant embracing evil impulses.

Beyond this is the even more disturbing prospect of cultism. It is not that the globalists are simply evil as individuals; if that were the case then they would present far less of a threat. The greater terror is that they are also organized. When one confronts the problem of evil head on, one quickly realizes that evil is within us all. There will always be an internal battle in every individual. Organized evil, though, is in fact the ultimate danger, and it is organized evil that must be eradicated.

For organized evil to be defeated, there must be organized good. I believe the liberty movement in particular is that good; existing in early stages, not yet complete, but good none the less. Our championing of the non-aggression principle and individual liberty is conducive to respect for privacy, property and life. Conscience is a core tenet of the liberty ideal, and the exact counter to organized elitism based on moral relativity.

Recognize and take solace that though we live in dark times, and evil men roam free, we are also here. We are the proper response to evil, and we have been placed here at this time for a reason. Call it fate, call it destiny, call it coincidence, call it god, call it whatever you want, but the answer to evil is us.

  • None
  • Donald Trump
  • Private Jet
  • FBI
  • Washington D.C.
  • Printer-friendly version
  • Dec 8, 2016 10:15 PM
  • 35
  • Comment viewing options Select your preferred way to display the comments and click "Save settings" to activate your changes.
    AtATrESICI Dec 8, 2016 10:18 PM ,
    Wow
    eforce AtATrESICI Dec 8, 2016 10:24 PM ,
    "Out of the temporary evil we are now compelled to commit will emerge the good of an unshakable rule, which will restore the regular course of the machinery of the national life, brought to naught by liberalism. The result justifies the means. Let us, however, in our plans, direct our attention not so much to what is good and moral as to what is necessary and useful."

    --The Protocols.

    peddling-fiction eforce Dec 8, 2016 10:29 PM ,
    This rabbit hole requires a little spiritual know-how but is very blunt and direct.

    It is about EVIL this time around here in our terrarium.

    Almost Solvent peddling-fiction Dec 8, 2016 10:30 PM ,
    Only one question matters.

    Is there a basement or not?

    peddling-fiction Almost Solvent Dec 8, 2016 10:40 PM ,
    and what are chicken lovers?

    For a laugh read some real fake encyclopedia entries here-> https://en.wikipedia.org/wiki/Pizzagate_ (conspiracy_theory)

    eforce peddling-fiction Dec 8, 2016 10:42 PM ,
    I should also point out those alledgedly behind The Protocols are not the people the article is referring ie: those people are typically found in any liberal establishment.
    Fed Supporter eforce Dec 8, 2016 10:55 PM ,
    #PizzaGate New Info 12/8/16: Pizzagate SHOOTER & BROTHER Exposed Via their INSTAGRAM

    CHAOS MAYHEM https://www.youtube.com/watch?v=WHTsMWUGVeE NO KIDDING THE #PizzaGate Shooter's (KID BROTHER) HAS AN INSTAGRAM ... WTF FUBAR
    the Internet has located the Shooter's younger Transgendered BROTHER the artist from COMET ping Pong Band Nights..
    Squid-puppets a... peddling-fiction Dec 8, 2016 10:44 PM ,
    A good article, but it fails to deliver on these key aspects of the matter:

    Everyone knows from the Godfather and its genre that there is a connection between loyalty, criminality and power: Once you witness someone engaging in a criminal act, you have leverage over them and that ensures their loyalty. But what follows from that - which healthy sane minds have trouble contemplating - is that the greater the criminality the greater the leverage, and that because murderous paedophilia places a person utterly beyond any prospect of redemption in decent society, there in NO GREATER LOYALTY than those desperate to avoid being outed. These must be the three corners of the triangle - Power:Loyalty:Depravity through which the evil eys views the world.

    I always beleived in an Illuminati of sorts, however they care to self identify. Until Pizzagate, I never understood that murderous paedophilia, luciferian in style to accentuate their own depravity, is THE KEY TO RULING THE EARTH

    And another thing. If pizzagate is 'fake news' then it it inconceivably elaborate - they'd have had to fake Epstein 2008, Silsby 2010, Breitbart 2011, the 2013 portugese release of podestaesque mccann suspects, as well as the current run of wikileaks and Alefantis' instagram account - which had an avatar photo of the 13 yr old lover of a roman emperor.

    Is that much fake news a possibility? Or has this smoke been blowing for years and we've all been too distracted to stop and look for fire?

    JacksNight eforce Dec 8, 2016 10:43 PM ,
    Happy Advent everyone! "Glory to God in the highest heaven, and on earth peace to those on whom his favor rests."

    Matthew 5:43-48

    PizzaGate/TwitterGate/RedditGate repost:

    PizzaGate Infographic:

    http://sli.mg/lwgIgH

    Archived reddit thread to fellow journalists which led to the banning of r/pizzagate:

    https://archive.fo/MrsGu

    Andrew Breitbart tweets before death adds fuel to online speculation of D.C. sex-trafficking ring:

    https://i.sli.mg/C9U1nQ.jpg

    The Pedophocracy by David McGowan – Bibliography included:

    http://www.whale.to/b/pedophocracy.html

    FBI Special Agent Ted Gunderson outlines satanic pedophile elements in the United States:

    https://www.youtube.com/watch?v=BplUD6kQYuU

    Evidence regarding international pedophile rings being protected by police and intelligence agencies:

    https://www.reddit.com/r/conspiracy/comments/1cm0t3/original_research_the_mountain_of_evidence_for_a/

    // //
    Draybin Defferc... eforce Dec 8, 2016 10:30 PM ,
    What floors me about the whole pizzagate thing is the evil staring us right in the face. And then to realize that the libtards don't even believe in evil at all, only "mental illness"!
    Umh Dec 8, 2016 10:22 PM ,
    Lesson #1: Do not waste your time figuring some things out. Things like evil people are probably beyond a decent persons ability to understand and let's be honest I don't want to feel any sympathy for them anyway.
    peddling-fiction Umh Dec 8, 2016 10:30 PM ,
    Invest some time if you want to understand what is going on> http://www.bibliotecapleyades.net/sociopolitica/hiddenevil/hiddenevil.htm
    Uwantsun Dec 8, 2016 10:22 PM ,
    PIZZAGATE IS REAL. All else is intrigue.
    peddling-fiction Uwantsun Dec 8, 2016 10:34 PM ,
    PIZZAGATE

    Why does this artist paint this-> https://pbs.twimg.com/media/CyS0-oIUQAAJ7e8.jpg

    freddymercury Dec 8, 2016 10:22 PM ,
    The 'devil' is in the details
    Armadillo Bandit freddymercury Dec 8, 2016 10:33 PM ,
    Good subject to show your wit on.
    conraddobler Dec 8, 2016 10:35 PM ,
    True liberty does not exist and will never exist if the oxygen in the room is owned and rented back to you.

    Soul Glow Dec 8, 2016 10:33 PM ,
    The best thing about Pizzagate is that it vindicates Breitbart's tweets before he died about Podesta being a pedophile.

    https://i.sli.mg/C9U1nQ.jpg

    peddling-fiction Soul Glow Dec 8, 2016 10:38 PM ,
    May he rest in peace. No fear.
    JTimchenko Dec 8, 2016 10:39 PM ,
    Lots of evil going on... but people ought not to be nuts enough to go into some pizza joint with a gun firing just because rumors are flying.
    Soul Glow JTimchenko Dec 8, 2016 10:43 PM ,
    I'm all for gold manipulation. Leaves more time for me to buy it!

    ;)

    Neighbour Dec 8, 2016 10:37 PM ,
    Man knows Good and Evil, which is the tree of knowledge of Good and Evil. Man does not know God-Yet!

    When we are brought low, then we will know God, inwhich he will offer to us The Tree of Life.

    Keep your eyes open and ears tuned...our world is spinning faster and more violently then ever.

    cherry picker Neighbour Dec 8, 2016 10:54 PM ,
    The deeds of humans bring this out.

    This recent election illustrates how evil works.

    Read a book years ago by Dr. Karl Menninger, a psychiatrist, titled 'Whatever happened to Sin?'

    In it he talks of murder and that it is not a natural thing for man to do,. However, when the burden of guilt is spread over many shoulders and government condones the action, it becomes easier to bear.

    When observing the results, such as soldiers returning from war, unstable mentally, it is evident that evil has occured. It has been decades since I read the book, so the words I wrote may not be verbatim.

    dark pools of soros Dec 8, 2016 10:37 PM ,
    Good article.. must be fake

    ebworthen Dec 8, 2016 10:39 PM ,
    Wall Street, Washington, the FED, and the Kleptoligarchy are evil; Satanic.

    Was there a question in there somewhere?

    quax Dec 8, 2016 10:41 PM ,
    Unlike victimless Pizzagate a victim aledged to have been raped by Trump at the age of 13 did come forward, but this has been all but ignored here.
    kuwa mzuri quax Dec 8, 2016 10:50 PM ,
    You're saying raped, tortured, snuffed and maybe eaten child victims haven't come forward?

    You've got a point, then.

    stant Dec 8, 2016 10:41 PM ,
    Peak evil is hear , forget peak oil , peak debt etc
    Armadillo Bandit Dec 8, 2016 10:42 PM ,
    Lurked ZH for years, just started reading the comments. This is worse than Reddit's echo chamber. Bible quotes? 3 guys 1 hammer on liveleak has more productive comments. Why not mention methods you've used to help people reach their own conclusion about Pizzagate?
    Handful of Dust Dec 8, 2016 10:43 PM ,
    I had two slices of pizza for dinner. I had to try not to think of the poor children walking innocently about the store who may at any moment fall victim to a pedo. My gf said pizza places all over now need to keep a keen eye out for the Posdesta Brothers and their Gang after all the stuff that has come out from WikiLeaks and other sources about them.

    I notice the Podesta Brothers are now in hiding.

    Shameful.

    flaminratzazz Dec 8, 2016 10:51 PM ,
    The bible says God created evil and loosed it on us. The correct reading of Genesis 4;1 is from the dead sea scrolls stating :

    "And Adam knew his wife Eve, who was pregnant by Sammael [Satan] , and she conceived and bare Cain, and he was like the heavenly beings, and not like earthly beings, and she said, I have gotten a man from the angel of the Lord."

    So in Isaiah 45:7 we have this:

    I form the light, and create darkness: I make peace, and create evil: I the LORD do all these things .

    So my research shows evil was "grafted" into humans through the unholy alliance and 2 seedline of people resulted.

    US and THEM

    you can see it in their eyes

    kuwa mzuri Dec 8, 2016 10:54 PM ,
    Good article but an exception: evil doesn't reside in all of us, sin does. Evil is the expression of wanton and intentional deception, injury, degradation, and destruction and rarely self-recognizes or admits to God as supreme. It may be DNA encoded. Sociopathy certainly is.

    But you're so right about the organized nature of it all, and for thousands of years. The newly formed EU didn't advertise itself as the New Babylonia for nothing on publicty posters, heralding the coming age of one tongue out of many and fashioning its parliament building after the Tower of Bablyon:

    http://nteb-mudflowermedia.netdna-ssl.com/wp-content/uploads/2015/02/eur...

    Secret societies are cannibalizing us, and themselves, but members won't know till it's too late that they'll also be eaten fairly early on. Of all "people", they should know those in the pyramid capstone won't have enough elbow room if they let in every Tom, Dick and Harry Mason.

    HRH Feant Dec 8, 2016 10:47 PM ,
    I am sympatico with Brandon. I have always had similar interests, about the soul, about ethics, about human behavior.

    The reality is that evil is extant in other human beings. The thought that your property manager is going to piss in your OJ or fuck their BFF in your bed is abhorrent to most people, but not all. There was an article this week about a married couple that had concerns about their rental unit manager. And what did they find? He was fucking his BFF (yes, of course it was another dude) in their bed. The good news is they got it on video and moved. The bad news? This kind of attitude is rampant. People don't give a shit about other people. They think the rules don't apply to them. That they are special. The result is renting from some asshat that fucks in your bed or pisses in your OJ. Or parents that wonder why little Johnny or little Janie never move out of the house and are stoned and play video games all day.

    Evil exists, in varying forms. Sadly too many people continue to make excuses for not only bad behavior but evil behavior. I don't think that way and I don't live my life that way but I am fully aware of all the morons stumbling through the world that do.

    Ms No Dec 8, 2016 10:50 PM ,
    I think people are misunderstanding the setup theory. Nobody believes, at least I hope not, that all of this art and bizarre behavior on the part of these freaks was staged for the purposes of taking down the last of our free media, but rather, they just took advantage of a situation where they knew people were making accusations that couldn't be sufficiently backed up or even prosecuted, and yet caused proven or contrived damages to people. If this is the case, their intention, with the help of intelligence agencies , is to frame alt-media for starting vigilante violence and the destruction of innocent people's lives through promoting defamation against others.

    I have no doubt that our entire system is riddled with pedophilia and likely much worse. They have also been getting away with this forever, so when we go for the takedown we better have our ducks in a row. To do otherwise will just give these sickos complete immunity and more decades will pass with them continuing to prey on our children. Not only is this at stake but the fate of all the children of this nation is at stake if we lose our media. We are in very dangerous and treacherous times. When you go toe to toe with the professional trade crafters you have to play smart or they will have you every time.

    Once people have had enough exposure to NPDs or psychopaths you will vibe them after a while. I imagine this is likely the case for anyone who has worked as a trader, finance, politics, big commodity booms are bad, etc. We have all encountered them somewhere. People should pay attention to how they feel (yeah I know, people hate that word) when they are around people. I have to pretend that I don't notice them because it is so apparent to me and immediately.

    The last time I picked one out at work, a few months later the creepy bastard walked past me at night during a -20 blizzard, with next to no visibility, knowing that I had an hour drive, and told me in super spooky whisper.. "Don't hit a deer on your way home now." I found out later that a bunch of horses had mysteriously died in his care and a bunch of other things that confirmed my suspicions. I had a long battle with him so I eventually got to understand him pretty well. I didn't have to hear the guy state a single sentence or watch any body language, I just knew immediately because I could feel his malevolence and threat in my stomach where we have a large nerve cluster. Pay attention and you will know. Also their eye contact is all wrong and too intense.

    Aussiekiwi Dec 8, 2016 10:55 PM ,
    Globalism, is designed to make you poorer slowly over decades by allowing wages and conditions to be for ever slowly reduced under the guise of free market competition to funnel wealth ever upwards to the 1%.

    [Dec 05, 2016] Trump campaign is a similar to Brexit crusade by grassroots activists against big banks and global political insiders . by those who feel disaffected and disenfranchised

    Notable quotes:
    "... Speaking to a local radio station before the joint rally, Farage urged Americans to "go out and fight" against Hillary Clinton. ..."
    "... "I am going to say to people in this country that the circumstances, the similarities, the parallels between the people who voted Brexit and the people who could beat Clinton in a few weeks time here in America are uncanny," Farage told Super Talk Mississippi. "If they want things to change they have get up out of their chairs and go out and fight for it. It can happen. We've just proved it." ..."
    "... It's not for me as a foreign politician to say who you should vote for ... All I will say is that if you vote for Hillary Clinton, then nothing will change. She represents the very politics that we've just broken through the Brexit vote in the United Kingdom. ..."
    Aug 24, 2016 | www.theguardian.com

    ...the British politician, who was invited by Mississippi governor Phil Bryant, will draw parallels between what he sees as the inspirational story of Brexit and Trump's campaign. Farage will describe the Republican's campaign as a similar crusade by grassroots activists against "big banks and global political insiders" and how those who feel disaffected and disenfranchised can become involved in populist, rightwing politics. With Trump lagging in the polls, just as Brexit did prior to the vote on the referendum, Farage will also hearten supporters by insisting that they can prove pundits and oddsmakers wrong as well.

    This message resonates with the Trump campaign's efforts to reach out to blue collar voters who have become disillusioned with American politics, while also adding a unique flair to Trump's never staid campaign rallies.

    The event will mark the first meeting between Farage and Trump.

    Arron Banks, the businessman who backed Leave.EU, the Brexit campaign group associated with the UK Independence party (Ukip), tweeted that he would be meeting Trump over dinner and was looking forward to Farage's speech.

    The appointment last week of Stephen Bannon, former chairman of the Breitbart website, as "CEO" of Trump's campaign has seen the example of the Brexit vote, which Breitbart enthusiastically advocated, rise to the fore in Trump's campaign narrative.

    Speaking to a local radio station before the joint rally, Farage urged Americans to "go out and fight" against Hillary Clinton.

    "I am going to say to people in this country that the circumstances, the similarities, the parallels between the people who voted Brexit and the people who could beat Clinton in a few weeks time here in America are uncanny," Farage told Super Talk Mississippi. "If they want things to change they have get up out of their chairs and go out and fight for it. It can happen. We've just proved it."

    "I am being careful," he added when asked if he supported the controversial Republican nominee. "It's not for me as a foreign politician to say who you should vote for ... All I will say is that if you vote for Hillary Clinton, then nothing will change. She represents the very politics that we've just broken through the Brexit vote in the United Kingdom."

    [Dec 05, 2016] Failure of Globalization and the Fourth Estate

    Notable quotes:
    "... As Mr. Buffet so keenly said it, There is a war going on, and we are winning. ..."
    "... Just type `TPP editorial' into news.google.com and watch a toxic sludge of straw men, misdirection, and historical revisionism flow across your screen. And the `objective' straight news reporting is no better. ..."
    "... "Why is it afraid of us?" Because we the people are perceived to be the enemy of America the Corporation. Whistleblowers have already stated that the NSA info is used to blackmail politicians and military leaders, provide corporate espionage to the highest payers and more devious machinations than the mind can grasp from behind a single computer. 9/11 was a coup – I say that because looking around the results tell me that. ..."
    "... The fourth estate (the media) has been purchased outright by the second estate (the nobility). I guess you could call this an 'estate sale'. All power to the markets! ..."
    naked capitalism
    Free Trade," the banner of Globalization, has not only wrecked the world's economy, it has left Western Democracy in shambles. Europe edges ever closer to deflation. The Fed dare not increase interest rates, now poised at barely above zero. As China's stock market threatened collapse, China poured billions to prop it up. It's export machine is collapsing. Not once, but twice, it recently manipulated its currency to makes its goods cheaper on the world market. What is happening?

    The following two graphs tell most of the story. First, an overview of Free Trade.

    Deficit4-1024x420

    Capital fled from developed countries to undeveloped countries with slave-cheap labor, countries with no environmental standards, countries with no support for collective bargaining. Corporations, like Apple, set up shop in China and other undeveloped countries. Some, like China, manipulated its currency to make exported goods to the West even cheaper. Some, like China, gave preferential tax treatment to Western firm over indigenous firms. Economists cheered as corporate efficiency unsurprisingly rose. U.S. citizens became mere consumers.

    Thanks to Bill Clinton and the Financial Modernization Act, banks, now unconstrained, could peddle rigged financial services, offer insurance on its own investment products–in short, banks were free to play with everyone's money–and simply too big to fail. Credit was easy and breezy. If nasty Arabs bombed the Trade Center, why the solution was simple: Go to the shopping mall–and buy. That remarkable piece of advice is just what freedom has been all about.

    Next: China's export machine sputters.

    CAIXEN-1024x527

    China's problem is that there are not enough orders to keep the export machine going. There comes a time when industrialized nations simply run out of cash–I mean the little people run out of cash. CEOs and those just below them–along with slick Wall Street gauchos–made bundles on Free Trade, corporate capital that could set up shop in any impoverished nation in the world.. No worries about labor–dirt cheap–or environmental regulations–just bring your gas masks. At some point the Western consumer well was bound to run dry. Credit was exhausted; the little guy could not buy anymore. Free trade was on its last legs.

    So what did China do then? As its markets crashed, it tried to revive its export model, a model based on foreign firms exporting cheap goods to the West. China lowered its exchange rates, not once but twice. Then China tried to rescue the markets with cash infusion of billions. Still its market continued to crash. Manufacturing plants had closed–thousands of them. Free Trade and Globalization had run its course.

    And what has the Fed been doing? Why quantitative easy–increase the money supply and lower short term interest rates. Like China's latest currency manipulation, both were merely stop-gap measures. No one, least of all Obama and his corporate advisors, was ready to address corporate outsourcing that has cost millions of jobs. Prime the pump a little, but never address the real problem.

    The WTO sets the groundwork for trade among its member states. That groundwork is deeply flawed. Trade between impoverished third world countries and sophisticated first world economies is not merely a matter of regulating "dumping"-not allowing one country to flood the market with cheap goods-nor is it a matter of insuring that the each country does not favor its indigenous firms over foreign firms. Comparable labor and environmental standards are necessary. Does anyone think that a first world worker can compete with virtual slave labor? Does anyone think that a first world nation with excellent environmental regulations can compete with a third world nation that refuses to protect its environment?

    Only lately has Apple even mentioned that it might clean up its mess in China. The Apple miracle has been on the backs of the Chinese poor and abysmal environmental wreckage that is China.

    The WTO allows three forms of inequities-all of which encourage outsourcing: labor arbitrage, tax arbitrage, and environmental arbitrage. For a fuller explanation of these inequities and the "race to the bottom," see here.

    Of course now we have the mother of all Free Trade deals –the Trans-Pacific Partnership (TPP)– carefully wrapped in a black box so that none of us can see what finally is in store for us. Nothing is ever "Free"–even trade. I suspect that China is becoming a bit too noxious and poisonous. It simply has to deal with its massive environmental problems. Time to move the game to less despoiled and maybe more impoverished countries. Meanwhile, newscasters are always careful to tout TPP.

    Fast Tracking is a con man's game. Do it so fast that the marks never have a chance to watch their wallets. In hiding negotiations from prying, public eyes, Obama, has given the con men a bigger edge: A screen to hide the corporations making deals. Their interest is in profits, not in public good.

    Consider the media. Our only defense is a strong independent media. At one time, newsrooms were not required to be profitable. Reporting the news was considered a community service. Corporate ownership provided the necessary funding for its newsrooms–and did not interfere.

    But the 70′s and 80′s corporate ownership required its newsrooms to be profitable. Slowly but surely, newsrooms focused on personality, entertainment, and wedge issues–always careful not to rock the corporate boat, always careful not to tread on governmental policy. Whoever thought that one major news service–Fox–would become a breeding ground for one particular party.

    But consider CNN: It organizes endless GOP debates; then spends hours dissecting them. Create the news; then sell it–and be sure to spin it in the direction you want.

    Are matters of substance ever discussed? When has a serious foreign policy debate ever been allowed occurred–without editorial interference from the media itself. When has trade and outsourcing been seriously discussed–other than by peripheral news media?

    Meanwhile, news media becomes more and more centralized. Murdoch now owns National Geographic!

    Now, thanks to Bush and Obama, we have the chilling effect of the NSA. Just whom does the NSA serve when it collects all of our digital information? Is it being used to ferret out the plans of those exercising their right of dissent? Is it being used to increase the profits of favored corporations? Why does it need all of your and my personal information–from bank accounts, to credit cards, to travel plans, to friends with whom we chat .Why is it afraid of us?


    jefemt, October 23, 2015 at 9:43 am

    As Mr. Buffet so keenly said it, There is a war going on, and we are winning.

    If 'they' are failing, I'd hate to see success!

    Isn't it the un-collective WE who are failing?

    failing to organize,
    failing to come up with plausible, 90 degrees off present Lemming-to-Brink path alternative plans and policies,
    failing to agree on any of many plausible alternatives that might work

    Divided- for now- hopefully not conquered ..

    I gotta scoot and get back to Dancing with the Master Chefs

    allan, October 23, 2015 at 10:03 am

    Just type `TPP editorial' into news.google.com and watch a toxic sludge of straw men, misdirection, and historical revisionism flow across your screen. And the `objective' straight news reporting is no better.

    Vatch, October 23, 2015 at 10:36 am

    Don't just watch the toxic sludge; respond to it with a letter to the editor (LTE) of the offending publication! For some of those toxic editorials, and contact information for LTEs, see:

    http://www.nakedcapitalism.com/2015/10/200pm-water-cooler-10162015.html#comment-2503316

    http://www.nakedcapitalism.com/2015/10/trading-away-land-rights-tpp-investment-agreements-and-the-governance-of-land.html#comment-2502833

    A few of the editorials may now be obscured by paywalls or registration requirements, but most should still be visible. Let them know that we see through their nonsense!

    TedWa, October 23, 2015 at 10:38 am

    "Why is it afraid of us?" Because we the people are perceived to be the enemy of America the Corporation. Whistleblowers have already stated that the NSA info is used to blackmail politicians and military leaders, provide corporate espionage to the highest payers and more devious machinations than the mind can grasp from behind a single computer. 9/11 was a coup – I say that because looking around the results tell me that.

    TG, October 23, 2015 at 3:27 pm

    The fourth estate (the media) has been purchased outright by the second estate (the nobility). I guess you could call this an 'estate sale'. All power to the markets!

    Pelham, October 23, 2015 at 8:32 pm

    Even when newsrooms were more independent they probably would not, in general, have reported on free trade with any degree of skepticism. The recent disappearance of the old firewall between the news and corporate sides has made things worse, but at least since the "professionalization" of newsrooms that began to really take hold in the '60s, journalists have tended to identify far more with their sources in power than with their readers.

    There have, of course, been notable exceptions. But even these sometimes serve more to obscure the real day-to-day nature of journalism's fealty to the corporate world than to bring about any significant change.

    [Dec 05, 2016] The Great Ponzi Scheme of the Global Economy

    www.counterpunch.org
    March 25, 2016

    CHRIS HEDGES: We're going to be discussing a great Ponzi scheme that not only defines not only the U.S. but the global economy, how we got there and where we're going. And with me to discuss this issue is the economist Michael Hudson, author of Killing the Host: How Financial Parasites and Debt Destroy the Global Economy. A professor of economics who worked for many years on Wall Street, where you don't succeed if you don't grasp Marx's dictum that capitalism is about exploitation. And he is also, I should mention, the godson of Leon Trotsky.

    I want to open this discussion by reading a passage from your book, which I admire very much, which I think gets to the core of what you discuss. You write,

    "Adam Smith long ago remarked that profits often are highest in nations going fastest to ruin. There are many ways to create economic suicide on a national level. The major way through history has been through indebting the economy. Debt always expands to reach a point where it cannot be paid by a large swathe of the economy. This is the point where austerity is imposed and ownership of wealth polarizes between the One Percent and the 99 Percent. Today is not the first time this has occurred in history. But it is the first time that running into debt has occurred deliberately." Applauded. "As if most debtors can get rich by borrowing, not reduced to a condition of debt peonage."

    So let's start with the classical economists, who certainly understood this. They were reacting of course to feudalism. And what happened to the study of economics so that it became gamed by ideologues?

    HUDSON: The essence of classical economics was to reform industrial capitalism, to streamline it, and to free the European economies from the legacy of feudalism. The legacy of feudalism was landlords extracting land-rent, and living as a class that took income without producing anything. Also, banks that were not funding industry. The leading industrialists from James Watt, with his steam engine, to the railroads

    HEDGES: From your book you make the point that banks almost never funded industry.

    HUDSON: That's the point: They never have. By the time you got to Marx later in the 19th century, you had a discussion, largely in Germany, over how to make banks do something they did not do under feudalism. Right now we're having the economic surplus being drained not by the landlords but also by banks and bondholders.

    Adam Smith was very much against colonialism because that lead to wars, and wars led to public debt. He said the solution to prevent this financial class of bondholders burdening the economy by imposing more and more taxes on consumer goods every time they went to war was to finance wars on a pay-as-you-go basis. Instead of borrowing, you'd tax the people. Then, he thought, if everybody felt the burden of war in the form of paying taxes, they'd be against it. Well, it took all of the 19th century to fight for democracy and to extend the vote so that instead of landlords controlling Parliament and its law-making and tax system through the House of Lords, you'd extend the vote to labor, to women and everybody. The theory was that society as a whole would vote in its self-interest. It would vote for the 99 Percent, not for the One Percent.

    By the time Marx wrote in the 1870s, he could see what was happening in Germany. German banks were trying to make money in conjunction with the government, by lending to heavy industry, largely to the military-industrial complex.

    HEDGES: This was Bismarck's kind of social – I don't know what we'd call it. It was a form of capitalist socialism

    HUDSON: They called it State Capitalism. There was a long discussion by Engels, saying, wait a minute. We're for Socialism. State Capitalism isn't what we mean by socialism. There are two kinds of state-oriented–.

    HEDGES: I'm going to interject that there was a kind of brilliance behind Bismarck's policy because he created state pensions, he provided health benefits, and he directed banking toward industry, toward the industrialization of Germany which, as you point out, was very different in Britain and the United States.

    HUDSON: German banking was so successful that by the time World War I broke out, there were discussions in English economic journals worrying that Germany and the Axis powers were going to win because their banks were more suited to fund industry. Without industry you can't have really a military. But British banks only lent for foreign trade and for speculation. Their stock market was a hit-and-run operation. They wanted quick in-and-out profits, while German banks didn't insist that their clients pay as much in dividends. German banks owned stocks as well as bonds, and there was much more of a mutual partnership.

    That's what most of the 19th century imagined was going to happen – that the world was on the way to socializing banking. And toward moving capitalism beyond the feudal level, getting rid of the landlord class, getting rid of the rent, getting rid of interest. It was going to be labor and capital, profits and wages, with profits being reinvested in more capital. You'd have an expansion of technology. By the early twentieth century most futurists imagined that we'd be living in a leisure economy by now.

    HEDGES: Including Karl Marx.

    HUDSON: That's right. A ten-hour workweek. To Marx, socialism was to be an outgrowth of the reformed state of capitalism, as seemed likely at the time – if labor organized in its self-interest.

    HEDGES: Isn't what happened in large part because of the defeat of Germany in World War I? But also, because we took the understanding of economists like Adam Smith and maybe Keynes. I don't know who you would blame for this, whether Ricardo or others, but we created a fictitious economic theory to praise a rentier or rent-derived, interest-derived capitalism that countered productive forces within the economy. Perhaps you can address that.

    HUDSON: Here's what happened. Marx traumatized classical economics by taking the concepts of Adam Smith and John Stuart Mill and others, and pushing them to their logical conclusion. 2KillingTheHost_Cover_ruleProgressive capitalist advocates – Ricardian socialists such as John Stuart Mill – wanted to tax away the land or nationalize it. Marx wanted governments to take over heavy industry and build infrastructure to provide low-cost and ultimately free basic services. This was traumatizing the landlord class and the One Percent. And they fought back. They wanted to make everything part of "the market," which functioned on credit supplied by them and paid rent to them.

    None of the classical economists imagined how the feudal interests – these great vested interests that had all the land and money – actually would fight back and succeed. They thought that the future was going to belong to capital and labor. But by the late 19th century, certainly in America, people like John Bates Clark came out with a completely different theory, rejecting the classical economics of Adam Smith, the Physiocrats and John Stuart Mill.

    HEDGES: Physiocrats are, you've tried to explain, the enlightened French economists.

    HUDSON: The common denominator among all these classical economists was the distinction between earned income and unearned income. Unearned income was rent and interest. Earned incomes were wages and profits. But John Bates Clark came and said that there's no such thing as unearned income. He said that the landlord actually earns his rent by taking the effort to provide a house and land to renters, while banks provide credit to earn their interest. Every kind of income is thus "earned," and everybody earns their income. So everybody who accumulates wealth, by definition, according to his formulas, get rich by adding to what is now called Gross Domestic Product (GDP).

    HEDGES: One of the points you make in Killing the Host which I liked was that in almost all cases, those who had the capacity to make money parasitically off interest and rent had either – if you go back to the origins – looted and seized the land by force, or inherited it.

    HUDSON: That's correct. In other words, their income is unearned. The result of this anti-classical revolution you had just before World War I was that today, almost all the economic growth in the last decade has gone to the One Percent. It's gone to Wall Street, to real estate

    HEDGES: But you blame this on what you call Junk Economics.

    HUDSON: Junk Economics is the anti-classical reaction.

    HEDGES: Explain a little bit how, in essence, it's a fictitious form of measuring the economy.

    HUDSON: Well, some time ago I went to a bank, a block away from here – a Chase Manhattan bank – and I took out money from the teller. As I turned around and took a few steps, there were two pickpockets. One pushed me over and the other grabbed the money and ran out. The guard stood there and saw it. So I asked for the money back. I said, look, I was robbed in your bank, right inside. And they said, "Well, we don't arm our guards because if they shot someone, the thief could sue us and we don't want that." They gave me an equivalent amount of money back.

    Well, imagine if you count all this crime, all the money that's taken, as an addition to GDP. Because now the crook has provided the service of not stabbing me. Or suppose somebody's held up at an ATM machine and the robber says, "Your money or your life." You say, "Okay, here's my money." The crook has given you the choice of your life. In a way that's how the Gross National Product accounts are put up. It's not so different from how Wall Street extracts money from the economy. Then also you have landlords extracting

    HEDGES: Let's go back. They're extracting money from the economy by debt peonage. By raising

    HUDSON: By not playing a productive role, basically.

    HEDGES: Right. So it's credit card interest, mortgage interest, car loans, student loans. That's how they make their funds.

    HUDSON: That's right. Money is not a factor of production. But in order to have access to credit, in order to get money, in order to get an education, you have to pay the banks. At New York University here, for instance, they have Citibank. I think Citibank people were on the board of directors at NYU. You get the students, when they come here, to start at the local bank. And once you are in a bank and have monthly funds taken out of your account for electric utilities, or whatever, it's very cumbersome to change.

    So basically you have what the classical economists called the rentier class. The class that lives on economic rents. Landlords, monopolists charging more, and the banks. If you have a pharmaceutical company that raises the price of a drug from $12 a shot to $200 all of a sudden, their profits go up. Their increased price for the drug is counted in the national income accounts as if the economy is producing more. So all this presumed economic growth that has all been taken by the One Percent in the last ten years, and people say the economy is growing. But the economy isn't growing

    HEDGES: Because it's not reinvested.

    HUDSON: That's right. It's not production, it's not consumption. The wealth of the One Percent is obtained essentially by lending money to the 99 Percent and then charging interest on it, and recycling this interest at an exponentially growing rate.

    HEDGES: And why is it important, as I think you point out in your book, that economic theory counts this rentier income as productive income? Explain why that's important.

    HUDSON: If you're a rentier, you want to say that you earned your income by

    HEDGES: We're talking about Goldman Sachs, by the way.

    HUDSON: Yes, Goldman Sachs. The head of Goldman Sachs came out and said that Goldman Sachs workers are the most productive in the world. That's why they're paid what they are. The concept of productivity in America is income divided by labor. So if you're Goldman Sachs and you pay yourself $20 million a year in salary and bonuses, you're considered to have added $20 million to GDP, and that's enormously productive. So we're talking in a tautology. We're talking with circular reasoning here.

    So the issue is whether Goldman Sachs, Wall Street and predatory pharmaceutical firms, actually add "product" or whether they're just exploiting other people. That's why I used the word parasitism in my book's title. People think of a parasite as simply taking money, taking blood out of a host or taking money out of the economy. But in nature it's much more complicated. The parasite can't simply come in and take something. First of all, it needs to numb the host. It has an enzyme so that the host doesn't realize the parasite's there. And then the parasites have another enzyme that takes over the host's brain. It makes the host imagine that the parasite is part of its own body, actually part of itself and hence to be protected.

    That's basically what Wall Street has done. It depicts itself as part of the economy. Not as a wrapping around it, not as external to it, but actually the part that's helping the body grow, and that actually is responsible for most of the growth. But in fact it's the parasite that is taking over the growth.

    The result is an inversion of classical economics. It turns Adam Smith upside down. It says what the classical economists said was unproductive – parasitism – actually is the real economy. And that the parasites are labor and industry that get in the way of what the parasite wants – which is to reproduce itself, not help the host, that is, labor and capital.

    HEDGES: And then the classical economists like Adam Smith were quite clear that unless that rentier income, you know, the money made by things like hedge funds, was heavily taxed and put back into the economy, the economy would ultimately go into a kind of tailspin. And I think the example of that, which you point out in your book, is what's happened in terms of large corporations with stock dividends and buybacks. And maybe you can explain that.

    HUDSON: There's an idea in superficial textbooks and the public media that if companies make a large profit, they make it by being productive. And with

    HEDGES: Which is still in textbooks, isn't it?

    HUDSON: Yes. And also that if a stock price goes up, you're just capitalizing the profits – and the stock price reflects the productive role of the company. But that's not what's been happening in the last ten years. Just in the last two years, 92 percent of corporate profits in America have been spent either on buying back their own stock, or paid out as dividends to raise the price of the stock.

    HEDGES: Explain why they do this.

    HUDSON: About 15 years ago at Harvard, Professor Jensen said that the way to ensure that corporations are run most efficiently is to make the managers increase the price of the stock. So if you give the managers stock options, and you pay them not according to how much they're producing or making the company bigger, or expanding production, but the price of the stock, then you'll have the corporation run efficiently, financial style.

    So the corporate managers find there are two ways that they can increase the price of the stock. The first thing is to cut back long-term investment, and use the money instead to buy back their own stock. But when you buy your own stock, that means you're not putting the money into capital formation. You're not building new factories. You're not hiring more labor. You can actually increase the stock price by firing labor.

    HEDGES: That strategy only works temporarily.

    HUDSON: Temporarily. By using the income from past investments just to buy back stock, fire the labor force if you can, and work it more intensively. Pay it out as dividends. That basically is the corporate raider's model. You use the money to pay off the junk bond holders at high interest. And of course, this gets the company in trouble after a while, because there is no new investment.

    So markets shrink. You then go to the labor unions and say, gee, this company's near bankruptcy, and we don't want to have to fire you. The way that you can keep your job is if we downgrade your pensions. Instead of giving you what we promised, the defined benefit pension, we'll turn it into a defined contribution plan. You know what you pay every month, but you don't know what's going to come out. Or, you wipe out the pension fund, push it on to the government's Pension Benefit Guarantee Corporation, and use the money that you were going to pay for pensions to pay stock dividends. By then the whole economy is turning down. It's hollowed out. It shrinks and collapses. But by that time the managers will have left the company. They will have taken their bonuses and salaries and run.

    HEDGES: I want to read this quote from your book, written by David Harvey, in A Brief History of Neoliberalism, and have you comment on it.

    "The main substantive achievement of neoliberalism has been to redistribute rather than to generate wealth and income. [By] 'accumulation by dispossession' I mean the commodification and privatization of land, and the forceful expulsion of peasant populations; conversion of various forms of property rights (common collective state, etc.) into exclusive private property rights; suppression of rights to the commons; colonial, neocolonial, and the imperial processes of appropriation of assets (including natural resources); and usury, the national debt and, most devastating at all, the use of the credit system as a radical means of accumulation by dispossession. To this list of mechanisms, we may now add a raft of techniques such as the extraction of rents from patents, and intellectual property rights (such as the diminution or erasure of various forms of common property rights, such as state pensions, paid vacations, and access to education, health care) one through a generation or more of class struggle. The proposal to privatize all state pension rights, pioneered in Chile under the dictatorship is, for example, one of the cherished objectives of the Republicans in the US."

    This explains the denouement. The final end result you speak about in your book is, in essence, allowing what you call the rentier or the speculative class to cannibalize the entire society until it collapses.

    HUDSON: A property right is not a factor of production. Look at what happened in Chicago, the city where I grew up. Chicago didn't want to raise taxes on real estate, especially on its expensive commercial real estate. So its budget ran a deficit. They needed money to pay the bondholders, so they sold off the parking rights to have meters – you know, along the curbs. The result is that they sold to Goldman Sachs 75 years of the right to put up parking meters. So now the cost of living and doing business in Chicago is raised by having to pay the parking meters. If Chicago is going to have a parade and block off traffic, it has to pay Goldman Sachs what the firm would have made if the streets wouldn't have been closed off for a parade. All of a sudden it's much more expensive to live in Chicago because of this.

    But this added expense of having to pay parking rights to Goldman Sachs – to pay out interest to its bondholders – is counted as an increase in GDP, because you've created more product simply by charging more. If you sell off a road, a government or local road, and you put up a toll booth and make it into a toll road, all of a sudden GDP goes up.

    If you go to war abroad, and you spend more money on the military-industrial complex, all this is counted as increased production. None of this is really part of the production system of the capital and labor building more factories and producing more things that people need to live and do business. All of this is overhead. But there's no distinction between wealth and overhead.

    Failing to draw that distinction means that the host doesn't realize that there is a parasite there. The host economy, the industrial economy, doesn't realize what the industrialists realized in the 19th century: If you want to be an efficient economy and be low-priced and under-sell competitors, you have to cut your prices by having the public sector provide roads freely. Medical care freely. Education freely.

    If you charge for all of these, you get to the point that the U.S. economy is in today. What if American factory workers were to get all of their consumer goods for nothing. All their food, transportation, clothing, furniture, everything for nothing. They still couldn't compete with Asians or other producers, because they have to pay up to 43% of their income for rent or mortgage interest, 10% or more of their income for student loans, credit card debt. 15% of their paycheck is automatic withholding to pay Social Security, to cut taxes on the rich or to pay for medical care.

    So Americans built into the economy all this overhead. There's no distinction between growth and overhead. It's all made America so high-priced that we're priced out of the market, regardless of what trade policy we have.

    HEDGES: We should add that under this predatory form of economics, you game the system. So you privatize pension funds, you force them into the stock market, an overinflated stock market. But because of the way companies go public, it's the hedge fund managers who profit. And it's those citizens whose retirement savings are tied to the stock market who lose. Maybe we can just conclude by talking about how the system is fixed, not only in terms of burdening the citizen with debt peonage, but by forcing them into the market to fleece them again.

    HUDSON: Well, we talk about an innovation economy as if that makes money. Suppose you have an innovation and a company goes public. They go to Goldman Sachs and other Wall Street investment banks to underwrite the stock to issue it at $40 a share. What's considered a successful float is when, immediately, Goldman and the others will go to their insiders and tell them to buy this stock and make a quick killing. A "successful" flotation doubles the price in one day, so that at the end of the day the stock's selling for $80.

    HEDGES: They have the option to buy it before anyone else, knowing that by the end of the day it'll be inflated, and then they sell it off.

    HUDSON: That's exactly right.

    HEDGES: So the pension funds come in and buy it at an inflated price, and then it goes back down.

    HUDSON: It may go back down, or it may be that the company just was shortchanged from the very beginning. The important thing is that the Wall Street underwriting firm, and the speculators it rounds up, get more in a single day than all the years it took to put the company together. The company gets $40. And the banks and their crony speculators also get $40.

    So basically you have the financial sector ending up with much more of the gains. The name of the game if you're on Wall Street isn't profits. It's capital gains. And that's something that wasn't even part of classical economics. They didn't anticipate that the price of assets would go up for any other reason than earning more money and capitalizing on income. But what you have had in the last 50 years – really since World War II – has been asset-price inflation. Most middle-class families have gotten the wealth that they've got since 1945 not really by saving what they've earned by working, but by the price of their house going up. They've benefited by the price of the house. And they think that that's made them rich and the whole economy rich.

    The reason the price of housing has gone up is that a house is worth whatever a bank is going to lend against it. If banks made easier and easier credit, lower down payments, then you're going to have a financial bubble. And now, you have real estate having gone up as high as it can. I don't think it can take more than 43% of somebody's income to buy it. But now, imagine if you're joining the labor force. You're not going to be able to buy a house at today's prices, putting down a little bit of your money, and then somehow end up getting rich just on the house investment. All of this money you pay the bank is now going to be subtracted from the amount of money that you have available to spend on goods and services.

    So we've turned the post-war economy that made America prosperous and rich inside out. Somehow most people believed they could get rich by going into debt to borrow assets that were going to rise in price. But you can't get rich, ultimately, by going into debt. In the end the creditors always win. That's why every society since Sumer and Babylonia have had to either cancel the debts, or you come to a society like Rome that didn't cancel the debts, and then you have a dark age. Everything collapses.

    [Dec 05, 2016] A Protectionist Moment?

    Notable quotes:
    "... Furthermore, as Mark Kleiman sagely observes , the conventional case for trade liberalization relies on the assertion that the government could redistribute income to ensure that everyone wins - but we now have an ideology utterly opposed to such redistribution in full control of one party, and with blocking power against anything but a minor move in that direction by the other. ..."
    Sep 12, 2016 | economistsview.typepad.com
    Paul Krugman:
    A Protectionist Moment? : ... if Sanders were to make it to the White House, he would find it very hard to do anything much about globalization - not because it's technically or economically impossible, but because the moment he looked into actually tearing up existing trade agreements the diplomatic, foreign-policy costs would be overwhelmingly obvious. ...

    But it's also true that much of the elite defense of globalization is basically dishonest: false claims of inevitability, scare tactics ( protectionism causes depressions !), vastly exaggerated claims for the benefits of trade liberalization and the costs of protection, hand-waving away the large distributional effects that are what standard models actually predict. I hope, by the way, that I haven't done any of that...

    Furthermore, as Mark Kleiman sagely observes , the conventional case for trade liberalization relies on the assertion that the government could redistribute income to ensure that everyone wins - but we now have an ideology utterly opposed to such redistribution in full control of one party, and with blocking power against anything but a minor move in that direction by the other.

    So the elite case for ever-freer trade is largely a scam, which voters probably sense even if they don't know exactly what form it's taking.

    Ripping up the trade agreements we already have would, again, be a mess, and I would say that Sanders is engaged in a bit of a scam himself in even hinting that he could do such a thing. Trump might actually do it, but only as part of a reign of destruction on many fronts.

    But it is fair to say that the case for more trade agreements - including TPP, which hasn't happened yet - is very, very weak. And if a progressive makes it to the White House, she should devote no political capital whatsoever to such things.

    cawley : , Thursday, March 10, 2016 at 03:47 AM
    Again, just because automation has been a major factor in job loss doesn't mean "off shoring" (using the term broadly and perhaps somewhat inaccurately) is not a factor.

    The "free" trade deals suck. They are correctly diagnosed as part of the problem.

    What would you propose to fix the problems caused by automation?

    jonny bakho -> cawley... , Thursday, March 10, 2016 at 04:25 AM
    Automation frees labor to do more productive and less onerous tasks. We should expand our solar production and our mass transit. We need to start re-engineering our urban areas. This will not bring back the number of jobs it would take to make cities like Flint thrive once again.

    Flint and Detroit have severe economic problems because they were mismanaged by road building and suburbanization in the 1950s and 1960s. Money that should have been spent on maintaining and improving urban infrastructure was instead plowed into suburban development that is not dense enough to sustain the infrastructure required to support it. People moved to the suburbs, abandoned the built infrastructure of the cities and kissed them goodbye.

    Big roads polluted the cities with lead, noise, diesel particles and ozone and smog. Stroads created pedestrian kill zones making urban areas, unwalkable, unpleasant- an urban blights to drive through rather than destinations to drive to.

    Government subsidized the white flight to the suburbs that has left both the suburbs and the urban cores with too low revenue to infrastructure ratio. The inner suburbs have aged into net losers, their infrastructure must be subsidized. Big Roads were built on the Big Idea that people would drive to the city to work and play and then drive home. That Big idea has a big problem. Urban areas are only sustainable when they have a high resident density. The future of cities like Flint and Detroit will be tearing out the roads and replacing them with streets and houses and renewing the housing stock that has been abandoned. It needs to be done by infill, revitalizing inner neighborhoods and working outward. Cities like Portland have managed to protect much of their core, but even they are challenged by demands for suburban sprawl.

    Slash and burn development, creating new suburbs and abandoning the old is not a sustainable model. Not only should we put people to work replacing the Flint lead pipes, but much of the city should be rebuilt from the inside out. Flint is the leading edge of this problem that requires fundamental changes in our built environment to fix. I recommend studying Flint as an object lesson of what bad development policy could do to all of our cities.

    http://www.flintexpats.com

    jonny bakho -> jonny bakho... , Thursday, March 10, 2016 at 04:29 AM
    An Interview with Frank Popper about Shrinking Cities, Buffalo Commons, and the Future of Flint

    How does America's approach shrinking cities compare to the rest of the world?

    I think the American way is to do nothing until it's too late, then throw everything at it and improvise and hope everything works. And somehow, insofar as the country's still here, it has worked. But the European or the Japanese way would involve much more thought, much more foresight, much more central planning, and much less improvising. They would implement a more, shall we say, sustained effort. The American way is different. Europeans have wondered for years and years why cities like Detroit or Cleveland are left to rot on the vine. There's a lot of this French hauteur when they ask "How'd you let this happen?"

    Do shrinking cities have any advantages over agricultural regions as they face declining populations?

    The urban areas have this huge advantage over all these larger American regions that are going through this. They have actual governments with real jurisdiction. Corrupt as Detroit or Philadelphia or Camden may be, they have actual governments that are supposed to be in charge of them. Who's in charge of western Kansas? Who's in charge of the Great Plains? Who is in charge of the lower Mississippi Delta or central Appalachia? All they've got are these distant federal agencies whose past performance is not exactly encouraging.

    Why wasn't there a greater outcry as the agricultural economy and the industrial economy collapsed?

    One reason for the rest of the country not to care is that there's no shortage of the consumer goods that these places once produced. All this decline of agriculture doesn't mean we're running out of food. We've got food coming out of our ears. Likewise, Flint has suffered through all this, but it's not like it's hard to buy a car in this country. It's not as if Flint can behave like a child and say "I'm going to hold my nose and stop you from getting cars until you do the right thing." Flint died and you can get zero A.P.R. financing. Western Kansas is on its last legs and, gee, cereal is cheaper than ever.

    In some sense that's the genius of capitalism - it's heartless. But if you look at the local results and the cultural results and the environmental results you shake your head. But I don't see America getting away from what I would call a little sarcastically the "wisdom" of the market. I don't think it's going to change.

    So is there any large-scale economic fallout from these monumental changes?

    Probably not, and it hurts to say so. And the only way I can feel good about saying that is to immediately point to the non-economic losses, the cultural losses. The losses of ways of life. The notion of the factory worker working for his or her children. The notion of the farmer working to build up the country and supply the rest of the world with food. We're losing distinctive ways of life. When we lose that we lose something important, but it's not like The Wall Street Journal cares. And I feel uncomfortable saying that. From a purely economic point of view, it's just the price of getting more efficient. It's a classic example of Schumpeter's theory of creative destruction, which is no fun if you're on the destruction end.

    Does the decline of cities like Flint mirror the death of the middle class in the United States?

    I think it's more the decline of the lower-middle class in the United States. Even when those jobs in the auto factories paid very high wages they were still for socially lower-middle-class people. I think there was always the notion in immigrant families and working-class families who worked in those situations that the current generation would work hard so that the children could go off and not have to do those kind of jobs. And when those jobs paid well that was a perfectly reasonable ambition. It's the cutting off of that ambition that really hurts now. The same thing has been true on farms and ranches in rural parts of the united states.

    http://www.flintexpats.com/2010/05/interview-with-frank-popper-about.html

    RC AKA Darryl, Ron said in reply to jonny bakho... , Thursday, March 10, 2016 at 04:45 AM
    It is a much different thing to be small minded about trade than it is to be large minded about everything else. The short story that it is all about automation and not trade will always get a bad reception because it is small minded. When you add in the large minded story about everything else then it becomes something entirely different from the short story. We all agree with you about everything else. You are wrong about globalization though. Both financialization and globalization suck and even if we paper over them with tax and transfer then they will still suck. One must forget what it is to be a created equal human to miss that. Have you never felt the job of accomplishment? Does not pride and self-confidence matter in your life?
    RC AKA Darryl, Ron said in reply to RC AKA Darryl, Ron... , Thursday, March 10, 2016 at 06:11 AM
    "Have you never felt the joY of accomplishment?"

    [Apparently I have "jobs" on the mind even though I no longer have one nor need one in the least.]

    ken melvin -> jonny bakho... , Thursday, March 10, 2016 at 04:49 AM
    America's first course of action is denial; then, we pretend that things are different than the seem a lot.
    RC AKA Darryl, Ron said in reply to ken melvin... , Thursday, March 10, 2016 at 05:39 AM
    Priceless!
    DrDick -> jonny bakho... , Thursday, March 10, 2016 at 08:52 AM
    While automation is part of the story, offshoring is just as important. Even when there is not net loss in the numbers of jobs in aggregate, there is significant loss in better paying jobs in manufacturing. It is important to look at the distributional effects within countries, as well as between them

    http://www.statisticbrain.com/outsourcing-statistics-by-country/

    https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=12&ved=0ahUKEwjj9OK1xrbLAhUG92MKHbveBAgQFghhMAs&url=https%3A%2F%2Fwww.wto.org%2Fenglish%2Fres_e%2Fbooksp_e%2Fglob_soc_sus_e_chap1_e.pdf&usg=AFQjCNHRBtLPlhJsKMg5PfxSlUIgOsFuwA&cad=rja

    https://www.americanprogress.org/issues/economy/news/2014/07/30/94864/offshoring-work-is-taking-a-toll-on-the-u-s-economy/

    Julio -> cawley... , Thursday, March 10, 2016 at 08:24 AM
    "off shoring"

    [The trending term is "tossing it over the Wall".]

    Chris G : , Thursday, March 10, 2016 at 03:58 AM
    Legislatively, what would it take to withdraw from the WTO? NAFTA? Other trade agreements?
    RC AKA Darryl, Ron said in reply to Chris G ... , Thursday, March 10, 2016 at 04:52 AM
    It would probably be cheaper and easier to just fix them. We don't need to withdraw from trade. We just need to fix the terms of trade that cause large trade deficits and cross border capital flows and also fix the FOREX system rigging.
    JohnH -> Chris G ... , Thursday, March 10, 2016 at 08:10 AM
    What would it take to ignore trade agreements? They shouldn't be any more difficult to ignore than the Geneva Conventions, which the US routinely flaunts.
    Richard A. : , Thursday, March 10, 2016 at 04:30 AM
    In order to import we must export and in order to export we must import. The two are tied together. Suppressing imports means we export less.

    What free trade does is lower the price level relative to wages. It doesn't uniformly lower the price level but rather lowers the cost of goods that are capable of being traded internationally. It lowers the price on those goods that are disproportionately purchased by those with low incomes.

    Free trade causes a progressive decline in the price level while protectionism causes a regressive increase in the price level.

    RC AKA Darryl, Ron said in reply to Richard A.... , Thursday, March 10, 2016 at 04:56 AM
    Are you saying that free trade lowers the cost of rice in India and China and raises the cost of cell phones and autos in the US?
    pgl -> RC AKA Darryl, Ron... , Thursday, March 10, 2016 at 05:48 AM
    Funny rebuttal! Bhagwati probably has a model that says the opposite! But then he grew up in India and should one day get a Nobel Prize for his contributions to international economics.
    pgl -> Richard A.... , Thursday, March 10, 2016 at 05:47 AM
    "What free trade does is lower the price level relative to wages."

    Which price? Whose wages? Look up Stopler-Samuelson ... a 1941 classic which I suspect Greg Mankiw has never bothered to learn.

    Tom aka Rusty said in reply to Richard A.... , Thursday, March 10, 2016 at 06:54 AM
    People don't need good wages, they can buy cheap Chinese stuff at WalMart.
    JohnH -> Richard A.... , Thursday, March 10, 2016 at 08:14 AM
    "In order to import we must export and in order to export we must import." One would think. However, experience shows that that's not the case.

    Capital flows from overseas investments help balance the books. When that doesn't work, the US simply prints money to be held by foreign CBs.

    ken melvin : , Thursday, March 10, 2016 at 04:53 AM
    Our media needs to copy France 24, ... and have real debates about real issues. What we get is along the lines of ignoring the problem then attacking any effort to correct. for example, the media stayed away from the healthcare crisis, too complicated, but damn they are good at criticizing.
    JohnH -> ken melvin... , Thursday, March 10, 2016 at 08:16 AM
    France 24 promotes neocon-style jingoism...even worse than Big Media in America.

    I hope they're better on domestic social policy.

    Tom Palley : , Thursday, March 10, 2016 at 05:08 AM
    A seriously shameful article. Krugman has been a booster of trade & globalization for 30 years: marginally more nuanced than the establishment, but still a booster.

    Now, the establishment has what it wanted and the effects have been disastrous for those not in the top 20 percent of the income distribution.

    At this stage, comes insult to injury. Establishment economists (like Mr. Krugman) can reinvent themselves with "brilliant new studies" showing the costs and damage of globalization. They pay no professional costs for the grievous injuries inflicted; there is no mention of the fact that critical outsider economists have been predicting and writing about these injuries and were right; and they blithely say we must stay the course because we are locked-in and have few options.

    Forgive me while I puke.

    RC AKA Darryl, Ron said in reply to Tom Palley ... , Thursday, March 10, 2016 at 05:44 AM
    Bless you my son.

    I don't think that they think that we weebles have memories.

    Peter K. -> RC AKA Darryl, Ron... , Thursday, March 10, 2016 at 06:13 AM
    "I don't think that they think that we weebles have memories."

    They insult our intelligence and wonder why people get mad.

    pgl -> Tom Palley ... , Thursday, March 10, 2016 at 05:51 AM
    Krugman is not Greg Mankiw. Most people who actually get international economics (Mankiw does not) are not of the free trade benefits all types. Paul Samuelson certainly does not buy into Mankiw's spin. Funny thing - Mankiw recently cited an excellent piece from Samuelson only to dishonestly suggest Samuelson did not believe in what he wrote.
    Peter K. -> pgl... , Thursday, March 10, 2016 at 06:12 AM
    Why are we talking about Mankiw? You can't move the goalposts.
    pgl -> Peter K.... , Thursday, March 10, 2016 at 06:40 AM
    Why are you mischaracterizing what Krugman has written? That's my point. Oh wait - you misrepresent what people write so you can "win" a "debate". Never mind. Please proceed with the serial dishonesty.
    Peter K. -> pgl... , Thursday, March 10, 2016 at 08:55 AM
    "The truth is that if Sanders were to make it to the White House, he would find it very hard to do anything much about globalization - not because it's technically or economically impossible, but because the moment he looked into actually tearing up existing trade agreements the diplomatic, foreign-policy costs would be overwhelmingly obvious. In this, as in many other things, Sanders currently benefits from the luxury of irresponsibility: he's never been anywhere close to the levers of power, so he could take principled-sounding but arguably feckless stances in a way that Clinton couldn't and can't."

    As Dean Baker says, we need to confront Walmart and Goldman Sachs at home, who like these policies, more than the Chinese.

    The Chinese want access to our consumer market. They'd also like if we did't invade countries like Iraq.

    "so he could take principled-sounding but arguably feckless stances in a way that Clinton couldn't"

    And what is that? Tear up trade deals? It is Krugman who is engaging in straw man arguments.

    DrDick -> pgl... , Thursday, March 10, 2016 at 09:02 AM
    Krugman does indeed misrepresent Sanders' positions on trade. Sander is not against trade, he merely insists on *Fair Trade*, which incorporates human rights and environmental protections. His opposition is to the kinds of deals, like NAFTA and TPP, which effectively gut those (a central element in Kruman's own critique of the latter).
    DrDick -> pgl... , Thursday, March 10, 2016 at 08:56 AM
    Krugman has definitely backed off his (much) earlier boosterism and publicly said so. This is an excellent piece by him, though it does rather downplay his earlier stances a bit. This is one of the things I especially like about him.
    Dan Kervick -> Tom Palley ... , Thursday, March 10, 2016 at 06:11 AM
    I can get the idea that some people win, some people lose from liberalized trade. But what really bugs me about the neoliberal trade agenda is that it has been part of a larger set of economically conservative, laissez faire policies that have exacerbated the damages from trade rather than offsetting them.

    At the same time they were exposing US workers to greater competition from abroad and destroying and offshoring working class jobs via both trade and liberalized capital flows, the neoliberals were also doing things like "reinventing government" - that is, shrinking structural government spending and public investment - and ending welfare. They have done nothing serious about steering capital and job development efforts toward the communities devastated by the liberalization.

    The neoliberal position has seem to come down to "We can't make bourgeois progress without breaking a few working class eggs."

    pgl -> Dan Kervick... , Thursday, March 10, 2016 at 06:41 AM
    I guess I'm not a neoliberal. Neither is Dani Rodrik. Nor is Paul Krugman.
    Dan Kervick -> pgl... , Thursday, March 10, 2016 at 07:50 AM
    What does Dani Rodrik have to do with the above comments?
    pgl -> Dan Kervick... , Thursday, March 10, 2016 at 08:51 AM
    Read his 1997 book. Excellent stuff.
    Julio -> Dan Kervick... , Thursday, March 10, 2016 at 08:38 AM
    Great points, and a good line too.
    JohnH -> Tom Palley ... , Thursday, March 10, 2016 at 08:22 AM
    Agreed! "Krugman has been a booster of trade & globalization for 30 years: marginally more nuanced than the establishment, but still a booster.'

    Now he claims that he saw the light all along! "much of the elite defense of globalization is basically dishonest: false claims of inevitability, scare tactics (protectionism causes depressions!), vastly exaggerated claims for the benefits of trade liberalization and the costs of protection, hand-waving away the large distributional effects that are what standard models actually predict. I hope, by the way, that I haven't done any of that..."

    You would be hard pressed to find any Krugman clips that cited any of those problems in the past. Far from being an impartial economist, he was always an avid booster of free trade, overlooking those very downsides that he suddenly decides to confess.

    Dan Kervick : , Thursday, March 10, 2016 at 05:11 AM
    As far as I know, Sanders has not proposed ripping up the existing trade deals. His information page on trade emphasizes (i) his opposition to these deals when they were first negotiated and enacted, and (ii) the principles he will apply to the consideration of future trade deals. Much of his argumentation concerning past deals is put forward to motivate his present opposition to TPP.

    http://feelthebern.org/bernie-sanders-on-trade/

    So Krugman's point about how difficult it would be diplomatically to "rip up" the existing trade deals seems like a red herring.

    Dan Kervick -> Dan Kervick... , Thursday, March 10, 2016 at 05:29 AM
    Note also that Sanders connects his discussion of the harms of past trade policy to the Rebuild America Act. That is, his approach is forward facing. We can't undo most of the past damage by recreating the old working class economy we wrecked, but we can be aggressive about using government-directed national investment programs to create new, high-paying jobs in the US.
    jonny bakho -> Dan Kervick... , Thursday, March 10, 2016 at 06:16 AM
    You could have said the same about the 1920s
    We can't undo most of the past damage by recreating the old agrarian class economy we wrecked, but we can be aggressive about using government-directed national investment programs to create new, high-paying jobs in the US.

    The march of progress:
    Mechanization of agriculture with displacement of large numbers of Ag workers.
    The rise of factory work and large numbers employed in manufacturing.
    Automation of Manufacturing with large displacement of workers engaged in manufacturing.
    What do we want our workers to do? This question must be answered at the highest level of society and requires much government facilitation. The absence of government facilitation is THE problem.

    Dan Kervick -> jonny bakho... , Thursday, March 10, 2016 at 06:23 AM
    Completely agree. Countries need economic strategies that go beyond, "let the markets sort it all out."
    RC AKA Darryl, Ron said in reply to Dan Kervick... , Thursday, March 10, 2016 at 05:47 AM
    "...So Krugman's point about how difficult it would be diplomatically to "rip up" the existing trade deals seems like a red herring."

    [Win one for the kipper.]

    pgl -> Dan Kervick... , Thursday, March 10, 2016 at 05:52 AM
    Memo to Paul Krugman - lead with the economics and stay with the economics. His need to get into the dirty business of politics dilutes what he ends up sensibly writes later on.
    Peter K. -> pgl... , Thursday, March 10, 2016 at 08:56 AM
    ""The truth is that if Sanders were to make it to the White House, he would find it very hard to do anything much about globalization - not because it's technically or economically impossible, but because the moment he looked into actually tearing up existing trade agreements the diplomatic, foreign-policy costs would be overwhelmingly obvious. In this, as in many other things, Sanders currently benefits from the luxury of irresponsibility: he's never been anywhere close to the levers of power, so he could take principled-sounding but arguably feckless stances in a way that Clinton couldn't and can't."
    Chatham -> Dan Kervick... , Thursday, March 10, 2016 at 09:36 AM
    Yeah, it's pretty dishonest for Krugman to pretend that Sanders' position is "ripping up the trade agreements we already have" and then say Sanders is "engaged in a bit of a scam" because he can't do that. Sanders actual position (trying to stop new trade deals like the TPP) is something the president has a lot of influence over (they can veto the deal). Hard to tell what Krugman is doing here other than deliberately spreading misinformation.

    Also worth noting that he decides to compare Sanders' opposition to trade deals with Trump, and ignore the fact that Clinton has come out against the TPP as well .

    anne : , Thursday, March 10, 2016 at 05:26 AM
    http://krugman.blogs.nytimes.com/2016/03/09/a-protectionist-moment/

    March 9, 2016

    A Protectionist Moment?
    By Paul Krugman

    Busy with real life, but yes, I know what happened in the primaries yesterday. Triumph for Trump, and big upset for Sanders - although it's still very hard to see how he can catch Clinton. Anyway, a few thoughts, not about the horserace but about some deeper currents.

    The Sanders win defied all the polls, and nobody really knows why. But a widespread guess is that his attacks on trade agreements resonated with a broader audience than his attacks on Wall Street; and this message was especially powerful in Michigan, the former auto superpower. And while I hate attempts to claim symmetry between the parties - Trump is trying to become America's Mussolini, Sanders at worst America's Michael Foot * - Trump has been tilling some of the same ground. So here's the question: is the backlash against globalization finally getting real political traction?

    You do want to be careful about announcing a political moment, given how many such proclamations turn out to be ludicrous. Remember the libertarian moment? The reformocon moment? Still, a protectionist backlash, like an immigration backlash, is one of those things where the puzzle has been how long it was in coming. And maybe the time is now.

    The truth is that if Sanders were to make it to the White House, he would find it very hard to do anything much about globalization - not because it's technically or economically impossible, but because the moment he looked into actually tearing up existing trade agreements the diplomatic, foreign-policy costs would be overwhelmingly obvious. In this, as in many other things, Sanders currently benefits from the luxury of irresponsibility: he's never been anywhere close to the levers of power, so he could take principled-sounding but arguably feckless stances in a way that Clinton couldn't and can't.

    But it's also true that much of the elite defense of globalization is basically dishonest: false claims of inevitability, scare tactics (protectionism causes depressions! ** ), vastly exaggerated claims for the benefits of trade liberalization and the costs of protection, hand-waving away the large distributional effects that are what standard models actually predict. I hope, by the way, that I haven't done any of that; I think I've always been clear that the gains from globalization aren't all that (here's a back-of-the-envelope on the gains from hyperglobalization *** - only part of which can be attributed to policy - that is less than 5 percent of world GDP over a generation); and I think I've never assumed away the income distribution effects.

    Furthermore, as Mark Kleiman sagely observes, **** the conventional case for trade liberalization relies on the assertion that the government could redistribute income to ensure that everyone wins - but we now have an ideology utterly opposed to such redistribution in full control of one party, and with blocking power against anything but a minor move in that direction by the other.

    So the elite case for ever-freer trade is largely a scam, which voters probably sense even if they don't know exactly what form it's taking.

    Ripping up the trade agreements we already have would, again, be a mess, and I would say that Sanders is engaged in a bit of a scam himself in even hinting that he could do such a thing. Trump might actually do it, but only as part of a reign of destruction on many fronts.

    But it is fair to say that the case for more trade agreements - including Trans-Pacific Partnership, which hasn't happened yet - is very, very weak. And if a progressive makes it to the White House, she should devote no political capital whatsoever to such things.

    * https://en.wikipedia.org/wiki/Michael_Foot

    ** http://krugman.blogs.nytimes.com/2016/03/04/the-mitt-hawley-fallacy/

    *** http://krugman.blogs.nytimes.com/2013/10/01/the-gains-from-hyperglobalization-wonkish/

    **** http://www.washingtonmonthly.com/ten-miles-square/2016/03/trade_trump_and_downward_class059814.php

    anne -> anne... , Thursday, March 10, 2016 at 05:26 AM
    https://en.wikipedia.org/wiki/Michael_Foot

    Michael Mackintosh Foot (1913 – 2010) was a British Labour Party politician and man of letters who was a Member of Parliament (MP) from 1945 to 1955 and from 1960 until 1992. He was Deputy Leader of the Labour Party from 1976 to 1980, and later the Leader of the Labour Party and Leader of the Opposition from 1980 to 1983.

    Associated with the left of the Labour Party for most of his career, Foot was an ardent supporter of the Campaign for Nuclear Disarmament and British withdrawal from the European Economic Community. He was appointed to the Cabinet as Secretary of State for Employment under Harold Wilson in 1974, and he later served as Leader of the House of Commons under James Callaghan. A passionate orator, he led Labour through the 1983 general election, when the party obtained its lowest share of the vote at a general election since 1918 and the fewest parliamentary seats it had had at any time since before 1945.

    pgl -> anne... , Thursday, March 10, 2016 at 05:53 AM
    Foot sounds like he was a good leader of the Labour Party.
    anne -> anne... , Thursday, March 10, 2016 at 05:27 AM
    http://krugman.blogs.nytimes.com/2016/03/04/the-mitt-hawley-fallacy/

    March 4, 2016

    The Mitt-Hawley Fallacy
    By Paul Krugman

    There was so much wrong with Mitt Romney's Trump-is-a-disaster-whom-I-will-support-in-the-general * speech that it may seem odd to call him out for bad international macroeconomics. But this is a pet peeve of mine, in an area where I really, truly know what I'm talking about. So here goes.

    In warning about Trumponomics, Romney declared:

    "If Donald Trump's plans were ever implemented, the country would sink into prolonged recession. A few examples. His proposed 35 percent tariff-like penalties would instigate a trade war and that would raise prices for consumers, kill our export jobs and lead entrepreneurs and businesses of all stripes to flee America."

    After all, doesn't everyone know that protectionism causes recessions? Actually, no. There are reasons to be against protectionism, but that's not one of them.

    Think about the arithmetic (which has a well-known liberal bias). Total final spending on domestically produced goods and services is

    Total domestic spending + Exports – Imports = GDP

    Now suppose we have a trade war. This will cut exports, which other things equal depresses the economy. But it will also cut imports, which other things equal is expansionary. For the world as a whole, the cuts in exports and imports will by definition be equal, so as far as world demand is concerned, trade wars are a wash.

    OK, I'm sure some people will start shouting "Krugman says protectionism does no harm." But no: protectionism in general should reduce efficiency, and hence the economy's potential output. But that's not at all the same as saying that it causes recessions.

    But didn't the Smoot-Hawley tariff cause the Great Depression? No. There's no evidence at all that it did. Yes, trade fell a lot between 1929 and 1933, but that was almost entirely a consequence of the Depression, not a cause. (Trade actually fell faster ** during the early stages of the 2008 Great Recession than it did after 1929.) And while trade barriers were higher in the 1930s than before, this was partly a response to the Depression, partly a consequence of deflation, which made specific tariffs (i.e. tariffs that are stated in dollars per unit, not as a percentage of value) loom larger.

    Again, not the thing most people will remember about Romney's speech. But, you know, protectionism was the only reason he gave for believing that Trump would cause a recession, which I think is kind of telling: the GOP's supposedly well-informed, responsible adult, trying to save the party, can't get basic economics right at the one place where economics is central to his argument.

    * http://www.nytimes.com/2016/03/04/us/politics/mitt-romney-speech.html

    ** http://www.voxeu.org/article/tale-two-depressions-what-do-new-data-tell-us-february-2010-update

    anne -> anne... , Thursday, March 10, 2016 at 05:28 AM
    http://krugman.blogs.nytimes.com/2013/10/01/the-gains-from-hyperglobalization-wonkish/

    October 1, 2013

    The Gains From Hyperglobalization (Wonkish)
    By Paul Krugman

    Still taking kind of an emotional vacation from current political madness. Following up on my skeptical post on worries about slowing trade growth, * I wondered what a state-of-the-art model would say.

    The natural model to use, at least for me, is Eaton-Kortum, ** which is a very ingenious approach to thinking about multilateral trade flows. The basic model is Ricardian - wine and cloth and labor productivity and all that - except that there are many goods and many countries, transportation costs, and countries are assumed to gain productivity in any particular industry through a random process. They make some funny assumptions about distributions - hey, that's kind of the price of entry for this kind of work - and in return get a tractable model that yields gravity-type equations for international trade flows. This is a good thing, because gravity models *** of trade - purely empirical exercises, with no real theory behind them - are known to work pretty well.

    Their model also yields a simple expression for the welfare gains from trade:

    Real income = A*(1-import share)^(-1/theta)

    where A is national productivity and theta is a parameter of their assumed random process (don't ask); they suggest that theta=4 provides the best match to available data.

    Now, what I wanted to do was apply this to the rapid growth of trade that has taken place since around 1990, what Subramanian **** calls "hyperglobalization". According to Subramanian's estimates, overall trade in goods and services has risen from about 19 percent of world GDP in the early 1990s to 33 percent now, bringing us to a level of integration that really is historically unprecedented.

    There are some conceptual difficulties with using this rise directly in the Eaton-Kortum framework, because much of it has taken the form of trade in intermediate goods, and the framework isn't designed to handle that. Still, let me ignore that, and plug Subramanian's numbers into the equation above; I get a 4.9 percent rise in real incomes due to increased globalization.

    That's by no means small change, but it's only a fairly small fraction of global growth. The Maddison database ***** gives us a 45 percent rise in global GDP per capita over the same period, so this calculation suggests that rising trade was responsible for around 10 percent of overall global growth. My guess is that most people who imagine themselves well-informed would give a bigger number.

    By the way, for those critical of globalization, let me hasten to concede that by its nature the Eaton-Kortum model doesn't let us talk about income distribution, and it also makes no room for the possible role of globalization in causing secular stagnation. ******

    Still, I thought this was an interesting calculation to make - which may show more about my warped sense of what's interesting than it does about anything else.

    * http://krugman.blogs.nytimes.com/2013/09/30/should-slowing-trade-growth-worry-us/

    ** http://www.nber.org/papers/w11764

    *** https://en.wikipedia.org/wiki/Gravity_model_of_trade

    **** http://www.gcf.ch/wp-content/uploads/2013/06/GCF_Subramanian-working-paper-3_-6.17.13.pdf

    ***** http://www.ggdc.net/maddison/maddison-project/home.htm

    ****** http://krugman.blogs.nytimes.com/2013/09/26/trade-and-secular-stagnation/

    anne -> anne... , Thursday, March 10, 2016 at 05:46 AM
    http://www.nber.org/papers/w11764

    November, 2005

    General Equilibrium Analysis of the Eaton-Kortum Model of International Trade
    By Fernando Alvarez and Robert E. Lucas

    We study a variation of the Eaton-Kortum model, a competitive, constant-returns-to-scale multicountry Ricardian model of trade. We establish existence and uniqueness of an equilibrium with balanced trade where each country imposes an import tariff. We analyze the determinants of the cross-country distribution of trade volumes, such as size, tariffs and distance, and compare a calibrated version of the model with data for the largest 60 economies. We use the calibrated model to estimate the gains of a world-wide trade elimination of tariffs, using the theory to explain the magnitude of the gains as well as the differential effect arising from cross-country differences in pre-liberalization of tariffs levels and country size.

    anne -> anne... , Thursday, March 10, 2016 at 05:46 AM
    https://en.wikipedia.org/wiki/Gravity_model_of_trade

    The gravity model of international trade in international economics, similar to other gravity models in social science, predicts bilateral trade flows based on the economic sizes (often using GDP measurements) and distance between two units. The model was first used by Jan Tinbergen in 1962.

    anne -> anne... , Thursday, March 10, 2016 at 05:47 AM
    http://www.gcf.ch/wp-content/uploads/2013/06/GCF_Subramanian-working-paper-3_-6.17.13.pdf

    June, 2013

    The Hyperglobalization of Trade and Its Future
    By Arvind Subramanian and Martin Kessler

    Abstract

    The open, rules-based trading system has delivered immense benefits-for the world, for individual countries, and for average citizens in these countries. It can continue to do so, helping today's low-income countries make the transition to middle-income status. Three challenges must be met to preserve this system. Rich countries must sustain the social consensus in favor of open markets and globalization at a time of considerable economic uncertainty and weakness; China and other middle-income countries must remain open; and mega-regionalism must be prevented from leading to discrimination and trade conflicts. Collective action should help strengthen the institutional underpinnings of globalization. The world should move beyond the Doha Round dead to more meaningful multilateral negotiations to address emerging challenges, including possible threats from new mega-regional agreements. The rising powers, especially China, will have a key role to play in resuscitating multilateralism.

    anne -> anne... , Thursday, March 10, 2016 at 05:56 AM
    Real income = A*(1-import share)^(-1/theta)

    [ Help! What does this mean in words? ]

    Peter K. : , Thursday, March 10, 2016 at 05:37 AM
    "Furthermore, as Mark Kleiman sagely observes, the conventional case for trade liberalization relies on the assertion that the government could redistribute income to ensure that everyone wins"

    That was never the conventional case for trade. Plus it's kind of odd that you have to add "plus have the government redistribute" to the case your making.

    Tom Pally above is correct. Krugman has been on the wrong side of this issue. He's gotten better, but the timing is he's gotten better as the Democratic Party has moved to the left and pushed back against corporate trade deals. Even Hillary came out late against Obama's TPP.

    Sanders has nothing about ripping up trade deals. He has said he won't do any more.

    As cawley predicted, once Sanders won Michigan, Krugman started hitting him again at his blog. With cheap shots I might add. He's ruining his brand.

    Peter K. -> Peter K.... , Thursday, March 10, 2016 at 05:41 AM
    'A Protectionist Moment?'

    So for Krugman, no doing corporate trade deals means you're "protectionist?"

    It's a fair trade moment. As Dean Baker points out, corporate trade deals are protectionist:

    http://cepr.net/blogs/beat-the-press/tell-morning-edition-it-s-not-free-trade-folks

    Tell Morning Edition: It's Not "Free Trade" Folks
    by Dean Baker
    Published: 10 March 2016

    Hey, can an experienced doctor from Germany show up and start practicing in New York next week? Since the answer is no, we can say that we don't have free trade. It's not an immigration issue, if the doctor wants to work in a restaurant kitchen, she would probably get away with it. We have protectionist measures that limit the number of foreign doctors in order to keep their pay high. These protectionist measures have actually been strengthened in the last two decades.

    We also have strengthened patent and copyright protections, making drugs and other affected items far more expensive. These protections are also forms of protectionism.

    This is why Morning Edition seriously misled its listeners in an interview with ice cream barons Ben Cohen and Jerry Greenfield over their support of Senator Bernie Sanders. The interviewer repeatedly referred to "free trade" agreements and Sanders' opposition to them. While these deals are all called "free trade" deals to make them sound more palatable ("selective protectionism to redistribute income upward" doesn't sound very appealing), that doesn't mean they are actually about free trade. Morning Edition should not have used the term employed by promoters to push their trade agenda.

    pgl -> Peter K.... , Thursday, March 10, 2016 at 05:57 AM
    This has been Dean Baker's excellent theme for a very long time. And if you actually paid attention to what Krugman said about TPP - he agreed with Dean's excellent points. But do continue to set up straw man arguments so you can dishonestly attack Krugman.
    Peter K. -> pgl... , Thursday, March 10, 2016 at 06:06 AM
    Some of us have memories. Like Tom Palley up above.
    pgl -> Peter K.... , Thursday, March 10, 2016 at 06:42 AM
    Memories of things Krugman never wrote. In other words, very faulty memories.
    Julio -> pgl... , Thursday, March 10, 2016 at 09:07 AM
    No. That is not a sign of a faulty memory, quite the contrary.

    Krugman writes column after column praising trade pacts and criticizing (rightly, I might add) the yahoos who object for the wrong reasons.
    But he omits a few salient facts like
    - the gains are small,
    - the government MUST intervene with redistribution for this to work socially,
    - there are no (or minimal) provisions for that requirement in the pacts.

    I would say his omissions speak volumes and are worth remembering.

    Syaloch -> pgl... , Thursday, March 10, 2016 at 11:51 AM
    Krugman initially wrote a confused column about the TPP, treating it as a simple free trade deal which he said would have little impact because tariffs were already so low. But he did eventually look into the matter further and wound up agreeing with Baker's take.
    pgl -> Peter K.... , Thursday, March 10, 2016 at 05:56 AM
    "That was never the conventional case for trade". Actually it was. Of course Greg Mankiw never got the memo so his free trade benefits all BS confuses a lot of people. Mankiw sucks at international trade.
    Peter K. -> pgl... , Thursday, March 10, 2016 at 06:11 AM
    Actually it wasn't. I remember what Krugman and others wrote at the time about NAFTA and the WTO.

    https://uneasymoney com/2016/03/06/krugman-suffers-a-memory-lapse/

    David Glasner attacks Krugman from the right, but he doesn't whitewash the past as you do. He remembers Gore versus Perot:

    "Indeed, Romney didn't even mention the Smoot-Hawley tariff, but Krugman evidently forgot the classic exchange between Al Gore and the previous incarnation of protectionist populist outrage in an anti-establishment billionaire candidate for President:

    GORE I've heard Mr. Perot say in the past that, as the carpenters says, measure twice and cut once. We've measured twice on this. We have had a test of our theory and we've had a test of his theory. Over the last five years, Mexico's tariffs have begun to come down because they've made a unilateral decision to bring them down some, and as a result there has been a surge of exports from the United States into Mexico, creating an additional 400,000 jobs, and we can create hundreds of thousands of more if we continue this trend. We know this works. If it doesn't work, you know, we give six months notice and we're out of it. But we've also had a test of his theory.

    PEROT When?

    GORE In 1930, when the proposal by Mr. Smoot and Mr. Hawley was to raise tariffs across the board to protect our workers. And I brought some pictures, too.

    [Larry] KING You're saying Ross is a protectionist?

    GORE This is, this is a picture of Mr. Smoot and Mr. Hawley. They look like pretty good fellows. They sounded reasonable at the time; a lot of people believed them. The Congress passed the Smoot-Hawley Protection Bill. He wants to raise tariffs on Mexico. They raised tariffs, and it was one of the principal causes, many economists say the principal cause, of the Great Depression in this country and around the world. Now, I framed this so you can put it on your wall if you want to.

    You can watch it here*

    * https://uneasymoney com/2016/02/17/competitive-devaluation-plus-monetary-expansion-does-create-a-free-lunch/

    jonny bakho -> Peter K.... , Thursday, March 10, 2016 at 06:26 AM
    You obviously have not read Krugman. Here is from his 1997 Slate piece:

    But putting Greenspan (or his successor) into the picture restores much of the classical vision of the macroeconomy. Instead of an invisible hand pushing the economy toward full employment in some unspecified long run, we have the visible hand of the Fed pushing us toward its estimate of the noninflationary unemployment rate over the course of two or three years. To accomplish this, the board must raise or lower interest rates to bring savings and investment at that target unemployment rate in line with each other.

    And so all the paradoxes of thrift, widow's cruses, and so on become irrelevant. In particular, an increase in the savings rate will translate into higher investment after all, because the Fed will make sure that it does.

    To me, at least, the idea that changes in demand will normally be offset by Fed policy--so that they will, on average, have no effect on employment--seems both simple and entirely reasonable. Yet it is clear that very few people outside the world of academic economics think about things that way. For example, the debate over the North American Free Trade Agreement was conducted almost entirely in terms of supposed job creation or destruction. The obvious (to me) point that the average unemployment rate over the next 10 years will be what the Fed wants it to be, regardless of the U.S.-Mexico trade balance, never made it into the public consciousness. (In fact, when I made that argument at one panel discussion in 1993, a fellow panelist--a NAFTA advocate, as it happens--exploded in rage: "It's remarks like that that make people hate economists!")

    http://www.slate.com/articles/business/the_dismal_science/1996/10/economic_culture_wars.html

    pgl -> jonny bakho... , Thursday, March 10, 2016 at 06:44 AM
    Yes. But please do not interrupt PeterK with reality. He has important work do with his bash all things Krugman agenda. BTW - it is a riot that he cites Ross Perot on NAFTA. Perot has a self centered agenda there which Gore exposed. Never trust a corrupt business person whether it is Perot or Trump.
    Peter K. -> pgl... , Thursday, March 10, 2016 at 07:42 AM
    Did you read what Al Gore said? He said nothing about the government redistributing the gains from NAFTA?
    Peter K. -> pgl... , Thursday, March 10, 2016 at 07:44 AM
    "But please do not interrupt PeterK with reality."

    We are talking about the reality of Krugman's past support for free trade agreements.

    You can't rewrite the past.

    jonny bakho -> pgl... , Thursday, March 10, 2016 at 07:47 AM
    Yes the model PeterK is using is unclear. He doesn't seem to have a grasp on the economics of the issues. He seems to think that Sanders is a font of economic wisdom who is not to be questioned. I would hate to see the left try to make a flawed candidate into the larger than life icon that the GOP has made out of Reagan.
    Peter K. -> jonny bakho... , Thursday, March 10, 2016 at 09:15 AM
    "Yes the model PeterK is using is unclear. He doesn't seem to have a grasp on the economics of the issues."

    Dean Baker and Jared Bernstein. Like you I want full employment and rising wages. And like Krugman I am very much an internationalist. I want us to deal fairly with the rest of the world. We need to cooperate especially in the face of global warming.

    1. My first, best solution would be fiscal action. Like everyone else. I prefer Sanders's unicorn plan of $1 trillion over five years rather than Hillary's plan which is one quarter of the size. Her plan puts more pressure on the Fed and monetary policy.

    a. My preference would be to pay for it with Pigouvian taxes on the rich, corporations, and the financial sector.

    b. if not a, then deficit spending like Trudeau in Canada

    C. if the deficit hawks block that, then monetary-financing would be the way around them.

    2. close the trade deficit. Dean Baker and Bernstein have written about this a lot. Write currency agreements into trade deals. If we close the trade deficit and are at full employment, then we can import more from the rest of the world.

    3. If powerful interests block 1. and 2. then lean on monetary policy. Reduce the price of credit to boost demand. It works as a last resort.

    "I would hate to see the left try to make a flawed candidate into the larger than life icon that the GOP has made out of Reagan.'

    I haven't seen any evidence of this. It would be funny if the left made an old Jewish codger from Brooklyn into an icon. Feel the Bern!!!

    Sanders regularly points out it's not about him as President fixing everything, it's about creating a movement. It's about getting people involved. He can't do it by himself. Obama would say this too. Elizabeth Warren become popular by saying the same things Sanders is saying.

    Syaloch -> jonny bakho... , Thursday, March 10, 2016 at 12:19 PM
    The Compensation Principle certainly is part of standard Heckscher-Ohlin trade model, you can find it in any textbook:

    http://internationalecon.com/Trade/Tch60/T60-13.php

    However to say that the conventional case for trade liberalization relies on the Compensation Principle isn't quite accurate. The conventional case has traditionally relied on the assertion that "we" are better off with trade since we could *theoretically* distribute the gains. However, free trade boosters never seem to get around to worrying about distributing the gains *in practice*. In practice, free trade is typically justified simply by the net aggregate gain, regardless of how these gains are distributed or who is hurt in the process.

    To my mind, before considering some trade liberalization deal we should FIRST agree to and implement the redistribution mechanisms and only then reduce barriers. Implementing trade deals in a backward, half-assed way as has typically been the case often makes "us" worse off than autarky.

    Peter K. -> jonny bakho... , Thursday, March 10, 2016 at 07:43 AM
    From Krugman's wikipedia article:

    "Krugman has at times advocated free markets in contexts where they are often viewed as controversial. He has ... likened the opposition against free trade and globalization to the opposition against evolution via natural selection (1996),[167]

    167 167 http://web.mit.edu/krugman/www/ricardo.htm

    "Ricardo's difficult idea". Web.mit.edu. 1996. Retrieved 2011-10-04.

    pgl -> Peter K.... , Thursday, March 10, 2016 at 07:48 AM
    Wikipedia. Now there is an unimpeachable source!
    Peter K. -> pgl... , Thursday, March 10, 2016 at 09:17 AM
    what's your alternative?
    Julio -> jonny bakho... , Thursday, March 10, 2016 at 09:10 AM
    (In fact, when I made that argument at one panel discussion in 1993, a fellow panelist--a NAFTA advocate, as it happens--exploded in rage: "It's remarks like that that make people hate economists!")

    [Thanks to electoral politics, we're all fellow panelists now.]

    Peter K. -> Julio ... , Thursday, March 10, 2016 at 09:20 AM
    "To me, at least, the idea that changes in demand will normally be offset by Fed policy--so that they will, on average, have no effect on employment--seems both simple and entirely reasonable. Yet it is clear that very few people outside the world of academic economics think about things that way."

    As we've seen the Fed is overly fearful of inflation, so the Fed doesn't offset the trade deficit as quickly as it should. Instead we suffer hysteresis and reduction of potential output.

    Peter K. : , Thursday, March 10, 2016 at 06:04 AM
    "The truth is that if Sanders were to make it to the White House, he would find it very hard to do anything much about globalization - not because it's technically or economically impossible, but because the moment he looked into actually tearing up existing trade agreements the diplomatic, foreign-policy costs would be overwhelmingly obvious."

    Here Krugman is more honest. We're basically buying off the Chinese, etc. The cost for stopping this would be less cooperation from the Chinese, etc.

    This is new. He never used to say this kind of thing. Instead he'd go after "protectionists" as luddites.

    pgl -> Peter K.... , Thursday, March 10, 2016 at 06:09 AM
    "This is new. He never used to say this kind of thing. Instead he'd go after "protectionists" as luddites."

    You have Krugman confused with Greg Mankiw. Most real international economics (Mankiw is not one) recognize the distributional consequences of free trade v. protectionism. Then again - putting forth the Mankiw uninformed spin is a prerequisite for being on Team Republican. Of course Republicans will go protectionist whenever it is politically expedient as in that temporary set of steel tariffs. Helped Bush-Cheney in 2004 and right after that - no tariffs. Funny how that worked.

    Peter K. -> pgl... , Thursday, March 10, 2016 at 06:20 AM
    "Most real international economics (Mankiw is not one) recognize the distributional consequences of free trade v. protectionism."

    Obama and others don't defend the TPP that way. Krugman and Hillary don't support the TPP but only because the politics has shifted since the 1990s.

    If Krugman wrote today as he did in the 1990s, he'd completely ruin his brand as liberal economist.

    Peter K. -> Peter K.... , Thursday, March 10, 2016 at 06:22 AM
    Where is the "redistribution from government" in the TPP. There isn't any.

    Even the NAFTA side agreements on labor and the environment are toothless. The point of these corporate trade deals is to profit from the lower labor and environmental standards of poorer countries.

    pgl -> Peter K.... , Thursday, March 10, 2016 at 06:46 AM
    And where did I say TPP was a good thing? I have slammed TPP. And I never said NAFTA included this compensation thing. Nor did Mark Kleiman.

    But do continue to misrepresent what I and others have said. It is what you do.

    pgl -> Peter K.... , Thursday, March 10, 2016 at 06:12 AM
    Hat tip to my Econospeak colleague Sandwichman for noting this from Krugman:

    http://econospeak.blogspot.com/2013/06/paul-krugmans-sympathy-for-luddites.html

    Mark Thoma also noted this sympathy for the Luddites. But the professional Krugman haters have to deny he would write such things.

    Peter K. -> pgl... , Thursday, March 10, 2016 at 06:17 AM
    The fact that you resort to calling me a professional Krugman hater means you're not interested in an actual debate about actual ideas. You've lost the debate and I'm not participating.

    One is not allowed to criticize Krugman lest one be labeled a professional Krugman hater?

    Your resort to name calling just weakens the case you're making.

    pgl -> Peter K.... , Thursday, March 10, 2016 at 06:47 AM
    You of late have wasted so much space misrepresenting what Krugman has said. Maybe you don't hate him - maybe you just want to get his attention. For a date maybe. Lord - the troll in you is truly out of control.
    Peter K. -> pgl... , Thursday, March 10, 2016 at 07:29 AM
    I have not misrepresented what Krugman has said.
    pgl -> Peter K.... , Thursday, March 10, 2016 at 07:49 AM
    Who wrote?

    "This is new. He never used to say this kind of thing. Instead he'd go after "protectionists" as luddites."

    Did you even bother to read that link to what the Sandwichman posted? Didn't think so.

    Peter K. -> pgl... , Thursday, March 10, 2016 at 09:23 AM
    Sandwichman's quote is from 2013. I'm talking about before that and especially in the 1990s.

    Sandwichman says the quote is notable because Krugman has changed his views. That proves my point.

    Did you read it?

    pgl -> Peter K.... , Thursday, March 10, 2016 at 10:34 AM
    Sandwichman may think Krugman changed his views but if one actually read what he has written over the years (as opposed to your cherry picking quotes), you might have noticed otherwise. But of course you want Krugman to look bad. It is what you do.
    Syaloch -> pgl... , Thursday, March 10, 2016 at 12:31 PM
    Krugman's views have evolved quite a bit over the years. Can you envision today's Krugman singing the praises of cheap labor?

    http://www.pkarchive.org/trade/smokey.htm

    In Praise of Cheap Labor (1997)

    Peter K. -> pgl... , Thursday, March 10, 2016 at 09:25 AM
    Only recently he has begun to say that trade deals are part of diplomacy, like we're giving these countries something in order for them to cooperate.

    If we didn't do these trade deals, these countries would cooperate less.

    Peter K. -> Peter K.... , -1
    It's a legitimate point.

    [Dec 05, 2016] The conditions that produced and enabled Trump are the Democratic Party betrayal or working classes, especially its transformation into another wing of neoliberal party of the USA under Clinton. People now view a vote for Hillary as a vote for more of the same - increasing disparity in wealth and income.

    Sizeable numbers of Americans have seen wages decline in real terms for nearly 20 years. Many/most parents in many communities do not see a better future before them, or for their children.
    Notable quotes:
    "... Democracy demands that ballot access rules be selected by referendum, not by the very legacy parties that maintain legislative control by effectively denying ballot access to parties that will pose a challenge to their continued rule. ..."
    "... I think the U.S. Party system, in the political science sense, shifted to a new state during George W Bush's administration as, in Kevin Phillip's terms the Republican Party was taken over by Theocrats and Bad Money. ..."
    "... My understanding is trumps support disproportionately comes from the small business owning classes, Ie a demographic similar to the petite bourgeoisie who have often been heavily involved in reactionary movements. This gets oversold as "working class" when class is defined by education level rather than income. ..."
    "... Racism serves as an organizing principle. Politically, in an oppressive and stultifying hierarchy like the plantation South, racism not incidentally buys the loyalty of subalterns with ersatz status. ..."
    "... For a time, the balkanization of American political communities by race, religion and ethnicity was an effective means to the dominance of an tiny elite with ties to an hegemonic community, but it backfired. Dismantling that balkanization has left the country with a very low level of social affiliation and thus a low capacity to organize resistance to elite depredations. ..."
    "... Watching Clinton scoop up bankster money, welcome Republicans neocons to the ranks of her supporters does not fill me with hope. ..."
    Aug 02, 2016 | crookedtimber.org

    Glenn 08.02.16 at 5:01 pm

    @William Meyer 08.02.16 at 4:41 pm

    Legislators affiliated with the duopoly parties should not write the rules governing the ballot access of third parties. This exclusionary rule making amounts to preserving a self-dealing duopoly. Elections are the interest of the people who vote and those elected should not be able to subvert the democratic process by acting as a cartel.

    Democracy demands that ballot access rules be selected by referendum, not by the very legacy parties that maintain legislative control by effectively denying ballot access to parties that will pose a challenge to their continued rule.

    Of course any meaningful change would require a voluntary diminishment of power of the duopoly that now has dictatorial control over ballot access, and who will prevent any Constitutional Amendment that would enhance the democratic nature of the process.

    bruce wilder 08.02.16 at 8:02 pm

    I think the U.S. Party system, in the political science sense, shifted to a new state during George W Bush's administration as, in Kevin Phillip's terms the Republican Party was taken over by Theocrats and Bad Money.

    Ronan(rf) 08.04.16 at 10:35 pm

    "I generally don't give a shit about polls so I have no "data" to evidence this claim, but my guess is the majority of Trump's support comes from this broad middle"

    My understanding is trumps support disproportionately comes from the small business owning classes, Ie a demographic similar to the petite bourgeoisie who have often been heavily involved in reactionary movements. This gets oversold as "working class" when class is defined by education level rather than income.

    This would make some sense as they are generally in economically unstable jobs, they tend to be hostile to both big govt (regulations, freeloaders) and big business (unfair competition), and while they (rhetorically at least) tend to value personal autonomy and self sufficiency , they generally sell into smaller, local markets, and so are particularly affected by local demographic and cultural change , and decline. That's my speculation anyway.

    bruce wilder 08.06.16 at 4:28 pm

    I am somewhat suspicious of leaving dominating elites out of these stories of racism as an organizing principle for political economy or (cultural) community.

    Racism served the purposes of a slaveholding elite that organized political communities to serve their own interests. (Or, vis a vis the Indians a land-grab or genocide.)

    Racism serves as an organizing principle. Politically, in an oppressive and stultifying hierarchy like the plantation South, racism not incidentally buys the loyalty of subalterns with ersatz status. The ugly prejudices and resentful arrogance of working class whites is thus a component of how racism works to organize a political community to serve a hegemonic master class. The business end of racism, though, is the autarkic poverty imposed on the working communities: slaves, sharecroppers, poor blacks, poor whites - bad schools, bad roads, politically disabled communities, predatory institutions and authoritarian governments.

    For a time, the balkanization of American political communities by race, religion and ethnicity was an effective means to the dominance of an tiny elite with ties to an hegemonic community, but it backfired. Dismantling that balkanization has left the country with a very low level of social affiliation and thus a low capacity to organize resistance to elite depredations.

    bruce wilder 08.06.16 at 4:31 pm

    Watching Clinton scoop up bankster money, welcome Republicans neocons to the ranks of her supporters does not fill me with hope.

    [Dec 05, 2016] Trump and the Transformation of Politics

    Notable quotes:
    "... Journal of Democracy ..."
    "... John Feffer is the director of Foreign Policy In Focus. ..."
    Sep 04, 2016 | fpif.org
    Trump and the other illiberal populists have been benefiting from three overlapping backlashes.

    The first is cultural. Movements for civil liberties have been remarkably successful over the last 40 years. Women, ethnic and religious minorities, and the LGBTQ community have secured important gains at a legal and cultural level. It is remarkable, for instance, how quickly same-sex marriage has become legal in more than 20 countries when no country recognized it before 2001.

    Resistance has always existed to these movements to expand the realm of civil liberties. But this backlash increasingly has a political face. Thus the rise of parties that challenge multiculturalism and immigration in Europe, the movements throughout Africa and Asia that support the majority over the minorities, and the Trump/Tea Party takeover of the Republican Party with their appeals to primarily white men.

    The second backlash is economic. The globalization of the economy has created a class of enormously wealthy individuals (in the financial, technology, and communications sectors). But globalization has left behind huge numbers of low-wage workers and those who have watched their jobs relocate to other countries.

    Illiberal populists have directed all that anger on the part of people left behind by the world economy at a series of targets: bankers who make billions, corporations that are constantly looking for even lower-wage workers, immigrants who "take away our jobs," and sometimes ethnic minorities who function as convenient scapegoats. The targets, in other words, include both the very powerful and the very weak.

    The third backlash, and perhaps the most consequential, is political. It's not just that people living in democracies are disgusted with their leaders and the parties they represent. Rather, as political scientists Roberto Stefan Foa and Yascha Mounk write in the Journal of Democracy , "they have also become more cynical about the value of democracy as a political system, less hopeful that anything they do might influence public policy, and more willing to express support for authoritarian alternatives."

    Foa and Mounk are using 20 years of data collected from surveys of citizens in Western Europe and North America – the democracies with the greatest longevity. And they have found that support for illiberal alternatives is greater among the younger generation than the older one. In other countries outside Europe and North America, the disillusionment with democratic institutions often takes the form of a preference for a powerful leader who can break the rules if necessary to preserve order and stability – like Putin in Russia or Abdel Fattah el-Sisi in Egypt or Prayuth Chan-ocha in Thailand.

    These three backlashes – cultural, economic, political – are also anti-internationalist because international institutions have become associated with the promotion of civil liberties and human rights, the greater globalization of the economy, and the constraint of the sovereignty of nations (for instance, through the European Union or the UN's "responsibility to protect" doctrine).

    ... ... ....

    The current political order is coming apart. If we don't come up with a fair, Green, and internationalist alternative, the illiberal populists will keep winning. John Feffer is the director of Foreign Policy In Focus.

    [Dec 05, 2016] The most powerful force in Presidential election 2016 is the sense of betrayal pervading our politics, especially among Democratic electorate

    Notable quotes:
    "... if neo-liberalism is partly defined by the free flow of goods, labor and capital - and that has been the Republican agenda since at least Reagan - how is Trump a continuation of the same tradition?" ..."
    "... Trump is a conservative (or right populist, or whatever), and draws on that tradition. He's not a neoliberal. ..."
    "... Trump is too incoherent to really represent the populist view. He's consistent w/the trade and immigration views but (assuming you can actually figure him out) wrong on banks, taxes, etc. ..."
    "... But the next populists we see might be more full bore. When that happens, you'll see much more overlap w/Sanders economic plans for the middle class. ..."
    "... There's always tension along the lead running between the politician and his constituents. The thing that seems most salient to me at the present moment is the sense of betrayal pervading our politics. At least since the GFC of 2008, it has been hard to deny that the two Parties worked together to set up an economic betrayal. And, the long-running saga of the wars in Iraq and Afghanistan also speak to elite failure, as well as betrayal. ..."
    "... Trump is a novelty act. He represents a chance for people who feel resentful without knowing much of anything about anything to cast a middle-finger vote. They wouldn't be willing to do that, if times were really bad, instead of just disappointing and distressing. ..."
    "... There's also the fact Reagan tapped a fair number of Nixon people, as did W years later. Reagan went after Nixon in the sense of running against him, and taking the party in a much more hard-right direction, sure. But he was repudiated largely because he got caught doing dirty tricks with his pants down. ..."
    "... From what I can tell - the 1972 election gave the centrists in the democratic party power to discredit and marginalize the anti-war left, and with it, the left in general. ..."
    "... Ready even now to whine that she's a victim and that the whole community is at fault and that people are picking on her because she's a woman, rather than because she has a habit of making accusations like this every time she comments. ..."
    "... That is a perfect example of predatory "solidarity". Val is looking for dupes to support her ..."
    Aug 12, 2016 | crookedtimber.org
    Rich Puchalsky 08.12.16 at 4:15 pm 683
    "Once again, if neo-liberalism is partly defined by the free flow of goods, labor and capital - and that has been the Republican agenda since at least Reagan - how is Trump a continuation of the same tradition?"

    You have to be willing to see neoliberalism as something different from conservatism to have the answer make any sense. John Quiggin has written a good deal here about a model of U.S. politics as being divided into left, neoliberal, and conservative. Trump is a conservative (or right populist, or whatever), and draws on that tradition. He's not a neoliberal.

    ... ... ...

    T 08.12.16 at 5:52 pm

    RP @683

    That's a bit of my point. I think Corey has defined the Republican tradition solely in response to the Southern Strategy that sees a line from Nixon (or Goldwater) to Trump. But that gets the economics wrong and the foreign policy too - the repub foreign policy view has not been consistent across administrations and Trump's economic pans (to the extent he has a plan) are antithetical to the Nixon – W tradition. I have viewed post-80 Dem administrations as neoliberals w/transfers and Repub as neoliberals w/o transfers.

    Trump is too incoherent to really represent the populist view. He's consistent w/the trade and immigration views but (assuming you can actually figure him out) wrong on banks, taxes, etc.

    But the next populists we see might be more full bore. When that happens, you'll see much more overlap w/Sanders economic plans for the middle class. Populists have nothing against gov't programs like SS and Medicare and were always for things like the TVA and infrastructure spending. Policies aimed at the poor and minorities not so much.

    bruce wilder 08.12.16 at 7:47 pm 689

    T @ 685: Trump is too incoherent to really represent the populist view.

    There's always tension along the lead running between the politician and his constituents. The thing that seems most salient to me at the present moment is the sense of betrayal pervading our politics. At least since the GFC of 2008, it has been hard to deny that the two Parties worked together to set up an economic betrayal. And, the long-running saga of the wars in Iraq and Afghanistan also speak to elite failure, as well as betrayal.

    These are the two most unpopular candidates in living memory. That is different.

    I am not a believer in "the fire next time". Trump is a novelty act. He represents a chance for people who feel resentful without knowing much of anything about anything to cast a middle-finger vote. They wouldn't be willing to do that, if times were really bad, instead of just disappointing and distressing.

    Nor will Sanders be back. His was a last New Deal coda. There may be second acts in American life, but there aren't 7th acts.

    If there's a populist politics in our future, it will have to have a much sharper edge. It can talk about growth, but it has to mean smashing the rich and taking their stuff. There's very rapidly going to come a point where there's no other option, other than just accepting cramdown by the authoritarian surveillance state built by the neoliberals. that's a much taller order than Sanders or Trump have been offering.<

    Michael Sullivan 08.12.16 at 8:06 pm 690

    Corey, you write: "It's not just that the Dems went after Nixon, it's also that Nixon had so few allies. People on the right were furious with him because they felt after this huge ratification that the country had moved to the right, Nixon was still governing as if the New Deal were the consensus. So when the time came, he had very few defenders, except for loyalists like Leonard Garment and G. Gordon Liddy. And Al Haig, God bless him."

    You've studied this more than I have, but this is at least somewhat at odds with my memory. I recall some prominent attackers of Nixon from the Republican party that were moderates, at least one of whom was essentially kicked out of the party for being too liberal in later years. There's also the fact Reagan tapped a fair number of Nixon people, as did W years later. Reagan went after Nixon in the sense of running against him, and taking the party in a much more hard-right direction, sure. But he was repudiated largely because he got caught doing dirty tricks with his pants down.

    To think that something similar would happen to Clinton (watergate like scandal) that would actually have a large portion of the left in support of impeachment, she would have to be as dirty as Nixon was, *and* the evidence to really put the screws to her would have to be out, as it was against Nixon during watergate.

    OTOH, my actual *hope* would be that a similar left-liberal sea change comparable to 1980 from the right would be plausible. I don't think a 1976-like interlude is plausible though, that would require the existence of a moderate republican with enough support within their own party to win the nomination. I suppose its possible that such a beast could come to exist if Trump loses a landslide, but most of the plausible candidates have already left or been kicked out of the party.

    From what I can tell - the 1972 election gave the centrists in the democratic party power to discredit and marginalize the anti-war left, and with it, the left in general. A comparable election from the other side would give republican centrists/moderates the ability to discredit and marginalize the right wing base. But unlike Democrats in 1972, there aren't any moderates left in the Republican party by my lights. I'm much more concerned that this will simply re-empower the hard-core conservatives with plausbly-deniable dog-whistle racism who are now the "moderates", and enable them to whitewash their history.

    Unfortunately, unlike you, I'm not convinced that a landslide is possible without an appeal to Reagan/Bush republicans. I don't think we're going to see a meaningful turn toward a real left until Democrats can win a majority of statehouses and clean up the ridiculous gerrymandering.

    Rich Puchalsky 08.12.16 at 9:18 pm

    Val: "Similarly with your comments on "identity politics" where you could almost be seen by MRAs and white supremacists as an ally, from the tone of your rhetoric."

    That is 100% perfect Val. Insinuates that BW is a sort-of-ally of white supremacists - an infuriating insinuation. Does this insinuation based on a misreading of what he wrote. Completely resistant to any sort of suggestion that what she dishes out so expansively to others had better be something she should be willing to accept herself, or that she shouldn't do it. Ready even now to whine that she's a victim and that the whole community is at fault and that people are picking on her because she's a woman, rather than because she has a habit of making accusations like this every time she comments.

    That is a perfect example of predatory "solidarity". Val is looking for dupes to support her - for people to jump in saying "Why are you being hostile to women?" in response to people's response to her comment.

    [Dec 05, 2016] Yes, the System Is Rigged

    Notable quotes:
    "... More than a dozen Republican rivals, described as the strongest GOP field since 1980, were sent packing. This was the year Americans rose up to pull down the establishment in a peaceful storming of the American Bastille. ..."
    "... If 2016 taught us anything, it is that if the establishment's hegemony is imperiled, it will come together in ferocious solidarity - for the preservation of their perks, privileges and power. All the elements of that establishment - corporate, cultural, political, media - are today issuing an ultimatum to Middle America: Trump is unacceptable. Instructions are going out to Republican leaders that either they dump Trump, or they will cease to be seen as morally fit partners in power. ..."
    "... Our CIA, NGOs and National Endowment for Democracy all beaver away for "regime change" in faraway lands whose rulers displease us. How do we effect "regime change" here at home? ..."
    "... Donald Trump's success, despite the near-universal hostility of the media, even much of the conservative media, was due in large part to the public's response to the issues he raised. ..."
    Aug 12, 2016 | www.theamericanconservative.com

    "I'm afraid the election is going to be rigged," Donald Trump told voters in Ohio and Sean Hannity on Fox News. And that hit a nerve.

    "Dangerous," "toxic," came the recoil from the media.

    Trump is threatening to "delegitimize" the election results of 2016.

    Well, if that is what Trump is trying to do, he has no small point. For consider what 2016 promised and what it appears about to deliver.

    This longest of election cycles has rightly been called the Year of the Outsider. It was a year that saw a mighty surge of economic populism and patriotism, a year when a 74-year-old Socialist senator set primaries ablaze with mammoth crowds that dwarfed those of Hillary Clinton.

    It was the year that a non-politician, Donald Trump, swept Republican primaries in an historic turnout, with his nearest rival an ostracized maverick in his own Republican caucus, Senator Ted Cruz.

    More than a dozen Republican rivals, described as the strongest GOP field since 1980, were sent packing. This was the year Americans rose up to pull down the establishment in a peaceful storming of the American Bastille.

    But if it ends with a Clintonite restoration and a ratification of the same old Beltway policies, would that not suggest there is something fraudulent about American democracy, something rotten in the state?

    If 2016 taught us anything, it is that if the establishment's hegemony is imperiled, it will come together in ferocious solidarity - for the preservation of their perks, privileges and power. All the elements of that establishment - corporate, cultural, political, media - are today issuing an ultimatum to Middle America: Trump is unacceptable. Instructions are going out to Republican leaders that either they dump Trump, or they will cease to be seen as morally fit partners in power.

    It testifies to the character of Republican elites that some are seeking ways to carry out these instructions, though this would mean invalidating and aborting the democratic process that produced Trump.

    But what is a repudiated establishment doing issuing orders to anyone?

    Why is it not Middle America issuing the demands, rather than the other way around?

    Specifically, the Republican electorate should tell its discredited and rejected ruling class: If we cannot get rid of you at the ballot box, then tell us how, peacefully and democratically, we can be rid of you?

    You want Trump out? How do we get you out? The Czechs had their Prague Spring. The Tunisians and Egyptians their Arab Spring. When do we have our American Spring? The Brits had their "Brexit," and declared independence of an arrogant superstate in Brussels. How do we liberate ourselves from a Beltway superstate that is more powerful and resistant to democratic change?

    Our CIA, NGOs and National Endowment for Democracy all beaver away for "regime change" in faraway lands whose rulers displease us. How do we effect "regime change" here at home?

    Donald Trump's success, despite the near-universal hostility of the media, even much of the conservative media, was due in large part to the public's response to the issues he raised.

    By campaign's end, he had won the argument on trade, as Hillary Clinton was agreeing on TPP and confessing to second thoughts on NAFTA.

    But if TPP is revived at the insistence of the oligarchs of Wall Street, the Business Roundtable, the U.S. Chamber of Commerce - backed by conscript editorial writers for newspapers that rely on ad dollars - what do elections really mean anymore?

    And if, as the polls show we might, we get Clinton - and TPP, and amnesty, and endless migrations of Third World peoples who consume more tax dollars than they generate, and who will soon swamp the Republicans' coalition - what was 2016 all about?

    Would this really be what a majority of Americans voted for in this most exciting of presidential races?

    "Those who make peaceful revolution impossible will make violent revolution inevitable," said John F. Kennedy.

    The 1960s and early 1970s were a time of social revolution in America, and President Nixon, by ending the draft and ending the Vietnam war, presided over what one columnist called the "cooling of America."

    But if Hillary Clinton takes power, and continues America on her present course, which a majority of Americans rejected in the primaries, there is going to be a bad moon rising.

    And the new protesters in the streets will not be overprivileged children from Ivy League campuses.

    Patrick J. Buchanan is a founding editor of The American Conservative and the author of book The Greatest Comeback: How Richard Nixon Rose From Defeat to Create the New Majority .

    [Dec 05, 2016] Neoliberalism has only exacerbated falling living standards

    Notable quotes:
    "... the capitalist economy is more and more an asset driven one. This article does not even begin to address the issue of asset valuations, the explicit CB support for asset inflation and the effect on inequality, and especially generational plunder. ..."
    "... the problem of living standards is obviously a Malthusian one. despite all the progress of social media tricks, we cannot fool nature. the rate of ecological degradation is alarming, and now irreversible. "the market" is now moving rapidly to real assets. This will eventually lead to war as all war is eventually for resources. ..."
    Aug 07, 2016 | www.nakedcapitalism.com
    Sally Snyder , August 5, 2016 at 11:57 am

    Here is an article that explains the key reason why economic growth will be slow for the foreseeable future:

    http://viableopposition.blogspot.ca/2016/08/the-baby-bust-and-its-impact-on.html

    No matter what central banks do, their actions will not be able to create the same level of economic growth that we have become used to over the past seven decades.

    JEHR , August 5, 2016 at 12:57 pm

    Economic growth does not come from the central banks; if government sought to provide the basics for all its citizens, including health care, education, a home, and proper food and all the infrastructure needed to give people the basics, then you could have something akin to "growth" while at the same time making life more pleasant for the less fortunate. There seems to be no definition of economic growth that includes everyone.

    David , August 5, 2016 at 1:25 pm

    This seems a very elaborate way of stating a simple problem, that can be summarised in three points.

      The living standards of most people have fallen over the last thirty years or so because of the impact of neoliberal economic policies. Conventional politicians are promising only more of the same. Therefore people are increasingly voting for non-conventional politicians.

    And that's about it.

    jgordon , August 5, 2016 at 8:10 pm

    Neoliberalism has only exacerbated falling living standards. Living standards would be falling even without it, albeit more gradually.

    Neoliberalism itself may even be nothing more than a standard type response of species that have expanded beyond the capacity of their environment to support them. What we see as an evil ideology is only the expression of a mechanism that apportions declining resources to the elites, like shutting shutting down the periphery so the core can survive as in hypothermia.

    I Lost at Jeopardy , August 5, 2016 at 6:57 pm

    I really don't have problem with this. Let the financial sector run the world into the ground and get it over with.

    In defference to a great many knowledgable commentors here that work in the FIRE sector, I don't want to create a damning screed on the cost of servicing money, but at some point even the most considered opinions have to acknowledge that that finance is flooded with *talent* which creates a number of problems; one being a waste of intellect and education in a field that doesn't offer much of a return when viewed in an egalitarian sense, secondly; as the field grows due to, the technical advances, the rise in globilization, and the security a financial occuptaion offers in an advanced first world country nowadays, it requires substantially more income to be devoted to it's function.

    This income has to be derived somewhere, and the required sacrifices on every facet of a global economy to bolster positions and maintain asset prices has precipitated this decline in the well being of peoples not plugged-in to the consumer capitalist regime and dogma.

    Something has to give here, and I honestly couldn't care about your 401k or home resale value, you did this to yourself as much as those day-traders who got clobbered in the dot-com crash.

    nothing but the truth , August 6, 2016 at 11:46 am

    the capitalist economy is more and more an asset driven one. This article does not even begin to address the issue of asset valuations, the explicit CB support for asset inflation and the effect on inequality, and especially generational plunder.

    the problem of living standards is obviously a Malthusian one. despite all the progress of social media tricks, we cannot fool nature. the rate of ecological degradation is alarming, and now irreversible. "the market" is now moving rapidly to real assets. This will eventually lead to war as all war is eventually for resources.

    [Dec 04, 2016] UK election Who really governs Britain

    But those politicians lucky enough to win discover -- if they did not know already -- that their capacity to affect even their own domestic environment is constrained by forces beyond their control.
    Notable quotes:
    "... But those politicians lucky enough to win discover -- if they did not know already -- that their capacity to affect even their own domestic environment is constrained by forces beyond their control. ..."
    "... In the case of Britain, the once-powerful centralized governments of that country are now multiply constrained. As the power of Britain in international affairs has declined, so has the British government's power within its own domain. Membership of the European Union constrains British governments' ability to determine everything from the quantities of fish British fishermen can legally catch to the amount in fees that British universities can charge students from other EU countries. ..."
    "... Not least, the EU's insistence on the free movement of labor caused the Conservative-dominated coalition that came to power in 2010 to renege on the Tories' spectacularly ill-judged pledge to reduce to "tens of thousands a year" the number of migrants coming to Britain. The number admitted in 2014 alone was nearer 300,000. ..."
    "... On top of all that, British governments -- even more than those of some other predominantly capitalist economies -- are open to being buffeted by market forces, whose winds can acquire gale force. In a world of substantially free trade, imports and exports of goods and services are largely beyond any government's control, and the Bank of England's influence over the external value of sterling is negligible. During the present election campaign, HSBC, one of the world's largest banks, indicated that it was contemplating shifting its headquarters from the City of London to Hong Kong. For good or ill, Britain's government was, and is, effectively helpless to intervene. ..."
    "... That's why we need a federal Europe. Local governments for local issues and elected by the local people and a European government for European issues elected by all Europeans. ..."
    May 04, 2015 | CNN.com

    Once upon a time, national elections were -- or seemed to be -- overwhelmingly domestic affairs, affecting only the peoples of the countries taking part in them. If that was ever true, it is so no longer. Angela Merkel negotiates with Greece's government with Germany's voters looming in the background. David Cameron currently fights an election campaign in the UK holding fast to the belief that a false move on his part regarding Britain's relationship with the EU could cost his Conservative Party seats, votes and possibly the entire election.

    Britain provides a good illustration of a general proposition. It used to be claimed, plausibly, that "all politics is local." In 2015, electoral politics may still be mostly local, but the post-electoral business of government is anything but local. There is a misfit between the two. Voters are mainly swayed by domestic issues. Vote-seeking politicians campaign accordingly. But those politicians lucky enough to win discover -- if they did not know already -- that their capacity to affect even their own domestic environment is constrained by forces beyond their control.

    Anyone viewing the UK election campaign from afar could be forgiven for thinking that British voters and politicians alike imagined they were living on some kind of self-sufficient sea-girt island. The opinion polls indicate that a large majority of voters are preoccupied -- politically as well as in other ways -- with their own financial situation, tax rates, welfare spending and the future of the National Health Service. Immigration is an issue for many voters, but mostly in domestic terms (and often as a surrogate for generalized discontent with Britain's political class). The fact that migrants from Eastern Europe and elsewhere make a positive net contribution to both the UK's economy and its social services scarcely features in the campaign.

    ... ... ...

    After polling day, all that will change -- probably to millions of voters' dismay. One American presidential candidate famously said that politicians campaign in poetry, but govern in prose. Politicians in democracies, not just in Britain, campaign as though they can move mountains, then find that most mountains are hard or impossible to move.

    In the case of Britain, the once-powerful centralized governments of that country are now multiply constrained. As the power of Britain in international affairs has declined, so has the British government's power within its own domain. Membership of the European Union constrains British governments' ability to determine everything from the quantities of fish British fishermen can legally catch to the amount in fees that British universities can charge students from other EU countries.

    Not least, the EU's insistence on the free movement of labor caused the Conservative-dominated coalition that came to power in 2010 to renege on the Tories' spectacularly ill-judged pledge to reduce to "tens of thousands a year" the number of migrants coming to Britain. The number admitted in 2014 alone was nearer 300,000.

    The UK's courts are also far more active than they were. The British parliament in 1998 incorporated the European Convention on Human Rights into British domestic law, and British judges have determinedly enforced those rights. During the 1970s, they had already been handed responsibility for enforcing the full range of EU law within the UK.

    Also, Britain's judges have, on their own initiative, exercised increasingly frequently their long-standing power of "judicial review," invalidating ministerial decisions that violated due process or seemed to them to be wholly unreasonable. Devolution of substantial powers to semi-independent governments in Scotland, Wales and Northern Ireland has also meant that the jurisdiction of many so-called UK government ministers is effectively confined to the purely English component part.

    On top of all that, British governments -- even more than those of some other predominantly capitalist economies -- are open to being buffeted by market forces, whose winds can acquire gale force. In a world of substantially free trade, imports and exports of goods and services are largely beyond any government's control, and the Bank of England's influence over the external value of sterling is negligible. During the present election campaign, HSBC, one of the world's largest banks, indicated that it was contemplating shifting its headquarters from the City of London to Hong Kong. For good or ill, Britain's government was, and is, effectively helpless to intervene.

    The heirs of Gladstone, Disraeli, Lloyd George and Winston Churchill, Britain's political leaders are understandably still tempted to talk big. But their effective real-world influence is small. No wonder a lot of voters in Britain feel they are being conned.

    ItsJustTim

    That's globalization. And it won't go away, even if you vote nationalist. The issues are increasingly international, while the voters still have a mostly local perspective. That's why we need a federal Europe. Local governments for local issues and elected by the local people and a European government for European issues elected by all Europeans.

    [Dec 04, 2016] James Pinkerton Globalism Hits a Brick Wall Now, What Will Donald Trump and Hillary Clinton Do

    Notable quotes:
    "... The Guardian ..."
    "... it seems fair to say: Globalism isn't quite the Wave of the Future that most observers thought it was, even just a year ago. And so before we attempt to divide the true intentions of Clinton and Trump, we might first step back and consider how we got to this point. ..."
    "... An Inquiry into the Nature and Causes of the Wealth of Nations . ..."
    "... Clinton will say anything then she'll sell you out. I hope we never get a chance to see how she will sell us out on TPP ..."
    "... What we would be headed for under Hillary Clinton is fascism--Mussolini's shorthand definition of fascism was the marriage of industry and commerce with the power of the State. That is what the plutocrats who run the big banks (to whom she owes her soul) aim to do. President, Thomas Jefferson knew the dangers of large European-style central banks. ..."
    Aug 30, 2016 | Breitbart
    On the surface, it appears that Hillary Clinton and Donald Trump, for all their mutual antipathy, are united on one big issue: opposition to new trade deals. Here's a recent headline in The Guardian: "Trump and Clinton's free trade retreat: a pivotal moment for the world's economic future."

    And the subhead continues in that vein:

    Never before have both main presidential candidates broken so completely with Washington orthodoxy on globalization, even as the White House refuses to give up. The problem, however, goes much deeper than trade deals.

    In the above quote, we can note the deliberate use of the loaded word, "problem." As in, it's a problem that free trade is unpopular-a problem, perhaps, that the MSM can fix. Yet in the meantime, the newspaper sighed, the two biggest trade deals on the horizon, the well-known Trans Pacific Partnership (TPP), and the lesser-known Trans Atlantic Trade Investment Partnership (TTIP), aimed at further linking the U.S. and European Union (EU), are both in jeopardy.

    Indeed, if TPP isn't doing well, TTIP might be dead: Here's an August 28 headline from the Deutsche Welle news service quoting Sigmar Gabriel, the No. 2 in the Berlin government: "Germany's Vice Chancellor Gabriel: US-EU trade talks 'have failed.'"

    So now we must ask broader questions: What does this mean for trade treaties overall? And what are the implications for globalism?

    More specifically, we can ask: Are we sure that the two main White House hopefuls, Clinton and Trump, are truly sincere in their opposition to those deals? After all, as has been widely reported, President Obama still has plans to push TPP through to enactment in the "lame duck" session of Congress after the November elections. Of course, Obama wouldn't seek to do that if the president-elect opposed it-or would he?

    Yet on August 30, Politico reminded its Beltway readership, "How Trump or Clinton could kill Pacific trade deal." In other words, even if Obama were to move TPP forward in his last two months in office, the 45th president could still block its implementation in 2017 and beyond. If, that is, she or he really wanted to.

    Indeed, as we think about Clinton and Trump, we realize that there's "opposition" that's for show and there's opposition that's for real.

    Still, given what's been said on the presidential campaign trail this year, it seems fair to say: Globalism isn't quite the Wave of the Future that most observers thought it was, even just a year ago. And so before we attempt to divide the true intentions of Clinton and Trump, we might first step back and consider how we got to this point.

    2. The Free Trade Orthodoxy

    It's poignant that the headline, "Trump and Clinton's free trade retreat", lamenting the decay of free trade, appeared in The Guardian. Until recently, the newspaper was known as The Manchester Guardian, as in Manchester, England. And Manchester is not only a big city, population 2.5 million, it is also a city with a fabled past: You see, Manchester was the cradle of the Industrial Revolution, which transformed England and the world. It was that city that helped create the free trade orthodoxy that is now crumbling.

    Yes, in the 18th and 19th centuries, Manchester was the leading manufacturing city in the world, especially for textiles. It was known as "Cottonopolis."

    Indeed, back then, Manchester was so much more efficient and effective at mass production that it led the world in exports. That is, it could produce its goods at such low cost that it could send them across vast oceans and still undercut local producers on price and quality.

    Over time, this economic reality congealed into a school of thought: As Manchester grew rich from exports, its business leaders easily found economists, journalists, and propagandists who would help advance their cause in the press and among the intelligentsia.

    The resulting school of thought became known, in the 19th century, as "Manchester Liberalism." And so, to this day, long after Manchester has lost its economic preeminence to rivals elsewhere in the world, the phrase "Manchester Liberalism" is a well-known in the history of economics, bespeaking ardent support for free markets and free trade.

    More recently, the hub for free-trade enthusiasm has been the United States. In particular, the University of Chicago, home to the Nobel Prize-winning economist Milton Friedman, became free trade's academic citadel; hence the "Chicago School" has displaced Manchesterism.

    And just as it made sense for Manchester Liberalism to exalt free trade and exports when Manchester and England were on top, so, too, did the Chicago School exalt free trade when the U.S. was unquestionably the top dog.

    So back in the 40s and 50s, when the rest of the world was either bombed flat or still under the yoke of colonialism, it made perfect sense that the U.S., as the only intact industrial power, would celebrate industrial exports: We were Number One, and it was perfectly rational to make the most of that first-place status. And if scribblers and scholars could help make the case for this new status quo, well, bring 'em aboard. Thus the Chicago School gained ascendancy in the late 20th century. And of course, the Chicagoans drew inspiration from a period even earlier than Manchesterism,

    3. On the Origins of the Orthodoxy: Adam Smith and David Ricardo

    The beginnings of an intellectually rigorous discussion of trade can be traced to 1776, when Adam Smith published his famous work, An Inquiry into the Nature and Causes of the Wealth of Nations.

    One passage in that volume considers how individuals might optimize their own production and consumption:

    It is the maxim of every prudent master of a family never to attempt to make at home what it will cost him more to make than to buy.

    Smith is right, of course; everyone should always be calculating, however informally, whether or not it's cheaper to make it at home or buy it from someone else.

    We can quickly see: If each family must make its own clothes and grow its own food, it's likely to be worse off than if it can buy its necessities from a large-scale producer. Why? Because, to be blunt about it, most of us don't really know how to make clothes and grow food, and it's expensive and difficult-if not downright impossible-to learn how. So we can conclude that self-sufficiency, however rustic and charming, is almost always a recipe for poverty.

    Smith had a better idea: specialization. That is, people would specialize in one line of work, gain skills, earn more money, and then use that money in the marketplace, buying what they needed from other kinds of specialists.

    Moreover, the even better news, in Smith's mind, was that this kind of specialization came naturally to people-that is, if they were free to scheme out their own advancement. As Smith argued, the ideal system would allow "every man to pursue his own interest his own way, upon the liberal plan of equality, liberty and justice."

    That is, men (and women) would do that which they did best, and then they would all come together in the free marketplace-each person being inspired to do better, thanks to, as Smith so memorably put it, the "invisible hand." Thus Smith articulated a key insight that undergirds the whole of modern economics-and, of course, modern-day prosperity.

    A few decades later, in the early 19th century, Smith's pioneering work was expanded upon by another remarkable British economist, David Ricardo.

    Ricardo's big idea built on Smithian specialization; Ricardo called it "comparative advantage." That is, just as each individual should do what he or she does best, so should each country.

    In Ricardo's well-known illustration, he explained that the warm and sunny climate of Portugal made that country ideal for growing the grapes needed for wine, while the factories of England made that country ideal for spinning the fibers needed for apparel and other finished fabrics.

    Thus, in Ricardo's view, we could see the makings of a beautiful economic friendship: The Portuguese would utilize their comparative advantage (climate) and export their surplus wine to England, while the English would utilize their comparative advantage (manufacturing) and export apparel to Portugal. Thus each would benefit from the exchange of efficiently-produced products, as each export paid for the other.

    Furthermore, in Ricardo's telling, if tariffs and other barriers were eliminated, then both countries, Portugal and England, would enjoy the maximum free-trading win-win.

    Actually, in point of fact-and Ricardo knew this-the relationship was much more of a win for England, because manufacture is more lucrative than agriculture. That is, a factory in Manchester could crank out garments a lot faster than a vineyard in Portugal could ferment wine.

    And as we all know, the richer, stronger countries are industrial, not agricultural. Food is essential-and alcohol is pleasurable-but the real money is made in making things. After all, crops can be grown easily enough in many places, and so prices stay low. By contrast, manufacturing requires a lot of know-how and a huge upfront investment. Yet with enough powerful manufacturing, a nation is always guaranteed to be able to afford to import food. And also, it can make military weapons, and so, if necessary, take foreign food and croplands by force.

    We can also observe that Ricardo, smart fellow that he was, nevertheless was describing the economy at a certain point in time-the era of horse-drawn carriages and sailing ships. Ricardo realized that transportation was, in fact, a key business variable. He wrote that it was possible for a company to seek economic advantage by moving a factory from one part of England to another. And yet in his view, writing from the perspective of the year 1817, it was impossible to imagine moving a factory from England to another country:

    It would not follow that capital and population would necessarily move from England to Holland, or Spain, or Russia.

    Why this presumed immobility of capital and people? Because, from Ricardo's early 19th-century perspective, transportation was inevitably slow and creaky; he didn't foresee steamships and airplanes. In his day, relying on the technology of the time, it wasn't realistic to think that factories, and their workers, could relocate from one country to another.

    Moreover, in Ricardo's era, many countries were actively hostile to industrialization, because change would upset the aristocratic rhythms of the old order. That is, industrialization could turn docile or fatalistic peasants, spread out thinly across the countryside, into angry and self-aware proletarians, concentrated in the big cities-and that was a formula for unrest, even revolution.

    Indeed, it was not until the 20th century that every country-including China, a great civilization, long asleep under decadent imperial misrule-figured out that it had no choice other than to industrialize.

    So we can see that the ideas of Smith and Ricardo, enduringly powerful as they have been, were nonetheless products of their time-that is, a time when England mostly had the advantages of industrialism to itself. In particular, Ricardo's celebration of comparative advantage can be seen as an artifact of his own era, when England enjoyed a massive first-mover advantage in the industrial-export game.

    Smith died in 1790, and Ricardo died in 1823; a lot has changed since then. And yet the two economists were so lucid in their writings that their work is studied and admired to this day.

    Unfortunately, we can also observe that their ideas have been frozen in a kind of intellectual amber; even in the 21st century, free trade and old-fashioned comparative advantage are unquestioningly regarded as the keys to the wealth of nations-at least in the U.S.-even if they are so no longer.

    4. Nationalist Alternatives to Free Trade Orthodoxy

    As we have seen, Smith and Ricardo were pushing an idea, free trade, that was advantageous to Britain.

    So perhaps not surprisingly, rival countries-notably the United States and Germany-soon developed different ideas. Leaders in Washington, D.C., and Berlin didn't want their respective nations to be mere dependent receptacles for English goods; they wanted real independence. And so they wanted factories of their own.

    In the late 18th century, Alexander Hamilton, the visionary American patriot, could see that both economic wealth and military power flowed from domestic industry. As the nation's first Treasury Secretary, he persuaded President George Washington and the Congress to support a system of protective tariffs and "internal improvements" (what today we would call infrastructure) to foster US manufacturing and exporting.

    And in the 19th century, Germany, under the much heavier-handed leadership of Otto von Bismarck, had the same idea: Make a concerted effort to make the nation stronger.

    In both countries, this industrial policymaking succeeded. So whereas at the beginning of the 19th century, England had led the world in steel production, by the beginning of the 20th century century, the U.S. and Germany had moved well ahead. Yes, the "invisible hand" of individual self-interest is always a powerful economic force, but sometimes, the "visible hand" of national purpose, animated by patriotism, is even more powerful.

    Thus by 1914, at the onset of World War One, we could see the results of the Smith/Ricardo model, on the one hand, and the Hamilton/Bismarck model, on the other. All three countries-Britain, the US, and Germany, were rich-but only the latter two had genuine industrial mojo. Indeed, during World War One, English weakness became glaringly apparent in the 1915 shell crisis-as in, artillery shells. It was only the massive importing of made-in-USA ammunition that saved Britain from looming defeat.

    Yet as always, times change, as do economic circumstances, as do prevailing ideas.

    As we have seen, at the end of World War II, the U.S. was the only industrial power left standing. And so it made sense for America to shift from a policy of Hamiltonian protection to a policy of Smith-Ricardian export-minded free trade. Indeed, beginning in around 1945, both major political parties, Democrats and Republicans, solidly embraced the new line: The U.S. would be the factory for the world.

    Yet if times, circumstances, and ideas change, they can always change again.

    5. The Contemporary Crack-Up

    As we have seen, in the 19th century, not every country wanted to be on the passive receiving end of England's exports. And this was true, too, in the 20th century; Japan, notably, had its own ideas.

    If Japan had followed the Ricardian doctrine of comparative advantage, it would have focused on exporting rice and tuna. Instead, by dint of hard work, ingenuity, and more than a little national strategizing, Japan grew itself into a great and prosperous industrial power. Its exports, we might note, were such high-value-adds as automobiles and electronics, not mere crops and fish.

    Moreover, according to the same theory of comparative advantage, South Korea should have been exporting parasols and kimchi, and China should have settled for exporting fortune cookies and pandas.

    Yet as the South Korean economist Ha-Joon Chang has chronicled, these Asian nations resolved, in their no-nonsense neo-Confucian way, to launch state-guided private industries-and the theory of comparative advantage be damned.

    Yes, their efforts violated Western economic orthodoxy, but as the philosopher Kant once observed, the actual proves the possible. Indeed, today, as we all know, the Asian tigers are among the richest and fastest-growing economies in the world.

    Leading them all, of course, is China. As the economic historian Michael Lind recounted recently,

    China is not only the world's largest economy in terms of purchasing power parity (PPP), but also the world's largest manufacturing nation-producing 52 percent of color televisions, 75 percent of mobile phones and 87 percent of the world's personal computers. The Chinese automobile industry is the world's largest, twice the size of America's. China leads the world in foreign exchange reserves. The United States is the main trading partner for seventy-six countries. China is the main trading partner for 124.

    In particular, we might pause over one item in that impressive litany: China makes 87 percent of the world's personal computers.

    Indeed, if it's true, as ZDNet reports, that the Chinese have built "backdoors" into almost all the electronic equipment that they sell-that is to say, the equipment that we buy-then we can assume that we face a serious military challenge, as well as a serious economic challenge.

    Yes, it's a safe bet that the People's Liberation Army has a good handle on our defense establishment, especially now that the Pentagon has fully equipped itself with Chinese-made iPhones and iPads.

    Of course, we can safely predict that Defense Department bureaucrats will always say that there's nothing to worry about, that they have the potential hacking/sabotage matter under control (although just to be sure, the Pentagon might say, give us more money).

    Yet we might note that this is the same defense establishment that couldn't keep track of lone internal rogues such as Bradley Manning and Edward Snowden. Therefore, should we really believe that this same DOD knows how to stop the determined efforts of a nation of 1.3 billion people, seeking to hack machines-machines that they made in the first place?

    Yes, the single strongest argument against the blind application of free- trade dogma is the doctrine of self defense. That is, all the wealth in the world doesn't matter if you're conquered. Even Adam Smith understood that; as he wrote, "Defense . . . is of much more importance than opulence."

    Yet today we can readily see: If we are grossly dependent on China for vital wares, then we can't be truly independent of China. In fact, we should be downright fearful.

    Still, despite these deep strategic threats, directly the result of careless importing, the Smith-Ricardo orthodoxy remains powerful, even hegemonistic-at least in the English-speaking world.

    Why is this so? Yes, economists are typically seen as cold and nerdy, even bloodless, and yet, in fact, they are actual human beings. And as such, they are susceptible to the giddy-happy feeling that comes from the hope of building a new utopia, the dream of ushering in an era of world harmony, based on untrammeled international trade. Indeed, this woozy idealism among economists goes way back; it was the British free trader Richard Cobden who declared in 1857,

    Free trade is God's diplomacy. There is no other certain way of uniting people in the bonds of peace.

    And lo, so many wars later, many economists still believe that.

    Indeed, economists today are still monolithically pro-fee trade; a recent survey of economists found that 83 percent supported eliminating all tariffs and other barriers; just 10 percent disagreed.

    We might further note that others, too, in the financial and intellectual elite are fully on board the free-trade train, including most corporate officers and their lobbyists, journalists, academics, and, of course, the mostly for-hire think-tankers.

    To be sure, there are always exceptions: As that Guardian article, the one lamenting the sharp decrease in support for free trade as a "problem," noted, not all of corporate America is on board, particularly those companies in the manufacturing sector:

    Ford openly opposes TPP because it fears the deal does nothing to stop Japan manipulating its currency at the expense of US rivals.

    Indeed, we might note that the same Guardian story included an even more cautionary note, asserting that support for free trade, overall, is remarkably rickety:

    Some suggest a "bicycle theory" of trade deals: that the international bandwagon has to keep rolling forward or else it all wobbles and falls down.

    So what has happened? How could virtually the entire elite be united in enthusiasm for free trade, and yet, even so, the free trade juggernaut is no steadier than a mere two-wheeled bike? Moreover, free traders will ask: Why aren't the leaders leading? More to the point, why aren't the followers following?

    To answer those questions, we might start by noting the four-decade phenomenon of wage stagnation-that's taken a toll on support for free trade. But of course, it's in the heartland that wages have been stagnating; by contrast, incomes for the bicoastal elites have been soaring.

    We might also note that some expert predictions have been way off, thus undermining confidence in their expertise. Remember, this spring, when all the experts were saying that the United Kingdom would fall into recession, or worse, if it voted to leave the EU? Well, just the other day came this New York Post headline: "Brexit actually boosting the UK economy."

    Thus from the Wall Street-ish perspective of the urban chattering classes, things are going well-so what's the problem?

    Yet the folks on Main Street have known a different story. They have seen, with their own eyes, what has happened to them, and no fusillade of op-eds or think-tank monographs will persuade them to change their mind.

    So we can see that there's been a standoff: Wall Street vs. Main Street; nor is this the first time this has happened.

    However, because the two parties have been so united on the issues of trade and globalization-the "Uniparty," it's sometimes called-the folks in the boonies have had no political alternative. And as they say, the only power you have in this world is the power of an alternative. And so, lacking an alternative, the working/middle class has just had to accept its fate.

    Indeed, it has been a bitter fate, particularly bitter in the former industrial heartland. In a 2013 paper, the Economic Policy Institute (EPI) came to some startling conclusions:

    Growing trade with less-developed countries lowered wages in 2011 by 5.5 percent-or by roughly $1,800-for a full-time, full-year worker earning the average wage for workers without a four-year college degree.

    The paper added, "One-third of this total effect is due to growing trade with just China."

    Continuing, EPI found that even as trade with low-wage countries caused a decrease in the incomes for lower-end workers, it had caused an increase in the incomes of high-end workers-so no wonder the high-end thinks globalism in great.

    To be sure, some in the elite are bothered by what's been happening. Peggy Noonan, writing earlier this year in The Wall Street Journal-a piece that must have raised the hackles of her doctrinaire colleagues-put the matter succinctly: There's a wide, and widening, gap between the "protected" and the "unprotected":

    The protected make public policy. The unprotected live in it. The unprotected are starting to push back, powerfully.

    Of course, Noonan was alluding to the Trump candidacy-and also to the candidacy of Sen. Bernie Sanders. Those two insurgents, in different parties, have been propelled by the pushing from all the unprotected folks across America.

    We might pause to note that free traders have arguments which undoubtedly deserve a fuller airing. Okay. However, we can still see the limits. For example, the familiar gambit of outsourcing jobs to China, or Mexico-or 50 other countries-and calling that "free trade" is now socially unacceptable, and politically unsustainable.

    Still, the broader vision of planetary freedom, including the free flow of peoples and their ideas, is always enormously appealing. The United States, as well as the world, undoubtedly benefits from competition, from social and economic mobility-and yes, from new blood.

    As Stuart Anderson, executive director of the National Foundation for American Policy, notes, "77 percent of the full-time graduate students in electrical engineering and 71 percent in computer science at U.S. universities are international students." That's a statistic that should give every American pause to ask: Why aren't we producing more engineers here at home?

    Moreover, Reuters reported in 2012 that 44 percent of all Silicon Valley startups were founded by at least one immigrant, and a 2016 study found that more than half of all billion-dollar startups were founded by immigrants. No doubt some will challenge the methodology of these studies, and that's fine; it's an important national debate in which all Americans might engage.

    We can say, with admiration, that Silicon Valley is the latest Manchester; as such, it's a powerful magnet for the best and the brightest from overseas, and from a purely dollars-and-cents point of view, there's a lot to be said for welcoming them.

    So yes, it would be nice if we could retain this international mobility that benefits the U.S.-but only if the economic benefits can be broadly shared, and patriotic assimilation of immigrants can be truly achieved, such that all Americans can feel good about welcoming newcomers.

    The further enrichment of Silicon Valley won't do much good for the country unless those riches are somehow widely shared. In fact, amidst the ongoing outsourcing of mass-production jobs, total employment in such boomtowns as San Francisco and San Jose has barely budged. That is, new software billionaires are being minted every day, but their workforces tend to be tiny-or located overseas. If that past pattern is the future pattern, well, something will have to give.

    We can say: If America is to be one nation-something Mitt "47 percent" Romney never worried about, although it cost him in the end-then we will have to figure out a way to turn the genius of the few into good jobs for the many. The goal isn't socialism, or anything like that; instead, the goal is the widespread distribution of private property, facilitated, by conscious national economic development, as I argued at the tail end of this piece.

    If we can't, or won't, find a way to expand private ownership nationwide, then the populist upsurges of the Trump and Sanders campaigns will be remembered as mere overtures to a starkly divergent future.

    6. Clinton and Trump Say They Are Trade Hawks: But Are They Sincere?

    So now we come to a mega-question for 2016: How should we judge the sincerity of the two major-party candidates, Clinton or Trump, when they affirm their opposition to TPP? And how do we assess their attitude toward globalization, including immigration, overall?

    The future is, of course, unknown, but we can make a couple of points.

    First, it is true that many have questioned the sincerity of Hillary's new anti-TPP stance, especially given the presence of such prominent free-traders as vice presidential nominee Tim Kaine and presidential transition-planning chief Ken Salazar. Moreover, there's also Hillary's own decades-long association with open-borders immigration policies, as well as past support for such trade bills as NAFTA, PNTR, and, of course, TPP. And oh yes, there's the Clinton Foundation, that global laundromat for every overseas fortune; most of those billionaires are globalists par excellence-would a President Hillary really cross them?

    Second, since there's still no way to see inside another person's mind, the best we can do is look for external clues-by which we mean, external pressures. And so we might ask a basic question: Would the 45th president, whoever she or he is, feel compelled by those external pressures to keep their stated commitment to the voters? Or would they feel that they owe more to their elite friends, allies, and benefactors?

    As we have seen, Clinton has long chosen to surround herself with free traders and globalists. Moreover, she has raised money from virtually every bicoastal billionaire in America.

    So we must wonder: Will a new President Clinton really betray her own class-all those Davos Men and Davos Women-for the sake of middle-class folks she has never met, except maybe on a rope line? Would Clinton 45, who has spent her life courting the powerful, really stick her neck out for unnamed strangers-who never gave a dime to the Clinton Foundation?

    Okay, so what to make of Trump? He, too, is a fat-cat-even more of fat-cat, in fact, than Clinton. And yet for more than a year now, he has based his campaign on opposition to globalism in all its forms; it's been the basis of his campaign-indeed, the basis of his base. And his campaign policy advisers are emphatic. According to Politico, as recently as August 30, Trump trade adviser Peter Navarro reiterated Trump's opposition to TPP, declaring,

    Any deal must increase the GDP growth rate, reduce the trade deficit, and strengthen the manufacturing base.

    So, were Trump to win the White House, he would come in with a much more solid anti-globalist mandate.

    Thus we can ask: Would a President Trump really cross his own populist-nationalist base by going over to the other side-to the globalists who voted, and donated, against him? If he did-if he repudiated his central platform plank-he would implode his presidency, the way that Bush 41 imploded his presidency in 1990 when he went back on his "read my lips, no new taxes" pledge.

    Surely Trump remembers that moment of political calamity well, and so surely, whatever mistakes he might make, he won't make that one.

    To be sure, the future is unknowable. However, as we have seen, the past, both recent and historical, is rich with valuable clues.

    [Dec 04, 2016] Democrat Tom Coyne : Trump Challenging Institutional Elites in Both Parties

    Notable quotes:
    "... Donald Trump is challenging the very fabric of the institutional elites in this country on both sides that have, quite frankly, just straight up screwed this country up and made the world a mess. ..."
    Aug 30, 2016 | www.breitbart.com
    Tom Coyne, a lifelong Democrat and the mayor of Brook Park, Ohio, spoke about his endorsement of Republican presidential nominee Donald Trump with Breitbart News Daily SiriusXM host Matt Boyle.

    Coyne said:

    The parties are blurred. What's the difference? They say the same things in different tones. At the end of the day, they accomplish nothing. Donald Trump is challenging the very fabric of the institutional elites in this country on both sides that have, quite frankly, just straight up screwed this country up and made the world a mess.

    Regarding the GOP establishment's so-called Never Trumpers, Coyne stated, "If it's their expertise that people are relying upon as to advice to vote, people should go the opposite."

    Coyne has been described as "a blue-collar populist, blunt and politically incorrect":

    In an interview last week, Coyne said that Democrats and Republicans have failed the city through inaction and bad trade policies, key themes Trump often trumpets.

    "He understands us," Coyne said of Trump. "He is saying what we feel, and therefore, let him shake the bedevils out of everyone in the canyons of Washington D.C. The American people are responding to him."

    Breitbart News Daily airs on SiriusXM Patriot 125 weekdays from 6:00 a.m. to 9:00 a.m. Eastern.

    [Dec 04, 2016] In Trump We Trust E Pluribus Awesome! Ann Coulter

    Notable quotes:
    "... Donald Trump isn't a politician -- he's a one-man wrecking ball against our dysfunctional and corrupt establishment. We're about to see the deluxe version of the left's favorite theme: Vote for us or we'll call you stupid. It's the working class against the smirking class. ..."
    "... He understands that if we're ever going to get our economy back on its feet the wage-earning middle class will have to prosper along with investors ..."
    "... Trump that really "gets" the idea that the economy is suffering because the middle class can't find employment at livable wages ..."
    "... Ms. Coulter says it more eloquently: "The Republican establishment has no idea how much ordinary voters hate both parties." Like me, she's especially annoyed with Republicans, because we think of the Republican Party as being our political "family" that has turned against us: ..."
    "... The RNC has been forcing Republican candidates to take suicidal positions forever They were happy to get 100 percent of the Business Roundtable vote and 20 percent of the regular vote. ..."
    "... American companies used free trade with low-wage countries as an opportunity to close their American factories and relocate the jobs to lower-paying foreign workers. Instead of creating product and exporting it to other countries, our American companies EXPORTED American JOBS to other countries and IMPORTED foreign-made PRODUCTS into America! Our exports have actually DECLINED during the last five years with most of the 20 countries we signed free trade with. Even our exports to Canada, our oldest free trade partner, are less than what they were five years ago. ..."
    "... Trade with Japan, China, and South Korea is even more imbalanced, because those countries actively restrict imports of American-made products. We run a 4x trade imbalance with China, which cost us $367 billion last year. We lost $69 billion to Japan and $28 billion to South Korea. Our exports to these countries are actually DECLINING, even while our imports soar! ..."
    "... Why do Establishment Republicans join with Democrats in wanting to diminish the future with the WRONG kind of "free trade" that removes jobs and wealth from the USA? As Ms. Coulter reminds us, it is because Republican Establishment, like the Democrat establishment, is PAID by the money and jobs they receive from big corporations to believe it. ..."
    "... The donor class doesn't care. The rich are like locusts: once they've picked America dry, they'll move on to the next country. A hedge fund executive quoted in The Atlantic a few years ago said, "If the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile [that] means one American drops out of the middle class, that's not such a bad trade." ..."
    "... The corporate 1% who believe that the global labor market should be tapped in order to beat American workers out of their jobs; and that corporations and the 1% who own them should be come tax-exempt organizations that profit by using cheap overseas labor to product product that is sold in the USA, and without paying taxes on the profit. Ms. Coulter calls this group of Republican Estblishmentarians "locusts: once they've picked America dry, they'll move on to the next country." ..."
    "... Pretending to care about the interests of minorities. Of course, the Republican Establishment has even less appeal to minorities than to the White Middle Class (WMC) they abandoned. Minorities are no more interested in losing their jobs to foreigners or to suffer economic stagnation while the rich have their increasing wealth (most of which is earned at the expense of the middle class) tax-sheltered, than do the WMC. ..."
    "... Trump has given Republicans a new lease on life. The Establishment doesn't like having to take a back seat to him, but perhaps they should understand that having a back seat in a popular production is so much better than standing outside alone in the cold. ..."
    Aug 26, 2016 | www.amazon.com

    Donald Trump isn't a politician -- he's a one-man wrecking ball against our dysfunctional and corrupt establishment. We're about to see the deluxe version of the left's favorite theme: Vote for us or we'll call you stupid. It's the working class against the smirking class.

    Frank A. Lewes

    No pandering! The essence of Trump in personality and issues , August 23, 2016

    Ms. Coulter explains the journey of myself and so many other voters into Trump's camp. It captures the essence of Trump as a personality and Trump on the issues. If I had to sum Ms. Coulter's view of the reason for Trump's success in two words, I'd say "No Pandering!" I've heard many people, including a Liberal tell me, "Trump says what needs to be said."

    I've voted Republican in every election going back to Reagan in 1980, except for 2012 when I supported President Obama's re-election. I've either voted for, or financially supported many "Establishment Republicans" like Mitt Romney and John McCain in 2008. I've also supported some Conservative ones like Newt Gingrich and Rudy Giuliani. In this election I'd been planning to vote for Jeb Bush, a superb governor when I lived in Florida.

    Then Trump announced his candidacy. I had seen hints of that happening as far back as 2012. In my Amazon reviews in 2012 I said that many voters weren't pleased with Obama or the Republican Establishment. So the question became: "Who do you vote for if you don't favor the agendas of either party's legacy candidates?" In November 2013 I commented on the book DOUBLE DOWN: GAME CHANGE 2012 by Mark Halperin and John Heileman:

    =====
    Mr. Trump occupies an important place in the political spectrum --- that of being a Republican Populist.

    He understands that if we're ever going to get our economy back on its feet the wage-earning middle class will have to prosper along with investors, who are recovering our fortunes in the stock market.

    IMO whichever party nominates a candidate like Trump that really "gets" the idea that the economy is suffering because the middle class can't find employment at livable wages, will be the party that rises to dominance.

    Mr. Trump, despite his flakiness, at least understood that essential fact of American economic life.

    November 7, 2013
    =====

    Ms. Coulter says it more eloquently: "The Republican establishment has no idea how much ordinary voters hate both parties." Like me, she's especially annoyed with Republicans, because we think of the Republican Party as being our political "family" that has turned against us:

    =====
    The RNC has been forcing Republican candidates to take suicidal positions forever They were happy to get 100 percent of the Business Roundtable vote and 20 percent of the regular vote.

    when the GOP wins an election, there is no corresponding "win" for the unemployed blue-collar voter in North Carolina. He still loses his job to a foreign worker or a closed manufacturing plant, his kids are still boxed out of college by affirmative action for immigrants, his community is still plagued with high taxes and high crime brought in with all that cheap foreign labor.

    There's no question but that the country is heading toward being Brazil. One doesn't have to agree with the reason to see that the very rich have gotten much richer, placing them well beyond the concerns of ordinary people, and the middle class is disappearing. America doesn't make anything anymore, except Hollywood movies and Facebook. At the same time, we're importing a huge peasant class, which is impoverishing what remains of the middle class, whose taxes support cheap labor for the rich.

    With Trump, Americans finally have the opportunity to vote for something that's popular.

    =====

    That explains how Trump won my vote --- and held on to it through a myriad of early blunders and controversies that almost made me switch my support to other candidates.

    I'm no "xenophobe isolationist" stereotype. My first employer was an immigrant from Eastern Europe. What I learned working for him launched me on my successful career. I've developed and sold computer systems to subsidiaries of American companies in Europe and Asia. My business partners have been English and Canadian immigrants. My family are all foreign-born Hispanics. Three of my college roommates were from Ecuador, Germany, and Syria.

    BECAUSE of this international experience I agree with the issues of trade and immigration that Ms. Coulter talks about that have prompted Trump's rising popularity.

    First, there is the false promise that free trade with low-wage countries would "create millions of high-paying jobs for American workers, who will be busy making high-value products for export." NAFTA was signed in 1994. GATT with China was signed in 2001. Since then we've signed free trade with 20 countries. It was said that besides creating jobs for Americans, that free trade would prosper the global economy. In truth the opposite happened:

    American companies used free trade with low-wage countries as an opportunity to close their American factories and relocate the jobs to lower-paying foreign workers. Instead of creating product and exporting it to other countries, our American companies EXPORTED American JOBS to other countries and IMPORTED foreign-made PRODUCTS into America! Our exports have actually DECLINED during the last five years with most of the 20 countries we signed free trade with. Even our exports to Canada, our oldest free trade partner, are less than what they were five years ago.

    We ran trade SURPLUSES with Mexico until 1994, when NAFTA was signed. The very next year the surplus turned to deficit, now $60 billion a year. Given that each American worker produces an average of $64,000 in value per year, that is a loss of 937,000 American jobs to Mexico alone. The problem is A) that Mexicans are not wealthy enough to be able to afford much in the way of American-made product and B) there isn't much in the way of American-made product left to buy, since so much of former American-made product is now made in Mexico or China.

    Trade with Japan, China, and South Korea is even more imbalanced, because those countries actively restrict imports of American-made products. We run a 4x trade imbalance with China, which cost us $367 billion last year. We lost $69 billion to Japan and $28 billion to South Korea. Our exports to these countries are actually DECLINING, even while our imports soar!

    Thus, free trade, except with a few fair-trading countries like Canada, Australia, and possibly Britain, has been a losing proposition. Is it coincidence that our economy has weakened with each trade deal we have signed? Our peak year of labor force participation was 1999. Then we had the Y2K collapse and the Great Recession, followed by the weakest "recovery" since WWII? As Trump would say, free trade has been a "disaster."

    Why do Establishment Republicans join with Democrats in wanting to diminish the future with the WRONG kind of "free trade" that removes jobs and wealth from the USA? As Ms. Coulter reminds us, it is because Republican Establishment, like the Democrat establishment, is PAID by the money and jobs they receive from big corporations to believe it. Ms. Coulter says:

    =====
    The donor class doesn't care. The rich are like locusts: once they've picked America dry, they'll move on to the next country. A hedge fund executive quoted in The Atlantic a few years ago said, "If the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile [that] means one American drops out of the middle class, that's not such a bad trade."
    =====

    Then there is immigration. My wife, son, and extended family legally immigrated to the USA from Latin America. The first family members were recruited by our government during the labor shortage of the Korean War. Some fought for the United States in Korea. Some of their children fought for us in Vietnam, and some grandchildren are fighting in the Middle East. Most have become successful professionals and business owners. They came here LEGALLY, some waiting in queue for up to 12 years. They were supported by the family already in America until they were on their feet.

    Illegal immigration has been less happy. Illegals are here because the Democrats want new voters and the Republicans want cheap labor. Contrary to business propaganda, illegals cost Americans their jobs. A colleague just old me, "My son returned home from California after five years, because he couldn't get construction work any longer. All those jobs are now done off the books by illegals."

    It's the same in technology. Even while our high-tech companies are laying off 260,000 American employees in 2016 alone, they are banging the drums to expand the importation of FOREIGN tech workers from 85,000 to 195,000 to replace the Americans they let go. Although the H1-B program is billed as bringing in only the most exceptional, high-value foreign engineers, in truth most visas are issued to replace American workers with young foreigners of mediocre ability who'll work for much less money than the American family bread-winners they replaced.

    Both parties express their "reverse racism" against the White Middle Class. Democrats don't like them because they tend to vote Republican. The Republican Establishment doesn't like them because they cost more to employ than overseas workers and illegal aliens. According to them the WMC is too technologically out of date and overpaid to allow our benighted business leaders to "compete internationally."

    Ms. Coulter says "Americans are homesick" for our country that is being lost to illegal immigration and the removal of our livelihoods overseas. We are sick of Republican and Democrat Party hidden agendas, reverse-racism, and economic genocide against the American people. That's why the Establishment candidates who started out so theoretically strong, like Jeb Bush, collapsed like waterlogged houses of cards when they met Donald Trump. As Ms. Coulter explains, Trump knows their hidden agendas, and knows they are working against the best interests of the American Middle Class.

    Coulter keeps coming back to Mr. Trump's "Alpha Male" personality that speaks to Americans as nation without pandering to specific voter identity groups. She contrasts his style to the self-serving "Republican (Establishment) Brain Trust that is mostly composed of comfortable, well-paid mediocrities who, by getting a gig in politics, earn salaries higher than a capitalist system would ever value their talents." She explains what she sees as the idiocy of those Republican Establishment political consultants who wrecked the campaigns of Jeb Bush and Ted Cruz by micromanaging with pandering.

    She says the Republican Establishment lost because it served itself --- becoming wealthy by serving the moneyed interests of Wall Street. Trump won because he is speaking to the disfranchised American Middle Class who loves our country, is proud of our traditions, and believes that Americans have as much right to feed our families through gainful employment as do overseas workers and illegal aliens.

    "I am YOUR voice," says Trump to the Middle Class that until now has been ignored and even sneered at by both parties' establishments.

    I've given an overview of the book here. The real delight is in the details, told as only Anne Coulter can tell them. I've quoted a few snippets of her words, that relate most specifically to my views on Trump and the issues. I wish there were space to quote many more. Alas, you'll need to read the book to glean them all!

    Frank A. Lewes
    Bruce, I would also add that the Republican Establishment chose not to represent the interests of the White Middle Class on trade, immigration, and other issues that matter to us. They chose to represent the narrow interests of:

    1. The corporate 1% who believe that the global labor market should be tapped in order to beat American workers out of their jobs; and that corporations and the 1% who own them should be come tax-exempt organizations that profit by using cheap overseas labor to product product that is sold in the USA, and without paying taxes on the profit. Ms. Coulter calls this group of Republican Estblishmentarians "locusts: once they've picked America dry, they'll move on to the next country."

    2. Pretending to care about the interests of minorities. Of course, the Republican Establishment has even less appeal to minorities than to the White Middle Class (WMC) they abandoned. Minorities are no more interested in losing their jobs to foreigners or to suffer economic stagnation while the rich have their increasing wealth (most of which is earned at the expense of the middle class) tax-sheltered, than do the WMC.

    The Republican Establishment is in a snit because Trump beat them by picking up the WMC votes that the Establishment abandoned. What would have happened if Trump had not come on the scene? The probable result is that the Establishment would have nominated a ticket of Jeb Bush and John Kasich. These candidates had much to recommend them as popular governors of key swing states. But they would have gone into the election fighting the campaign with Republican Establishment issues that only matter to the 1%. They would have lost much of the WMC vote that ultimately rallied around Trump, while gaining no more than the usual 6% of minorities who vote Republican. It would have resulted in a severe loss for the Republican Party, perhaps making it the minority party for the rest of the century.

    Trump has given Republicans a new lease on life. The Establishment doesn't like having to take a back seat to him, but perhaps they should understand that having a back seat in a popular production is so much better than standing outside alone in the cold.

    Frank A. Lewes
    It's funny how White Men are supposed to be angry. But I've never seen any White men:

    1. Running amok, looting and burning down their neighborhood, shooting police and other "angry White men." There were 50 people shot in Chicago last weekend alone. How many of those do you think were "angry white men?" Hint: they were every color EXCEPT white.

    2. Running around complaining that they aren't allowed into the other gender's bathroom, then when they barge their way in there complain about being sexually assaulted. No, it's only "angry females" (of any ethnicity) who barge their way into the men's room and then complain that somebody in there offended them.

    Those "angry white men" are as legendary as "Bigfoot." They are alleged to exist everywhere, but are never seen. Maybe that's because they mostly hang out in the quiet neighborhoods of cookie-cutter homes in suburbia, go to the lake or bar-be-que on weekends, and take their allotment of Viagra in hopes of occassionally "getting lucky" with their wives. If they're "angry" then at least they don't take their angry frustrations out on others, as so many other militant, "in-your-face" activist groups do!

    [Dec 04, 2016] Michael Hudson 2016 Is Wall Street and the Corporate Sector (Clinton) vs. the Populists (Trump)

    Notable quotes:
    "... I've tuned out Warren-she has become the "red meat" surrogate for Clinton. Just because Taibbi was excellent on exposing Wall St. doesn't mean he really knows s**t about politics. I find the depiction of Trump as some kind of monster-buffoon to be simply boring and not very helpful. ..."
    "... (might be the Trump Chaos bc Hillary will strategically turn our war machine on us can't believe this is as good as it gets, sighed out) ..."
    "... Having the establishment, the military-industrial complex and Wall Street against him helps Trump a lot. ..."
    "... You can fool part of the people all the time, and all people part of the time, but Brexit won, so will Trump, politician extraordinaire ..."
    "... Given his family, a Trump presidency may look more like JFK's, where Bobby had more power than LBJ. Also, given Trump's negotiating expertise, I would certainly not believe any assertion of support he proclaims for the VP. I expect he had little choice in the matter, and that he also plans to send the VP to the hinterlands at the first opportunity. I'm unclear why so many appear to believe the VP has any influence whatsoever; I believe GWB was the only post-WW2 president who let the VP have any power. ..."
    "... What is a populist? Somebody that tries to do what the majority want. Current examples: Less wars and military spending. More infrastructure spending. Less support for banks and corps (imagine how many votes trump would gain if he said 'as pres I will jail bankers that break the law' And how that repudiates Obama and both parties.) Gun control (but not possible from within the rep party) ..."
    "... What is a fascist? Somebody that supports corporations, military, and military adventures. ..."
    "... Actually, it sounds a whole lot like a different candidate from a different party, doesn't it? ..."
    "... Neoliberal "Goodthink" flag. What this means when neoliberals say it is not let's build a better global society for all it means Corporations and our military should be able to run roughshod over the world and the people's of other countries. Exploit their citizens for cheap Labor, destroy their environment and move on. These are the exact policies of Hillary Clinton (see TPP, increase foreign wars etc.). Hillary globalism is not about global Brotherhood it's about global economic and military exploitation. Trump is nationalist non – interventionist, which leads to less global military destruction than hillary and less global exploitation. So who is a better for those outside the US, hillary the interventionist OR trump the non-interventionist? ..."
    "... Look, the Clintons are criminals, and their affiliate entities, including the DNC, could be considered criminal enterprises or co-conspirators at this point. ..."
    "... The very fact that Establishment, Wall St and Koch bros are behind HRC is evidence that the current 'status quo' will be continued! I cannot stand another 4 years of Hilabama. ..."
    "... The striving for American empire has so totally confused the political order of the country that up is down and down is up. The idea of government for and by the people is a distant memory. Covering for lies and contradictions of beliefs has blurred any notion of principles informing public action. ..."
    "... If there is any principle that matters today, it is the pursuit of money and profit reigns supreme. Trump is populist in the sense he is talking about bringing money and wealth back to the working classes. Not by giving it directly, but by forcing businesses to turn their sights back to the US proper and return to making their profits at home. In the end, it is all nostalgia and probably impossible, but working class people remember those days so it rings true. That is hope and change in action. People also could care less if he cheats on his taxes or is found out lying about how much he is worth. Once again, fudging your net worth is something working people care little about. Having their share of the pie is all that matters and Trump is tapping into that. ..."
    "... The only crime Trump has committed so far is his language. Liberals like Clinton, Blair and Obama drip blood. ..."
    "... The 2016 election cannot be looked at in isolation. The wars for profit are spreading from Nigeria through Syria to Ukraine. Turkey was just lost to the Islamists and is on the road to being a failed state. The EU is in an existential crisis due to Brexit, the refugee crisis and austerity. Western leadership is utterly incompetent and failing to protect its citizens. Globalization is failing. Its Losers are tipping over the apple cart. Humans are returning to their tribal roots for safety. The drums for war with Russia are beating. Clinton / Kaine are 100% Status Quo Globalists. Trump / Pence are candidates of change to who knows what. Currently I am planning on voting for the Green Party in the hope it becomes viable and praying that the chaos avoids Maryland. ..."
    Jul 24, 2016 | www.nakedcapitalism.com

    naked capitalism

    Brindle, July 24, 2016 at 10:09 am

    I've tuned out Warren-she has become the "red meat" surrogate for Clinton. Just because Taibbi was excellent on exposing Wall St. doesn't mean he really knows s**t about politics. I find the depiction of Trump as some kind of monster-buffoon to be simply boring and not very helpful.

    abynormal , July 24, 2016 at 4:51 am

    for all the run around Hillary, Trump's chosen circle of allies are Wall Street and Austerity enablers. actually, Trump chaos could boost the enablers as easily as Hillary's direct mongering. War is Money low hanging fruit in this cash strapped era and either directly or indirectly neither candidate will disappoint.
    So I Ask Myself which candidate will the majority manage sustainability while assembling to create different outcomes? (might be the Trump Chaos bc Hillary will strategically turn our war machine on us can't believe this is as good as it gets, sighed out)

    Norb , July 24, 2016 at 10:54 am

    War is only good for the profiteers when it can be undertaken in another territory. Bringing the chaos home cannot be good for business. Endless calls for confidence and stability in markets must reflect the fact that disorder effects more business that the few corporations that benefit directly from spreading chaos. A split in the business community seems to be underway or at least a possible leverage point to bring about positive change.
    Even the splits in the political class reflect this. Those that benefit from spreading chaos are loosing strength because they have lost control of where that chaos takes place and who is directly effected from its implementation. Blowback and collateral damage are finally registering.

    Plenue , July 24, 2016 at 6:32 am

    Trump may be a disaster. Clinton will be a disaster. One of these two will win. I won't vote for either, but if you put a gun to my head and forced me to choose, I'd take Trump. He's certainly not a fascist (I think it was either Vice or Vox that had an article where they asked a bunch of historians of fascism if he was, the answer was a resounding no), he's a populist in the Andrew Jackson style. If nothing else Trump will (probably) not start WW3 with Russia.

    cm , July 24, 2016 at 11:28 am

    And war with Russia doesn't depend just on Hillary, it depends on us in Western Europe agreeing with it.

    A laughable proposition. The official US policy, as you may recall, is fuck the EU .

    Where was Europe when we toppled the Ukrainian govt? Get back to me when you can actually spend 2% GDP on your military. At the moment you can't even control your illegal immigrants.

    Lambert Strether Post author , July 24, 2016 at 12:46 pm

    The political parties that survive display adaptability, and ideological consistency isn't a requirement for that. Look at the party of Lincoln. Or look at the party of FDR.

    If the Democrats decapitate the Republican party by bringing in the Kagans of this world and Republican suburbanites in swing states, then the Republicans will go where the votes are; the Iron Law of Institutions will drive them to do it, and the purge of the party after Trump will open the positions in the party for people with that goal.

    In a way, what we're seeing now is what should have happened to the Republicans in 2008. The Democrats had the Republicans down on the ground with Obama's boot on their neck. The Republicans had organized and lost a disastrous war, they had lost the legislative and executive branches, they were completely discredited ideologically, and they were thoroughly discredited in the political class and in the press.

    Instead, Obama, with his strategy of bipartisanship - good faith or not - gave them a hand up, dusted them off, and let them right back in the game, by treating them as a legitimate opposition party. So the Republican day of reckoning was postponed. We got various bids for power by factions - the Tea Party, now the Liberty Caucus - but none of them came anywhere near taking real power, despite (click-driven money-raising) Democrat hysteria.

    And now the day of reckoning has arrived. Trump went through the hollow institutional shell of the Republican Party like the German panzers through the French in 1939. And here we are!

    (Needless to say, anybody - ***cough*** Ted Cruz ***cough*** - yammering about "conservative principles" is part of the problem, dead weight, part of the dead past.) I don't know if the Republicans can remake themselves after Trump; what he's doing is necessary for that, but may not be sufficient.

    Steve C , July 24, 2016 at 5:09 pm

    Republicans won Congress and the states because the Democrats handed them to them on a silver platter. To Obama and his fan club meaningful power is a hot potato, to be discarded as soon as plausible.

    Older & Wiser , July 24, 2016 at 8:37 am

    Having the establishment, the military-industrial complex and Wall Street against him helps Trump a lot.

    Pro-Sanders folks, blacks, and hispanics will mostly vote for Trump.
    Having Gov. Pence on the ticket, core Republicans and the silent majority will vote for Trump.
    Women deep inside know Trump will help their true interests better than the Clinton-Obama rinse repeat
    Young people, sick and tired of the current obviously rigged system, will vote for change.

    You can fool part of the people all the time, and all people part of the time, but Brexit won, so will Trump, politician extraordinaire
    Even Michael Moore gets it

    cm , July 24, 2016 at 11:35 am

    Trump has intimated that he is not going to deal with the nuts and bolts of government, that will be Pence's job.

    Given his family, a Trump presidency may look more like JFK's, where Bobby had more power than LBJ.

    Also, given Trump's negotiating expertise, I would certainly not believe any assertion of support he proclaims for the VP. I expect he had little choice in the matter, and that he also plans to send the VP to the hinterlands at the first opportunity. I'm unclear why so many appear to believe the VP has any influence whatsoever; I believe GWB was the only post-WW2 president who let the VP have any power.

    John k , July 24, 2016 at 10:48 am

    Minorities will benefit at least as much as whites with infrastructure spending, which trump says he wants to do It would make him popular, which he likes, why not believe him? And if pres he would be able to get enough rep votes to get it passed. No chance with Hillary, who anyway would rather spend on wars, which are mostly fought by minorities.

    What is a populist? Somebody that tries to do what the majority want. Current examples:
    Less wars and military spending. More infrastructure spending. Less support for banks and corps (imagine how many votes trump would gain if he said 'as pres I will jail bankers that break the law' And how that repudiates Obama and both parties.) Gun control (but not possible from within the rep party)

    What is a fascist? Somebody that supports corporations, military, and military adventures.

    Uahsenaa , July 24, 2016 at 12:59 pm

    I'm saying you have a much better chance to pressure Clinton

    Sorry, but this argues from facts not in evidence and closely resembles the Correct the Record troll line (now substantiated through the Wikileaks dump) that Clinton "has to be elected" because she is at least responsive to progressive concerns.

    Except she isn't, and the degree to which the DNC clearly has been trying to pander to disillusioned Republicans and the amount of bile they spew every time they lament how HRC has had to "veer left" shows quite conclusively to my mind that, in fact, the opposite of what you say is true.

    Also, when NAFTA was being debated in the '90s, the Clintons showed themselves to be remarkably unresponsive both to the concerns of organized labor (who opposed it) as well as the majority of the members of their own party, who voted against it. NAFTA was passed only with a majority of Republican votes.

    I have no way of knowing whether you're a troll or sincerely believe this, but either way, it needs to be pointed out that the historical record actually contradicts your premise. If you do really believe this, try not to be so easily taken in by crafty rhetoric.

    EndOfTheWorld , July 24, 2016 at 8:19 am

    BTW, I'll take Trump's record as a husband over HRC's record as a wife. He loves a woman, then they break up, and he finds another one. This is not unusual in the US. Hillary, OTOH, "stood by her man" through multiple publicly humiliating infidelities, including having to settle out of court for more than $800,000, and rape charges. No problem with her if her husband was flying many times on the "Lolita Express" with a child molester. Could be she had no idea where her "loved one" was at the time. Do they in fact sleep in the same bed, or even live in the same house? I don't know.

    EndOfTheWorld , July 24, 2016 at 7:12 am

    RE: calling Donald Trump a "sociopath"-this is another one of those words that is thrown around carelessly, like "nazi" and "fascist". In the Psychology Today article "How to Spot a Sociopath", they list 16 key behavioral characteristics. I can't see them in Trump-you could make a case for a few of them, but not all. For example: "failure to follow any life plan", "sex life impersonal, trivial, and poorly integrated", "poor judgment and failure to learn by experience", "incapacity for love"-–you can't reasonably attach these characteristics to The Donald, who, indeed, has a more impressive and loving progeny than any other prez candidate I can think of.

    edmondo , July 24, 2016 at 8:01 am

    Actually, it sounds a whole lot like a different candidate from a different party, doesn't it?

    HBE , July 24, 2016 at 11:06 am

    "I have a sense of international identity as well: we are all brothers and sisters."

    Neoliberal "Goodthink" flag. What this means when neoliberals say it is not let's build a better global society for all it means Corporations and our military should be able to run roughshod over the world and the people's of other countries. Exploit their citizens for cheap Labor, destroy their environment and move on. These are the exact policies of Hillary Clinton (see TPP, increase foreign wars etc.). Hillary globalism is not about global Brotherhood it's about global economic and military exploitation. Trump is nationalist non – interventionist, which leads to less global military destruction than hillary and less global exploitation. So who is a better for those outside the US, hillary the interventionist OR trump the non-interventionist?

    "And not everyone feels the same way, but for most voters there is either a strong tribal loyalty (Dem or Repub) or a weaker sense of "us" guiding the voter on that day.
    Mad as I am about the Blue Dogs, I strongly identify with the Dems."

    So you recognize you are a tribalist, and assume all the baggage and irrationality that tribalism often fosters, but instead of addressing your tribalism you embrace it. What you seem to be saying (to me)is that we should leave critical thinking at the door and become dem tribalists like you.

    "But the Repubs and Dems see Wall Street issues through different cultural prisms. Republican are more reflexively pro-business. It matters."

    Hillary Clinton's biggest donors are Wallstreet and her dem. Husband destroyed glass-steagall. Trump wants to reinstate glass-steagall, so who is more business friendly again?

    "He is racist, and so he knows how to push ugly buttons."

    This identity politics trope is getting so old. Both are racist just in different ways, Trump says in your face racist things, which ensure the injustice cannot be ignored, where hillary has and does support racist policies, that use stealth racism to incrementaly increase the misery of minorities, while allowing the majority to pretend it's not happening.

    "First, he will govern with the Republicans. Republican judges, TPP, military spending, environmental rollbacks, etc. Trump will not overrule Repubs in Congress."

    These are literally hillarys policies not trumps.
    Trump: anti TPP, stop foreign interventions, close bases use money for infrastructure.
    Hillary :Pro TPP, more interventions and military spending

    "And no, no great Left populist party will ride to the rescue. The populist tradition (identity) is mostly rightwing and racist in our society.
    People do not change political identity like their clothes. The left tradition in the US, such as it is, is in the Dem party."

    So what you are saying is quit being stupid, populism is bad and you should vote for hillarys neoliberalism. The democrats were once left so even if they are no longer left, we must continue to support them if another party or candidate that is to the left isn't a democrat? Your logic hurts my head.

    Arnold Babar , July 24, 2016 at 3:53 pm

    Look, the Clintons are criminals, and their affiliate entities, including the DNC, could be considered criminal enterprises or co-conspirators at this point. Those who haven't realized that, or worse, who shill for them are willfully ignorant, amoral, or unethical. The fact that that includes a large chunk of the population doesn't change that. I don't vote for criminals.

    sunny129 , July 24, 2016 at 2:20 pm

    DNC is no different than RNC!

    The very fact that Establishment, Wall St and Koch bros are behind HRC is evidence that the current 'status quo' will be continued! I cannot stand another 4 years of Hilabama.

    I hate Hillary more than Trump. I want to protest at the Establishment, which at this represented by Hillary.

    http://www.cnn.com/2016/07/24/politics/dnc-email-leak-wikileaks/index.html

    John k , July 24, 2016 at 11:13 am

    Populism (support for popular issues) is, well, popular.

    Fascism (support for corps and military adventures) is, at least after our ME adventures, unpopular.

    Commenters are expressing support for the person expressing popular views, such as infrastructure spending, and expressing little support for the candidate they believe is most fascist.

    Btw, Most on this site are liberals, few are reps, so to support him they have had to buck some of their long held antipathy regarding reps.

    EndOfTheWorld , July 24, 2016 at 12:14 pm

    Right, what is changing with Trump is the Republicans are going back to, say, the Eisenhower era, when Ike started the interstate highway system, a socialist program if there ever was one.

    local to oakland , July 24, 2016 at 10:48 am

    This article by Mckay Coppins was illuminating I thought.
    https://www.buzzfeed.com/mckaycoppins/how-the-haters-made-trump?utm_term=.sm0BPXq0g#.qnzvzj8aP

    It shows some of his history in a fairly sympathetic light.

    Lambert Strether Post author , July 24, 2016 at 1:23 pm

    It's a good article; this is a general observation. Sorry!

    "Hate" seems to be a continuing Democrat meme, and heck, who can be for hate? So it makes sense rhetorically, but in policy terms it's about as sensible as being against @ssh0les (since as the good book says, ye have the @ssh0les always with you). So we're really looking at virtue signaling as a mode of reinforcing tribalism, and to be taken seriously only for that reason. If you look at the political class writing about the working class - modulo writers like Chris Arnade - the hate is plain as day, though it's covered up with the rhetoric of meritocracy, taking care of losers, etc.

    Strategic hate management is a great concept. It's like hate can never be created or destroyed, and is there as a resource to be mined or extracted. The Clinton campaign is doing a great job of strategic hate management right now, by linking Putin and Trump, capitalizing on all the good work done in the press over the last year or so.

    Pat , July 24, 2016 at 12:10 pm

    For years we have been told that government should be run like a business. In truth that statement was used as a cudgel to avoid having the government provide any kind of a safety net to its citizenry because there was little or no profit in it for the people who think that government largess should only be for them.

    Here's the thing, if government had been run like a business, we the people would own huge portions of Citigroup, Goldman Sachs and Chase today. We wouldn't have bailed them out without an equity stake in them. Most cities would have a share of the gate for every stadium that was built. And rather than paying nothing to the community Walmart would have been paying a share of their profits (much as those have dropped over the years).

    I do not like Trump's business, but he truly does approach his brand and his relationships as a business. When he says he doesn't like the trade deals because they are bad business and bad deals he is correct. IF the well being of the United states and his populace are what you are interested in regarding trade deals, ours are failures. Now most of us here know that was not the point of the trade deals. They have been a spectacular success for many of our largest businesses and richest people, but for America as a whole they have increased our trade deficit and devastated our job base. When he says he won't go there, this is one I believe him on.

    I also believe him on NATO and on the whole Russian thing. Why, because of the same reasons I believe him on Trade. They are not winners for America as a whole. They are bad deals. Europe is NOT living up to their contractual agreement regarding NATO. For someone who is a believer in getting the better of the deal that is downright disgusting. And he sees no benefit in getting into a war with Russia. The whole reserve currency thing vs. nukes is not going to work for him as a cost benefit analysis of doing it. He is not going to front this because it is a business loser.

    We truly have the worst choices from the main parties in my lifetime. There are many reasons Trump is a bad candidate. But on these two, he is far more credible and on the better side of things than the Democratic nominee. And on the few where she might reasonably considered to have a better position, unfortunately I do not for a moment believe her to be doing more than giving lip service based on both her record and her character.

    GF , July 24, 2016 at 12:51 pm

    This article from Talking Points Memo was pointed to by PK in his Twitter feed today. It has some interesting background on Trump's Russian connections:
    http://talkingpointsmemo.com/edblog/trump-putin-yes-it-s-really-a-thing

    tegnost , July 24, 2016 at 1:03 pm

    Is it your opinion that to have globalisation we must marginalize russia to the extent that they realize they can't have utopia and make the practical choice of allowing finance capitalism to guide them to realistic incrementally achieved debt bondage?

    DarkMatters , July 24, 2016 at 12:11 pm

    World turned upside down.

    The Democratic Party has been inching further and further to the right. Bernie tried to arrest this drift, but his internal populist rebellion was successfully thwarted by party elite corruption. The Democratic position is now so far to the right that the Republicans will marginalize themselves if they try to keep to the right of the Democrats.

    But, despite party loyalty or PC slogans, the Democrat's rightward position is now so obvious that it can be longer disguised by spin. The Trump campaign has demonstrated, the best electoral strategy for the Republican Party is to leapfrog leftward and campaign from a less corporate position. This has given space for the re-evaluation of party positions that Trump is enunciating, and the result is that the Trump is running to the
    left of Hillary. How weird is this?

    DarkMatters , July 24, 2016 at 12:59 pm

    I meant to use right and left to refer generally to elite vs popular. The issue is too big to discuss without some simplification, and I'm sorry it has distracted from the main issue. On the face of it, judging from the primaries, the Republican candidates who represented continued rightward drift were rejected. (Indications are that the same thing happened in the Democratic Party, but party control was stronger there, and democratic primary numbers will never be known).

    The main point I was trying to make is that the Democratic party has been stretching credulity to the breaking point in claiming to be democratic in any sense, and finally the contradiction between their statements and actions has outpaced the capabilities of their propaganda. Their Orwellian program overextended itself. Popular recognition of the disparity has caused a kind of political "snap" that's initiated a radical reorganization of what used to be the party of the right (or corporations, or elites, or finance, or "your description here".)

    Besides confusion between which issues are right or left for Republicans or Democrats on the national level, internationally, the breakdown of popular trust in the elites, and the failure of their propaganda on that scale, is leading to a related worldwide distrust and rejection of elite policies. This distrust has been percolating in pockets for some time, but it seems it's now become so widespread that it's practically become a movement.

    I suspect, however, there's a Plan B for this situation to restore the proper order. Will be interesting to see how this plays out.

    Norb , July 24, 2016 at 2:01 pm

    The striving for American empire has so totally confused the political order of the country that up is down and down is up. The idea of government for and by the people is a distant memory. Covering for lies and contradictions of beliefs has blurred any notion of principles informing public action.

    If there is any principle that matters today, it is the pursuit of money and profit reigns supreme. Trump is populist in the sense he is talking about bringing money and wealth back to the working classes. Not by giving it directly, but by forcing businesses to turn their sights back to the US proper and return to making their profits at home. In the end, it is all nostalgia and probably impossible, but working class people remember those days so it rings true. That is hope and change in action. People also could care less if he cheats on his taxes or is found out lying about how much he is worth. Once again, fudging your net worth is something working people care little about. Having their share of the pie is all that matters and Trump is tapping into that.

    Clintons arrogance is worse because the transcripts probably clearly show her secretly conspiring with bankers to screw the working people of this country. Trumps misdeeds effect his relationship to other elites while Clintons directly effect working people.

    Such a sorry state of affairs. When all that matters is the pursuit of money and profit, moving forward will be difficult and full of moral contradictions. Populism needs a new goal. The political machinery that gives us two pro-business hacks and an ineffectual third party has fundamentally failed.

    The business of America must be redefined, not somehow brought back to a mythical past greatness. Talk about insanity.

    John Wright , July 24, 2016 at 3:14 pm

    Thanks for the mention of the Bob Herbert editorial.

    I found it by searching for your quoted statement at http://www.nytimes.com/2001/02/26/opinion/in-america-cut-him-loose.html

    I was published Feb 26,2001

    Herbert has some advice for the Democrats.

    "Bill Clinton has been a disaster for the Democratic Party. Send him packing."

    "There's not much the Democrats can do about Mrs. Clinton. She's got a Senate seat for six years. But there is no need for the party to look to her for leadership. The Democrats need to regroup, re-establish their strong links to middle-class and working-class Americans, and move on."

    "You can't lead a nation if you are ashamed of the leadership of your party. The Clintons are a terminally unethical and vulgar couple, and they've betrayed everyone who has ever believed in them."

    "As neither Clinton has the grace to retire from the scene, the Democrats have no choice but to turn their backs on them. It won't be easy, but the Democrats need to try. If they succeed they'll deserve the compliment Bill Clinton offered Gennifer Flowers after she lied under oath: "Good for you." "

    Amazing how the New York Times has "evolved" from Herbert's editorial stance of 15 years ago to their unified editorial/news support for HRC's candacy,

    In my view, it is not as if HRC has done anything to redeem herself in the intervening years.

    Herbert left the NY Times in 2011..

    Sound of the Suburbs , July 24, 2016 at 3:28 pm

    It takes liberals to create a refugee crisis.
    What country are we going to bomb back into the stone age this week?

    We are very squeamish about offensive language.
    We don't mind dropping bombs and ripping people apart with red hot shrapnel.
    We are liberals.

    Liberal sensibilities were on display in the film "Apocalypse Now".
    No writing four letter words on the side of aircraft.
    Napalm, white phosphorous and agent orange – no problem.

    Liberals are like the English upper class – outward sophistication hiding the psychopath underneath.
    They were renowned for their brutality towards slaves, the colonies and the English working class (men, women and children) but terribly sophisticated when with their own.

    Are you a bad language sort of person – Trump
    Or a liberal, psychopath, empire builder – Clinton

    The only crime Trump has committed so far is his language. Liberals like Clinton, Blair and Obama drip blood.

    Richard , July 24, 2016 at 3:39 pm

    Lambert strether said: my view is that the democrat party cannot be saved, but it can be seized.
    Absolutely correct.
    That is why Trump must be elected. Only then through the broken remains of both Parties can the frangible Democrat Party be seized and restored.

    VietnamVet , July 24, 2016 at 6:54 pm

    The 2016 election cannot be looked at in isolation. The wars for profit are spreading from Nigeria through Syria to Ukraine. Turkey was just lost to the Islamists and is on the road to being a failed state. The EU is in an existential crisis due to Brexit, the refugee crisis and austerity. Western leadership is utterly incompetent and failing to protect its citizens. Globalization is failing. Its Losers are tipping over the apple cart. Humans are returning to their tribal roots for safety. The drums for war with Russia are beating. Clinton / Kaine are 100% Status Quo Globalists. Trump / Pence are candidates of change to who knows what. Currently I am planning on voting for the Green Party in the hope it becomes viable and praying that the chaos avoids Maryland.

    [Dec 04, 2016] Dont blame the masses

    Notable quotes:
    "... Because we interpreted the end of the Cold War as the ultimate vindication of America's economic system, we intensified our push toward the next level of capitalism, called globalization. It was presented as a project that would benefit everyone. Instead it has turned out to be a nightmare for many working people. Thanks to "disruption" and the "global supply chain," many American workers who could once support families with secure, decent-paying jobs must now hope they can be hired as greeters at Walmart. Meanwhile, a handful of super-rich financiers manipulate our political system to cement their hold on the nation's wealth. ..."
    "... Rather than shifting to a less assertive and more cooperative foreign policy, we continued to insist that America must reign supreme. When we declared that we would not tolerate the emergence of another "peer power," we expected that other countries would blithely obey. Instead they ignore us. We interpret this as defiance and seek to punish the offenders. That has greatly intensified tensions between the United States and the countries we are told to consider our chief adversaries, Russia and China. ..."
    Aug 08, 2016 | www.bostonglobe.com
    Because we interpreted the end of the Cold War as the ultimate vindication of America's economic system, we intensified our push toward the next level of capitalism, called globalization. It was presented as a project that would benefit everyone. Instead it has turned out to be a nightmare for many working people. Thanks to "disruption" and the "global supply chain," many American workers who could once support families with secure, decent-paying jobs must now hope they can be hired as greeters at Walmart. Meanwhile, a handful of super-rich financiers manipulate our political system to cement their hold on the nation's wealth.
    Enrique Ferro's insight:
    Moments of change require adaptation, but the United States is not good at adapting. We are used to being in charge. This blinded us to the reality that as other countries began rising, our relative power would inevitably decline. Rather than shifting to a less assertive and more cooperative foreign policy, we continued to insist that America must reign supreme. When we declared that we would not tolerate the emergence of another "peer power," we expected that other countries would blithely obey. Instead they ignore us. We interpret this as defiance and seek to punish the offenders. That has greatly intensified tensions between the United States and the countries we are told to consider our chief adversaries, Russia and China.

    [Dec 04, 2016] The reason Trump and Sanders are doing well in the US while fascists are doing well in Europe is the same reason: neoliberalism has gutted, or is in the process of gutting, societies

    This is downright sickening and the people who are voting for Hillary will not even care what will happen with the USA iif she is elected.
    By attacking Trump using "Khan gambit" she risks a violent backlash (And not only via Wikileaks, which already promised to release information about her before the elections)
    People also start to understand that she is like Trump. He destroyed several hundred American lifes by robbing them, exploiting their vanity (standard practice in the USA those days) via Trump University scam. She destroyed the whole country -- Libya and is complicit in killing Khaddafi (who, while not a nice guy, was keeping the country together and providing be highest standard of living in Africa for his people).
    In other words she is a monster and sociopath. He probably is a narcissist too. So there is no much phychological difference between them. And we need tight proportions to judge this situation if we are talking about Hillary vs Trump.
    As for people voting for Trump -- yes they will. I think if Hillary goes aganst Trump, the female neoliberal monster will be trumped. She has little chances even taking into account the level of brainwashing in the USA (which actually is close to those that existed in the USSR).
    Notable quotes:
    "... The reason Trump and Sanders are doing well in the US while fascists are doing well in Europe is the same reason: neoliberalism has gutted, or is in the process of gutting, societies. Workers and other formerly "safe" white collar workers are seeing their job security, income security, retirement security all go up in smoke. Neoliberals are trying to snip and cut labor protections, healthcare, environmental regulations all for corporate profit. In Europe this is all in addition to a massive refugee crisis itself brought on by neoliberalism (neocon foreign policy is required for neoliberal social policy, they go hand-in-hand). The US and NATO destabilize countries with the intent of stealing their resources and protecting their markets, cause massive refugee flows which strain social structures in Europe (which falls right into the hands of the gutters and cutters of neoliberalism). Of course the people will lean fascist. ..."
    "... U.S. Government Tried to Tackle Gun Violence in 1960s ..."
    "... Another key feature of fascism is territorial expansionism. As far as I am aware, none of the nationalist parties advocate invading other countries or retaking former colonies. Once again, contemporary neoliberalism is far closer to fascism. But you are correct about both Israel and Turkey – our allies. They are much closer to the genuine article. But you won't hear those complaining about the rise of fascism in Europe complaining too much about them. ..."
    "... The only way they have avoided complete revolt has been endless borrowing to fund entitlements, once that one-time fix plays out the consequences will be apparent. The funding mechanism itself (The Fed) has even morphed into a neo-liberal tool designed to enrich Capital while enslaving Labor with the consequences. ..."
    "... "Every society chooses how resources are allocated between capital and labor." More specifically, isn't it a struggle between various political/economic/cultural movements within a society which chooses how resources are allocated between capital and labor. ..."
    "... My objection to imprecise language here isn't merely pedantic. The leftist dismissal of right wing populists like Trump (or increasingly influential European movements like Ukip, AfD, and the Front national) as "fascist" is a reductionist rhetorical device intended to marginalize them by implying their politics are so far outside of the mainstream that they do not need to be taken seriously. ..."
    "... " the gutters and cutters of neoliberalism" ..."
    "... The neoliberals are all too aware that the clock is ticking. In this morning's NYT, yet more talk of ramming TPP through in the lame duck. ..."
    "... The roads here are deteriorating FAST. In Price County, the road commissioner said last night that their budget allows for resurfacing all the roads on a 200 year basis. ..."
    "... This Trump support seems like a form of political vandalism with Trump as the spray paint. People generally feel frustrated with government, utterly powerless and totally left out as the ranks of the precariat continue to grow. Trump appeals to the nihilistic tendencies of some people who, like frustrated teens, have decided to just smashed things up for the hell of it. They think a presidency mix of Caligula with Earl Scheib would be a funny hoot. ..."
    "... Someone at American Conservative, when trying to get at why it's pointless to tell people Trump will wreck the place, described him as a "hand grenade" lobbed into the heart of government. You can't scare people with his crass-ness and destructive tendencies, because that's precisely what his voters are counting on when/if he gets into government. ..."
    "... In other words, the MSM's fear is the clearest sign to these voters that their ..."
    "... Your phrase "Trump is political vandalism" is great. I don't think I've seen a better description. NPR this morning was discussing Trump and his relationship with the press and the issues some GOP leaders have with him. When his followers were discussed, the speakers closely circled your vandalism point. Basically they said that his voters are angry with the power brokers and leaders in DC and regardless of whether they think Trump's statements are heartfelt or just rhetoric, they DO know he will stick it to those power brokers so that's good. Vandalism by a longer phrase. ..."
    "... Meritocracy was ALWAYS a delusional fraud. What you invariably get, after a couple of generations, is a clique of elitists who define merit as themselves and reproduce it ad nauseam. Who still believes in such laughable kiddie stories? ..."
    "... Campaign Finance Reform: If you can't walk into a voting booth you cannot contribute, or make all elections financed solely by government funds and make private contributions of any kind to any politician illegal. ..."
    "... Re-institute Glass-Steagall but even more so. Limit the number of states a bank can operate in. Make the Fed publicly owned, not privately owned by banks. Completely revise corporate law, doing away with the legal person hood of corporations and limit of liability for corporate officers and shareholders. ..."
    "... Single payer health care for everyone. Allow private health plans but do away with health insurance as a deductible for business. Remove the AMA's hold on licensing of medical schools which restricts the number of doctors. ..."
    "... Do away with the cap on Social Security wages and make all income, wages, capital gains, interest, and dividends subject to taxation. Impose tariffs to compensate for lower labor costs overseas and revise industry. ..."
    "... Cut the Defense budget by 50% and use that money for intensive infrastructure development. ..."
    "... Raise the national minimum wage to $15 and hour. ..."
    "... Severely curtail the revolving door from government to private industry with a 10 year restriction on working for an industry you dealt with in any way as a government official. ..."
    "... Free public education including college (4 year degree). ..."
    "... Obama and Holder, allowing the banks to be above the law have them demi-gods, many of whom are psychopaths and kleptocrats, and with their newly granted status, they are now re-shaping the world in their own image. Prosecute these demi-gods and restore sanity. Don't and their greed for our things will never end until nothings left. ..."
    "... This is why Hillary is so much more dangerous than trump, because she and the demi gods are all on the same page. The TPP is their holy grail so I expect heaven and earth to be moved, especially if it looks like some trade traitors are going to get knocked off in the election, scoundrels like patty murray (dino, WA) will push to get it through then line up at the feed trough to gorge on k street dough. I plan to vote stein if it's not Bernie, but am reserving commitment until I see what kind of betrayals the dems have for me, if it's bad enough I'll go with the trump hand grenade. ..."
    "... Totally agree tegnost, no more democratic neoliberals -- ..."
    "... "they are now re-shaping the world in their own image" Isn't this intrinsic to bourgeois liberalism? ..."
    "... Two things are driving our troubles: over-population and globalization. The plutocrats and kleptocrats have all the leverage over the rest of us laborers when the population of human beings has increased seven-fold in the last 70 years, from a little over a billion to seven billions (and growing) today. They are happy to let us freeze to death behind gas stations in order for them to compete with other oligarchs in excess consumption. ..."
    "... Thank you for mentioning the third rail of overpopulation. Too often, this giant category of problems is ignored, because it makes people uncomfortable. The planet is finite, resources on the planet are finite, yet the number of people keeps growing. We need to strive for a higher quality of life, not a higher quantity of people. ..."
    "... The issue goes beyond "current neoliberals up for election", it is most of our political establishment that has been corrupted by a system that provides for the best politicians money can buy. ..."
    "... America has always been a country where a majority of the population has been poor. With the exception of a fifty five year(1950-2005) year period where access to large quantities of consumer debt by households was deployed to first to provide a wealth illusion to keep socialism at bay, followed by a mortgage debt boom to both keep the system afloat and strip the accumulated capital of the working class, i.e. home equity, the history of the US has been one of poverty for the masses. ..."
    "... Further debt was foisted on the working class in the form of military Keynesianism, generating massive fiscal deficits which are to be paid for via austerity in a neo-feudal economy. ..."
    www.nakedcapitalism.com
    The first comment gives a window into the hidden desperation in America that is showing up in statistics like increasing opioid addiction and suicides, rather than in accounts of how and why so many people are suffering. I hope readers will add their own observations in comments.

    seanseamour, June 1, 2016 at 3:26 am

    We recently took three months to travel the southern US from coast to coast. As an expat for the past twenty years, beyond the eye opening experience it left us in a state of shock. From a homeless man convulsing in the last throes of hypothermia (been there) behind a fuel station in Houston (the couldn't care less attendant's only preoccupation getting our RV off his premises), to the general squalor of near-homelessness such as the emergence of "American favelas" a block away from gated communities or affluent ran areas, to transformation of RV parks into permanent residencies for the foreclosed who have but their trailer or RV left, to social study one can engage while queuing at the cash registers of a Walmart before beneficiaries of SNAP.

    Stopping to take the time to talk and attempt to understand their predicament and their beliefs as to the cause of their plight is a dizzying experience in and of itself. For a moment I felt transposed to the times of the Cold War, when the Iron Curtain dialectics fuzzed the perception of that other world to the west with a structured set of beliefs designed to blacken that horizon as well as establish a righteous belief in their own existential paradigm.

    What does that have to do with education? Everything if one considers the elitist trend that is slowly setting the framework of tomorrow's society. For years I have felt there is a silent "un-avowed conspiracy", why the seeming redundancy, because it is empirically driven as a by-product of capitalism's surge and like a self-redeeming discount on a store shelf crystalizes a group identity of think-alike know-little or nothing frustrated citizens easily corralled by a Fox or Trump piper. We have re-rcreated the conditions or rather the reality of "Poverty In America" barely half a century after its first diagnostic with one major difference : we are now feeding the growth of the "underclass" by lifting ever higher and out of reach the upward mobility ladder, once the banner of opportunity now fallen behind the supposedly sclerotic welfare states of Europe.

    Praedor, June 1, 2016 at 5:37 pm

    So Richard Cohen now fears American voters because of Trump. Well, on Diane Reem today (NPR) was a discussion on why fascist parties are growing in Europe. Both Cohen and the clowns on NPR missed the forest for the trees. The reason Trump and Sanders are doing well in the US while fascists are doing well in Europe is the same reason: neoliberalism has gutted, or is in the process of gutting, societies. Workers and other formerly "safe" white collar workers are seeing their job security, income security, retirement security all go up in smoke. Neoliberals are trying to snip and cut labor protections, healthcare, environmental regulations all for corporate profit. In Europe this is all in addition to a massive refugee crisis itself brought on by neoliberalism (neocon foreign policy is required for neoliberal social policy, they go hand-in-hand). The US and NATO destabilize countries with the intent of stealing their resources and protecting their markets, cause massive refugee flows which strain social structures in Europe (which falls right into the hands of the gutters and cutters of neoliberalism). Of course the people will lean fascist.

    In the US we don't have the refugees, but the neoliberalism is further along and more damaging. There's no mystery here or in Europe, just the natural effects of governments failing to represent real people in favor of useless eater rich.

    Make the people into commodities, endanger their washes and job security, impose austerity, and tale in floods of refugees. Of COURSE Europeans stay leaning fascist.

    Praedor , June 2, 2016 at 3:31 pm

    According to NPR's experts, many or most of those parties are "fascist". The fascist label is getting tossed around a LOT right now. It is slung at Trump, at UKIP, or any others. Fascist is what you call the opposition party to the right that you oppose. Now I don't call Trump a fascist. A buffoon, yes, even a charlatan (I still rather doubt he really originally thought he would become the GOP nominee. Perhaps I'm wrong but, like me, many seemed to think that he was pushing his "brand" – a term usage of which I HATE because it IS like we are all commodities or businesses rather than PEOPLE – and that he would drop by the wayside and profit from his publicity).

    Be that as it may, NPR and Co were discussing the rise of fascist/neofascist parties and wondering why there were doing so well. Easy answer: neoliberalism + refugee hoards = what you see in Europe.

    I've also blamed a large part of today's gun violence in the USA on the fruits of neoliberalism. Why? Same reason that ugly right-wing groups (fascist or not) are gaining ground around the Western world. Neoliberalism destroys societies. It destroys the connections within societies (the USA in this case). Because we have guns handy, the result is mass shootings and flashes of murder-suicides. This didn't happen BEFORE neoliberalism got its hooks into American society. The guns were there, always have been (when I was a teen I recall seeing gun mags advertising various "assault weapons" for sale this was BEFORE Reagan and this was BEFORE mass shootings, etc). Machine guns were much easier to come by BEFORE the 1980s yet we didn't have mass killings with machine guns, handguns, or shotguns. ALL that stuff is a NEW disease. A disease rooted in neoliberalism. Neoliberalism steals your job security, your healthcare security, your home, your retirement security, your ability to provide for your family, your ability to send your kids to college, your ability to BUY FOOD. Neoliberalism means you don't get to work for a company for 20 years and then see the company pay you back for that long, good service with a pension. You'll be lucky to hold a job at any company from month-to-month now and FORGET about benefits! Healthcare? Going by the wayside too. Workers in the past felt a bond with each other, especially within a company. Neoliberalism has turned all workers against each other because they have to fight to gain any of the scraps being tossed out by the rich overlords. You can't work TOGETHER to gain mutual benefit, you need to fight each other in a zero sum game. For ME to win you have to lose. You are a commodity. A disposable and irrelevant widget. THAT combines with guns (that have always been available!) and you get desperate acting out: mass shootings, murder suicides, etc.

    WorldBLee , June 2, 2016 at 6:06 pm

    There are actual fascist parties in Europe. To name a few in one country I've followed, Ukraine, there's Right Sector, Svoboda, and others, and that's just one country. I don't think anyone calls UKIP fascist.

    John Zelnicker , June 3, 2016 at 12:24 am

    @Praedor – Your comment that Yves posted and this one are excellent. One of the most succinct statements of neoliberalism and its worst effects that I have seen.

    As to the cause of recent mass gun violence, I think you have truly nailed it. If one thinks at all about the ways in which the middle class and lower have been squeezed and abused, it's no wonder that a few of them would turn to violence. It's the same despair and frustration that leads to higher suicide rates, higher rates of opiate addiction and even decreased life expectancy.

    Jacob , June 3, 2016 at 11:35 am

    "Machine guns were much easier to come by BEFORE the 1980s yet we didn't have mass killings with machine guns, handguns, or shotguns. ALL that stuff is a NEW disease. A disease rooted in neoliberalism."

    Easy availability of guns was seen as a serious problem long before the advent of neoliberalism. For one example of articles about this, see U.S. Government Tried to Tackle Gun Violence in 1960s . Other examples include 1920s and 1930s gangster and mob violence that were a consequence of Prohibition (of alcohol). While gun violence per-capita might be increasing, the population is far larger today, and the news media select incidents of violence to make them seem like they're happening everywhere and that everyone needs to be afraid. That, of course, instills a sense of insecurity and fear into the public mind; thus, a fearful public want a strong leader and are willing to accept the inconvenience and dangers of a police state for protection.

    Disturbed Voter , June 2, 2016 at 6:49 am

    First they came for the blue collar workers

    America has plenty of refugees, from Latin America

    Neo-liberal goes back to the Monroe Doctrine. We used to tame our native workers with immigrants, and we still do, but we also tame them by globalism in trade. So many rationalizations for this, based on political and economic propaganda. All problems caused by the same cause American predatory behavior. And our great political choice iron fist with our without velvet glove.

    Jeff , June 2, 2016 at 7:58 am

    Germany, Belgium, France, Poland, Hungary, Romania, Turkey, Israel, Australia come to mind (if one is allowed to participate in a European song contest, one is supposed to be part of Europe :) They all have more or less fascist governments.
    Once you realize that the ECB creates something like 60 billion euros a month, and gives nothing to its citizens nor its nation-states, that means the money goes to corporations, which means that the ECB, and by extension the whole EU, is a fascist construct (fascism being defined as a government running on behalf of the corporations).

    Seb , June 2, 2016 at 8:07 am

    That's a fallacy. Corporatism is a feature of fascism, not the other way around.

    None of the governments you mention, with the possible exception of Israel and Turkey, can be called fascist in any meaningful sense.

    Even the anti-immigration parties in the Western European countries you mention – AfD, Front National, Vlaams Belang – only share their nationalism with fascist movements. And they are decidedly anti-corporatist.

    BananaBreakfast , June 4, 2016 at 5:28 pm

    The problem here is one of semantics, really. You're using "fascist" interchangeably with "authoritarian", which is a misnomer for these groups. The EU is absolutely anti-democratic, authoritarian, and technocratic in a lot of respects, but it's not fascist. Both have corporatist tendencies, but fascist corporatism was much more radical, much more anti-capitalist (in the sense that the capitalist class was expected to subordinate itself to the State as the embodiment of the will of the Nation or People, as were the other classes/corporate units). EU technocratic corporatism has none of the militarism, the active fiscal policy, the drive for government supported social cohesion, the ethno-nationalism, or millenarianism of Fascism.

    The emergent Right parties like UKIP, FNP, etc. share far more with the Fascists, thought I'd say they generally aren't yet what Fascists would have recognized as other Fascists in the way that the NSDAP and Italian Fascists recognized each other -perhaps they're more like fellow travelers.

    tgs , June 2, 2016 at 9:46 am

    True, I posted a few minutes ago saying roughly the same thing – but it seems to have gone to moderation.

    Another key feature of fascism is territorial expansionism. As far as I am aware, none of the nationalist parties advocate invading other countries or retaking former colonies. Once again, contemporary neoliberalism is far closer to fascism. But you are correct about both Israel and Turkey – our allies. They are much closer to the genuine article. But you won't hear those complaining about the rise of fascism in Europe complaining too much about them.

    Jeff , June 2, 2016 at 10:05 am

    When I was young, there were 4 divisions:
    * who owned the means of production (public or private entities)
    * who decided what those means were used for.
    If it is a 'public entity' (aka government or regime) that decides what is built, we have a totalitarian state, which can be 'communist' (if the means also belong the public entities like the government or regional fractions of it) or 'fascist' (if the factories are still in private hands).
    If it is the private owner of the production capacity who decides what is built, you get capitalism. I don't recall any examples of private entities deciding what to do with public means of production (mafia perhaps).
    Sheldon Wolin introduced us to inverted totalitarism. While it is no longer the government that decides what must be done, the private 'owners' just buy the government, the judiciary, the press, or whatever is needed to achieve their means.
    When I cite Germany, it is not so much AfD, but the 2€/hour jobs I am worried about. When I cite Belgium, it is not the fools of Vlaams Belang, but rather the un-taxing of corporations and the tear-down of social justice that worries me.

    Jim , June 2, 2016 at 1:57 pm

    But Jeff, is Wolin accurate in using the term "inverted totalitarianism" to try to capture the nature of our modern extractive bureaucratic monolith that apparently functions in an environment where "it is no longer the government that decides what must be done..simply.."private owners just buy the government, the judiciary, the press, or whatever is needed to achieve their means."

    Mirowski argues quite persuasively that the neoliberal ascendency does not represent the retreat of the State but its remaking to strongly support a particular conception of a market society that is imposed with the help of the State on our society.

    For Mirowski, neoliberalism is definitely not politically libertarian or opposed to strong state intervention in the economy and society.

    TedWa , June 2, 2016 at 10:19 am

    Inverted totalitarianism is the mirror image of fascism, which is why so many are confused. Fascism is just a easier term to use and more understandable by all. There is not a strict adherence to fascism going on, but it's still totalitarian just the same.

    jan , June 2, 2016 at 10:54 am

    Hi
    I live in Europe as well, and what to think of Germany's AfD, Greece's Golden Dawn, the Wilder's party in the Netherlands etc. Most of them subscribe to the freeloading, sorry free trading economic policies of neoliberalism.

    schizosoph , June 2, 2016 at 9:28 am

    There's LePen in France and the far-right, fascist leaning party nearly won in Austria. The far right in Greece as well. There's clearly a move to the far right in Europe. And then there's the totalitarian mess that is Turkey. How much further this turn to a fascist leaning right goes and how widespread remains to be seen, but it's clearly underway.

    myshkin , June 2, 2016 at 11:28 am

    Searched 'current fascist movements europe' and got these active groups from wiki.

    National Bolshevik Party-Belarus
    Parti Communautaire National-Européen Belgium
    Bulgarian National Alliance Bulgaria
    Nova Hrvatska Desnica Croatia
    Ustaše Croatia
    National Socialist Movement of Denmark
    La Cagoule France
    National Democratic Party of Germany
    Fascism and Freedom Movement – Italy
    Fiamma Tricolore Italy
    Forza Nuova Italy
    Fronte Sociale Nazionale Italy
    Movimento Fascismo e Libertŕ Italy
    Pērkonkrusts Latvia
    Norges Nasjonalsosialistiske Bevegelse Norway
    National Radical Camp (ONR) Poland
    National Revival of Poland (NOP)
    Polish National Community-Polish National Party (PWN-PSN)
    Noua Dreaptă Romania
    Russian National Socialist Party(formerly Russian National Union)
    Barkashov's Guards Russia
    National Socialist Society Russia
    Nacionalni stroj Serbia
    Otačastveni pokret Obraz Serbia
    Slovenska Pospolitost Slovakia
    Espańa 2000 Spain
    Falange Espańola Spain
    Nordic Realm Party Sweden
    National Alliance Sweden
    Swedish Resistance Movement Sweden
    National Youth Sweden
    Legion Wasa Sweden
    SPAS Ukraine
    Blood and Honour UK
    British National Front UK
    Combat 18 UK
    League of St. George UK
    National Socialist Movement UK
    Nationalist Alliance UK
    November 9th Society UK
    Racial Volunteer Force UK

    Lexington , June 2, 2016 at 12:50 pm

    "Fascism" has become the prefered term of abuse applied indiscriminately by the right thinking to any person or movement which they want to tar as inherently objectionable, and which can therefore be dismissed without the tedium of actually engaging with them at the level of ideas.

    Most of the people who like to throw this word around couldn't give you a coherant definition of what exactly they understand it to signify, beyond "yuck!!"

    In fairness even students of political ideology have trouble teasing out a cosistent system of beliefs, to the point where some doubt fascism is even a coherent ideology. That hardly excuses the intellectual vacuity of those who use it as a term of abuse, however.

    OpenThePodBayDoorsHAL , June 2, 2016 at 4:39 pm

    Precisely 3,248 angels can fit on the head of a pin. Parsing the true definition of "fascism" is a waste of time, broadly, fascism is an alliance of the state, the corporation, and the military, anyone who doesn't see that today needs to go back to their textbooks.

    As far as the definition "neo-liberalism" goes, yes it's a useful label. But let's keep it simple: every society chooses how resources are allocated between Capital and Labor. The needle has been pegged over on the Capital side for quite some time, my "start date" is when Reagan busted the air traffic union. The hideous Republicans managed to sell their base that policies that were designed to let companies be "competitive" were somehow good for them, not just for the owners of the means of production.

    The only way they have avoided complete revolt has been endless borrowing to fund entitlements, once that one-time fix plays out the consequences will be apparent. The funding mechanism itself (The Fed) has even morphed into a neo-liberal tool designed to enrich Capital while enslaving Labor with the consequences.

    Jim , June 2, 2016 at 7:40 pm

    PodBay stated:

    "Every society chooses how resources are allocated between capital and labor." More specifically, isn't it a struggle between various political/economic/cultural movements within a society which chooses how resources are allocated between capital and labor.

    Take, for example, the late 1880s-1890s in the U.S. During that time-frame there were powerful agrarian populists movements and the beginnings of some labor/socialist movements from below, while from above the property-production system was modified by a powerful political movement advocating for more corporate administered markets over the competitive small-firm capitalism of an earlier age.

    It was this movement for corporate administered markets which won the battle and defeated/absorbed the agrarian populists.

    What are the array of such forces in 2016? What type of movement doe Trump represent? Sanders? Clinton?

    Lexington , June 2, 2016 at 10:31 pm

    fascism is an alliance of the state, the corporation, and the military, anyone who doesn't see that today needs to go back to their textbooks

    Which textbooks specifically?

    The article I cited above in Vox canvasses the opinion of five serious students of fascism, and none of them believe Trump is a fascist. I'd be most interested in knowing what you have been reading.

    As for your definition of "fascism", it's obviously so vague and broad that it really doesn't explain anything. To the extent it contains any insight it is that public institutions (the state), private businesses (the corporation) and the armed forces all exert significant influence on public policy. That and a buck and and a half will get you a cup of coffee. If anything it is merely a very crude descriptive model of the political process. It doesn't define fascism as a particular set of beliefs that make it a distinct political ideology that can be differentiated from other ideologies (again, see the Vox article for a discussion of some of the beliefs that are arguably characteristic of fascist movements). Indeed by your standard virtually every state that has ever existed has to a greater or lesser extent been "fascist".

    My objection to imprecise language here isn't merely pedantic. The leftist dismissal of right wing populists like Trump (or increasingly influential European movements like Ukip, AfD, and the Front national) as "fascist" is a reductionist rhetorical device intended to marginalize them by implying their politics are so far outside of the mainstream that they do not need to be taken seriously. Given that these movements are only growing in strength as faith in traditional political movements and elites evaporate this is likely to produce exactly the opposite result. Right wing populism isn't going to disappear just because the left keeps trying to wish it away. Refusing to accept this basic political fact risks condemning the left rather than "the fascists" to political irrelevance.

    Roger Smith , June 2, 2016 at 7:13 am

    " the gutters and cutters of neoliberalism"

    This phrase is pure gold.

    allan , June 2, 2016 at 7:44 am

    The neoliberals are all too aware that the clock is ticking. In this morning's NYT, yet more talk of ramming TPP through in the lame duck.

    sleepy , June 2, 2016 at 7:56 am

    I moved to a small city/town in Iowa almost 20 years ago. Then, it still had something of a Norman Rockwell quality to it, particularly in a sense of egalitarianism, and also some small factory jobs which still paid something beyond a bare existence.

    Since 2000, many of those jobs have left, and the population of the county has declined by about 10%. Kmart, Penney's, and Sears have left as payday/title loan outfits, pawnshops, smoke shops, and used car dealers have all proliferated.

    Parts of the town now resemble a combination of Appalachia and Detroit. Sanders easily won the caucuses here and, no, his supporters were hardly the latte sippers of someone's imagination, but blue collar folks of all ages.

    weinerdog43 , June 2, 2016 at 8:25 am

    My tale is similar to yours. About 2 years ago, I accepted a transfer from Chicagoland to north central Wisconsin. JC Penney left a year and a half ago, and Sears is leaving in about 3-4 months. Kmart is long gone.

    I was back at the old homestead over Memorial Day, and it's as if time has stood still. Home prices still going up; people out for dinner like crazy; new & expensive automobiles everywhere. But driving out of Chicagoland, and back through rural Wisconsin it is unmistakeable.

    2 things that are new: The roads here are deteriorating FAST. In Price County, the road commissioner said last night that their budget allows for resurfacing all the roads on a 200 year basis. (Yes, that means there is only enough money to resurface all the county roads if spread out over 200 years.) 2nd, there are dead deer everywhere on the side of the road. In years past, they were promptly cleaned up by the highway department. Not any more. Gross, but somebody has to do the dead animal clean up. (Or not. Don't tell Snotty Walker though.)

    Anyway, not everything is gloom and doom. People seem outwardly happy. But if you're paying attention, signs of stress and deterioration are certainly out there.

    Jim Haygood , June 2, 2016 at 12:08 pm

    "the road commissioner said last night that their budget allows for resurfacing all the roads on a 200 year basis"

    while the fedgov spends north of 5 percent of GDP on global military dominance.

    We're the Soviets now, comrades: shiny weapons, rotting infrastructure.

    Today in San Diego, the Hildabeest will deliver a vigorous defense of this decadent, dying system.

    Mary Wehrheim , June 2, 2016 at 8:32 am

    This Trump support seems like a form of political vandalism with Trump as the spray paint. People generally feel frustrated with government, utterly powerless and totally left out as the ranks of the precariat continue to grow. Trump appeals to the nihilistic tendencies of some people who, like frustrated teens, have decided to just smashed things up for the hell of it. They think a presidency mix of Caligula with Earl Scheib would be a funny hoot.

    You also have the more gullible fundis who have actually deluded themselves into thinking the man who is ultimate symbol of hedonism will deliver them from secularism because he says he will. Authoritarians who seek solutions through strong leaders are usually the easiest to con because they desperately want to believe in their eminent deliverance by a human deus ex machina. Plus he is ostentatiously rich in a comfortably tacky way and a TV celebrity beats a Harvard law degree. And why not the thinking goes the highly vaunted elite college Acela crowd has pretty much made a pig's breakfast out of things. So much for meritocracy. Professor Harold Hill is going to give River City a boys band.

    uahsenaa , June 2, 2016 at 9:58 am

    Someone at American Conservative, when trying to get at why it's pointless to tell people Trump will wreck the place, described him as a "hand grenade" lobbed into the heart of government. You can't scare people with his crass-ness and destructive tendencies, because that's precisely what his voters are counting on when/if he gets into government.

    In other words, the MSM's fear is the clearest sign to these voters that their political revolution is working. Since TPTB decided peaceful change (i.e. Sanders) was a non-starter, then they get to reap the whirlwind.

    Praedor , June 2, 2016 at 3:41 pm

    Your phrase "Trump is political vandalism" is great. I don't think I've seen a better description. NPR this morning was discussing Trump and his relationship with the press and the issues some GOP leaders have with him. When his followers were discussed, the speakers closely circled your vandalism point. Basically they said that his voters are angry with the power brokers and leaders in DC and regardless of whether they think Trump's statements are heartfelt or just rhetoric, they DO know he will stick it to those power brokers so that's good. Vandalism by a longer phrase.

    hunkerdown , June 2, 2016 at 4:29 pm

    Meritocracy was ALWAYS a delusional fraud. What you invariably get, after a couple of generations, is a clique of elitists who define merit as themselves and reproduce it ad nauseam. Who still believes in such laughable kiddie stories?

    Besides, consumers need to learn to play the long game and suck up the "scurrilous attacks" on their personal consumption habits for the next four years. The end of abortion for four years is not important - lern2hand and lern2agency, and lern2cutyourrapist if it comes to that. What is important is that the Democratic Party's bourgeois yuppie constituents are forced to defend against GOP attacks on their personal and cultural interests with wherewithal that would have been ordinarily spent to attend to their sister act with their captive constituencies.

    If bourgeois Democrats hadn't herded us into a situation where individuals mean nothing outside of their assigned identity groups and their corporate coalition duopoly, they wouldn't be reaping the whirlwind today. Why, exactly, should I be sympathetic to exploitative parasites such as the middle class?

    Dave , June 2, 2016 at 11:04 am

    There are all good ideas. However, population growth undermines almost all of them. Population growth in America is immigrant based. Reverse immigration influxes and you are at least doing something to reduce population growth.

    How to "reverse immigration influxes"?

    • Stop accepting refugees. It's outrageous that refugees from for example, Somalia, get small business loans, housing assistance, food stamps and lifetime SSI benefits while some of our veterans are living on the street.
    • No more immigration amnesties of any kind.
    • Deport all illegal alien criminals.
    • Practice "immigrant family unification" in the country of origin. Even if you have to pay them to leave. It's less expensive in the end.
    • Eliminate tax subsidies to American corn growers who then undercut Mexican farmers' incomes through NAFTA, driving them into poverty and immigration north. Throw Hillary Clinton out on her ass and practice political and economic justice to Central America.

    I too am a lifetime registered Democrat and I will vote for Trump if Clinton gets the crown. If the Democrats want my vote, my continuing party registration and my until recently sizeable donations in local, state and national races, they will nominate Bernie. If not, then I'm an Independent forevermore. They will just become the Demowhig Party.

    Jack Heape , June 2, 2016 at 10:00 am

    Here's a start

    1. Campaign Finance Reform: If you can't walk into a voting booth you cannot contribute, or make all elections financed solely by government funds and make private contributions of any kind to any politician illegal.
    2. Re-institute Glass-Steagall but even more so. Limit the number of states a bank can operate in. Make the Fed publicly owned, not privately owned by banks.
    3. Completely revise corporate law, doing away with the legal person hood of corporations and limit of liability for corporate officers and shareholders.
    4. Single payer health care for everyone. Allow private health plans but do away with health insurance as a deductible for business. Remove the AMA's hold on licensing of medical schools which restricts the number of doctors.
    5. Do away with the cap on Social Security wages and make all income, wages, capital gains, interest, and dividends subject to taxation.
    6. Impose tariffs to compensate for lower labor costs overseas and revise industry.
    7. Cut the Defense budget by 50% and use that money for intensive infrastructure development.
    8. Raise the national minimum wage to $15 and hour.
    9. Severely curtail the revolving door from government to private industry with a 10 year restriction on working for an industry you dealt with in any way as a government official.
    10. Free public education including college (4 year degree).
    TedWa , June 2, 2016 at 10:56 am

    Obama and Holder, allowing the banks to be above the law have them demi-gods, many of whom are psychopaths and kleptocrats, and with their newly granted status, they are now re-shaping the world in their own image. Prosecute these demi-gods and restore sanity. Don't and their greed for our things will never end until nothings left.

    tegnost , June 2, 2016 at 11:56 am

    This is why Hillary is so much more dangerous than trump, because she and the demi gods are all on the same page. The TPP is their holy grail so I expect heaven and earth to be moved, especially if it looks like some trade traitors are going to get knocked off in the election, scoundrels like patty murray (dino, WA) will push to get it through then line up at the feed trough to gorge on k street dough. I plan to vote stein if it's not Bernie, but am reserving commitment until I see what kind of betrayals the dems have for me, if it's bad enough I'll go with the trump hand grenade.

    TedWa , June 2, 2016 at 12:35 pm

    Totally agree tegnost, no more democratic neoliberals -- Patty Murray (up for re-election) and Cantwell are both trade traitors and got fast track passed.

    hunkerdown , June 2, 2016 at 4:44 pm

    "they are now re-shaping the world in their own image" Isn't this intrinsic to bourgeois liberalism?

    Sluggeaux , June 2, 2016 at 9:13 am

    Two things are driving our troubles: over-population and globalization. The plutocrats and kleptocrats have all the leverage over the rest of us laborers when the population of human beings has increased seven-fold in the last 70 years, from a little over a billion to seven billions (and growing) today. They are happy to let us freeze to death behind gas stations in order for them to compete with other oligarchs in excess consumption.

    This deserves a longer and more thoughtful comment, but I don't have the time this morning. I have to fight commute traffic, because the population of my home state of California has doubled from 19M in 1970 to an estimated 43M today (if you count the Latin American refugees and H1B's).

    Vatch , June 2, 2016 at 11:04 am

    Thank you for mentioning the third rail of overpopulation. Too often, this giant category of problems is ignored, because it makes people uncomfortable. The planet is finite, resources on the planet are finite, yet the number of people keeps growing. We need to strive for a higher quality of life, not a higher quantity of people.

    seanseamour , June 3, 2016 at 7:59 am

    The issue goes beyond "current neoliberals up for election", it is most of our political establishment that has been corrupted by a system that provides for the best politicians money can buy.

    In the 1980's I worked inside the beltway witnessing the new cadre of apparatchiks that drove into town on the Reagan coattails full of moral a righteousness that became deviant, parochial, absolutist and for whom bi-partisan approaches to policy were scorned prodded on by new power brokers promoting their gospels in early morning downtown power breakfasts. Sadly our politicians no longer serve but seek a career path in our growing meritocratic plutocracy.

    paul whalen , June 2, 2016 at 9:19 am

    America has always been a country where a majority of the population has been poor. With the exception of a fifty five year(1950-2005) year period where access to large quantities of consumer debt by households was deployed to first to provide a wealth illusion to keep socialism at bay, followed by a mortgage debt boom to both keep the system afloat and strip the accumulated capital of the working class, i.e. home equity, the history of the US has been one of poverty for the masses.

    Further debt was foisted on the working class in the form of military Keynesianism, generating massive fiscal deficits which are to be paid for via austerity in a neo-feudal economy.

    http://www.counterpunch.org/2015/08/28/the-myth-of-the-middle-class-have-most-americans-always-been-poor/

    [Dec 04, 2016] Methheads as a sign of socioeconomic desperation: neoliberalism behaves much like British behaves in China during opium wars

    Notable quotes:
    "... Money, it seems to him, has somehow changed its role. It has "increased" (is that possible, he asks?) while at the same time it has become concentrated in fewer and fewer hands. It appears to seek to become an autonomous and dominating sector of economic life, functionally separated from production of real things, almost all of which seem to come from faraway places. "Real" actually begins to change its meaning, another topic more interesting still. This devotion to the world of money-making-money seems to have obsessed the lives of many of the most "important" Americans. Entire TV networks are devoted to it. They talk about esoteric financial instruments that to the ordinary citizen look more like exotically placed bets-on-credit in the casino than genuine ways to grow real-world business, jobs, wages, and family income. The few who are in position to master the game live material lives that were beyond what almost any formerly "wealthy" man or woman in Rip's prior life could even imagine ..."
    "... children gone away and lost to either the relentless rootlessness of the trans-national economy or the virtual hell-world of meth and opioids and heroin and unending underemployed hopelessness. ..."
    "... "If public life can suffer a metaphysical blow, the death of the labor question was that blow. For millions of working people, it amputated the will to resist." ..."
    "... It's a Wonderful Life ..."
    "... as educators ..."
    "... OK, so I hear some of you saying, corporate America will never let this Civic Media get off the ground. My short answer to this is that corporations do what makes money for them, and in today's despairing political climate there's money to be made in sponsoring something truly positive, patriotic and constructive. ..."
    "... I am paying an exorbitant subscription for the UK Financial Times at the moment. Anyway, the good news is that very regular articles are appearing where you can almost feel the panic at the populist uprisings. ..."
    "... The kernel of Neoliberal Ideology: "There is no such a thing as society." (Margaret Thatcher). ..."
    "... "In this postindustrial world not only is the labor question no longer asked, not only is proletarian revolution passé, but the proletariat itself seems passé. And the invisibles who nonetheless do indeed live there have internalized their nonexistence, grown demoralized, resentful, and hopeless; if they are noticed at all, it is as objects of public disdain. What were once called "blue-collar aristocrats"-skilled workers in the construction trades, for example-have long felt the contempt of the whole white-collar world. ..."
    "... Or, we could replace Western liberal culture, with its tradition to consume and expand by force an unbroken chain from the Garden of Eden to Friedrich von Hayek, with the notion of maintenance and "enough". Bourgeois make-work holds no interest to me. ..."
    "... My understanding of the data is that living standards increased around the world during the so-called golden age, not just in the U.S. (and Western Europe and Japan and Australia ). It could be that it was still imperialism at work, but the link between imperialism and the creation of the middle class is not straightforward. ..."
    "... I thought neoliberalism was just the pogrom to make everyone – rational agents – as subscribed by our genetic / heraldic betters .. putting this orbs humans and resources in the correct "natural" order . ..."
    "... Disheveled Marsupial for those thinking neoliberalism is not associated with libertarianism one only has to observe the decades of think tanks and their mouth organs roaming the planet . especially in the late 80s and 90s . bringing the might and wonders of the – market – to the great unwashed globally here libertarian priests rang in the good news to the great unwashed ..."
    "... I would argue that neoliberalism is a program to define markets as primarily engaged in information processing and to make everyone into non-agents ( as not important at all to the proper functioning of markets). ..."
    "... It also appears that neoliberals want to restrict democracy to the greatest extent possible and to view markets as the only foundation for truth without any need for input from the average individual. ..."
    Jun 02, 2016 | www.nakedcapitalism.com
    bluecollarAl , June 2, 2016 at 10:06 am

    I am almost 70 years old, born and raised in New York City, still living in a near suburb.

    Somehow, somewhere along the road to my 70th year I feel as if I have been gradually transported to an almost entirely different country than the land of my younger years. I live painfully now in an alien land, a place whose habits and sensibilities I sometimes hardly recognize, while unable to escape from memories of a place that no longer exists. There are days I feel as I imagine a Russian pensioner must feel, lost in an unrecognizable alien land of unimagined wealth, power, privilege, and hyper-glitz in the middle of a country slipping further and further into hopelessness, alienation, and despair.

    I am not particularly nostalgic. Nor am I confusing recollection with sentimental yearnings for a youth that is no more. But if I were a contemporary Rip Van Winkle, having just awakened after, say, 30-40 years, I would not recognize my beloved New York City. It would be not just the disappearance of the old buildings, Penn Station, of course, Madison Square Garden and its incandescent bulb marquee on 50th and 8th announcing NYU vs. St. John's, and the WTC, although I always thought of the latter as "new" until it went down. Nor would it be the disappearance of all the factories, foundries, and manufacturing plants, the iconic Domino Sugar on the East River, the Wonder Bread factory with its huge neon sign, the Swingline Staples building in Long Island City that marked passage to and from the East River tunnel on the railroad, and my beloved Schaeffer Beer plant in Williamsburg, that along with Rheingold, Knickerbocker, and a score of others, made beer from New York taste a little bit different.

    It wouldn't be the ubiquitous new buildings either, the Third Avenue ghostly glass erected in the 70's and 80's replacing what once was the most concentrated collection of Irish gin mills anywhere. Or the fortress-like castles built more recently, with elaborate high-ceilinged lobbies decorated like a kind of gross, filthy-wealthy Versailles, an aesthetically repulsive style that shrieks "power" in a way the neo-classical edifices of our Roman-loving founders never did. Nor would it even be the 100-story residential sticks, those narrow ground-to-clouds skyscraper condominiums proclaiming the triumph of globalized capitalism with prices as high as their penthouses, driven ever upward by the foreign billionaires and their obsession with burying their wealth in Manhattan real estate.

    It is not just the presence of new buildings and the absence of the old ones that have this contemporary Van Winkle feeling dyslexic and light-headed. The old neighborhoods have disintegrated along with the factories, replaced by income segregated swatches of homogenous "real estate" that have consumed space, air, and sunlight while sucking the distinctiveness out of the City. What once was the multi-generational home turf for Jewish, Afro-American, Puerto Rican, Italian, Polak and Bohunk families is now treated as simply another kind of investment, stocks and bonds in steel and concrete. Mom's Sunday dinners, clothes lines hanging with newly bleached sheets after Monday morning wash, stickball games played among parked cars, and evenings of sitting on the stoop with friends and a transistor radio listening to Mel Allen call Mantle's home runs or Alan Freed and Murray the K on WINS 1010 playing Elvis, Buddy Holly, and The Drifters, all gone like last night's dreams.

    Do you desire to see the new New York? Look no further than gentrifying Harlem for an almost perfect microcosm of the city's metamorphosis, full of multi-million condos, luxury apartment renovations, and Maclaren strollers pushed by white yuppie wife stay-at-homes in Marcus Garvey Park. Or consider the "new" Lower East Side, once the refuge of those with little material means, artists, musicians, bums, drug addicts, losers and the physically and spiritually broken - my kind of people. Now its tenements are "retrofitted" and remodeled into $4000 a month apartments and the new residents are Sunday brunching where we used to score some Mary Jane.

    There is the "Brooklyn brand", synonymous with "hip", and old Brooklyn neighborhoods like Red Hook and South Brooklyn (now absorbed into so desirable Park Slope), and Bushwick, another former outpost of the poor and the last place I ever imagined would be gentrified, full of artists and hipsters driving up the price of everything. Even large sections of my own Queens and the Bronx are affected (infected?). Check out Astoria, for example, neighborhood of my father's family, with more of the old ways than most but with rents beginning to skyrocket and starting to drive out the remaining working class to who knows where.

    Gone is almost every mom and pop store, candy stores with their egg creams and bubble gum cards and the Woolworth's and McCrory's with their wooden floors and aisles containing ordinary blue collar urgencies like thread and yarn, ironing boards and liquid bleach, stainless steel utensils of every size and shape. Where are the locally owned toy and hobby stores like Jason's in Woodhaven under the el, with Santa's surprises available for lay-away beginning in October? No more luncheonettes, cheap eats like Nedicks with hot dogs and paper cones of orange drink, real Kosher delis with vats of warm pastrami and corned beef cut by hand, and the sacred neighborhood "bar and grill", that alas has been replaced by what the kids who don't know better call "dive bars", the detestable simulacra of the real thing, slick rooms of long slick polished mahogany, a half-dozen wide screen TV's blaring mindless sports contests from all over the world, over-priced micro-brews, and not a single old rummy in sight?

    Old Rip searches for these and many more remembered haunts, what Ray Oldenburg called the "great good places" of his sleepy past, only to find store windows full of branded, high-priced, got-to-have luxury-necessities (necessary if he/she is to be certified cool, hip, and successful), ridiculously overpriced "food emporia", high and higher-end restaurants, and apparel boutiques featuring hardened smiles and obsequious service reserved for those recognized by celebrity or status.

    Rip notices too that the visible demographic has shifted, and walking the streets of Manhattan and large parts of Brooklyn, he feels like what walking in Boston Back Bay always felt like, a journey among an undifferentiated mass of privilege, preppy or 'metro-sexed' 20 and 30-somethings jogging or riding bicycles like lean, buff gods and goddesses on expense accounts supplemented by investments enriched by yearly holiday bonuses worth more than Rip earned in a lifetime.

    Sitting alone on a park bench by the river, Rip reflects that more than all of these individual things, however, he despairs of a city that seems to have been reimagined as a disneyfied playground of the privileged, offering endless ways to self-gratify and philistinize in a clean, safe (safest big city in U.S., he heard someone say), slick, smiley, center-of-the-world urban paradise, protected by the new centurions (is it just his paranoia or do battle-ready police seem to be everywhere?). Old ethnic neighborhoods are filled with apartment buildings that seem more like post-college "dorms", tiny studios and junior twos packed with three or four "singles" roommates pooling their entry level resources in order to pay for the right to live in "The City". Meanwhile the newer immigrants find what place they can in Kingsbridge, Corona, Jamaica, and Cambria Heights, far from the city center, even there paying far too much to the landlord for what they receive.

    New York has become an unrecognizable place to Rip, who can't understand why the accent-less youngsters keep asking him to repeat something in order to hear his quaint "Brooklyn" accent, something like the King's English still spoken on remote Smith Island in the Chesapeake, he guesses
    .
    Rip suspects that this "great transformation" (apologies to Polanyi) has coincided, and is somehow causally related, to the transformation of New York from a real living city into, as the former Mayor proclaimed, the "World Capital" of financialized commerce and all that goes with it.

    "Financialization", he thinks, is not the expression of an old man's disapproval but a way of naming a transformed economic and social world. Rip is not an economist. He reads voraciously but, as an erstwhile philosopher trained to think about the meaning of things, he often can't get his head around the mathematical model-making explanations of the economists that seem to dominate the more erudite political and social analyses these days. He has learned, however, that the phenomenon of "capitalism" has changed along with his city and his life.

    Money, it seems to him, has somehow changed its role. It has "increased" (is that possible, he asks?) while at the same time it has become concentrated in fewer and fewer hands. It appears to seek to become an autonomous and dominating sector of economic life, functionally separated from production of real things, almost all of which seem to come from faraway places. "Real" actually begins to change its meaning, another topic more interesting still. This devotion to the world of money-making-money seems to have obsessed the lives of many of the most "important" Americans. Entire TV networks are devoted to it. They talk about esoteric financial instruments that to the ordinary citizen look more like exotically placed bets-on-credit in the casino than genuine ways to grow real-world business, jobs, wages, and family income. The few who are in position to master the game live material lives that were beyond what almost any formerly "wealthy" man or woman in Rip's prior life could even imagine
    .
    Above all else is the astronomical rise in wealth and income inequality. Rip recalls that growing up in the 1950's, the kids on his block included, along with firemen, cops, and insurance men dads (these were virtually all one-parent income households), someone had a dad who worked as a stock broker. Yea, living on the same block was a "Wall Streeter". Amazingly democratic, no? Imagine, people of today, a finance guy drinking at the same corner bar with the sanitation guy. Rip recalls that Aristotle had some wise and cautionary words in his Politics concerning the stability of oligarchic regimes.

    Last year I drove across America on blue highways mostly. I stayed in small towns and cities, Zanesville, St. Charles, Wichita, Pratt, Dalhart, Clayton, El Paso, Abilene, Clarksdale, and many more. I dined for the most part in local taverns, sitting at the bar so as to talk with the local bartender and patrons who are almost always friendly and talkative in these spaces. Always and everywhere I heard similar stories as my story of my home town. Not so much the specifics (there are no "disneyfied" Lubbocks or Galaxes out there, although Oxford, MS comes close) but in the sadness of men and women roughly my age as they recounted a place and time – a way of life – taken out from under them, so that now their years are filled with decayed and dead downtowns, children gone away and lost to either the relentless rootlessness of the trans-national economy or the virtual hell-world of meth and opioids and heroin and unending underemployed hopelessness.

    I am not a trained economist. My graduate degrees were in philosophy. My old friends call me an "Eric Hoffer", who back in the day was known as the "longshoreman philosopher". I have been trying for a long time now to understand the silent revolution that has been pulled off right under my nose, the replacement of a world that certainly had its flaws (how could I forget the civil rights struggle and the crime of Viet Nam; I was a part of these things) but was, let us say, different. Among you or your informed readers, is there anyone who can suggest a book or books or author(s) who can help me understand how all of this came about, with no public debate, no argument, no protest, no nothing? I would be very much appreciative.

    tegnost , June 2, 2016 at 2:20 pm

    I'll just highlight this line for emphasis
    "there are no "disneyfied" Lubbocks or Galaxes out there, although Oxford, MS comes close) but in the sadness of men and women roughly my age as they recounted a place and time – a way of life – taken out from under them, so that now their years are filled with decayed and dead downtowns, children gone away and lost to either the relentless rootlessness of the trans-national economy or the virtual hell-world of meth and opioids and heroin and unending underemployed hopelessness."
    my best friend pretty much weeps every day.

    Michael Fiorillo , June 2, 2016 at 3:13 pm

    bluecollar Al,

    As a lifelong New Yorker, I too mourn the demise of my beloved city. Actually, that's wrong: my city didn't die, it was taken from me/us.

    But if it's any consolation, remember that Everyone Loses Their New York (even insufferable hipster colonizers)

    Left in Wisconsin , June 2, 2016 at 3:24 pm

    Beautifully said.

    I don't have a book to recommend. I do think you identify a really underemphasized central fact of recent times: the joint processes by which real places have been converted into "real estate" and real, messy lives replaced by safe, manufactured "experiences." This affects wealthy and poor neighborhoods alike, in different ways but in neither case for the better.

    I live in a very desirable neighborhood in one of those places that makes a lot of "Best of" lists. I met a new neighbor last night who told me how he and his wife had plotted for years to get out of the Chicago burbs, not only to our city but to this specific neighborhood, which they had decided is "the one." (This sentiment is not atypical.) Unsurprisingly, property values in the neighborhood have gone through the roof. Which, as far as I can tell, most everyone here sees as an unmitigated good thing.

    At the same time, several families I got to know because they moved into the neighborhood about the same time we did 15-20 years ago, are cashing out and moving away, kids off to or out of college, parents ready (and financed) to get on to the next phase and the next place. Of course, even though our children are all Lake Woebegoners, there are no next generations staying in the neighborhood, except of course the ones still living, or back, at "home." (Those families won't be going anywhere for awhile!)

    I can't argue that new money in the hood hasn't improved some things. Our formerly struggling food co-op just finished a major expansion and upgrade. Good coffee is 5 minutes closer than it used to be. But to my wife and me, the overwhelming feeling is that we are now outsiders here in this neighborhood where we know all the houses and the old trees but not what motivates our new neighbors. So I made up a word for it: unsettling (adj., verb, noun).

    Softie , June 2, 2016 at 4:14 pm

    Try to read this one:

    "If public life can suffer a metaphysical blow, the death of the labor question was that blow. For millions of working people, it amputated the will to resist."

    - Steve Fraser, The Age of Acquiescence

    Jim , June 2, 2016 at 4:25 pm

    bluecollar Al:

    Christopher Lash in "Revolt of the Elites and the Betrayal of Democracy" mentions Ray Oldenburg's "The Great Good Places: Cafes, Coffee Shops, Community Centers, Beauty Parlors, General Stores, Bars, Hangouts and How they Got You through the Day."

    He argued that the decline of democracy is directly related to the disappearance of what he called third places:,

    "As neighborhood hangouts give way to suburban shopping malls, or, on the other hand private cocktail parties, the essentially political art of conversation is replaced by shoptalk or personal gossip.

    Increasingly, conversation literally has no place in American society. In its absence how–or better, where–can political habits be acquired and polished?

    Lasch finished he essay by noting that Oldenburg's book helps to identify what is missing from our then newly emerging world (which you have concisely updated):

    "urban amenities, conviviality, conversation, politics–almost everything in part that makes life worth living."

    JDH , June 2, 2016 at 4:28 pm

    The best explainer of our modern situation that I have read is Wendell Berry. I suggest that you start with "The Unsettling of America," quoted below.

    "Let me outline briefly as I can what seem to me the characteristics of these opposite kinds of mind. I conceive a strip-miner to be a model exploiter, and as a model nurturer I take the old-fashioned idea or ideal of a farmer. The exploiter is a specialist, an expert; the nurturer is not. The standard of the exploiter is efficiency; the standard of the nurturer is care. The exploiter's goal is money, profit; the nurturer's goal is health - his land's health, his own, his family's, his community's, his country's. Whereas the exploiter asks of a piece of land only how much and how quickly it can be made to produce, the nurturer asks a question that is much more complex and difficult: What is its carrying capacity? (That is: How much can be taken from it without diminishing it? What can it produce dependably for an indefinite time?) The exploiter wishes to earn as much as possible by as little work as possible; the nurturer expects, certainly, to have a decent living from his work, but his characteristic wish is to work as well as possible. The competence of the exploiter is in organization; that of the nurturer is in order - a human order, that is, that accommodates itself both to other order and to mystery. The exploiter typically serves an institution or organization; the nurturer serves land, household, community, place. The exploiter thinks in terms of numbers, quantities, "hard facts"; the nurturer in terms of character, condition, quality, kind."

    I also think Prof. Patrick Deneen works to explain the roots (and progression) of decline. I'll quote him at length here describing the modern college student.

    "[T]he one overarching lesson that students receive is the true end of education: the only essential knowledge is that know ourselves to be radically autonomous selves within a comprehensive global system with a common commitment to mutual indifference. Our commitment to mutual indifference is what binds us together as a global people. Any remnant of a common culture would interfere with this prime directive: a common culture would imply that we share something thicker, an inheritance that we did not create, and a set of commitments that imply limits and particular devotions.

    Ancient philosophy and practice praised as an excellent form of government a res publica – a devotion to public things, things we share together. We have instead created the world's first Res Idiotica – from the Greek word idiotes, meaning "private individual." Our education system produces solipsistic, self-contained selves whose only public commitment is an absence of commitment to a public, a common culture, a shared history. They are perfectly hollowed vessels, receptive and obedient, without any real obligations or devotions.

    They won't fight against anyone, because that's not seemly, but they won't fight for anyone or anything either. They are living in a perpetual Truman Show, a world constructed yesterday that is nothing more than a set for their solipsism, without any history or trajectory."

    ekstase , June 2, 2016 at 5:55 pm

    Wow. Did this hit a nerve. You have eloquently described what was the city of hope for several generations of outsiders, for young gay men and women, and for real artists, not just from other places in America, but from all over the world. In New York, once upon a time, bumping up against the more than 50% of the population who were immigrants from other countries, you could learn a thing or two about the world. You could, for a while, make a living there at a job that was all about helping other people. You could find other folks, lots of them, who were honest, well-meaning, curious about the world. Then something changed. As you said, you started to see it in those hideous 80's buildings. But New York always seemed somehow as close or closer to Europe than to the U.S., and thus out of the reach of mediocrity and dumbing down. New York would mold you into somebody tough and smart, if you weren't already – if it didn't, you wouldn't make it there.

    Now, it seems, this dream is dreamt. Poseurs are not artists, and the greedy and smug drive out creativity, kindness, real humor, hope.

    It ain't fair. I don't know where in this world an aspiring creative person should go now, but it probably is not there.

    Dave , June 2, 2016 at 10:21 am

    Americans cannot begin to reasonably demand a living wage, benefits and job security when there is an unending human ant-line of illegals and legal immigrants willing to under bid them.

    Only when there is a parity or shortage of workers can wage demands succeed, along with other factors.

    From 1925 to 1965 this country accepted hardly any immigrants, legal or illegal. We had the bracero program where Mexican males were brought in to pick crops and were then sent home to collect paychecks in Mexico. American blacks were hired from the deep south to work defense plants in the north and west.

    Is it any coincidence that the 1965 Great Society program, initiated by Ted Kennedy to primarily benefit the Irish immigrants, then co-opted by LBJ to include practically everyone, started this process of Middle Class destruction?

    1973 was the peak year of American Society as measured by energy use per capita, expansion of jobs and unionization and other factors, such as an environment not yet destroyed, nicely measured by the The Real Progress Indicator.

    Solution? Stop importing uneducated people. That's real "immigration reform".

    Now explain to me why voters shouldn't favor Trump's radical immigration stands?

    RUKidding , June 2, 2016 at 11:06 am

    Maybe, but OTOH, who is it, exactly, who is recruiting, importing, hiring and training undocumented workers to downgrade pay scales??

    Do some homework, please. If businesses didn't actively go to Central and South America to recruit, pay to bring here, hire and employ undocumented workers, then the things you discuss would be great.

    When ICE comes a-knocking at some meat processing plant or mega-chicken farm, what happens? The undocumented workers get shipped back to wherever, but the big business owner doesn't even get a tap on the wrist. The undocumented worker – hired to work in unregulated unsafe unhealthy conditions – often goes without their last paycheck.

    It's the business owners who manage and support this system of undocumented workers because it's CHEAP, and they don't get busted for it.

    Come back when the USA actually enforces the laws that are on the books today and goes after big and small business owners who knowingly recruit, import, hire, train and employee undocumented workers you know, like Donald Trump has all across his career.

    tegnost , June 2, 2016 at 12:24 pm

    This is the mechanism by which the gov't has assisted biz in destroying the worker, competition for thee, but none for me. For instance I can't go work in canada or mexico, they don't allow it. Policy made it, policy can change it, go bernie. While I favor immigration, in it's current form it is primarily conducted on these lines of destroying workers (H1b etc and illegals combined) Lucky for the mexicans they can see the american dream is bs and can go home. I wonder who the latinos that have gained citizenship will vote for. Unlikely it'll be trump, but they can be pretty conservative, and the people they work for are pretty conservative so no guarantee there, hillary is in san diego at the tony balboa park where her supporters will feel comfortable, not a huge venue I think they must be hoping for a crowd, and if she can't get one in san diego while giving a "if we don't rule the world someone else will" speech, she can't get one anywhere. Defense contractors and military advisors and globalist biotech (who needs free money more than biotech? they are desperate for hillary) are thick in san diego.

    RUKidding , June 2, 2016 at 12:47 pm

    I live part-time in San Diego. It is very conservative. The military, who are constantly screwed by the GOP, always vote Republican. They make up a big cohort of San Diego county.

    Hillary may not get a big crowd at the speech, but that, in itself, doesn't mean that much to me. There is a segment of San Diego that is somewhat more progressive-ish, but it's a pretty conservative county with parts of eastern SD county having had active John Birch Society members until recently or maybe even ongoing.

    There's a big push in the Latino community to GOTV, and it's mostly not for Trump. It's possible this cohort, esp the younger Latino/as, will vote for Sanders in the primary, but if Clinton gets the nomination, they'll likely vote for her (v. Trump).

    I was unlucky enough to be stuck for an hour in a commuter train last Friday after Trump's rally there. Hate to sound rude, but Trump's fans were everything we've seen. Loud, rude, discourteous and an incessant litany of rightwing talking points (same old, same old). All pretty ignorant. Saying how Trump will "make us great again." I don't bother asking how. A lot of ugly comments about Obama and how Obama has been "so racially divisive and polarizing." Well, No. No, Obama has not been or done that, but the rightwing noise machine has sure ginned up your hatreds, angers and fears. It was most unpleasant. The only instructive thing about it was confirming my worst fears about this group. Sorry to say but pretty loutish and very uninformed. Sigh.

    tegnost , June 2, 2016 at 2:12 pm

    part timer in sd as well, family for hillary except for nephew and niece .I keep telling my mom she should vote bernie for their sake but it never goes over very well

    Bob Haugen , June 2, 2016 at 10:35 am

    Re Methland, we live in rural US and we got a not-very-well hidden population of homeless children. I don't mean homeless families with children, I mean homeless children. Sleeping in parks in good weather, couch-surfing with friends, etc. I think related.

    equote , June 2, 2016 at 10:43 am

    Fascism is a system of political and social order intended to reinforce the unity, energy and purity of communities in which liberal democracy stand(s) accused of producing division and decline. . . . George Orwell reminded us, clad in the mainstream patriotic dress of their own place and time, . . . an authentically popular fascism in the United States would be pious and anti-Black; in Western Europe, secular and antisemitic, or more probably, these days anti-Islamic; in Russia and Eastern Europe, religious, antisemitic, and slavophile.
    Robert O. Paxton
    In The Five Stages of Faschism

    " that eternal enemy: the conservative manipulators of privilege who damn as 'dangerous agitators' any man who menaces their fortunes" (maybe 'power and celebrity' should be added to fortunes)
    Sinclair Lewis
    It Can't Happen Here page 141

    Take the Fork , June 2, 2016 at 11:07 am

    On the Boots To Ribs Front: Anyone hereabouts notice that Captain America has just been revealed to be a Nazi? Maybe this is what R. Cohen was alluding to but I doubt it.

    pissed younger baby boomer , June 2, 2016 at 11:57 am

    The four horse men are, political , social, economic and environmental collapse . Any one remember the original Mad Max movie. A book I recommend is the Crash Of 2016 By Thom Hartmann.

    rfam , June 2, 2016 at 11:59 am

    From the comment, I agree with the problems, not the cause. We've increased the size and scope of the safety net over the last decade. We've increased government spending versus GDP. I'm not blaming government but its not neoliberal/capitalist policy either.

    1. Globalization clearly helps the poor in other countries at the expense of workers in the U.S. But at the same time it brings down the cost of goods domestically. So jobs are not great but Walmart/Amazon can sell cheap needs.

    2. Inequality started rising the day after Bretton Woods – the rich got richer everyday after "Nixon Shock"

    https://www.google.com/search?q=gini+coefficient+usa+chart&client=safari&rls=en&biw=1371&bih=793&tbm=isch&imgil=tRkxcVEo17ID8M%253A%253B-Lt3-YscSzdOaM%253Bhttp%25253A%25252F%25252Fwww.the-crises.com%25252Fincome-inequality-in-the-us-1%25252F&source=iu&pf=m&fir=tRkxcVEo17ID8M%253A%252C-Lt3-YscSzdOaM%252C_&usg=__bipTqXhWx0tXxke6Xcj5MUAcn-o%3D&ved=0ahUKEwjY18rm2onNAhUPeFIKHREjAS4QyjcILw&ei=nFdQV9iZCo_wyQKRxoTwAg#imgrc=tRkxcVEo17ID8M%3A

    TedWa , June 2, 2016 at 12:30 pm

    Hi rfam : To point 1 : Why is there a need to bring down the cost of goods? Is it because of past outsourcing and trade agreements and FR policies? I think there's a chicken and egg thing going on, ie.. which came first. Globalization is a way to bring down wages while supplying Americans with less and less quality goods supplied at the hand of global corporations like Walmart that need welfare in the form of food stamps and the ACA for their workers for them to stay viable (?). Viable in this case means ridiculously wealthy CEO's and the conglomerate growing bigger constantly. Now they have to get rid of COOL's because the WTO says it violates trade agreements so we can't trace where our food comes from in case of an epidemic. It's all downhill. Wages should have risen with costs so we could afford high quality American goods, but haven't for a long, long time.

    tegnost , June 2, 2016 at 12:35 pm

    Globalization helps the rich here way more than the poor there. The elites get more money for nothing (see QE before you respond, if you do, that's where the money for globalization came from) the workers get the husk. Also the elite gets to say "you made your choices" and other moralistic crap. The funny(?) thing is they generally claim to be atheists, which I translate into "I am God, there doesn't need to be any other" Amazon sells cheap stuff by cheating on taxes, and barely makes money, mostly just driving people out of business. WalMart has cheap stuff because they subsidise their workers with food stamps and medicaid. Bringing up bretton woods means you don't know much about money creation, so google "randy wray/bananas/naked capitalism" and you'll find a quick primer.

    RUKidding , June 2, 2016 at 12:57 pm

    The Walmart loathsome spawn and Jeff Bezos are the biggest welfare drains in our nation – or among the biggest. They woefully underpay their workers, all while training them on how to apply for various welfare benefits. Just so that their slaves, uh, workers can manage to eat enough to enable them to work.

    It slays me when US citizens – and it happens across the voting spectrum these days; I hear just as often from Democratic voters as I do from GOP voters – bitch, vetch, whine & cry about welfare abuse. And if I start to point out the insane ABUSE of welfare by the Waltons and Jeff Bezos, I'm immediately greeted with random TRUE stories about someone who knew someone who somehow made out like a bandit on welfare.

    Hey, I'm totally sure and in agreement that there are likely a small percentage of real welfare cheats who manage to do well enough somehow. But seriously? That's like a drop in the bucket. Get the eff over it!!!

    Those cheats are not worth discussing. It's the big fraud cheats like Bezos & the Waltons and their ilk, who don't need to underpay their workers, but they DO because the CAN and they get away with it because those of us the rapidly dwindling middle/working classes are footing the bill for it.

    Citizens who INSIST on focusing on a teeny tiny minority of real welfare cheats, whilst studiously ignoring the Waltons and the Bezos' of the corporate world, are enabling this behavior. It's one of my bugabears bc it's so damn frustrating when citizens refuse to see how they are really being ripped off by the 1%. Get a clue.

    That doesn't even touch on all the other tax breaks, tax loopholes, tax incentives and just general all-around tax cheating and off-shore money hiding that the Waltons and Bezos get/do. Sheesh.

    JustAnObserver , June 2, 2016 at 2:51 pm

    This statement –

    "I'm immediately greeted with random TRUE stories about someone who knew someone who somehow made out like a bandit on welfare."

    is the key and a v. long term result of the application of Bernays' to political life. Its local and hits at the gut interpersonal level 'cos the "someones" form a kind of chain of trust esp. if the the first one on the list is a friend or a credentialed media pundit. Utterly spurious I know but countering this with a *merely* rational analysis of how Walmart, Amazon abuse the welfare system to gouge profits from the rest of us just won't ever, for the large majority, get through this kind emotional wall.

    I don't know what any kind of solution might look like but, somehow, we need to find a way of seriously demonising the corporate parasites that resonates at the same emotional level as the "welfare cheat" meme that Bill Clinton and the rest of the DLC sanctified back in the '90s.

    Something like "Walmart's stealing your taxes" might work but how to get it out there in a viral way ??

    Vatch , June 2, 2016 at 6:54 pm

    "random TRUE stories about someone who knew someone who somehow made out like a bandit on welfare."

    Hmm. Your acquaintances might need to be educated about urban legends .

    Anonymous Coward , June 2, 2016 at 12:04 pm

    Wait, you mean we don't all enjoy living in Pottersville?

    For anyone missing the reference, you clearly haven't been subjected to It's a Wonderful Life enough times.

    Judith , June 2, 2016 at 12:06 pm

    People may be interested in an ongoing project by the photographer Matt Black (who was recently invited to join Magnum) called the Geography of Poverty. http://www.mattblack.com/the-geography-of-poverty/

    Steve Sewall , June 2, 2016 at 12:07 pm

    What a comment from seanseamour. And the "hoisting" of it to high visibility at the site is a testament to the worth of Naked Capitalism.

    seanseamour asks "What does that have to do with education?" and answers "Everything if one considers the elitist trend " This question & answer all but brings tears to my eyes. It is so utterly on point. My own experience of it, if I may say so, comes from inside the belly of the beast. As a child and a product of America's elite universities (I have degrees from Harvard and Yale, and my dad, Richard B. Sewall, was a beloved English prof at Yale for 42 years), I could spend all morning detailing the shameful roles played by America's torchbearing universities – Harvard, Yale, Stanford etc – in utterly abandoning their historic responsibility as educators to maintaining the health of the nation's public school system.*

    And as I suspect seanseymour would agree, when a nation loses public education, it loses everything.

    But I don't want to spend all morning doing that because I'm convinced that it's not too late for America to rescue itself from maelstrom in which it finds itself today. (Poe's "Maelstrom" story, cherished by Marshall McLuhan, is supremely relevant today.)

    To turn America around, I don't look to education – that system is too far gone to save itself, let alone the rest of the country – but rather to the nation's media: to the all-powerful public communication system that certainly has the interactive technical capabilities to put citizens and governments in touch with each other on the government decisions that shape the futures of communities large and small.

    For this to happen, however, people like the us – readers of Naked Capitalism – need to stop moaning and groaning about the damage done by the neoliberals and start building an issue-centered, citizen-participatory, non-partisan, prime-time Civic Media strong enough to give all Americans an informed voice in the government decisions that affect their lives. This Civic media would exist to make citizens and governments responsive and accountable to each other in shaping futures of all three communities – local, state and national – of which every one of us is a member.

    Pie in the sky? Not when you think hard about it. A huge majority of Americans would welcome this Civic Media. Many yearn for it. This means that a market exists for it: a Market of the Whole of all members of any community, local, state and national. This audience is large enough to rival those generated by media coverage of pro sports teams, and believe it or not much of the growth of this Civic media could be productively modeled on the growth of media coverage of pro sports teams. This Civic Media would attract the interest of major advertisers, especially those who see value in non-partisan programming dedicated to getting America moving forward again. Dynamic, issue-centered, problem-solving public forums, some modeled on voter-driven reality TV contests like The Voice or Dancing with the Stars, could be underwritten by a "rainbow" spectrum of funders, commericial, public, personal and even government sources.

    So people take hope! Be positive! Love is all we need, etc. The need for for a saving alternative to the money-driven personality contests into which our politics has descended this election year is literally staring us all in the face from our TV, cellphone and computer screens. This is no time to sit back and complain, it's a time to start working to build a new way of connecting ourselves so we can reverse America's rapid decline.

    OK, so I hear some of you saying, corporate America will never let this Civic Media get off the ground. My short answer to this is that corporations do what makes money for them, and in today's despairing political climate there's money to be made in sponsoring something truly positive, patriotic and constructive. And I hear a few others saying that Americans are too dumbed down, too busy, too polarized or too just plain stupid to make intelligent, constructive use of a non-partisan, problem-solving Civic Media. But I would not underestimate the intelligence of Americans when they can give their considered input – by vote, by comment or by active participation – in public forums that are as exciting and well managed as an NFL game or a Word Series final.

    hunkerdown , June 2, 2016 at 5:40 pm

    "Don't hate the media, become the media" -Jello Biafra

    Sound of the Suburbs , June 2, 2016 at 12:36 pm

    I am paying an exorbitant subscription for the UK Financial Times at the moment. Anyway, the good news is that very regular articles are appearing where you can almost feel the panic at the populist uprisings.

    The end is nigh for the Neo-Liberals.

    Sound of the Suburbs , June 2, 2016 at 1:04 pm

    Whatever system is put in place the human race will find a way to undermine it. I believe in capitalism because fair competition means the best and most efficient succeed.

    I send my children to private schools and universities because I want my own children at the top and not the best. Crony capitalism is inevitable, self-interest undermines any larger system that we try and impose.

    Can we design a system that can beat human self-interest? It's going to be tricky.

    "If that's the system, how can I take advantage of it?" human nature at work. "If that's the system, is it working for me or not?" those at the top.
    If not, it's time to change the system.
    If so, how can I tweak it to get more out of it?

    Neo-Liberalism

    Academics, who are not known for being street-wise, probably thought they had come up with the ultimate system using markets and numeric performance measures to create a system free from human self-interest.

    They had already missed that markets don't just work for price discovery, but are frequently used for capital gains by riding bubbles and hoping there is a "bigger fool" out there than you, so you can cash out with a handsome profit.

    (I am not sure if the Chinese realise markets are supposed to be for price discovery at all).

    Hence, numerous bubbles during this time, with housing bubbles being the global favourite for those looking for capital gains.

    If we are being governed by the markets, how do we rig the markets?
    A question successfully solved by the bankers.

    Inflation figures, that were supposed to ensure the cost of living didn't rise too quickly, were somehow manipulated to produce low inflation figures with roaring house price inflation raising the cost of living.

    What unemployment measure will best suit the story I am trying to tell?
    U3 – everything great
    U6 – it's not so good
    Labour participation rate – it hasn't been this bad since the 1970s

    Anything missing from the theory has been ruthlessly exploited, e.g. market bubbles ridden for capital gains, money creation by private banks, the difference between "earned" and "unearned" income and the fact that Capitalism trickles up through the following mechanism:

    1) Those with excess capital collect rent and interest.
    2) Those with insufficient capital pay rent and interest.

    Neo-Liberalism – It's as good as dead.

    perpetualWAR , June 2, 2016 at 1:18 pm

    I just went on a rant last week. (Not only because the judge actually LIED in court)

    I left the courthouse in downtown Seattle, to cross the street to find the vultures selling more foreclosures on the steps of the King County Administration Building, while above them, there were tents pitched on the building's perimeter. And people were walking by just like this scene was normal.

    Because the people at the entrance of the courthouse could view this, I went over there and began to rant. I asked (loudly) "Do you guys see that over there? Vultures selling homes rendering more people homeless and then the homeless encampment with tents pitched on the perimeter above them? In what world is this normal?" One guy replied, "Ironic, isn't it?" After that comment, the Marshall protecting the judicial crooks in the building came over and tried to calm me down. He insisted that the scene across the street was "normal" and that none of his friends or neighbors have been foreclosed on. I soon found out that that lying Marshall was from Pierce County, the epicenter of Washington foreclosures.

    The scene was totally surreal. And unforgettable.

    Softie , June 2, 2016 at 2:26 pm

    You need to take a photograph or two using your above words as caption.

    EGrise , June 2, 2016 at 2:31 pm

    And nobody cares
    As long as they get theirs

    Softie , June 2, 2016 at 3:09 pm

    The kernel of Neoliberal Ideology: "There is no such a thing as society." (Margaret Thatcher).

    Softie , June 2, 2016 at 2:16 pm

    "In this postindustrial world not only is the labor question no longer asked, not only is proletarian revolution passé, but the proletariat itself seems passé. And the invisibles who nonetheless do indeed live there have internalized their nonexistence, grown demoralized, resentful, and hopeless; if they are noticed at all, it is as objects of public disdain. What were once called "blue-collar aristocrats"-skilled workers in the construction trades, for example-have long felt the contempt of the whole white-collar world.

    For these people, already skeptical about who runs things and to what end, and who are now undergoing their own eviction from the middle class, skepticism sours into a passive cynicism. Or it rears up in a kind of vengeful chauvinism directed at alien others at home and abroad, emotional compensation for the wounds that come with social decline If public life can suffer a metaphysical blow, the death of the labor question was that blow. For millions of working people, it amputated the will to resist."

    - Steve Fraser, The Age of Acquiescence

    LeitrimNYC , June 2, 2016 at 2:25 pm

    One thing I don't think I have seen addressed on this site (apologies if I have missed it!) in all the commentary about the destruction of the middle class is the role of US imperialism in creating that middle class in the first place and what it is that we want to save from destruction by neo-liberalism. The US is rich because we rob the rest of the world's resources and have been doing so in a huge way since 1945, same as Britain before us. I don't think it's a coincidence that the US post-war domination of the world economy and the middle class golden age happened at the same time. Obviously there was enormous value created by US manufacturers, inventors, government scientists, etc but imperialism is the basic starting point for all of this. The US sets the world terms of trade to its own advantage. How do we save the middle class without this level of control? Within the US elites are robbing everyone else but they are taking what we use our military power to appropriate from the rest of the world.

    Second, if Bernie or whoever saves the middle class, is that so that everyone can have a tract house and two cars and continue with a massively wasteful and unsustainable lifestyle based on consumption? Or are we talking about basic security like shelter, real health care, quality education for all, etc? Most of the stories I see seem to be nostalgic for a time when lots of people could afford to buy lots of stuff and don't 1) reflect on origin of that stuff (imperialism) and 2) consider whether that lifestyle should be the goal in the first place.

    perpetualWAR , June 2, 2016 at 2:49 pm

    I went to the electronics recycling facility in Seattle yesterday. The guy at customer service told me that they receive 20 million pounds per month. PER MONTH. Just from Seattle. I went home and threw up.

    Praedor , June 2, 2016 at 3:57 pm

    It doesn't have to be that way. You can replace military conquest (overt and covert) with space exploration and science expansion. Also, instead of pushing consumerism, push contentment. Don't setup and goose a system of "gotta keep up with the Joneses!"

    In the 50s(!!!) there was a plan, proven in tests and studies, that would have had humans on the mars by 1965, out to Saturn by 72. Project Orion. Later, the British Project Daedalus was envisioned which WOULD have put space probes at the next star system within 20 years of launch. It was born of the atomic age and, as originally envisioned, would have been an ecological disaster BUT it was reworked to avoid this and would have worked. Spacecraft capable of comfortably holding 100 personnel, no need to build with paper-thin aluminum skin or skimp on amenities. A huge ship built like a large sea vessel (heavy iron/steel) accelerated at 1g (or more or slightly less as desired) so no prolonged weightlessness and concomitant loss of bone and muscle mass. It was all in out hands but the Cold War got in the way, as did the many agreements and treaties of the Cold War to avoid annihilation. It didn't need to be that way. Check it out: https://en.wikipedia.org/wiki/Project_Orion_(nuclear_propulsion)

    All that with 1950s and 60s era technology. It could be done better today and for less than your wars in the Middle East. Encourage science, math, exploration instead of consumption, getting mine before you can get yours, etc.

    hunkerdown , June 2, 2016 at 5:48 pm

    Or, we could replace Western liberal culture, with its tradition to consume and expand by force an unbroken chain from the Garden of Eden to Friedrich von Hayek, with the notion of maintenance and "enough". Bourgeois make-work holds no interest to me.

    Left in Wisconsin , June 2, 2016 at 4:12 pm

    My understanding of the data is that living standards increased around the world during the so-called golden age, not just in the U.S. (and Western Europe and Japan and Australia ). It could be that it was still imperialism at work, but the link between imperialism and the creation of the middle class is not straightforward.

    Likewise, US elites are clearly NOT robbing the manufacturing firms that have set up in China and other low-wage locations, so it is an oversimplification to say they are "robbing everyone else."

    Nostalgia is overrated but I don't sense the current malaise as a desire for more stuff. (I grew up in the 60s and 70s and I don't remember it as a time where people had, or craved, a lot of stuff. That period would be now, and I find it infects Sanders' supporters less than most.) If anything, it is nostalgia for more (free) time and more community, for a time when (many but not all) people had time to socialize and enjoy civic life.

    jrs , June 2, 2016 at 5:52 pm

    those things would be nice as would just a tiny bit of hope for the future, our own and the planet's and not an expectation of things getting more and more difficult and sometimes for entirely unnecessary reasons like imposed austerity. But being we can't have "nice things" like free time, community and hope for the future, we just "buy stuff".

    catlady , June 2, 2016 at 5:12 pm

    I live on the south side, in the formerly affluent south shore neighborhood. A teenager was killed, shot in the head in a drive by shooting, at 5 pm yesterday right around the corner from my residence. A white coworker of mine who lives in a rich northwest side neighborhood once commented to me how black people always say goodbye by saying "be safe". More easily said than done.

    Skippy , June 2, 2016 at 6:50 pm

    I thought neoliberalism was just the pogrom to make everyone – rational agents – as subscribed by our genetic / heraldic betters .. putting this orbs humans and resources in the correct "natural" order .

    Disheveled Marsupial for those thinking neoliberalism is not associated with libertarianism one only has to observe the decades of think tanks and their mouth organs roaming the planet . especially in the late 80s and 90s . bringing the might and wonders of the – market – to the great unwashed globally here libertarian priests rang in the good news to the great unwashed

    Jim , June 2, 2016 at 8:10 pm

    Hi Skippy:

    I would argue that neoliberalism is a program to define markets as primarily engaged in information processing and to make everyone into non-agents ( as not important at all to the proper functioning of markets).

    It also appears that neoliberals want to restrict democracy to the greatest extent possible and to view markets as the only foundation for truth without any need for input from the average individual.

    But as Mirowski argues–carrying their analysis this far begins to undermine their own neoliberal assumptions about markets always promoting social welfare.

    Skippy , June 2, 2016 at 10:09 pm

    Hay Jim

    When I mean – agents – I'm not referring to agency, like you say the market gawd/computer does that. I was referencing the – rational agent – that 'ascribes' the markets the right at defining facts or truth as neoliberalism defines rational thought/behavior.

    Disheveled Marsupial yes democracy is a direct threat to Hayekian et al [MPS and Friends] paranoia due to claims of irrationality vs rationally

    Rick Cass , June 2, 2016 at 7:32 pm

    Neo-liberalism could not have any power without legal and ethical positivism as the ground work of the national thought processes.

    seanseamour , June 3, 2016 at 4:32 am

    I have trouble understanding the focus on an emergence of fascism in Europe, focus that seems to dominate this entire thread when, put in perspective such splinter groups bear little weight on the European political spectrum.
    As an expat living in France, in my perception the Front National is a threat to the political establishments that occupy the center left and right and whose historically broad constituencies have been brutalized by the financial crisis borne of unbridled anglo-saxon runaway capitalism, coined neoliberalism. The resulting disaffection has allowed the growth of the FN but it is also fueled by a transfer of reactionary constituencies that have historically found identity in far left parties (communist, anti-capitalist, anarchist ), political expressions the institutions of the Republic allow and enable in the name of plurality, a healthy exultury in a democratic society.
    To consider that the FN in France, UKIP in the UK and others are a threat to democratic values any more that the far left is non-sensical, and I dare say insignificant compared to the "anchluss" our conservative right seeks to impose upon the executive, legislative and judicial branches of government.
    The reality in Europe as in America is economic. The post WWII era of reconstruction, investment and growth is behind us, the French call these years the "Trente Glorieuses" (30 glorious years) when prosperity was felt through all societal strats, consumerism for all became the panacea for a just society, where injustice prevailed welfare formulas provided a new panacea.
    As the perspective of an unravelling of this golden era began to emerge elites sought and conspired to consolidate power and wealth, under the aegis of greed is good culture by further corrupting government to serve the few, ensuring impunity for the ruling class, attempting societal cohesiveness with brash hubristic dialectics (America, the greatest this or that) and adventurism (Irak, mission accomplished), conspiring to co-opt and control institutions and the media (to understand the depth of this deception a must read is Jane Mayer in The Dark Side and in Dark Money).
    The difference between America and Europe is that latter bears of brunt of our excess.
    The 2008 Wall St / City meltdown eviscerated much of America' middle class and de-facto stalled, perhaps definitively, the vehicle of upward mobility in an increasingly wealth-ranked class structured society – the Trump phenomena feeds off the fatalistic resilience and "good book" mythologies remnant of the "go west" culture.
    In Europe where to varying degrees managed capitalism prevails the welfare state(s) provided the shock absorbers to offset the brunt of the crisis, but those who locked-in on neoliberal fiscal conservatism have cut off their nose in spite leaving scant resources to spur growth. If social mobility survives, more vibrantly than the US, unemployment and the cost thereof remains steadfast and crippling.
    The second crisis borne of American hubris is the human tidal wave resulting from the Irak adventure; it has unleashed mayhem upon the Middle East, Sub Saharan Africa and beyond. The current migrational wave Europe can not absorb is but the beginning of much deeper problem – as ISIS, Boko Haram and so many others terrorist groups destabilize the nation-states of a continent whose population is on the path to explode in the next half century.
    The icing on the cake provided by a Trump election will be a world wave of climate change refugees as the neoliberal establishment seeks to optimize wealth and power through continued climate change denial.
    Fascism is not the issue, nationalism resulting from a self serving bully culture will decimate the multilateral infrastructure responsible nation-states need to address today's problems.
    Broadly, Trump Presidency capping the neoliberal experience will likely signal the end of the US' dominant role on the world scene (and of course the immense benefits derived for the US). As he has articulated his intent to discard the art of diplomacy, from soft to institutional, in favor of an agressive approach in which the President seeks to "rattle" allies (NATO, Japan and S. Korea for example) as well as his opponents (in other words anyone who does not profess blind allegiance), expect that such modus operandi will create a deep schism accompanied by a loss of trust, already felt vis-a-vis our legislature' behavior over the last seven years.
    The US's newfound respect among friends and foes generated by President Obama' presidency, has already been undermined by the GOP primaries, if Trump is elected it will dissipate for good as other nations and groups thereof focus upon new, no-longer necessarily aligned strategic relationships, some will form as part as a means of taking distance, or protection from the US, others more opportunist with the risk of opponents such as Putin filling the void – in Europe for example.

    dk , June 3, 2016 at 8:08 am

    Neoliberalism isn't helping, but it's a population/resource ratio thing. Impacts on social orders occur well before raw supply factors kick in (and there is more than food supply to basic rations). The world population has more than doubled in the last 50 years, one doesn't get that kind of accelerated growth without profound impacts to every aspect of societies. Some of the most significant impacts are consequent to the acceleration of technological changes (skill expirations, automations) that are driven in no small part by the needs of a vast + growing population.

    https://en.wikipedia.org/wiki/Population_growth
    Note that the vertical scale in the of the first graph is logarithmic.

    I don't suggest population as a pat simplistic answer. And neoliberalism accelerates the declining performance of institutions (as in the CUNY article and that's been going on for decades already, neoliberalism just picked up where neoconservatism petered out), but we would be facing issues like homelessness, service degradation, population displacements, etc regardless of poor policies. One could argue (I do) that neoliberalism has undertaken to accelerate existing entropies for profit.

    Murica Derp , June 3, 2016 at 3:21 pm

    Thanks for soliciting reader comments on socioeconomic desperation. It's encouraging to know that I'm not the only failure to launch in this country.

    I'm a seasonal farm worker with a liberal arts degree in geology and history. I barely held on for six months as a junior environmental consultant at a dysfunctional firm that tacitly encouraged unethical and incompetent behavior at all levels. From what I could gather, it was one of the better-run firms in the industry. Even so, I was watching mid-level and senior staff wander into extended mid-life crises while our entire service line was terrorized by a badly out-of-shape, morbidly obese, erratic, vicious PG who had alienated almost the entire office but was untouchable no matter how many firing offenses she committed. Meanwhile I was watching peers in other industries (especially marketing and FIRE) sell their souls in real time. I'm still watching them do so a decade later.

    It's hard to exaggerate how atrociously I've been treated by bougie conformists for having failed/dropped out of the rat race. A family friend who got into trouble with the state of Hawaii for misclassifying direct employees of his timeshare boiler room as 1099's gave me a panic attack after getting stoned and berating me for hours about how I'd wake up someday and wonder what the fuck I'd done with my life. At the time, I had successfully completed a summer job as the de facto lead on a vineyard maintenance crew and was about to get called back for the harvest, again as the de facto lead picker.

    Much of my social life is basically my humiliation at the hands of amoral sleazeballs who presume themselves my superiors. No matter how strong an objective case I have for these people being morally bankrupt, it's impossible to really dismiss their insults. Another big component is concern-trolling from bourgeois supremacists who will do awfully little for me when I ask them for specific help. I don't know what they're trying to accomplish, and they probably don't, either. A lot of it is cognitive dissonance and incoherence.

    Some of the worst aggression has come from a Type A social climber friend who sells life insurance. He's a top producer in a company that's about a third normal, a third Willy Loman, and a third Glengarry Glen Ross. This dude is clearly troubled, but in ways that neither of us can really figure out, and a number of those around him are, too. He once admitted, unbidden, to having hazed me for years.

    The bigger problem is that he's surrounded by an entire social infrastructure that enables and rewards noxious, predatory behavior. When college men feel like treating the struggling like garbage, they have backup and social proof from their peers. It's disgusting. Many of these people have no idea of how to relate appropriately to the poor or the unemployed and no interest in learning. They want to lecture and humiliate us, not listen to us.

    Dude recently told me that our alma mater, Dickinson College, is a "grad school preparatory institution." I was floored that anyone would ever think to talk like that. In point of fact, we're constantly lectured about how versatile our degrees are, with or without additional education. I've apparently annoyed a number of Dickinsonians by bitterly complaining that Dickinson's nonacademic operations are a sleazy racket and that President Emeritus Bill Durden is a shyster who brainwashed my classmates with crude propaganda. If anything, I'm probably measured in my criticism, because I don't think I know the full extent of the fraud and sleaze. What I have seen and heard is damning. I believe that Dickinson is run by people with totalitarian impulses that are restrained only by a handful of nonconformists who came for the academics and are fed up with the propaganda.

    Meanwhile, I've been warm homeless for most of the past four years. It's absurd to get pledge drive pitches from a well-endowed school on the premise that my degree is golden when I'm regularly sleeping in my car and financially dependent on my parents. It's absurd to hear stories about how Dickinson's alumni job placement network is top-notch when I've never gotten a viable lead from anyone I know from school. It's absurd to explain my circumstances in detail to people who, afterwards, still can't understand why I'm cynical.

    While my classmates preen about their degrees, I'm dealing with stuff that would make them vomit. A relative whose farm I've been tending has dozens of rats infesting his winery building, causing such a stench that I'm just about the only person willing to set foot inside it. This relative is a deadbeat presiding over a feudal slumlord manor, circumstances that he usually justifies by saying that he's broke and just trying to make ends meet. He has rent-paying tenants living on the property with nothing but a pit outhouse and a filthy, disused shower room for facilities. He doesn't care that it's illegal. One of his tenants left behind a twenty-gallon trash can full to the brim with his own feces. Another was seen throwing newspaper-wrapped turds out of her trailer into the weeds. They probably found more dignity in this than in using the outhouse.

    When I was staying in Rancho Cordova, a rough suburb of Sacramento, I saw my next-door neighbor nearly come to blows with a man at the light rail station before apologizing profusely to me, calling me "sir," "man," "boss," and "dog." He told me that he was angry at the other guy for selling meth to his kid sister. Eureka is even worse: its west side is swarming with tweakers, its low-end apartment stock is terrible, no one brings the slumlords to heel, and it has a string of truly filthy residential motels along Broadway that should have been demolished years ago.

    A colleague who lives in Sweet Home, Oregon, told me that his hometown is swarming with druggies who try to extract opiates from local poppies and live for the next arriving shipment of garbage drugs. The berry farm where we worked had ten- and twelve-year-olds working under the table to supplement their families' incomes. A Canadian friend told me that he worked for a crackhead in Lillooet who made his own supply at home using freebase that he bought from a meathead dealer with ties to the Boston mob. Apparently all the failing mill towns in rural BC have a crack problem because there's not much to do other than go on welfare and cocaine. An RCMP sergeant in Kamloops was recently indicted for selling coke on the side.

    Uahsenaa's comment about the invisible homeless is spot on. I think I blend in pretty well. I've often stunned people by mentioning that I'm homeless. Some of them have been assholes about it, but not all. There are several cars that I recognize as regular overnighters at my usual rest area. Thank God we don't get hassled much. Oregon is about as safe a place as there is to be homeless. Some of the rest areas in California, including the ones at Kingsburg and the Sacramento Airport, end up at or beyond capacity overnight due to the homeless. CalTrans has signs reminding drivers that it's rude to hog a space that someone else will need. This austerity does not, of course, apply to stadium construction for the Kings.

    Another thing that almost slipped my mind (and is relevant to Trump's popularity): I've encountered entrenched, systemic discrimination against Americans when I've tried to find and hold menial jobs, and I've talked to other Americans who have also encountered it. There is an extreme bias in favor of Mexican peasants and against Americans in the fields and increasingly in off-farm jobs. The top quintile will be lucky not to reap the whirlwind on account of this prejudice.

    [Dec 04, 2016] Donald Trump, Brexit Are Blowback From Years of Anti-Government Rhetoric US News Opinion

    Notable quotes:
    "... The number one issue fueling the leave vote was immigration – a lot like Trump's wall against Mexico. The number two issue was lack of accountability of government: Leavers believe that the EU government in Brussels is unaccountable to voters. For Trump supporters, resentment towards a distant and unaccountable Washington government ranks high as well. The Brexit constituency and the Trump constituency are both motivated by the same sense of loss and vulnerability. ..."
    "... In both the U.S. and the U.K., a large and growing segment of voters has not prospered in today's complex, technology-driven global economy. Their wages have stagnated and in many cases fallen. Too few good-paying jobs exist for people lacking a college degree, or even people with a college degree, if the degree is not in the right field. These people are angry, frustrated, and afraid -- and with very good reason. Both countries' governments have done little to help them adapt, and little to soothe the sting of globalization. The voter's concerns in both places are mostly the same even though these concerns have coalesced around a policy issue ("leave") in the U.K. whereas here in the U.S. they have coalesced around a candidate (Trump). ..."
    "... Similarly, the elite insiders of the Republican Party and their business allies badly underestimated Trump. Establishment candidates like former Florida Gov. Jeb Bush failed terribly. Now the Republican political insiders are trying to make sense of a presumptive nominee who trashes free trade, one of the fundamental principles of the party, and openly taunts one of most important emerging voting blocks. ..."
    "... Perhaps the biggest reason for the impotence of today's political elites is that elites have trashed the very idea of competent and effective government for 35 years now, and the public has taken the message to heart. Ever since Reagan identified government as the problem, conservative elites have attacked the idea of government itself – rather than respecting the idea of government itself while criticizing the particular policies of a particular government. This is a crucial (and dangerous) distinction. In 1986, Reagan went on to say "the nine most terrifying words in the English language are 'I'm from the government and I'm here to help.'" ..."
    Aug 07, 2016 | www.usnews.com
    In addition, the issues are similar between the two campaigns: The number one issue fueling the leave vote was immigration – a lot like Trump's wall against Mexico. The number two issue was lack of accountability of government: Leavers believe that the EU government in Brussels is unaccountable to voters. For Trump supporters, resentment towards a distant and unaccountable Washington government ranks high as well. The Brexit constituency and the Trump constituency are both motivated by the same sense of loss and vulnerability.

    In both the U.S. and the U.K., a large and growing segment of voters has not prospered in today's complex, technology-driven global economy. Their wages have stagnated and in many cases fallen. Too few good-paying jobs exist for people lacking a college degree, or even people with a college degree, if the degree is not in the right field. These people are angry, frustrated, and afraid -- and with very good reason. Both countries' governments have done little to help them adapt, and little to soothe the sting of globalization. The voter's concerns in both places are mostly the same even though these concerns have coalesced around a policy issue ("leave") in the U.K. whereas here in the U.S. they have coalesced around a candidate (Trump).

    In both countries, political elites were caught flat-footed. Elites lost control over the narrative and lost credibility and persuasiveness with angry, frustrated and fearful voters. The British elites badly underestimated the intensity of public frustration with immigration and with the EU. Most expected the vote would end on the side of "remain," up to the very last moment. Now they are trying to plot their way out of something they never expected would actually happen, and never prepared for.

    Similarly, the elite insiders of the Republican Party and their business allies badly underestimated Trump. Establishment candidates like former Florida Gov. Jeb Bush failed terribly. Now the Republican political insiders are trying to make sense of a presumptive nominee who trashes free trade, one of the fundamental principles of the party, and openly taunts one of most important emerging voting blocks.

    How did the elites lose control? There are many reasons: With social media so pervasive, advertising dollars no longer controls what the public sees and hears. With unrestricted campaign spending, the party can no longer "pinch the air hose" of a candidate who strays from party orthodoxy.

    Perhaps the biggest reason for the impotence of today's political elites is that elites have trashed the very idea of competent and effective government for 35 years now, and the public has taken the message to heart. Ever since Reagan identified government as the problem, conservative elites have attacked the idea of government itself – rather than respecting the idea of government itself while criticizing the particular policies of a particular government. This is a crucial (and dangerous) distinction. In 1986, Reagan went on to say "the nine most terrifying words in the English language are 'I'm from the government and I'm here to help.'"

    Reagan booster Grover Norquist is known for saying, "I don't want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub." Countless candidates and elected officials slam "Washington bureaucrats" even though these "bureaucrats" were none other than themselves. It's not a great way to build respect. Then the attack escalated, with the aim of destroying parts of government that were actually mostly working. This was done to advance the narrative that government itself is the problem, and pave the way for privatization. Take the Transportation Security Administration for example. TSA has actually done its job. No terrorist attacks have succeeded on U.S. airplanes since it was established. But by systematically underfunding it , Congress has made the lines painfully long, so people hate it. Take the Post Office. Here Congress manufactured a crisis to force service cuts, making the public believe the institution is incompetent. But the so-called "problem" is due almost entirely to a requirement, imposed by Congress, forcing the Postal Service to prepay retiree's health care to an absurd level, far beyond what a similar private sector business would have to do. A similar dynamic now threatens Social Security. Thirty-five years have passed since Reagan first mocked the potential for competent and effective government. Years of unrelenting attack have sunk in. Many Americans now distrust government leaders and think it's pointless to demand or expect wisdom and statesmanship. Today's American voters (and their British counterparts), well-schooled in skepticism, disdain and dismiss leaders of all parties and they are ready to burn things down out of sheer frustration. The moment of blowback has arrived.

    [Dec 04, 2016] Human beings are now considered consumer goods in job market to be used and then discarded. As a consequence, a lot of people find themselves excluded and marginalized: without work, without possibilities, without any means of escape (pope Francis)

    Aug 28, 2016 | economistsview.typepad.com

    R.L.Love : August 27, 2016 at 09:49 AM

    PK has nearly lost all of his ability to see things objectively. Ambition got him, I suppose, or maybe he has always longed to be popular. He was probably teased and ridiculed too much in his youth. He is something of a whinny sniveler after-all.

    Then too, I doubt if PK has ever used a public restroom in the Southwest, or taken his kids to a public park in one of the thousands of small towns where non-English speaking throngs take over all of the facilities and parking.Or had his children bullied at school by a gang of dark-skinned kids whose parents believe that whites took their land, or abused or enslaved their distant ansestors. It might be germane here too... to point out that some of this anti-white sentiment gets support and validation from the very rhetoric that Democrats have made integral to their campaigns.

    As for not knowing why crime rates have been falling, the incarceration rates rose in step, so duh, if you lock up those with propensities for crime, well, how could crime rates not fall? And while I'm on the subject of crime, the statistical analysis that is commonly used focuses too much on violent crime and convictions. Thus, crimes of a less serious nature, that being the type of crimes committed by poor folks, is routinely ignored. Then too, those who are here illegally are often transient and using assumed names, and so they are, presumably, more difficult to catch. So, statistics are all too often not as telling as claimed.

    And, though I'm not a Trump supporter, I fully understand his appeal. As would PK if he were more travelled and in touch with those who have seen their schools, parks, towns, and everything else turn tawdry and dysfunctional. But of course the nation that most of us live in is much different than the one that PK knows.

    likbez -> R.L.Love

    > And, though I'm not a Trump supporter, I fully understand his appeal

    I wonder why everybody is thinking about this problem only in terms of identity politics.

    This is a wrong, self-defeating framework to approach the problem. which is pushed by neoliberal MSM and which we should resist in this forum as this translates the problems that the nation faces into term of pure war-style propaganda ("us vs. them" mentality). To which many posters here already succumbed

    IMHO the November elections will be more of the referendum on neoliberal globalization (with two key issues on the ballot -- jobs and immigration) than anything else.

    If so, then the key question is whether the anger of population at neoliberal elite that stole their jobs and well-being reached the boiling point or not. The level of this anger might decide the result of elections, not all those petty slurs that neoliberal MSM so diligently use as a smoke screen.

    All those valiant efforts in outsourcing and replacing permanent jobs with temporary to increase profit margin at the end have the propensity to produce some externalities. And not only in the form "over 50 and unemployed" but also by a much more dangerous "globalization of indifference" to human beings in general.

    JK Galbraith once gave the following definition of neoliberal economics: "trickle down economics is the idea that if you feed the horse enough oats eventually some will pass through to the road for the sparrows." This is what neoliberalism is about. Lower 80% even in so-called rich countries are forced to live in "fear and desperation", forced to work "with precious little dignity".

    Human beings are now considered consumer goods in "job market" to be used and then discarded. As a consequence, a lot of people find themselves excluded and marginalized: "without work, without possibilities, without any means of escape" (pope Francis).

    And that inevitably produces a reaction. Which in extreme forms we saw during French and Bolsheviks revolutions. And in less extremist forms (not involving lampposts as the placeholders for the "Masters of the Universe" (aka financial oligarchy) and the most obnoxious part of the "creative class" aka intelligentsia https://en.wikipedia.org/wiki/Intelligentsia ) in Brexit vote.

    Hillary and Trump are just symbols here. The issue matters, not personalities.

    [Dec 02, 2016] The incomes of the financial sector are mostly pure rents so there are fewer gains from trade possible here than there are for more productive sectors. Trade negotiations on this are therefore more win-lose rather than potentially win-win

    Notable quotes:
    "... The incomes of the financial sector are mostly pure rents so there are fewer gains from trade possible here than there are for more productive sectors. Trade negotiations on this are therefore more 'win-lose' rather than potentially 'win-win'. ..."
    Dec 02, 2016 | crookedtimber.org

    derrida derider 11.29.16 at 2:09 am 5

    T's right – the economic impact of Brexit on the UK will overwhelmingly depend on how the EU "passport" entitlements for the banks are negotiated. And of course the Germans (with Frankfurt) and the French (with Paris) have a strong incentive to make sure that a good slab of the City's business goes to them.

    The incomes of the financial sector are mostly pure rents so there are fewer gains from trade possible here than there are for more productive sectors. Trade negotiations on this are therefore more 'win-lose' rather than potentially 'win-win'.

    I think the result will certainly be lower aggregate GDP for the UK but it might well be better distributed (eg London property prices may be less absurd). The City has long made the rest of the UK economy suffer from a form of Dutch disease through an overvalued pound sterling. So those Sunderland Brexit voters might prove ultimately correct in their assessment of their economic interests – just not in the way they think.

    [Nov 30, 2016] The Electoral Consequences of Globalization

    Notable quotes:
    "... Capital in the Twenty-first Century, ..."
    Nov 29, 2016 | angrybearblog.com
    by Joseph Joyce The Electoral Consequences of Globalization

    The reasons for the election of Donald Trump as President of the U.S. will be analyzed and argued about for many years to come. Undoubtedly there are U.S.-specific factors that are relevant, such as racial divisions in voting patterns. But the election took place after the British vote to withdraw from the European Union and the rise to power of conservative politicians in continental Europe, so it is reasonable to ask whether globalization bears any responsibility.

    The years before the global financial crisis were years of rapid economic globalization. Trade flows grew on average by 7% a year over the 1987-2007 period. Financial flows also expanded, particularly amongst the advanced economies. Global financial assets increased by 8% a year between 1990 and 2007 . But all this activity was curtailed in 2008-09 when the global financial crisis pushed the world economy into a downturn. Are the subsequent rises in nationalist sentiment the product of these trends?

    Trump seized upon some of the consequences of increased trade and investment to make the case that globalization was bad for the U.S. He had great success with his claim that international trade deals are responsible for a loss of jobs in the manufacturing sector. In addition, he blamed outward foreign direct investment (FDI) by U.S. firms that opened production facilities in foreign countries for moving manufacturing jobs outside the U.S. Among the firms that Trump criticized were Ford Motor, Nabisco and the Carrier Corporation , which is moving a manufacturing operation from Indiana to Mexico.

    Have foreign workers taken the jobs of U.S. workers? Increased trade does lead to a reallocation of resources, as a country increases its output in those sectors where it has an advantage while cutting back production in other sectors. Resources should flow from the latter to the former, but in reality it can be difficult to switch employment across sectors. Daron Acemoglu and David Autor of MIT, David Dorn of the University of Zurich, Gordon Hanson of UC-San Diego and Brendan Price of MIT have found that import competition from China after 2000 contributed to reductions in U.S. manufacturing employment and weak U.S. job growth. They estimated manufacturing job losses due to Chinese competition of 2.0 – 2.4 million. Other studies find similar results for workers who do not have high school degrees.

    Moreover, multinational firms do shift production across borders in response to lower wages, among other factors. Ann E. Harrison of UC-Berkeley and Margaret S. McMillan of Tufts University looked at the hiring practices of the foreign affiliates of U.S. firms during the period of 1977 to 1999. They found that lower wages in affiliate countries where the employees were substitutes for U.S. workers led to more employment in those countries but reductions in employment in the U.S. However, when employment across geographical locations is complementary for firms that do significantly different work at home and abroad, domestic and foreign employment rise and fall together.

    Imports and foreign production, therefore, have had an impact on manufacturing employment in the U.S. But several caveats should be raised. First, as Erik Brynjolfsson and Andrew McAfee of MIT and others have pointed out, technology has had a much larger effect on jobs. The U.S. is the second largest global producer of manufactured goods, but these products are being made in plants that employ fewer workers than they did in the past. Many of the lost jobs simply do not exist any more. Second, the U.S. exports goods and services as well as purchases them. Among the manufactured goods that account for significant shares of U.S. exports are machines and engines, electronic equipment and aircraft . Third, there is inward FDI as well as outward, and the foreign-based firms hire U.S. workers. A 2013 Congressional Research Service study by James V. Jackson reported that by year-end 2011 foreign firms employed 6.1 million Americans, and 37% of this employment-2.3 million jobs-was in the manufacturing sector. More recent data shows that employment by the U.S. affiliates of multinational companies rose to 6.4 million in 2014. Mr. Trump will find himself in a difficult position if he threatens to shut down trade and investment with countries that both import from the U.S. and invest here.

    The other form of globalization that drew Trump's derision was immigration. Most of his ire focused on those who had entered the U.S. illegally. However, in a speech in Arizona he said that he would set up a commission that would roll back the number of legal migrants to "historic norms."

    The current number of immigrants (42 million) represents around 13% of the U.S. population, and 16% of the labor force. An increase in the number of foreign-born workers depresses the wages of some native-born workers, principally high-school dropouts, as well as other migrants who arrived earlier. But there are other, more significant reasons for the stagnation in working-class wages . In addition, a reduction in the number of migrant laborers would raise the ratio of young and retired people to workers-the dependency ratio-and endanger the financing of Social Security and Medicare. And by increasing the size of the U.S. economy, these workers induce expansions in investment expenditures and hiring in areas that are complementary.

    The one form of globalization that Trump has not criticized, with the exception of outward FDI, is financial. This is a curious omission, as the crisis of 2008-09 arose from the financial implosion that followed the collapse of the housing bubble in the U.S. International financial flows exacerbated the magnitude of the crisis. But Trump has pledged to dismantle the Dodd-Frank legislation, which was enacted to implement financial regulatory reform and lower the probability of another crisis. While Trump has criticized China for undervaluing its currency in order to increase its exports to the U.S., most economists believe that the Chinese currency is no longer undervalued vis-ŕ-vis the U.S. dollar.

    Did globalization produce Trump, or lead to the circumstances that resulted in 46.7% of the electorate voting for him? A score sheet of the impact of globalization within the U.S. would record pluses and minuses. Among those who have benefitted are consumers who purchase items made abroad at cheaper prices, workers who produce export goods, and firms that hire migrants. Those who have been adversely affected include workers who no longer have manufacturing jobs and domestic workers who compete with migrants for low-paying jobs. Overall, most studies find evidence of positive net benefits from trade . Similarly, studies of the cost and benefits of immigration indicate that overall foreign workers make a positive contribution to the U.S. economy.

    Other trends have exerted equal or greater consequences for our economic welfare. First, as pointed out above, advances in automation have had an enormous impact on the number and nature of jobs, and advances in artificial intelligence wii further change the nature of work. The launch of driverless cars and trucks, for example, will affect the economy in unforeseen ways, and more workers will lose their livelihoods. Second, income inequality has been on the increase in the U.S. and elsewhere for several decades. While those in the upper-income classes have benefitted most from increased trade and finance, inequality reflects many factors besides globalization.

    Why, then, is globalization the focus of so much discontent? Trump had the insight that demonizing foreigners and U.S.-based multinationals would allow him to offer simple solutions-ripping up trade deals, strong-arming CEOs to relocate facilities-to complex problems. Moreover, it allows him to draw a line between his supporters and everyone else, with Trump as the one who will protect workers against the crafty foreigners and corrupt elite who conspire to steal American jobs. Blaming the foreign "other" is a well-trod route for those who aspire to power in times of economic and social upheaval.

    Globalization, therefore, should not be held responsible for the election of Donald Trump and those in other countries who offer similar simplistic solutions to challenging trends. But globalization's advocates did indirectly lead to his rise when they oversold the benefits of globalization and neglected the downside. Lower prices at Wal-Mart are scarce consolation to those who have lost their jobs. Moreover, the proponents of globalization failed to strengthen the safety networks and redistributive mechanisms that allow those who had to compete with foreign goods and workers to share in the broader benefits. Dani Rodrik of Harvard's Kennedy School has described how the policy priorities were changed: "The new model of globalization stood priorities on their head, effectively putting democracy to work for the global economy, instead of the other way around. The elimination of barriers to trade and finance became an end in itself, rather than a means toward more fundamental economic and social goals."

    The battle over globalization is not finished, and there will be future opportunities to adapt it to benefit a wider section of society. The goal should be to place it within in a framework that allows a more egalitarian distribution of the benefits and payment of the costs. This is not a new task. After World War II, the Allied planners sought to revive international trade while allowing national governments to use their policy tools to foster full employment. Political scientist John Ruggie of the Kennedy School called the hybrid system based on fixed exchange rates, regulated capital accounts and government programs " embedded liberalism ," and it prevailed until it was swept aside by the wave of neoliberal policies in the 1980s and 1990s.

    What would today's version of "embedded liberalism" look like? In the financial sector, the pendulum has already swung back from unregulated capital flows and towards the use of capital control measures as part of macroprudential policies designed to address systemic risk in the financial sector. In addition, Thomas Piketty of the École des hautes etudes en sciences (EHESS) and associate chair at the Paris School of Economics , and author of Capital in the Twenty-first Century, has called for a new focus in discussions over the next stage of globalization: " trade is a good thing, but fair and sustainable development also demands public services, infrastructure, health and education systems. In turn, these themselves demand fair taxation systems."

    The current political environment is not conducive toward the expansion of public goods. But it is unlikely that our new President's policies will deliver on their promise to return to a past when U.S. workers could operate without concern for foreign competition or automation. We will certainly revisit these issues, and we need to redefine what a successful globalization looks like. And if we don't? Thomas Piketty warns of the consequences of not enacting the necessary domestic policies and institutions: "If we fail to deliver these, Trump_vs_deep_state will prevail."

    cross posted with Capital Ebbs and Flows

    Comments (10) | Digg Facebook Twitter | --> --> --> Comments (10)

    1. spencer November 29, 2016 10:33 am

      Since 1980, US manufacturing output has approximately doubled while manufacturing employment fell by about a third.

      Yes, globalization impacts the composition of output and it is a contributing factor in the weaker growth of manufacturing output. but overall it has accounted for a very minor share of the weakness in manufacturing employment since 1980. Productivity has been the dominant factor driving manufacturing employment down.

    2. JimH November 29, 2016 11:11 am

      "Overall, most studies find evidence of positive net benefits from trade."

      Of course they do! And in your world, studies always Trump real world experience.

      Studies on trade can ignore the unemployed workers with a high school education or less. How were they supposed to get an equivalent paying job? EDUCATION they say! A local public university has a five year freshman graduation rate of 25%. Are those older students to eat dirt while attempting to accumulate that education!

      Studies on trade can ignore that illegal immigration increases competition for the those under educated employees. Since 1990 there has been a rising demand that education must be improved! That potential high school drop outs should be discouraged by draconian means if necessary. YET we allow immigrants to enter this country and STAY with less than the equivalent of an American high school education! Why are we spending so much on secondary education if it is not necessary!

      "In Mexico, 34% of adults aged 25-64 have completed upper secondary education, much lower than the OECD average of 76% the lowest rate amongst OECD countries."
      See: http://www.oecdbetterlifeindex.org/countries/mexico/

      Trade studies can ignore the fate of a small town when its major employer shuts down and leaves. Trade studies can assume that we are one contiguous job market. They can assume that an unemployed worker in Pennsylvania will learn of a good paying job in Washington state, submit an application, and move within 2 weeks. Or assume that the Washington state employer will hold a factory job open for a month! And they can assume that moving expenses are trivial for an unemployed person.

      Our trade partners have not attempted anything remotely resembling balanced trade with us.

      Here are the trade deficits since 1992.
      Year__________US Trade Balance with the world
      1992__________-39,212
      1993__________-70,311
      1994__________-98,493
      1995__________-96,384
      1996__________-104,065
      1997__________-108,273
      1998__________-166,140
      1999__________-258,617
      2000__________-372,517
      2001__________-361,511
      2002__________-418,955
      2003__________-493,890
      2004__________-609,883
      2005__________-714,245
      2006__________-761,716
      2007__________-705,375
      2008__________-708,726
      2009__________-383,774
      2010__________-494,658
      2011__________-548,625
      2012__________-536,773
      2013__________-461,876
      2014__________-490,176
      2015__________-500,361
      From: https://www.census.gov/foreign-trade/statistics/historical/gands.pdf

      AND there is the loss of the income from tariffs which had been going to the federal government! How has that effected our national debt?

      "However, when employment across geographical locations is complementary for firms that do significantly different work at home and abroad, domestic and foreign employment rise and fall together."

      And exactly how do you think that the US government could guarantee that complementary work at home and abroad. Corporations are profit seeking, amoral entities, which will seek profit any way they can. (Legal or illegal)

      The logical conclusion of your argument is that we could produce nothing and still have a thriving economy. How would American consumers earn an income?

      Indiana, Michigan, Ohio, Pennsylvania, and Wisconsin are RUST BELT states. Were the voters there merely ignorant or demented? You should never ever run for elected office.

    3. Beverly Mann November 29, 2016 12:30 pm

      Meanwhile, Trump today chose non-swampy Elaine Chao, Mitch McConnell's current wife and GWBush's former Labor Secretary, as Transportation Secretary, to privatize roads, bridges, etc.

    4. JimH November 29, 2016 12:36 pm

      The trade balances are in millions of dollars in the table in my last comment.

      Global trade had a chance of success beginning in 1992. But that required a mechanism which was very difficult to game. A mechanism like the one that the Obama administration advocated in October 2010.

      "At the meeting in South Korea's southern city of Gyeongju, U.S. officials sought to set a cap for each country's deficit or surplus at 4% of its economic output by 2015.
      The idea drew support from Britain, Australia, Canada and France, all of which are running trade deficits, as well as South Korea, which is hosting the G-20 meetings and hoping for a compromise among the parties.
      But the proposal got a cool reception from export powerhouses such as China, which has a current account surplus of 4.7% of its gross domestic product; Germany, with a surplus of 6.1%; and Russia, with a surplus of 4.7%, according to IMF statistics."
      See: http://articles.latimes.com/2010/oct/24/business/la-fi-g20-summit-20101024

      That cap was probably too high. But at least the Obama administration showed some realization that global trade was exhibiting serious unpredicted problems. Too bad that Hillary Clinton could not have internalized that realization enough to campaign on revamping problematic trade treaties. (And persuaded a few more of the voters in the RUST BELT to vote for her.) Elections have consequences and voters understand that, but what choice did they have?

      In your world, while American corporations act out in ways that would be diagnosed as antisocial personality disorder in a human being, American human beings are expected to wait patiently for decades while global trade is slowly adjusted into some practical system. (As one shortcoming after another is addressed.)

      Antisocial personality disorder:
      "a personality disorder that is characterized by antisocial behavior exhibiting pervasive disregard for and violation of the rights, feelings, and safety of others "
      See: http://www.merriam-webster.com/dictionary/antisocial%20personality%20disorder#medicalDictionary

    5. Ray LaPan-Love November 29, 2016 1:01 pm

      Spencer,

      The article states almost exactly what you 'add' in your comment:

      "Imports and foreign production, therefore, have had an impact on manufacturing employment in the U.S. But several caveats should be raised. First, as Erik Brynjolfsson and Andrew McAfee of MIT and others have pointed out, technology has had a much larger effect on jobs".

      So, what gives? Is there an award today for who ever gets the biggest DUH??? If there is anything worth adding, it would be a mention of the Ball St study that supports the author's claim but is somehow overlooked. But your comment, well, DUH!!

      =================================================

      JimH,

      Some good stuff there, your assessment of Economics and its penchant for ignoring variables, and your insight which states that "studies can assume that we are one contiguous job market", is all very true, and especially when it comes to immigration issues. I've lived most of my life near the Southern border and when economists claim that undocumented workers are good for our economy I can only chuckle and shake my head. I suppose I could also list all of the variables which those economists ignore, and there are many to choose from, but, there is that quote by Upton Sinclair: "You can't get a man to understand what his salary depends on his not understanding".

      In all fairness though, The Dept. of Labor does of course have its JOLTS data, and so not all such studies are based on broad assumptions, but Economics does have its blind spots, generally speaking. And of course economists apply far too much effort and energy serving their political and financial masters.

      As for your comment in regards to the the trade deficit, you might want to read up a little on the Triffin Dilemma. The essence of globalization has a lot to do with the US leadership choosing to maintain the reserve-currency status and Triffin showed that an increasing amount of dollars must supply the world's demand for dollars, or, global growth would falter. So, the trade deficit since 1975 has been intentional, for that reason, and others. Of course the cost of labor in the US was a factor too, and shipping and standards and so on. But, it is wise also, to remember that these choices were made at time, during and just after the Viet Nam war, when military recruitment was a very troubling issue for the leadership. And the option of good paying jobs for the working-class was very probably seen as in conflict with military recruitment. Accordingly, the working-class has been left with fewer options. This being accomplished in part with the historical anomaly of high immigration quotas, (and by the tolerance for illegal immigration), during periods with high unemployment, a falling participation-rate, inadequate infrastructure, and etc.

    6. Ray LaPan-Love November 29, 2016 2:18 pm

      JimH,

      After posting my earlier comment it occurred to me that I should have recommended an article by Tim Taylor that has some good info on the Triffin dilemma.

      http://conversableeconomist.blogspot.com/2013/11/the-triffin-dilemma-and-us-trade.html

      Also, it might be worth mentioning that you are making the common mistake of assigning blame to an international undertaking that would be more accurately assigned to national shortcomings. I'm referring here to what you quoted and said:

      ""Overall, most studies find evidence of positive net benefits from trade.""

      "Of course they do! And in your world, studies always Trump real world experience".

      My point being that "positive net benefits from trade" are based on just another half-baked measurement as you suggest, but the problems which result from trade-related displacements are not necessarily the fault of trade itself. There are in fact political options, for example, immigration could have been curtailed about 40 years ago and we would now have about 40 million fewer citizens, and thus there would almost certainly be more jobs available. Or, the laws pertaining to illegal immigration could have been enforced, or the 'Employee Free Choice Act could have been passed, or whatever, and then trade issues may have had much different impact.

    7. Ray LaPan-Love November 29, 2016 3:12 pm

      It seems worth mentioning here, that there are other more important goals that make globalization valuable than just matters of money or employment or who is getting what. Let us not forget the famous words of Immanuel Kant:

      "the spirit of commerce . . . sooner or later takes hold of every nation, and is incompatible with war."

    8. coberly November 29, 2016 6:33 pm

      Ray

      the spirit of commerce did not prevent WW1 or WW2.

      otherwise, thank you, and Jim H and Joseph Joyce for the first Post and Comments for grownups we've had around here in some time.

    9. Ray LaPan-Love November 29, 2016 7:03 pm

      Hey Coberly, long time no see.

      And yes, you are right, 'the spirit of commerce' theory has had some ups and downs. But, one could easily and accurately argue that the effort which began with the League of Nations, and loosely connects back to Kant's claim, has gained some ground since WW2. There has not, after-all, been a major war since.

      So, when discussing the pros and cons of globalization, that factor, as I said, is worthy of mention. And it was a key consideration in the formation of the Bretton Woods institutions, and in the globalization effort in general. This suggesting then that there are larger concerns than the unemployment-rate, or the wage levels, of the working-class folks who may, or may not, have been at the losing end of 'free-trade'.

      I've been a 'labor-lefty' since the 1970s, but I am still capable of understanding that things could have been much worse for the American working-class. Plus, if anyone must give up a job, who better than those with a fairly well-constructed safety-net. History always has its winners and losers, and progress rarely, if ever, comes in an even flow.

      Meanwhile, those living in extreme poverty, worldwide, have dropped from 40% in 1981, to about 10% in 2015 (World Bank), so, progress is occurring. But of course much of that is now being ignored by the din which has drowned out so many considerations that really do matter, and a great deal.

    10. coberly November 29, 2016 8:25 pm

      Ray

      I am inclined to agree with you, but sometimes it's hard to see the forest for the trees. Especially if one of those trees has fallen on you.

      In general I am more interested in stopping predatory business models that really hurt people than in creating cosmic justice.

      as for the relative lack of big wars since WW2, I always thought that was because of mutual assured destruction. I am sure Vietnam looked like a big enough war to the Vietnamese.

    [Nov 19, 2016] The global revolt against elites is not just driven by revulsion and loss of jobs. The era of neoliberalism is over. The era of neonationalism has just begun.

    It is the end of neoliberalism and the start of the era of authoritarian nationalism, and we all need to come together to stamp out the authoritarian part.
    Notable quotes:
    "... Neoliberalism has been disastrous for the Rust Belt, and I think we need to envision a new future for what was once the country's industrial heartland, now little more than its wasteland ..."
    "... The question of what the many millions of often-unionized factory workers, SMEs which supplied them, family farmers (now fully industrialized and owned by corporations), and all those in secondary production and services who once supported them are to actually do in future to earn a decent living is what I believe should really be the subject of debate. ..."
    "... two factors (or three, I guess) have contributed to this state of despair: offshoring and outsourcing, and technology. ..."
    "... Medicaid, the CHIP program, the SNAP program and others (including NGOs and private charitable giving) may alleviate some of the suffering, but there is currently no substitute for jobs that would enable men and women to live lives of dignity – a decent place to live, good educations for their children, and a reasonable, secure pension in old age. Near-, at-, and below-minimum wage jobs devoid of any benefits don't allow any of these – at most, they make possible a subsistence life, one which requires continued reliance on public assistance throughout one's lifetime. ..."
    "... In the U.S. (a neoliberal pioneer), poverty is closely linked with inequality and thus, a high GINI coefficient (near that of Turkey); where there is both poverty and a very unequal distribution of resources, this inevitably affects women (and children) and racial (and ethnic) minorities disproportionately. The economic system, racism, sexism, and xenophobia are not separate, stand-alone issues; they are profoundly intertwined. ..."
    "... But really, if you think about it, slavery was defined as ownership, ownership of human capital (which was convertible into cash), and women in many societies throughout history were acquired as part of a financial transaction (either through purchase or through sale), and control of their capital (land, property [farmland, herds], valuables and later, money) often entrusted to a spouse or male guardian. All of these practices were economically-driven, even if the driver wasn't 21st-century capitalism. ..."
    "... Let it be said at once: Trump's victory is primarily due to the explosion in economic and geographic inequality in the United States over several decades and the inability of successive governments to deal with this. ..."
    "... Both the Clinton and the Obama administrations frequently went along with the market liberalization launched under Reagan and both Bush presidencies. At times they even outdid them: the financial and commercial deregulation carried out under Clinton is an example. What sealed the deal, though, was the suspicion that the Democrats were too close to Wall Street – and the inability of the Democratic media elite to learn the lessons from the Sanders vote. ..."
    "... Regional inequality and globalization are the principal drivers in Japanese politics, too, along with a number of social drivers. ..."
    "... The tsunami/nuclear meltdown combined with the Japanese government's uneven response is an apt metaphor for the impact of neo-liberalism/globalization on Japan; and on the US. I then explained that the income inequality in the US was far more severe than that of Japan and that many Americans did not support the export of jobs to China/Mexico. ..."
    "... I contend that in some hypothetical universe the DNC and corrupt Clinton machine could have been torn out, root and branch, within months. As I noted, however, the decision to run HRC effectively unopposed was made several years, at least, before the stark evidence of the consequences of such a decision appeared in sharp relief with Brexit. ..."
    "... Just as the decline of Virginia coal is due to global forces and corporate stupidity, so the decline of the rust belt is due to long (30 year plus) global forces and corporate decisions that predate the emergence of identity politics. ..."
    "... It's interesting that the clear headed thinkers of the Marxist left, who pride themselves on not being distracted by identity, don't want to talk about these factors when discussing the plight of their cherished white working class. ..."
    "... The construction 'white working class' is a useful governing tool that splits poor people and possible coalitions against the violence of capital. Now, discussion focuses on how some of the least powerful, most vulnerable people in the United States are the perpetrators of a great injustice against racialised and minoritised groups. Such commentary colludes in the pathologisation of the working class, of poor people. Victims are inculpated as the vectors of noxious, atavistic vices while the perpetrators get off with impunity, showing off their multihued, cosmopolitan C-suites and even proposing that their free trade agreements are a form of anti-racist solidarity. Most crucially, such analysis ignores the continuities between a Trumpian dystopia and our satisfactory present. ..."
    "... Race-thinking forecloses the possibility of the coalitions that you imagine, and reproduces ideas of difference in ways that always, always privilege 'whiteness'. ..."
    "... Historical examples of ethnic groups becoming 'white', how it was legal and political decision-making that defined the present racial taxonomy, suggest that groups can also lose or have their 'whiteness' threatened. CB has written here about how, in the UK at least, Eastern and Southern Europeans are racialised, and so refused 'whiteness'. JQ has written about southern white minoritisation. Many commentators have pointed that the 'white working class' vote this year looked a lot like a minority vote. ..."
    "... Given the subordination of groups presently defined as 'white working class', I wonder if we could think beyond ethnic and epidermal definition to consider that the impossibility of the American Dream refuses these groups whiteness; i.e the hoped for privileges of racial superiority, much in the same way that African Americans, Latin Americans and other racialised minorities are denied whiteness. Can a poor West Virginian living in a toxified drugged out impoverished landscape really be defined as a carrier of 'white privilege'? ..."
    "... I was first pointed at this by the juxtapositions of racialised working class and immigrants in Imogen Tyler's Revolting Subjects – Social Abjection and Resistance in Neoliberal Britain but this below is a useful short article that takes a historical perspective. ..."
    "... In a 1990 essay, the late Yale political scientist Juan Linz observed that "aside from the United States, only Chile has managed a century and a half of relatively undisturbed constitutional continuity under presidential government - but Chilean democracy broke down in the 1970s." ..."
    "... Linz offered several reasons why presidential systems are so prone to crisis. One particularly important one is the nature of the checks and balances system. Since both the president and the Congress are directly elected by the people, they can both claim to speak for the people. When they have a serious disagreement, according to Linz, "there is no democratic principle on the basis of which it can be resolved." The constitution offers no help in these cases, he wrote: "the mechanisms the constitution might provide are likely to prove too complicated and aridly legalistic to be of much force in the eyes of the electorate." ..."
    "... In a parliamentary system, deadlocks get resolved. A prime minister who lacks the backing of a parliamentary majority is replaced by a new one who has it. If no such majority can be found, a new election is held and the new parliament picks a leader. It can get a little messy for a period of weeks, but there's simply no possibility of a years-long spell in which the legislative and executive branches glare at each other unproductively.' ..."
    "... In any case, as I pointed out before, given that the US is increasingly an urbanised country, and the Electoral College was created to protect rural (slave) states, the grotesque electoral result we have just seen is likely to recur, which means more and more Presidents with dubious democratic legitimacy. Thanks to Bush (and Obama) these Presidents will have, at the same time, more and more power. ..."
    "... To return to my original question and answer it myself: I'm forced to conclude that the Democrats did not specifically address the revitalization – rebirth of the Rust Belt in their 2016 platform. Its failure to do so carried a heavy cost that (nearly) all of us will be forced to pay. ..."
    "... This sub seems to have largely fallen into the psychologically comfortable trap of declaring that everyone who voted against their preferred candidate is racist. It's a view pushed by the neoliberals, who want to maintain he stranglehold of identity politics over the DNC, and it makes upper-class 'intellectuals' feel better about themselves and their betrayal of the filthy, subhuman white underclass (or so they see it). ..."
    "... You can scream 'those jobs are never coming back!' all you want, but people are never going to accept it. So either you come up with a genuine solution (instead of simply complaining that your opponents solutions won't work; you're partisan and biased, most voters won't believe you), you may as well resign yourself to fascism. Because whining that you don't know what to do won't stop people from lining up behind someone who says that they do have one, whether it'll work or not. Nobody trusts the elite enough to believe them when they say that jobs are never coming back. Nobody trusts the elite at all. ..."
    "... You sound just like the Wiemar elite. No will to solve the problem, but filled with terror at the inevitable result of failing to solve the problem. ..."
    "... One brutal fact tells us everything we need to know about the Democratic party in 2016: the American Nazi party is running on a platform of free health care to working class people. This means that the American Nazi Party is now running to the left of the Democratic party. ..."
    "... Back in the 1930s, when the economy collapsed, fascists appeared and took power. Racists also came out of the woodwork, ditto misogynists. Fast forward 80 years, and the same thing has happened all over again. The global economy melted down in 2008 and fascists appeared promising to fix the problems that the pols in power wouldn't because they were too closely tied to the existing (failed) system. Along with the fascists, racists gained power because they were able to scapegoat minorities as the alleged cause of everyone's misery. ..."
    "... None of this is surprising. We have seen it before. Whenever you get a depression in a modern industrial economy, you get scapegoating, racism, and fascists. We know what to do. The problem is that the current Democratic party isn't doing it. ..."
    "... . It is the end of neoliberalism and the start of the era of authoritarian nationalism, and we all need to come together to stamp out the authoritarian part. ..."
    "... This hammered people on the bottom, disproportionately African Americans and especially single AA mothers in America. It crushed the blue collar workers. It is wiping out the savings and careers of college-educated white collar workers now, at least, the ones who didn't go to the Ivy League, which is 90% of them. ..."
    "... Calling Hillary an "imperfect candidate" is like calling what happened to the Titanic a "boating accident." Trump was an imperfect candidate. Why did he win? ..."
    "... "The neoliberal era in the United States ended with a neofascist bang. The political triumph of Donald Trump shattered the establishments in the Democratic and Republican parties – both wedded to the rule of Big Money and to the reign of meretricious politicians." ..."
    "... "It is not an exaggeration to say that the Democratic Party is in shambles as a political force. Not only did it just lose the White House to a wildly unpopular farce of a candidate despite a virtually unified establishment behind it, and not only is it the minority party in both the Senate and the House, but it is getting crushed at historical record rates on the state and local levels as well. Surveying this wreckage last week, party stalwart Matthew Yglesias of Vox minced no words: `the Obama years have created a Democratic Party that's essentially a smoking pile of rubble.' ..."
    "... "One would assume that the operatives and loyalists of such a weak, defeated and wrecked political party would be eager to engage in some introspection and self-critique, and to produce a frank accounting of what they did wrong so as to alter their plight. In the case of 2016 Democrats, one would be quite mistaken." ..."
    "... Foreign Affairs ..."
    "... "At the end of World War II, the United States and its allies decided that sustained mass unemployment was an existential threat to capitalism and had to be avoided at all costs. In response, governments everywhere targeted full employment as the master policy variable-trying to get to, and sustain, an unemployment rate of roughly four percent. The problem with doing so, over time, is that targeting any variable long enough undermines the value of the variable itself-a phenomenon known as Goodhart's law. (..) ..."
    "... " what we see [today] is a reversal of power between creditors and debtors as the anti-inflationary regime of the past 30 years undermines itself-what we might call "Goodhart's revenge." In this world, yields compress and creditors fret about their earnings, demanding repayment of debt at all costs. Macro-economically, this makes the situation worse: the debtors can't pay-but politically, and this is crucial-it empowers debtors since they can't pay, won't pay, and still have the right to vote. ..."
    "... "The traditional parties of the center-left and center-right, the builders of this anti-inflationary order, get clobbered in such a world, since they are correctly identified by these debtors as the political backers of those demanding repayment in an already unequal system, and all from those with the least assets. This produces anti-creditor, pro-debtor coalitions-in-waiting that are ripe for the picking by insurgents of the left and the right, which is exactly what has happened. ..."
    "... "The global revolt against elites is not just driven by revulsion and loss and racism. It's also driven by the global economy itself. This is a global phenomenon that marks one thing above all. The era of neoliberalism is over. The era of neonationalism has just begun." ..."
    "... They want what their families have had which is secure, paid, benefits rich, blue collar work. ..."
    "... trump's campaign empathized with that feeling just by focusing on the factory jobs as jobs and not as anachronisms that are slowly fading away for whatever reason. Clinton might have been "correct", but these voters didn't want to hear "the truth". And as much as you can complain about how stupid they are for wanting to be lied to, that is the unfortunate reality you, and the Democratic party, have to accept. ..."
    "... trump was offering a "bailout" writ large. Clinton had no (good) counteroffer. It was like the tables were turned. Romney was the one talking about "change" and "restructuring" while Obama was defending keeping what was already there. ..."
    "... "Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course - the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check." http://www.nytimes.com/2008/11/19/opinion/19romney.html ..."
    "... Clinton toward the end offered tariffs. But the trump campaign hit back with what turned out to be a pretty strong counter attack – ""How's she going to get tough on China?" said Trump economic advisor Peter Navarro on CNN's Quest Means Business. He notes that some of Clinton's economic advisors have supported TPP or even worked on it. "" ..."
    Nov 19, 2016 | crookedtimber.org

    dbk 11.18.16 at 6:41 pm 130

    Bruce Wilder @102

    The question is no longer her neoliberalism, but yours. Keep it or throw it away?

    I wish this issue was being seriously discussed. Neoliberalism has been disastrous for the Rust Belt, and I think we need to envision a new future for what was once the country's industrial heartland, now little more than its wasteland (cf. "flyover zone" – a pejorative term which inhabitants of the zone are not too stupid to understand perfectly, btw).

    The question of what the many millions of often-unionized factory workers, SMEs which supplied them, family farmers (now fully industrialized and owned by corporations), and all those in secondary production and services who once supported them are to actually do in future to earn a decent living is what I believe should really be the subject of debate.

    As noted upthread, two factors (or three, I guess) have contributed to this state of despair: offshoring and outsourcing, and technology. The jobs that have been lost will not return, and indeed will be lost in ever greater numbers – just consider what will happen to the trucking sector when self-driving trucks hit the roads sometime in the next 10-20 years (3.5 million truckers; 8.7 in allied jobs).

    Medicaid, the CHIP program, the SNAP program and others (including NGOs and private charitable giving) may alleviate some of the suffering, but there is currently no substitute for jobs that would enable men and women to live lives of dignity – a decent place to live, good educations for their children, and a reasonable, secure pension in old age. Near-, at-, and below-minimum wage jobs devoid of any benefits don't allow any of these – at most, they make possible a subsistence life, one which requires continued reliance on public assistance throughout one's lifetime.

    In the U.S. (a neoliberal pioneer), poverty is closely linked with inequality and thus, a high GINI coefficient (near that of Turkey); where there is both poverty and a very unequal distribution of resources, this inevitably affects women (and children) and racial (and ethnic) minorities disproportionately. The economic system, racism, sexism, and xenophobia are not separate, stand-alone issues; they are profoundly intertwined.

    I appreciate and espouse the goals of identity politics in all their multiplicity, and also understand that the institutions of slavery and sexism predated modern capitalist economies. But really, if you think about it, slavery was defined as ownership, ownership of human capital (which was convertible into cash), and women in many societies throughout history were acquired as part of a financial transaction (either through purchase or through sale), and control of their capital (land, property [farmland, herds], valuables and later, money) often entrusted to a spouse or male guardian. All of these practices were economically-driven, even if the driver wasn't 21st-century capitalism.

    Also: Faustusnotes@100
    For example Indiana took the ACA Medicaid expansion but did so with additional conditions that make it worse than in neighboring states run by democratic governors.

    And what states would those be? IL, IA, MI, OH, WI, KY, and TN have Republican governors. Were you thinking pre-2014? pre-2012?

    To conclude and return to my original point: what's to become of the Rust Belt in future? Did the Democratic platform include a New New Deal for PA, OH, MI, WI, and IA (to name only the five Rust Belt states Trump flipped)?

    kidneystones 11.18.16 at 11:32 pm ( 135 )

    Thomas Pickety

    " Let it be said at once: Trump's victory is primarily due to the explosion in economic and geographic inequality in the United States over several decades and the inability of successive governments to deal with this.

    Both the Clinton and the Obama administrations frequently went along with the market liberalization launched under Reagan and both Bush presidencies. At times they even outdid them: the financial and commercial deregulation carried out under Clinton is an example. What sealed the deal, though, was the suspicion that the Democrats were too close to Wall Street – and the inability of the Democratic media elite to learn the lessons from the Sanders vote. "

    The Guardian

    kidneystones 11.18.16 at 11:56 pm 137 ( 137 )

    What should have been one comment came out as 4, so apologies on that front.

    I spent the last week explaining the US election to my students in Japan in pretty much the terms outlined by Lilla and PIketty, so I was delighted to discover these two articles.

    Regional inequality and globalization are the principal drivers in Japanese politics, too, along with a number of social drivers. It was therefore very easy to call for a show of hands to identify students studying here in Tokyo who are trying to decide whether or not to return to areas such as Tohoku to build their lives; or remain in Kanto/Tokyo – the NY/Washington/LA of Japan put crudely.

    I asked students from regions close to Tohoku how they might feel if the Japanese prime minister decided not to visit the region following Fukushima after the disaster, or preceding an election. The tsunami/nuclear meltdown combined with the Japanese government's uneven response is an apt metaphor for the impact of neo-liberalism/globalization on Japan; and on the US. I then explained that the income inequality in the US was far more severe than that of Japan and that many Americans did not support the export of jobs to China/Mexico.

    I then asked the students, particularly those from outlying regions whether they believe Japan needed a leader who would 'bring back Japanese jobs' from Viet Nam and China, etc. Many/most agreed wholeheartedly. I then asked whether they believed Tokyo people treated those outside Kanto as 'inferiors.' Many do.

    Piketty may be right regarding Trump's long-term effects on income inequality. He is wrong, I suggest, to argue that Democrats failed to respond to Sanders' support. I contend that in some hypothetical universe the DNC and corrupt Clinton machine could have been torn out, root and branch, within months. As I noted, however, the decision to run HRC effectively unopposed was made several years, at least, before the stark evidence of the consequences of such a decision appeared in sharp relief with Brexit.

    Faustusnotes 11.19.16 at 12:14 am 138

    Also worth noting is that the rust belts problems are as old as Reagan – even the term dates from the 80s, the issue is so uncool that there is a dire straits song about it. Some portion of the decline of manufacturing there is due to manufacturers shifting to the south, where the anti Union states have an advantage. Also there has been new investment – there were no Japanese car companies in the us in the 1980s, so they are new job creators, yet insufficient to make up the losses. Just as the decline of Virginia coal is due to global forces and corporate stupidity, so the decline of the rust belt is due to long (30 year plus) global forces and corporate decisions that predate the emergence of identity politics.

    It's interesting that the clear headed thinkers of the Marxist left, who pride themselves on not being distracted by identity, don't want to talk about these factors when discussing the plight of their cherished white working class. Suddenly it's not the forces of capital and the objective facts of history, but a bunch of whiny black trannies demanding safe spaces and protesting police violence, that drove those towns to ruin.

    And what solutions do they think the dems should have proposed? It can't be welfare, since we got the ACA (watered down by representatives of the rust belt states). Is it, seriously, tariffs? Short of going to an election promising w revolution, what should the dems have done? Give us a clear answer so we can see what the alternative to identity politics is.

    basil 11.19.16 at 5:11 am

    Did this go through?
    Thinking with WLGR @15, Yan @81, engels variously above,

    The construction 'white working class' is a useful governing tool that splits poor people and possible coalitions against the violence of capital. Now, discussion focuses on how some of the least powerful, most vulnerable people in the United States are the perpetrators of a great injustice against racialised and minoritised groups. Such commentary colludes in the pathologisation of the working class, of poor people. Victims are inculpated as the vectors of noxious, atavistic vices while the perpetrators get off with impunity, showing off their multihued, cosmopolitan C-suites and even proposing that their free trade agreements are a form of anti-racist solidarity. Most crucially, such analysis ignores the continuities between a Trumpian dystopia and our satisfactory present.

    I get that the tropes around race are easy, and super-available. Privilege confessing is very in vogue as a prophylactic against charges of racism. But does it threaten the structures that produce this abjection – either as embittered, immiserated 'white working class' or as threatened minority group? It is always *those* 'white' people, the South, the Working Class, and never the accusers some of whom are themselves happy to vote for a party that drowns out anti-war protesters with chants of USA! USA!

    Race-thinking forecloses the possibility of the coalitions that you imagine, and reproduces ideas of difference in ways that always, always privilege 'whiteness'.

    --

    Historical examples of ethnic groups becoming 'white', how it was legal and political decision-making that defined the present racial taxonomy, suggest that groups can also lose or have their 'whiteness' threatened. CB has written here about how, in the UK at least, Eastern and Southern Europeans are racialised, and so refused 'whiteness'. JQ has written about southern white minoritisation. Many commentators have pointed that the 'white working class' vote this year looked a lot like a minority vote.

    Given the subordination of groups presently defined as 'white working class', I wonder if we could think beyond ethnic and epidermal definition to consider that the impossibility of the American Dream refuses these groups whiteness; i.e the hoped for privileges of racial superiority, much in the same way that African Americans, Latin Americans and other racialised minorities are denied whiteness. Can a poor West Virginian living in a toxified drugged out impoverished landscape really be defined as a carrier of 'white privilege'?

    I was first pointed at this by the juxtapositions of racialised working class and immigrants in Imogen Tyler's Revolting Subjects – Social Abjection and Resistance in Neoliberal Britain but this below is a useful short article that takes a historical perspective.

    Why the Working Class was Never 'White'

    The 'racialisation' of class in Britain has been a consequence of the weakening of 'class' as a political idea since the 1970s – it is a new construction, not an historic one.

    .

    This is not to deny the existence of working-class racism, or to suggest that racism is somehow acceptable if rooted in perceived socio-economic grievances. But it is to suggest that the concept of a 'white working class' needs problematizing, as does the claim that the British working-class was strongly committed to a post-war vision of 'White Britain' analogous to the politics which sustained the idea of a 'White Australia' until the 1960s.

    Yes, old, settled neighbourhoods could be profoundly distrustful of outsiders – all outsiders, including the researchers seeking to study them – but, when it came to race, they were internally divided. We certainly hear working-class racist voices – often echoing stock racist complaints about over-crowding, welfare dependency or exploitative landlords and small businessmen, but we don't hear the deep pathological racial fears laid bare in the letters sent to Enoch Powell after his so-called 'Rivers of Blood' speech in 1968 (Whipple, 2009).

    But more importantly, we also hear strong anti-racist voices loudly and clearly. At Wallsend on Tyneside, where the researchers were gathering their data just as Powell shot to notoriety, we find workers expressing casual racism, but we also find eloquent expressions of an internationalist, solidaristic perspective in which, crucially, black and white are seen as sharing the same working-class interests.

    Racism is denounced as a deliberate capitalist strategy to divide workers against themselves, weakening their ability to challenge those with power over their lives (shipbuilding had long been a very fractious industry and its workers had plenty of experience of the dangers of internal sectarian battles).

    To be able to mobilize across across racialised divisions, to have race wither away entirely would, for me, be the beginning of a politics that allowed humanity to deal with the inescapable violence of climate change and corporate power.

    *To add to the bibliography – David R. Roediger, Elizabeth D. Esch – The Production of Difference – Race and the Management of Labour, and Denise Ferreira da Silva – Toward a Global Idea of Race. And I have just been pointed at Ian Haney-López, White By Law – The Legal Construction of Race.

    Hidari 11.19.16 at 8:16 am 152

    FWIW 'merica's constitutional democracy is going to collapse.

    Some day - not tomorrow, not next year, but probably sometime before runaway climate change forces us to seek a new life in outer-space colonies - there is going to be a collapse of the legal and political order and its replacement by something else. If we're lucky, it won't be violent. If we're very lucky, it will lead us to tackle the underlying problems and result in a better, more robust, political system. If we're less lucky, well, then, something worse will happen .

    In a 1990 essay, the late Yale political scientist Juan Linz observed that "aside from the United States, only Chile has managed a century and a half of relatively undisturbed constitutional continuity under presidential government - but Chilean democracy broke down in the 1970s."

    Linz offered several reasons why presidential systems are so prone to crisis. One particularly important one is the nature of the checks and balances system. Since both the president and the Congress are directly elected by the people, they can both claim to speak for the people. When they have a serious disagreement, according to Linz, "there is no democratic principle on the basis of which it can be resolved." The constitution offers no help in these cases, he wrote: "the mechanisms the constitution might provide are likely to prove too complicated and aridly legalistic to be of much force in the eyes of the electorate."

    In a parliamentary system, deadlocks get resolved. A prime minister who lacks the backing of a parliamentary majority is replaced by a new one who has it. If no such majority can be found, a new election is held and the new parliament picks a leader. It can get a little messy for a period of weeks, but there's simply no possibility of a years-long spell in which the legislative and executive branches glare at each other unproductively.'

    http://www.vox.com/2015/3/2/8120063/american-democracy-doomed

    Given that the basic point is polarisation (i.e. that both the President and Congress have equally strong arguments to be the the 'voice of the people') and that under the US appalling constitutional set up, there is no way to decide between them, one can easily imagine the so to speak 'hyperpolarisation' of a Trump Presidency as being the straw (or anvil) that breaks the camel's back.

    In any case, as I pointed out before, given that the US is increasingly an urbanised country, and the Electoral College was created to protect rural (slave) states, the grotesque electoral result we have just seen is likely to recur, which means more and more Presidents with dubious democratic legitimacy. Thanks to Bush (and Obama) these Presidents will have, at the same time, more and more power.

    Eventually something is going to break.

    dbk 11.19.16 at 10:39 am ( 153 )

    nastywoman @ 150
    Just study the program of the 'Sozialdemokratische Partei Deutschland' or the Program of 'Die Grünen' in Germany (take it through google translate) and you get all the answers you are looking for.

    No need to run it through google translate, it's available in English on their site. [Or one could refer to the Green Party of the U.S. site/platform, which is very similar in scope and overall philosophy. (www.gp.org).]

    I looked at several of their topic areas (Agricultural, Global, Health, Rural) and yes, these are general theses I would support. But they're hardly policy/project proposals for specific regions or communities – the Greens espouse "think global, act local", so programs and projects must be tailored to individual communities and regions.

    To return to my original question and answer it myself: I'm forced to conclude that the Democrats did not specifically address the revitalization – rebirth of the Rust Belt in their 2016 platform. Its failure to do so carried a heavy cost that (nearly) all of us will be forced to pay.

    Soullite 11.19.16 at 12:46 pm 156

    This sub seems to have largely fallen into the psychologically comfortable trap of declaring that everyone who voted against their preferred candidate is racist. It's a view pushed by the neoliberals, who want to maintain he stranglehold of identity politics over the DNC, and it makes upper-class 'intellectuals' feel better about themselves and their betrayal of the filthy, subhuman white underclass (or so they see it).

    I expect at this point that Trump will be reelected comfortably. If not only the party itself, but also most of its activists, refuse to actually change, it's more or less inevitable.

    You can scream 'those jobs are never coming back!' all you want, but people are never going to accept it. So either you come up with a genuine solution (instead of simply complaining that your opponents solutions won't work; you're partisan and biased, most voters won't believe you), you may as well resign yourself to fascism. Because whining that you don't know what to do won't stop people from lining up behind someone who says that they do have one, whether it'll work or not. Nobody trusts the elite enough to believe them when they say that jobs are never coming back. Nobody trusts the elite at all.

    You sound just like the Wiemar elite. No will to solve the problem, but filled with terror at the inevitable result of failing to solve the problem.

    mclaren 11.19.16 at 2:37 pm 160

    One brutal fact tells us everything we need to know about the Democratic party in 2016: the American Nazi party is running on a platform of free health care to working class people. This means that the American Nazi Party is now running to the left of the Democratic party.

    Folks, we have seen this before. Let's not descend in backbiting and recriminations, okay? We've got some commenters charging that other commenters are "mansplaining," meanwhile we've got other commenters claiming that it's economics and not racism/misogyny. It's all of the above.

    Back in the 1930s, when the economy collapsed, fascists appeared and took power. Racists also came out of the woodwork, ditto misogynists. Fast forward 80 years, and the same thing has happened all over again. The global economy melted down in 2008 and fascists appeared promising to fix the problems that the pols in power wouldn't because they were too closely tied to the existing (failed) system. Along with the fascists, racists gained power because they were able to scapegoat minorities as the alleged cause of everyone's misery.

    None of this is surprising. We have seen it before. Whenever you get a depression in a modern industrial economy, you get scapegoating, racism, and fascists. We know what to do. The problem is that the current Democratic party isn't doing it.

    Instead, what we're seeing is a whirlwind of finger-pointing from the Democratic leadership that lost this election and probably let the entire New Deal get rolled back and wiped out. Putin is to blame! Julian Assange is to blame! The biased media are to blame! Voter suppression is to blame! Bernie Sanders is to blame! Jill Stein is to blame! Everyone and anyone except the current out-of-touch influence-peddling elites who currently have run the Democratic party into the ground.

    We need the feminists and the black lives matter groups and we also need the green party people and the Bernie Sanders activists. But everyone has to understand that this is not an isolated event. Trump did not just happen by accident. First there was Greece, then there was Brexit, then there was Trump, next it'll be Renzi losing the referendum in Italy and a constitutional crisis there, and after that, Marine Le Pen in France is going to win the first round of elections. (Probably not the presidency, since all the other French parties will band together to stop her, but the National Front is currently polling at 40% of all registered French voters.) And Marine LePen is the real deal, a genuine full-on out-and-out fascist. Not a closet fascist like Steve Bannon, LePen is the full monty with everything but a Hugo Boss suit and the death's heads on the cap.

    Does anyone notice a pattern here?

    This is an international movement. It is sweeping the world . It is the end of neoliberalism and the start of the era of authoritarian nationalism, and we all need to come together to stamp out the authoritarian part.

    Feminists, BLM, black bloc anarchiest anti-globalists, Sandernistas, and, yes, the former Hillary supporters. Because it not just a coincidence that all these things are happening in all these countries at the same time. The bottom 90% of the population in the developed world has been ripped off by a managerial and financial and political class for the last 30 years and they have all noticed that while the world GDP was skyrocketing and international trade agreements were getting signed with zero input from the average citizen, a few people were getting very very rich but nobody else was getting anything.

    This hammered people on the bottom, disproportionately African Americans and especially single AA mothers in America. It crushed the blue collar workers. It is wiping out the savings and careers of college-educated white collar workers now, at least, the ones who didn't go to the Ivy League, which is 90% of them.

    And the Democratic party is so helpless and so hopeless that it is letting the American Nazi Party run to the left of them on health care, fer cripes sake! We are now in a situation where the American Nazi Party is advocating single-payer nationalized health care, while the former Democratic presidential nominee who just got defeated assured everyone that single-payer "will never, ever happen."

    C'mon! Is anyone surprised that Hillary lost? Let's cut the crap with the "Hillary was a flawed candidate" arguments. The plain fact of the matter is that Hillary was running mainly on getting rid of the problems she and her husband created 25 years ago. Hillary promised criminal justice reform and Black Lives Matter-friendly policing policies - and guess who started the mass incarceration trend and gave speeches calling black kids "superpredators" 20 years ago? Hillary promised to fix the problems with the wretched mandate law forcing everyone to buy unaffordable for-profit private insurance with no cost controls - and guess who originally ran for president in 2008 on a policy of health care mandates with no cost controls? Yes, Hillary (ironically, Obama's big surge in popularity as a candidate came when he ran against Hillary from the left, ridiculing helath care mandates). Hillary promises to reform an out-of-control deregulated financial system run amok - and guess who signed all those laws revoking Glass-Steagal and setting up the Securities Trading Modernization Act? Yes, Bill Clinton, and Hillary was right there with him cheering the whole process on.

    So pardon me and lots of other folks for being less than impressed by Hillary's trustworthiness and honesty. Run for president by promising to undo the damage you did to the country 25 years ago is (let say) a suboptimal campaign strategy, and a distinctly suboptimal choice of presidential candidate for a party in the same sense that the Hiroshima air defense was suboptimal in 1945.

    Calling Hillary an "imperfect candidate" is like calling what happened to the Titanic a "boating accident." Trump was an imperfect candidate. Why did he win?

    Because we're back in the 1930s again, the economy has crashed hard and still hasn't recovered (maybe because we still haven't convened a Pecora Commission and jailed a bunch of the thieves, and we also haven't set up any alphabet government job programs like the CCC) so fascists and racists and all kinds of other bottom-feeders are crawling out of the political woodwork to promise to fix the problems that the Democratic party establishment won't.
    Rule of thumb: any social or political or economic writer virulently hated by the current Democratic party establishment is someone we should listen to closely right now.

    Cornel West is at the top of the current Democratic establishment's hate list, and he has got a great article in The Guardian that I think is spot-on:

    "The neoliberal era in the United States ended with a neofascist bang. The political triumph of Donald Trump shattered the establishments in the Democratic and Republican parties – both wedded to the rule of Big Money and to the reign of meretricious politicians."

    https://www.theguardian.com/commentisfree/2016/nov/17/american-neoliberalism-cornel-west-2016-election

    Glenn Greenwald is another writer who has been showered with more hate by the Democratic establishment recently than even Trump or Steve Bannon, so you know Greenwald is saying something important. He has a great piece in The Intercept on the head-in-the-ground attitude of Democratic elites toward their recent loss:

    "It is not an exaggeration to say that the Democratic Party is in shambles as a political force. Not only did it just lose the White House to a wildly unpopular farce of a candidate despite a virtually unified establishment behind it, and not only is it the minority party in both the Senate and the House, but it is getting crushed at historical record rates on the state and local levels as well. Surveying this wreckage last week, party stalwart Matthew Yglesias of Vox minced no words: `the Obama years have created a Democratic Party that's essentially a smoking pile of rubble.'

    "One would assume that the operatives and loyalists of such a weak, defeated and wrecked political party would be eager to engage in some introspection and self-critique, and to produce a frank accounting of what they did wrong so as to alter their plight. In the case of 2016 Democrats, one would be quite mistaken."

    https://theintercept.com/2016/11/18/the-stark-contrast-between-the-gops-self-criticism-in-2012-and-the-democrats-blame-everyone-else-posture-now/

    Last but far from least, Scottish economist Mark Blyth has what looks to me like the single best analysis of the entire global Trump_vs_deep_state tidal wave in Foreign Affairs magazine:

    "At the end of World War II, the United States and its allies decided that sustained mass unemployment was an existential threat to capitalism and had to be avoided at all costs. In response, governments everywhere targeted full employment as the master policy variable-trying to get to, and sustain, an unemployment rate of roughly four percent. The problem with doing so, over time, is that targeting any variable long enough undermines the value of the variable itself-a phenomenon known as Goodhart's law. (..)

    " what we see [today] is a reversal of power between creditors and debtors as the anti-inflationary regime of the past 30 years undermines itself-what we might call "Goodhart's revenge." In this world, yields compress and creditors fret about their earnings, demanding repayment of debt at all costs. Macro-economically, this makes the situation worse: the debtors can't pay-but politically, and this is crucial-it empowers debtors since they can't pay, won't pay, and still have the right to vote.

    "The traditional parties of the center-left and center-right, the builders of this anti-inflationary order, get clobbered in such a world, since they are correctly identified by these debtors as the political backers of those demanding repayment in an already unequal system, and all from those with the least assets. This produces anti-creditor, pro-debtor coalitions-in-waiting that are ripe for the picking by insurgents of the left and the right, which is exactly what has happened.

    "In short, to understand the election of Donald Trump we need to listen to the trumpets blowing everywhere in the highly indebted developed countries and the people who vote for them.

    "The global revolt against elites is not just driven by revulsion and loss and racism. It's also driven by the global economy itself. This is a global phenomenon that marks one thing above all. The era of neoliberalism is over. The era of neonationalism has just begun."

    https://www.foreignaffairs.com/articles/2016-11-15/global-Trump_vs_deep_state

    efcdons 11.19.16 at 3:07 pm 161 ( 161 )

    Faustusnotes @147

    You don't live here, do you? I'm really asking a genuine question because the way you are framing the question ("SPECIFICS!!!!!!) suggests you don't. (Just to show my background, born and raised in Australia (In the electoral division of Kooyong, home of Menzies) but I've lived in the US since 2000 in the midwest (MO, OH) and currently in the south (GA))

    If this election has taught us anything it's no one cared about "specifics". It was a mood, a feeling which brought trump over the top (and I'm not talking about the "average" trump voter because that is meaningless. The average trunp voter was a republican voter in the south who the Dems will never get so examining their motivations is immaterial to future strategy. I'm talking about the voters in the Upper Midwest from places which voted for Obama twice then switched to trump this year to give him his margin of victory).

    trump voters have been pretty clear they don't actually care about the way trump does (or even doesn't) do what he said he would do during the campaign. It was important to them he showed he was "with" people like them. They way he did that was partially racialized (law and order, islamophobia) but also a particular emphasis on blue collar work that focused on the work. Unfortunately these voters, however much you tell them they should suck it up and accept their generations of familial experience as relatively highly paid industrial workers (even if it is something only their fathers and grandfathers experienced because the factories were closing when the voters came of age in the 80s and 90s) is never coming back and they should be happy to retrain as something else, don't want it. They want what their families have had which is secure, paid, benefits rich, blue collar work.

    trump's campaign empathized with that feeling just by focusing on the factory jobs as jobs and not as anachronisms that are slowly fading away for whatever reason. Clinton might have been "correct", but these voters didn't want to hear "the truth". And as much as you can complain about how stupid they are for wanting to be lied to, that is the unfortunate reality you, and the Democratic party, have to accept.

    The idea they don't want "government help" is ridiculous. They love the government. They just want the government to do things for them and not for other people (which unfortunately includes blah people but also "the coasts", "sillicon valley", etc.). Obama won in 2008 and 2012 in part due to the auto bailout.

    trump was offering a "bailout" writ large. Clinton had no (good) counteroffer. It was like the tables were turned. Romney was the one talking about "change" and "restructuring" while Obama was defending keeping what was already there.

    "Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course - the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check."
    http://www.nytimes.com/2008/11/19/opinion/19romney.html

    So yes. Clinton needed vague promises. She needed something more than retraining and "jobs of the future" and "restructuring". She needed to show she was committed to their way of life, however those voters saw it, and would do something, anything, to keep it alive. trump did that even though his plan won't work. And maybe he'll be punished for it. In 4 years. But in the interim the gop will destroy so many things we need and rely on as well as entrench their power for generations through the Supreme Court.

    But really, it was hard for Clinton to be trusted to act like she cared about these peoples' way of life because she (through her husband fairly or unfairly) was associated with some of the larger actions and choices which helped usher in the decline.

    Clinton toward the end offered tariffs. But the trump campaign hit back with what turned out to be a pretty strong counter attack – ""How's she going to get tough on China?" said Trump economic advisor Peter Navarro on CNN's Quest Means Business. He notes that some of Clinton's economic advisors have supported TPP or even worked on it. ""

    http://money.cnn.com/2016/08/11/news/economy/hillary-clinton-trade/

    [Nov 19, 2016] How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer

    Nov 19, 2016 | economistsview.typepad.com

    anne -> anne... November 18, 2016 at 05:07 AM

    http://deanbaker.net/images/stories/documents/Rigged.pdf

    October, 2016

    Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer
    By Dean Baker

    Introduction: Trading in Myths

    In winter 2016, near the peak of Bernie Sanders' bid for the Democratic presidential nomination, a new line became popular among the nation's policy elite: Bernie Sanders is the enemy of the world's poor. Their argument was that Sanders, by pushing trade policies to help U.S. workers, specifically manufacturing workers, risked undermining the well-being of the world's poor because exporting manufactured goods to the United States and other wealthy countries is their path out of poverty. The role model was China, which by exporting has largely eliminated extreme poverty and drastically reduced poverty among its population. Sanders and his supporters would block the rest of the developing world from following the same course.

    This line, in its Sanders-bashing permutation, appeared early on in Vox, the millennial-oriented media upstart, and was quickly picked up elsewhere (Beauchamp 2016). After all, it was pretty irresistible. The ally of the downtrodden and enemy of the rich was pushing policies that would condemn much of the world to poverty.

    The story made a nice contribution to preserving the status quo, but it was less valuable if you respect honesty in public debate.

    The problem in the logic of this argument should be apparent to anyone who has taken an introductory economics course. It assumes that the basic problem of manufacturing workers in the developing world is the need for someone who will buy their stuff. If people in the United States don't buy it, then the workers will be out on the street and growth in the developing world will grind to a halt. In this story, the problem is that we don't have enough people in the world to buy stuff. In other words, there is a shortage of demand. But is it really true that no one else in the world would buy the stuff produced by manufacturing workers in the developing world if they couldn't sell it to consumers in the United States? Suppose people in the developing world bought the stuff they produced raising their living standards by raising their own consumption.

    That is how the economics is supposed to work. In the standard theory, general shortages of demand are not a problem. Economists have traditionally assumed that economies tended toward full employment. The basic economic constraint was a lack of supply. The problem was that we couldn't produce enough goods and services, not that we were producing too much and couldn't find anyone to buy them. In fact, this is why all the standard models used to analyze trade agreements like the Trans-Pacific Partnership assume trade doesn't affect total employment. Economies adjust so that shortages of demand are not a problem.

    In this standard story (and the Sanders critics are people who care about textbook economics), capital flows from slow-growing rich countries, where it is relatively plentiful and so gets a low rate of return, to fast-growing poor countries, where it is scarce and gets a high rate of return.

    [Figure 1-1] Theoretical and actual capital flows.

    So the United States, Japan, and the European Union should be running large trade surpluses, which is what an outflow of capital means. Rich countries like ours should be lending money to developing countries, providing them with the means to build up their capital stock and infrastructure while they use their own resources to meet their people's basic needs.

    This wasn't just theory. That story accurately described much of the developing world, especially Asia, through the 1990s. Countries like Indonesia and Malaysia were experiencing rapid annual growth of 7.8 percent and 9.6 percent, respectively, even as they ran large trade deficits, just over 2 percent of GDP each year in Indonesia and almost 5 percent in Malaysia.

    These trade deficits probably were excessive, and a crisis of confidence hit East Asia and much of the developing world in the summer of 1997. The inflow of capital from rich countries slowed or reversed, making it impossible for the developing countries to sustain the fixed exchange rates most had at the time. One after another, they were forced to abandon their fixed exchange rates and turn to the International Monetary Fund (IMF) for help.

    Rather than promulgating policies that would allow developing countries to continue the textbook development path of growth driven by importing capital and running trade deficits, the IMF made debt repayment a top priority. The bailout, under the direction of the Clinton administration Treasury Department, required developing countries to switch to large trade surpluses (Radelet and Sachs 2000, O'Neil 1999).

    The countries of East Asia would be far richer today had they been allowed to continue on the growth path of the early and mid-1990s, when they had large trade deficits. Four of the five would be more than twice as rich, and the fifth, Vietnam, would be almost 50 percent richer. South Korea and Malaysia would have higher per capita incomes today than the United States.

    [Figure 1-2] Per capita income of East Asian countries, actual vs. continuing on 1990s growth path.

    In the wake of the East Asia bailout, countries throughout the developing world decided they had to build up reserves of foreign exchange, primarily dollars, in order to avoid ever facing the same harsh bailout terms as the countries of East Asia. Building up reserves meant running large trade surpluses, and it is no coincidence that the U.S. trade deficit has exploded, rising from just over 1 percent of GDP in 1996 to almost 6 percent in 2005. The rise has coincided with the loss of more than 3 million manufacturing jobs, roughly 20 percent of employment in the sector.

    There was no reason the textbook growth pattern of the 1990s could not have continued. It wasn't the laws of economics that forced developing countries to take a different path, it was the failed bailout and the international financial system. It would seem that the enemy of the world's poor is not Bernie Sanders but rather the engineers of our current globalization policies.

    There is a further point in this story that is generally missed: it is not only the volume of trade flows that is determined by policy, but also the content. A major push in recent trade deals has been to require stronger and longer patent and copyright protection. Paying the fees imposed by these terms, especially for prescription drugs, is a huge burden on the developing world. Bill Clinton would have much less need to fly around the world for the Clinton Foundation had he not inserted the TRIPS (Trade Related Aspects of Intellectual Property Rights) provisions in the World Trade Organization (WTO) that require developing countries to adopt U.S.-style patent protections. Generic drugs are almost always cheap - patent protection makes drugs expensive. The cancer and hepatitis drugs that sell for tens or hundreds of thousands of dollars a year would sell for a few hundred dollars in a free market. Cheap drugs would be more widely available had the developed world not forced TRIPS on the developing world.

    Of course, we have to pay for the research to develop new drugs or any innovation. We also have to compensate creative workers who produce music, movies, and books. But there are efficient alternatives to patents and copyrights, and the efforts by the elites in the United States and other wealthy countries to impose these relics on the developing world is just a mechanism for redistributing income from the world's poor to Pfizer, Microsoft, and Disney. Stronger and longer patent and copyright protection is not a necessary feature of a 21st century economy.

    In textbook trade theory, if a country has a larger trade surplus on payments for royalties and patent licensing fees, it will have a larger trade deficit in manufactured goods and other areas. The reason is that, in theory, the trade balance is fixed by national savings and investment, not by the ability of a country to export in a particular area. If the trade deficit is effectively fixed by these macroeconomic factors, then more exports in one area mean fewer exports in other areas. Put another way, income gains for Pfizer and Disney translate into lost jobs for workers in the steel and auto industries....

    reason : , November 18, 2016 at 05:14 AM

    I thought this from Dean Baker was interesting:
    http://cepr.net/blogs/beat-the-press/if-you-thought-a-trump-presidency-was-bad?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+beat_the_press+%28Beat+the+Press%29

    It includes this interesting piece on international trade:

    "I'll start with my favorite, the complaint that the trade policy advocating by Warren and Sanders would hurt the poor in the developing world, or to use their words:


    "And their ostensible protection of American workers leaves no room to consider the welfare of poor people elsewhere in the world."

    I like this one because it turns standard economic theory on its head to advance the interests of the rich and powerful. In the economic textbooks, rich countries like the United States are supposed to be exporting capital to the developing world. This provides them the means to build up their capital stock and infrastructure, while maintaining the living standards of their populations. This is the standard economic story where the problem is scarcity.

    But to justify trade policies that have harmed tens of millions of U.S. workers, either by costing them jobs or depressing their wages, the Post discards standard economics and tells us the problem facing people in the developing world is that there is too much stuff. If we didn't buy the goods produced in the developing world then there would just be a massive glut of unsold products.

    In the standard theory the people in the developing world buy their own stuff, with rich countries like the U.S. providing the financing. It actually did work this way in the 1990s, up until the East Asian financial crisis in 1997. In that period, countries like Malaysia, Vietnam, and Indonesia were growing very rapidly while running large trade deficits. This pattern of growth was ended by the terms of the bailout imposed on these countries by the U.S. Treasury Department through the International Monetary Fund.

    The harsh terms of the bailout forced these and other developing countries to reverse the standard textbook path and start running large trade surpluses. This post-bailout period was associated with slower growth for these countries. In other words, the poor of the developing world suffered from the pattern of trade the Post advocates. If they had continued on the pre-bailout path they would be much richer today. In fact, South Korea and Malaysia would be richer than the United States if they had maintained their pre-bailout growth rate over the last two decades. (This is the topic of the introduction to my new book, Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer, it's free.)"

    Not sure that I fully agree with him, but I do agree that trade imbalances and mercantilism is a large part of the problem.

    Oh I see Anne posted this in parallel.

    anne -> reason ... , November 18, 2016 at 05:59 AM
    http://cepr.net/blogs/beat-the-press/if-you-thought-a-trump-presidency-was-bad?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+beat_the_press+%28Beat+the+Press%29

    November 15, 2016

    If You Thought a Trump Presidency Was Bad .

    The Washington Post editorial page decided to lecture readers * on the meaning of progressivism. Okay, that is nowhere near as bad as a Trump presidency, but really, did we need this?

    The editorial gives us a potpourri of neo-liberal (yes, the term is appropriate here) platitudes, all of which we have heard many times before and are best half true. For framing, the villains are Bernie Sanders and Elizabeth Warren who it tells us "are embracing principles that are not genuinely progressive."

    I'll start with my favorite, the complaint that the trade policy advocating by Warren and Sanders would hurt the poor in the developing world, or to use their words:

    "And their ostensible protection of American workers leaves no room to consider the welfare of poor people elsewhere in the world."

    I like this one because it turns standard economic theory on its head to advance the interests of the rich and powerful. In the economic textbooks, rich countries like the United States are supposed to be exporting capital to the developing world. This provides them the means to build up their capital stock and infrastructure, while maintaining the living standards of their populations. This is the standard economic story where the problem is scarcity.

    But to justify trade policies that have harmed tens of millions of U.S. workers, either by costing them jobs or depressing their wages, the Post discards standard economics and tells us the problem facing people in the developing world is that there is too much stuff. If we didn't buy the goods produced in the developing world then there would just be a massive glut of unsold products.

    In the standard theory the people in the developing world buy their own stuff, with rich countries like the U.S. providing the financing. It actually did work this way in the 1990s, up until the East Asian financial crisis in 1997. In that period, countries like Malaysia, Vietnam, and Indonesia were growing very rapidly while running large trade deficits. This pattern of growth was ended by the terms of the bailout imposed on these countries by the U.S. Treasury Department through the International Monetary Fund.

    The harsh terms of the bailout forced these and other developing countries to reverse the standard textbook path and start running large trade surpluses. This post-bailout period was associated with slower growth for these countries. In other words, the poor of the developing world suffered from the pattern of trade the Post advocates. If they had continued on the pre-bailout path they would be much richer today. In fact, South Korea and Malaysia would be richer than the United States if they had maintained their pre-bailout growth rate over the last two decades. (This is the topic of the introduction to my new book, "Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer," ** it's free.)

    It is also important to note that the Post is only bothered by forms of protection that might help working class people. The United States prohibits foreign doctors from practicing in the United States unless they complete a U.S. residency program. (The total number of slots are tightly restricted with only a small fraction open to foreign trained doctors.) This is a classic protectionist measure. No serious person can believe that the only way for a person to be a competent doctor is to complete a U.S. residency program. It costs the United States around $100 billion a year ($700 per family) in higher medical expenses. Yet, we never hear a word about this or other barriers that protect the most highly paid professionals from the same sort of international competition faced by steelworkers and textile workers.

    Moving on, we get yet another Post tirade on Social Security.

    "You can expand benefits for everyone, as Ms. Warren favors. Prosperous retirees who live mostly off their well-padded 401(k)s will appreciate what to them will feel like a small bonus, if they notice it. But spreading wealth that way will make it harder to find the resources for the vulnerable elderly who truly depend on Social Security.

    "But demographics - the aging of the population - cannot be wished away. In the 1960s, about five taxpayers were helping to support each Social Security recipient, and the economy was growing about 6 percent annually. Today there are fewer than three workers for each pensioner, and the growth rate even following the 2008 recession has averaged about 2 percent . On current trends, 10 years from now the federal government will be spending almost all its money on Medicare, Social Security and other entitlements and on interest payments on the debt, leaving less and less for schools, housing and job training. There is nothing progressive about that."

    There are all sorts of misleading or wrong claims here. First, the economy did not grow "about 6 percent annually" in the 1960s. There were three years in which growth did exceed 6.0 percent, and it was a very prosperous decade, but growth only averaged 4.6 percent from 1960 to 1970.

    I suppose we should be happy that the Post is at least getting closer to the mark. A 2007 editorial *** praising The North American Free Trade Agreement told readers that Mexico's GDP "has more than quadrupled since 1987." The International Monetary Fund data **** put the gain at 83 percent. So by comparison, they are doing pretty good with the 6 percent growth number for the sixties.

    But getting to the demographics, we did go from more than five workers for every retiree to less than three today, and this number is projected to fall further to around 2.0 workers per retiree in the next fifteen years. This raises the obvious question, so what?

    The economy did not collapse even as we saw the fall from 5 workers per retiree to less than 3, so something really really bad happens when it falls further? We did raise taxes to cover the additional cost and we will probably have to raise taxes in the future.

    We get that the Post doesn't like tax increases (no one does), but this hardly seems like the end of the world. The Social Security Trustees project ***** that real wages will rise on average by more than 34 percent over the next two decades. Suppose we took back 5–10 percent of these projected wage gains through tax increases (still leaving workers with wages that are more than 30 percent higher than they are today), what is the big problem?

    Of course most workers have not seen their wages rise in step with the economy's growth over the last four decades. This is a huge issue which is the sort of thing that progressives should be and are focusing on. But the Post would rather distract us with the possibility that at some point in the future we may be paying a somewhat higher Social Security tax.

    The Post's route for savings is also classic misdirection. It tells how about high-living seniors who get so much money from their 401(k)s they don't even notice their Social Security checks. Only a bit more than 4.0 percent of the over 65 population has non-Social Security income of more than $80,000 a year. If the point is to have substantial savings from means-testing it would be necessary to hit people with incomes around $40,000 a year or even lower. That is not what most people consider wealthy.

    We could have substantial savings on Medicare by pushing down the pay of doctors and reducing the prices of drugs and medical equipment. The latter could be done by substituting public financing for research and development for government granted patent monopolies (also discussed in Rigged). These items would almost invariably be cheap in a free market. But the Post seems uninterested in ways to save money that could affect the incomes of the rich.

    One can quibble with whether the current benefits for middle income people are right or should be somewhat higher or lower, but it is ridiculous to argue that raising them $50 a month, as proposed by Senator Warren, will break the bank.

    Then we have the issue of free college. The Post raises the issue, pushed by Senator Sanders in his presidential campaign, and then tells readers:

    "Our answer - we would argue, the progressive answer - is that there are people in society with far greater needs than that upper-middle-class family in Fairfax County that would be relieved of its tuition burden at the College of William & Mary if Mr. Sanders got his wish."

    There are two points to be made here. First there is extensive research ****** showing that many children from low- and moderate-income families hugely over-estimate the cost of college, failing to realize that they would be eligible for financial aid that would make it free or nearly free. This means that the current structure is preventing many relatively disadvantaged children from attending college. Arguably better education on the opportunities to get aid would solve this problem, but the problem has existed for a long time and better education has not done much to change the picture thus far.

    The second point is that the process of determining eligibility for aid is itself costly. Many children have divorced parents, with a non-custodial parent often not anxious to pay for their children's college. Perhaps it is appropriate that they should pay, but forcing payment is not an easy task and it doesn't make sense to make the children in such situations suffer.

    In many ways, the free college solution is likely to be the easiest, with the tax coming out of the income of higher earners, the vast majority of whom will be the beneficiaries of this policy. There are ways to save on paying for college. My favorite is limiting the pay of anyone at a public school to the salary of the president of the United States ($400,000 a year). We can also deny the privilege of tax exempt status to private universities or other non-profits that don't accept a similar salary cap. These folks can pay their top executives whatever they want, but they shouldn't ask the taxpayers to subsidize their exorbitant pay packages.

    There is one final issue in the column worth noting. At one point it makes a pitch for the virtues of economic growth then tells readers:

    "It's not in conflict with the goal of redistribution."

    At least some of us progressive types are not particularly focused on "redistribution." The focus of my book and much of my other writing is on the way that the market has been structured to redistribute income upward, compared with the structures in place in the quarter century after World War II. Is understandable that people who are basically very satisfied with this upward redistribution of market income would not want this rigging of the market even to be discussed, but serious progressives do.

    * https://www.washingtonpost.com/opinions/what-does-it-mean-to-be-progressive/2016/11/14/469662fe-9c8d-11e6-b3c9-f662adaa0048_story.html

    ** http://deanbaker.net/images/stories/documents/Rigged.pdf

    *** http://www.washingtonpost.com/wp-dyn/content/article/2007/12/02/AR2007120201588.html

    **** http://www.imf.org/external/pubs/ft/weo/2016/02/weodata/weorept.aspx?pr.x=44&pr.y=2&sy=1987&ey=2007&scsm=1&ssd=1&sort=country&ds=.&br=1&c=273&s=NGDP_R&grp=0&a=

    ***** https://www.ssa.gov/oact/tr/2015/index.html

    ****** http://www.allhallows.org/ourpages/auto/2012/9/7/43578201/Real%20and%20Imagined%20barriers.pdf

    -- Dean Baker

    anne -> reason ... , November 18, 2016 at 06:01 AM
    I thought this from Dean Baker was interesting...

    [ And, I think, especially important. ]

    reason -> anne... , November 18, 2016 at 06:19 AM
    Although I like much of what Dean Baker, I don't like his term "loser liberalism", nor do I think his de-emphasis on redistribution useful. Au contraire, I think talking about redistribution is absolutely essential if we are to move to sustainable world. We can no longer be certain that per person GDP growth will be sufficient to be able to ignore distribution or to rely on "predistribution".
    anne -> reason ... , November 18, 2016 at 06:35 AM
    "Although I like much of what Dean Baker, I don't like his term 'loser liberalism', nor do I think his de-emphasis on redistribution useful...."

    http://www.cepr.net/blogs/beat-the-press/ending-loser-liberalism-why-a-market-based-approach-makes-sense

    November 18, 2015

    Ending Loser Liberalism: Why a Market Based Approach Makes Sense

    -- Dean Baker

    [ Well worth arguing about. ]

    anne -> reason ... , November 18, 2016 at 07:19 AM
    http://deanbaker.net/images/stories/documents/End-of-Loser-Liberalism.pdf

    2011

    The End of Loser Liberalism: Making Markets Progressive
    By Dean Baker

    Upward Redistribution of Income: It Didn't Just Happen

    Money does not fall up. Yet the United States has experienced a massive upward redistribution of income over the last three decades, leaving the bulk of the workforce with little to show from the economic growth since 1980. This upward redistribution was not the result of the natural workings of the market. Rather, it was the result of deliberate policy, most of which had the support of the leadership of both the Republican and Democratic parties.

    Unfortunately, the public and even experienced progressive political figures are not well informed about the key policies responsible for this upward redistribution, even though they are not exactly secrets. The policies are so well established as conventional economic policy that we tend to think of them as incontrovertibly virtuous things, but each has a dark side. An anti-inflation policy by the Federal Reserve Board, which relies on high interest rates, slows growth and throws people out of work. Major trade deals hurt manufacturing workers by putting them in direct competition with low-paid workers in the developing world. A high dollar makes U.S. goods uncompetitive in world markets.

    Almost any economist would acknowledge these facts, but few economists have explored their implications and explained them to the general public. As a result, most of us have little understanding of the economic policies that have the largest impact on our jobs, our homes, and our lives. Instead, public debate and the most hotly contested legislation in Congress tend to be about issues that will have relatively little impact.

    This lack of focus on crucial economic issues is a serious problem from the standpoint of advancing a progressive agenda....

    Johannes Y O Highness -> anne... , November 18, 2016 at 06:25 AM
    Awareness is the first step forward. Foreign workers is just another name for workers, just another

    name for My
    People --

    anne -> Johannes Y O Highness... , November 18, 2016 at 06:36 AM
    Foreign workers is just another name for workers...

    [ Nicely expressed. ]

    [Nov 19, 2016] What Did Draghi Know About Potential Loss And Abuses At Italys Largest Bank

    Notable quotes:
    "... Apparently lax and/or incompetent regulation of systemically important banks by bureaucrats, central bankers, and politicians may not be just a recent American phenomenon. ..."
    "... He related how he was not only ignored by his bank, the Irish regulator but also all the major political parties. He then pointed out that the Irish regulator claims that it always – and it is the law after all – informs the regulator of the home country of banks which have subsidiaries in Ireland, about any serious problems. ..."
    "... Mr Sugarman suggested Mr Draghi should be asked point-blank of he did or if he did not know . If he did not then the Irish regulator was at least incompetent, and may have lied, misled and perhaps even broken Irish laws. If he was told and did know, then Mr Draghi has serious questions to answer regarding his own dereliction of duty. ..."
    Nov 19, 2016 | www.zerohedge.com
    Via Jesse's Cafe Americain blog,

    Apparently lax and/or incompetent regulation of systemically important banks by bureaucrats, central bankers, and politicians may not be just a recent American phenomenon.

    As we read this, it could imperil the soundness of the financial system in Europe as well, as is still apparently the case with The Banks in the states, despite assurances to the contrary.

    Golem XIV asks some very good questions in the article below, recently posted on his blog here.

    Whistleblowers Testify in EU Parliament

    Yesterday a very high-powered panel of international banking whistleblowers met and told their stories in the European parliament . The questions raised were important. Among them was the Irish Whistleblower, Jonathan Sugarman, who when UniCredit Ireland was breaking the law in very serious ways reported it to the Irish regulator.

    He related how he was not only ignored by his bank, the Irish regulator but also all the major political parties. He then pointed out that the Irish regulator claims that it always – and it is the law after all – informs the regulator of the home country of banks which have subsidiaries in Ireland, about any serious problems.

    In the case of UniCredit that would mean the Italian Central bank would have been told that Italy's largest Bank was in serious breach of Irish law in ways that could endanger the whole banking system. The head of the Italian Central Bank at the time was a certain Mr Mario Draghi.

    Mr Sugarman suggested Mr Draghi should be asked point-blank of he did or if he did not know . If he did not then the Irish regulator was at least incompetent, and may have lied, misled and perhaps even broken Irish laws. If he was told and did know, then Mr Draghi has serious questions to answer regarding his own dereliction of duty.

    Surely not I hear you say. Well perhaps someone might ask him? Or is he above the law?

    http://www.guengl.eu/news/article/whistleblower-protection-what-must-be-done

    [Nov 19, 2016] Trump's Win, Brexit Vote Stem From Mishandling of Globalization, Obama Says

    www.wsj.com

    President Barack Obama said Wednesday that America's election of Donald Trump and the U.K.'s vote to leave the European Union reflect a political uprising in the West over economic inequities spawned by leaders' mishandling of globalization.

    [Nov 19, 2016] Globalizations Last Gasp by Barry Eichengreen

    Notable quotes:
    "... Already, motor-vehicle manufacturers ship an automotive transmission back and forth across the US-Mexican border several times in the course of production. At some point, unpacking that production process still further will reach the point of diminishing returns. ..."
    "... The story for cross-border flows of financial capital is even more dramatic. Gross capital flows – the sum of inflows and outflows – are not just growing more slowly; they are down significantly in absolute terms from 2009 levels. ..."
    "... ... cross-border bank lending and borrowing that have fallen. Foreign direct investment – financial flows to build foreign factories and acquire foreign companies – remains at pre-crisis levels. ..."
    "... This difference reflects regulation. Having concluded, rightly, that cross-border bank lending is especially risky, regulators clamped down on banks' international operations. ..."
    Nov 19, 2016 | www.project-syndicate.org

    Does Donald Trump's election as United States president mean that globalization is dead, or are reports of the process' demise greatly exaggerated? If globalization is only partly incapacitated, not terminally ill, should we worry? How much will slower trade growth, now in the offing, matter for the global economy?

    World trade growth would be slowing down, even without Trump in office. Its growth was already flat in the first quarter of 2016, and it fell by nearly 1% in the second quarter. This continues a prior trend: since 2010, global trade has grown at an annual rate of barely 2%. Together with the fact that worldwide production of goods and services has been rising by more than 3%, this means that the trade-to-GDP ratio has been falling, in contrast to its steady upward march in earlier years.

    ... the resurgent protectionism manifest in popular opposition to the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP),

    Causality in economics may be elusive, but in this case it is clear. So far, slower trade growth has been the result of slower GDP growth, not the other way around.

    This is particularly evident in the case of investment spending, which has fallen sharply since the global financial crisis. Investment spending is trade-intensive, because countries rely disproportionately on a relatively small handful of producers, like Germany, for technologically sophisticated capital goods.

    In addition, slower trade growth reflects China's economic deceleration. Until 2011 China was growing at double-digit rates, and Chinese exports and imports were growing even faster. China's growth has now slowed by a third, leading to slower growth of Chinese trade.

    China's growth miracle, benefiting a fifth of the earth's population, is the most important economic event of the last quarter-century. But it can happen only once. And now that the phase of catch-up growth is over for China, this engine of global trade will slow.

    The other engine of world trade has been global supply chains. Trade in parts and components has benefited from falling transport costs, reflecting containerization and related advances in logistics. But efficiency in shipping is unlikely to continue to improve faster than efficiency in the production of what is being shipped. Already, motor-vehicle manufacturers ship an automotive transmission back and forth across the US-Mexican border several times in the course of production. At some point, unpacking that production process still further will reach the point of diminishing returns.

    The story for cross-border flows of financial capital is even more dramatic. Gross capital flows – the sum of inflows and outflows – are not just growing more slowly; they are down significantly in absolute terms from 2009 levels.

    ... cross-border bank lending and borrowing that have fallen. Foreign direct investment – financial flows to build foreign factories and acquire foreign companies – remains at pre-crisis levels.

    This difference reflects regulation. Having concluded, rightly, that cross-border bank lending is especially risky, regulators clamped down on banks' international operations.

    In response, many banks curtailed their cross-border business. But, rather than alarming anyone, this should be seen as reassuring, because the riskiest forms of international finance have been curtailed without disrupting more stable and productive forms of foreign investment.

    We now face the prospect of the US government revoking the Dodd-Frank Act and rolling back the financial reforms of recent years. Less stringent financial regulation may make for the recovery of international capital flows. But we should be careful what we wish for.

    [Nov 18, 2016] The statecraft of neoliberalism: the elimination of political agency and responsibility for economic performance and outcomes by Bruce Wilder

    Notable quotes:
    "... The New Deal did not seek to overthrow the plutocracy, but it did seek to side-step and disable their dominance. ..."
    "... It seems to me that while neoliberalism on the right was much the same old same old, the neoliberal turn on the left was marked by a measured abandonment of this struggle over the distribution of income between the classes. In the U.S., the Democrats gradually abandoned their populist commitments. In Europe, the labour and socialist parties gradually abandoned class struggle. ..."
    "... When Obama came in, in 2008 amid the unfolding GFC, one of the most remarkable features of his economic team was the extent to which it conceded control of policy entirely to the leading money center banks. Geithner and Bernanke continued in power with Geithner moving from the New York Federal Reserve (where he served as I recall under a Chair from Goldman Sachs) to Treasury in the Obama Administration, but Geithner's Treasury was staffed from Goldman Sachs, JP Morgan Chase and Citibank. The crisis served to concentrate banking assets in the hands of the top five banks, but it seemed also to transfer political power entirely into their hands as well. Simon Johnson called it a coup. ..."
    "... Here's the thing: the globalization and financialization of the economy from roughly 1980 drove both increasingly extreme distribution of income and de-industrialization. ..."
    "... It was characteristic of neoliberalism that the policy, policy intention and policy consequences were hidden behind a rhetoric of markets and technological inevitability. Matt Stoller has identified this as the statecraft of neoliberalism: the elimination of political agency and responsibility for economic performance and outcomes. Globalization and financialization were just "forces" that just happened, in a meteorological economics. ..."
    "... This was not your grandfather's Democratic Party and it was a Democratic Party that could aid the working class and the Rust Belt only within fairly severe and sometimes sharply conflicting constraints. ..."
    "... No one in the Democratic Party had much institutional incentive to connect the dots, and draw attention to the acute conflicts over the distribution of income and wealth involved in financialization of the economy (including financialization as a driver of health care costs). And, that makes the political problem that much harder, because there are no resources for rhetorical and informational clarity or coherence. ..."
    "... If Obama could not get a very big stimulus indeed thru a Democratic Congress long out of power, Obama wasn't really trying. And, well-chosen spending on pork barrel projects is popular and gets Congressional critters re-elected. So, again, if the stimulus is small and the Democratic Congress doesn't get re-elected, Obama isn't really trying. ..."
    "... Again, it comes down to: by 2008, the Democratic Party is not a fit vehicle for populism, because it has become a neoliberal vehicle for giant banks. Turns out that makes a policy difference. ..."
    Nov 18, 2016 | crookedtimber.org

    bruce wilder 11.16.16 at 10:07 pm 30

    At the center of Great Depression politics was a political struggle over the distribution of income, a struggle that was only decisively resolved during the War, by the Great Compression. It was at center of farm policy where policymakers struggled to find ways to support farm incomes. It was at the center of industrial relations politics, where rapidly expanding unions were seeking higher industrial wages. It was at the center of banking policy, where predatory financial practices were under attack. It was at the center of efforts to regulate electric utility rates and establish public power projects. And, everywhere, the clear subtext was a struggle between rich and poor, the economic royalists as FDR once called them and everyone else.

    FDR, an unmistakeable patrician in manner and pedigree, was leading a not-quite-revolutionary politics, which was nevertheless hostile to and suspicious of business elites, as a source of economic pathology. The New Deal did not seek to overthrow the plutocracy, but it did seek to side-step and disable their dominance.

    It seems to me that while neoliberalism on the right was much the same old same old, the neoliberal turn on the left was marked by a measured abandonment of this struggle over the distribution of income between the classes. In the U.S., the Democrats gradually abandoned their populist commitments. In Europe, the labour and socialist parties gradually abandoned class struggle.

    In retrospect, though the New Deal did use direct employment as a means of relief to good effect economically and politically, it never undertook anything like a Keynesian stimulus on a Keynesian scale - at least until the War.

    Where the New Deal witnessed the institution of an elaborate system of financial repression, accomplished in large part by imposing on the financial sector an explicitly mandated structure, with types of firms and effective limits on firm size and scope, a series of regulatory reforms and financial crises beginning with Carter and Reagan served to wipe this structure away.

    When Obama came in, in 2008 amid the unfolding GFC, one of the most remarkable features of his economic team was the extent to which it conceded control of policy entirely to the leading money center banks. Geithner and Bernanke continued in power with Geithner moving from the New York Federal Reserve (where he served as I recall under a Chair from Goldman Sachs) to Treasury in the Obama Administration, but Geithner's Treasury was staffed from Goldman Sachs, JP Morgan Chase and Citibank. The crisis served to concentrate banking assets in the hands of the top five banks, but it seemed also to transfer political power entirely into their hands as well. Simon Johnson called it a coup.

    I don't know what considerations guided Obama in choosing the size of the stimulus or its composition (as spending and tax cuts). Larry Summers was identified at the time as a voice of caution, not "gambling", but not much is known about his detailed reasoning in severely trimming Christina Romer's entirely conventional calculations. (One consideration might well have been worldwide resource shortages, which had made themselves felt in 2007-8 as an inflationary spike in commodity prices.) I do not see a case for connecting stimulus size policy to the health care reform. At the time the stimulus was proposed, the Administration had also been considering whether various big banks and other financial institutions should be nationalized, forced to insolvency or otherwise restructured as part of a regulatory reform.

    Here's the thing: the globalization and financialization of the economy from roughly 1980 drove both increasingly extreme distribution of income and de-industrialization. Accelerating the financialization of the economy from 1999 on made New York and Washington rich, but the same economic policies and process were devastating the Rust Belt as de-industrialization. They were two aspects of the same complex of economic trends and policies. The rise of China as a manufacturing center was, in critical respects, a financial operation within the context of globalized trade that made investment in new manufacturing plant in China, as part of globalized supply chains and global brand management, (arguably artificially) low-risk and high-profit, while reinvestment in manufacturing in the American mid-west became unattractive, except as a game of extracting tax subsidies or ripping off workers.

    It was characteristic of neoliberalism that the policy, policy intention and policy consequences were hidden behind a rhetoric of markets and technological inevitability. Matt Stoller has identified this as the statecraft of neoliberalism: the elimination of political agency and responsibility for economic performance and outcomes. Globalization and financialization were just "forces" that just happened, in a meteorological economics.

    It is conceding too many good intentions to the Obama Administration to tie an inadequate stimulus to a Rube Goldberg health care reform as the origin story for the final debacle of Democratic neoliberal politics. There was a delicate balancing act going on, but they were not balancing the recovery of the economy in general so much as they were balancing the recovery from insolvency of a highly inefficient and arguably predatory financial sector, which was also not incidentally financing the institutional core of the Democratic Party and staffing many key positions in the Administration and in the regulatory apparatus.

    This was not your grandfather's Democratic Party and it was a Democratic Party that could aid the working class and the Rust Belt only within fairly severe and sometimes sharply conflicting constraints.

    No one in the Democratic Party had much institutional incentive to connect the dots, and draw attention to the acute conflicts over the distribution of income and wealth involved in financialization of the economy (including financialization as a driver of health care costs). And, that makes the political problem that much harder, because there are no resources for rhetorical and informational clarity or coherence.

    bruce wilder 11.16.16 at 10:33 pm ( 31 )

    The short version of my thinking on the Obama stimulus is this: Keynesian stimulus spending is a free lunch; it doesn't really matter what you spend money on up to a very generous point, so it seems ready-made for legislative log-rolling. If Obama could not get a very big stimulus indeed thru a Democratic Congress long out of power, Obama wasn't really trying. And, well-chosen spending on pork barrel projects is popular and gets Congressional critters re-elected. So, again, if the stimulus is small and the Democratic Congress doesn't get re-elected, Obama isn't really trying.

    Again, it comes down to: by 2008, the Democratic Party is not a fit vehicle for populism, because it has become a neoliberal vehicle for giant banks. Turns out that makes a policy difference.

    likbez 11.18.16 at 4:48 pm 121

    bruce wilder 11.16.16 at 10:07 pm 30

    Great comment. Simply great. Hat tip to the author !

    Notable quotes:

    "… The New Deal did not seek to overthrow the plutocracy, but it did seek to side-step and disable their dominance. …"

    "… It seems to me that while neoliberalism on the right was much the same old same old, the neoliberal turn on the left was marked by a measured abandonment of this struggle over the distribution of income between the classes. In the U.S., the Democrats gradually abandoned their populist commitments. In Europe, the labour and socialist parties gradually abandoned class struggle. …"

    "… When Obama came in, in 2008 amid the unfolding GFC, one of the most remarkable features of his economic team was the extent to which it conceded control of policy entirely to the leading money center banks. Geithner and Bernanke continued in power with Geithner moving from the New York Federal Reserve (where he served as I recall under a Chair from Goldman Sachs) to Treasury in the Obama Administration, but Geithner's Treasury was staffed from Goldman Sachs, JP Morgan Chase and Citibank. The crisis served to concentrate banking assets in the hands of the top five banks, but it seemed also to transfer political power entirely into their hands as well. Simon Johnson called it a coup. … "

    "… Here's the thing: the globalization and financialization of the economy from roughly 1980 drove both increasingly extreme distribution of income and de-industrialization. …"

    "… It was characteristic of neoliberalism that the policy, policy intention and policy consequences were hidden behind a rhetoric of markets and technological inevitability. Matt Stoller has identified this as the statecraft of neoliberalism: the elimination of political agency and responsibility for economic performance and outcomes. Globalization and financialization were just "forces" that just happened, in a meteorological economics. …"

    "… This was not your grandfather's Democratic Party and it was a Democratic Party that could aid the working class and the Rust Belt only within fairly severe and sometimes sharply conflicting constraints. …"

    "… No one in the Democratic Party had much institutional incentive to connect the dots, and draw attention to the acute conflicts over the distribution of income and wealth involved in financialization of the economy (including financialization as a driver of health care costs). And, that makes the political problem that much harder, because there are no resources for rhetorical and informational clarity or coherence. …"

    "… If Obama could not get a very big stimulus indeed thru a Democratic Congress long out of power, Obama wasn't really trying. And, well-chosen spending on pork barrel projects is popular and gets Congressional critters re-elected. So, again, if the stimulus is small and the Democratic Congress doesn't get re-elected, Obama isn't really trying. …"

    "… Again, it comes down to: by 2008, the Democratic Party is not a fit vehicle for populism, because it has become a neoliberal vehicle for giant banks. Turns out that makes a policy difference. …"

    [Nov 15, 2016] Suspected 5th Column blogger Streetwise Professor Defends Elites

    Notable quotes:
    "... Earning your living in finance or the related co-dependent fields such as economics, business management, certain areas of law and, most especially, information technology, you quickly pick up on the cult mentality that pervades it. ..."
    "... When, like so many of us, you're desperate to try to cling onto some semblance of middle class status, you're an easy and, although I'd strongly qualify this statement, understandable, target for buying into the group-think. ..."
    "... " Markets " do not " demand " anything. ..."
    "... But a "market" can - at the very most, through the use of pricing signals - induce actors to consider entering into a transaction. ..."
    "... They provided credit to low income customers because it was insanely profitable. The reason it was insanely profitable was that the loans to the low income customers could be securitised and the commissions the banks earned on the sale of those securities paid for massive bonus pools which directly benefitted bank employees. ..."
    "... Yes, I'd always be the first to agree with the proverb "In Heaven you get justice, here on Earth we have the law". The law and our legal systems are not perfect. But they are not that shabby either. ..."
    "... If it is regulatory interventions, rather than criminal indictments, that the Streetwise Professor is referring to, the banks can and do leave no political stone unturned in their efforts to water down, delay and neuter regulatory bodies. Look , if you can do so without wincing, at what has happened to the SEC. ..."
    "... It wasn't a " pre-crisis political bargain " that caused the Global Financial Crisis. It was financial innovation that was supposed to "free" the financial services industry to allow it to soar to ever greater heights, heights that couldn't be reached with cumbersome "legacy" thinking. If that sounds a lot like Mike Hearn's Blockchain justifications, it's because it is exactly the same thing. ..."
    "... Innovation must never be viewed only through separate, disconnected lenses of "technology", "politics", "ethics", "economics", "power relationships" and "morality". Each specific innovation is subject to and either lives or dies by the interplay between these forces." ..."
    "... I agree - however, "I don't mind people doing dangerous things" should require a little elucidation. What you likely meant to say was you don't mind people doing dangerous things, WITHIN REASON. ..."
    "... Also, there is the rank unwillingness on the part of regulators to, you know, actually do their jobs. I can no longer count the number of times Yellen has sat in front of the Senate banking committee like a deer in headlights ..."
    "... Excellent points, I thought that the Bush Wars were initiated to alleviate an oncoming recession as well as ensure W's reelection ..."
    "... It did take them a while to get the pieces in place, the Banksters Real Estate Fraud Appraisals were identified as early as 2000, then the Banksters Fraudulent Loans peaked in 2006, and then we had the Banksters Fraudulent Reps and Warranties . ..."
    "... Ah, the neo-liberals and the libertarians make their arguments by redefining terms and eliding facts. Once the audience agrees that up is down, why then their arguments are reasonable, dispassionate, and offered in dulcet tones of humble sincerity and objectivity. ..."
    "... What a pleasure, then, to read your cold water smack-down of their confidence game. Perhaps they believed their own nonsense. Who knows. ..."
    "... A third consequence of modern-day liberals' unquestioning, reflexive respect for expertise is their blindness to predatory behavior if it comes cloaked in the signifiers of professionalism. ..."
    "... The difference in interpretation carries enormous consequences: Did Wall Street commit epic fraud, or are they highly advanced professionals who fell victim to epic misfortune? modern day liberals pretty much insist on the later view . Wall Street's veneer of professionalism is further buttressed by its technical jargon, which the financial industry uses to protect itself from the scrutiny of the public ..."
    Nov 15, 2016 | www.nakedcapitalism.com
    Posted on November 14, 2016 by Clive

    Earning your living in finance or the related co-dependent fields such as economics, business management, certain areas of law and, most especially, information technology, you quickly pick up on the cult mentality that pervades it.

    When, like so many of us, you're desperate to try to cling onto some semblance of middle class status, you're an easy and, although I'd strongly qualify this statement, understandable, target for buying into the group-think. Or at least going along with it on the promise of continued employment. While I'm letting myself off the hook in the process, I think that's forgivable. I and others like me need the money. Besides, in our spare time, we might try to atone for our misdeeds by using whatever means we have available, such as contributing to Naked Capitalism in whatever way we can, to try to set the record straight.

    Not quite so easily forgivable, though, are the members of an altogether different cadre who don't give the impression of having to live paycheck to paycheck. What is it that motivates them? Why do they willingly devise clever - and, I have to say it, some are exceptionally adept - ruses to defend and further the causes of our élites?

    ... ... ...

    As readers with not-so-long memories will recall, in the run-up to the Global Financial Crisis, the TBTFs did indeed exercise the " FU Option ". As asset prices for the securities they held fell precipitously, they held more and more of those assets on their balance sheets, refusing to - or unable to - off-load them into a market that was shunning them. Eventually their capital cushions were so depleted because of this, they became insolvent. Staring catastrophe in the face, governments were put into a double-bind by the TBTFs: Rescue us through bail-outs or stand by and see our societies suffer major collateral damage (bank runs, a collapse of world trade, ruining of perfectly good and solvent businesses with the likelihood of mass unemployment and civil unrest).

    In that situation, who was the " U " who was being " F "'ed? It was governments and the public.

    Faced with an asymmetry of power, in a reverse of the scenario painted by the Streetwise Professor for OTC trading (where a notional seller tells a theoretical buyer they can go to Hell if they don't want to pay the price the seller is asking), governments - and us - found themselves on the buy-side of an " FU Option ". "F the-rest-of-us By Necessity" was a better description as we were turned into forced buyers of what no other "market participant" would touch.

    My dear Professor, allow me to give you , if I may risk the label of being impudent, a lesson. If I am selling my prized Diana, Princess of Wales tea cups in a yard sale and you make me a offer for them, that - I'm sure we'd agree on this point - is an OTC transaction. There's no exchange (mercifully) for Diana, Princess of Wales tea cups. I put a price sticker on them. If you want them, you pay the price I'm asking. Or else, you make me a different offer. If you don't pay the price I want, or I don't accept the price you're offering, we do, indeed, have a genuine " FU Option " scenario. But if instead my mother-in-law threatens to saw your face off with her cheese grater if you don't buy my Diana, Princess of Wales tea cups at the price shown on the sticker, then we no longer have an OTC transaction. We have extortion. See the difference?

    That's not all. The piece discusses the differences between a proposed smart-contract based settlement compared with a centralised counterparty which brings up some very valid points. But then it makes a serious blunder which is introduced with some subtly but is all the more dangerous because of it. I'll highlight the problem:

    So the proposal does some of the same things as a CCP, but not all of them, and in fact omits the most important bits that make central clearing central clearing. To the extent that these other CCP services add value–or regulation compels market participants to utilize a CCP that offers these services–market participants will choose to use a CCP, rather than this service. It is not a perfect substitute for central clearing, and will not disintermediate central clearing in cases where the services it does not offer and the functions it does not perform are demanded by market participants , or by regulators.

    Did you catch what is the most troubling thing in that paragraph? The technicalities of it are fine, but the bigger framing is perilous. "Market participants" is given agency. And put on the same level as actions taken by regulators. This is at best unintentionally misleading and at worse an entirely deliberate falsehood.

    The fallacious thinking which caused it is due to a traditional economist's mind-set. But this mind-set is hopelessly wrong and every time we encounter it, we must challenge it. Regardless of what other progressive goodies it is being bundled up with.

    " Markets " do not " demand " anything.

    A regulator or central bank can demand that a bank hold more capital and open its books to check the underlying asset quality. The CFPB can demand that Wells Fargo stops opening fake accounts. Even I can demand a pony. The power structures, laws, enforcement and levels of trust (to name the main constraints) governing who is demanding what from whom determine how likely they will be to have their demands met.

    But a "market" can - at the very most, through the use of pricing signals - induce actors to consider entering into a transaction. The pricing signal cannot make any potential actor participate in that transaction. Not, probably, that it would have helped her much, but Hillary Clinton could have created a market for left-wing bloggers to shill for Obamacare by offering Lambert $1million to start churning out pro-ACA posts on his blog. But that market which Hillary could create could not "demand" Lambert accept her offer. Lambert would not take that, or any other monetary amount, and would never enter such a transaction. Markets have limits.

    Whether unintentionally or by design, we have a nice example of bait and switch in the Streetwise Professor's Blockchain article. If you run a critique of Blockchain, you'll likely attract an anti-libertarian audience. It's a classic example of nudge theory . If you can lure readers in with the promise of taking a swipe at disruptive innovation nonsense but then lead them to being suckered into a reinforcement of failed conventional free-market hogwash, that can be a powerful propaganda tool.

    But perhaps the Blockchain feature was an aberration, just a one-off? No.

    Take, for example, this feature on Deutsche Bank from earlier this month which I'll enter as Exhibit B - It's not the TBTFs Fault, the Regulators / Governments / Some Guy / Made Us Do It

    I'll leave the worst 'til last, but for now let's start with this little treasure:

    the pre-crisis political bargain was that banks would facilitate income redistribution policy by provide credit to low income individuals. This seeded the crisis (though like any complex event, there were myriad other contributing causal factors), the political aftershocks of which are being felt to this day. Banking became a pariah industry, as the very large legal settlements extracted by governments indicate.

    No, Streetwise Professor, banks did not provide credit to low income individuals as part of some "political bargain". They provided credit to low income customers because it was insanely profitable. The reason it was insanely profitable was that the loans to the low income customers could be securitised and the commissions the banks earned on the sale of those securities paid for massive bonus pools which directly benefitted bank employees.

    Almost unimaginable wealth could be generated by individuals (the Naked Capitalism archive details the full sordid story of the likes of Magnetar). The fact that this would all blow up eventually was certainly predicable and even known by many actors in the prevailing milieu but they didn't care. They knew they'd have already set themselves up for life financially even after just a few years in that "game". Politics, for once, had nothing to do with it, save perhaps that regulators, which are the politicians' responsibility, should have been better able to spot what was going on.

    But the Streetwise Professor is only just getting started with the counterfactual misinformation:

    It is definitely desirable to have mechanisms to hold financial malfeasors accountable, but the Deutsche episode illustrates several difficulties. The first is that even the biggest entities can be judgment proof, and imposing judgments on them can have disastrous economic externalities. Another is that there is a considerable degree of arbitrariness in the process, and the results of the process. There is little due process here, and the risks and costs of litigation mean that the outcome of attempts to hold bankers accountable is the result of a negotiation between the state and large financial institutions that is carried out in a highly politicized environment in which emotions and narratives are likely to trump facts. There is room for serious doubt about the quality of justice that results from this process.

    A casual skim could leave the reader with the impression that the Streetwise Professor is lamenting, rightly, the persistency of the TBTF model. But there's something really dastardly being concocted here - the notion that in our societies, the rule of law is always and inevitably fallible and not fit for the purpose of bringing errant TBTFs to justice. And that, if a case is brought against a TBTF like Deutsche, then it can't help but become a political football.

    Yes, I'd always be the first to agree with the proverb "In Heaven you get justice, here on Earth we have the law". The law and our legal systems are not perfect. But they are not that shabby either. Any quick parse through the judgments which the U.S. Supreme Court, the U.K. Supreme Court or the European Court of Justice (to name only a few) hand down on complex cases - often running to hundreds or even a thousand pages - demonstrates that courts can and do consider fairly and justly the evidence that prosecutors present and make balanced rulings. And banks can utilize the same legal safeguards that the law provides - they're not likely to be short of good legal advice options. Trying, as the Steetwise Professor does, to claim that the TBTFs can't get justice is an insult to our judicial systems and acceptance of this notion followed by any routine repetition serves to undermine faith in the rule of law.

    If it is regulatory interventions, rather than criminal indictments, that the Streetwise Professor is referring to, the banks can and do leave no political stone unturned in their efforts to water down, delay and neuter regulatory bodies. Look , if you can do so without wincing, at what has happened to the SEC.

    It wasn't a " pre-crisis political bargain " that caused the Global Financial Crisis. It was financial innovation that was supposed to "free" the financial services industry to allow it to soar to ever greater heights, heights that couldn't be reached with cumbersome "legacy" thinking. If that sounds a lot like Mike Hearn's Blockchain justifications, it's because it is exactly the same thing.

    In summary, when you throw brickbats at a fellow blogger, it seems to me that you have a moral obligation to put your cards on the table, to explain your motivations. I don't have to write for a living ("just as well", I hear forbearing readers shout back). I don't take a penny from Naked Capitalism's hard-wrung fundraisers, although Yves has generously offered a very modest stipend in line with other contributors, I cannot conscientiously take anything for what I submit. I write in the hope that I have some small insights that would help to undo some of the damage which big finance has done to our cultures, our shared values and our aspirations for what we hope the future will be for us and others.

    That's what motivates me, anyway. After reading his output, I'm really still not at all sure what is motivating the Streetwise Professor. Certainly there is nothing at all to suggest that he is interested in rebuking or revising any of the traditional thought-forms which pass for the so-called science of economics. Conventional economic theory is the ultimate in betrayal of the use of rational methodology to provide air-cover for élite power grabs. It'll take more than a refutation of Blockchain spin to convince me that the Streetwise Professor is ready to kick away the more odious ladders - like being a professional economist - that have given him the leg-ups to the lofty perch he enjoys occupying.

    About Clive

    Survivor of nearly 30 years in a TBTF bank. Also had the privilege of working in Japan, which was great, selling real estate, which was an experience bordering on the psychedelic. View all posts by Clive →

    vlade November 14, 2016 at 7:15 am

    I disagree on the first bit. Even at this blog, Yves mentiones not quite rarely the dangers of tight coupling. The central exchanges create exactly that. Yes, the FU option of OTC is dangerous. But then, everything is dangerous, and if I have to choose between tight coupling dangerous option and loose coupling one, I'll chose the lose coupling one.

    The problem is that the regulators refused to recognise that the institutions gamed the regulations – moving stuff from trading to banking books. It is recognised now, under the new regulation, although I still have some doubts about its effectivness.

    To me all the para says is: markets demand services, and CCP don't offer them – and don't have to. Regulators demand services (to be offered by CCP), and CCP deliver.

    And sorry, I also disagree with your "markets participants demand". The text says "services [ ] are demanded [by potential clients and by regulators]". I can't honestly see what's the problem with that. Of course, regulatory demand, and a client demand are two different things – the former you ignore at your peril, the second you can ignore to your heart's content.

    But markets (or, I'd say agents that want to purchase – or sell) _always_ demand something, and always offer something – otherwise there would not be any market or exchange of services (it doesn't have to be there even with offer and demand, but in the absence of one it definitely won't be there).

    You could happily change the word to "require" "want" etc. and the meaning of the para would remain unchanged.

    Clive Post author November 14, 2016 at 8:20 am

    The problem I had with the notion that OTC reduces tight coupling is that it gives the appearance of reducing tight couple but doesn't actually do this. While "the market" is functioning within its expected parameters, OTC is less tightly coupled than an Exchange. But as we saw first-hand in the GFC, those markets function, right up until the point where they don't. By continuing to function, or certainly giving the appearances of continuing to be functioning, they hide the stresses which are building up within them but no-one can see. Unless you are deeply plumbed in to the day-to-day operational activities of the OTC market and can spot signs - and that's all they are, signs, you don't get to take a view of the whole edifice - you simply don't have a clue. There were, at most, only a couple of dozen people in the organisation itself and outside it who knew that my TBTF was a day away from being unable to open for business. That was entirely down to information asymmetry and that asymmetry was 100% down to OTC prevalence.

    And all the while TBTF isn't fixed, then as soon as the OTC market(s) fall off a cliff, the public provision backstops can be forced to kick in. Yes, everything is dangerous. I don't mind people doing dangerous things. But I do mind an awful lot being asked to pick up the pieces when their dangerous things blow up in their faces and they expect me to sort the mess out. If that is the dynamic, and to me, it most definitely is, then I want the actors who are engaged in the dangerous things to be highly visible, I want them right where I can see them. Not hiding their high-risk activities in an OTC venue that I'm not privy to.

    And I stick by my objection to the - what I can't see how it isn't being deliberate - fuzziness or obfuscation about who gets to "demand" and who is merely allowed "invite" parties to a transaction to either perform or not perform of their own volition. This isn't an incidental semantic about vocabulary. It goes to the heart of what's wrong with the Streetwise Professor's assessment of innovation.

    Innovation must never be viewed only through separate, disconnected lenses of "technology", "politics", "ethics", "economics", "power relationships" and "morality". Each specific innovation is subject to and either lives or dies by the interplay between these forces. My biggest lambaste of the Streetwise Professor's commentaries is that he examines them only in terms of "technology" and "economics". In doing so, he reaches partial and inaccurate conclusions.

    A 10 year old child might "demand", "require", "ask for", "insist", "claim a right to have" (use whatever word or phrase you like there) a gun and live ammunition. But they are not, and should not be, permitted to enter into a transaction to obtain the said gun and ammo based only on the availability of the technology and the economics that would allow them to satisfy the seller's market clearing sale price if they saved their pocket money for a sufficient amount of time. The other forces I listed in my above paragraph are also involved, and just as well.

    Ulysses November 14, 2016 at 9:30 am

    "Innovation must never be viewed only through separate, disconnected lenses of "technology", "politics", "ethics", "economics", "power relationships" and "morality". Each specific innovation is subject to and either lives or dies by the interplay between these forces."

    Very well said. I would argue further that "power relationships" structure how all the other lenses actually operate. In the early sixteenth century the power relationship between the Church, and Martin Luther, was such that the latter had an opening to redefine "morality"– in such a way that the Pope's moral opinion was eventually no longer dispositive for Protestants.

    In other words, the French invasion of Italy, late in the fifteenth century, weakened the papal states enough to allow for defiance.

    Ulysses November 14, 2016 at 10:02 am

    That last sentence, is of course a gross over-simplification! Anyone wishing to know the nitty-gritty details of how foreign domination over the Italian peninsula was established by the middle of the sixteenth century should read Machiavelli and Guicciardini.

    The latter author's appeal to skepticism, when interpreting the actions and motivations of powerful people, rings very true five centuries later:

    " perché di accidenti tanto memorabili si intendino i consigli e i fondamenti; i quali spesso sono occulti, e divulgati il piů delle volte in modo molto lontano da quell che č vero."

    ( Storia d'Italia , XVI, vi)

    animalogic November 15, 2016 at 5:12 am

    "Yes, everything is dangerous. I don't mind people doing dangerous things. But I do mind an awful lot being asked to pick up the pieces when their dangerous things blow up in their faces".

    I agree - however, "I don't mind people doing dangerous things" should require a little elucidation. What you likely meant to say was you don't mind people doing dangerous things, WITHIN REASON.

    And let's face it, much of the prior GFC behaviour was unreasonably dangerous. As it turned out, not that dangerous to its perpetrators .

    Danger, like risk, is a cost-benefit calculation. When that calculation ONLY includes benefits for its originator & suppresses any (real & calculatable) cost for the community it's already looking suspiciously like an unreasonable danger .

    Uahsenaa November 14, 2016 at 9:04 am

    The problem is that the regulators refused to recognise that the institutions gamed the regulations – moving stuff from trading to banking books. It is recognised now, under the new regulation, although I still have some doubts about its effectivness.

    Also, there is the rank unwillingness on the part of regulators to, you know, actually do their jobs. I can no longer count the number of times Yellen has sat in front of the Senate banking committee like a deer in headlights as Warren tries to get her to give anything like a straight answer as to why, to this day, many if not most TBTFs have no rapid selloff/solvency plan (which is required by the Dodd-Frank law) or why those banks that fail their stress tests (again and again) suffer no consequences as a result.

    How is any of this supposed to work when so many are clearly acting in bad faith?

    bmeisen November 14, 2016 at 9:06 am

    Bravo bravo encore encore! Especially the characterization of Sorkin and the account of the crisis at the start of exhibit B. Clive for President!

    Synoia November 14, 2016 at 9:44 am

    Earning your living in finance or the related co-dependent fields such as economics, business management, certain areas of law and, most especially, information technology, you quickly pick up on the cult mentality that pervades it.

    If you do not subscribe to the "cult mentality," although I'd prefer to call it a dogma, because it is a unswerving belief in an unproven fact in the face of evidence the fact is not only unproven, but wrong, one is "not a team player" and then penalized.

    If these libertarian want "open markets" and innovation they have to shed the human response to proof. In their behavior they are no better than the medieval pope, and his court, who did not want to believe a the earth travels around the sun.

    WJ November 14, 2016 at 8:32 pm

    Medieval popes were probably more open to Pythagorean/Copernican cosmologies than early 17th century Jesuits (i.e. Bellarmine); the opposition of the latter to Galileo had nothing to do with science and everything to do with Protestantism and Protestant biblical interpretation. Bellarmine was wrong and what happened to Galileo was shameful. But many of the best astronomers of the time were in fact Jesuits, and the traditional way the story is told is inaccurate on almost every level (and a product of late 19th century Italian nationalism).

    susan the other November 14, 2016 at 12:02 pm

    this was very interesting stuff. Since a lot of things were coming together in the 90s and 2000s that were all connected in a mess too big to understand simply as immoral banking (freeing up capital like that was crazy but there must have been a reason to try it besides windfall profiteering and flat-out gambling), I imagine the following: Greenspan and the TBTFs knew returns were diminishing and set out to do something about it. Because growth and expanding markets were the only thing that could keep up with a demand by pension funds (and then little Bush's idiotic war) for a minimum 8% return. But growth was slowing down so the situation required clever manipulations and incomprehensible things like financial derivatives. Makes sense to me. And if this is even partially true then there was a political mandate all mixed up with the GFC. The banks really did crazy stuff, but with the blessing of the Fed. Later when Bernanke said about QE and nirp: "now we are in uncharted territory" he was fibbing – the Fed had been in uncharted territory, trying to make things work, for almost 20 years. And failing.

    madame de farge November 14, 2016 at 12:47 pm

    Excellent points, I thought that the Bush Wars were initiated to alleviate an oncoming recession as well as ensure W's reelection

    It did take them a while to get the pieces in place, the Banksters Real Estate Fraud Appraisals were identified as early as 2000, then the Banksters Fraudulent Loans peaked in 2006, and then we had the Banksters Fraudulent Reps and Warranties .

    WORSE then a bunch of Used Car Salesman, but what else would you expect from people who KEEP the State Income taxes withheld from their employees checks

    Lambert Strether November 15, 2016 at 12:00 am

    > "how long does that take" and he said "minimum of ten years, 15 is better"

    Via Extra, Extra – Read All About It: Nearly All Binary Searches and Mergesorts are Broken Google Research, 2006:

    This bug can manifest itself for arrays whose length (in elements) is 230 or greater (roughly a billion elements). This was inconceivable back in the '80s, when Programming Pearls was written, but it is common these days at Google and other places. In Programming Pearls, Bentley says "While the first binary search was published in 1946, the first binary search that works correctly for all values of n did not appear until 1962." The truth is, very few correct versions have ever been published, at least in mainstream programming languages.

    Sorting is, or ought to be, basic blocking and tackling. Very smart, not corrupt people worked on this. And yet, 2006 – 1946 = 60 years later, bugs are still being discovered.

    The nice thing about putting your cash in a coffee can in the back yard is that it won't evaporate because some hacker gets clever about big numbers.

    flora November 14, 2016 at 7:30 pm

    Ah, the neo-liberals and the libertarians make their arguments by redefining terms and eliding facts. Once the audience agrees that up is down, why then their arguments are reasonable, dispassionate, and offered in dulcet tones of humble sincerity and objectivity.

    What a pleasure, then, to read your cold water smack-down of their confidence game. Perhaps they believed their own nonsense. Who knows.

    flora November 14, 2016 at 8:28 pm

    What is the Streetwise Professor's (note the word "professor") real view? Has he thought much about it or simply imbibed his "owners'" views, making him a useful tool. I don't know.

    From the book "Listen, Liberal."

    " A third consequence of modern-day liberals' unquestioning, reflexive respect for expertise is their blindness to predatory behavior if it comes cloaked in the signifiers of professionalism. Take the sort of complexity we saw in the financial instruments that drove the last financial crisis. For old-school regulators, I am told, undue financial complexity was an indication of likely fraud. But for the liberal class, it is the opposite: an indicator of sophistication. Complexity is admirable in its own right. The difference in interpretation carries enormous consequences: Did Wall Street commit epic fraud, or are they highly advanced professionals who fell victim to epic misfortune? modern day liberals pretty much insist on the later view . Wall Street's veneer of professionalism is further buttressed by its technical jargon, which the financial industry uses to protect itself from the scrutiny of the public. "
    -Thomas Frank

    [Nov 14, 2016] Clintons electoral defeat is bound up with the nature of the Democratic Party, an alliance of Wall Street and the military-intelligence apparatus with privileged sections of the upper-middle class based on the politics of race, gender and sexual orientation

    Notable quotes:
    "... The affluent and rich voted for Clinton by a much broader margin than they had voted for the Democratic candidate in 2012. Among those with incomes between $100,000 and $200,000, Clinton benefited from a 9-point Democratic swing. Voters with family incomes above $250,000 swung toward Clinton by 11 percentage points. The number of Democratic voters amongst the wealthiest voting block increased from 2.16 million in 2012 to 3.46 million in 2016-a jump of 60 percent. ..."
    "... Clinton's electoral defeat is bound up with the nature of the Democratic Party, an alliance of Wall Street and the military-intelligence apparatus with privileged sections of the upper-middle class based on the politics of race, gender and sexual orientation ..."
    "... Over the course of the last forty years, the Democratic Party has abandoned all pretenses of social reform, a process escalated under Obama. Working with the Republican Party and the trade unions, it is responsible for enacting social policies that have impoverished vast sections of the working class, regardless of race or gender. ..."
    Nov 14, 2016 | www.wsws.org
    The elections saw a massive shift in party support among the poorest and wealthiest voters. The share of votes for the Republicans amongst the most impoverished section of workers, those with family incomes under $30,000, increased by 10 percentage points from 2012. In several key Midwestern states, the swing of the poorest voters toward Trump was even larger: Wisconsin (17-point swing), Iowa (20 points), Indiana (19 points) and Pennsylvania (18 points).

    The swing to Republicans among the $30,000 to $50,000 family income range was 6 percentage points. Those with incomes between $50,000 and $100,000 swung away from the Republicans compared to 2012 by 2 points.

    The affluent and rich voted for Clinton by a much broader margin than they had voted for the Democratic candidate in 2012. Among those with incomes between $100,000 and $200,000, Clinton benefited from a 9-point Democratic swing. Voters with family incomes above $250,000 swung toward Clinton by 11 percentage points. The number of Democratic voters amongst the wealthiest voting block increased from 2.16 million in 2012 to 3.46 million in 2016-a jump of 60 percent.

    Clinton was unable to make up for the vote decline among women (2.1 million), African Americans (3.2 million), and youth (1.2 million), who came overwhelmingly from the poor and working class, with the increase among the rich (1.3 million).

    Clinton's electoral defeat is bound up with the nature of the Democratic Party, an alliance of Wall Street and the military-intelligence apparatus with privileged sections of the upper-middle class based on the politics of race, gender and sexual orientation.

    Over the course of the last forty years, the Democratic Party has abandoned all pretenses of social reform, a process escalated under Obama. Working with the Republican Party and the trade unions, it is responsible for enacting social policies that have impoverished vast sections of the working class, regardless of race or gender.

    [Nov 14, 2016] Trump and Brexit Defeat Globalism, but For How Long

    Notable quotes:
    "... There are some who believe the elites are actually splintered into numerous groups and that domestic US elites have positioned themselves against the banking elites in London's City. ..."
    "... US elites are basically in the employ of a handful of families, individuals and institutions in our view. It is confusing because it is hard to tell if Hillary, for instance, is operating on her own accord or at the behest of higher and more powerful authorities. ..."
    "... It is probably a combination of both but at root those who control central banks are managing the world's move towards globalism. ..."
    "... The vote to propel Trump to the US presidency reflects a profound backlash against open markets and borders, and the simmering anger of millions of blue-collar white and working-class people who blame their economic woes on globalisation and multiculturalism. ..."
    "... If indeed Trump's election has damped the progress of TPP, and TTIP, this is a huge event. As we've pointed out, both agreements effectively substituted technocratic corporatism for the current sociopolitical model of "democracy." ..."
    "... one of the elite's most powerful, operative memes today is "populism vs. globalism" ..."
    "... No matter what, the reality of these two events, the victories of both Trump and Brexit, stand as signal proof that elite stratagems have been defeated, at least temporarily. Though whether these defeats have been self-inflicted as part of a change in tactics remains to be seen. ..."
    Nov 14, 2016 | www.zerohedge.com

    Via The Daily Bell

    ... ... ...

    Was Trump's victory actually created by the very globalist elites that Trump is supposed to have overcome? There are some who believe the elites are actually splintered into numerous groups and that domestic US elites have positioned themselves against the banking elites in London's City. We see no fundamental evidence of this.

    The world's real elites in our view may have substantive histories in the hundreds and thousands of years. US elites are basically in the employ of a handful of families, individuals and institutions in our view. It is confusing because it is hard to tell if Hillary, for instance, is operating on her own accord or at the behest of higher and more powerful authorities.

    It is probably a combination of both but at root those who control central banks are managing the world's move towards globalism. History easily shows us who these groups are – and they are not located in America.

    This is a cynical perspective to be sure, and certainly doesn't remove the impact of Trump's victory or his courage in waging his election campaign despite what must surely be death threats to himself and his family..

    But if true, this perspective corresponds to predictions that we've been making for nearly a decade now, suggesting that sooner or later elites – especially those in London's City – would have to "take a step back."

    More:

    The vote to propel Trump to the US presidency reflects a profound backlash against open markets and borders, and the simmering anger of millions of blue-collar white and working-class people who blame their economic woes on globalisation and multiculturalism.

    "There are a few parallels to Switzerland – that the losers of globalisation find somebody who is listening to them," said Swiss professor and lawyer Wolf Linder, a former director of the University of Bern's political science institute.

    "Trump is doing his business with the losers of globalisation in the US, like the Swiss People's Party is doing in Switzerland," he said. "It is a phenomenon which touches all European nations."

    ... ... ...

    If indeed Trump's election has damped the progress of TPP, and TTIP, this is a huge event. As we've pointed out, both agreements effectively substituted technocratic corporatism for the current sociopolitical model of "democracy." The elites were trying to move toward a new model of world control with these two agreements. ...

    Additionally, one of the elite's most powerful, operative memes today is "populism vs. globalism" that seeks to contrast the potentially freedom-oriented events of Trump and Brexit to the discarded wisdom of globalism. See here and here.

    No matter what, the reality of these two events, the victories of both Trump and Brexit, stand as signal proof that elite stratagems have been defeated, at least temporarily. Though whether these defeats have been self-inflicted as part of a change in tactics remains to be seen.

    Conclusion: But the change has come. One way or another the Internet and tens of millions or people talking, writing and acting has forced new trends. This can be hardly be emphasized enough. Globalism has been at least temporarily redirected.

    Editor's Note: The Daily Bell is giving away a silver coin and a silver "white paper" to subscribers. If you enjoy DB's articles and want to stay up-to-date for free, please subscribe here .

    spqrusa Nov 14, 2016 8:28 PM ,

    The analysis is flawed in that it fails to understand the context for power and influence in the western alliance. The Crowns in contest are seeking coordinated domination through political proxy, i.e. the force behind the EU and the UN. The problem is the most influential crown was not in a mind to destroy the fabric of their civilization and more importantly to continue to bail-out the "socialist" paradises in the continent and beyond. Britannia has its own socialism to support much less that of the world.

    Trump represents keeping the Colony in line with a growing interest in keeping traditions intact and in more direct control of Anglo values. Europe has this insane multi-culturalism that is fundamentally incompatible with a "free" and robust civilization. The whole goal of detente with China was to convert them to our values via proxy institutions and that is working in the long-run. In the short-run, the Empire must reunite and solidify its value bulwark against the coming storm from China and to a lesser extend from the expanded EU states. Russia is playing out on its own.

    [Nov 14, 2016] Working class wages destroyed. The wages of the low paid lowered. Ordinary people robbed of holiday and sickness pay

    Most commenters do not realise that it is neoliberalism that caused the current suffering of working people in the USA and elsewhere...
    Notable quotes:
    "... Working class wages destroyed. The wages of the low paid lowered. Ordinary people robbed of holiday and sickness pay. Working people priced out of ever owning their own home. Our city centers socially cleansed of the working class. Poor people forced to fight like rats in sacks with even poorer foreigners for jobs, housing, school places and social and health services. ..."
    "... Keep going mate. Continue to pump out that snobbish attitude because every time you do you've bagged Mr Trump, Mr Farage and Ms LePen another few votes. ..."
    "... I recall a time when any suggestion that immigration may be too high was silenced by cries of racism, eventually that label was misused so often that it lost its potency, one gets the sense that this trend for dubbing those who hold certain opinions as somehow unintelligent will go the same way. People are beginning to see through this most hateful tactic of the Modern Left. ..."
    "... Which is why I think Mr D'Ancona and many others are wrong to say that Farage and Trump will face the whirlwind when voters realise that their promises were all unachievable. The promises were much less important than the chance to slap the political world in the face. Given another chance, a lot of voters will do the same again. ..."
    "... I think the author completely misses the most salient point from the two events he cites: simply that the *vast* majority of people have become completely disenfranchised with the utter corruption that is mainstream politics today. ..."
    "... It doesn't matter who is voted in, the status quo [big business and the super-rich get wealthier whilst the middle is squeezed and the poorest are destroyed] remains. ..."
    "... The votes for Brexit and Trump are as much a rejection of "establishment" as anything else. Politicians in both countries heed these warnings at their peril... ..."
    "... The majority of the people are sick and tired of PC ism and the zero hour, minimum wage economy that both Britain and America have suffered under "globalisation". And of the misguided "[neo]liberal" agenda of much of the media which simply does not speak to or for society. ..."
    "... People in western democracies are rising up through the ballot box to defeat PC [neo]liberalism and globalisation that has done so much to impoverish Europe and America morally and economically. To the benefit of the tax haven corporates. ..."
    "... Globalisation disembowelled American manufacturing so the likes of Blair and the Clintons could print money. The illimitable lives they destroyed never entered their calculus. ..."
    "... I have stood in the blue lane in Atlanta waiting for my passport to be processed; in the adjoining lane was a young British female student (so she said to the official). The computer revealed she had overstayed her visa by 48 hours the last time she visited. She was marched out by two armed tunics to the next plane home. That's how Europeans get treated if they try to enter America illegally. Why the demented furor over returning illegal Hispanics or anyone else? ..."
    Nov 14, 2016 | www.theguardian.com

    IanPitch 12h ago

    Surely the people who voted for Trump and Farage are too stupid to realise the sheer, criminal folly of their decision...

    thoughtcatcher -> IanPitch 12h ago

    Working class wages destroyed. The wages of the low paid lowered. Ordinary people robbed of holiday and sickness pay. Working people priced out of ever owning their own home. Our city centers socially cleansed of the working class. Poor people forced to fight like rats in sacks with even poorer foreigners for jobs, housing, school places and social and health services.

    But yeah, they voted against the elite because they are "stupid".

    attila9000 -> IanPitch 11h ago

    I think at some point a lot of them will realize they have been had, but then they will probably just blame immigrants, or the EU. Anything that means they don't have to take responsibility for their own actions. It would appear there is a huge pool of people who can be conned into acting against their own self interest.

    jonnyoyster -> IanPitch 11h ago

    Keep going mate. Continue to pump out that snobbish attitude because every time you do you've bagged Mr Trump, Mr Farage and Ms LePen another few votes. Most people don't appreciate being talked down to and this arrogant habit of calling those who hold views contrary to your own 'stupid' is encouraging more and more voters to ditch the established parties in favour of the new.

    I recall a time when any suggestion that immigration may be too high was silenced by cries of racism, eventually that label was misused so often that it lost its potency, one gets the sense that this trend for dubbing those who hold certain opinions as somehow unintelligent will go the same way. People are beginning to see through this most hateful tactic of the Modern Left.

    DilemmataDocta -> IanPitch 11h ago

    A lot of the people who put their cross against Brexit or Trump weren't actually voting for anything. They were just voting against this, that or the other thing about the world that they disliked. It was voting as a gesture.

    Which is why I think Mr D'Ancona and many others are wrong to say that Farage and Trump will face the whirlwind when voters realise that their promises were all unachievable. The promises were much less important than the chance to slap the political world in the face. Given another chance, a lot of voters will do the same again.


    Sproggit 12h ago

    I think the author completely misses the most salient point from the two events he cites: simply that the *vast* majority of people have become completely disenfranchised with the utter corruption that is mainstream politics today.

    It doesn't matter who is voted in, the status quo [big business and the super-rich get wealthier whilst the middle is squeezed and the poorest are destroyed] remains.

    The votes for Brexit and Trump are as much a rejection of "establishment" as anything else. Politicians in both countries heed these warnings at their peril...

    NotoBlair 11h ago

    OMG, the lib left don't Geddit do they?

    The majority of the people are sick and tired of PC ism and the zero hour, minimum wage economy that both Britain and America have suffered under "globalisation". And of the misguided "[neo]liberal" agenda of much of the media which simply does not speak to or for society.

    People in western democracies are rising up through the ballot box to defeat PC [neo]liberalism and globalisation that has done so much to impoverish Europe and America morally and economically. To the benefit of the tax haven corporates.

    The sour grapes bleating of the lib left who refuse to accept the democratic will of the people is a movement doomed failure.

    Frankincensedabit 11h ago

    Malign to whom? Wall Street and people who want us all dead?

    Globalisation disembowelled American manufacturing so the likes of Blair and the Clintons could print money. The illimitable lives they destroyed never entered their calculus.

    I have stood in the blue lane in Atlanta waiting for my passport to be processed; in the adjoining lane was a young British female student (so she said to the official). The computer revealed she had overstayed her visa by 48 hours the last time she visited. She was marched out by two armed tunics to the next plane home. That's how Europeans get treated if they try to enter America illegally. Why the demented furor over returning illegal Hispanics or anyone else?

    I likely wouldn't have voted at all. But all my life the occupants of the White House represented the interests of those nobody could ever identify. The owners of the media and the numbered accounts who took away the life-chances of U.S. citizens by the million and called any of them who objected a thick white-trash bigot. Whatever Trump is, he will be different.

    [Nov 08, 2016] Like rapists neoliberals do not take no for the answer and will push Britain back in the EU again until the right result was achieved.

    Nov 08, 2016 | www.nakedcapitalism.com

    Carolinian November 7, 2016 at 3:11 pm

    Raimondo–globalism is the issue

    That's why a British court has effectively overturned the results of the Brexit vote – in a lawsuit brought by a hedge fund manager and former model – and thrown the fate of the country into the hands of pro-EU Tories, and their Labor and Liberal Democrat collaborators.

    This stunning reversal was baked in to the legislation that enabled the referendum to begin with, and is par for the course as far as EU referenda are concerned: in 1992,

    Danish voters rejected the EU, only to have the Euro-crats demand a rematch with a "modified" EU treaty which won narrowly. There have been repeated attempts to modify the modifications, which have all failed. Ireland voted against both the Lisbon Treaty and the Nice Treaty, only to have the issue brought up again until the "right" result was achieved.

    http://original.antiwar.com/justin/2016/11/06/bringing-globalist-monster/

    [Nov 08, 2016] The real danger of serious election-rigging: electronic voting machines. How do we know the machine *really* recorded everyones votes correctly? Insrtead we have anti-russian hysteria fed to us 24 x 7

    Notable quotes:
    "... "Yet commentators who have been ready and willing to attribute Donald Trump's success to anger, authoritarianism, or racism rather than policy issues have taken little note of the extent to which Mr. Sanders's support is concentrated not among liberal ideologues but among disaffected white men." ... ..."
    "... poor pk a leader of the Stalinist press ..."
    "... the surprising success of Bernie Sanders -- a Brooklyn-born, Jewish socialist -- in the primaries is solid proof that the electorate was open to a coherent argument for genuine progressive change, and that a substantial portion of that electorate is not acting on purely racist and sexist impulses, as so many progressive commentators say. ..."
    "... "I will live my life calmly and my children will be just fine. I will live my life calmly and my children will be just fine." That assumes you're about 85 years old...and don't have long to live! ..."
    "... Laid out by whom? By the commercial "media" hype machine that has 12-16 hours of airtime to fill every day with the as sensationalized as possible gossip (to justify the price for the paid advertisements filling the remaining hours). ..."
    "... Killary Clinton got no closer than Ann Arbor this weekend, a message! ..."
    "... Mr. Krugman forgot to list the collusion of the DNC and the Clinton campaign to work against Sanders. ..."
    "... putting crooked in the same sentence as Clinton or DNC is duplicative wording. This mortification is brought to US by the crooked and the stalinist press that calls crooked virtue. ..."
    "... Krugman did so much to help create the mass of white working class discontent that is electing Trump. Krugman and co cheering on NAFTA/PNTR/WTO etc, US deindustrialization, collapse of middle class... ..."
    "... Hopefully the working class masses will convince our rulers to abandon free trade before every last factory is sold off or dismantled and the US falls to the depths of a Chad or an Armenia. ..."
    economistsview.typepad.com

    anne -> anne... , November 07, 2016 at 01:47 PM

    http://krugman.blogs.nytimes.com/2016/05/23/the-truth-about-the-sanders-movement/

    May 23, 2016

    The Truth About the Sanders Movement
    By Paul Krugman

    In short, it's complicated – not all bad, by any means, but not the pure uprising of idealists the more enthusiastic supporters imagine.

    The political scientists Christopher Achen and Larry Bartels have an illuminating discussion of Sanders support. The key graf that will probably have Berniebros boiling is this:

    "Yet commentators who have been ready and willing to attribute Donald Trump's success to anger, authoritarianism, or racism rather than policy issues have taken little note of the extent to which Mr. Sanders's support is concentrated not among liberal ideologues but among disaffected white men." ...

    [ Yes, I do find defaming people by speculation or stereotype to be beyond saddening. ]

    ilsm -> anne... , November 07, 2016 at 03:53 PM
    poor pk a leader of the Stalinist press
    anne -> Chris Lowery ... , November 07, 2016 at 10:28 AM
    The fact that Obama either won, or did so much better than Hillary appears to be doing with, the white working-class vote in so many key battleground states, as well as the surprising success of Bernie Sanders -- a Brooklyn-born, Jewish socialist -- in the primaries is solid proof that the electorate was open to a coherent argument for genuine progressive change, and that a substantial portion of that electorate is not acting on purely racist and sexist impulses, as so many progressive commentators say.

    And her opponent was/is incapable of debating on substance, as there was/is neither coherence nor consistency in any part of his platform -- nor that of his party....

    [ Compelling argument. ]

    JohnH : , November 07, 2016 at 10:26 AM
    Question is, will Krugman be able to move on after the election...and talk about something useful? Like how to get Hillary to recognize and deal with inequality...
    JohnH : , November 07, 2016 at 10:29 AM
    Barbara Ehrenreich: "Forget fear and loathing. The US election inspires projectile vomiting. The most sordid side of our democracy has been laid out for all to see. But that's only the beginning: whoever wins, the mutual revulsion will only intensify... With either Clinton or Trump, we will be left to choke on our mutual revulsion."
    JohnH -> JohnH... , November 07, 2016 at 10:29 AM
    Link: https://www.theguardian.com/commentisfree/2016/nov/03/us-election-projectile-vomiting-barbara-ehrenreich
    JohnH -> Bloix... , November 07, 2016 at 04:59 PM
    "I will live my life calmly and my children will be just fine. I will live my life calmly and my children will be just fine." That assumes you're about 85 years old...and don't have long to live!
    ilsm -> JohnH... , November 07, 2016 at 03:54 PM
    the great mortification, these two.
    cm -> JohnH... , November 07, 2016 at 11:11 PM
    Laid out by whom? By the commercial "media" hype machine that has 12-16 hours of airtime to fill every day with the as sensationalized as possible gossip (to justify the price for the paid advertisements filling the remaining hours).
    Tom aka Rusty : , November 07, 2016 at 11:17 AM
    Something interesting today.... President Obama came to Michigan. I fully expected him to speak in Detroit with a get out the vote message. Instead he is in Ann Arbor, speaking to an overwhelmingly white and white-collar audience. On a related note, the Dems have apparently written off the white blue collar vote in Michigan, even much of the union vote. the union leaders are pro Clinton, but the workers not so much. Strange year.
    ilsm -> Tom aka Rusty... , November 07, 2016 at 03:55 PM
    Killary Clinton got no closer than Ann Arbor this weekend, a message!
    John M : , November 07, 2016 at 11:26 AM
    The real danger of serious election-rigging: electronic voting machines. How do we know the machine *really* recorded everyone's votes correctly? (Did any Florida county ever give Al Gore negative something votes?)
    Julio -> John M ... , November 08, 2016 at 06:42 AM
    That's a big subject but you are right, that is the biggest risk of significant fraud. Not just the voting machines, but the automatic counting systems. Other forms of possible election fraud are tiny by comparison.
    Enquiring Mind : , November 07, 2016 at 11:48 AM
    Here is the transcript from 60 Minutes about the Luntz focus group rancor. Instructive to read about the depth of feeling in case you didn't see the angry, disgusted faces of citizens.

    http://www.cbsnews.com/news/60-minutes-american-voters-on-trump-clinton/

    ScottB : , November 07, 2016 at 12:08 PM
    Mr. Krugman forgot to list the collusion of the DNC and the Clinton campaign to work against Sanders.
    ilsm -> ScottB... , November 07, 2016 at 03:57 PM
    putting crooked in the same sentence as Clinton or DNC is duplicative wording. This mortification is brought to US by the crooked and the stalinist press that calls crooked virtue.
    Before the 1970s the US was both rich and protectionist - no look at our horrible roads and hopeless people - the miracle of free trade! : , November 07, 2016 at 07:13 PM
    Krugman did so much to help create the mass of white working class discontent that is electing Trump. Krugman and co cheering on NAFTA/PNTR/WTO etc, US deindustrialization, collapse of middle class...

    Hopefully the working class masses will convince our rulers to abandon free trade before every last factory is sold off or dismantled and the US falls to the depths of a Chad or an Armenia.

    [Nov 07, 2016] Inside that Great Wage Growth Number

    Notable quotes:
    "... In our artificial economy real things do not matter so much, but politics and managing the perceptions of the public are of paramount importance. And so the 'Goldilocks' Jobs Report, which is how the business TV channels described that lukewarm piece of dreck, did little to rally the markets except fleetingly intraday. ..."
    "... The headline includes ALL employees, but if you take out the top 15-20% of managers, the average hourly earning growth showed a pronounced downward divergence to a lower growth rate. The BLS switched to this number including all employees a few years ago from the non-supervisory number. As a rule of thumb, when someone shows you the 'average' number, find out the median number for the same sample. Especially in these days of historically high inequality. ..."
    Nov 07, 2016 | jessescrossroadscafe.blogspot.com

    "The wealth of another region excites their greed; and if it is weak, their lust for power as well. Nothing from the rising to the setting of the sun is enough for them.

    Among all others only they are compelled to attack the poor as well as the rich. Robbery, rape, and slaughter they falsely call empire; and where they make a desert, they call it peace."

    Tacitus


    "He who makes a beast of himself gets rid of the pain of being a man."

    Samuel Johnson

    In our artificial economy real things do not matter so much, but politics and managing the perceptions of the public are of paramount importance. And so the 'Goldilocks' Jobs Report, which is how the business TV channels described that lukewarm piece of dreck, did little to rally the markets except fleetingly intraday.

    In the first chart below I take a look inside that 'average hourly earnings growth' number.

    The headline includes ALL employees, but if you take out the top 15-20% of managers, the average hourly earning growth showed a pronounced downward divergence to a lower growth rate. The BLS switched to this number including all employees a few years ago from the non-supervisory number. As a rule of thumb, when someone shows you the 'average' number, find out the median number for the same sample. Especially in these days of historically high inequality.

    Be that as it may, the markets overall were in a flight to safety as the financiers bowed to their fears of the upcoming presidential election, that something might happen that will upset their status quo.

    Not the status quo- theirs.

    ... ... ...

    [Nov 07, 2016] More Jobs, a Strong Economy, and a Threat to Institutions

    Notable quotes:
    "... it's easy to imagine a President Trump refusing to heed our own highest court, which, as President Andrew Jackson observed, has no way, other than respect of institutions, to enforce its decisions. ..."
    "... It's easy to carp like this but the sclerotic elite in charge of the country has failed to address demographic concerns, and has stamped out any politically incorrect thoughts as being signs of baseness. ..."
    "... Now they are so upset that a challenger has arisen. It's unfortunate that this particular challenger has no background in government and will probably harm our economic growth with his lack of skill, but the elites will have to eat the cake they baked. ..."
    "... Economists told us that free trade deals and open borders would make us prosperous and yet that hasn't happens. ..."
    "... The technicians running trade policy, monetary policy and fiscal policy haven't held up their end of the bargain. ..."
    "... Wealth and power has been redistributed upwards. ..."
    "... The union movement has been destroyed in outright class war. ..."
    "... The corporate media spread lies and distraction. It induces both apathy and a rat race/dog-eat-dog mentality. ..."
    "... Consider how far we've moved right, so that Nixon e.g. would be considered hopelessly and radically leftist today. Given that, moving left should be one of the first things you consider. ..."
    "... Yes, we've seen right wing policies killing jobs and steering wealth to the wealthy, and that's bad policy. But unfortunately it seems it's always possible to do *worse*. ..."
    "... Trump's policies would double down on wealth transfer, while he spouts the typical RW mantra of "(my dopey policy which would destroy jobs) would be good for jobs." ..."
    "... Economic growth fueled by foreign oil is nice while it lasts but what will happen to the country when the oil runs out or we are forced to fight a war that disrupts the supply? ..."
    Nov 07, 2016 | economistsview.typepad.com
    Adam Davidson in the New Yorker:
    More Jobs, a Strong Economy, and a Threat to Institutions : ...Institutions are significant to economists, who have come to see that countries become prosperous not because they have bounteous natural resources or an educated population or the most advanced technology but because they have good institutions. Crucially, formal structures are supported by informal, often unstated, social agreements. A nation not only needs courts; its people need to believe that those courts can be fair. ...

    Over most of history, a small élite confiscated wealth from the poor. Subsistence farmers lived under rules designed to tax them so that the rulers could live in palaces and pay for soldiers to maintain their power. Every now and then, though, a system appeared in which leaders were forced to accommodate the needs of at least some of their citizens. ... The societies with the most robust systems for forcing the powerful to accommodate some of the needs of the powerless became wealthier and more peaceful. ... Most nations without institutions to check the worst impulses of the rich and powerful stay stuck in poverty and dysfunction. ...

    This year's Presidential election has alarmed economists for several reasons. No economist, save one , supports Donald J. Trump's stated economic plans, but an even larger concern is that, were he elected, Trump would attack the very institutions that have provided our economic stability. In his campaign, Trump has shown outright contempt for courts, free speech, international treaties, and many other pillars of the American way of life. There is little reason to think that, if granted the Presidency, Trump would soften his stand. ...

    ...it's easy to imagine a President Trump refusing to heed our own highest court, which, as President Andrew Jackson observed, has no way, other than respect of institutions, to enforce its decisions. No one knows what Trump would do as President, but, based on his statements on the campaign trail, it's possible to imagine a nation where people have less confidence in the courts, the military, and their rights to free speech and assembly. When this happens, history tells us, people stop dreaming about what they could have if they invest in education, new businesses, and new ideas. They focus, instead, on taking from others and holding tightly to what they've already amassed. Those societies, without the institutions that protect us from our worst impulses, become poorer, uglier, more violent. That is how nations fail.

    Alex S : , November 05, 2016 at 01:15 PM
    It's easy to carp like this but the sclerotic elite in charge of the country has failed to address demographic concerns, and has stamped out any politically incorrect thoughts as being signs of baseness.

    Now they are so upset that a challenger has arisen. It's unfortunate that this particular challenger has no background in government and will probably harm our economic growth with his lack of skill, but the elites will have to eat the cake they baked.

    Peter K. : , November 05, 2016 at 01:23 PM
    "No one knows what Trump would do as President, but, based on his statements on the campaign trail, it's possible to imagine a nation where people have less confidence in the courts, the military, and their rights to free speech and assembly. When this happens, history tells us, people stop dreaming about what they could have if they invest in education, new businesses, and new ideas. They focus, instead, on taking from others and holding tightly to what they've already amassed. Those societies, without the institutions that protect us from our worst impulses, become poorer, uglier, more violent. That is how nations fail."

    This is all true but let's provide a little more context than the totebaggers' paint-by-numbers narrative.

    • Economists told us that free trade deals and open borders would make us prosperous and yet that hasn't happens.
    • The technicians running trade policy, monetary policy and fiscal policy haven't held up their end of the bargain.
    • Wealth and power has been redistributed upwards.
    • The union movement has been destroyed in outright class war.
    • The corporate media spread lies and distraction. It induces both apathy and a rat race/dog-eat-dog mentality.

    The Democratic Party has been moved to right as the middle class has struggled.

    And more and more people become susceptible to demagogues like Trump as Democrats try to play both sides of the fence, instead of standing foresquarely behind the job class.

    Let's hope we don't find out what Trump does if elected. My guess is that he'd delegate foreign and domestic policy to Mike Pence as Trump himself would be free to pursue his own personal grudges via whatever means are available.

    Alex S -> Peter K.... , -1
    As we can see here, through leftist glasses, the only possible remedy for solving a problem is moving left.
    Julio -> Alex S... , November 05, 2016 at 03:02 PM
    Consider how far we've moved right, so that Nixon e.g. would be considered hopelessly and radically leftist today.
    Given that, moving left should be one of the first things you consider.
    anne -> Julio ... , November 05, 2016 at 03:26 PM
    Consider how far we've moved right, so that Nixon e.g. would be considered hopelessly and radically leftist today. Given that, moving left should be one of the first things you consider.

    [ An important criticism. ]

    Alex S -> Julio ... , November 05, 2016 at 03:50 PM
    We have moved left. The gays and blacks are treated better. We no longer tolerate wars like Vietnam. The Iraq war was an order of magnitude smaller. War helps scientific discovery and progress. http://www.nytimes.com/2014/06/14/upshot/the-lack-of-major-wars-may-be-hurting-economic-growth.html?_r=0 For more capable nations to help civilize weaker and more chaotic ones is helpful, but leftists won't accept that.
    Peter K. -> Alex S... , November 05, 2016 at 03:12 PM
    As Julio points out, under any objective analysis, politics have moved to the right.

    Rightwing policy solutions have been tried: tax cuts for the rich, deregulation, breaking of unions, etc.

    We've seen the results. Stagnation and slow growth.

    The social democratic post-war years were much better with shared prosperity for all citizens.

    JohnH -> Peter K.... , November 05, 2016 at 03:53 PM
    "It's possible to imagine a nation where people have less confidence in the courts."

    When Obama refuses to jail torturers or those responsible for mortgage fraud, we the people are justified in having less confidence in the courts.

    Peter Liepmann -> Peter K.... , November 05, 2016 at 05:52 PM
    Yes, we've seen right wing policies killing jobs and steering wealth to the wealthy, and that's bad policy. But unfortunately it seems it's always possible to do *worse*.

    Trump's policies would double down on wealth transfer, while he spouts the typical RW mantra of "(my dopey policy which would destroy jobs) would be good for jobs."

    Tim Harford made a good case for trust accounting for 99% of the difference in per capita GNP between the US and Somalia.

    ""If you take a broad enough definition of trust, then it would explain basically all the difference between the per capita income of the United States and Somalia," ventures Steve Knack, a senior economist at the World Bank who has been studying the economics of trust for over a decade. That suggests that trust is worth $12.4 trillion dollars a year to the U.S., which, in case you are wondering, is 99.5% of this country's income (2006 figures). If you make $40,000 a year, then $200 is down to hard work and $39,800 is down to trust.

    How could that be? Trust operates in all sorts of ways, from saving money that would have to be spent on security to improving the functioning of the political system. But above all, trust enables people to do business with each other. Doing business is what creates wealth." goo.gl/t3OqHc

    anne -> Peter Liepmann... , November 05, 2016 at 06:38 PM
    Precise references, including links are necessary.
    anne : , November 05, 2016 at 01:49 PM
    Adam Davidson in the essay refers to this paper, which is well worth reading:

    https://www.aeaweb.org/articles?id=10.1257/aer.20140913

    April, 2016

    Presidents and the US Economy: An Econometric Exploration
    By Alan S. Blinder and Mark W. Watson

    Abstract

    The US economy has performed better when the president of the United States is a Democrat rather than a Republican, almost regardless of how one measures performance. For many measures, including real GDP growth (our focus), the performance gap is large and significant. This paper asks why. The answer is not found in technical time series matters nor in systematically more expansionary monetary or fiscal policy under Democrats. Rather, it appears that the Democratic edge stems mainly from more benign oil shocks, superior total factor productivity (TFP) performance, a more favorable international environment, and perhaps more optimistic consumer expectations about the near-term future.

    Alex S -> anne... , November 05, 2016 at 02:59 PM
    Economic growth fueled by foreign oil is nice while it lasts but what will happen to the country when the oil runs out or we are forced to fight a war that disrupts the supply?
    pgl -> Alex S... , November 05, 2016 at 03:03 PM
    I was in college in the mid 1970's and we asked this question a lot. Some think this worry has gone away. I don't agree with those types. Which is why a green technology investment drive makes a lot of sense for so many reasons.
    Alex S -> anne... , November 05, 2016 at 04:03 PM
    Quote from the paper you linked to: "Arguably, oil shocks have more to do with US foreign policy than with US economic policy-the two Gulf Wars being prominent examples. That said, several economists have claimed that US monetary policy played an important role in bringing on the oil shocks. See, for example, Barsky and Kilian (2002)."
    anne -> Alex S... , November 05, 2016 at 04:13 PM
    Do set down a link to a reference when possible:

    http://www.nber.org/papers/w8389

    July, 2001

    Do We Really Know that Oil Caused the Great Stagflation? A Monetary Alternative
    By Robert B. Barsky and Lutz Kilian

    Abstract

    This paper argues that major oil price increases were not nearly as essential a part of the causal mechanism that generated the stagflation of the 1970s as is often thought. There is neither a theoretical presumption that oil supply shocks are stagflationary nor robust empirical evidence for this view. In contrast, we show that monetary expansions and contractions can generate stagflation of realistic magnitude even in the absence of supply shocks. Furthermore, monetary fluctuations help to explain the historical movements of the prices of oil and other commodities, including the surge in the prices of industrial commodities that preceded the 1973/74 oil price increase. Thus, they can account for the striking coincidence of major oil price increases and worsening stagflation.

    Alex S -> Alex S... , November 05, 2016 at 04:22 PM
    My quote dragged on too long. I should have ended it with the first sentence. Monetary policy could play a role but foreign policy could still be the biggest factor.
    Peter K. -> anne... , November 05, 2016 at 03:09 PM
    http://www.bloomberg.com/news/articles/2016-10-25/fed-inclined-to-raise-rates-if-next-president-pumps-up-budget

    "Former Fed Vice Chairman Alan Blinder said he's skeptical that fiscal policy will be loosened a great deal if Clinton wins the election, as seems likely based on recent voter surveys.

    "She is promising not to make budget deficits bigger by her programs," said Blinder, who is now a professor at Princeton University. "Whatever fiscal stimulus there is ought to be small enough for the Fed practically to ignore it."

    PGL told us that Hillary's fiscal program would be YUGE.

    Like with Trump everything he says is a lie.

    anne -> Peter K.... , November 05, 2016 at 03:56 PM
    Dean Baker in "Rigged" * reminds me of the lasting limits to growth that appear to follow the sacrifice of growth, especially to the extent of allowing a recession, for the sake of budget balancing during a time of surrounding economic weakness:

    * http://deanbaker.net/images/stories/documents/Rigged.pdf

    October, 2016

    Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer
    By Dean Baker

    anne -> Peter K.... , November 05, 2016 at 04:01 PM
    Simply excellent:

    http://deanbaker.net/images/stories/documents/Rigged.pdf

    October, 2016

    Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer
    By Dean Baker

    Introduction: Trading in Myths

    In winter 2016, near the peak of Bernie Sanders' bid for the Democratic presidential nomination, a new line became popular among the nation's policy elite: Bernie Sanders is the enemy of the world's poor. Their argument was that Sanders, by pushing trade policies to help U.S. workers, specifically manufacturing workers, risked undermining the well-being of the world's poor because exporting manufactured goods to the United States and other wealthy countries is their path out of poverty. The role model was China, which by exporting has largely eliminated extreme poverty and drastically reduced poverty among its population. Sanders and his supporters would block the rest of the developing world from following the same course.

    This line, in its Sanders-bashing permutation, appeared early on in Vox, the millennial-oriented media upstart, and was quickly picked up elsewhere (Beauchamp 2016). After all, it was pretty irresistible. The ally of the downtrodden and enemy of the rich was pushing policies that would condemn much of the world to poverty.

    The story made a nice contribution to preserving the status quo, but it was less valuable if you respect honesty in public debate.

    The problem in the logic of this argument should be apparent to anyone who has taken an introductory economics course. It assumes that the basic problem of manufacturing workers in the developing world is the need for someone who will buy their stuff. If people in the United States don't buy it, then the workers will be out on the street and growth in the developing world will grind to a halt. In this story, the problem is that we don't have enough people in the world to buy stuff. In other words, there is a shortage of demand. But is it really true that no one else in the world would buy the stuff produced by manufacturing workers in the developing world if they couldn't sell it to consumers in the United States? Suppose people in the developing world bought the stuff they produced raising their living standards by raising their own consumption.

    That is how the economics is supposed to work. In the standard theory, general shortages of demand are not a problem. Economists have traditionally assumed that economies tended toward full employment. The basic economic constraint was a lack of supply. The problem was that we couldn't produce enough goods and services, not that we were producing too much and couldn't find anyone to buy them. In fact, this is why all the standard models used to analyze trade agreements like the Trans-Pacific Partnership assume trade doesn't affect total employment. Economies adjust so that shortages of demand are not a problem.

    In this standard story (and the Sanders critics are people who care about textbook economics), capital flows from slow-growing rich countries, where it is relatively plentiful and so gets a low rate of return, to fast-growing poor countries, where it is scarce and gets a high rate of return....

    pgl -> Peter K.... , November 06, 2016 at 03:37 AM
    It is yuuuuge - and no I did not say anything of the sort. Rather I noted it would be less than 1% of GDP. This is what I get for trying to get the facts right. It gets too complicated for you even when we simplify things so you get angry and start screaming "liar". Grow up.
    mrrunangun : , November 05, 2016 at 06:23 PM
    Per capta GDP grew from $51,100 to $51,400 between July 1 2015 and July 1 2016. This 0.6% growth does not seem to me to be a statistic supporting claims of improving employment and improving wage growth.

    Dean has suggested in one of his commentaries that wage growth may be an artifact of a decline in the quality of health insurance coverage. Wage growth is not figured net of increased outlays for deductibles and copays related to changes in health insurance. PPACA discourages low deductible and low copay health plans by placing a "Cadillac tax" on them, or at least threatening to do so. The consequent rise in wage workers' outlays for copays and deductibles are not captured in the statistics that claim to measure wage gains. This results in an income transfer from the well to the sick, but can produce statistics that can be interpreted in politically convenient ways by those so inclined

    anne -> mrrunangun... , November 05, 2016 at 06:33 PM
    https://fred.stlouisfed.org/graph/?g=8cpp

    August 4, 2014

    Real per capita Gross Domestic Product for United States and United Kingdom, 2007-2015

    (Percent change)


    https://fred.stlouisfed.org/graph/?g=8cpv

    August 4, 2014

    Real per capita Gross Domestic Product for United States and United Kingdom, 2007-2015

    (Indexed to 2007)

    anne -> mrrunangun... , November 05, 2016 at 06:35 PM
    https://fred.stlouisfed.org/graph/?g=8bue

    January 15, 2016

    Employment Cost Indexes for Wages and Salaries & Benefits, 2007-2016

    (Percent change)


    https://fred.stlouisfed.org/graph/?g=8bua

    January 15, 2016

    Employment Cost Indexes for Wages and Salaries & Benefits, 2002-2016

    (Percent change)

    pgl -> mrrunangun... , November 06, 2016 at 03:38 AM
    Excellent perspective. Let me say well done before PeterK gets angry and calls you a liar.
    ilsm -> mrrunangun... , November 06, 2016 at 05:10 AM
    I had a job offer about 15 years ago, the quoted salary was not to my liking so the HR type told me how much the Cadillac insurance was "worth".

    I do not think you 'get' why Cadillac plans are taxed............

    or

    'income transfers'......

    mrrunangun -> ilsm... , November 06, 2016 at 12:25 PM
    I get why the plans are taxed. I don't believe that the results of that policy have been beneficial for the bulk of the population. Most of the good done by PPACA was done by the expansion of Medicaid eligibility. I believe that requiring the working poor people to settle for high deductible high copay policies has had the practical effect of requiring them to choose between adequate medical and further impoverishment. I do not believe that the PPACA could not have been financed in a way less injurious to the working poor. As the insurers have been unable to make money in this deal, the hospital operators seem to have been the only winners in that their bad debt problems have been ameliorated.
    cm : , November 05, 2016 at 11:09 PM
    "people stop dreaming about what they could have if they invest in education, new businesses, and new ideas"

    And this is entirely rational, as in the situation described, the fruits of their efforts will likely be siphoned from their pockets by the elites and generally rent-seekers with higher social standing and leverage, or at best their efforts will amount to too little to be worth the risk (including the risk of wasting one's time i.e. opportunity cost). It also becomes correspondingly harder to convince and motivate others to join or fund any worthwhile efforts. What also happens (and has happened in "communism") is that people take their interests private, i.e. hidden from the view of those who would usurp or derail them.

    Chris G : , -1
    "Those who witness extreme social collapse at first hand seldom describe any deep revelation about the truths of human existence. What they do mention, if asked, is their surprise at how easy it is to die.

    The pattern of ordinary life, in which so much stays the same from one day to the next, disguises the fragility of its fabric. How many of our activities are made possible by the impression of stability that pattern gives? So long as it repeats, or varies steadily enough, we are able to plan for tomorrow as if all the things we rely on and don't think about too carefully will still be there. When the pattern is broken, by civil war or natural disaster or the smaller-scale tragedies that tear at its fabric, many of those activities become impossible or meaningless, while simply meeting needs we once took for granted may occupy much of our lives.

    What war correspondents and relief workers report is not only the fragility of the fabric, but the speed with which it can unravel. As we write this, no one can say with certainty where the unraveling of the financial and commercial fabric of our economies will end. Meanwhile, beyond the cities, unchecked industrial exploitation frays the material basis of life in many parts of the world, and pulls at the ecological systems which sustain it.

    Precarious as this moment may be, however, an awareness of the fragility of what we call civilisation is nothing new.

    'Few men realise,' wrote Joseph Conrad in 1896, 'that their life, the very essence of their character, their capabilities and their audacities, are only the expression of their belief in the safety of their surroundings.' Conrad's writings exposed the civilisation exported by European imperialists to be little more than a comforting illusion, not only in the dark, unconquerable heart of Africa, but in the whited sepulchres of their capital cities. The inhabitants of that civilisation believed 'blindly in the irresistible force of its institutions and its morals, in the power of its police and of its opinion,' but their confidence could be maintained only by the seeming solidity of the crowd of like-minded believers surrounding them. Outside the walls, the wild remained as close to the surface as blood under skin, though the city-dweller was no longer equipped to face it directly.

    Bertrand Russell caught this vein in Conrad's worldview, suggesting that the novelist 'thought of civilised and morally tolerable human life as a dangerous walk on a thin crust of barely cooled lava which at any moment might break and let the unwary sink into fiery depths.' What both Russell and Conrad were getting at was a simple fact which any historian could confirm: human civilisation is an intensely fragile construction. It is built on little more than belief: belief in the rightness of its values; belief in the strength of its system of law and order; belief in its currency; above all, perhaps, belief in its future.

    Once that belief begins to crumble, the collapse of a civilisation may become unstoppable. That civilisations fall, sooner or later, is as much a law of history as gravity is a law of physics. What remains after the fall is a wild mixture of cultural debris, confused and angry people whose certainties have betrayed them, and those forces which were always there, deeper than the foundations of the city walls: the desire to survive and the desire for meaning."

    Source - http://dark-mountain.net/about/manifesto/

    [Nov 07, 2016] How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer

    economistsview.typepad.com

    anne -> Peter K.... , November 05, 2016 at 04:01 PM

    Simply excellent:

    http://deanbaker.net/images/stories/documents/Rigged.pdf

    October, 2016

    Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer
    By Dean Baker

    Introduction: Trading in Myths

    In winter 2016, near the peak of Bernie Sanders' bid for the Democratic presidential nomination, a new line became popular among the nation's policy elite: Bernie Sanders is the enemy of the world's poor. Their argument was that Sanders, by pushing trade policies to help U.S. workers, specifically manufacturing workers, risked undermining the well-being of the world's poor because exporting manufactured goods to the United States and other wealthy countries is their path out of poverty. The role model was China, which by exporting has largely eliminated extreme poverty and drastically reduced poverty among its population. Sanders and his supporters would block the rest of the developing world from following the same course.

    This line, in its Sanders-bashing permutation, appeared early on in Vox, the millennial-oriented media upstart, and was quickly picked up elsewhere (Beauchamp 2016). After all, it was pretty irresistible. The ally of the downtrodden and enemy of the rich was pushing policies that would condemn much of the world to poverty.

    The story made a nice contribution to preserving the status quo, but it was less valuable if you respect honesty in public debate.

    The problem in the logic of this argument should be apparent to anyone who has taken an introductory economics course. It assumes that the basic problem of manufacturing workers in the developing world is the need for someone who will buy their stuff. If people in the United States don't buy it, then the workers will be out on the street and growth in the developing world will grind to a halt. In this story, the problem is that we don't have enough people in the world to buy stuff. In other words, there is a shortage of demand. But is it really true that no one else in the world would buy the stuff produced by manufacturing workers in the developing world if they couldn't sell it to consumers in the United States? Suppose people in the developing world bought the stuff they produced raising their living standards by raising their own consumption.

    That is how the economics is supposed to work. In the standard theory, general shortages of demand are not a problem. Economists have traditionally assumed that economies tended toward full employment. The basic economic constraint was a lack of supply. The problem was that we couldn't produce enough goods and services, not that we were producing too much and couldn't find anyone to buy them. In fact, this is why all the standard models used to analyze trade agreements like the Trans-Pacific Partnership assume trade doesn't affect total employment. Economies adjust so that shortages of demand are not a problem.

    In this standard story (and the Sanders critics are people who care about textbook economics), capital flows from slow-growing rich countries, where it is relatively plentiful and so gets a low rate of return, to fast-growing poor countries, where it is scarce and gets a high rate of return....

    [Nov 07, 2016] Economists View More Jobs, a Strong Economy, and a Threat to Institutions

    Nov 07, 2016 | economistsview.typepad.com
    Adam Davidson in the New Yorker:
    More Jobs, a Strong Economy, and a Threat to Institutions : ...Institutions are significant to economists, who have come to see that countries become prosperous not because they have bounteous natural resources or an educated population or the most advanced technology but because they have good institutions. Crucially, formal structures are supported by informal, often unstated, social agreements. A nation not only needs courts; its people need to believe that those courts can be fair. ...

    Over most of history, a small élite confiscated wealth from the poor. Subsistence farmers lived under rules designed to tax them so that the rulers could live in palaces and pay for soldiers to maintain their power. Every now and then, though, a system appeared in which leaders were forced to accommodate the needs of at least some of their citizens. ... The societies with the most robust systems for forcing the powerful to accommodate some of the needs of the powerless became wealthier and more peaceful. ... Most nations without institutions to check the worst impulses of the rich and powerful stay stuck in poverty and dysfunction. ...

    This year's Presidential election has alarmed economists for several reasons. No economist, save one , supports Donald J. Trump's stated economic plans, but an even larger concern is that, were he elected, Trump would attack the very institutions that have provided our economic stability. In his campaign, Trump has shown outright contempt for courts, free speech, international treaties, and many other pillars of the American way of life. There is little reason to think that, if granted the Presidency, Trump would soften his stand. ...

    ...it's easy to imagine a President Trump refusing to heed our own highest court, which, as President Andrew Jackson observed, has no way, other than respect of institutions, to enforce its decisions. No one knows what Trump would do as President, but, based on his statements on the campaign trail, it's possible to imagine a nation where people have less confidence in the courts, the military, and their rights to free speech and assembly. When this happens, history tells us, people stop dreaming about what they could have if they invest in education, new businesses, and new ideas. They focus, instead, on taking from others and holding tightly to what they've already amassed. Those societies, without the institutions that protect us from our worst impulses, become poorer, uglier, more violent. That is how nations fail.

    Alex S : , November 05, 2016 at 01:15 PM
    It's easy to carp like this but the sclerotic elite in charge of the country has failed to address demographic concerns, and has stamped out any politically incorrect thoughts as being signs of baseness. Now they are so upset that a challenger has arisen. It's unfortunate that this particular challenger has no background in government and will probably harm our economic growth with his lack of skill, but the elites will have to eat the cake they baked.
    pgl -> Alex S... , November 05, 2016 at 01:51 PM
    Agreed. You should have seen Peter Navarro latest performance. He may be ruder than Trump himself and he certainly babbles gibberish.
    Peter K. : , November 05, 2016 at 01:23 PM
    "No one knows what Trump would do as President, but, based on his statements on the campaign trail, it's possible to imagine a nation where people have less confidence in the courts, the military, and their rights to free speech and assembly. When this happens, history tells us, people stop dreaming about what they could have if they invest in education, new businesses, and new ideas. They focus, instead, on taking from others and holding tightly to what they've already amassed. Those societies, without the institutions that protect us from our worst impulses, become poorer, uglier, more violent. That is how nations fail."

    This is all true but let's provide a little more context than the totebaggers' paint-by-numbers narrative.

    • Economists told us that free trade deals and open borders would make us prosperous and yet that hasn't happens.
    • The technicians running trade policy, monetary policy and fiscal policy haven't held up their end of the bargain.
    • Wealth and power has been redistributed upwards.
    • The union movement has been destroyed in outright class war.
    • The corporate media spread lies and distraction. It induces both apathy and a rat race/dog-eat-dog mentality.

    The Democratic Party has been moved to right as the middle class has struggled.

    And more and more people become susceptible to demagogues like Trump as Democrats try to play both sides of the fence, instead of standing foresquarely behind the job class.

    Let's hope we don't find out what Trump does if elected. My guess is that he'd delegate foreign and domestic policy to Mike Pence as Trump himself would be free to pursue his own personal grudges via whatever means are available.

    Peter K. -> Peter K.... , November 05, 2016 at 01:29 PM
    As Bernie Sanders's campaign demonstrated, there is still hope. In fact hope is growing.

    Lucky for us Sanders campaigned hard for Hillary, knowing what the stakes are.

    Given the way people like PGL treated Sanders during the campaign and given what Wikileaks showed, I doubt the reverse would have been true had Sanders won the primary.

    Peter K. -> Peter K.... , November 05, 2016 at 01:30 PM
    But then Sanders still would have beaten Trump easily.
    Gerri -> Peter K.... , November 06, 2016 at 06:39 AM
    The reverse would have been true, because we Democrats would have voted party above all else and especially in this election year. Remember "party" the thing that Bernie supporters and Bernie himself denigrated? I believe the term
    "elites" was used more than once to describe the party faithful.
    Alex S -> Peter K.... , -1
    As we can see here, through leftist glasses, the only possible remedy for solving a problem is moving left.
    Julio -> Alex S... , November 05, 2016 at 03:02 PM
    Consider how far we've moved right, so that Nixon e.g. would be considered hopelessly and radically leftist today.
    Given that, moving left should be one of the first things you consider.
    anne -> Julio ... , November 05, 2016 at 03:26 PM
    Consider how far we've moved right, so that Nixon e.g. would be considered hopelessly and radically leftist today.

    Given that, moving left should be one of the first things you consider.

    [ An important criticism. ]

    Alex S -> Julio ... , November 05, 2016 at 03:50 PM
    We have moved left. The gays and blacks are treated better. We no longer tolerate wars like Vietnam. The Iraq war was an order of magnitude smaller. War helps scientific discovery and progress. http://www.nytimes.com/2014/06/14/upshot/the-lack-of-major-wars-may-be-hurting-economic-growth.html?_r=0 For more capable nations to help civilize weaker and more chaotic ones is helpful, but leftists won't accept that.
    anne -> Alex S... , November 05, 2016 at 04:08 PM
    Oh, I understand:

    http://www.nytimes.com/2014/06/14/upshot/the-lack-of-major-wars-may-be-hurting-economic-growth.html

    June 13, 2014

    The Lack of Major Wars May Be Hurting Economic Growth
    By Tyler Cowen

    [ Who else could possibly have written such an essay? The guy is really, really scary. ]

    anne -> anne... , November 05, 2016 at 04:20 PM
    http://www.cepr.net/index.php/blogs/beat-the-press/does-the-right-hold-the-economy-hostage-to-advance-its-militarist-agenda

    June 14, 2014

    Does the Right Hold the Economy Hostage to Advance Its Militarist Agenda?

    That's one way to read Tyler Cowen's New York Times column * noting that wars have often been associated with major economic advances which carries the headline "the lack of major wars may be hurting economic growth." Tyler lays out his central argument:

    "It may seem repugnant to find a positive side to war in this regard, but a look at American history suggests we cannot dismiss the idea so easily. Fundamental innovations such as nuclear power, the computer and the modern aircraft were all pushed along by an American government eager to defeat the Axis powers or, later, to win the Cold War. The Internet was initially designed to help this country withstand a nuclear exchange, and Silicon Valley had its origins with military contracting, not today's entrepreneurial social media start-ups. The Soviet launch of the Sputnik satellite spurred American interest in science and technology, to the benefit of later economic growth."

    This is all quite true, but a moment's reflection may give a bit different spin to the story. There has always been substantial support among liberals for the sort of government sponsored research that he describes here. The opposition has largely come from the right. However the right has been willing to go along with such spending in the context of meeting national defense needs. Its support made these accomplishments possible.

    This brings up the suggestion Paul Krugman made a while back (jokingly) that maybe we need to convince the public that we face a threat from an attack from Mars. Krugman suggested this as a way to prompt traditional Keynesian stimulus, but perhaps we can also use the threat to promote an ambitious public investment agenda to bring us the next major set of technological breakthroughs.

    * http://www.nytimes.com/2014/06/14/upshot/the-lack-of-major-wars-may-be-hurting-economic-growth.html

    -- Dean Baker

    Alex S -> anne... , November 05, 2016 at 05:15 PM
    Three points

    1. Baker's peaceful spending scenario is not likely because of human nature.

    2. Even if Baker's scenario happened, a given dollar will be used more efficiently in a war. If there is a threat of losing, you have an incentive to cut waste and spend on what produces results.

    3. The United States would not exist at all if we had not conquered the territory.

    anne -> anne... , November 05, 2016 at 04:24 PM
    http://watson.brown.edu/costsofwar/files/cow/imce/papers/2016/Costs%20of%20War%20through%202016%20FINAL%20final%20v2.pdf

    September, 2016

    US Budgetary Costs of Wars through 2016: $4.79 Trillion and Counting
    Summary of Costs of the US Wars in Iraq, Syria, Afghanistan and Pakistan and Homeland Security
    By Neta C. Crawford

    Summary

    Wars cost money before, during and after they occur - as governments prepare for, wage, and recover from them by replacing equipment, caring for the wounded and repairing the infrastructure destroyed in the fighting. Although it is rare to have a precise accounting of the costs of war - especially of long wars - one can get a sense of the rough scale of the costs by surveying the major categories of spending.

    As of August 2016, the US has already appropriated, spent, or taken on obligations to spend more than $3.6 trillion in current dollars on the wars in Iraq, Afghanistan, Pakistan and Syria and on Homeland Security (2001 through fiscal year 2016). To this total should be added the approximately $65 billion in dedicated war spending the Department of Defense and State Department have requested for the next fiscal year, 2017, along with an additional nearly $32 billion requested for the Department of Homeland Security in 2017, and estimated spending on veterans in future years. When those are included, the total US budgetary cost of the wars reaches $4.79 trillion.

    But of course, a full accounting of any war's burdens cannot be placed in columns on a ledger....

    anne -> anne... , November 05, 2016 at 04:27 PM
    http://www.nytimes.com/2014/06/14/upshot/the-lack-of-major-wars-may-be-hurting-economic-growth.html

    June 13, 2014

    The Lack of Major Wars May Be Hurting Economic Growth
    By Tyler Cowen

    [ Guy is really, really, really scary. ]

    Peter K. -> Alex S... , November 05, 2016 at 03:12 PM
    As Julio points out, under any objective analysis, politics have moved to the right.

    Rightwing policy solutions have been tried: tax cuts for the rich, deregulation, breaking of unions, etc.

    We've seen the results. Stagnation and slow growth.

    The social democratic post-war years were much better with shared prosperity for all citizens.

    JohnH -> Peter K.... , November 05, 2016 at 03:53 PM
    "It's possible to imagine a nation where people have less confidence in the courts."

    When Obama refuses to jail torturers or those responsible for mortgage fraud, we the people are justified in having less confidence in the courts.

    Peter Liepmann -> Peter K.... , November 05, 2016 at 05:52 PM
    Yes, we've seen right wing policies killing jobs and steering wealth to the wealthy, and that's bad policy. But unfortunately it seems it's always possible to do *worse*. Trump's policies would double down on wealth transfer, while he spouts the typical RW mantra of "(my dopey policy which would destroy jobs) would be good for jobs." Tim Harford made a good case for trust accounting for 99% of the difference in per capita GNP between the US and Somalia.
    ""If you take a broad enough definition of trust, then it would explain basically all the difference between the per capita income of the United States and Somalia," ventures Steve Knack, a senior economist at the World Bank who has been studying the economics of trust for over a decade. That suggests that trust is worth $12.4 trillion dollars a year to the U.S., which, in case you are wondering, is 99.5% of this country's income (2006 figures). If you make $40,000 a year, then $200 is down to hard work and $39,800 is down to trust.

    How could that be? Trust operates in all sorts of ways, from saving money that would have to be spent on security to improving the functioning of the political system. But above all, trust enables people to do business with each other. Doing business is what creates wealth." goo.gl/t3OqHc

    anne -> Peter Liepmann... , November 05, 2016 at 06:38 PM
    Precise references, including links are necessary.
    anne : , November 05, 2016 at 01:49 PM
    Adam Davidson in the essay refers to this paper, which is well worth reading:

    https://www.aeaweb.org/articles?id=10.1257/aer.20140913

    April, 2016

    Presidents and the US Economy: An Econometric Exploration
    By Alan S. Blinder and Mark W. Watson

    Abstract

    The US economy has performed better when the president of the United States is a Democrat rather than a Republican, almost regardless of how one measures performance. For many measures, including real GDP growth (our focus), the performance gap is large and significant. This paper asks why. The answer is not found in technical time series matters nor in systematically more expansionary monetary or fiscal policy under Democrats. Rather, it appears that the Democratic edge stems mainly from more benign oil shocks, superior total factor productivity (TFP) performance, a more favorable international environment, and perhaps more optimistic consumer expectations about the near-term future.

    Alex S -> anne... , November 05, 2016 at 02:59 PM
    Economic growth fueled by foreign oil is nice while it lasts but what will happen to the country when the oil runs out or we are forced to fight a war that disrupts the supply?
    pgl -> Alex S... , November 05, 2016 at 03:03 PM
    I was in college in the mid 1970's and we asked this question a lot. Some think this worry has gone away. I don't agree with those types. Which is why a green technology investment drive makes a lot of sense for so many reasons.
    anne -> Alex S... , November 05, 2016 at 03:40 PM
    Economic growth fueled by foreign oil is nice while it lasts but what will happen to the country when the oil runs out or we are forced to fight a war that disrupts the supply?

    [ Having read and reread this question, I do not begin to understand what it means. There is oil here, there is oil all about us, there is oil in Canada and Mexico and on and on, and the supply of oil about us is not about to be disrupted by any conceivable war and an inconceivable war is never going to be fought. ]

    anne -> anne... , November 05, 2016 at 03:50 PM
    Economic growth fueled by foreign oil is nice while it lasts but what will happen to the country when the oil runs out or we are forced to fight a war that disrupts the supply?

    [ My guess is that this is a way of scarily pitching for fracking for oil right in my garden, but I like my azealia bushes and mocking birds. ]

    Alex S -> anne... , November 05, 2016 at 04:03 PM
    Quote from the paper you linked to: "Arguably, oil shocks have more to do with US foreign policy than with US economic policy-the two Gulf Wars being prominent examples. That said, several economists have claimed that US monetary policy played an important role in bringing on the oil shocks. See, for example, Barsky and Kilian (2002)."
    anne -> Alex S... , November 05, 2016 at 04:13 PM
    Do set down a link to a reference when possible:

    http://www.nber.org/papers/w8389

    July, 2001

    Do We Really Know that Oil Caused the Great Stagflation? A Monetary Alternative
    By Robert B. Barsky and Lutz Kilian

    Abstract

    This paper argues that major oil price increases were not nearly as essential a part of the causal mechanism that generated the stagflation of the 1970s as is often thought. There is neither a theoretical presumption that oil supply shocks are stagflationary nor robust empirical evidence for this view. In contrast, we show that monetary expansions and contractions can generate stagflation of realistic magnitude even in the absence of supply shocks. Furthermore, monetary fluctuations help to explain the historical movements of the prices of oil and other commodities, including the surge in the prices of industrial commodities that preceded the 1973/74 oil price increase. Thus, they can account for the striking coincidence of major oil price increases and worsening stagflation.

    Alex S -> Alex S... , November 05, 2016 at 04:22 PM
    My quote dragged on too long. I should have ended it with the first sentence. Monetary policy could play a role but foreign policy could still be the biggest factor.
    Peter K. -> anne... , November 05, 2016 at 03:09 PM
    http://www.bloomberg.com/news/articles/2016-10-25/fed-inclined-to-raise-rates-if-next-president-pumps-up-budget

    "Former Fed Vice Chairman Alan Blinder said he's skeptical that fiscal policy will be loosened a great deal if Clinton wins the election, as seems likely based on recent voter surveys.

    "She is promising not to make budget deficits bigger by her programs," said Blinder, who is now a professor at Princeton University. "Whatever fiscal stimulus there is ought to be small enough for the Fed practically to ignore it."

    PGL told us that Hillary's fiscal program would be YUGE.

    Like with Trump everything he says is a lie.

    anne -> Peter K.... , November 05, 2016 at 03:56 PM
    Dean Baker in "Rigged" * reminds me of the lasting limits to growth that appear to follow the sacrifice of growth, especially to the extent of allowing a recession, for the sake of budget balancing during a time of surrounding economic weakness:

    * http://deanbaker.net/images/stories/documents/Rigged.pdf

    October, 2016

    Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer
    By Dean Baker

    anne -> Peter K.... , November 05, 2016 at 04:01 PM
    Simply excellent:

    http://deanbaker.net/images/stories/documents/Rigged.pdf

    October, 2016

    Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer
    By Dean Baker

    Introduction: Trading in Myths

    In winter 2016, near the peak of Bernie Sanders' bid for the Democratic presidential nomination, a new line became popular among the nation's policy elite: Bernie Sanders is the enemy of the world's poor. Their argument was that Sanders, by pushing trade policies to help U.S. workers, specifically manufacturing workers, risked undermining the well-being of the world's poor because exporting manufactured goods to the United States and other wealthy countries is their path out of poverty. The role model was China, which by exporting has largely eliminated extreme poverty and drastically reduced poverty among its population. Sanders and his supporters would block the rest of the developing world from following the same course.

    This line, in its Sanders-bashing permutation, appeared early on in Vox, the millennial-oriented media upstart, and was quickly picked up elsewhere (Beauchamp 2016). After all, it was pretty irresistible. The ally of the downtrodden and enemy of the rich was pushing policies that would condemn much of the world to poverty.

    The story made a nice contribution to preserving the status quo, but it was less valuable if you respect honesty in public debate.

    The problem in the logic of this argument should be apparent to anyone who has taken an introductory economics course. It assumes that the basic problem of manufacturing workers in the developing world is the need for someone who will buy their stuff. If people in the United States don't buy it, then the workers will be out on the street and growth in the developing world will grind to a halt. In this story, the problem is that we don't have enough people in the world to buy stuff. In other words, there is a shortage of demand. But is it really true that no one else in the world would buy the stuff produced by manufacturing workers in the developing world if they couldn't sell it to consumers in the United States? Suppose people in the developing world bought the stuff they produced raising their living standards by raising their own consumption.

    That is how the economics is supposed to work. In the standard theory, general shortages of demand are not a problem. Economists have traditionally assumed that economies tended toward full employment. The basic economic constraint was a lack of supply. The problem was that we couldn't produce enough goods and services, not that we were producing too much and couldn't find anyone to buy them. In fact, this is why all the standard models used to analyze trade agreements like the Trans-Pacific Partnership assume trade doesn't affect total employment. Economies adjust so that shortages of demand are not a problem.

    In this standard story (and the Sanders critics are people who care about textbook economics), capital flows from slow-growing rich countries, where it is relatively plentiful and so gets a low rate of return, to fast-growing poor countries, where it is scarce and gets a high rate of return....

    pgl -> Peter K.... , November 06, 2016 at 03:37 AM
    It is yuuuuge - and no I did not say anything of the sort. Rather I noted it would be less than 1% of GDP. This is what I get for trying to get the facts right. It gets too complicated for you even when we simplify things so you get angry and start screaming "liar". Grow up.
    mrrunangun : , November 05, 2016 at 06:23 PM
    Per capta GDP grew from $51,100 to $51,400 between July 1 2015 and July 1 2016. This 0.6% growth does not seem to me to be a statistic supporting claims of improving employment and improving wage growth.

    Dean has suggested in one of his commentaries that wage growth may be an artifact of a decline in the quality of health insurance coverage. Wage growth is not figured net of increased outlays for deductibles and copays related to changes in health insurance. PPACA discourages low deductible and low copay health plans by placing a "Cadillac tax" on them, or at least threatening to do so. The consequent rise in wage workers' outlays for copays and deductibles are not captured in the statistics that claim to measure wage gains. This results in an income transfer from the well to the sick, but can produce statistics that can be interpreted in politically convenient ways by those so inclined

    anne -> mrrunangun... , November 05, 2016 at 06:33 PM
    https://fred.stlouisfed.org/graph/?g=8cpp

    August 4, 2014

    Real per capita Gross Domestic Product for United States and United Kingdom, 2007-2015

    (Percent change)


    https://fred.stlouisfed.org/graph/?g=8cpv

    August 4, 2014

    Real per capita Gross Domestic Product for United States and United Kingdom, 2007-2015

    (Indexed to 2007)

    anne -> mrrunangun... , November 05, 2016 at 06:35 PM
    https://fred.stlouisfed.org/graph/?g=8bue

    January 15, 2016

    Employment Cost Indexes for Wages and Salaries & Benefits, 2007-2016

    (Percent change)


    https://fred.stlouisfed.org/graph/?g=8bua

    January 15, 2016

    Employment Cost Indexes for Wages and Salaries & Benefits, 2002-2016

    (Percent change)

    pgl -> mrrunangun... , November 06, 2016 at 03:38 AM
    Excellent perspective. Let me say well done before PeterK gets angry and calls you a liar.
    ilsm -> mrrunangun... , November 06, 2016 at 05:10 AM
    I had a job offer about 15 years ago, the quoted salary was not to my liking so the HR type told me how much the Cadillac insurance was "worth".

    I do not think you 'get' why Cadillac plans are taxed............

    or

    'income transfers'......

    mrrunangun -> ilsm... , November 06, 2016 at 12:25 PM
    I get why the plans are taxed. I don't believe that the results of that policy have been beneficial for the bulk of the population. Most of the good done by PPACA was done by the expansion of Medicaid eligibility. I believe that requiring the working poor people to settle for high deductible high copay policies has had the practical effect of requiring them to choose between adequate medical and further impoverishment. I do not believe that the PPACA could not have been financed in a way less injurious to the working poor. As the insurers have been unable to make money in this deal, the hospital operators seem to have been the only winners in that their bad debt problems have been ameliorated.
    cm : , November 05, 2016 at 11:09 PM
    "people stop dreaming about what they could have if they invest in education, new businesses, and new ideas"

    And this is entirely rational, as in the situation described, the fruits of their efforts will likely be siphoned from their pockets by the elites and generally rent-seekers with higher social standing and leverage, or at best their efforts will amount to too little to be worth the risk (including the risk of wasting one's time i.e. opportunity cost). It also becomes correspondingly harder to convince and motivate others to join or fund any worthwhile efforts. What also happens (and has happened in "communism") is that people take their interests private, i.e. hidden from the view of those who would usurp or derail them.

    Chris G : , -1
    "Those who witness extreme social collapse at first hand seldom describe any deep revelation about the truths of human existence. What they do mention, if asked, is their surprise at how easy it is to die.

    The pattern of ordinary life, in which so much stays the same from one day to the next, disguises the fragility of its fabric. How many of our activities are made possible by the impression of stability that pattern gives? So long as it repeats, or varies steadily enough, we are able to plan for tomorrow as if all the things we rely on and don't think about too carefully will still be there. When the pattern is broken, by civil war or natural disaster or the smaller-scale tragedies that tear at its fabric, many of those activities become impossible or meaningless, while simply meeting needs we once took for granted may occupy much of our lives.

    What war correspondents and relief workers report is not only the fragility of the fabric, but the speed with which it can unravel. As we write this, no one can say with certainty where the unraveling of the financial and commercial fabric of our economies will end. Meanwhile, beyond the cities, unchecked industrial exploitation frays the material basis of life in many parts of the world, and pulls at the ecological systems which sustain it.

    Precarious as this moment may be, however, an awareness of the fragility of what we call civilisation is nothing new.

    'Few men realise,' wrote Joseph Conrad in 1896, 'that their life, the very essence of their character, their capabilities and their audacities, are only the expression of their belief in the safety of their surroundings.' Conrad's writings exposed the civilisation exported by European imperialists to be little more than a comforting illusion, not only in the dark, unconquerable heart of Africa, but in the whited sepulchres of their capital cities. The inhabitants of that civilisation believed 'blindly in the irresistible force of its institutions and its morals, in the power of its police and of its opinion,' but their confidence could be maintained only by the seeming solidity of the crowd of like-minded believers surrounding them. Outside the walls, the wild remained as close to the surface as blood under skin, though the city-dweller was no longer equipped to face it directly.

    Bertrand Russell caught this vein in Conrad's worldview, suggesting that the novelist 'thought of civilised and morally tolerable human life as a dangerous walk on a thin crust of barely cooled lava which at any moment might break and let the unwary sink into fiery depths.' What both Russell and Conrad were getting at was a simple fact which any historian could confirm: human civilisation is an intensely fragile construction. It is built on little more than belief: belief in the rightness of its values; belief in the strength of its system of law and order; belief in its currency; above all, perhaps, belief in its future.

    Once that belief begins to crumble, the collapse of a civilisation may become unstoppable. That civilisations fall, sooner or later, is as much a law of history as gravity is a law of physics. What remains after the fall is a wild mixture of cultural debris, confused and angry people whose certainties have betrayed them, and those forces which were always there, deeper than the foundations of the city walls: the desire to survive and the desire for meaning."

    Source - http://dark-mountain.net/about/manifesto/

    [Nov 06, 2016] Trump vs. the REAL Nuts -- the GOP Uniparty Establishment

    Notable quotes:
    "... An awful lot of people out there think we live in a one-party state-that we're ruled by what is coming to be called the "Uniparty." ..."
    "... There is a dawning realization, ever more widespread among ordinary Americans, that our national politics is not Left versus Right or Republican versus Democrat; it's we the people versus the politicians. ..."
    "... Donald Trump is no nut. If he were a nut, he would not have amassed the fortune he has, nor nurtured the capable and affectionate family he has. ..."
    "... To be conservative, then, is to prefer the familiar to the unknown, to prefer the tried to the untried, fact to mystery, the actual to the possible, the limited to the unbounded, the near to the distant, the sufficient to the superabundant, the convenient to the perfect, present laughter to utopian bliss. ..."
    "... Trump has all the right instincts. And he's had the guts and courage-and, just as important, the money -to do a thing that has badly needed doing for twenty years: to smash the power of the real nuts in the GOP Establishment. ..."
    Oct 29, 2016 | www.unz.com
    54 Comments Credit: VDare.com.

    A couple of remarks in Professor Susan McWillams' recent Modern Age piece celebrating the 25th anniversary of Christopher Lasch's 1991 book The True and Only Heaven , which analyzed the cult of progress in its American manifestation, have stuck in my mind. Here's the first one:

    In the most recent American National Election Studies survey, only 19 percent of Americans agreed with the idea that the government, "is run for the benefit of all the people." [ The True and Only Lasch: On The True and Only Heaven, 25 Years Later , Fall 2016]

    McWilliams adds a footnote to that: The 19 percent figure is from 2012, she says. Then she tells us that in 1964, 64 percent of Americans agreed with the same statement.

    Wow. You have to think that those two numbers, from 64 percent down to 19 percent in two generations, tell us something important and disturbing about our political life.

    Second McWilliams quote:

    In 2016 if you type the words "Democrats and Republicans" or "Republicans and Democrats" into Google, the algorithms predict your next words will be "are the same".

    I just tried this, and she's right. These guesses are of course based on the frequency with which complete sentences show up all over the internet. An awful lot of people out there think we live in a one-party state-that we're ruled by what is coming to be called the "Uniparty."

    There is a dawning realization, ever more widespread among ordinary Americans, that our national politics is not Left versus Right or Republican versus Democrat; it's we the people versus the politicians.

    Which leads me to a different lady commentator: Peggy Noonan, in her October 20th Wall Street Journal column.

    The title of Peggy's piece was: Imagine a Sane Donald Trump . [ Alternate link ]Its gravamen: Donald Trump has shown up the Republican Party Establishment as totally out of touch with their base, which is good; but that he's bat-poop crazy, which is bad. If a sane Donald Trump had done the good thing, the showing-up, we'd be on course to a major beneficial correction in our national politics.

    It's a good clever piece. A couple of months ago on Radio Derb I offered up one and a half cheers for Peggy, who gets a lot right in spite of being a longtime Establishment Insider. So it was here. Sample of what she got right last week:

    Mr. Trump's great historical role was to reveal to the Republican Party what half of its own base really thinks about the big issues. The party's leaders didn't know! They were shocked, so much that they indulged in sheer denial and made believe it wasn't happening.

    The party's leaders accept more or less open borders and like big trade deals. Half the base does not! It is longtime GOP doctrine to cut entitlement spending. Half the base doesn't want to, not right now! Republican leaders have what might be called assertive foreign-policy impulses. When Mr. Trump insulted George W. Bush and nation-building and said he'd opposed the Iraq invasion, the crowds, taking him at his word, cheered. He was, as they say, declaring that he didn't want to invade the world and invite the world. Not only did half the base cheer him, at least half the remaining half joined in when the primaries ended.

    I'll just pause to note Peggy's use of Steve Sailer' s great encapsulation of Bush-style NeoConnery: "Invade the world, invite the world." Either Peggy's been reading Steve on the sly, or she's read my book We Are Doomed , which borrows that phrase. I credited Steve with it, though, so in either case she knows its provenance, and should likewise have credited Steve.

    End of pause. OK, so Peggy got some things right there. She got a lot wrong, though

    Start with the notion that Trump is crazy. He's a nut, she says, five times. His brain is "a TV funhouse."

    Well, Trump has some colorful quirks of personality, to be sure, as we all do. But he's no nut. A nut can't be as successful in business as Trump has been.

    I spent 32 years as an employee or contractor, mostly in private businesses but for two years in a government department. Private businesses are intensely rational, as human affairs go-much more rational than government departments. The price of irrationality in business is immediate and plainly financial. Sanity-wise, Trump is a better bet than most people in high government positions.

    Sure, politicians talk a good rational game. They present as sober and thoughtful on the Sunday morning shows.

    Look at the stuff they believe, though. Was it rational to respond to the collapse of the U.S.S.R. by moving NATO right up to Russia's borders? Was it rational to expect that post-Saddam Iraq would turn into a constitutional democracy? Was it rational to order insurance companies to sell healthcare policies to people who are already sick? Was the Vietnam War a rational enterprise? Was it rational to respond to the 9/11 attacks by massively increasing Muslim immigration?

    Make your own list.

    Donald Trump displays good healthy patriotic instincts. I'll take that, with the personality quirks and all, over some earnest, careful, sober-sided guy whose head contains fantasies of putting the world to rights, or flooding our country with unassimilable foreigners.

    I'd add the point, made by many commentators, that belongs under the general heading: "You don't have to be crazy to work here, but it helps." If Donald Trump was not so very different from run-of-the-mill politicians-which I suspect is a big part of what Peggy means by calling him a nut-would he have entered into the political adventure he's on?

    Thor Heyerdahl sailed across the Pacific on a hand-built wooden raft to prove a point, which is not the kind of thing your average ethnographer would do. Was he crazy? No, he wasn't. It was only that some feature of his personality drove him to use that way to prove the point he hoped to prove.

    And then there is Peggy's assertion that the Republican Party's leaders didn't know that half the party's base were at odds with them.

    Did they really not? Didn't they get a clue when the GOP lost in 2012, mainly because millions of Republican voters didn't turn out for Mitt Romney? Didn't they, come to think of it, get the glimmering of a clue back in 1996, when Pat Buchanan won the New Hampshire primary?

    Pat Buchanan is in fact a living counter-argument to Peggy's thesis-the "sane Donald Trump" that she claims would win the hearts of GOP managers. Pat is Trump without the personality quirks. How has the Republican Party treated him ?

    Our own Brad Griffin , here at VDARE.com on October 24th, offered a couple more "sane Donald Trumps": Ron Paul and Mike Huckabee. How did they fare with the GOP Establishment?

    Donald Trump is no nut. If he were a nut, he would not have amassed the fortune he has, nor nurtured the capable and affectionate family he has. Probably he's less well-informed about the world than the average pol. I doubt he could tell you what the capital of Burkina Faso is. That's secondary, though. A President has people to look up that stuff for him. The question that's been asked more than any other about Donald Trump is not, pace Peggy Noonan, "Is he nuts?" but, " Is he conservative? "

    I'm sure he is. But my definition of "conservative" is temperamental, not political. My touchstone here is the sketch of the conservative temperament given to us by the English political philosopher Michael Oakeshott :

    To be conservative, then, is to prefer the familiar to the unknown, to prefer the tried to the untried, fact to mystery, the actual to the possible, the limited to the unbounded, the near to the distant, the sufficient to the superabundant, the convenient to the perfect, present laughter to utopian bliss.

    Rationalism in Politics and other essays (1962)

    That fits Trump better than it fits any liberal you can think of-better also than many senior Republicans.

    For example, it was one of George W. Bush's senior associates-probably Karl Rove-who scoffed at opponents of Bush's delusional foreign policy as "the reality-based community." It would be hard to think of a more un -Oakeshottian turn of phrase.

    Trump has all the right instincts. And he's had the guts and courage-and, just as important, the money -to do a thing that has badly needed doing for twenty years: to smash the power of the real nuts in the GOP Establishment.

    I thank him for that, and look forward to his Presidency.

    [Nov 06, 2016] Michael Hudson on Meet the Renegades

    Notable quotes:
    "... In fact, I would posit that the Ivy League, especially Yale, Princeton, Harvard and MIT, are the principal crime factories in America today. ..."
    "... Brownback is in Kansas; UMKC is in Missouri. There is a Kansas City in Kansas, and another Kansas City in Missouri. Missouri is not as red as KS, but it's still a red state. ..."
    "... UMKC is part of the state system and most likely receives no funding from the city. It was home to New Letters, a respected literary magazine edited by poet John Ciardi. I hail from Kanasa City and always thought of UMKC as a decent commuter school, mostly catering to the educational needs of adult city dwellers. But the evolution of both the Econ and jazz studies departments lead me to suspect things have changed. Whether that's by design or through organic happenstance I don't know. ..."
    "... Couldn't a Marxian analysis of capitalism as a whole also shed some light on this issue? I think Hudson is pretty much right but I think, like Sanders, he's offering a reformist option as opposed to a full on critique of the entire system. ..."
    "... Not that a revolution is the option you necessarily want to go with, I just think that Marx's criticism of capitalism has useful information that could help with shaping the perspective here. ..."
    Nov 05, 2016 | www.nakedcapitalism.com
    Michael Hudson spends a half hour with Meet the Renegades explaining his views on money, finance, economic training, rentier capitalism, and how debt overhangs operate. Hudson fans will recognize his regular themes. This is a good segment for introducing people you know to Hudson and to heterodox economic ideas.

    EndOfTheWorld November 5, 2016 at 5:52 am

    I've always found it interesting that both Hudson and Bill Black are on the faculty of UMKC, which is a state university in a pretty conservative state. It's possible that some of the funding for UMKC comes from the municipality of Kansas City, MO, but that town has never been known as a hotbed of radical intellectuality either.

    Distrubed Voter November 5, 2016 at 6:21 am

    Joseph Campbell didn't teach at an Ivy League either. Conformity starts with the faculty in your own department … and the Ivy League is as status quo and status conscious as it gets.

    craazyboy November 5, 2016 at 8:43 am

    The Ivy League are not much different than privately held corporations when you consider who their alma materi are, how much money the alma materi have, and where Ivy League endowments come from.

    sgt_doom November 5, 2016 at 1:31 pm

    In fact, I would posit that the Ivy League, especially Yale, Princeton, Harvard and MIT, are the principal crime factories in America today.

    Please recall that the dood who financed Liberty Lobby and other white supremacist nonsense was Koch family patriarch, Fred Koch, who was a trustee at MIT. (Ever hear Noam Chomsky complain about that????? Of course not!)

    a different chris November 5, 2016 at 8:40 am

    Ah but is it really an inherently conservative state fiscally, or just socially? That is, are the people like Brownback appealing to one sort of conservatism and using that to do a "trust me" on the other sort?

    I would say it's not unreasonable for anybody to delegate something they are not so sure of to somebody they trust for other reasons.

    EndOfTheWorld November 5, 2016 at 11:11 am

    Brownback is in Kansas; UMKC is in Missouri. There is a Kansas City in Kansas, and another Kansas City in Missouri. Missouri is not as red as KS, but it's still a red state.

    Randy November 5, 2016 at 8:53 am

    UMKC is part of the state system and most likely receives no funding from the city. It was home to New Letters, a respected literary magazine edited by poet John Ciardi. I hail from Kanasa City and always thought of UMKC as a decent commuter school, mostly catering to the educational needs of adult city dwellers. But the evolution of both the Econ and jazz studies departments lead me to suspect things have changed. Whether that's by design or through organic happenstance I don't know.

    Moneta November 5, 2016 at 8:59 am

    If you are not on the money makers' distribution list, it would make sense to find other ways to get some of that loot if you can't the traditional way…

    You can be conservative in your social values but want change, i.e. liberalism, in the way the monetary system distributes the money.

    Steve H. November 5, 2016 at 10:47 am

    Thank Warren Mosler, wouldn't be there without his direct support.

    EndOfTheWorld November 5, 2016 at 7:32 am

    Well, little UMKC can claim to be pretty much "cutting edge" in economics with these two stalwarts on their faculty.

    Benedict@Large November 5, 2016 at 9:32 am

    The UMKC is also the home of the Kansas City School of Economics, more commonly known as the MMT School. Neither Hudson nor Black are MMTers per se, but both have grown by their affiliation with the school.

    Amateur Socialist November 5, 2016 at 9:14 am

    Thanks for sharing this excellent interview. Watching it I realized the people I actually admire more than Hudson are his students. They must care more about learning the truth than securing wealth and job prospects on wall street.

    susan the other November 5, 2016 at 11:04 am

    fun to learn how Hudson fired Greenspan way back when

    EndOfTheWorld November 5, 2016 at 11:08 am

    lol "Free trade" is Orwellian word usage.

    King Arthur November 5, 2016 at 11:49 am

    Couldn't a Marxian analysis of capitalism as a whole also shed some light on this issue? I think Hudson is pretty much right but I think, like Sanders, he's offering a reformist option as opposed to a full on critique of the entire system.

    Not that a revolution is the option you necessarily want to go with, I just think that Marx's criticism of capitalism has useful information that could help with shaping the perspective here.

    BecauseTradition November 5, 2016 at 12:29 pm

    The solution is write down the debt. Michael Hudson

    Why not Steve Keen's "A Modern Jubilee" since non-debtors have been cheated by the system too?

    Steve in Dallas November 5, 2016 at 12:46 pm

    I asked Yves Smith at the Dallas meetup last week (paraphrasing) "Do you meet with Michael Hudson and Bill Black… is the independent media community, or any community, organizing around Michael Hudson and Bill Black… to not only support and promote Hudson's and Black's perspectives but to help develop their concepts and 'fine tune' their messaging?" I said to Yves "Hudson and Black are clearly the leaders we desperately need to rally behind and push into Washington… they clearly know what needs to be done… a PR machine needs to be developed… to get their messages out to our families, friends, and acquaintances… unfortunately, the current messaging is not good enough… I can't get my family, friends, and others to engage and echo the messaging to their family, friends, etc."

    Michael Hudson has been good at repeating his central message… 'by increasing land, monopoly, and finance rent costs… the 1% are a highly organized mafia methodically looting our economy… effectively raping, pillaging and consequently destroying every component of our social structures'.

    Very unfortunately, Bill Blacks central message seems to have been lost for years now… he doesn't repeat his central message… 'the crimes must be stopped… there is no alternative… looting criminals MUST be publicly exposed, investigated, indicted, prosecuted, convicted, punished and their loot returned to society… by letting cheaters prosper, organized white-collar crime, perpetrated by the top-most leaders of our public and private institutions, has become an epidemic… the very fabric of civil society is being destroyed… we have no choice… the criminals must be stopped… and the only way to do that is to publicly expose, investigate, indict, prosecute, punish, and take back what is ours'.

    In 2008, when I tuned out of the mainstream media and tuned into the independent media, I thought the messages from Michael Hudson ("they are organized criminals… this is what they're doing…") and Bill Black ("the criminals must be stopped… here's how we stopped the Savings & Loan criminals…) would resonate and become common knowledge. I quickly discovered that it didn't even resonate with close family and friends. Why???

    I will send out this video… Michael Hudson at his best, speaking-wise. I don't expect to get any reaction… why?… very frustrated…

    Ivy November 5, 2016 at 1:35 pm

    Amen. Once you start noticing, it becomes hard to stop. In looking hard for a silver lining to the current election storm clouds, public awareness of the MSM seems to have nudged a few toward slightly more objectivity, although I may just be wishing for that after media fatigue ;)

    [Nov 05, 2016] Economists View Paul Krugman Who Broke Politics

    Notable quotes:
    "... I'll be interested to see how much Hillary tries to "work with Republicans" when it comes to foreign or domestic policy, as she's promising on the campaign trail. ..."
    "... In a recent interview Biden was talking about how his "friends" in the Senate like McCain, Lindsy Graham, etc. - the sane ones who hate Trump - have to come out in support of the Republican plan to block Clinton from nominating a Supreme Court judge, because of if they don't, the Koch brothers will primary them. ..."
    "... While I agree that the Republican party has been interested in whatever argument will win elections and benefit their donor class, doesn't the Democratic Party also have a donor class? Haven't Bill Clinton, Barack Obama, and Hillary Clinton had a close relationship with some business interests? Did anyone go to jail after the asset bubble? Did welfare reform work or simply shift the problem out of view? How complicit are the Democrats in the great risk shift? ..."
    "... I would think the scorched earth politics of the neoliberals required Democrats to shift to the right if they ever hoped to win an election, again. That is what it has looked like to me. The American equivalent of New Labor in Britain. So, we have a more moderate business-interest group of Democrats and a radical business-interest group of Republicans during the past 40 years. I think Kevin Phillips has made this argument. ..."
    "... Our grand experimental shift back to classical theory involved supply side tax cuts, deregulation based on the magic of new finance theory, and monetarist pro-financial monetary policy. All of which gave us the masquerade of a great moderation that ended in the mother of all asset bubbles. While we shredded the safety net. ..."
    "... Now the population is learning the arguments about free trade magically lifting all boats up into the capitalist paradise has blown up. We've shifted the risk onto the working population and they couldn't bear it. ..."
    "... Economists lied to the American people about trade and continue to lie about the issue day in and day out. Brainwashing kids with a silly model called comparative advantage. ..."
    Nov 05, 2016 | economistsview.typepad.com
    Peter K. : November 04, 2016 at 08:51 AM , 2016 at 08:51 AM
    This is all true but Krugman always fails to tell the other side of the story.

    I'll be interested to see how much Hillary tries to "work with Republicans" when it comes to foreign or domestic policy, as she's promising on the campaign trail.

    The centrists always do this to push through centrist, neoliberal "solutions" which anger the left.

    In a recent interview Biden was talking about how his "friends" in the Senate like McCain, Lindsy Graham, etc. - the sane ones who hate Trump - have to come out in support of the Republican plan to block Clinton from nominating a Supreme Court judge, because of if they don't, the Koch brothers will primary them.

    Let's hope Hillary does something about campaign finance reform and Citizen United and takes a harder line against obstructionist Republicans.

    Eric : November 04, 2016 at 09:28 AM

    While I agree that the Republican party has been interested in whatever argument will win elections and benefit their donor class, doesn't the Democratic Party also have a donor class? Haven't Bill Clinton, Barack Obama, and Hillary Clinton had a close relationship with some business interests? Did anyone go to jail after the asset bubble? Did welfare reform work or simply shift the problem out of view? How complicit are the Democrats in the great risk shift?

    I would think the scorched earth politics of the neoliberals required Democrats to shift to the right if they ever hoped to win an election, again. That is what it has looked like to me. The American equivalent of New Labor in Britain. So, we have a more moderate business-interest group of Democrats and a radical business-interest group of Republicans during the past 40 years. I think Kevin Phillips has made this argument.

    Our grand experimental shift back to classical theory involved supply side tax cuts, deregulation based on the magic of new finance theory, and monetarist pro-financial monetary policy. All of which gave us the masquerade of a great moderation that ended in the mother of all asset bubbles. While we shredded the safety net.

    Now the population is learning the arguments about free trade magically lifting all boats up into the capitalist paradise has blown up. We've shifted the risk onto the working population and they couldn't bear it.

    Perhaps the less partisan take-way would be - is it possible for any political candidate to get elected in this environment without bowing to the proper interests? How close did Bernie get? And, how do we fix it without first admitting that the policies of both political parties have not really addressed the social adjustments necessary to capture the benefits of globalization? We need an evolution of both political parties - not just the Republicans. If we don't get it, we can expect the Trump argument to take even deeper root.

    America was rich when it had tariff walls - now it's becoming poor - Thanks economists! : November 04, 2016 at 09:43 PM
    Economists lied to the American people about trade and continue to lie about the issue day in and day out. Brainwashing kids with a silly model called comparative advantage. East Asian economists including Ha Joon Chang among others debunked comparative advantage and Ricardianism long ago.

    Manufacturing is everything. It is all that matters. We needed tariffs yesterday. Without them the country is lost.

    [Oct 28, 2016] Stately mating of dinosaurs:

    Oct 28, 2016 | www.nakedcapitalism.com

    Jim Haygood October 27, 2016 at 3:29 pm

    Stately mating of dinosaurs:

    CenturyLink Inc. is in advanced talks to merge with Level 3 Communications Inc., a deal that would give the telecommunications companies greater heft in a brutally competitive industry.

    Terms of the deal couldn't be learned. As of Thursday afternoon before the Journal's report of the talks, Level 3, based in Broomfield, Colo., had a market value of $16.8 billion. CenturyLink, based in Monroe, La., was worth $15.2 billion.

    http://www.marketwatch.com/story/centurylink-in-advanced-merger-talks-with-level-3-communications-2016-10-27

    CenturyLink is a former rural telephone exchange operator which bought former Baby Bell, Qwest (U S West) in 2011.

    CenturyLink is a miserable, crappy telco - so spectacularly bad it makes the cable company look like a paragon of customer friendliness by comparison. CTL's share price has declined by about a third since its acquisition of Qwest, reflecting CTL's braindead managerial incompetence.

    If this merger goes through, we'll have a Big Three of dinosaur telcos: AT&T, Verizon, and CenturyLink.

    Arizona Slim October 27, 2016 at 5:00 pm

    CenturyLink is the landline carrier/ISP wannabe for my part of AZ. Around here, they make Cox Communications look like an excellent cable/ISP company.

    EnonZ October 27, 2016 at 5:52 pm

    My experience has been just the opposite. I have had excellent, reliable DSL service from CenturyLink and good technical support. Perhaps it's because I live somewhere there is still some competition – a duopoly with Comcast. I do have to call them every 6 or 12 months and talk to a retention service rep to keep the charges down.

    CenturyLink does seem slow in getting fiber to the end of the block everywhere in my city. I know lots of people who have been stuck for years down at 5Mbps, which is not enough these days. The routers they provide for customers (which most people call modems even though they're not) are crap. I tried getting a router from CenturyLink that supports 802.11n so I could use 5GHz (2.4GHz is very crowded in my neighborhood) – that's when I found out that 5GHz support is OPTIONAL under the 802.11n standard. Of course CenturyLink went with the cheaper model. Returning the router was no problem and the refund appeared promptly and correctly on my bill.

    The return of monopolization is traced by Barry C. Lynn in his 2010 book, Cornered: The New Monopoly Capitalism and the Economics of Destruction . It goes back to the decision of the Reagan administration to reinterpret antitrust regulation to emphasize efficiency over competition. No previous 20th century administration would have allowed the A&P chain to become a behemoth like Walmart.

    [Oct 26, 2016] There are some countervailing forces in action and the Triumphal march of neoliberalism with the USA as the hegemon of the new neoliberal order is either over, or soon will be over

    Notable quotes:
    "... Any analysis that starts with the assumption reactionaries still has a great deal to its agenda to achieve, such as promoting regressive taxation; privatization of Social Security; limiting Medicare; privatization of education; expansion of the police state; using the military to support the dollar, banking, world markets, etc., rather than Corey Robin's belief that "the Right" has won is in my view an improvement on the OP. ..."
    "... In the end, Putin will be done in by his oligarchs, despite the care he has taken to give them their share if they just refrain from wrecking everything with their excesses. Again, no need for NGOs. ..."
    Oct 26, 2016 | crookedtimber.org
    stevenjohnson

    @58

    This is a very good analyses. But I am less pessimistic: the blowback against neoliberal globalization is real and it is difficult to swipe it under the carpet.

    There are some signs of the "revolutionary situation" in the USA in a sense that the neoliberal elite lost control and their propaganda loss effectiveness, despite dusting off the "Red scare" trick with "Reds in each computer" instead of "Reds under each bed". With Putin as a very convenient bogeyman.

    As somebody here said Trump might be a reaction of secular stagnation, kind of trump card put into play by some part of the elite, because with continued secular stagnation, the social stability in the USA is under real threat.

    But it looks like newly formed shadow "Committee for Saving [neo]Liberal Order" (with participation of three latter agencies, just read the recent "Red scare" memorandum ( https://www.dni.gov/index.php/newsroom/press-releases/215-press-releases-2016/1423-joint-dhs-odni-election-security-statement ) want Hillary to be the POTUS.

    But the problem is that Hillary with her failing health is our of her prime and with a bunch of neocons in key positions in her administration, she really represents a huge threat to world peace. She might not last long as the level of stress inherent in POTUS job make it a killing ground for anybody with advanced stage of Parkinson or similar degenerative neurological disease. But that might make her more impulsive and more aggressive (and she always tried to outdo male politicians in jingoism, real John McCain is the red pantsuit).

    All-in-all it looks like she in not a solution for neoliberal elite problems, she is a part of the problem

    Adventurism of the US neoliberal elite, and especially possible aggressive moves in Syria by Hillary regime ("no fly zone"), makes military alliance of Russia and China very likely (with Pakistan, Iran and India as possible future members). So Hillary might really work like a powerful China lobbyist, because the alliance with Russia will be on China terms.

    Regime change via color revolution in either country requires at dense network of subservient to the Western interests and financed via shadow channels MSM (including TV channels), strong network of NGO and ability to distribute cash to selected members of the fifth column of neoliberal globalization. All those condition were made more difficult in Russia and impossible in mainland China. In Russia the US adventurism in Ukraine and the regime change of February 2014 (creation of neo-fascist regime nicknamed by some "Kaganat of Nuland" (Asia Times http://www.atimes.com/atimes/Central_Asia/CEN-01-100315.html )) essentially killed the neoliberal fifth column in Russia and IMHO it no longer represent a viable political force.

    Also Russians probably learned well lesson of unsuccessful attempt of regime change by interfering into Russian Presidential election process attempted by Hillary and Obama in 2011-2012. I would like to see the US MSM reaction if Russian ambassador invited Sanders and Trump into the embassy and promised full and unconditional support for their effort to remove criminal Obama regime, mired in corruption and subservient to Wall Street interests, the regime that produced misery for so many American workers, lower middle class and older Americans ;-)

    Ambassador McFaul soon left the country, NED was banned and screws were tightened enough to make next attempt exceedingly difficult. Although everything can happen I would discount the possibility of the next "White Revolution" in Russia. So called "Putin regime" survived the period of low oil prices and with oil prices over $60 in 2017 Russian economy might be able to grow several percent a year. At the same time the US "post-Obama" regime might well face the winds of returning higher oil prices and their negative influence of economy growth and unemployment.

    In China recent troubles in Hong Cong were also a perfect training ground for "anti color revolution" measures and the next attempt would much more difficult, unless China experience economic destabilization due to some bubble burst.

    That means that excessive military adventurism inherent in the future Hillary regime might speed up loss by the USA military dominance and re-alignment of some states beyond Philippines. Angela Merkel regime also might not survive the next election and that event might change "pro-Atlantic" balance in Europe.

    Although the list in definitely not complete, we can see that there are distinct setbacks for attempts of further neoliberalization beyond Brexit and TPP troubles.

    So there are some countervailing forces in action and my impression that the Triumphal march of neoliberalism with the USA as the hegemon of the new neoliberal order is either over, or soon will be over. In certain regions of the globe the USA foreign policy is in trouble (Syria, Ukraine) and while you can do anything using bayonets, you can't sit on them.

    So while still there is no viable alternative to neoliberalism as a social system, the ideology itself is discredited and like communism after 1945 lost its hold of hearts and minds of the USA population. I would say that in the USA neoliberalism entered Zombie stage.

    My hope is that reasonable voices in foreign policy prevail, and the disgust of unions members toward DemoRats (Neoliberal Democrats) could play the decisive role in coming elections. As bad as Trump is for domestic policy, it represent some hope as for foreign policy unless co-opted by Republican establishment.

    Val 10.26.16 at 3:54 am 72

    #70
    But the problem is that Hillary with her failing health is our of her prime and with a bunch of neocons in key positions in her administration, she really represents a huge threat to world peace. She might not last long as the level of stress inherent in POTUS job make it a killing ground for anybody with advanced stage of Parkinson or similar degenerative neurological disease. But that might kale her more impulsive and more aggressive (and she always tried to outdo her male politicians in jingoism, real John McCain is the red pantsuit).

    Does the new CT moderation regime have any expectations about the veracity of claims made by commenters? Because I think it would be useful in cases like this.

    Howard Frant 10.26.16 at 6:19 am ( 73 )

    Stephen @58

    Yes, it was late and I was tired, or I wouldn't have said something so foolish. Still, the point is that after centuries of constant war, Europe went 70 years without territorial conquest. That strikes me as a significant achievement, and one whose breach should not be taken lightly.

    phenomenal cat @64

    So democratic structures have to be robust and transparent before we care about them? I'd give a pretty high value to an independent press and contested elections. Those have been slowly crushed in Russia. The results for transparency have not been great. Personally, I don't believe that Ukraine is governed by fascists, or that Ukraine shot down that jetliner, but I'm sure a lot of Russians do.

    Russian leaders have always complained about "encirclement," but we don't have to believe them. Do you really believe Russia's afraid of an attack from Estonia? Clearly what Putin wants is to restore as much of the old Soviet empire as possible. Do you think the independence of the Baltic states would be more secure or less secure if they weren't members of NATO? (Hint: compare to Ukraine, Georgia, Moldova.)

    Layman 10.26.16 at 11:33 am ( 79 )

    ' .makes military alliance of Russia and China very likely '

    Any analysis which arrives at this conclusion is profoundly ignorant.

    Meta-comment: Is it permitted to say that a moderation scheme which objects to engels as a troll, while permitting this tripe from likbez has taken a wrong turn somewhere. Seriously, some explanation called for.

    likbez 10.26.16 at 3:54 pm 80

    @72

    Does the new CT moderation regime have any expectations about the veracity of claims made by commenters? Because I think it would be useful in cases like this.

    I would like to apologize about the number of typos, but I stand by statements made. Your implicit assumption that I am lying was not specific, so let's concentrate on three claims made:

    1. "Hillary has serious neurological disease for at least four years",
    2. "Obama and Hillary tried to stage color revolution in Russia in 2011-2012 interfering in Russian Presidential elections"
    3. "Hillary Clinton is a neocon, a warmonger similar to John McCain"

    1. Hillary Health : Whether she suffers from Parkinson disease or not in unclear, but signs of some serious neurological disease are observable since 2012 (for four years). Parkinson is just the most plausible hypothesis based on symptoms observed. Those symptoms suggests that she is at Stage 2 of the disease due to an excellent treatment she gets:

    http://www.viartis.net/parkinsons.disease/news/100312.htm
    The average time taken to progress from Stage 1 (mild) to Stage 2 (mild but various symptoms) was 1 year 8 months. The average time taken to progress from Stage 2 to Stage 3 (typical) was 7 years and 3 months. From Stage 3 to Stage 4 (severe) took 2 years. From Stage 4 to Stage 5 (incapacitated) took 2 years and 2 months. So the stage with typical symptoms lasts the longest. Those factors associated with faster progression were older age at diagnosis, and longer disease duration. Gender and ethnicity were not associated with the rate of Parkinson's Disease progression.

    These figures are only averages. Progression is not inevitable. Some people with Parkinson's Disease have either : stayed the same for decades, reduced their symptoms, rid their symptoms, or worsened at a rapid rate. For more current news go to Parkinson's Disease News.

    Concern about Hillary health were voiced in many publications and signs of her neurological disease are undisputable:

    2. Hillary and Obama attempt to stage the color revolution in Russia in 2011-2012 are also undisputable, but not widely known:

    3. The opinion that Hillary as a neocon is supported by facts from all her career , but especially during her tenure as the Secretary of State. She voted for Iraq war and was instrumental in unleashing Libya war and Syria war. The amount of evidence can't be ignored:

    If you have more specific concerns please voice them and I will try to support my statements with references and known facts.


    stevenjohnson 10.26.16 at 1:50 pm

    likbez @70 Any analysis that starts with the assumption reactionaries still has a great deal to its agenda to achieve, such as promoting regressive taxation; privatization of Social Security; limiting Medicare; privatization of education; expansion of the police state; using the military to support the dollar, banking, world markets, etc., rather than Corey Robin's belief that "the Right" has won is in my view an improvement on the OP. But whether mine is actually a deep analysis seems doubtful even to me.

    But the OP is really limiting itself solely to domestic politics, and in that context the resistance to "neoliberal globalization," (Why not use the term "imperialism?") is more or less irrelevant. The OP seems to have some essentialist notion of the "Right" as openly aimed at restoring the past, ignoring the content of policies. Reaction would be something blatant like restoring censorship of TV and movies, instead of IP laws that favor giant telecommunications companies, or abolition of divorce, instead of discriminatory enforcement of child protection laws that break up poor families. This cultural/psychological/moralizing/spiritual approach seems to me to be fundamentally a diversion from a useful understanding.

    There may be some sort of confused notions about popular morals and tastes clearly evolving in a more leftish direction. Free love was never a conservative principle for instance, yet many of its tenets are now those of the majority of the population. Personally I can only observe that there's nothing quite like the usefulness of laws and law enforcement, supplemented by the occasional illicit violence, to change social attitudes. The great model of course is the de facto extermination of the Left by "McCarthyism." No doubt the disappearance of the left targeted by "McCarthyism" is perceived to be a purification of the real left. It is customary for the acceptable "left" to agree with the McCarthys that communism lost its appeal to the people, rather than being driven out by mass repression. As to populism, such reactionary goals as the abolition of public education are notoriously sold as service to the people against the hifalutin' snobs, starting of course with lazy ass teachers. It seems to me entirely mistaken to see the populist reactionaries as out of ammunition because the old forms of race-baiting aren't working so well.

    By the way, there already is a Chinese bourgeoisie, in Taiwan, Singapore, the Philippines, Malaysia, Indonesia, Hong Kong, as well as elements in SEZs in China proper and select circles in various financial capitals. Restoration of capitalism in China has run into the difficulty that capitalism isn't holding up its end. President Xi Jinping is finding it difficult for capitalism to keep the mainland economy growing at a sufficiently rapid rate to keep the working class pacific, much less generate the so-called middle class whose stock market portfolios will bind them to the new ruling class forever. These are the sources for a revolution in China, not NGOs or a color revolution. In the end, Putin will be done in by his oligarchs, despite the care he has taken to give them their share if they just refrain from wrecking everything with their excesses. Again, no need for NGOs.

    Val @72 I remember that there were only rare, vague hints about Reagan, not factual evidence. So unless you are committed to the proposition his Alzheimer's disease only set in January 21, 1992, demanding factual evidence about the mental and physical health of our elective divinities seems unduly restrictive I think.

    Layman @79 The Shanghai Cooperation Organization alone makes an analysis that a military alliance between Russia and China reasonable enough. Even if incorrect in the end, it is not "profoundly ignorant."

    Meta-comment: Engels post was perceived as mocking, which was its offense. As for "trolling," that's an internet thing...

    [Oct 25, 2016] Dean Baker: Rigged – How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer

    Notable quotes:
    "... Geithner's comments about his sacrifices in public service did not elicit any outcry from the media at the time because his perspective was widely shared. The implicit assumption is that the sort of person who is working at a high level government job could easily be earning a paycheck that is many times higher if they were employed elsewhere. In fact, this is often true. When he left his job as Treasury Secretary, Geithner took a position with a private equity company where his salary is likely several million dollars a year. ..."
    "... The CEOs who are paid tens of millions a year would like the public to think that the market is simply compensating them for their extraordinary skills. A more realistic story is that a broken corporate governance process gives corporate boards of directors - the people who largely determine CEO pay -little incentive to hold down pay. Directors are more closely tied to top management than to the shareholders they are supposed to represent, and their positions are lucrative, usually paying six figures for very part-time work. Directors are almost never voted out by shareholders for their lack of attention to the job or for incompetence. ..."
    "... We also have done little to foster medical travel. This could lead to enormous benefits to patients and the economy, since many high cost medical procedures can be performed at a fifth or even one-tenth the U.S. price in top quality medical facilities elsewhere in the world. In this context, it is not surprising that the median pay of physicians is over $250,000 a year and some areas of specialization earn close to twice this amount. In the case of physicians alone, if pay were reduced to West European-levels the savings would be close to $100 billion a year (@ 0.6 percent of GDP). ..."
    "... As a technical matter, the Federal Reserve Bank of New York is a private bank. It is owned by the banks that are members of the Federal Reserve System in the New York District. ..."
    Oct 25, 2016 | www.nakedcapitalism.com

    Yves here. We are delighted to feature an excerpt from Dean Baker's new book Rigged , which you can find at http://deanbaker.net/books/rigged.htm via either a free download or in hard copy for the cost of printing and shipping. The book argues that policy in five areas, macroeconomics, the financial sector, intellectual property, corporate governance, and protection for highly paid professionals, have all led to the upward distribution of income. The implication is that the yawning gap between the 0.1% and the 1% versus everyone else is not the result of virtue ("meritocracy") but preferential treatment, and inequality would be substantially reduced if these policies were reversed.

    I urge you to read his book in full and encourage your friends, colleagues, and family to do so as well.

    By Dean Baker, Co-Director, Center for Economic and Policy Research

    Chapter 1: Introduction: Trading in myths

    In winter 2016, near the peak of Bernie Sanders' bid for the Democratic presidential nomination, a new line became popular among the nation's policy elite: Bernie Sanders is the enemy of the world's poor. Their argument was that Sanders, by pushing trade policies to help U.S. workers, specifically manufacturing workers, risked undermining the well-being of the world's poor because exporting manufactured goods to the United States and other wealthy countries is their path out of poverty. The role model was China, which by exporting has largely eliminated extreme poverty and drastically reduced poverty among its population. Sanders and his supporters would block the rest of the developing world from following the same course.

    This line, in its Sanders-bashing permutation, appeared early on in Vox, the millennial-oriented media upstart, and was quickly picked up elsewhere (Beauchamp 2016). [1] After all, it was pretty irresistible. The ally of the downtrodden and enemy of the rich was pushing policies that would condemn much of the world to poverty.

    The story made a nice contribution to preserving the status quo, but it was less valuable if you respect honesty in public debate.

    The problem in the logic of this argument should be apparent to anyone who has taken an introductory economics course. It assumes that the basic problem of manufacturing workers in the developing world is the need for someone who will buy their stuff. If people in the United States don't buy it, then the workers will be out on the street and growth in the developing world will grind to a halt.

    In this story, the problem is that we don't have enough people in the world to buy stuff. In other words, there is a shortage of demand. But is it really true that no one else in the world would buy the stuff produced by manufacturing workers in the developing world if they couldn't sell it to consumers in the United States? Suppose people in the developing world bought the stuff they produced raising their living standards by raising their own consumption.

    That is how the economics is supposed to work. In the standard theory, general shortages of demand are not a problem. [2] Economists have traditionally assumed that economies tended toward full employment. The basic economic constraint was a lack of supply. The problem was that we couldn't produce enough goods and services, not that we were producing too much and couldn't find anyone to buy them. In fact, this is why all the standard models used to analyze trade agreements like the Trans-Pacific Partnership assume trade doesn't affect total employment. [3] Economies adjust so that shortages of demand are not a problem.

    In this standard story (and the Sanders critics are people who care about textbook economics), capital flows from slow-growing rich countries, where it is relatively plentiful and so gets a low rate of return, to fast-growing poor countries, where it is scarce and gets a high rate of return (Figure 1-1).

    So the United States, Japan, and the European Union should be running large trade surpluses, which is what an outflow of capital means. Rich countries like ours should be lending money to developing countries, providing them with the means to build up their capital stock and infrastructure while they use their own resources to meet their people's basic needs.

    This wasn't just theory. That story accurately described much of the developing world, especially Asia, through the 1990s. Countries like Indonesia and Malaysia were experiencing rapid annual growth of 7.8 percent and 9.6 percent, respectively, even as they ran large trade deficits, just over 2 percent of GDP each year in Indonesia and almost 5 percent in Malaysia.

    These trade deficits probably were excessive, and a crisis of confidence hit East Asia and much of the developing world in the summer of 1997. The inflow of capital from rich countries slowed or reversed, making it impossible for the developing countries to sustain the fixed exchange rates most had at the time. One after another, they were forced to abandon their fixed exchange rates and turn to the International Monetary Fund (IMF) for help.

    Rather than promulgating policies that would allow developing countries to continue the textbook development path of growth driven by importing capital and running trade deficits, the IMF made debt repayment a top priority. The bailout, under the direction of the Clinton administration Treasury Department, required developing countries to switch to large trade surpluses (Radelet and Sachs 2000, O'Neil 1999).

    The countries of East Asia would be far richer today had they been allowed to continue on the growth path of the early and mid-1990s, when they had large trade deficits (Figure 1-2). Four of the five would be more than twice as rich, and the fifth, Vietnam, would be almost 50 percent richer. South Korea and Malaysia would have higher per capita incomes today than the United States.

    In the wake of the East Asia bailout, countries throughout the developing world decided they had to build up reserves of foreign exchange, primarily dollars, in order to avoid ever facing the same harsh bailout terms as the countries of East Asia. Building up reserves meant running large trade surpluses, and it is no coincidence that the U.S. trade deficit has exploded, rising from just over 1 percent of GDP in 1996 to almost 6 percent in 2005. The rise has coincided with the loss of more than 3 million manufacturing jobs, roughly 20 percent of employment in the sector.

    There was no reason the textbook growth pattern of the 1990s could not have continued. It wasn't the laws of economics that forced developing countries to take a different path, it was the failed bailout and the international financial system. It would seem that the enemy of the world's poor is not Bernie Sanders but rather the engineers of our current globalization policies.

    There is a further point in this story that is generally missed: it is not only the volume of trade flows that is determined by policy, but also the content. A major push in recent trade deals has been to require stronger and longer patent and copyright protection. Paying the fees imposed by these terms, especially for prescription drugs, is a huge burden on the developing world. Bill Clinton would have much less need to fly around the world for the Clinton Foundation had he not inserted the TRIPS (Trade Related Aspects of Intellectual Property Rights ) provisions in the World Trade Organization (WTO) that require developing countries to adopt U.S.-style patent protections. Generic drugs are almost always cheap -patent protection makes drugs expensive. The cancer and hepatitis drugs that sell for tens or hundreds of thousands of dollars a year would sell for a few hundred dollars in a free market. Cheap drugs would be more widely available had the developed world not forced TRIPS on the developing world.

    Of course, we have to pay for the research to develop new drugs or any innovation. We also have to compensate creative workers who produce music, movies, and books. But there are efficient alternatives to patents and copyrights, and the efforts by the elites in the United States and other wealthy countries to impose these relics on the developing world is just a mechanism for redistributing income from the world's poor to Pfizer, Microsoft, and Disney. Stronger and longer patent and copyright protection is not a necessary feature of a 21 st century economy.

    In textbook trade theory, if a country has a larger trade surplus on payments for royalties and patent licensing fees, it will have a larger trade deficit in manufactured goods and other areas. The reason is that, in theory, the trade balance is fixed by national savings and investment, not by the ability of a country to export in a particular area. If the trade deficit is effectively fixed by these macroeconomic factors, then more exports in one area mean fewer exports in other areas. Put another way, income gains for Pfizer and Disney translate into lost jobs for workers in the steel and auto industries.

    The conventional story is that we lose manufacturing jobs to developing countries because they have hundreds of millions of people willing to do factory work at a fraction of the pay of manufacturing workers in the United States. This is true, but developing countries also have tens of millions of smart and ambitious people willing to work as doctors and lawyers in the United States at a fraction of the pay of the ones we have now.

    Gains from trade work the same with doctors and lawyers as they do with textiles and steel. Our consumers would save hundreds of billions a year if we could hire professionals from developing countries and pay them salaries that are substantially less than what we pay our professionals now. The reason we import manufactured goods and not doctors is that we have designed the rules of trade that way. We deliberately write trade pacts to make it as easy as possible for U.S. companies to set up manufacturing operations abroad and ship the products back to the United States, but we have done little or nothing to remove the obstacles that professionals from other countries face in trying to work in the United States. The reason is simple: doctors and lawyers have more political power than autoworkers. [4]

    In short, there is no truth to the story that the job loss and wage stagnation faced by manufacturing workers in the United States and other wealthy countries was a necessary price for reducing poverty in the developing world. [5] This is a fiction that is used to justify the upward redistribution of income in rich countries. After all, it is pretty selfish for rich country autoworkers and textile workers to begrudge hungry people in Africa and Asia and the means to secure food, clothing, and shelter.

    The other aspect of this story that deserves mention is the nature of the jobs to which our supposedly selfish workers feel entitled. The manufacturing jobs that are being lost to the developing world pay in the range of $15 to $30 an hour, with the vast majority closer to the bottom figure than the top. The average hourly wage for production and nonsupervisory workers in manufacturing in 2015 was just under $20 an hour, or about $40,000 a year. While a person earning $40,000 is doing much better than a subsistence farmer in Sub-Saharan Africa, it is difficult to see this worker as especially privileged.

    By contrast, many of the people remarking on the narrow-mindedness and sense of entitlement of manufacturing workers earn comfortable six-figure salaries. Senior writers and editors at network news shows or at the New York Times and Washington Post feel entitled to their pay because they feel they have the education and skills to be successful in a rapidly changing global economy.

    These are the sort of people who consider it a sacrifice to work at a high-level government job for $150,000 to $200,000 a year. For example, Timothy Geithner, President Obama's first treasury secretary, often boasts about his choice to work for various government agencies rather than earn big bucks in the private sector. His sacrifice included a stint as president of the Federal Reserve Bank of New York that paid $415,000 a year. [6] This level of pay put Geithner well into the top 1 percent of wage earners.

    Geithner's comments about his sacrifices in public service did not elicit any outcry from the media at the time because his perspective was widely shared. The implicit assumption is that the sort of person who is working at a high level government job could easily be earning a paycheck that is many times higher if they were employed elsewhere. In fact, this is often true. When he left his job as Treasury Secretary, Geithner took a position with a private equity company where his salary is likely several million dollars a year.

    Not everyone who was complaining about entitled manufacturing workers was earning as much as Timothy Geithner, but it is a safe bet that the average critic was earning far more than the average manufacturing worker - and certainly far more than the average displaced manufacturing worker.

    Turning the Debate Right-Side Up: Markets Are Structured

    The perverse nature of the debate over a trade policy that would have the audacity to benefit workers in rich countries is a great example of how we accept as givens not just markets themselves but also the policies that structure markets. If we accept it as a fact of nature that poor countries cannot borrow from rich countries to finance their development, and that they can only export manufactured goods, then their growth will depend on displacing manufacturing workers in the United States and other rich countries.

    It is absurd to narrow the policy choices in this way, yet the centrists and conservatives who support the upward redistribution of the last four decades have been extremely successful in doing just that, and progressives have largely let them set the terms of the debate.

    Markets are never just given. Neither God nor nature hands us a worked-out set of rules determining the way property relations are defined, contracts are enforced, or macroeconomic policy is implemented. These matters are determined by policy choices. The elites have written these rules to redistribute income upward. Needless to say, they are not eager to have the rules rewritten which means they have no interest in even having them discussed.

    But for progressive change to succeed, these rules must be addressed. While modest tweaks to tax and transfer policies can ameliorate the harm done by a regressive market structure, their effect will be limited. The complaint of conservatives - that tampering with market outcomes leads to inefficiencies and unintended outcomes - is largely correct, even if they may exaggerate the size of the distortions from policy interventions. Rather than tinker with badly designed rules, it is far more important to rewrite the rules so that markets lead to progressive and productive outcomes in which the benefits of economic growth and improving technology are broadly shared

    This book examines five broad areas where the rules now in place tend to redistribute income upward and where alternative rules can lead to more equitable outcomes and a more efficient market:

    In each of these areas, it is possible to identify policy choices that have engineered the upward redistribution of the last four decades.

    In the case of macroeconomic policy, the United States and other wealthy countries have explicitly adopted policies that focus on maintaining low rates of inflation. Central banks are quick to raise interest rates at the first sign of rising inflation and sometimes even before. Higher interest rates slow inflation by reducing demand, thereby reducing job growth, and reduced job growth weakens workers' bargaining power and puts downward pressure on wages. In other words, the commitment to an anti-inflation policy is a commitment by the government, acting through central banks, to keep wages down. It should not be surprising that this policy has the effect of redistributing income upward.

    The changing structure of financial regulation and financial markets has also been an important factor in redistributing income upward. This is a case where an industry has undergone very rapid change as a result of technological innovation. Information technology has hugely reduced the cost of financial transactions and allowed for the development of an array of derivative instruments that would have been unimaginable four decades ago. Rather than modernizing regulation to ensure that these technologies allow the financial sector to better serve the productive economy, the United States and other countries have largely structured regulations to allow a tiny group of bankers and hedge fund and private equity fund managers to become incredibly rich.

    This changed structure of regulation over the last four decades was not "deregulation," as is often claimed. Almost no proponent of deregulation argued against the bailouts that saved Wall Street in the financial crisis or against the elimination of government deposit insurance that is an essential part of a stable banking system. Rather, they advocated a system in which the rules restricting their ability to profit were eliminated, while the insurance provided by the Federal Reserve Board, the Federal Deposit Insurance Corporation, and other arms of the government were left in place. The position of "deregulators" effectively amounted to arguing that they should not have to pay for the insurance they were receiving.

    The third area in which the rules have been written to ensure an upward redistribution is patent and copyright protection. Over the last four decades these protections have been made stronger and longer. In the case of both patent and copyright, the duration of the monopoly period has been extended. In addition, these monopolies have been applied to new areas. Patents can now be applied to life forms, business methods, and software. Copyrights have been extended to cover digitally produced material as well as the internet. Penalties for infringement have been increased and the United States has vigorously pursued their application in other countries through trade agreements and diplomatic pressure.

    Government-granted monopolies are not facts of nature, and there are alternative mechanisms for financing innovation and creative work. Direct government funding, as opposed to government granted monopolies, is one obvious alternative. For example, the government spends more than $30 billion a year on biomedical research through the National Institutes of Health - money that all parties agree is very well spent. There are also other possible mechanisms. It is likely that these alternatives are more efficient than the current patent and copyright system, in large part because they would be more market-oriented. And, they would likely lead to less upward redistribution than the current system.

    The CEOs who are paid tens of millions a year would like the public to think that the market is simply compensating them for their extraordinary skills. A more realistic story is that a broken corporate governance process gives corporate boards of directors - the people who largely determine CEO pay -little incentive to hold down pay. Directors are more closely tied to top management than to the shareholders they are supposed to represent, and their positions are lucrative, usually paying six figures for very part-time work. Directors are almost never voted out by shareholders for their lack of attention to the job or for incompetence.

    The market discipline that holds down the pay of ordinary workers does not apply to CEOs, since their friends determine their pay. And a director has little incentive to pick a fight with fellow directors or top management by asking a simple question like, "Can we get a CEO just as good for half the pay?" This privilege matters not just for CEOs; it has the spillover effect of raising the pay of other top managers in the corporate sector and putting upward pressure on the salaries of top management in universities, hospitals, private charities, and other nonprofits.

    Reformed corporate governance structures could empower shareholders to contain the pay of their top-level employees. Suppose directors could count on boosts in their own pay if they cut the pay of top management without hurting profitability, With this sort of policy change, CEOs and top management might start to experience some of the downward wage pressure that existing policies have made routine for typical workers.

    This is very much not a story of the natural workings of the market. Corporations are a legal entity created by the government, which also sets the rules of corporate governance. Current law includes a lengthy set of restrictions on corporate governance practices. It is easy to envision rules which would make it less likely that CEOs earn such outlandish paychecks by making it easier for shareholders to curb excessive pay.

    Finally, government policies strongly promote the upward redistribution of income for highly paid professionals by protecting them from competition. To protect physicians and specialists, we restrict the ability of nurse practitioners or physician assistants to perform tasks for which they are entirely competent. We require lawyers for work that paralegals are capable of completing. While trade agreements go far to remove any obstacle that might protect an autoworker in the United States from competition with a low-paid factory worker in Mexico or China, they do little or nothing to reduce the barriers that protect doctors, dentists, and lawyers from the same sort of competition. To practice medicine in the United States, it is still necessary to complete a residency program here, as though there were no other way for a person to become a competent doctor.

    We also have done little to foster medical travel. This could lead to enormous benefits to patients and the economy, since many high cost medical procedures can be performed at a fifth or even one-tenth the U.S. price in top quality medical facilities elsewhere in the world. In this context, it is not surprising that the median pay of physicians is over $250,000 a year and some areas of specialization earn close to twice this amount. In the case of physicians alone, if pay were reduced to West European-levels the savings would be close to $100 billion a year (@ 0.6 percent of GDP).

    Changing the rules in these five areas could reduce much and possibly all of the upward redistribution of the last four decades. But changing the rules does not mean using government intervention to curb the market. It means restructuring the market to produce different outcomes. The purpose of this book is to show how.

    [1] See also Weissman (2016), Iacono (2016), Worstall (2016), Lane (2016), and Zakaria (2016).

    [2] As explained in the next chapter, this view is not exactly correct, but it's what you're supposed to believe if you adhere to the mainstream economic view.

    [3] There can be modest changes in employment through a supply-side effect. If the trade deal increases the efficiency of the economy, then the marginal product of labor should rise, leading to a higher real wage, which in turn should induce some people to choose work over leisure. So the trade deal results in more people choosing to work, not an increased demand for labor.

    [4] For those worried about brain drain from developing countries, there is an easy fix. Economists like to talk about taxing the winners, in this case developing country professionals and rich country consumers, to compensate the losers, which would be the home countries of the migrating professionals. We could tax a portion of the professionals' pay to allow their home countries to train two or three professionals for every one that came to the United States. This is a classic win-win from trade.

    [5] The loss of manufacturing jobs also reduced the wages of less-educated workers (those without college degrees) more generally. The displaced manufacturing workers crowded into retail and other service sectors, putting downward pressure on wages there.

    [6] As a technical matter, the Federal Reserve Bank of New York is a private bank. It is owned by the banks that are members of the Federal Reserve System in the New York District.

    fresno dan October 25, 2016 at 7:24 am

    "Markets are never just given. Neither God nor nature hands us a worked-out set of rules determining the way property relations are defined, contracts are enforced, or macroeconomic policy is implemented. These matters are determined by policy choices. The elites have written these rules to redistribute income upward. Needless to say, they are not eager to have the rules rewritten which means they have no interest in even having them discussed."

    ======================================================
    It is one of those remarkable hypocrisies that free "unregulated" trade requires deals of thousands of pages .
    but if these deals weren't so carefully structured to help the 1%, support would melt like snowmen in Fresno on a July day

    Kokuanani October 25, 2016 at 8:05 am

    Any other way to buy a paperback copy than via Amazon [which is where the link takes me]?

    I refuse to use them/it.

    JeffC October 25, 2016 at 9:15 am

    It's also at BarnesandNoble.com .

    Katharine October 25, 2016 at 11:15 am

    Or check your local indy, or one of those that take orders (I refrain from naming my favorite co-op in Chicago, and anyway I admit there are others). Nice to support those when you can.

    RickM October 25, 2016 at 10:55 am

    I downloaded the complete pdf directly from the link time to make a donation to the CEPR, I reckon.

    Vatch October 25, 2016 at 2:47 pm

    There's also this, which can help to find an independent bookseller in your area:

    http://www.indiebound.org/book/9780692793367

    Carolinian October 25, 2016 at 9:05 am

    Almost no proponent of deregulation argued against the bailouts that saved Wall Street in the financial crisis or against the elimination of government deposit insurance that is an essential part of a stable banking system.

    Actually I believe there were some Republicans who denounced the Wall Street bailout as a violation of capitalist principles. My state's Mark Sanford comes to mind. It was the Dems at the urging of Pelosi who saved the bailout. On the other hand many of my local politicians are big on "public/private" partnerships which would be a violation of laissez-faire that they approve. Perhaps it was simply that there are no giant banks headquartered in SC.

    The truth is there is no coherent intellectual basis to how the US economy is currently run. It's all about power and what you can do with it. Which is to say it is our politics, above all, that is broken.

    Sound of the Suburbs October 25, 2016 at 9:34 am

    "That is how the economics is supposed to work. In the standard theory, general shortages of demand are not a problem.[2] Economists have traditionally assumed that economies tended toward full employment. The basic economic constraint was a lack of supply. The problem was that we couldn't produce enough goods and services, not that we were producing too much and couldn't find anyone to buy them. In fact, this is why all the standard models used to analyze trade agreements like the Trans-Pacific Partnership assume trade doesn't affect total employment.[3] Economies adjust so that shortages of demand are not a problem."

    Unbelievable.

    By the 1920s they realised the system produced so much stuff that extensive advertising was needed to shift it all.

    One hundred year's later, we might take this on board.

    What is the global advertising budget?

    The amount necessary to shift all the crap the system produces today.

    Sound of the Suburbs October 25, 2016 at 9:45 am

    Demand has to be manufactured through advertising due to chronic over-supply.

    Sound of the Suburbs October 25, 2016 at 9:40 am

    We need to move on from Milton Freidman's ideas and discover what trade in a globalized world is really about.

    We are still under the influence of Milton Freidman's ideas of a globalised free trade world.

    These ideas came from Milton Freidman's imagination where he saw the ideal as small state, raw capitalism and thought the public sector should be sold off and entitlement programs whittled down until everything must be purchased through the private sector.

    "You are free to spend your money as you choose"

    Not mentioning its other meaning:

    "No money, no freedom"

    After Milton Freedman's "shock therapy" in Russia, people were left with so little money they couldn't afford to eat and starved to death. In Greece people cannot afford even bread today.

    But this is economic liberalism, the economy comes first.

    Milton Freidman used his imagination to work out what small state, raw capitalism looked like whereas he could have looked at it in reality through history books of the 18th and 19th centuries where it had already existed.

    The Classical Economists studied it and were able to see its problems first hand and noted the detrimental effects of the rentier class on the economy. They were constantly looking to get "unearned" income from doing nothing; sucking purchasing power out of the economy and bleeding it dry.

    Adam Smith observed:

    "The Labour and time of the poor is in civilised countries sacrificed to the maintaining of the rich in ease and luxury. The Landlord is maintained in idleness and luxury by the labour of his tenants. The moneyed man is supported by his extractions from the industrious merchant and the needy who are obliged to support him in ease by a return for the use of his money. But every savage has the full fruits of his own labours; there are no landlords, no usurers and no tax gatherers."

    Adam Smith saw landlords, usurers (bankers) and Government taxes as equally parasitic, all raising the cost of doing business.

    He sees the lazy people at the top living off "unearned" income from their land and capital.

    He sees the trickle up of Capitalism:
    1) Those with excess capital collect rent and interest.
    2) Those with insufficient capital pay rent and interest.

    He differentiates between "earned" and "unearned" income.

    Today we encourage a new rentier class of BTL landlords who look to extract the "earned" income of generation rent for "unearned" income. If you have a large BTL portfolio you can become a true rentier, do nothing productive at all and live off "unearned" income extracted from generation rent, the true capitalist parasite. (UK)

    The Classical Economists realised capitalism has two sides, the productive side where "earned" income is generated and the unproductive, parasitic, rentier side where "unearned" income is generated.

    You should tax "unearned" income to discourage the parasitic side of capitalism.
    You shouldn't tax "earned" income to encourage the productive side of capitalism.

    You should provide low cost housing, education and services to create a low cost of living, giving a low minimum wage making you globally competitive. This is to be funded by taxes on "unearned" income.

    The US has probably been the most successful in making its labour force internationally uncompetitive with soaring costs of housing, healthcare and student loan repayments.

    These all have to be covered by wages and US businesses are now squealing about the high minimum wage.

    That's Milton Freidman's imagined small state, raw capitalism.

    What he imagined bears little resemblance to the reality the Classical Economists saw firsthand.

    We need to move on from Milton Freidman fantasy land.

    Sound of the Suburbs October 25, 2016 at 9:42 am

    Milton Freidman fantasy land:

    Businesses should maximise profit.

    Small state, raw capitalism as observed by Adam Smith:

    "But the rate of profit does not, like rent and wages, rise with the prosperity and fall with the declension of the society. On the contrary, it is naturally low in rich and high in poor countries, and it is always highest in the countries which are going fastest to ruin."

    When rates of profit are high, capitalism is cannibalising itself by:
    1) Not engaging in long term investment for the future
    2) Paying insufficient wages to maintain demand for its products and services

    In the 18th Century they would have understood today's problems with growth and demand.

    Luckily Jeff Bezos didn't inhabit Milton Freidman fantasy land.

    He re-invested almost everything to turn Amazon onto the global behemoth it is today.

    Jim Haygood October 25, 2016 at 9:47 am

    ' The commitment to an anti-inflation policy is a commitment by the government, acting through central banks, to keep wages down. '

    This is strikingly silly. Insert the word 'nominal' before wages, and it's not a howler anymore.

    Anti-inflation policy in fact has little influence on real wages (the variable of concern, not nominal wages). But it has a lot to do with preventing the social chaos of constantly rising prices, strikes for higher wages, inability of first-time home buyers to borrow at affordable rates, and so on.

    Inflationism is greasy kid stuff not to mention a brazen fraud on the public.

    Anonymous2 October 25, 2016 at 10:18 am

    As one who walked the corridors of power in a very modest capacity in my country in the early to mid 1990s, can I just say that people with power or influence then were aware that globalisation would create winners and losers. I recall the consensus of those I knew then was that steps would need to be taken to compensate the losers. The tragedy is that these steps were never taken, or, if they were, only to a wholly inadequate degree.

    Alejandro October 25, 2016 at 12:22 pm

    The always elusive referents for cost, price and value the flip-side of social chaos would seem the entropic degradation of wasted lives, excluded from participating {either-OR} abandoned as irredeemable

    Katharine October 25, 2016 at 1:01 pm

    Higher interest rates slow inflation by reducing demand, thereby reducing job growth, and reduced job growth weakens workers' bargaining power and puts downward pressure on wages.

    Your assertion that anti-inflation policy has little influence on real wages does not address Baker's statement about the mechanism by which he says it does. Given an argument between two people, one of whom cites a mechanism he is probably prepared to document with numbers and one of whom merely declares his belief, which are people more likely to trust? Granted always, they should go look for the numbers before they fully accept the statement, his credibility is currently higher than yours on this subject.

    Jim Haygood October 25, 2016 at 1:24 pm

    Real wages roughly doubled from 1947 (when BLS data begins) through the late 1970s:

    https://en.wikipedia.org/wiki/Real_wages#/media/File:US_productivity_and_real_wages.jpg

    Over this same period, the nominal yield on 10-year Treasury notes rose from 2.5% to over 10%:

    https://staticseekingalpha.a.ssl.fastly.net/uploads/2010/3/29/saupload_10_yr_treasury_yields_25_.jpg

    By contrast, since the 1970s real wages stalled, while interest rates round-tripped back to 2 percent.

    Over nearly seven decades, the correlation is quite the opposite from that made up claimed by Dean Bonkers. Namely, real wages soared under a regime of steadily rising nominal interest rates.

    Numbers - they can be crunchy sometimes.

    Katharine October 25, 2016 at 2:22 pm

    Since my original reply has disappeared in limbo, I will merely note that numbers are probably even crunchier when you don't generalize across a span of decades: first there was A, then there was B, nothing else happened. It's a sure way to obscure patterns.

    And Jim, please quit the ad hominem stuff! It's ugly and needless. If you really have an argument you don't need it, and if you don't you don't gain by it. You know perfectly well he's not making things up and he's not bonkers. When you say stuff like that, the obvious presumption is that you just don't want to consider his arguments because they lead somewhere you don't want to go.

    Paul Art October 25, 2016 at 4:56 pm

    Don't feed the troll

    Smell of Sulfur October 25, 2016 at 5:32 pm

    Perhaps I am missing the point being made, but if you are suggesting that increases in real wages in the 1945-1975 period caused inflation, why not provide the data on inflation which would in fact show that inflation was essentially tame for 20 years in this period (1952-1972, with a slight hiccup in 1969-1971), thereby contradicting your point? And if you are suggesting that Fed increases in interest rate have not resulted in suppression of wages you will have to demonstrate that using analysis that takes into account the lag in time between increase in rate and transmission to wages, and in that case would you not also use the Fed Funds Rate itself as a variable?

    sgt_doom October 25, 2016 at 5:31 pm

    Bulltwacky, they have been globalizing wages downwards while globalizing housing prices upwards!

    Every time some stupid and moronic newsy floozy on one of the CorporateNonMedia outlets claims housing purchases may be going down because consumer confidence is plummeting, they CHOOSE to ignore the foreign buyers of said houses!

    It's all connected - it's all rigged . . . .

    Minnie Mouse October 25, 2016 at 1:32 pm

    Did I get this right? Full employment is an assumed boundary condition and so is fixed balance of trade? If the model is to work as advertised then the boundary conditions must be hard wired to be true, right?

    sgt_doom October 25, 2016 at 5:28 pm

    Dean hits it out of the park once again!

    Sounds like a great book on every level.

    If the top 25 hedge fund managers saved around $5 billion per year in being taxed on their income at capital gains rate (carried interest ruling in tax code - utterly corrupt), then think of the amount that is being robbed from the tax base when one considers ALL the hedge fund people, and ALL the private equity types (who also do this), a conservative amount of tax revenues remitted should be around $100 billion per year!

    Now that would go far . . .

    [Oct 25, 2016] Mergers Raise Prices, Not Efficiency

    Oct 25, 2016 | economistsview.typepad.com

    RC AKA Darryl, Ron : October 25, 2016 at 04:56 AM RE: Mergers Raise Prices, Not Efficiency

    https://www.bloomberg.com/view/articles/2016-10-24/mergers-raise-prices-not-efficiency

    [IMO, Noah muddles the message, but it is a important topic that gets muddled by everyone else too. Economists with a financial bent had no problem apparently with the bank mergers that started in the seventies and everyone loved the auto maker mergers of the first half of the 2oth century.

    Efficiency itself is an amorphous term. Mergers can be an efficient use of capital since they deliver lower competition and higher profits. JP Morgan did not want to be in a industry that he could not dominate. Efficiency is different for a fish than a capital owner. Mergers are good for regulatory capture and ineffishient for fish. Mergers are inefficient for workers that want higher wages or the unemployed that want jobs. Market power and regulatory capture can be efficient vehicles for taking advantage of trade agreements to offshore production and increase returns to capital all while lowering both prices and quality as well as reducing domestic wages. Efficiency is in the eyeballs of the beholder especially if they make good soup.] Reply Tuesday, reason -> RC AKA Darryl, Ron... , October 25, 2016 at 06:58 AM

    But Keynes was saying something quite different - he wasn't actually talking about policy but about economics (the task of economists). He was saying that understanding short term fluctuations was as important as predicting the long term. Still relevant in this age of irrelevant general equilibrium models.
    RC AKA Darryl, Ron -> reason ... , October 25, 2016 at 09:56 AM
    Sorry, I thought that the whole purpose of the study of macroeconomics was to guide policy decisions. I stand corrected.
    RC AKA Darryl, Ron -> RC AKA Darryl, Ron... , October 25, 2016 at 10:02 AM
    I always looked at Keynes as a fellow traveler, one who wrote obtusely at times for the express purpose of couching his meaning in sweetened platitudes that at a second glance were drenched in cynicism and sarcasm, at least when it came to his opinions of economists and politicians and the capital owning class that they both served.
    RC AKA Darryl, Ron -> RC AKA Darryl, Ron... , October 25, 2016 at 10:39 AM
    OK, "obtusely" was a poor choice of words, at least with regards to Keynes. Keynes realized WWI was a big mistake, the Treaty at Versailles was an abomination with regards to German restitution, and he was accused of anti-Semitism just for being honest about Jewish elites in the Weimar Republic. It was not that Keynes was insensitive, unpatriotic, or anti-Semitic, but that Keynes was just correct on all counts.
    JohnH -> RC AKA Darryl, Ron... , -1
    This is a good example of economists working in lock step with investors: "Economists with a financial bent had no problem apparently with the bank mergers that started in the seventies and everyone loved the auto maker mergers of the first half of the 2oth century."

    I think it has been questioned for decades whether increased efficiency in banking actually materialized in the wake of industry consolidation. Local market oligopolies may well have generated higher profits and the appearance of more efficiency. And concentration certainly facilitated collusion as we have seen in many markets, including LIBOR.

    What concentration indisputably caused was a dramatic increase in the political power of the Wall Street banking cartel, which owns not only the Federal Reserve but also a lot of powerful politicians...a subject on which 'liberal' economists are generally agnostic, since politics is outside their silo.

    point -> RC AKA Darryl, Ron... , October 25, 2016 at 10:26 AM
    The article ignored the effect of mergers on supplier relationships, often one of near monopsony (oligopsony?). DOJ seems to be focused on unit pricing to consumers(though perhaps not with cable) to the point that most managements understand that they have free rein to squeeze suppliers. And so they merge to do so.

    It may be that more contribution to increasing margins is from purchase prices than selling prices.

    RC AKA Darryl, Ron -> point... , October 25, 2016 at 10:41 AM
    Doubly so with global supply chaining.

    [Oct 25, 2016] Trump supporters no longer believe or trust the Republican elite who they see as corrupt which is partly true

    Notable quotes:
    "... My impression is that Trump_vs_deep_state is more about dissatisfaction of the Republican base with the Republican brass (which fully endorsed neoliberal globalization), the phenomenon somewhat similar to Sanders. ..."
    "... Working class and lower middle class essentially abandoned DemoRats (Clinton democrats) after so many years of betrayal and "they have nowhere to go" attitude. ..."
    "... Now they try to forge the alliance of highly paid professionals who benefitted from globalization("creative class"), financial speculators and minorities. Which does not look like a stable coalition to me. ..."
    "... In other words both Parties are now split and have two mini-parties inside. I am not sure that Sanders part of Democratic party would support Hillary. The wounds caused by DNC betrayal and double dealing are still too fresh. ..."
    "... We have something like what Marxists call "revolutionary situation" when the elite loses control of "peons". And existence of Internet made MSM propaganda far less effective that it would be otherwise. That's why they resort to war propaganda tricks. ..."
    economistsview.typepad.com

    Peter K. -> Sanjait... , October 24, 2016 at 11:48 AM

    "That's not untrue, but it seems to me to be getting worse."

    Because of economic stagnation and anxiety among lower class Republicans. Trump blames immigration and trade unlike traditional elite Republicans. These are economic issues.

    Trump supporters no longer believe or trust the Republican elite who they see as corrupt which is partly true. They've been backing Nixon, Reagan, Bush etc and things are just getting worse. They've been played.

    Granted it's complicated and partly they see their side as losing and so are doubling down on the conservatism, racism, sexism etc. But Trump *brags* that he was against the Iraq war. That's not an elite Republican opinion.

    likbez -> DrDick... , -1
    My impression is that Trump_vs_deep_state is more about dissatisfaction of the Republican base with the Republican brass (which fully endorsed neoliberal globalization), the phenomenon somewhat similar to Sanders.

    Working class and lower middle class essentially abandoned DemoRats (Clinton democrats) after so many years of betrayal and "they have nowhere to go" attitude.

    Looks like they have found were to go this election cycle and this loss of the base is probably was the biggest surprise for neoliberal Democrats.

    Now they try to forge the alliance of highly paid professionals who benefitted from globalization("creative class"), financial speculators and minorities. Which does not look like a stable coalition to me.

    Some data suggest that among unions which endorsed Hillary 3 out of 4 members will vote against her. And that are data from union brass. Lower middle class might also demonstrate the same pattern this election cycle.

    In other words both Parties are now split and have two mini-parties inside. I am not sure that Sanders part of Democratic party would support Hillary. The wounds caused by DNC betrayal and double dealing are still too fresh.

    We have something like what Marxists call "revolutionary situation" when the elite loses control of "peons". And existence of Internet made MSM propaganda far less effective that it would be otherwise. That's why they resort to war propaganda tricks.

    likbez : , October 24, 2016 at 12:00 PM
    My impression is that that key issue is as following: a vote for Hillary is a vote for the War Party and is incompatible with democratic principles.

    She is way too militant, and is not that different in this respect from Senator McCain. That creates a real danger of unleashing the war with Russia.

    Trump with all his warts gives us a chance to get some kind of détente with Russia.

    In other words no real Democrat can vote for Hillary.

    [Oct 23, 2016] Trump Unloads in Pennsylvania Speech Hillary Clinton Should Be in Prison - Breitbart

    Oct 23, 2016 | www.breitbart.com
    In a lengthy speech on Saturday night in Manheim, Pennsylvania, Republican nominee for president Donald J. Trump lambasted his opponent Democratic nominee Hillary Rodham Clinton for a secret tape recording of her bashing supporters of Sen. Bernie Sanders of Vermont-and even called for Clinton to be placed in prison and questioned as to whether she has been loyal to her husband former President Bill Clinton.

    Trump said in the speech on Saturday night:

    A new audio tape that has surfaced just yesterday from another one of Hillary's high roller fundraisers shows her demeaning and mocking Bernie Sanders and all of his supporters. You know, and I'll tell you something we have a much bigger movement that Bernie Sanders ever had. We have much bigger crowds than Sanders ever had. And we have a more important movement than Bernie Sanders ever had because we're going to save our country, okay? We're going to save our country. But I can tell you Bernie Sanders would have left a great, great legacy had he not made the deal with the devil. He would have really left a great legacy. Now he shows up and 120 people come in to hear him talk. Bernie Sanders would have left a great legacy had he not made the deal, had he held his head high and walked away. Now he's on the other side perhaps from us and we want to get along with everybody and we will-we're going to unite the country-but what Bernie Sanders did to his supporters was very, very unfair. And they're really not his supporters any longer and they're not going to support Hillary Clinton. I really believe a lot of those people are coming over and largely because of trade, college education, lots of other things-but largely because of trade, they're coming over to our side-you watch, you watch. Especially after Hillary mocks him and mocks all of those people by attacking him and his supporters as 'living in their parents' basements,' and trapped in dead-end careers. That's not what they are.

    Also in his speech on Saturday night, Trump summed up exactly what came out in the latest Hillary Clinton tapes in which she mocks Sanders supporters:

    She describes many of them as ignorant, and [that] they want the United States to be more like Scandinavia but that 'half the people don't know what that means' in a really sarcastic tone because she's a sarcastic woman. To sum up, and I'll tell you the other thing-she's an incompetent woman. She's an incompetent woman. I've seen it. Just take a look at what she touches. It never works out, and you watch: her run for the presidency will never ever work out because we can't let it work out. To sum up, Hillary Clinton thinks Bernie supporters are hopeless and ignorant basement dwellers. Then, of course, she thinks people who vote for and follow us are deplorable and irredeemable. I don't think so. I don't think so. We have the smartest people, we have the sharpest people, we have the most amazing people, and you know in all of the years of this country they say, even the pundits-most of them aren't worth the ground they're standing on, some of that ground could be fairly wealthy but ground, but most of these people say they have never seen a phenomenon like is going on. We have crowds like this wherever we go.

    WATCH THE FULL SPEECH:

    Later in the speech, Trump came back to the tape again and hammered her once more for it.

    "Hillary Clinton all but said that most of the country is racist, including the men and women of law enforcement," Trump said. "She said that the other night. Did anybody like Lester Holt? Did anybody question her when she said that? No, she said it the other night. [If] you're not a die hard Clinton fan-you're not a supporter-from Day One, Hillary Clinton thinks you are a defective person. That's what she's going around saying."

    In the speech, Trump questioned whether Clinton has the moral authority to lead when she considers the majority of Americans-Trump supporters and Sanders supporters-to be "defective" people. And he went so far as saying that Clinton "should be in prison." He went on:

    How on earth can Hillary Clinton try to lead this country when she has nothing but contempt for the people who live in this country? She's got contempt. First of all, she's got so many scandals and she's been caught cheating so much. One of the worst things I've ever witnessed as a citizen of the United States was last week when the FBI director was trying so hard to explain how she away with what she got away with, because she should be in prison. Let me tell you. She should be in prison. She's being totally protected by the New York Times and the Washington Post and all of the media and CNN-Clinton News Network-which nobody is watching anyway so what difference does it make? Don't even watch it. But she's being protected by many of these groups. It's not like do you think she's guilty? They've actually admitted she's guilty. And then she lies and lies, 33,000 emails deleted, bleached, acid-washed! And then they take their phones and they hammer the hell out of them. How many people have acid washed or bleached a Tweet? How many?

    He returned to the secret Clinton tape a little while later:

    Hillary Clinton slanders and attacks anyone who wants to put America First, whether they are Trump Voters or Bernie Voters. What she said about Bernie voters amazing. Like the European Union, she wants to erase our borders and she wants to do it for her donors and she wants people to pour into country without knowing who they are.

    Trump later bashed the media as "dishonest as hell" when calling on the reporters at his event to "turn your cameras" to show the crowd that came to see him.

    "If they showed the kind of crowds we have-which people can hear, you know it's interesting: you can hear the crowd when you hear the television but if they showed the crowd it would be better television, but they don't know much about that. But it would actually be better television," Trump said.

    Trump also questioned whether Hillary Clinton has been loyal to her husband, former President Bill Clinton. Bill Clinton has been known to cheat on Hillary Clinton with a variety of mistresses and has been accused of rape and sexual assault by some women.

    "Hillary Clinton's only loyalty is to her financial contributors and to herself," Trump said. "I don't even think she's loyal to Bill, if you want to know the truth. And really, folks, really: Why should she be, right? Why should she be?"

    Throughout the speech, Trump weaved together references to his new campaign theme about Clinton-"Follow The Money"-with details about the Trans Pacific Partnership (TPP) trade deal. He said:

    We're going to take on the corrupt media, the powerful lobbyists and the special interests that have stolen your jobs, your factories, and your future-that's exactly what's happened. We're going to stop Hillary Clinton from continuing to raid the industry from your state for her profit. Hillary Clinton has collected millions of dollars from the same global corporations shipping your jobs and your dreams to other countries. You know it and everybody else knows it. That's why Clinton, if she ever got the chance, would 100 percent approve Trans Pacific Partnership-a total disastrous trade deal. She called the deal the 'gold standard.' The TPP will bring economic devastation to Pennsylvania and our campaign is the only chance to stop that and other bad things that are happening to our country. She lied about the Gold Standard the other night at the debate. She said she didn't say it-she said it. We want to stop the Trans Pacific Partnership and if we don't-remember this, if we don't stop it, billions and billions [of dollars] in jobs and wealth will be vacuumed right out of Pennsylvania and sent to these other countries. Just like NAFTA was a disaster, this will be a disaster. Frankly I don't think it'll be as bad as NAFTA. It can't get any worse than that-signed by Bill Clinton. All of us here in this massive room here tonight can prevent this from happening. Together we can stop TPP and we can end the theft of American jobs and prosperity.

    Trump praised Sanders for being strongly opposed to the TPP:

    I knew one man-I'm not a big fan-but one man who knew the dangers of the TPP was Bernie Sanders. Crazy Bernie. He was right about one thing, only one thing, and that was trade. He was right about it because he knew we were getting ripped off, but he wouldn't be able to do anything about it . We're going to do a lot about it. We're going to have those highways running the opposite direction. We're going to have a lot of trade, but it's going to come into our country. We are going to start benefitting our country because right now it's one way road to trouble. Our jobs leave us, our money leaves us. With Mexico, we get the drugs-they get the cash-it's that simple.

    Hillary Clinton, Trump noted, is "controlled by global special interests."

    "She's on the opposite side of Bernie on the trade issue," Trump said. "She's totally on the opposite side of Bernie."

    He circled back to trade a bit later in the more-than-hour-long speech, hammering TPP and Clinton cash connections. Trump continued:

    Three TPP member countries gave between $6 and $15 million to Clinton. At least four lobbyists who are actively lobbying for TPP passage have raised more than $800,000 for her campaign. I'm just telling you Pennsylvania, we're going to make it. We're going to make it. We're going to make it if we have Pennsylvania for sure. It'll be easy. But you cannot let this pass. NAFTA passed. It's been the worst trade deal probably ever passed, not in this country but anywhere in the world. It cleaned out New England. It cleaned out big portions of Pennsylvania. It cleaned out big portions of Ohio and North Carolina and South Carolina-you can't let it happen.

    Trump even called the politicians like Clinton "bloodsuckers" who have let America be drained out of millions upon millions of jobs.

    "These bloodsuckers want it to happen," Trump said. "They're politicians that are getting taken care of by people that want it to happen. Other countries want it to happen because it's good for them, but it's not good for us. So hopefully you're not going to let it happen. Whatever Hillary's donors want, they get. They own her. On Nov. 8, we're going to end Clinton corruption. Hillary Clinton, dishonest person, is an insider fighting for herself and for her friends. I'm an outsider fighting for you. And by the way, just in case you're not aware, I used to be an insider but I thought this was the right thing to do. This is the right thing to do, believe me."

    [Oct 20, 2016] This is the smoking gun behind the corruption of the Fed during the 2008 crisis

    Oct 20, 2016 | www.moonofalabama.org

    psychohistorian | Oct 19, 2016 8:29:29 PM | 99

    I just read this posting at ZH and believe that this information when fully grokked will take the market down.

    http://www.zerohedge.com/news/2016-10-19/never-seen-secret-memo-aig-bailout-feds-tarullo-obama-revealed-podesta-emails

    This is the smoking gun behind the corruption of the Fed during the 2008 crisis. I want to see how they tell the world that this was all legal.

    END PRIVATE FINANCE! The folks that own private finance also own the US and many other governments.....with or without vote rigging as one of their tools.

    [Oct 19, 2016] Toxic Politics Versus Better Economics by Mohamed A. El-Erian

    This guy is die hard neoliberal. That's why he is fond of Washington consensus. He does not understand that the time is over for Washington consensus in 2008. this is just a delayed reaction :-)
    Notable quotes:
    "... after years of unusually sluggish and strikingly non-inclusive growth, the consensus is breaking down. Advanced-country citizens are frustrated with an "establishment" – including economic "experts," mainstream political leaders, and dominant multinational companies – which they increasingly blame for their economic travails. ..."
    "... Anti-establishment movements and figures have been quick to seize on this frustration, using inflammatory and even combative rhetoric to win support. They do not even have to win elections to disrupt the transmission mechanism between economics and politics. ..."
    "... They also included attacks on "international elites" and criticism of Bank of England policies that were instrumental in stabilizing the British economy in the referendum's immediate aftermath – thus giving May's new government time to formulate a coherent Brexit strategy. ..."
    "... The risk is that, as bad politics crowds out good economics, popular anger and frustration will rise, making politics even more toxic. ..."
    "... At one time, the people's government served as a check on the excesses of economic interests -- now, it is simply owned by them. ..."
    "... The defects of the maximalist-globalist view were known for years before the "consensus began to break down". ..."
    "... In at least some of these cases, the "transmission" of the consensus involved more than a little coercion and undermining local interests, sovereignty, and democracy. This is an central feature of the "consensus", and it is hard to see how it can by anything but irredeemable. ..."
    "... However it is not bad politics crowding out out good economics, for the simple reason that the economic "consensus" itself, in embracing destructive and destabilizing economic policy crowded out the ostensibly centrist politics... ..."
    "... The Inclusive Growth has remained only a Slogan and Politicians never ventured into the theme. In the changed version of the World.] essential equal opportunity and World of Social media, perspective and social Political scene is changed. Its more like reverting to mean. ..."
    Oct 19, 2016 | www.project-syndicate.org

    In the 1990s and 2000s, for example, the so-called Washington Consensus dominated policymaking in much of the world...

    ... ... ...

    But after years of unusually sluggish and strikingly non-inclusive growth, the consensus is breaking down. Advanced-country citizens are frustrated with an "establishment" – including economic "experts," mainstream political leaders, and dominant multinational companies – which they increasingly blame for their economic travails.

    Anti-establishment movements and figures have been quick to seize on this frustration, using inflammatory and even combative rhetoric to win support. They do not even have to win elections to disrupt the transmission mechanism between economics and politics. The United Kingdom proved that in June, with its Brexit vote – a decision that directly defied the broad economic consensus that remaining within the European Union was in Britain's best interest.

    ... ... ...

    ... speeches by Prime Minister Theresa May and members of her cabinet revealed an intention to pursue a "hard Brexit," thereby dismantling trading arrangements that have served the economy well. They also included attacks on "international elites" and criticism of Bank of England policies that were instrumental in stabilizing the British economy in the referendum's immediate aftermath – thus giving May's new government time to formulate a coherent Brexit strategy.

    Several other advanced economies are experiencing analogous political developments. In Germany, a surprisingly strong showing by the far-right Alternative für Deutschland in recent state elections already appears to be affecting the government's behavior.

    In the US, even if Donald Trump's presidential campaign fails to put a Republican back in the White House (as appears increasingly likely, given that, in the latest twist of this highly unusual campaign, many Republican leaders have now renounced their party's nominee), his candidacy will likely leave a lasting impact on American politics. If not managed well, Italy's constitutional referendum in December – a risky bid by Prime Minister Matteo Renzi to consolidate support – could backfire, just like Cameron's referendum did, causing political disruption and undermining effective action to address the country's economic challenges.

    ... ... ...

    The risk is that, as bad politics crowds out good economics, popular anger and frustration will rise, making politics even more toxic. ...

    john zac OCT 17, 2016

    Mr El-Erian, I know you are a good man, but it seems as though everyone believes we can synthetically engineer a way out of this never ending hole that financial engineering dug us into in the first place.

    Instead why don't we let this game collapse, you are a good man and you will play a role in the rebuilding of better system, one that nurtures and guides instead of manipulate and lie.

    The moral suasion you mention can only appear by allowing for the self annihilation of this financial system. This way we can learn from the autopsies and leave speculative theories to third rate economists

    Curtis Carpenter OCT 15, 2016

    It is sadly true that "the relationship between politics and economics is changing," at least in the U.S.. At one time, the people's government served as a check on the excesses of economic interests -- now, it is simply owned by them.

    It seems to me that the best we can hope for now is some sort of modest correction in the relationship after 2020 -- and that the TBTF banks won't deliver another economic disaster in the meantime.

    Petey Bee OCT 15, 2016
    1. The defects of the maximalist-globalist view were known for years before the "consensus began to break down".

    2. In at least some of these cases, the "transmission" of the consensus involved more than a little coercion and undermining local interests, sovereignty, and democracy. This is an central feature of the "consensus", and it is hard to see how it can by anything but irredeemable.

    In the concluding paragraph, the author states that the reaction is going to be slow. That's absolutely correct, the evidence has been pushed higher and higher above the icy water line since 2008.

    However it is not bad politics crowding out out good economics, for the simple reason that the economic "consensus" itself, in embracing destructive and destabilizing economic policy crowded out the ostensibly centrist politics...

    Paul Daley OCT 15, 2016
    The Washington consensus collapsed during the Great Recession but the latest "consensus" among economists regarding "good economics" deserves respect.
    atul baride OCT 15, 2016
    The Inclusive Growth has remained only a Slogan and Politicians never ventured into the theme. In the changed version of the World.] essential equal opportunity and World of Social media, perspective and social Political scene is changed. Its more like reverting to mean.

    [Oct 19, 2016] October 19, 2016 at 12:17 PM

    Oct 19, 2016 | economistsview.typepad.com

    Anon : , 2016 at 12:17 PM

    so when people criticize the big deflation in computer/electronics hardware using baseless measures like "if the computer has a processor twice as fast then it has fallen by half in price" they are wackos. but now the real growth that is artificially generated by this way (quality improvements) to keep inflation down is being criticized by Fox. Of course it is completely made up growth. the absurdity of the economists deal with price inflation. now years later, everyone realizes we have all taken a big fall in living standards no matter how many gigahertz my stupid computer is.
    Ben Groves -> Anon... , October 19, 2016 at 01:10 PM
    Oh please, when RFK was talking about the massive poverty in eastern kentucky in 1968, where was the huge increase in living standards?

    Government data is flawed right now, to a extent in needs a total reworking. There is no artificial growth. Just lost growth by outdated models.

    pgl -> Ben Groves... , October 19, 2016 at 02:19 PM
    Do you have some weird need to spew nonsense completely unrelated to the post every time you comment? Geesh.
    DrDick : , October 19, 2016 at 12:20 PM
    Color me shocked by this revelation./s
    anne : , October 19, 2016 at 12:28 PM
    https://fred.stlouisfed.org/graph/?g=7yCj

    January 15, 2016

    Manufacturing Production Index, 1992-2016

    (Indexed to 1992)


    https://fred.stlouisfed.org/graph/?g=7OvR

    January 15, 2016

    Manufacturing Production and Manufacturing Durable Computer and Electronic Indexes, 1992-2016

    (Indexed to 1992)

    anne -> anne... , October 19, 2016 at 02:03 PM
    Using separate axes for clarity:

    https://fred.stlouisfed.org/graph/?g=7OBH

    January 15, 2016

    Manufacturing Production and Manufacturing Durable Computer and Electronic Indexes, 1992-2016

    (Indexed to 1992)

    anne -> anne... , October 19, 2016 at 02:40 PM
    What is the share of manufacturing production of durable computer and electronic manufacturing? I do not know how to graph this.
    anne -> anne... , October 19, 2016 at 03:32 PM
    Getting closer:

    https://fred.stlouisfed.org/graph/?g=7OFU

    January 15, 2016

    Relative Importance Weight (Contribution to the total industrial production index): Durable manufacturing: Computer and electronic product, 1992-2016

    (Indexed to 1992)

    anne -> anne... , October 19, 2016 at 03:37 PM
    https://fred.stlouisfed.org/graph/?g=7OG5

    January 15, 2016

    Relative Importance Weight (Contribution to the total industrial production index): Durable manufacturing: Computer and electronic product, 1992-2016

    8.8% in 1992
    to 11.4% in 1999
    to 5.2% in 2014
    to 6.1% in 2016.

    Ben Groves : , October 19, 2016 at 01:08 PM
    Manufacturing hasn't boomed since the 60's. The FRED graphs are garbage and useless in general. They are improperly calculated and they have out right admitted they may have "problems".

    Manufacturing is dying out and becoming automated over the decades. There is no such thing as artificial growth either. Demand based on consumption is just as valid as industrial production shipped to other countries.

    pgl -> Ben Groves... , October 19, 2016 at 02:21 PM
    "The FRED graphs are garbage and useless in general."

    No - your comments are garbage and useless. Actually READ the post. He did not get his graphs or data from FRED. Seriously - you need professional help.

    Ben Groves -> pgl... , October 19, 2016 at 02:48 PM
    poppycock. the garbage on their industrial production chart in the 90's and 00's was stupid bad. The US hasn't had a industrial boom since the 60's when our consumption was surging while we still made most of our products. No wonder inflation surged by the late 60's. The war against communism was having a painful bad side effects to rentiers and bankers, which spread to capital by the late 60's.
    pgl -> Ben Groves... , October 19, 2016 at 04:07 PM
    "the garbage on their industrial production chart in the 90's and 00's was stupid bad."

    Can we focus on the single word "their". You think he used FRED. No jackass, he made his own charts from the source data - BLS. But noooooooo - you are too stupid to get even this simple point. So the rest of your ramblings is nothing more than your usual intellectual garbage.

    likbez : , October 19, 2016 at 02:02 PM
    Quality adjustments = number racket
    jonny bakho : , October 19, 2016 at 03:28 PM
    Auto mfg dropped by half post 2008.
    It is now back but has nowhere to grow.
    Urbanization makes cars less necessary and less desirable
    There is not enough room to park them all now.
    People who earn MinWage cannot afford them
    sanjait : , October 19, 2016 at 03:53 PM
    Interesting point but many will overinterpret this. Leave in the expansion of computer and electronics manufacturing value add, and we have manufacturing output slightly expanding. Take it out entirely and we have manufacturing output basically steady.

    The difference isn't telling an important macro story.

    The important macro story is the major decline in manufacturing employment, and that has two big and one smaller causes.

    The two big factors are the increased productivity of manufacturing globally and the declining share of manufactured products as a % of GDP globally. The smaller factor is the US's declining share of global manufacturing output, which itself is only fractionally attributable to trade policy.

    This one graph tells most of the story:

    http://1.bp.blogspot.com/-JEZXR9XK7vc/Tbr46ReInRI/AAAAAAAAPQ0/HlLXeVin_g0/s1600/worldmfg.jpg

    I don't know anyone who says US manufacturing is "booming." It certainly isn't. It's treading water. It's growing slowly as the economy grows, but we can predict with high confidence that it will continue to contract as a share of total output over time, because that has been the secular trend for decades and there's no reason to expect that to change.

    The only big question is how we adapt to the world as it actually is.

    anne -> sanjait... , October 19, 2016 at 04:23 PM
    Nicely done.

    Also, I did not realize I was being presented with an argument about Chinese growth and sustainability. I foolishly stopped reading and I am entirely sorry. I have set down data and begun to answer the argument below on Links:

    http://economistsview.typepad.com/economistsview/2016/10/links-for-10-19-16.html#comment-6a00d83451b33869e201bb09479d0e970d

    October 19, 2016

    anne -> sanjait... , October 19, 2016 at 04:26 PM
    What is significant though is how China insists on holding to growth targets that are very likely not sustainable. Stability is a worthy aim but when growth is achieved through pushing bad private sector loans, that is ultimately the enemy of stability.

    [ For these 39 past years China has been holding to and achieving growth targets that were repeatedly considered unsustainable so I prefer to figure out why Chinese growth targets have been and from my perspective are now sustainable. ]

    the forgotten spirit of American protectionism : , -1
    YES! Of course US manufacturing isn't booming - how could it? We have horrible economic policies that are focused almost entirely on destroying our industrial base. High overvalued currency, combined with 0% tariffs and we have no VAT, so foreign imports from countries with a VAT receive export subsidies but are not taxed on the US side. That we have even one factory left is amazing and testament to the quality of American workers. Under Clinton, we'll lose what's left. Trump is our only hope. If we don't get Trump's protectionism we will quickly become a country as poor as Armenia or Moldova - stripped of industry and wealth, dependent on remittances from our migrant workers in Asia and Europe.

    [Oct 19, 2016] No, U.S. Manufacturing Isnt Really Booming

    Notable quotes:
    "... Of course it is completely made up growth. the absurdity of the economists deal with price inflation. now years later, everyone realizes we have all taken a big fall in living standards no matter how many gigahertz my stupid computer is. ..."
    "... The important macro story is the major decline in manufacturing employment, and that has two big and one smaller causes. ..."
    "... I don't know anyone who says US manufacturing is "booming." It certainly isn't. It's treading water. It's growing slowly as the economy grows, but we can predict with high confidence that it will continue to contract as a share of total output over time, because that has been the secular trend for decades and there's no reason to expect that to change. ..."
    Oct 19, 2016 | economistsview.typepad.com
    Justin Fox:

    No, U.S. Manufacturing Isn't Really Booming :...[Is]American manufacturing .. in decline? An answer frequently offered by wonky economics journalists is that, no, U.S. manufacturing output has actually kept growing. ...

    There's a catch, though. As economist Susan N. Houseman of the W.E. Upjohn Institute for Employment Research ... points out , about half of the growth in U.S. manufacturing output since 1997 has been in just one sector: computer and electronics manufacturing.

    If it weren't for computers and electronics (which includes semiconductors), manufacturing output would still be well below its 2008 peak and only 21 percent higher than in 1997...

    The ... way those computers-and-electronics numbers are arrived at is worthy of a closer look. ... Without adjusting for deflation, value added in computer and electronics manufacturing is up 45 percent since 1997. With the adjustments, it's up 699 percent! What's happening here is that the Bureau of Economic Analysis has been trying to account for vast improvements in ... quality... Writes Houseman:

    Such quality adjustment ... can make the numbers difficult to interpret..., figures that exclude this industry ... arguably provide a clearer picture of trends in manufacturing output.

    As it stands now, those trends don't look impressive. U.S. manufacturing output has held up a lot better than manufacturing employment. But it definitely isn't booming.

    Anon : October 19, 2016 at 12:17 PM

    so when people criticize the big deflation in computer/electronics hardware using baseless measures like "if the computer has a processor twice as fast then it has fallen by half in price" they are wackos. but now the real growth that is artificially generated by this way (quality improvements) to keep inflation down is being criticized by Fox.

    Of course it is completely made up growth. the absurdity of the economists deal with price inflation. now years later, everyone realizes we have all taken a big fall in living standards no matter how many gigahertz my stupid computer is.

    anne -> anne... , October 19, 2016 at 03:37 PM
    https://fred.stlouisfed.org/graph/?g=7OG5

    January 15, 2016

    Relative Importance Weight (Contribution to the total industrial production index): Durable manufacturing: Computer and electronic product, 1992-2016

    8.8% in 1992
    to 11.4% in 1999
    to 5.2% in 2014
    to 6.1% in 2016.

    likbez : , October 19, 2016 at 02:02 PM
    Quality adjustments = number racket
    jonny bakho : , October 19, 2016 at 03:28 PM
    Auto mfg dropped by half post 2008. It is now back but has nowhere to grow. Urbanization makes cars less necessary and less desirable
    There is not enough room to park them all now. People who earn MinWage cannot afford them
    sanjait : , October 19, 2016 at 03:53 PM
    Interesting point but many will overinterpret this. Leave in the expansion of computer and electronics manufacturing value add, and we have manufacturing output slightly expanding. Take it out entirely and we have manufacturing output basically steady.

    The difference isn't telling an important macro story.

    The important macro story is the major decline in manufacturing employment, and that has two big and one smaller causes.

    The two big factors are the increased productivity of manufacturing globally and the declining share of manufactured products as a % of GDP globally. The smaller factor is the US's declining share of global manufacturing output, which itself is only fractionally attributable to trade policy.

    This one graph tells most of the story:

    http://1.bp.blogspot.com/-JEZXR9XK7vc/Tbr46ReInRI/AAAAAAAAPQ0/HlLXeVin_g0/s1600/worldmfg.jpg

    I don't know anyone who says US manufacturing is "booming." It certainly isn't. It's treading water. It's growing slowly as the economy grows, but we can predict with high confidence that it will continue to contract as a share of total output over time, because that has been the secular trend for decades and there's no reason to expect that to change.

    The only big question is how we adapt to the world as it actually is.

    anne -> sanjait... , October 19, 2016 at 04:23 PM
    Nicely done.

    Also, I did not realize I was being presented with an argument about Chinese growth and sustainability. I foolishly stopped reading and I am entirely sorry. I have set down data and begun to answer the argument below on Links:

    http://economistsview.typepad.com/economistsview/2016/10/links-for-10-19-16.html#comment-6a00d83451b33869e201bb09479d0e970d

    October 19, 2016

    anne -> sanjait... , October 19, 2016 at 04:26 PM
    What is significant though is how China insists on holding to growth targets that are very likely not sustainable. Stability is a worthy aim but when growth is achieved through pushing bad private sector loans, that is ultimately the enemy of stability.

    [ For these 39 past years China has been holding to and achieving growth targets that were repeatedly considered unsustainable so I prefer to figure out why Chinese growth targets have been and from my perspective are now sustainable. ]

    the forgotten spirit of American protectionism : , -1
    YES! Of course US manufacturing isn't booming - how could it? We have horrible economic policies that are focused almost entirely on destroying our industrial base. High overvalued currency, combined with 0% tariffs and we have no VAT, so foreign imports from countries with a VAT receive export subsidies but are not taxed on the US side. That we have even one factory left is amazing and testament to the quality of American workers. Under Clinton, we'll lose what's left. Trump is our only hope. If we don't get Trump's protectionism we will quickly become a country as poor as Armenia or Moldova - stripped of industry and wealth, dependent on remittances from our migrant workers in Asia and Europe.

    [Oct 19, 2016] Why distrust data

    Notable quotes:
    "... **Opinions here are mine and should not to be attributed to anyone with whom I work.** ..."
    Oct 19, 2016 | claudiasahm.postagon.com
    48% of Trump supporters "completely distrust the economic data reported by the federal government" including unemployment, spending, jobs. https://t.co/5l9GhucBFI
    - Justin Wolfers (@JustinWolfers) October 15, 2016

    That tweet and the linked article got my attention (no trust of data by 25% of adults!) ... Still why reflect on this? ... so much else to get stuck on these days. First, I use official statistics in my work A LOT; second, I am always on the look out for new survey insights; and finally, I am a bit obsessed lately with models in which people are not acting on the same information. This level of distrust is troubling ... even though I doubt it's new or entirely about the data ... I want us to think about WHY.

    I study consumer behavior as an economist, which in 2016 still means reading lots of research with dynamic optimization and Euler equations. This is a typical early morning ritual for me, that quiet time before my kids wake up when I can still imagine a world in which we know everything about everything, including ourselves, and we choose calmly and appropriately. BUT I balance out my openness to such models with a determination to also understand what people ACTUALLY do and think.

    Nevertheless, I am picky about the survey insights that I absorb, pass on, and try to understand. My cognate in grad school was survey methodology and I still write survey questions in my research ... thus I understand how much responses can be manipulated, or even carelessly biased by poor methods and human nature. Also I want to know what people think, not what someone writing up the survey results wants me as a reader to think. (I'm not a fan of the tweet, by the way.) So I googled and found the survey's homepage , a Marketplace-Edison Research poll designed to measure economic anxiety. And, I found a description of the methods AND the full survey too (see page 30 for this question). It's not the micro data online, so I can't replicate the statistic in the tweet, but I could see that the "data trust" question was asked before voting intentions or political affiliation. I have learned from pollsters that asking about politics conjures up an identity that can be hard to shake in the rest of the survey. The main roadblock I see in interpreting the data distrust is this survey's short time series; it only began last fall as a quarterly survey. My hunch is that distrust of economic data is nothing new but I can't prove that here. Plus changes in attitudes are often more informative than a snapshot, since subjective questions are tricky to interpret. What does it mean to "trust data" anyway? Do you trust data?

    To be clear, I am not justifying anyone's views, but I am also trying not to be judgmental. A key principle of surveying is not to make people feel bad or shameful about their views. Because, guess what, if you do, they are less likely to tell you what they think or did ... then you are fighting blind and may miss the chance to learn why we sometimes see the world differently. I am not in the 25% of adults who have "no trust at all" in economic statistics from the government. In fact, I am in a rare set of adults who spends more time on the Bureau of Economic Analysis ' website sorting through spending data than on Amazon adding to it. So what's up with all this distrust? I have a few hypotheses to take to the data.

    Hypothesis 1: government economic data don't match people's life

    Sometimes I think the Representative Agent is a frenemy of economists. (Oh, not the Twitter persona , he's great, but the concept.) How can a simplifying assumption ... a focus on the typical or aggregate household ... be an enemy in disguise? Well, sometimes it gives theoretical models the focus they need and other times, especially in empirical work, it glosses over important details. Details, also known as people . So maybe distrust of economic data comes from not seeing your life experience in the numbers that roll across the screen. National aggregates get a lot of attention, so maybe it is minorities that end of distrusting data more, data that doesn't tell their story as loudly.

    Not so, at least in terms of data about the economy, minorities are more trusting than whites. Only 15 percent of African-American have no trust at all in economic data almost half the fraction of whites. And among Hispanics, only12 percent have complete distrust of data. With whites comprising over 70 percent of all adults, they are well represented in both aggregate statistics and the distrust of them. Of course, this is just one cut of the data and not seeing your life experience in the data may raise other issues (more below). Government agencies have made a push to improve regional statistics and even make neighborhood data more readily accessible and help improve local decision making. And of course, lots of household level surveys exist too. Another reason to take distrust (or even disinterest) in government economic data seriously is that the quality of the data we have depends on people's participation in our surveys. Response rates on numerous surveys have been falling and research suggests that non response could impact official statistics, making them a less accurate reflection of life experiences.

    Hypothesis 2: distrust stems from people being "hurt" by data

    One the first Friday of the every month, my Twitter feed is overflowing with chatter about the latest employment report from the Bureau of Labor Statistics . That makes me weird. I firmly believe that few people absorb the government statistics in the way that I and my fellow econos do. Why should they? People confront economic data when it affects them. One example I can think of is the cost-of-living adjustment, such as for Social Security benefits. That came to mind when I looked at data distrust by age.

    no cost-of-living adjustment to benefits had led some seniors to "distrust" government data, like the CPI-W? Again, this hypothesis would be a lot better to test with a time series of data, comparing years with benefit increases and without. But feeling shortchanged by the data may be understandable given wide variation relative price changes , few of us exactly consume the representative basket. Alternatively, as risk aversion appears to rise with age, maybe so too does distrust? I wrote earlier that age is more than just a number , the impact of demographic change deserves more study.

    Hypothesis 3: it's not the data, it is the way we use them ... the spin

    I don't trust data, I trust people. And even then, trust but verify, right? Perfectly measured data (dream, dream), can be still be suspect. In fact, data can codify a lot of the biases and mistakes we have made together in the past. Maybe we should also be concerned for the people who "completely trust" government economic data? (Do read Cathy O'Neil's book on Big Data and algorithms.) Yet, I suspect the distrust in the survey is not about data construction (I've never seen a protest at the ever-interesting BEA advisory committee meetings ) ... or even about the government employees who construct the statistics in excruciating detail, and in line with international standards . I bet the distrust is more about how the numbers are interpreted and how they are used in policy making. Drawing conclusions from data is hard and reasonable disagreement is to be expected. As just one example, the seasonally-adjusted unemployment rate for African Americans was 8.3 in September , which is below its average of 10.8 percent over the past 20 years but is almost double the 4.4 percent unemployment rate of whites. Should we call that 8.3 (or 4.4, for that matter) victory or 'full employment'? And is the unemployment rate even the right statistic to assess? Relative to the past it may well be but the past can be an imperfect guide for the future. Every data point has its shortcoming, especially where there is no clear counterfactual or agreed upon target. My "moderate" growth could easily be your "weaker-than-expected" growth. And, of course, on top of honest disagreements about data, plenty of motivated reasoning is done with numbers. BUT when we start with the same data, there are at least some bounds on the disagreement. In contrast, when government data are wholesale rejected one quarter of adults, it's no surprise that we aren't living in the same world. And we stop trying to understand each other. I would be lost (and bored out of my mind) in my work on consumer behavior without data. You don't want me extrapolating from my tiny circle of experience ... and frankly no one should make decisions with that little information. We can learn a lot from the data, including these attitudinal surveys. And data adds accountability, including in how its collected. Even so, no one likes to feel manipulated or, worse, written off, especially with numbers.

    Data can't solve problems but maybe it holds clues to a path forward ... to rebuild trust.

    **Opinions here are mine and should not to be attributed to anyone with whom I work.**

    Is it just not done to ask people why they distrust Government figures ?
    2016-10-17, Stuart Gibson The same thing happened here in Italy with Silvio Berlusconi. He got a lot of reforms but a lot of people ignored facts.
    2016-10-17, pietro No one 'trusts' data. We all have confidence intervals.
    This combined with your point number 3 is the main issue I suspect.
    Point number 1 is also in play, I think point 2 is essentially irrelevant, it might be true for some data, but not for data.
    As far as economics goes, people intuitively understand that economics attempts to push the envelope and use data to draw conclusions that are not really addressable with the data. Economists don't even have agreement on how data is used - thinking mostly of macro. I see no reason to puzzle on this until you can get economists to all agree. I don't mean this as a challenge, just a description of the situation.
    2016-10-17, Dan The headline unemployment number is obviously false, and this affects confidence in the other numbers.
    There is no particular mystery about what is going on.
    2016-10-17, Dave Chapman Because your aggregated statistics does not reflect the experience of the individuals:
    "But several underlying factors also appear to have contributed to the closeness of the race. For starters, many Americans are economically worse off than they were a quarter-century ago. The median income of full-time male employees is lower than it was 42 years ago, and it is increasingly difficult for those with limited education to get a full-time job that pays decent wages.
    Indeed, real (inflation-adjusted) wages at the bottom of the income distribution are roughly where they were 60 years ago. So it is no surprise that Trump finds a large, receptive audience when he says the state of the economy is rotten. But Trump is wrong both about the diagnosis and the prescription. The US economy as a whole has done well for the last six decades: GDP has increased nearly six-fold. But the fruits of that growth have gone to a relatively few at the top – people like Trump, owing partly to massive tax cuts that he would extend and deepen. "
    https://www.project-syndicate.org/commentary/trump-candidacy-message-to-political-leaders-by-joseph-e--stiglitz-2016-10
    2016-10-17, PSteele

    [Oct 18, 2016] For starters, many Americans are economically worse off* than they were a quarter-century ago. The median income of full-time male employees is lower than it was 42 years ago, and it is increasingly difficult for those with limited education to get a full-time job that pays decent wages

    Notable quotes:
    "... If you insist on focusing on individuals, you may miss the connection, because the worst off within communities - actual chronic discouraged workers, addicts - are likely to express no opinion to the degree they can be polled at all. Trump primary voters are white Republicans who vote, automatically a more affluent baseline* than the white voters generally. ..."
    Oct 18, 2016 | economistsview.typepad.com

    Peter K. : October 17, 2016 at 10:13 AM

    EMichael quotes Steve Randy Waldman and Dylan Matthews in today's links:

    ""Trump voters, FiveThirtyEight's Nate Silver found, had a median household income of $72,000, a fair bit higher than the $62,000 median household income for non-Hispanic whites in America."

    ...

    ""But it is also obvious that, within the Republican Party, Trump's support comes disproportionately from troubled communities, from places that have been left behind economically, that struggle with unusual rates of opiate addiction, low educational achievement, and other social vices."

    I followed the link and failed to find any numbers on the "troubled communities" thing. It seems strange to me that the two comments above are in conflict with each other."

    It seems like you are missing the point of Waldman's blog post (and Stiglitz and Shiller)

    You didn't quote this part:

    "... If you insist on focusing on individuals, you may miss the connection, because the worst off within communities - actual chronic discouraged workers, addicts - are likely to express no opinion to the degree they can be polled at all. Trump primary voters are white Republicans who vote, automatically a more affluent baseline* than the white voters generally.

    * [ http://election.princeton.edu/2016/05/07/among-republican-voters-trump-supporters-have-the-lowest-income/

    "Among Republicans, Trump supporters have slightly lower incomes. But what really differentiates them?"]

    "At the community level**, patterns are clear. (See this*** too.) Of course, it could still all be racism, because within white communities, measures of social and economic dysfunction are likely correlated with measures you could associate with racism."

    [** http://www.nytimes.com/2016/03/13/upshot/the-geography-of-Trump_vs_deep_state.html?_r=1

    "The Geography of Trump_vs_deep_state"

    *** http://www.cracked.com/blog/6-reasons-trumps-rise-that-no-one-talks-about/

    "How Half Of America Lost Its F**king Mind"]

    Of course, it could still all be racism, because within white communities, measures of social and economic dysfunction are likely correlated with measures you could associate with racism. Social affairs are complicated and the real world does not hand us unique well-identified models. We always have to choose our explanations,**** and we should think carefully about how and why we do so. Explanations have consequences, not just for the people we are imposing them upon, but for our polity as a whole. I don't get involved in these arguments to express some high-minded empathy for Trump voters, but because I think that monocausally attributing a broad political movement to racism when it has other plausible antecedents does real harm....

    **** http://www.interfluidity.com/v2/6602.html

    [Oct 16, 2016] The shackles have been taken off me and I can now fight for America the way I want to

    Notable quotes:
    "... ...Trump referred explicitly to "the disenfranchisement of working people" ..."
    "... Trump denounced the "global power structure that is responsible for the economic decisions that have robbed our working class, stripped our country of its wealth and put that money into the pockets of a handful of large corporations and political entities." ..."
    "... He continued: "Just look at what this corrupt establishment has done to our cities like Detroit and Flint, Michigan-and rural towns in Pennsylvania, Ohio, North Carolina and across our country. They have stripped these towns bare, and raided the wealth for themselves and taken away their jobs." ..."
    "... He went on to cite internal Clinton campaign emails published by WikiLeaks this week, documenting how, as Trump put it, "Hillary Clinton meets in secret with international banks to plot the destruction of US sovereignty in order to enrich these global financial powers." ..."
    "... The Clinton campaign, warned of the impending release of masses of politically incriminating documents by WikiLeaks, sought to preempt this exposure by denouncing the leaks as a conspiracy engineered by Russia and its president, Vladimir Putin. ..."
    "... Clinton is appealing for support from sections of the Republican Party, above all the neo-conservatives of the George W. Bush administration, responsible for the war in Iraq, the widespread use of torture and other crimes. ..."
    "... The anti-Russian campaign has been combined with an effort to demonize Trump for a series of purported sexual offenses, with a barrage of video and audio recordings, together with the testimony of alleged victims. ..."
    "... The Democratic campaign and its media allies are using methods similar to those the ultra-right employed in its efforts to oust Bill Clinton from the White House in the 1990s. They are seeking to stampede public opinion with increasingly sensationalized material. These methods degrade political discussion and distract popular consciousness from the real issues in the election. ..."
    Oct 16, 2016 | www.wsws.org
    In a speech delivered by Donald Trump to an audience of thousands in West Palm Beach, Florida, the Republican candidate turned his campaign in a more distinctly fascistic direction. Presenting himself as both the savior of America and the victim of a ruthless political and economic establishment, Trump sought to connect deep-seated social anger among masses of people with an "America First" program of anti-immigrant xenophobia, militarism, economic nationalism and authoritarianism.

    Responding to the latest allegations of sexual abuse, Trump proclaimed that he is being targeted by international bankers, the corporate-controlled media and the political establishment who fear that his election will undermine their interests.

    He offered as an alternative his own persona-the strong-man leader who is willing to bear the burden and make the sacrifices necessary for a pitiless struggle against such powerful adversaries. Trump warned that the November 8 election would be the last opportunity for the American people to defeat the powerful vested interests that are supporting Hillary Clinton.

    The clear implication of the speech is that if Trump loses the election, the struggle against the political establishment will have to be carried forward by other means...

    ...

    ...Trump referred explicitly to "the disenfranchisement of working people" -with racist, chauvinist and dictatorial solutions. This includes not only the demand for jailing Hillary Clinton, now a refrain of every speech, but his calls for his supporters to prevent a "rigged" election by blocking access to the polls for voters in "certain communities."

    Trump denounced the "global power structure that is responsible for the economic decisions that have robbed our working class, stripped our country of its wealth and put that money into the pockets of a handful of large corporations and political entities."

    He continued: "Just look at what this corrupt establishment has done to our cities like Detroit and Flint, Michigan-and rural towns in Pennsylvania, Ohio, North Carolina and across our country. They have stripped these towns bare, and raided the wealth for themselves and taken away their jobs."

    He went on to cite internal Clinton campaign emails published by WikiLeaks this week, documenting how, as Trump put it, "Hillary Clinton meets in secret with international banks to plot the destruction of US sovereignty in order to enrich these global financial powers."

    After the top congressional Republican, House Speaker Paul Ryan, publicly broke with Trump Monday, declaring that he would neither campaign for him nor defend him, Trump responded with the declaration, "It is so nice that the shackles have been taken off me and I can now fight for America the way I want to."

    ... ... ...

    The Clinton campaign, warned of the impending release of masses of politically incriminating documents by WikiLeaks, sought to preempt this exposure by denouncing the leaks as a conspiracy engineered by Russia and its president, Vladimir Putin.

    Clinton is appealing for support from sections of the Republican Party, above all the neo-conservatives of the George W. Bush administration, responsible for the war in Iraq, the widespread use of torture and other crimes.

    The anti-Russian campaign has been combined with an effort to demonize Trump for a series of purported sexual offenses, with a barrage of video and audio recordings, together with the testimony of alleged victims.

    The Democratic campaign and its media allies are using methods similar to those the ultra-right employed in its efforts to oust Bill Clinton from the White House in the 1990s. They are seeking to stampede public opinion with increasingly sensationalized material. These methods degrade political discussion and distract popular consciousness from the real issues in the election.

    [Oct 14, 2016] The well deserved hatred for Hillary and the globalists is so great, that at least 40% of the males in this country would back anyone who went up against the Clintons.

    Oct 14, 2016 | www.zerohedge.com
    dsty balolalo Oct 14, 2016 11:53 AM Thank You Vladimir Putin

    The Hillary Clinton campaign says the hackers behind the leaked email evidence of their collusion with the major media are from Russia and linked to the Russian regime. If so, I want to publicly thank those Russian hackers and their leader, Russian President Vladimir Putin, for opening a window into the modern workings of the United States government-corporate-media establishment.

    We always knew that the major media were extensions of the Democratic Party. But the email evidence of how figures like Maggie Haberman of The New York Times, Juliet Eilperin of The Washington Post, and John Harwood of CNBC worked hand-in-glove with the Democrats is important. The Daily Caller and Breitbart have led the way in digging through the emails and exposing the nature of this evidence. It is shocking even to those of us at Accuracy in Media who always knew about, and had documented, such collusion through analysis and observation.

    The Clinton campaign and various intelligence officials insist that the purpose of the Russian hacking is to weaken the confidence of the American people in their system of government, and to suggest that the American system is just as corrupt as the Russian system is alleged to be. Perhaps our confidence in our system should be shaken. The American people can see that our media are not independent of the government or the political system and, in fact, function as an arm of the political party in control of the White House that wants to maintain that control after November 8.

    In conjunction with other evidence, including the ability to conduct vote fraud that benefits the Democrats, the results on Election Day will be in question and will form the basis for Donald J. Trump to continue to claim that the system is "rigged" against outsiders like him.

    The idea of an American system of free and fair elections that includes an honest press has been terribly undermined by the evidence that has come to light. We are not yet to the point of the Russian system, where opposition outlets are run out of business and dissidents killed in the streets. That means that the Russians have not completely succeeded in destroying confidence in our system. But we do know that federal agencies like the Federal Election Commission (FEC) and Federal Communications Commission (FCC) are poised to strike blows against free and independent media. Earlier this year the three Democrats on the FEC voted to punish filmmaker Joel Gilbert for distributing a film critical of President Barack Obama during the 2012 campaign.

    The New York Times is reporting that Clinton campaign chairman John Podesta has been contacted by the FBI about the alleged Russian hackers behind the leaks of his emails. This is what Podesta and many in the media want to talk about.

    But the Russians, if they are responsible, have performed a public service. And until there is a thorough house-cleaning of those in the major media who have made a mockery of professional journalism, the American people will continue to lack confidence in their system. The media have been caught in the act of sabotaging the public's right to know by taking sides in the presidential contest. They have become a propaganda arm of the Democratic Party, coordinating with the Hillary Clinton for president campaign, which apparently was being run out of Georgetown University, where John Podesta was based. Many emails carry the web address of [email protected] , a reference to the Georgetown University position held by the chairman of the 2016 Hillary Clinton presidential campaign. Podesta is a Visiting Professor at Georgetown University Law Center. His other affiliations include the George Soros-funded Center for American Progress and the United Nations High Level Panel on the Post-2015 Development Agenda.

    Podesta and the other members of this U.N. panel had proposed " A New Global Partnership for the World ," which advocated for a "profound economic transformation" of the world's economic order that would result in a new globalist system. Shouldn't the American people be informed about what Podesta and his Democratic allies have planned for the United States should they win on November 8?

    That Podesta would serve the purposes of the U.N. is not a surprise. But it is somewhat surprising that he would use his base at Georgetown University to run the Hillary campaign. On the other hand, Georgetown, the nation's oldest Catholic and Jesuit university, describes itself as preparing "the next generation of global citizens to lead and make a difference in the world."

    In a previous column, "The Sad Demise of a Once-Catholic University," we noted that the university launched a " Hillary Rodham Clinton Fellowship Program ," and that Mrs. Clinton is the Honorary Founding Chair of the Georgetown Institute for Women, Peace and Security . Georgetown is even giving awards named after the former Secretary of State, designated the " Hillary Rodham Clinton Awards for Advancing Women in Peace and Security ."

    When a Catholic university serves as the base for the election of a Democratic Party politician committed to taxpayer-funded abortion on demand and transgender rights, you know America's political system and academia are rotten to the core. The disclosure from WikiLeaks that Podesta used his Georgetown email to engage in party politics only confirms what we already knew.

    If the Russians are ultimately responsible for the release of these emails, some of which show an anti-Catholic animus on the part of Clinton campaign officials, we are grateful to them. The answer has to be to clean out the American political system of those who corrupt it and demonstrate to the world that we can achieve higher standards of integrity and transparency.

    For its part, Georgetown University should be stripped of its Catholic affiliation and designated as an official arm of the Democratic Party.

  • Read more: " Thank You Vladimir Putin http://americasurvival.org/2016/10/thank-you-vladimir-putin.html#ixzz4N4iiqCrc

    Paul Kersey balolalo Oct 14, 2016 12:02 PM The well deserved hatred for Hillary and the globalists is so great, that at least 40% of the males in this country would back anyone who went up against the Clintons. That's just not the same thing as "BUYING TRUMPS BULLSHIT HOOK, LINE, AND SINKER".

    Trump is exposing the corruption and the hypocrisy of the Clintons in a way that no one has ever had the guts to do in the past. He's doing it on national TV with a large national audience. With Trump we may get anarchy, but with the Clintons, Deep State is guaranteed. It is Deep State that is working overtime to finish building the expressway to neofeudalism.

    [Oct 14, 2016] Hillary Clinton asks for landslide victory to rebuke Trumps bigotry and bullying

    Killary only can beg that voters hold their noses and vote for her. Guardian neoliberal presstitutes still don't want to understand that Hillary is more dangerous then trump, Sge with her attempt that she is more militant then male neocons can really provoke a confrontation with Russia or China.
    Notable quotes:
    "... War at home versus another foreign war, nothing will get through Congress, and either will get impeached...so third party all the way for me. ..."
    "... Keep in mind, the election is not over and that drip, drip, drip of Hillary emails may push more people towards Trump. ..."
    "... Shameless. Absolutely shameless, Guardian. This is not-even-disguised Clinton sycophancy... ..."
    "... Clinton has everything going for her. The media, the banks, big business, the UN, foreign leaders, special interest lobbyists, silicon valley, establishment Republicans. How can she not win in an landslide?! ..."
    "... We came, we saw, and he grabbed some pussy. ..."
    "... It seems nobody wants to talk about what is really going on here - instead we are fed this bilge from both sides about 'sexual misconduct' and other fluff ..."
    "... The stagnation of middle-class incomes in the West may last another five decades or more. ..."
    "... This calls into question either the sustainability of democracy under such conditions or the sustainability of globalization. ..."
    "... These classes of "globalization losers," particularly in the United States, have had little political voice or influence, and perhaps this is why the backlash against globalization has been so muted. They have had little voice because the rich have come to control the political process. The rich, as can be seen by looking at the income gains of the global top 5 percent in Figure 1, have benefited immensely from globalization and they have keen interest in its continuation. ..."
    "... But while their use of political power has enabled the continuation of globalization, it has also hollowed out national democracies and moved many countries closer to becoming plutocracies. Thus, the choice would seem either plutocracy and globalization – or populism and a halt to globalization. ..."
    Oct 14, 2016 | www.theguardian.com

    Julian Kelley , 14 Oct 2016 02:47

    The vast majority of her support comes from people that will be holding their noses as they vote for her. Seems to me that convincing those same people that you have it in the bag will just cause them to think voting isn't worth their time since they don't want to anyway.

    I know Trump's supporters, the real ones, and the anyone-but-Hillary club will show up as well. Funny if this backfires and he wins.

    I won't be voting for either one and couldn't care less which one wins. War at home versus another foreign war, nothing will get through Congress, and either will get impeached...so third party all the way for me.

    Apache287 -> Julian Kelley , 14 Oct 2016 02:57

    War at home versus another foreign war

    Yes because War in the US will be so great.

    ... ... ...

    AQuietNight -> playloro , 14 Oct 2016 02:56
    "Trump has to be the limit, and there has to be a re-alignment"

    Trump has shown one must fight fire with fire. The days of the meek and mild GOP are over. Twice they tried with nice guys and failed. Trump has clearly shown come out with both fists swinging and you attract needed media and you make the conversation about you. Trump's mistake was not seeking that bit of polish that leaves your opponent on the floor.

    Keep in mind, the election is not over and that drip, drip, drip of Hillary emails may push more people towards Trump.

    taxhaven , 14 Oct 2016 02:50
    Shameless. Absolutely shameless, Guardian. This is not-even-disguised Clinton sycophancy...
    tugend49

    For every woman that's been sexually harassed, bullied, raped, assaulted, catcalled, groped, objectified, and treated lesser than, a landslide victory for Clinton would be an especially sweet "Fuck You" to the Trumps of this world.

    DJROM -> tugend49 , 14 Oct 2016 03:17

    Tell that to Juanita Brodrick, Katherine Willie, or Paula Jones
    SwingState , 14 Oct 2016 02:53

    Clinton has everything going for her. The media, the banks, big business, the UN, foreign leaders, special interest lobbyists, silicon valley, establishment Republicans. How can she not win in an landslide?!

    It might be a reaction against Trump, but it's also a depressing example of the power of the establishment, and their desire for control in democracy. Just look at how they squealed at Brexit.

    chuckledog -> SwingState , 14 Oct 2016 03:06
    Rather low opinion of people's ability to decide for themselves.
    AlvaroBo -> chuckledog , 14 Oct 2016 03:13
    That low opinion is justified. See also: Asch experiment.
    Kieran Brown -> SwingState , 14 Oct 2016 03:52
    "squealed at Brexit" hahaha...hasnt happened yet and your currency is in the toilet. the squealing from england gonna be deafening...
    Boojay , 14 Oct 2016 02:54
    It takes a horrible man to make Clinton look good. We came, we saw, and he grabbed some pussy.
    SeenItAlready , 14 Oct 2016 02:55
    It seems nobody wants to talk about what is really going on here - instead we are fed this bilge from both sides about 'sexual misconduct' and other fluff

    There is a report from two years ago, July 2014, before the candidates had even been selected, by the economist Branko Milanovic for Yale 'Global' about the impact of Globalisation on the Lower Middle Classes in the West and how this was basically going to turn into exactly the choice the American electorate is facing now

    http://yaleglobal.yale.edu/content/tale-two-middle-classes

    Why won't the media discuss these issues instead of pushing this pointless circus?

    These are the penultimate paragraphs of the article on the report (there is a similar one for the Harvard Business Review here ):

    The populists warn disgruntled voters that economic trends observed during the past three decades are just the first wave of cheap labor from Asia pitted in direct competition with workers in the rich world, and more waves are on the way from poorer lands in Asia and Africa. The stagnation of middle-class incomes in the West may last another five decades or more.

    This calls into question either the sustainability of democracy under such conditions or the sustainability of globalization.

    If globalization is derailed, the middle classes of the West may be relieved from the immediate pressure of cheaper Asian competition. But the longer-term costs to themselves and their countries, let alone to the poor in Asia and Africa, will be high. Thus, the interests and the political power of the middle classes in the rich world put them in a direct conflict with the interests of the worldwide poor.

    These classes of "globalization losers," particularly in the United States, have had little political voice or influence, and perhaps this is why the backlash against globalization has been so muted. They have had little voice because the rich have come to control the political process. The rich, as can be seen by looking at the income gains of the global top 5 percent in Figure 1, have benefited immensely from globalization and they have keen interest in its continuation.

    But while their use of political power has enabled the continuation of globalization, it has also hollowed out national democracies and moved many countries closer to becoming plutocracies. Thus, the choice would seem either plutocracy and globalization – or populism and a halt to globalization.

    Martin51 -> SeenItAlready , 14 Oct 2016 09:19
    Globalisation will continue to happen. It has pulled a large part of the world population out of poverty and grown the global economy.

    Sure on the downside it has also hugely benefitted the 1%, while the western middle classes have done relatively less well and blue collar workers have suffered as they seek to turn to other types (less well paid) of work.

    The issue is the speed of change, how to manage globalisation and spread the wealth more equitably. Maybe it will require slowing but it cannot and should not be stopped.

    ozbornzadick , 14 Oct 2016 02:56
    Ah, the lesser of two evils.

    [Oct 12, 2016] Interesting read on the history of the Nobel Prize in Economics and its ideological tendency

    Notable quotes:
    "... In the West, the priority accorded to the individualist self-regarding norms underlying the Washington Consensus created a nurturing environment for growth in corruption, inequality, and mistrust in governing elites – the unintended consequences of rational-choice, me-first premises. With the emergence in advanced economies of disorders previously associated with developing countries, Swedish political scientist Bo Rothstein has petitioned the Academy of Sciences (of which he is a member) to suspend the Nobel Prize in economics until such consequences are investigated." ..."
    Oct 11, 2016 | economistsview.typepad.com

    JohnH : October 11, 2016 at 06:58 AM

    Interesting read on the history of the Nobel Prize in Economics and its ideological tendency:

    Avner Offer: "a group of center-right economists captured the process of selecting prizewinners...The prize kingmaker was Stockholm University economist Assar Lindbeck, who had turned away from social democracy. During the 1970s and 1980s, Lindbeck intervened in Swedish elections, invoked microeconomic theory against social democracy, and warned that high taxation and full employment led to disaster. His interventions diverted attention from the grave policy error being made at the time: deregulation of credit, which led to a deep financial crisis in the 1990s and anticipated the global crisis that erupted in 2008.

    Lindbeck's concerns were similar to those of the International Monetary Fund, the World Bank, and the US Treasury. These actors' insistence on privatization, deregulation, and liberalization of capital markets and trade – the so-called Washington Consensus – enriched business and financial elites, led to acute crises, and undermined emerging economies' growth.

    In the West, the priority accorded to the individualist self-regarding norms underlying the Washington Consensus created a nurturing environment for growth in corruption, inequality, and mistrust in governing elites – the unintended consequences of rational-choice, me-first premises. With the emergence in advanced economies of disorders previously associated with developing countries, Swedish political scientist Bo Rothstein has petitioned the Academy of Sciences (of which he is a member) to suspend the Nobel Prize in economics until such consequences are investigated."

    https://www.project-syndicate.org/commentary/economics-nobel-versus-social-democracy-by-avner-offer-2016-10

    [Oct 11, 2016] On the ongoing demise of globalisation

    Notable quotes:
    "... But if the third globalisation wave is mostly about taking advantage of cheap labour not commodities - whilst simultaneously reducing industrial capacity at home - today's global imbalances could result in a very different type of correction (something which may or may not be happening now). ..."
    "... The immediate consequence may be the developed world's desire to engage in significant industrial on-shoring. ..."
    "... I'm not convinced the end of globalization and the retrenchment of banking industry are the same thing. There are some things that can't be exp/imported. Maybe we just got to the point where it didn't make sense to order moules marinieres from Brussels!? ..."
    "... You forget the third leg - reducing the price of labour for services via immigration of labour from poorer countries. On top of the supply-and-demand effects, it reduces social solidarity (see Robert Putnam) - of which trades union membership and activity is one indicator. It's a win-win for capital. ..."
    Oct 11, 2016 | ftalphaville.ft.com
    10 comments
    According to strategists Bhanu Baweja, Manik Narain and Maximillian Lin the elasticity of trade to GDP - a measure of wealth creating globalisation - rose to as high as 2.2. in the so-called third wave of globalisation which began in the 1980s. This compared to an average of 1.5 since the 1950s. In the post-crisis era, however, the elasticity of trade has fallen to 1.1, not far from the weak average of the 1970s and early 1980s but well below the second and third waves of globalisation.

    ... ... ...

    The anti-globalist position has always been simple. Global trade isn't a net positive for anyone if the terms of trade relationships aren't reciprocal or if the trade exists solely for the purpose of taking advantage of undervalued local resources like labour or commodities whilst channeling rents/profits to a single central beneficiary. That, they have always argued, makes it more akin to an imperialistic relationship than a reciprocal one.

    If the latest wave of "globalisation" is mostly an expression of American imperialism, then it does seem logical it too will fade as countries wake-up to the one-sided nature of the current global value chains in place.

    Back in the first wave of globalisation, of course, much of the trade growth was driven by colonial empires taking advantage of cheap commodity resources abroad in a bid to add value to them domestically. When these supply chains unravelled, that left Europe short of commodities but long industrial capacity - a destabilising imbalance which coincided with two world wars.

    Simplistically speaking, resource rich countries at this point were faced with only two options: industrialising on their own autonomous terms or be subjugated by even more oppressive imperialist forces, which had even grander superiority agendas than their old colonial foes. That left those empires boasting domestic industrial capacity but lacking natural resources of their own, with the option of fighting to defend the rights of their former colonies in the hope that the promise of independence and friendly future knowledge exchanges (alongside military protection) would be enough to secure resource access from then on. But if the third globalisation wave is mostly about taking advantage of cheap labour not commodities - whilst simultaneously reducing industrial capacity at home - today's global imbalances could result in a very different type of correction (something which may or may not be happening now).

    The immediate consequence may be the developed world's desire to engage in significant industrial on-shoring.

    But while reversing the off-shoring trend may boost productivity in nations like the US or even in Europe, it's also likely to reduce demand for mobile international capital as a whole. As UBS notes, global cross border capital flows are already decelerating significantly as a share of GDP post-crisis, and the peak-to-trough swing in capital inflows to GDP over the past ten years has been much more dramatic in developed markets than in emerging ones:

    Related likes:
    How do you solve a problem like de-globalisation? – FT Alphaville
    As goes correspondent banking, so goes globalisation – FT Alphaville
    There is a war for capital coming, says UBS – FT Alphaville
    Prepare for the Post Pax-Americana era, says Citi – FT Alphaville

    Refractious

    To note, in China trade as a % of GDP fell from 65% in 2006 to 42% in 2014. The relationship between trade and GDP is in reality more variable than is usually claimed.

    Knockmacool

    I'm not convinced the end of globalization and the retrenchment of banking industry are the same thing. There are some things that can't be exp/imported. Maybe we just got to the point where it didn't make sense to order moules marinieres from Brussels!?

    labantall

    "if the third globalisation wave is mostly about taking advantage of cheap labour not commodities - whilst simultaneously reducing industrial capacity at home"

    You forget the third leg - reducing the price of labour for services via immigration of labour from poorer countries. On top of the supply-and-demand effects, it reduces social solidarity (see Robert Putnam) - of which trades union membership and activity is one indicator. It's a win-win for capital.

    Terra_Desolata 5pts Featured
    11 hours ago

    The simple problem with globalization is that it was based off economic views which looked at things in aggregate - but people are individuals, not aggregates. "On average, GDP per person has gone up" doesn't do anything for the person whose income has gone down. "Just think about all the people in China who are so much better off than they used to be" isn't going to do much for an American or European whose standard of living has slipped from middle class to working class to government assistance.

    "Redistribution" is routinely advertised as the solution to all of this. I leave it as an exercise to the reader to figure out how to redistribute wealth from the areas that have prospered the most (Asia, particularly China) to the individuals (primarily in the West) who have lost the most. In the absence of any viable redistribution scheme, though, I suspect the most likely outcome will be a pulling back on globalization.

    Meh... 5pts Featured
    11 hours ago

    @ Terra_Desolata The aggregates also do apply to countries - i.e. the US on aggregate has benefited from globalisation, but median wages have been stagnant in real terms, meaning that the benefits of globalisation have not been well distributed across the country (indeed, companies like Apple have benefited hugely from reducing the costs of production, while you could make the case that much of the benefits of lower production costs have been absorbed into profit margins).

    That suggests that redistribution can occur at the country level, rather than requiring a cross-border dimension.

    Terra_Desolata 5pts Featured
    8 hours ago
    @ Meh... @ Terra_Desolata Yes, there has been uneven distribution of income within countries as well as between them - but as the Panama Papers revealed, in a world of free movement of capital, incomes can also move freely between borders. (See: Apple.) While the U.S. has lower tolerance than Europe and Asia for such games, any attempts at redistribution would necessarily include an effort to keep incomes from slipping across national borders, which would have the same effect: a net reduction in globalization.

    [Oct 09, 2016] Economic Recovery Feels Weak Because the Great Recession Hasnt Really Ended

    Notable quotes:
    "... The banking and corporate elites certainly have a problem. The agenda for many decades has been to steal and rape enough from the 99% to maintain positive balance sheets and earnings per share. ..."
    "... Fewer and fewer of the 99% can now afford to pay for the promoted goods and services. It has reached a tipping point. Name one major bank that could afford to mark-to-mark its balance sheet assets. Name one S&P corporation that has shown solid earnings growth absent stock buybacks. And from here on, it only gets worse. ..."
    Oct 09, 2016 | www.nakedcapitalism.com
    cnchal October 9, 2016 at 9:11 am

    Global debt has now reached about a hundred and fifty-two trillion dollars . This includes government debt, household debt, non-financial firms' debt. What does all this debt mean for the global financial system and for everyday people here, Michael?

    That works out to only USD $20,540 for every man, woman and child on the planet. I'm sure the debt serfs can take double or triple that.

    a different chris October 9, 2016 at 10:03 am

    Yup, barely over 2 million dollars per 1 percenter. You can barely buy a passable vacation mansion for that, let alone staff it with peons. C'mon, guys, work harder for (and borrow more from) your betters!

    apber October 9, 2016 at 9:50 am

    The banking and corporate elites certainly have a problem. The agenda for many decades has been to steal and rape enough from the 99% to maintain positive balance sheets and earnings per share.

    It has worked too well, but pure math has a way of biting the 1% in the ass.

    Fewer and fewer of the 99% can now afford to pay for the promoted goods and services. It has reached a tipping point. Name one major bank that could afford to mark-to-mark its balance sheet assets. Name one S&P corporation that has shown solid earnings growth absent stock buybacks. And from here on, it only gets worse.

    [Oct 09, 2016] Trump angst looms over economic elite at IMF meetings

    Notable quotes:
    "... "In my lifetime I cannot remember anything like the scepticism about these values that we see today," said Suma Chakrabarti, president of the European Bank for Reconstruction and Development. ..."
    "... There was much discussion this week about the underlying causes of that scepticism - low growth, stagnant wages and other scars of the 2008 global financial crisis - together with calls for governments to do more to ensure the benefits of globalisation are distributed more widely. ..."
    "... Lou Jiwei, China's finance minister, told reporters on Friday, the current "political risks" would in the immediate future lead only to "superficial changes" for the global economy. But underlying them was a deeper trend of "deglobalisation". ..."
    Oct 09, 2016 | www.ft.com
    The world's economic elite spent this week invoking fears of protectionism and the existential crisis facing globalisation

    .... ... ...

    Mr Trump has raised the possibility of trying to renegotiate the terms of the US sovereign debt much as he did repeatedly with his own business debts as a property developer. He also has proposed imposing punitive tariffs on imports from China and Mexico and ripping up existing US trade pacts.

    ... ... ...

    "Once a tariff has been imposed on a country's exports, it is in that country's best interest to retaliate, and when it does, both countries end up worse off," IMF economists wrote.

    It is not just angst over Mr Trump. There are similar concerns over Brexit and the rise of populist parties elsewhere in Europe. All present their own threats to the advance of the US-led path of economic liberalisation pursued since Keynes and his peers gathered at Bretton Woods in 1944.

    "In my lifetime I cannot remember anything like the scepticism about these values that we see today," said Suma Chakrabarti, president of the European Bank for Reconstruction and Development.

    There was much discussion this week about the underlying causes of that scepticism - low growth, stagnant wages and other scars of the 2008 global financial crisis - together with calls for governments to do more to ensure the benefits of globalisation are distributed more widely.

    Lou Jiwei, China's finance minister, told reporters on Friday, the current "political risks" would in the immediate future lead only to "superficial changes" for the global economy. But underlying them was a deeper trend of "deglobalisation".

    ... ... ...

    [Oct 09, 2016] The Week Globalists Started to Panic

    Notable quotes:
    "... Weak global trade, fears that the U.K. is marching towards a hard Brexit , and polls indicating that the U.S. election remains a tighter call than markets are pricing in have led a bevy of analysts to redouble their warnings that a backlash over globalization is poised to roil global financial markets-with profound consequences for the real economy and investment strategies. ..."
    "... From the economists and politicians at the annual IMF meeting in Washington to strategists on Wall Street trying to advise clients, everyone seems to be pondering a future in which cooperation and global trade may look much different than they do now. ..."
    "... "The main risk with potentially tough negotiating tactics is that trade partners could panic, especially if global coordination evaporates." ..."
    Oct 09, 2016 | www.bloomberg.com
    Weak global trade, fears that the U.K. is marching towards a hard Brexit , and polls indicating that the U.S. election remains a tighter call than markets are pricing in have led a bevy of analysts to redouble their warnings that a backlash over globalization is poised to roil global financial markets-with profound consequences for the real economy and investment strategies.

    From the economists and politicians at the annual IMF meeting in Washington to strategists on Wall Street trying to advise clients, everyone seems to be pondering a future in which cooperation and global trade may look much different than they do now.

    Brexit

    Suggestions that the U.K. will prioritize control over its migration policy at the expense of open access to Europe's single market in negotiations to leave the European Union-a strategy that's being dubbed a "hard Brexit"-loomed large over global markets. The U.K. government is "strongly supportive of open markets, free markets, open economies, free trade," said Chancellor of the Exchequer Philip Hammond during a Bloomberg Television interview in New York on Thursday. "But we have a problem-and it's not just a British problem, it's a developed-world problem-in keeping our populations engaged and supportive of our market capitalism, our economic model."

    Trade

    Citing the rising anti-trade sentiment, analysts from Bank of America Merrill Lynch warned that "events show nations are becoming less willing to cooperate, more willing to contest," and a backlash against inequality is likely to trigger more activist fiscal policies. Looser government spending in developed countries-combined with trade protectionism and wealth redistribution-could reshape global investment strategies, unleashing a wave of inflation, the bank argued, amid a looming war against inequality.

    U.S. Treasury Secretary Jack Lew did his part to push for more openness. During an interview in Washington on Thursday, he said that efforts to boost trade, combined with a more equitable distribution of the fruits of economic growth, are key to ensuring U.S. prosperity. Rolling back on globalization would be counterproductive to any attempt to boost median incomes, he added.

    Trump

    Without mentioning him by name, Lew's comments appeared to nod to Donald Trump, who some believe could take the U.S. down a more isolationist trading path should he be elected president in November. "The emergence of Donald Trump as a political force reflects a mood of growing discontent about immigration, globalization and the distribution of wealth," write analysts at Fathom Consulting, a London-based research firm. Their central scenario is that a Trump administration might be benign for the U.S. economy. "However, in our downside scenario, Donald Dark, global trade falls sharply and a global recession looms. In this world, isolationism wins, not just in the U.S., but globally," they caution.

    Analysts at Standard Chartered Plc agree that the tail risks of a Trump presidency could be significant. "The main risk with potentially tough negotiating tactics is that trade partners could panic, especially if global coordination evaporates." They add that business confidence could take a big hit in this context. "The global trade system could descend into a spiral of trade tariffs, reminiscent of what happened after the Smoot-Hawley tariff of 1930 , and ultimately a trade war, possibly accompanied by foreign-exchange devaluations; this would be a 'lose-lose' deal for all."

    Market participants are also concerned that populism could take root under a Hillary Clinton administration. "We believe the liberal base's demands on a Clinton Administration could lead to an overly expansive federal government with aggressive regulators," write analysts at Barclays Plc. "If the GOP does not unify, Clinton may expand President Obama's use of executive authority to accomplish her goals."

    [Oct 05, 2016] The computers and the internet sped outsourcing to countries like China

    Notable quotes:
    "... Average US wages rose 350% in the 40 years between 1932 and 1972, but only 22% over the next 40 years. The pattern holds similar across the developed world. In other words, for all their hype, the computer and the internet have done less to lift economic growth than the flush toilet. ..."
    "... ahem… the computer and the internet sped outsourcing to countries like China. Ask China or India how their economic growth has been since 1972. The author is mixing up several things at once. ..."
    "... When so many of our jobs, technology and investment is offshored to China (and elsewhere), the future for innovation is certainly not bright, and this should be obvious to everyone, including the author. ..."
    Oct 05, 2016 | www.nakedcapitalism.com

    flora October 4, 2016 at 5:18 pm

    " Average US wages rose 350% in the 40 years between 1932 and 1972, but only 22% over the next 40 years. The pattern holds similar across the developed world. In other words, for all their hype, the computer and the internet have done less to lift economic growth than the flush toilet."

    ahem… the computer and the internet sped outsourcing to countries like China. Ask China or India how their economic growth has been since 1972. The author is mixing up several things at once.

    sgt_doom October 4, 2016 at 6:32 pm

    Great comments, and please allow me to piggyback off them:

    When so many of our jobs, technology and investment is offshored to China (and elsewhere), the future for innovation is certainly not bright, and this should be obvious to everyone, including the author.

    When so many have contributed so much, only to see their jobs and livelihoods offshored again and again and again, that great jump the others have will then zero out OUR innovation!

    [Oct 02, 2016] The absurdly high levels of executive pay under neoliberalism are disconnected with performance and encourage short-termism

    Oct 02, 2016 | www.ft.com

    Tommy Breen, the low profile boss of support services group DCC who earned a relatively modest €737,000 in the year to March 2016, offered the best value for money, according to rankings by consultants Mercer Kepler.

    Alison Cooper, chief executive of consumer goods group Imperial Brands, who was paid Ł3.58m in 2015, and George Weston, boss of international food group ABF, who earned Ł3.05m in 2015, were in second and third place.

    The total pay of all three is below the average pay of Ł5.5m for a FTSE 100 chief executive in 2015, according to the High Pay Centre.

    In contrast, only two of the top 10 best paid FTSE 100 CEOs in 2015 made the top 30 in the value for money rankings. This was Shire chief executive Flemming Ornskov, who earned Ł14.6m last year, and RELX boss Erik Engstrom, who was awarded Ł10.9m.

    None of the other top 10 best paid bosses last year, which included Sir Martin Sorrell, who earned Ł70.4m at WPP , Rakesh Kapoor, awarded Ł23.2m at Reckitt Benckiser , Jeremy Darroch, on Ł16.9m at Sky, or Bob Dudley, on Ł13.3m at BP , made the top 30 value for money list. The index only lists the top 30.

    Full details of Mrs May's plans will not be laid out until later in the autumn when BIS, the business department, launches a consultation. Some of the policies are already known: disclosure of pay ratios, annual binding shareholder votes on pay and having worker and consumer representatives on boards.

    Other investors and business groups have been critical of the planned government reforms, warning that they may force up pay levels. An annual binding vote, they warn, could create uncertainty, which in turn might prompt demands for extra compensation.

    The Mercer survey looks at the relationship between value created and money earned by a chief executive. The value is calculated by taking the company's total shareholder return relative to the FTSE and its sector.

    Money earned is the chief executive's three-year average realised pay figure, which is adjusted for the size of the company. Chief executive pay correlates strongly with company size as well as performance.

    Gordon Clark, partner at Mercer Kepler, said: "Our research puts all companies on a level playing field when comparing whether their executives offer value for money. It does this by controlling for differences in sector, size and complexity.

    "Executives who create the most value for shareholders relative to their peers, and relative to their pay, offer the best value for money."

    [Oct 01, 2016] Oddly, after outsourcing jobs CEO pay never decreases.

    Oct 01, 2016 | www.theguardian.com

    jellybelly21 5h ago 3 4 Why are Trump supporters under the illusion that DT can bring jobs back? Carrier will move production abroad because 'Most of its Indianapolis workers make about $26 an hour. Their Mexican replacements make $3 an hour'. DT products are manufactured overseas for the same reason: low production costs = higher profits. Reply Share Share on Facebook Facebook Share on Facebook Twitter | Pick Report WillKnotTell jellybelly21 3h ago 2 3 Oddly, CEO pay never decreases.

    [Oct 01, 2016] Doing what contemporary American economists suggest: eliminate tariffs, dont worry about huge capital inflows or a ridiculously overvalued dollar, has led the US from being the envy of the world to being a non-developed economy with worse roads than Cuba or Ghana.

    Oct 01, 2016 | economistsview.typepad.com

    Friederich List : September 30, 2016 at 05:29 PM

    Doing what contemporary American economists suggest: eliminate tariffs, don't worry about huge capital inflows or a ridiculously overvalued dollar, has led the US from being the envy of the world to being a non-developed economy with worse roads than Cuba or Ghana.

    That US economists are still treated with any degree of credibility it totally appalling. They are so obviously bought-and-paid for snake oil salesmen that people are finally tuning them out.

    TRUMP 2016: Return America to Protectionism - Screw globalism

    [Oct 01, 2016] Get real! No alumni of the Peterson Institute and IMF is going to go all mushy on the down sides of globalization and wealth distribution.

    Oct 01, 2016 | economistsview.typepad.com

    RC AKA Darryl, Ron : September 30, 2016 at 07:07 AM RE: The State of Advanced Economies and Related Policy Debates: A Fall 2016 Assessment

    https://piie.com/publications/policy-briefs/state-advanced-economies-and-related-policy-debates-fall-2016-assessment

    [There is a pdf at the link. Olivier Blanchard has surprised me again. As establishment economists go he is not so bad. There is plenty that he still glosses over but insofar as status quo establishment macroeconomics goes he is thorough and coherent. One might hope that those that do not understand either the debate for higher inflation targets or the debate for fiscal policy to accomplish what monetary policy cannot might learn from this article by Olivier Blanchard, but I will not hold my breath waiting for that. In any case the article is worth a read for anyone that can.] RC AKA Darryl, Ron -> RC AKA Darryl, Ron... , Friday, September 30, 2016 at 07:07 AM

    Get real! No alumni of the Peterson Institute and IMF is going to go all mushy on the down sides of globalization and wealth distribution.
    anne -> RC AKA Darryl, Ron... , Friday, September 30, 2016 at 07:13 AM
    https://piie.com/system/files/documents/pb16-14.pdf

    September, 2016

    The State of Advanced Economies and Related Policy Debates: A Fall 2016 Assessment
    By Olivier Blanchard

    Perhaps the most striking macroeconomic fact about advanced economies today is how anemic demand remains in the face of zero interest rates.

    In the wake of the global financial crisis, we had a plausible explanation why demand was persistently weak: Legacies of the crisis, from deleveraging by banks, to fiscal austerity by governments, to lasting anxiety by consumers and firms, could all explain why, despite low rates, demand remained depressed.

    This explanation is steadily becoming less convincing. Banks have largely deleveraged, credit supply has loosened, fiscal consolidation has been largely put on hold, and the financial crisis is farther in the rearview mirror. Demand should have steadily strengthened. Yet, demand growth has remained low.

    Why? The likely answer is that, as the legacies of the past have faded, the future has looked steadily bleaker. Forecasts of potential growth have been repeatedly revised down. And consumers and firms-anticipating a gloomier future-are cutting back spending, leading to unusually low demand growth today....

    RC AKA Darryl, Ron -> anne... , -1
    THANKS!

    [Sep 30, 2016] increasing inequality is bad news for managing resource limits and externalities. The demands of the masses can be crammed down, but at a cost to social discipline as well as poverty. The power of the rich to marshal resources to mitigate the effects and externalize and socialise costs will exacerbate the main drivers.

    Notable quotes:
    "... Ridiculing the anachronism of Marxism is a pastime, but what are to do with neoclassical economics? Even if I believed that world leaders ceremonially signing agreements were willing to act in (corrupt) principle, there is still the small matter of technocratic palsy among the economists. I mean, did you read the 5th IPCC summary? Responding will cost growth. ..."
    "... What I do get explicitly from Marxism which is mostly only implicit in neoclassical economics is that increasing inequality is bad news for managing resource limits and externalities. ..."
    "... The demands of the masses can be crammed down, but at a cost to social discipline as well as poverty. The power of the rich to marshal resources to mitigate the effects and externalize and socialise costs will exacerbate the main drivers. ..."
    Sep 30, 2016 | crookedtimber.org

    bruce wilder 09.29.16 at 4:07 pm ( 14 9 )

    Throwing around a Marxist accented capitalism label as all purpose explanator does not seem to me to providing much insight independent of what is projected onto it, and calling for Monty Python revolution proves as much, imho. That said, neoclassical economics is even less helpful.

    Quite apart from the impulses of sociopathic or philanthropic financiers - are they the same or different people? - the official doctrine of economic analysis, in which framework public policy must be drawn, has been remarkably unhelpful in developing a common understanding of what needs to be done, imho.

    Ridiculing the anachronism of Marxism is a pastime, but what are to do with neoclassical economics? Even if I believed that world leaders ceremonially signing agreements were willing to act in (corrupt) principle, there is still the small matter of technocratic palsy among the economists. I mean, did you read the 5th IPCC summary? Responding will cost growth.

    But, not to worry, we will be able to extract carbon at scale real soon and reverse overshoot.

    The optimistic reply seems to reject the need for an overarching framework of ideas to give context and orientation: apparently, solar electricity will keep getting cheaper - here is a price per kWh - problem solved. Which problem? . . .?

    What I do get explicitly from Marxism which is mostly only implicit in neoclassical economics is that increasing inequality is bad news for managing resource limits and externalities.

    The demands of the masses can be crammed down, but at a cost to social discipline as well as poverty. The power of the rich to marshal resources to mitigate the effects and externalize and socialise costs will exacerbate the main drivers.

    [Sep 30, 2016] Myth that neoliberal globalization reduces poverty

    Notable quotes:
    "... "Over the last 25 years, the number of people living in extreme poverty has been cut from nearly 40 percent of humanity to under 10 percent." This is roughly true, according to World Bank data, but the story of how it happened goes against his whole speech - which argues that this progress is a result of the "globalization" that Washington leads and supports wherever it has influence in the developing world. In fact, the majority of the reduction in extreme poverty during this period (more than 1.1 billion people worldwide) took place in China. But during this period China was really the counterexample to the "principles of open markets" with which Obama insists "we must go forward, not backward." ..."
    "... If we go back a bit more and look at 1981–2012, China accounted for even more of the reduction of the world population in extreme poverty, about 70 percent. This would indicate that other parts of the developing world increased their economic and social progress during the 21st century, relative to China, and indeed many developing countries did (as compared to the last two decades of the 20th century). But China played an increasingly large role in reducing poverty in other countries during this period. ..."
    "... It was so successful in its economic growth and development - by far the fastest in world history - that it became the largest economy in the world, and pulled up many developing countries through its imports. Chinese imports went from a negligible 0.1 percent of other developing countries' exports to 3 percent, from 1980–2010. China also provided hundreds of billions of dollars in investment, loans, and aid to low- and middle-income countries in the 21st century. (In the last few years, Chinese growth has slowed, along with that of most countries, and that has contributed - although perhaps not as much as Europe has - to the global slowdown since 2011.) ..."
    "... the "principles of open markets" that Obama refers to is really code for "policies that Washington supports." ..."
    "... In his defense of a world economic order ruled by Washington and its rich country allies, President Obama also asserted that "we have made international institutions like the World Bank and the International Monetary Fund more representative." But that is a gross exaggeration: the most recent reform of IMF voting shares left the US with an unchanged 16.7 percent share, enough to veto many important decisions (that require an 85 percent majority) by itself; and it left Washington and its traditional rich country allies with a solid majority of more than 60 percent of votes. Of course, it is the developing countries, especially poorer ones, that are most subject to IMF decisions. But the IMF is - by a gentleman's agreement among the rich country governments - headed by a European, and the World Bank by an American. It should not be surprising if these institutions do not look out for the interests of the developing world. ..."
    Sep 30, 2016 | economistsview.typepad.com

    anne : September 30, 2016 at 04:55 AM

    http://cepr.net/publications/op-eds-columns/president-obama-inadvertently-gives-high-praise-to-china-in-un-speech

    September 29, 2016

    President Obama Inadvertently Gives High Praise to China in UN Speech
    By Mark Weisbrot

    President Obama's speech at the UN last week was mostly a defense of the world's economic and political status quo, especially that part of it that is led or held in place by the US government and the global institutions that Washington controls or dominates. In doing so, he said some things that were exaggerated or wrong, or somewhat misleading. It is worth looking at some of the things that media reports on this speech missed.

    "Over the last 25 years, the number of people living in extreme poverty has been cut from nearly 40 percent of humanity to under 10 percent." This is roughly true, according to World Bank data, but the story of how it happened goes against his whole speech - which argues that this progress is a result of the "globalization" that Washington leads and supports wherever it has influence in the developing world. In fact, the majority of the reduction in extreme poverty during this period (more than 1.1 billion people worldwide) took place in China. But during this period China was really the counterexample to the "principles of open markets" with which Obama insists "we must go forward, not backward."

    China's historically unprecedented economic growth in the past 25 years (or 35 years, or even more) was accomplished with state-owned enterprises and banks dominating the economy. State control over investment, technology transfer, and foreign exchange was vastly greater than in other developing countries. China rejected the neoliberal policies of an "independent central bank," indiscriminate opening to international trade and investment, and rapid privatization of state companies. Instead, it chose a gradual transition, over 35 years, from an overwhelmingly planned economy to a mixed economy in which the state still plays a leading role. Even today, China expanded the investment of state-owned enterprises by 23.5 percent in the first six months of 2016 (as compared to the same period in 2015), to help boost the economy.

    If we go back a bit more and look at 1981–2012, China accounted for even more of the reduction of the world population in extreme poverty, about 70 percent. This would indicate that other parts of the developing world increased their economic and social progress during the 21st century, relative to China, and indeed many developing countries did (as compared to the last two decades of the 20th century). But China played an increasingly large role in reducing poverty in other countries during this period.

    It was so successful in its economic growth and development - by far the fastest in world history - that it became the largest economy in the world, and pulled up many developing countries through its imports. Chinese imports went from a negligible 0.1 percent of other developing countries' exports to 3 percent, from 1980–2010. China also provided hundreds of billions of dollars in investment, loans, and aid to low- and middle-income countries in the 21st century. (In the last few years, Chinese growth has slowed, along with that of most countries, and that has contributed - although perhaps not as much as Europe has - to the global slowdown since 2011.)

    Of course, the "principles of open markets" that Obama refers to is really code for "policies that Washington supports." Some of them are the exact opposite of "open markets," such as the lengthening and strengthening of patent and copyright protection included in the Trans-Pacific Partnership (TPP) agreement. President Obama also made a plug for the TPP in his speech, asserting that "we've worked to reach trade agreements that raise labor standards and raise environmental standards, as we've done with the Trans-Pacific Partnership, so that the benefits [of globalization] are more broadly shared." But the labor and environmental standards in the TPP, as with those in previous US-led commercial agreements, are not enforceable; whereas if a government approves laws or regulations that infringe on the future profit potential of a multinational corporation - even if such laws or regulations are to protect public health or safety - that government can be hit with billions of dollars in fines. And they must pay these fines, or be subject to trade sanctions.

    In his defense of a world economic order ruled by Washington and its rich country allies, President Obama also asserted that "we have made international institutions like the World Bank and the International Monetary Fund more representative." But that is a gross exaggeration: the most recent reform of IMF voting shares left the US with an unchanged 16.7 percent share, enough to veto many important decisions (that require an 85 percent majority) by itself; and it left Washington and its traditional rich country allies with a solid majority of more than 60 percent of votes. Of course, it is the developing countries, especially poorer ones, that are most subject to IMF decisions. But the IMF is - by a gentleman's agreement among the rich country governments - headed by a European, and the World Bank by an American. It should not be surprising if these institutions do not look out for the interests of the developing world.

    "We can choose to press forward with a better model of cooperation and integration," President Obama told the world at the UN General Assembly. "Or we can retreat into a world sharply divided, and ultimately in conflict, along age-old lines of nation and tribe and race and religion."

    But the rich country governments led by Washington are not offering the rest of the world any better model of cooperation and integration than the failed model they have been offering for the past 35 years. And that is a big part of the problem....

    RGC -> anne... , Friday, September 30, 2016 at 06:57 AM

    Excellent commentary by Mark Weisbrot.
    anne -> RGC... , Friday, September 30, 2016 at 07:09 AM
    Excellent commentary by Mark Weisbrot.

    [ Really so. ]

    anne -> anne... , Friday, September 30, 2016 at 09:23 AM
    http://cepr.net/publications/op-eds-columns/president-obama-inadvertently-gives-high-praise-to-china-in-un-speech

    September 29, 2016

    China's historically unprecedented economic growth in the past 25 years (or 35 years, or even more) was accomplished with state-owned enterprises and banks dominating the economy. State control over investment, technology transfer, and foreign exchange was vastly greater than in other developing countries. China rejected the neoliberal policies of an "independent central bank," indiscriminate opening to international trade and investment, and rapid privatization of state companies. Instead, it chose a gradual transition, over 35 years, from an overwhelmingly planned economy to a mixed economy in which the state still plays a leading role. Even today, China expanded the investment of state-owned enterprises by 23.5 percent in the first six months of 2016 (as compared to the same period in 2015), to help boost the economy....

    -- Mark Weisbrot

    anne -> anne... , Friday, September 30, 2016 at 10:04 AM
    http://cepr.net/publications/op-eds-columns/president-obama-inadvertently-gives-high-praise-to-china-in-un-speech

    September 29, 2016

    Even today, China expanded the investment of state-owned enterprises by 23.5 percent in the first six months of 2016 (as compared to the same period in 2015), to help boost the economy....

    -- Mark Weisbrot


    http://blogs.wsj.com/economics/2011/10/14/yale-professors-offer-economic-prescriptions/

    October 14, 2011

    Yale Professors Offer Economic Prescriptions
    By Brenda Cronin - Wall Street Journal

    Richard C. Levin, president of Yale - and also a professor of economics - moderated the conversation among Professors Judith Chevalier, John Geanakoplos, William D. Nordhaus, Robert J. Shiller and Aleh Tsyvinski....

    An early mistake during the recession, Mr. Levin said, was not targeting more stimulus funds to job creation. He contrasted America's meager pace of growth in gross domestic product in the past few years with China's often double-digit pace, noting that after the crisis hit, Washington allocated roughly 2% of GDP to job creation while Beijing directed 15% of GDP to that goal....

    anne -> anne... , Friday, September 30, 2016 at 10:13 AM
    Repeatedly there are warnings from Western economists that the Chinese economy is near collapse, nonetheless economic growth through the first 2 quarters this year is running at 6.7% and the third quarter looks about the same. The point is to ask and describe how after these last 39 remarkable years:

    https://fred.stlouisfed.org/graph/?g=7uKv

    August 4, 2014

    Real per capita Gross Domestic Product for China, 1976-2015

    (Percent change)

    https://fred.stlouisfed.org/graph/?g=7uKu

    August 4, 2014

    Real per capita Gross Domestic Product for China, 1976-2015

    (Indexed to 1976)

    anne -> anne... , Friday, September 30, 2016 at 10:16 AM
    https://fred.stlouisfed.org/graph/?g=7uKF

    November 1, 2014

    Total Factor Productivity at Constant National Prices for China, 1976-2014

    https://fred.stlouisfed.org/graph/?g=7uKE

    November 1, 2014

    Total Factor Productivity at Constant National Prices for China, 1976-2014

    (Indexed to 1976)

    jonny bakho : , -1
    Before the crash, complacent Democrats, ... tended to agree with them that the economy was largely self-correcting.

    Who is a complacent Democrat? Obama ran as a fiscal conservative and appointed a GOP as his SecTreas. Geithner was a "banks need to be bailed out" and the economy self corrects. Geithner was not in favor of cram down or mortgage programs that would have bailed out the injured little folks.

    Democrats like Romer and Summers were in favor a fiscal stimulus, but not enough of it. I expect to see the Clinton economic team include a lot more women and especially focus on economic policies that help working women and families.

    I have always thought that a big reason for the Bush jobless recovery was his lack of true fiscal stimulus. Bush had tax cuts for the wealthy, but the latest from Summers shows why trickle down does not work.

    Full employment may have been missing from the 1992 platform, but full employment was pursued aggressively by Bill Clinton. He got AG to agree to allow unemployment to drop to 4% in exchange for raising taxes and dropping the middle class tax cuts. Bill Clinton used fiscal policy to tax the economy and as a break so monetary policy could be accommodating.

    He should include raising the MinWage. Maybe that has not changed but it is a lynchpin for putting money in the pockets of the working poor.

    [Sep 30, 2016] Will the media ever stop the ridiculous charade of pretending that the path of globalization that we are on is somehow and natural and that it is the outcome of a "free" market?

    Notable quotes:
    "... Will the media ever stop the ridiculous charade of pretending that the path of globalization that we are on is somehow and natural and that it is the outcome of a "free" market? Are longer and stronger patent and copyright monopolies the results of a free market? ..."
    "... The NYT should up its game in this respect. It had a good piece on the devastation to millions of working class people and their communities from the flood of imports of manufactured goods in the last decade, but then it turns to hand-wringing nonsense about how it was all a necessary part of globalization. Actually, none of it was a necessary part of a free trade. ..."
    "... First, the huge trade deficits were the direct result of the decision of China and other developing countries to buy massive amounts of U.S. dollars to hold as reserves in this period. This raised the value of the dollar and made our goods and services less competitive internationally. This problem of a seriously over-valued dollar stems from the bungling of the East Asian bailout by the Clinton Treasury Department and the I.M.F. ..."
    "... The second point is political leaders are constantly working to make patents and copyrights stronger and longer. This raises the price that ordinary workers have to pay for everything from drugs to computer games. The result is lower real wages for ordinary workers and higher incomes for the beneficiaries of these rents. It also slows economic growth since markets are not smart enough to distinguish between a 10,000 percent price increase due to a tariff and a 10,000 percent price increase due to a patent monopoly. (In other words, all the bad things that "free trade" economists say about tariffs also apply to patents and copyrights, except the impact is far larger in the later case.) ..."
    Sep 30, 2016 | economistsview.typepad.com

    Mr. Bill -> Mr. Bill... September 30, 2016 at 05:30 PM

    Dean Baker:

    Why are none of the "free trade" members of Congress pushing to change the regulations that require doctors go through a U.S. residency program to be able to practice medicine in the United States? Obviously they are all protectionist Neanderthals.

    Will the media ever stop the ridiculous charade of pretending that the path of globalization that we are on is somehow and natural and that it is the outcome of a "free" market? Are longer and stronger patent and copyright monopolies the results of a free market?

    The NYT should up its game in this respect. It had a good piece on the devastation to millions of working class people and their communities from the flood of imports of manufactured goods in the last decade, but then it turns to hand-wringing nonsense about how it was all a necessary part of globalization. Actually, none of it was a necessary part of a free trade.

    First, the huge trade deficits were the direct result of the decision of China and other developing countries to buy massive amounts of U.S. dollars to hold as reserves in this period. This raised the value of the dollar and made our goods and services less competitive internationally. This problem of a seriously over-valued dollar stems from the bungling of the East Asian bailout by the Clinton Treasury Department and the I.M.F.

    If we had a more competent team in place, that didn't botch the workings of the international financial system, then we would have expected the dollar to drop as more imports entered the U.S. market. This would have moved the U.S. trade deficit toward balance and prevented the massive loss of manufacturing jobs we saw in the last decade.

    The second point is political leaders are constantly working to make patents and copyrights stronger and longer. This raises the price that ordinary workers have to pay for everything from drugs to computer games. The result is lower real wages for ordinary workers and higher incomes for the beneficiaries of these rents. It also slows economic growth since markets are not smart enough to distinguish between a 10,000 percent price increase due to a tariff and a 10,000 percent price increase due to a patent monopoly. (In other words, all the bad things that "free trade" economists say about tariffs also apply to patents and copyrights, except the impact is far larger in the later case.)

    Finally, the fact that trade has exposed manufacturing workers to international competition, but not doctors and lawyers, was a policy choice, not a natural development. There are enormous potential gains from allowing smart and ambitious young people in the developing world to come to the United States to work in the highly paid professions. We have not opened these doors because doctors and lawyers are far more powerful than autoworkers and textile workers. And, we rarely even hear the idea mentioned because doctors and lawyers have brothers and sisters who are reporters and economists.

    Addendum:

    Since some folks asked about the botched bailout from the East Asian financial crisis, the point is actually quite simple. Prior to 1997 developing countries were largely following the textbook model, borrowing capital from the West to finance development. This meant running large trade deficits. This reversed following the crisis as the conventional view in the developing world was that you needed massive amounts of reserves to avoid being in the situation of the East Asian countries and being forced to beg for help from the I.M.F. This led to the situation where developing countries, especially those in the region, began running very large trade surpluses, exporting capital to the United States. (I am quite sure China noticed how its fellow East Asian countries were being treated in 1997.)

    [Sep 29, 2016] The Coming of the Post Neoliberal Era

    Notable quotes:
    "... The current US presidential election shows, perhaps better than anything else, just how far that decadence has gone. Hillary Clinton's campaign is floundering in the face of Trump's challenge because so few Americans still believe that the [neo]liberal shibboleths in her campaign rhetoric mean anything at all. ..."
    "... Even among her supporters, enthusiasm is hard to find, and her campaign rallies have had embarrassingly sparse attendance. Increasingly frantic claims that only racists, fascists, and other deplorables support Trump convince no one but true believers, and make the concealment of interests behind shopworn values increasingly transparent. Clinton may still win the election by one means or another, but the broader currents in American political life have clearly changed course. ..."
    "... Or one could take the idea that "Health" or "College" reform is merely funneling ever more resources to insurance companies and College administrations with precious little if any improvement in the real cost or quality to the users of the service. ..."
    Sep 29, 2016 | www.nakedcapitalism.com

    fresno dan September 29, 2016 at 8:48 am

    The Coming of the Post[neo]liberal Era The Archdruid Report

    Ironies of this sort are anything but unusual in political history. It's astonishingly common for a movement that starts off trying to overturn the status quo in the name of some idealistic abstraction or other to check its ideals at the door once it becomes the status quo. If anything, American liberalism held onto its ideals longer than most and accomplished a great deal more than many, and I think that most of us-even those who, like me, are moderate Burkean conservatives-are grateful to the liberal movement of the past for ending such obvious abuses as chattel slavery and the denial of civil rights to women, and for championing the idea that values as well as interests deserve a voice in the public sphere. It deserves the modern equivalent of a raised hat and a moment of silence, if no more, as it finally sinks into the decadence that is the ultimate fate of every successful political movement.

    The current US presidential election shows, perhaps better than anything else, just how far that decadence has gone. Hillary Clinton's campaign is floundering in the face of Trump's challenge because so few Americans still believe that the [neo]liberal shibboleths in her campaign rhetoric mean anything at all.

    Even among her supporters, enthusiasm is hard to find, and her campaign rallies have had embarrassingly sparse attendance. Increasingly frantic claims that only racists, fascists, and other deplorables support Trump convince no one but true believers, and make the concealment of interests behind shopworn values increasingly transparent. Clinton may still win the election by one means or another, but the broader currents in American political life have clearly changed course.

    =====================================

    Great article IMHO – I certainly agree about the portion concerning immigration.

    And for an example of a contradiction – Police unions and big cities. Unions do much more than raise wages and pensions – many of the protections of police by hamstringing complaint investigations against the police are exposing a fissure that has reached the point of earthquake.

    Or one could take the idea that "Health" or "College" reform is merely funneling ever more resources to insurance companies and College administrations with precious little if any improvement in the real cost or quality to the users of the service.

    [Sep 29, 2016] How Short-Termism Saps the Economy

    Sep 29, 2016 | economistsview.typepad.com
    RC AKA Darryl, Ron : , Thursday, September 29, 2016 at 04:00 AM
    http://www.wsj.com/articles/how-short-termism-saps-the-economy-1475018087

    How Short-Termism Saps the Economy

    Paying CEOs so much in stocks puts their focus on the share price instead of building for the long run.

    By
    Joe Biden
    Sept. 27, 2016 7:14 p.m. ET

    135 COMMENTS

    Short-termism-the notion that companies forgo long-run investment to boost near-term stock price-is one of the greatest threats to America's enduring prosperity. Over the past eight years, the U.S. economy has emerged from crisis and maintained an unprecedented recovery. We are now on the cusp of a remarkable resurgence. But the country can't unlock its true potential without encouraging businesses to build for the long-run.

    Private investment-from new factories, to research, to worker training-is perhaps the greatest driver of economic growth, paving the way for future prosperity for businesses, their supply chains and the economy as a whole. Without it robust growth is nearly impossible. Yet all too often, executives face pressure to prioritize today's share price over adding long-term value.

    The origins of short-termism are rooted in policies and practices that have eroded the incentive to create value: the dramatic growth in executive compensation tied to short-term share price; inadequate regulations that allow share buybacks without limit; tax laws that designate an investment as "long-term" after only one year; a subset of activist investors determined to steer companies away from further investment; and a financial culture focused on quarterly earnings and short-run metrics.


    Consider the evolution in the structure of CEO compensation. In the 1980s, roughly three-fourths of executive pay at S&P 500 companies was in the form of cash salary and bonuses, and the rest in investment options and stock, according to an article in the Annual Review of Financial Economics. The Omnibus Budget Reconciliation Act of 1993 included a provision to link executive pay to the performance of the company. But it didn't work as intended. By the time I became vice president, only 40% of executive pay was in cash, with the bulk being tied to investment options and stock. Now more than ever, there is a direct link between share price and CEO pay.

    Performance-based pay encourages executives to think in the short-term. Ever since the Securities and Exchange Commission changed the buyback rules in 1982, there has been a proliferation in share repurchases. Today buybacks are the norm. According to economist William Lazonick , from 2003-12, companies on the S&P 500 spent 37% of their earnings on dividends and a full 54% on buybacks-leaving less than 10% for reinvestment.

    This emphasis on returning profits to shareholders has led to a significant decline in business investment. Total investment as a share of the economy has fallen to about 11% today, down from a high of about 15% in the early 1980s, according to the Bureau of Economic Analysis. With interest rates at historically low levels, and business confidence in the U.S. far ahead of its economic competitors, there should be more investment, not less.

    I am not blaming CEOs. The business leaders I've met over the course of my career want to build their firms and contribute to the economy, not simply send checks to investors or buy back their own stock. Sometimes they succeed. Other times the pressures to lift the short-run share price are simply too great.

    As these short-term pressures mount, most of the harm is borne by workers. As any economist will tell you, productivity is typically the most important driver of increasing wages. But productivity will never flourish without businesses investing in endeavors like on-the-job training, new equipment, and research and development. In short, business investment boosts productivity, which lifts wages.

    A continued economic resurgence requires solving the short-termism puzzle. The federal government can help foster private enterprise by providing worker training, building world-class infrastructure, and supporting research and innovation. But government should also take a look at regulations that promote share buybacks, tax laws that discourage long-term investment and corporate reporting standards that fail to account for long-run growth. The future of the economy depends on it.

    [You go, Joe! He even references William Lazonick.

    Lazonick wrote about the new economy business model (NEBM) versus the old, but never really pinned down what changed in the taxation on returns to capital that caused it. Also, Lazonick seemed to believe that the rapid capital formation used in the NEBM justified the low taxation on capital gains. That was a big mistake. Scarce capital has never been a obstacle in the US since early in the 20th century except when a financial shock locked up capital allocation.

    Dividends payouts are sometimes seen as short term payouts to shareholders, but if not for the capital gains tax preference that would not be true. Paying dividends reduces a firms capital, but increases the desirability of its shares both as a source of income and as a performer which boost share price more than the underlying reduction of equity due to capital payout. So, dividends versus capital gains is not an either or in the short term. Over the longer term accumulated dividends from a firm that invests in itself are a better incentive for reinvestment than a capital gains windfall at some point in that longer term. The capital gains preference makes selling shares more desirable than holding shares and M&A more desirable than internal investment.

    In 1954 the dividends tax credit was rescinded in that year's tax act. It had been in effect since 1913 except for 1936-1939. I know that I should provide references, but since I started writing about this five years ago most of the evidence has been taking off the WWW.

    The dividends tax credit returned to the individual taxpayer the amount of their tax liability on their dividends income that had been paid in corporate taxes by the issuing firms. This served as an incentive to shareholders to prefer higher corporate tax rates with fewer loopholes. Higher effective corporate tax rates encourage firms to increase their expenses in wages and exempt reinvestments that lowers their taxable profits.

    If we wanted even less short termism then we should have higher capital gains tax rates with reductions per year of holding term along with the dividends tax credit. Rescinding the dividends tax credit might be considered desirable because it was a tax increase on the wealthy, but in 1954 both Congress and POTUS were Republican which is worth considering. Democrats had done it before in 1936, but reversed it in 1939. Joe Biden's article on short termism is probably a lot more significant than it will ever been given credit for which goes a long ways to explain how corporatism and globalization have had such devastating effects on jobs and wages. We not only do not know what we are doing, but we don't know what we have done either.]

    RC AKA Darryl, Ron -> RC AKA Darryl, Ron... , Thursday, September 29, 2016 at 04:27 AM
    Sure huge executive stock options have a perverse effect on corporate financial decisions, but "higher capital gains tax rates with reductions per year of holding term along with the dividends tax credit" would go a long ways to changing the incentives created by stock options as well. By higher capital gains tax rates I mean much higher, at least before holding term exclusions. Also, an inflation adjustment to the basis for capital gains calculation for each year of holding term equal to each year's SSA COLA would eliminate the pressure against SSA COLA that is exerted by agents of the wealthy against the interest of retired wage class seniors.
    RC AKA Darryl, Ron -> RC AKA Darryl, Ron... , Thursday, September 29, 2016 at 04:29 AM
    It would be a much different world if rich people supported higher effective corporate tax rates and SSA COLA.
    Tom aka Rusty -> RC AKA Darryl, Ron... , Thursday, September 29, 2016 at 05:06 AM
    https://www.washingtonpost.com/news/wonk/wp/2012/08/16/bill-clinton-tried-to-limit-executive-pay-heres-why-it-didnt-work/
    jonny bakho -> Tom aka Rusty... , Thursday, September 29, 2016 at 05:27 AM
    The only way to limit executive pay is to tax it at very high levels. Reagan blew up the top tax rate and set the stage for executive pay to skyrocket.
    pgl -> jonny bakho ... , Thursday, September 29, 2016 at 05:46 AM
    From that WaPo story: "According to a new paper from Temple University's Steven Balsam published by the Economic Policy Institute, the big flaw in 162(m) was its broad exemption of "performance-based" pay. The $1 million cap only applied to traditional salaries, bonuses and grants of company stock."

    Sort of a silly way of measuring compensation it seems. I agree that a higher tax rate on income would help but be careful to define income as total compensation.

    Of course the other thing one might consider is to have a Board of Directors that answers to shareholders and not upper management.

    RC AKA Darryl, Ron -> Tom aka Rusty... , Thursday, September 29, 2016 at 05:53 AM
    The tax incentives on dividends relative to capital gains work for executive pay, monopoly, investment, and wage worker channels. Dividends can be used for just taking profits but they produce more over the longer term from investment returns. Capital gains are never more than a one time windfall although stable share price is useful for equities as collateral.
    RC AKA Darryl, Ron -> RC AKA Darryl, Ron... , -1
    Since CEOs are usually the shareholders with the most power then affecting their incentives as shareholders can be very effective. Getting CEOs to not raise their own pay is futile. Changing the game for everyone to favor internal investment over M&A as a use for retained earnings is necessary. The downside of my recommendation is that IPOs will no longer make angel investors insanely rich over night. Boohoo!

    [Sep 28, 2016] Battling Apple and the Giants naked capitalism

    Notable quotes:
    "... Reuters reports that an investigation conducted by it in 2013 found that around three-fourths of the 50 biggest U.S. technology companies use practices that are similar to Apple's to avoid paying tax. So Verstager has taken on not just one giant, but the worlds corporate elite. She should not lose. But even if she does this time, this is a battle well begun. ..."
    "... Thus the power of the multinationals comes not just from their own size and reach, and from the support that their own governments afford them, but from their ability to divide desperate countries seeking the presence of global giants to make a small difference to their economic conditions ..."
    "... Those who support globalisation support this power disparity. ..."
    Sep 28, 2016 | www.nakedcapitalism.com
    The case of Apple's Irish operations is an extreme example of such tax avoidance accounting. It relates to two Apple subsidiaries Apple Sales International and Apple Operations Europe. Apple Inc US has given the rights to Apple Sales International (ASI) to use its "intellectual property" to sell and manufacture its products outside of North and South America, in return for which Apple Inc of the US receives payments of more than $2 billion per year. The consequence of this arrangement is that any Apple product sold outside the Americas is implicitly first bought by ASI, Ireland from different manufacturers across the globe and sold along with the intellectual property to buyers everywhere except the Americas. So all such sales are by ASI and all profits from those sales are recorded in Ireland. Stage one is complete: incomes earned from sales in different jurisdictions outside the Americas (including India) accrue in Ireland, where tax laws are investor-friendly. What is important here that this was not a straight forward case of exercising the "transfer pricing" weapon. The profits recorded in Ireland were large because the payment made to Apple Inc in the US for the right to use intellectual property was a fraction of the net earnings of ASI.

    Does this imply that Apple would pay taxes on these profits in Ireland, however high or low the rate may be? The Commission found it did not. In two rather curious rulings first made in 1991 and then reiterated in 2007 the Irish tax authority allowed ASI to split it profits into two parts: one accruing to the Irish branch of Apple and another to its "head office". That "head office" existed purely on paper, with no formal location, actual offices, employees or activities. Interestingly, this made-of-nothing head office got a lion's share of the profits that accrued to ASI, with only a small fraction going to the Irish branch office. According to Verstager's Statement: "In 2011, Apple Sales International made profits of 16 billion euros. Less than 50 million euros were allocated to the Irish branch. All the rest was allocated to the 'head office', where they remained untaxed." As a result, across time, Apple paid very little by way of taxes to the Irish government. The effective tax rate on its aggregate profits was short of 1 per cent. The Commissioner saw this as illegal under the European Commission's "state aid rules", and as amounting to aid that harms competition, since it diverts investment away from other members who are unwilling to offer such special deals to companies.

    In the books, however, taxes due on the "head office" profits of Apple are reportedly treated as including a component of deferred taxes. The claim is that these profits will finally have to be repatriated to the US parent, where they would be taxed as per US tax law. But it is well known that US transnationals hold large volumes of surplus funds abroad to avoid US taxation and the evidence is they take very little of it back to the home country. In fact, using the plea that it has "permanent establishment" in Ireland and, therefore, is liable to be taxed there, and benefiting from the special deal the Irish government has offered it, Apple has accumulated large surpluses. A study by two non-profit groups published in 2015 has argued that Apple is holding as much as $181 billion of accumulated profits outside the US, a record among US companies. Moreover, The Washington Post reports that Apple's Chief Executive Tim Cook told its columnist Jena McGregor, "that the company won't bring its international cash stockpile back to the United States to invest here until there's a 'fair rate' for corporate taxation in America."

    This has created a peculiar situation where the US is expressing concern about the EC decision not because it disputes the conclusion about tax avoidance, but because it sees the tax revenues as due to it rather than to Ireland or any other EU country. US Treasury Secretary Jack Lew criticised the ruling saying, "I have been concerned that it reflected an attempt to reach into the U.S. tax base to tax income that ought to be taxed in the United States." In Europe on the other hand, the French Finance Minister and the German Economy Minister, among others, have come out in support of Verstager, recognizing the implication this has for their own tax revenues. Governments other than in Ireland are not with Apple, even if not always for reasons advanced by the EC.

    ... ... ...

    Thus the power of the multinationals comes not just from their own size and reach, and from the support that their own governments afford them, but from their ability to divide desperate countries seeking the presence of global giants to make a small difference to their economic conditions. The costs of garnering that difference are, therefore, often missed. Reuters reports that an investigation conducted by it in 2013 found that around three-fourths of the 50 biggest U.S. technology companies use practices that are similar to Apple's to avoid paying tax. So Verstager has taken on not just one giant, but the worlds corporate elite. She should not lose. But even if she does this time, this is a battle well begun.

    JEHR September 28, 2016 at 10:42 am

    Greed has no boundaries!

    Ranger Rick September 28, 2016 at 10:43 am

    I think the common misconception that multinational corporations exist because "they are big companies that happen to operate in more than one country" is one of the biggest lies ever told.

    From the beginning (e.g. Standard Oil, United Fruit) it was clear that multinational status was an exercise in political arbitrage.

    tegnost September 28, 2016 at 11:23 am

    " Thus the power of the multinationals comes not just from their own size and reach, and from the support that their own governments afford them, but from their ability to divide desperate countries seeking the presence of global giants to make a small difference to their economic conditions "

    Those who support globalisation support this power disparity.

    [Sep 26, 2016] Neoliberal corruption is enhanced by 401K investors

    Sep 26, 2016 | economistsview.typepad.com
    Peter K. : September 25, 2016 at 07:01 AM This is a large problem for the left. (and I see the prospect of enacting "maximum wage laws" as pretty slim. Maybe I'm wrong.)

    You read progressive commenters like David and EMichael here pondering the returns on their investments. Not that there's anything fundamentally wrong with it. It's just a problem needed to be solved by public policy so everyone is facing the same rules.

    http://cepr.net/blogs/beat-the-press/you-voted-to-pay-wells-fargo-ceo-john-stumpf-19-5-million

    You Voted to Pay Wells Fargo CEO John Stumpf $19.5 Million
    by Dean Baker

    Published: 24 September 2016


    You don't remember casting that vote? Well, you didn't actually cast it, but if you have a 401(k) someone like Blackrock CEO Larry Fink cast the vote for you.

    Most middle income people have 401(k)s for their retirement and most of this money is in mutual funds. These mutual funds have control over the proxy votes for the shares they hold. This means that funds like Blackrock, which has more than $5 trillion in assets, have enormous say over the distribution of income in this country. And, as Gretchen Morgenson points out in her NYT column this morning, these folks almost always endorse outlandish pay packages for CEOs. As they say in Wall Street circles, what's a few million dollars between friends.

    So, if you're upset about an economy where the rich keep getting richer, just remember, you voted for it, sort of. Reply Sunday, pgl -> Peter K.... , Sunday, September 25, 2016 at 09:43 AM

    $19.5 million and zero accountability. Wells Fargo needs a new CEO now.
    Cray Singularity -> pgl... , Sunday, September 25, 2016 at 10:04 AM

    Folks need to keep their $$$$ out of mutual funds, keep their $$$$ out of 401(k). Plus you will avoid the load. When stocks fall your t-bonds will rise by virtue of their negative beta. Is that why investment bankers are contributing more to Clinton Dynasty Foundation? To Clinton election slush fund? Than to Trump University? Because the strongly suspect that stocks will collapse when the Donald moves into White House?

    Do you know where your assets are? When was the last

    time you saw
    Uranus
    ?

    pgl -> Cray Singularity... , Sunday, September 25, 2016 at 10:47 AM
    Gold may be a negative beta asset but government bonds? Don't think so.
    mrrunangun -> Peter K.... , Sunday, September 25, 2016 at 10:06 AM
    I hate to remark on so obvious a matter. A TBTF bank CEO bonus of $19.5million is a low bonus by industry standards. Back in the 90s and oughties a $2million bonus for a managing director was an insult or an indication that you were on your way out. $10million was a good bonus, $5 million was OK. A $20 million bonus was really good for an MD. CEOs and leaders of successful business units could see 9 figure bonuses, like Mr Blankfein's $130million 2010 bonus, and he was not the highest paid GS exec that year. A bonus below $20million for a current day CEO could be read as bad news and is probably read as such by his friends. He is probably on his way out.

    Bonuses today are not as sumptuous as they were in 2010 when the Obama bailout money was considered income and bonuses were paid out in proportion to the income of the business unit.

    pgl -> mrrunangun... , Sunday, September 25, 2016 at 10:48 AM
    OK, I bet Jamie Dimon makes more but I'd be really dismayed if he refused to take basic accountability for what Wells Fargo did.
    pgl -> mrrunangun... , Sunday, September 25, 2016 at 10:50 AM
    It seems Wells Fargo may have avoided the disasterous decline in stock valuations that BofA and Citigroup experienced but this is not exactly a large increase either:

    https://finance.yahoo.com/quote/WFC?ltr=1

    pgl -> pgl... , Sunday, September 25, 2016 at 10:52 AM
    JPMorgan has seen a 25% increase in stock prices.

    https://finance.yahoo.com/quote/JPM?ltr=1

    Wells Fargo fairly flat and big stock declines for BofA and Citigroup. And yet we here from JohnH some incessant spin about record bank profits.

    So many misconceptions so easily debunked.

    JohnH -> pgl... , -1
    More BS from pgl. Banks were able to take advantage of the Fed's historically low interest rates and post record profits in 2014 and 2015, while median real household income was back where it was a generation ago.
    http://www.bloomberg.com/news/articles/2015-09-02/u-s-banks-posted-record-profits-in-second-quarter-fdic-says

    Sad part, is that now pgl will tell us about the woes of one or two of his favorite banks and try to project that to the industry...or he'll put in a link showing declines in net interest margins...because he's a dissembling sleazebag.

    This dude is so confused that he doesn't even know the difference between net INCOME margin (profit) and net INTEREST margin!

    [Sep 24, 2016] Income Inequality in a Globalising World

    Notable quotes:
    "... By Miguel Nińo-Zarazúa, Research Fellow, UNU-WIDE, Laurence Roope, Researcher, Health Economics Research Centre, University of Oxford, and Finn Tarp, Director, UNU-WIDER. Originally published at VoxEU ..."
    "... See original post for references ..."
    "... John Ross argues that the reduction in poverty has been pretty much all China. I'm also not convinced China is actually that much richer than before. A sweatshop worker has a higher income than a traditional farmer, but probably has a lower standard of living, and while the traditional farmer maintains the natural resource base, the industrial worker destroys it. ..."
    "... Globalization is an economic and ecological disaster. We have outsourced wealth creation to China and they do it in the most polluting way possible, turning their country into a toxic waste dump in the process. ..."
    "... The peasants slaving away in the cinder block hellholes of their factories churning out the crapola on Wal-Mart's shelves also get paid squat, while the leaders of the Chinese Criminal Party steal half of their effort for themselves and smuggle the loot out, to get away from the pollution. The other half gets stolen by the likes of Wal-Mart and Apple. ..."
    "... The elites sold globalization as something that would generate such a munificent surplus that those in harms way would be helped. It ends up as a lie, where the elites the world over help themselves to the stolen sweat of the lowest people in society, with nothing left over, except for a polluted planet. ..."
    "... Yes, those who "have seen their incomes stagnating in real terms for over 20 years" are indeed experiencing "considerable discontent." But this anodyne phrasing masks the reality of entire communities seeing their means of livelihood ripped out and shipped across the globe. This rhetoric makes it sound like, Oh those prosperous American workers can't buy as many luxuries now, boo hoo, when the standard practice from NAFTA on of globalization-as-corporate-welfare has meant real impoverishment for hundreds of thousands of individuals, entire cities and large chunks of whole states. As Lambert always says, Whose economy? ..."
    Sep 23, 2016 | www.nakedcapitalism.com
    ...if you look at absolute inequality, as opposed to relative inequality, inequality has increased around the world. This calls into question one of the big arguments made in favor of globalization: that the cost to workers in advanced economies are offset by gains to workers in developing economies, and is thus virtuous by lowering inequality more broadly measured.

    By Miguel Nińo-Zarazúa, Research Fellow, UNU-WIDE, Laurence Roope, Researcher, Health Economics Research Centre, University of Oxford, and Finn Tarp, Director, UNU-WIDER. Originally published at VoxEU

    Since the turn of the century, inequality in the distribution of income, together with concerns over the pace and nature of globalisation, have risen to be among the most prominent policy issues of our time. These concerns took centre stage at the recent annual G20 summit in China. From President Obama to President Xi, there was broad agreement that the global economy needs more inclusive and sustainable growth, where the economic pie increases in size and is at the same time divided more fairly. As President Obama emphasised, "[t]he international order is under strain." The consensus is well founded, following as it does the recent Brexit vote, and the rise of populism (especially on the right) in the US and Europe, with its hard stance against free trade agreements, capital flows and migration.

    ... ... ...

    The inclusivity aspect of growth is now more imperative than ever. Globalisation has not been a zero sum game. Overall perhaps more have benefitted, especially in fast-growing economies in the developing world. However, many others, for example among the working middle class in industrialised nations, have seen their incomes stagnating in real terms for over 20 years. It is unsurprising that this has bred considerable discontent, and it is an urgent priority that concrete steps are taken to reduce the underlying sources of this discontent. Those who feel they have not benefitted, and those who have even lost from globalisation, have legitimate reasons for their discontent. Appropriate action will require not only the provision of social protection to the poorest and most vulnerable. It is essential that the very nature of the ongoing processes of globalisation, growth, and economic transformation are scrutinised, and that broad based investments are made in education, skills, and health, particularly among relatively disadvantaged groups. Only in this way will the world experience sustained – and sustainable – economic growth and the convergence of nations in the years to come.

    See original post for references

    tony , September 23, 2016 at 7:20 am

    http://ablog.typepad.com/keytrendsinglobalisation/2013/11/china-world-poverty.html

    John Ross argues that the reduction in poverty has been pretty much all China. I'm also not convinced China is actually that much richer than before. A sweatshop worker has a higher income than a traditional farmer, but probably has a lower standard of living, and while the traditional farmer maintains the natural resource base, the industrial worker destroys it.

    cnchal , September 23, 2016 at 7:32 am

    Only in this way will the world experience sustained – and sustainable – economic growth and the convergence of nations in the years to come.

    Globalization is an economic and ecological disaster. We have outsourced wealth creation to China and they do it in the most polluting way possible, turning their country into a toxic waste dump in the process.

    The peasants slaving away in the cinder block hellholes of their factories churning out the crapola on Wal-Mart's shelves also get paid squat, while the leaders of the Chinese Criminal Party steal half of their effort for themselves and smuggle the loot out, to get away from the pollution. The other half gets stolen by the likes of Wal-Mart and Apple.

    The elites sold globalization as something that would generate such a munificent surplus that those in harms way would be helped. It ends up as a lie, where the elites the world over help themselves to the stolen sweat of the lowest people in society, with nothing left over, except for a polluted planet.

    Sustainable economic growth is an oxymoron.

    Sally Snyder , September 23, 2016 at 7:35 am

    Here is an article that looks at the relationship between wealth and ethnicity/race in the United States:

    http://viableopposition.blogspot.ca/2016/08/the-growing-ethnicracial-wealth-gap.html

    The notable presence of public policies that exacerbate racial and economic inequality and the lack of will by Washington to change the system mean that the ethnic/racial wealth gap is becoming more firmly entrenched in society.

    tegnost , September 23, 2016 at 10:15 am

    Good article but standard policy prescription…

    "broad based investments are made in education, skills, and health, particularly among relatively disadvantaged groups. Only in this way will the world experience sustained – and sustainable – economic growth and the convergence of nations in the years to come."

    …I guess if the skills were sustainable low chemical and diverse farming in 5 acre lots or in co-ops then I might have less complaint, however the skills people apparently are going to need are supervising robots and going to non jobs in autonomous vehicles and being fed on chemical mush shaped like things we used to eat, a grim dystopia.

    Yesterday I had the unpleasant experience of reading the hard copy nyt wherein kristof opined that hey it's not so bad, extreme poverty has eased (the same as in this article, but without this article's Vietnamese example where 1 v. 8 becomes 8 v. 80),ignoring the relative difference while on another lackluster page there was an article saying immigrants don't take jobs from citizens which had to be one of the most thinly veiled press releases of some study made by some important sounding acronym and and, of course a supposed "balance" between pro and anti immigration academics. because in this case, they claim we're relatively better off.

    So there you have it, it's all relative. Bi color bird cage liner, dedicated to the ever shrinking population of affluent/wealthy who are relatively better off as opposed to the ever increasing population of people who are actually worse off…There was also an article on the desert dwelling uighur and their system of canals bringing glacier water to farm their arid land which showed some people who were fine for thousands of years, but now thanks to fracking, industrial pollution and less community involvement (kids used to clean the karatz, keeping it healthy) now these people can be uplifted into the modern world(…so great…) that was reminiscent of the nyt of olde which presented the conundrum but left out the policy prescription which now always seems to be "the richer I get the less extreme poverty there is in the world so stop your whining and borrow a few hundred thousand to buy a PhD "

    http://www.nytimes.com/2016/09/22/world/asia/china-xinjiang-turpan-water.html

    timotheus , September 23, 2016 at 2:26 pm

    Yes, those who "have seen their incomes stagnating in real terms for over 20 years" are indeed experiencing "considerable discontent." But this anodyne phrasing masks the reality of entire communities seeing their means of livelihood ripped out and shipped across the globe. This rhetoric makes it sound like, Oh those prosperous American workers can't buy as many luxuries now, boo hoo, when the standard practice from NAFTA on of globalization-as-corporate-welfare has meant real impoverishment for hundreds of thousands of individuals, entire cities and large chunks of whole states. As Lambert always says, Whose economy?

    sgt_doom , September 23, 2016 at 4:47 pm

    Great comments, timotheus , great comments!

    Three reading recommendations for anyone who doesn't grasp your sentiment, shared by millions: Sold Out , by Michelle Malkin Outsourcing America , by Ron Hira America: Who Stole the Dream? , by Donald L. Barlett Reply

    [Sep 21, 2016] When Capitalism Becomes an Act of War Alternet

    Notable quotes:
    "... traditional ways of life are dissolving as a new class of entrepreneur-warriors are wielding unprecedented power - and changing the global landscape. ..."
    "... It's a huge psychological dent in people's faith in the system. I think what's going to happen in the next few years is huge unemployment in the middle class in America because a lot of their jobs will be outsourced or automated. ..."
    Mar 04, 2015 | AlterNet

    Inside the trauma of globalization.

    Novelist Rana Dasgupta recently turned to nonfiction to explore the explosive social and economic changes in Delhi starting in 1991, when India launched a series of transformative economic reforms. In Capital: The Eruption of Delhi, he describes a city where the epic hopes of globalization have dimmed in the face of a sterner, more elitist world. In Part 1 of an interview with the Institute for New Economic Thinking, Dasgupta traces a turbulent time in which traditional ways of life are dissolving as a new class of entrepreneur-warriors are wielding unprecedented power - and changing the global landscape.

    Lynn Parramore: Why did you decide to move from New York to Delhi in 2000, and then to write a book about the city?

    Rana Dasgupta: I moved to be with my partner who lived in Delhi, and soon realized it was a great place to have landed. I was trying write a novel and there were a lot of people doing creative things. There was a fascinating intellectual climate, all linked to changes in society and the economy. It was 10 years since liberalization and a lot of the impact of that was just being felt and widely sensed.

    There was a sense of opportunity, not any more just on the part of business people, but everyone. People felt that things were really going to change in a deep way - in every part of the political spectrum and every class of society. Products and technology spread, affecting even very poor people. Coke made ads about the rickshaw drivers with their mobile phones -people who had never had access to a landline. A lot of people sensed a new possibility for their own lives.

    Amongst the artists and intellectuals that I found myself with, there were very big hopes for what kind of society Delhi could become and they were very interested in being part of creating that. They were setting up institutions, publications, publishing houses, and businesses. They were thinking new ideas. When I arrived, I felt, this is where stuff is happening. The scale of conversations, the philosophy of change was just amazing.

    LP: You've interviewed many of the young tycoons who emerged during Delhi's transformation. How would you describe this new figure? How do they do business?

    RD: Many of their fathers and grandfathers had run significant provincial businesses. They were frugal in their habits and didn't like to advertise themselves, and anyway their wealth remained local both in its magnitude and its reach. They had business and political associates that they drank with and whose weddings they went to, and so it was a tight-knit kind of wealth.

    But the sons, who would probably be now between 35 and 45, had an entirely different experience. Their adult life happened after globalization. Because their fathers often didn't have the skills or qualifications to tap into the forces of globalization, the sons were sent abroad, probably to do an MBA, so they could walk into a meeting with a management consultancy firm or a bank and give a presentation. When they came back they operated not from the local hubs where their fathers ruled but from Delhi, where they could plug into federal politics and global capital.

    So you have these very powerful combinations of father/son businesses. The sons revere the fathers, these muscular, huge masculine figures who have often done much more risky and difficult work building their businesses and have cultivated relationships across the political spectrum. They are very savvy, charismatic people. They know who to give gifts to, how to do favors.

    The sons often don't have that set of skills, but they have corporate skills. They can talk finance in a kind of international language. Neither skill set is enough on its own by early 2000's: they need each other. And what's interesting about this package is that it's very powerful elsewhere, too. It's kind of a world-beating combination. The son fits into an American style world of business and finance, but the thing about American-style business is that there are lots of things in the world that are closed to it. It's very difficult for an American real estate company or food company to go to the president of an African country and do a deal. They don't have the skills for it. But even if they did, they are legally prevented from all the kinds of practices involved, the bribes and everything.

    This Indian business combination can go into places like Africa and Central Asia and do all the things required. If they need to go to market and raise money, they can do that. But if they need to sit around and drink with some government guys and figure out who are the players that need to be kept happy, they can do that, too. They see a lot of the world open to themselves.

    LP: How do these figures compare to American tycoons during, say, the Gilded Age?

    RD: When American observers see these people they think, well, we had these guys between 1890 and 1920, but then they all kind of went under because there was a massive escalation of state power and state wealth and basically the state declared a kind of protracted war on them.

    Americans think this is a stage of development that will pass. But I think it's not going to pass in our case. The Indian state is never going to have the same power over private interests as the U.S. state because lots of things have to happen. The Depression and the Second World War were very important in creating a U.S. state that was that powerful and a rationale for defeating these private interests. I think those private interests saw much more benefit in consenting to, collaborating in, and producing a stronger U.S. state.

    Over time, American business allied itself with the government, which did a lot to open up other markets for it. In India, I think these private interests will not for many years see a benefit in operating differently, precisely because continents like Africa, with their particular set of attributes, have such a bright future. It's not just about what India's like, but what other places are like, and how there aren't that many people in the world that can do what they can do.

    LP: What has been lost and gained in a place like Delhi under global capitalism?

    RD: Undeniably there has been immense material gain in the city since 1991, including the very poorest people, who are richer and have more access to information. What my book tracks is a kind of spiritual and moral crisis that affects rich and poor alike.

    One kind of malaise is political and economic. Even though the poorest are richer, they have less political influence. In a socialist system, everything is done in the name of the poor, for good or for bad, and the poor occupy center stage in political discourse. But since 1991 the poor have become much less prominent in political and economic ideology. As the proportion of wealth held by the richest few families of India has grown massively larger, the situation is very much like the break-up of the Soviet Union, which leads to a much more hierarchical economy where people closest to power have the best information, contacts, and access to capital. They can just expand massively.

    Suddenly there's a state infrastructure that's been built for 70 years or 60 years which is transferred to the private domain and that is hugely valuable. People gain access to telecommunication systems, mines, land, and forests for almost nothing. So ordinary people say, yes, we are richer, and we have all these products and things, but those making the decisions about our society are not elected and hugely wealthy.

    Imagine the upper-middle-class guy who has been to Harvard, works for a management consultancy firm or for an ad agency, and enjoys a kind of international-style middle-class life. He thinks he deserves to make decisions about how the country is run and how resources are used. He feels himself to be a significant figure in his society. Then he realizes that he's not. There's another, infinitely wealthier class of people who are involved in all kinds of backroom deals that dramatically alter the landscape of his life. New private highways and new private townships are being built all around him. They're sucking the water out of the ground. There's a very rapid and seemingly reckless transformation of the landscape that's being wrought and he has no part in it.

    If he did have a say, he might ask, is this really the way that we want this landscape to look? Isn't there enormous ecological damage? Have we not just kicked 10,000 farmers off their land?

    All these conversations that democracies have are not being had. People think, this exactly what the socialists told us that capitalism was - it's pillage and it creates a very wealthy elite exploiting the poor majority. To some extent, I think that explains a lot of why capitalism is so turbulent in places like India and China. No one ever expected capitalism to be tranquil. They had been told for the better part of a century that capitalism was the imperialist curse. So when it comes, and it's very violent, and everyone thinks, well that's what we expected. One of the reasons that it still has a lot of ideological consensus is that people are prepared for that. They go into it as an act of war, not as an act of peace, and all they know is that the rewards for the people at the top are very high, so you'd better be on the top.

    The other kind of malaise is one of culture. Basically, America and Britain invented capitalism and they also invented the philosophical and cultural furniture to make it acceptable. Places where capitalism is going in anew do not have 200 years of cultural readiness. It's just a huge shock. Of course, Indians are prepared for some aspects of it because many of them are trading communities and they understand money and deals. But a lot of those trading communities are actually incredibly conservative about culture - about what kind of lifestyle their daughters will have, what kinds of careers their sons will have. They don't think that their son goes to Brown to become a professor of literature, but to come back and run the family business.

    LP: What is changing between men and women?

    RD: A lot of the fallout is about families. Will women work? If so, will they still cook and be the kind of wife they're supposed to be? Will they be out on the street with their boyfriends dressed in Western clothes and going to movies and clearly advertising the fact that they are economically independent, sexually independent, socially independent? How will we deal with the backlash of violent crimes that have everything to do with all these changes?

    This capitalist system has produced a new figure, which is the economically successful and independent middle-class woman. She's extremely globalized in the sense of what she should be able to do in her life. It's also created a set of lower-middle-class men who had a much greater sense of stability both in their gender and professional situation 30 years ago, when they could rely on a family member or fellow caste member to keep them employed even if they didn't have any marketable attributes. They had a wife who made sure that the culture of the family was intact - religion, cuisine, that kind of stuff.

    Thirty years later, those guys are not going to get jobs because that whole caste value thing has no place in the very fast-moving market economy. Without a high school diploma, they just have nothing to offer. Those guys in the streets are thinking, I don't have a claim on the economy, or on women anymore because I can't earn anything. Women across the middle classes - and it's not just across India, it's across Asia -are trying to opt out of marriage for as long as they can because they see only a downside. Remaining single allows all kinds of benefits – social, romantic, professional. So those guys are pretty bitter and there's a backlash that can become quite violent. We also have an upswing of Hindu fundamentalism as a way of trying to preserve things. It's very appealing to people who think society is falling apart.

    LP: You've described India's experience of global capitalism as traumatic. How is the trauma distinct in Delhi, and in what ways is it universal?

    RD: Delhi suffers specifically from the trauma of Partition, which has created a distinct society. When India became independent, it was divided into India and Pakistan. Pakistan was essentially a Muslim state, and Hindis and Sikhs left. The border was about 400 kilometers from Delhi, which was a tiny, empty city, a British administrative town. Most of those Hindis and Sikhs settled in Delhi where they were allocated housing as refugees. Muslims went in the other direction to Pakistan, and as we know, something between 1 and 2 million were killed in that event.

    The people who arrived in Delhi arrived traumatized, having lost their businesses, properties, friends, and communities, and having seen their family members murdered, raped and abducted. Like the Jewish Holocaust, everyone can tell the stories and everyone has experienced loss. When they all arrive in Delhi, they have a fairly homogeneous reaction: they're never going to let this happen to them again. They become fiercely concerned with security, physical and financial. They're not interested in having nice neighbors and the lighter things of life. They say, it was our neighbors that killed us, so we're going to trust only our blood and run businesses with our brother and our sons. We're going to build high walls around our houses.

    When the grandchildren of these people grow up, it's a problem because none of this has been exorcised. The families have not talked about it. The state has not dealt with it and wants to remember only that India became independent and that was a glorious moment. So the catastrophe actually becomes focused within families rather than the reverse. A lot of grandchildren are more fearful and hateful of Muslims than the grandparents, who remembered a time before when they actually had very deep friendships with Muslims.

    Parents of my generation grew up with immense silence in their households and they knew that in that silence was Islam - a terrifying thing. When you're one year old, you don't even know yet what Islam is, you just know that it's something which is the greatest horror in the universe.

    The Punjabi businessman is a very distinct species. They have treated business as warfare, and they are still doing it like that 70 years later and they are very good at it. They enter the global economy at a time when it's becoming much less civilized as well. In many cases they succeed not because they have a good idea, but because they know how to seize global assets and resources. Punjabi businessmen are not inventing Facebook. They are about mines and oil and water and food -things that everyone understands and needs.

    In this moment of globalization, the world will have to realize that events like the Partition of India are not local history anymore but global history. Especially in this moment when the West no longer controls the whole system, these traumas explode onto the world and affect all of us, like the Holocaust. They introduce levels of turbulence into businesses and practices that we didn't expect necessarily.

    Then there's the trauma of capitalism itself, and here I think it's important for us to re-remember the West's own history. Capitalism achieved a level of consensus in the second half of the 20th century very accidentally, and by a number of enormous forces, not all of which were intended. There's no guarantee that such consensus will be achieved everywhere in the emerging world. India and China don't have an empire to ship people off to as a safety valve when suffering become immense. They just have to absorb all that stuff.

    For a century or so, people in power in Paris and London and Washington felt that they had to save the capitalist system from socialist revolution, so they gave enormous concessions to their populations. Very quickly, people in the West forgot that there was that level of dissent. They thought that everyone loved capitalism. I think as we come into the next period where the kind of consensus has already been dealt a huge blow in the West, we're going to have to deal with some of those forces again.

    LP: When you say that the consensus on capitalism has been dealt a blow, are you talking about the financial crisis?

    RD: Yes, the sense that the nation-state - I'm talking about the U.S. context - can no longer control global capital, global processes, or, indeed, it's own financial elite.

    It's a huge psychological dent in people's faith in the system. I think what's going to happen in the next few years is huge unemployment in the middle class in America because a lot of their jobs will be outsourced or automated. Then, if you have 30-40 percent unemployment in America, which has always been the ideological leader in capitalism, America will start to re-theorize capitalism very profoundly (and maybe the Institute of New Economic Thinking is part of that). Meanwhile, I think the middle class in India would not have these kinds of problems. It's precisely because American technology and finance are so advanced that they're going to hit a lot of those problems. I think in places like India there's so much work to be done that no one needs to leap to the next stage of making the middle class obsolete. They're still useful.

    Lynn Parramore is contributing editor at AlterNet. She is cofounder of Recessionwire, founding editor of New Deal 2.0, and author of "Reading the Sphinx: Ancient Egypt in Nineteenth-Century Literary Culture." She received her Ph.D. in English and cultural theory from NYU. Follow her on Twitter @LynnParramore.

    [Sep 18, 2016] We Have to Deal With Putin

    Notable quotes:
    "... Moscow did indeed support secessionist pro-Russia rebels in East Ukraine. But did not the U.S. launch a 78-day bombing campaign on tiny Serbia to effect a secession of its cradle province of Kosovo? ..."
    "... Russia is reportedly hacking into our political institutions. If so, it ought to stop. But have not our own CIA, National Endowment for Democracy, and NGOs meddled in Russia's internal affairs for years? ..."
    "... Scores of the world's 190-odd nations are today ruled by autocrats. How does it advance our interests or diplomacy to have congressional leaders yapping "thug" at the ruler of a nation with hundreds of nuclear warheads? ..."
    "... Very good article indeed. Knee-jerk reaction of american politicians and journalists looks extremely strange. As a matter of fact they look like idiots or puppets. ..."
    "... Rubio and Graham are reflexively ready to push US influence everywhere, all the time, with military force always on the agenda, and McCain seems to be in a state of constant agitation ..."
    "... Very sensible article. And as the EU falls further into disarray and possible disintegration, due to migration and other catastrophically mishandled problems, a working partnership with Russia will become even more important. Right now, we treat Russia as an enemy and Saudi Arabia as a friend. That makes no sense at all. ..."
    "... As I've stated many times, Obama the narcissist hates Putin because Putin doesn't play the sycophantic lapdog yapping about how good it is to interact with the "smartest person in the room". ..."
    "... I'm serious. Obama craves sources of narcissistic supply and has visceral contempt for sources of narcissistic injury. I.e., people who may reveal the mediocrity that he actually is. Obama considers Putin a threat in that context. ..."
    "... The downside for the U.S. is that Obama has extended hating Putin to hating Russia. And yes, Washington is flooded with sources of sycophantic narcissistic supply for Obama including the MSM. And they are happy to massage his twisted ego by enthusiastically playing along with the Putin/Russia fear-monger bashing. ..."
    "... P.S. too bad Hillary is saturated with her own psychopathology that portends more Global Cop wreckage. ..."
    "... Anyway, what Buchanan is saying is, "We have to deal with him," not "favor him." The two terms should not be confused. ..."
    "... There are a lot of "allies" of questionable usefulness that the US should stop "favoring," and a lot of competitors (and potential allies in the true sense) out there the US should begin "dealing" with. ..."
    "... Everything the Western elite does is about dollar hegemony and control of energy. ..."
    "... As long as Russia is not a puppet of the globalist banking cartel they will be presented as an "enemy". Standing in the way of energy imperialism was the last straw for the all out hybrid war being launched on Russia now. ..."
    "... If the Western public wasn't so lazy and stupid we would remove the globalists controlling us. Instead people, especially liberals, get in bed with the globalists plans against Russia bc they can't stand Russia is Christian and supports the family. ..."
    "... Every word about Russia allowed in the Western establishment are lies funded and molded by people like Soros and warmongers. This is the reality. Nobody who will speak honestly or positively about Russia is allowed any voice. And scumbag neoliberal globalists like Kasperov are presented as "Russians" while real Russian people are given zero voice. ..."
    "... What the Western elite is doing right now in Ukraine and Syria is reprehensible and its all our fault for letting these people control us. ..."
    Sep 16, 2016 | www.theamericanconservative.com

    ...Arriving on Capitol Hill to repair ties between Trump and party elites, Gov. Mike Pence was taken straight to the woodshed.

    What causes the Republican Party to lose it whenever the name of Vladimir Putin is raised?

    Putin is no Stalin, whom FDR and Harry Truman called "Good old Joe" and "Uncle Joe." Unlike Nikita Khrushchev, he never drowned a Hungarian Revolution in blood. He did crush the Chechen secession. But what did he do there that General Sherman did not do to Atlanta when Georgia seceded from Mr. Lincoln's Union?

    Putin supported the U.S. in Afghanistan, backed our nuclear deal with Iran, and signed on to John Kerry's plan have us ensure a cease fire in Syria and go hunting together for ISIS and al-Qaida terrorists.

    Still, Putin committed "aggression" in Ukraine, we are told. But was that really aggression, or reflexive strategic reaction? We helped dump over a pro-Putin democratically elected regime in Kiev, and Putin acted to secure his Black Sea naval base by re-annexing Crimea, a peninsula that has belonged to Russia from Catherine the Great to Khrushchev. Great powers do such things.

    When the Castros pulled Cuba out of America's orbit, we decided to keep Guantanamo, and dismiss Havana's protests?

    Moscow did indeed support secessionist pro-Russia rebels in East Ukraine. But did not the U.S. launch a 78-day bombing campaign on tiny Serbia to effect a secession of its cradle province of Kosovo?

    ... ... ...

    Russia is reportedly hacking into our political institutions. If so, it ought to stop. But have not our own CIA, National Endowment for Democracy, and NGOs meddled in Russia's internal affairs for years?

    ... ... ...

    Is Putin's Russia more repressive than Xi Jinping's China? Yet, Republicans rarely use "thug" when speaking about Xi. During the Cold War, we partnered with such autocrats as the Shah of Iran and General Pinochet of Chile, Ferdinand Marcos in Manila, and Park Chung-Hee of South Korea. Cold War necessity required it.

    Scores of the world's 190-odd nations are today ruled by autocrats. How does it advance our interests or diplomacy to have congressional leaders yapping "thug" at the ruler of a nation with hundreds of nuclear warheads?

    ... ... ...

    Patrick J. Buchanan is a founding editor of The American Conservative and the author of book The Greatest Comeback: How Richard Nixon Rose From Defeat to Create the New Majority

    Tiktaalik , says: September 16, 2016 at 2:41 am

  • >>During the Cold War, we partnered with such autocrats as the Shah of Iran and General Pinochet of Chile, Ferdinand Marcos in Manila, and Park Chung-Hee of South Korea
  • buttressed could be even more pertinent)
  • Very good article indeed. Knee-jerk reaction of american politicians and journalists looks extremely strange. As a matter of fact they look like idiots or puppets.
  • bacon , says: September 16, 2016 at 5:29 am

    Rubio and Graham are reflexively ready to push US influence everywhere, all the time, with military force always on the agenda, and McCain seems to be in a state of constant agitation whenever US forces are not actively engaged in combat somewhere. They are loud voices, yes, but irrational voices, too.

    Skeptic , says: September 16, 2016 at 9:13 am

    Very sensible article. And as the EU falls further into disarray and possible disintegration, due to migration and other catastrophically mishandled problems, a working partnership with Russia will become even more important. Right now, we treat Russia as an enemy and Saudi Arabia as a friend. That makes no sense at all.

    John Blade Wiederspan , says: September 16, 2016 at 10:18 am

    "Just" states the starvation of the Ukraine is a western lie. The Harvest of Sorrow by Robert Conquest refutes this dangerous falsehood. Perhaps "Just" believes The Great Leap Forward did not lead to starvation of tens of millions in China. After all, this could be another "western lie". So to could be the Armenian genocide in Turkey or slaughter of Communists in Indonesia.

    SteveM , says: September 16, 2016 at 10:23 am

    As I've stated many times, Obama the narcissist hates Putin because Putin doesn't play the sycophantic lapdog yapping about how good it is to interact with the "smartest person in the room".

    I'm serious. Obama craves sources of narcissistic supply and has visceral contempt for sources of narcissistic injury. I.e., people who may reveal the mediocrity that he actually is. Obama considers Putin a threat in that context.

    The downside for the U.S. is that Obama has extended hating Putin to hating Russia. And yes, Washington is flooded with sources of sycophantic narcissistic supply for Obama including the MSM. And they are happy to massage his twisted ego by enthusiastically playing along with the Putin/Russia fear-monger bashing.

    And so the U.S. – Russia relationship is wrecked by the "smartest person in the room".

    P.S. too bad Hillary is saturated with her own psychopathology that portends more Global Cop wreckage.

    blimbax , says: September 16, 2016 at 11:29 am

    John asks, "We also have to deal with our current allies. Whom would Mr. Buchanan like to favor?"

    Well, we could redouble our commitment to our democracy and peace loving friends in Saudi Arabia, we could deepen our ties to those gentle folk in Egypt, and maybe for a change give some meaningful support to Israel. Oh, and our defensive alliances will be becoming so much stronger with Montenegro as a member, we will need to pour more resources into that country.

    Anyway, what Buchanan is saying is, "We have to deal with him," not "favor him." The two terms should not be confused.

    There are a lot of "allies" of questionable usefulness that the US should stop "favoring," and a lot of competitors (and potential allies in the true sense) out there the US should begin "dealing" with.

    Joe the Plutocrat , says: September 16, 2016 at 3:46 pm

    "During the Cold War, we partnered with such autocrats as the Shah of Iran and General Pinochet of Chile, Ferdinand Marcos in Manila, and Park Chung-Hee of South Korea. Cold War necessity required it (funny, you failed to mention Laos, South Vietnam, Nicaragua, Noriega/Panama, and everyone's favorite 9/11 co-conspirator and WMD developer, Saddam Hussein). either way how did these "alliances" work out for the US? really doesn't matter, does it? it is early 21st century, not mid 20th century. there is a school of thought in the worlds of counter-terrorism/intelligence operations, which suggests if you want to be successful, you have to partner with some pretty nasty folks. Trump is being "handled" by an experienced, ruthless (that's a compliment), and focused "operator". unless, of course, Trump is actually the superior operator, in which case, this would be the greatest black op of all time.

    Clint , says: September 16, 2016 at 4:41 pm

    "From Russia With Money - Hillary Clinton, the Russian Reset and Cronyism,"

    "Of the 28 US, European and Russian companies that participated in Skolkovo, 17 of them were Clinton Foundation donors" or sponsored speeches by former President Bill Clinton, Schweizer told The Post.

    http://nypost.com/2016/07/31/report-raises-questions-about-clinton-cash-from-russians-during-reset/

    WakeUp , says: September 16, 2016 at 4:45 pm

    Everything the Western elite does is about dollar hegemony and control of energy. Once you understand that then the (evil)actions of the Western elite make sense. Anyone who stands in the way of those things is an "enemy". This is how they determine an "enemy".

    As long as Russia is not a puppet of the globalist banking cartel they will be presented as an "enemy". Standing in the way of energy imperialism was the last straw for the all out hybrid war being launched on Russia now.

    If the Western public wasn't so lazy and stupid we would remove the globalists controlling us. Instead people, especially liberals, get in bed with the globalists plans against Russia bc they can't stand Russia is Christian and supports the family.

    Every word about Russia allowed in the Western establishment are lies funded and molded by people like Soros and warmongers. This is the reality. Nobody who will speak honestly or positively about Russia is allowed any voice. And scumbag neoliberal globalists like Kasperov are presented as "Russians" while real Russian people are given zero voice.

    What the Western elite is doing right now in Ukraine and Syria is reprehensible and its all our fault for letting these people control us.

    [Sep 18, 2016] Brexit In America: Clinton vs. Trump

    You need to substitute PIC (a.k.a., The Elites or Political Class)) for neoliberal elite for the article to make more sense.
    Notable quotes:
    "... Our nation is in the grip of such poisonous thinking. The DNC with its "Super Delegates" already has a way to control who will be their candidate. In an irony to beat all ironies, the DNC's Super Delegates were able to stop Bernie Sanders... ..."
    "... The reason Trump is still rising (and I believe will win handily) is he clearly represents the original image of America: a self made success story based on capitalism and the free market. ..."
    strata-sphere.com

    This election cycle is so amazing one cannot help but think it has been scripted by some invisible, all-powerful, hand. I mean, how could we have two completely opposite candidates, perfectly reflecting the forces at play in this day and age? It truly is a clash between The Elites and The Masses!

    Main Street vs Wall & K Street.

    The Political Industrial Complex (PIC – a.k.a., The Elites or Political Class) is all up arms over the outsider barging in on their big con. The PIC is beside itself trying to stop Donald Trump from gaining the Presidency, where he will be able to clean out the People's House and the bureaucratic cesspool that has shackled Main Street with political correctness, propaganda, impossibly expensive health care, ridiculous taxes and a national debt that will take generations to pay off.

    The PIC has run amok long enough – illustrated perfectly by the defect ridden democrat candidate: Hillary Clinton. I mean, how could you frame America's choices this cycle any better than this --

    Back in July, Democratic presidential nominee and former Secretary of State Hillary Clinton said, "there is absolutely no connection between anything that I did as secretary of state and the Clinton Foundation."

    On Monday of this week, ABC's Liz Kreutzer reminded people of that statement, as a new batch of emails reveal that there was a connection, and it was cash .

    The Abedin emails reveal that the longtime Clinton aide apparently served as a conduit between Clinton Foundation donors and Hillary Clinton while Clinton served as secretary of state. In more than a dozen email exchanges, Abedin provided expedited, direct access to Clinton for donors who had contributed from $25,000 to $10 million to the Clinton Foundation. In many instances, Clinton Foundation top executive Doug Band, who worked with the Foundation throughout Hillary Clinton's tenure at State, coordinated closely with Abedin. In Abedin's June deposition to Judicial Watch, she conceded that part of her job at the State Department was taking care of " Clinton family matters ."

    This is what has Main Street so fed up with Wall & K street (big business, big government). The Clinton foundation is a cash cow for Clinton, Inc. So while our taxes go up, our debt sky rockets and our health care becomes too expensive to afford, Clan Clinton has made 100's of millions of dollars selling access (and obviously doing favors, because no one spends that kind of money without results).

    The PIC is circling the wagons with its news media arm shrilly screaming anything and everything about Trump as if they could fool Main Street with their worn out propaganda. I seriously doubt it will work. The Internet has broken the information monopoly that allowed the PIC in the not too distant past to control what people knew and thought.

    Now we have cracks in the PIC's media spin, through which we can see the ugly truth about our modern democracy :

    Massachusetts has a long history of using the power of incumbency to cripple political opponents. In fact, it's a leading state for such partisan gamesmanship. Dating back to 1812, when Gov. Elbridge Gerry signed into law a redistricting plan for state Senate districts that favored his Democratic-Republican Party, the era of Massachusetts rule rigging began. It has continued, unabated, ever since.

    Given the insider dealing and venality that epitomized the 2016 presidential primary process, I'd hoped that politicians would think twice before abusing the power of the state for political purposes. Galvin quickly diminished any such prospect of moderation in the sketchy behavior of elected officials. He hid his actions behind the thin veil of fiscal responsibility. He claimed to be troubled by the additional $56,000 he was going to have to spend printing ballots to accommodate Independent voters. He conveniently ignored the fact that thousands of these UIP members have been paying taxes for decades to support a primary process that excludes them.

    In my home state of Kansas, where my 2014 candidacy threatened to take a U.S. Senate seat from the Republicans, they responded predictably. Instead of becoming more responsive to voters, our state's highly partisan secretary of state, Kris Kobach, introduced legislation that would bring back one of the great excesses of machine politics: straight party-line voting – which is designed to discourage voters from considering an Independent candidacy altogether. Kobach's rationale, like Galvin's, was laughable. He described it as a "convenience" for voters.

    The article goes on to note these acts by the PIC are an affront to the large swath of the electorate who really choose who will win elections:

    In a recent Gallup poll, 60 percent of Americans said they do not feel well-represented by the Democrats and Republicans and believe a third major party is needed. Fully 42 percent of Americans now describe themselves as politically independent .

    That means the two main parties are each smaller in size than the independents (68% divided by 2 equals 34%), which is why independents pick which side will win. If the PIC attacks this group – guess what the response will look like?

    I recently had a discussion with someone from Washington State who is pretty much my opposite policy-wise. She is a deep blue democrat voter, whereas I am a deep purple independent who is more small-government Tea Party than conservative-GOP. She was lamenting the fact that her state has caucuses, which is one method to blunt Main Street voters from having a say. It was interesting that we quickly and strongly agreed on one thing above all else: open primaries. We both knew that if the voters had the only say in who are leaders would be, all sides could abide that decision easily. It is when PIC intervenes that things get ugly.

    Open primaries make the political parties accountable to the voters. Open primaries make it harder for the PIC to control who gets into office, and reduces the leverage of big donors. Open primaries reflect the will of the states and the nation – not the vested interests (read bank accounts) of the PIC.

    That is why you when you hear someone oppose open primaries , it is a clear sign they are from the Political Industrial Complex and not from Main Street. For example:

    Without doubt, one of the most troublesome aspects of the current system is its gross inefficiency. Whereas generations ago selecting a nominee took relatively little time and money , today's process has resulted in a near-permanent campaign. Because would-be nominees have to win primaries and open caucuses in several states, they must put together vast campaign apparatuses that spread across the nation, beginning years in advance and raising tens of millions of dollars.

    The length of the campaign alone keeps many potential candidates on the sidelines. In particular, those in positions of leadership at various levels of our government cannot easily put aside their duties and shift into full-time campaign mode for such an extended period.

    It is amazing how this kind of thinking can be considered legitimate. Note how independent voters are evil in the mind of the PIC, and only government leaders need apply. Not surprising, their answer is to control access to the ballot:

    During the week of Lincoln's birthday (February 12), the Republican Party would hold a Republican Nomination Convention that would borrow from the process by which the Constitution was ratified. Delegates to the convention would be selected by rank-and-file Republicans in their local communities , and those chosen delegates would meet, deliberate, and ultimately nominate five people who, if willing, would each be named as one of the party's officially sanctioned finalists for its presidential nomination. Those five would subsequently debate one another a half-dozen times.

    Brexit became a political force because the European Union was not accountable to the voters. The EU members are also selected by members of the European PIC – not citizens of the EU. Without direct accountability to all citizens (a.k.a. – voters) there is no democracy – just a variant of communism:

    During the Russian Civil War (1918–1922), the Bolsheviks nationalized all productive property and imposed a policy named war communism, which put factories and railroads under strict government control, collected and rationed food, and introduced some bourgeois management of industry . After three years of war and the 1921 Kronstadt rebellion, Lenin declared the New Economic Policy (NEP) in 1921, which was to give a "limited place for a limited time to capitalism." The NEP lasted until 1928, when Joseph Stalin achieved party leadership, and the introduction of the Five Year Plans spelled the end of it. Following the Russian Civil War, the Bolsheviks, in 1922, formed the Union of Soviet Socialist Republics (USSR), or Soviet Union, from the former Russian Empire.

    Following Lenin's democratic centralism, the Leninist parties were organized on a hierarchical basis, with active cells of members as the broad base; they were made up only of elite cadres approved by higher members of the party as being reliable and completely subject to party discipline .

    Emphasis mine. Note how communism begins with government control of major industries. The current con job about Global Warming is the cover-excuse for a government grab of the energy sector. Obamacare is an attempt to grab the healthcare sector. And Wall Street already controls the banking sector. See a trend yet?

    This is then followed by imposing a rigid hierarchy of "leaders" at all levels of politics – so no opposing views can gain traction. Party discipline uber alles!

    Our nation is in the grip of such poisonous thinking. The DNC with its "Super Delegates" already has a way to control who will be their candidate. In an irony to beat all ironies, the DNC's Super Delegates were able to stop Bernie Sanders...

    The reason Trump is still rising (and I believe will win handily) is he clearly represents the original image of America: a self made success story based on capitalism and the free market.

    His opponent is the epitome of the Political Industrial Complex – a cancer that has eaten away America's free market foundation and core strength. A person who wants to impose government on the individual.

    How could the choice be any starker, any clearer?

    [Sep 18, 2016] The dynamic interaction of neoliberalism and cultural nationalism

    Notable quotes:
    "... cultural nationalism is the only ideology capable of being a legitimising ideology under the prevailing global and national political economy. ..."
    "... Neoliberalism cannot perform this role since its simplicities make it harsh not just towards the lower orders, but give it the potential for damaging politically important interests amongst capitalist classes themselves. ..."
    "... In this form, cultural nationalism provides national ruling classes a sense of their identity and purpose, as well as a form of legitimation among thelower orders. ..."
    "... As Gramsci said, these are the main functions of every ruling ideology. Cultural nationalism masks, and to a degree resolves, the intense competition between capitals over access to the state for support domestically and in the international arena – in various bilateral and multilateral fora – where it bargainsfor the most favoured national capitalist interests within the global and imperial hierarchy. ..."
    Sep 18, 2016 | www.scribd.com

    Neoliberal Hegemony

    This is where cultural nationalism comes in. Only it can serve to mask, and bridge, the divides within the 'cartel of anxiety' in a neoliberal context.

    Cultural nationalism is a nationalism shorn of its civic-egalitarian and developmentalist thrust, one reduced to its cultural core. It is structured around the culture of thee conomically dominant classes in every country, with higher or lower positions accorded to other groups within the nation relative to it. These positions correspond, on the whole, to the groups' economic positions, and as such it organises the dominant classes, and concentric circles of their allies, into a collective national force. It also gives coherence to, and legitimises, the activities of the nation-state on behalf of capital, or sections thereof, in the international sphere.

    Indeed, cultural nationalism is the only ideology capable of being a legitimising ideology under the prevailing global and national political economy.

    Neoliberalism cannot perform this role since its simplicities make it harsh not just towards the lower orders, but give it the potential for damaging politically important interests amongst capitalist classes themselves. The activities of the state on behalf of this or that capitalist interest necessarily exceed the Spartan limits that neoliberalism sets. Such activities can only be legitimised as being 'in the national interest.'

    Second, however, the nationalism that articulates these interests is necessarily different from, but can easily (and given its function as a legitimising ideology, it must be said, performatively) be mis-recognised as, nationalism as widely understood: as being in some real sense in the interests of all members of the nation. In this form, cultural nationalism provides national ruling classes a sense of their identity and purpose, as well as a form of legitimation among thelower orders.

    As Gramsci said, these are the main functions of every ruling ideology. Cultural nationalism masks, and to a degree resolves, the intense competition between capitals over access to the state for support domestically and in the international arena – in various bilateral and multilateral fora – where it bargainsfor the most favoured national capitalist interests within the global and imperial hierarchy.

    Except for a commitment to neoliberal policies, the economic policy content of this nationalism cannot be consistent: within the country, and inter-nationally, the capitalist system is volatile and the positions of the various elements of capital in the national and international hierarchies shift constantly as does the economic policy of cultural nationalist governments. It is this volatility that also increases the need for corruption – since that is how competitive access of individual capitals to the state is today organised.

    Whatever its utility to the capitalist classes, however, cultural nationalism can never have a settled or secure hold on those who are marginalised or sub-ordinated by it. In neoliberal regimes the scope for offering genuine economic gains to the people at large, however measured they might be, is small.

    This is a problem for right politics since even the broadest coalition of the propertied can never be an electoral majority, even a viable plurality. This is only in the nature of capitalist private property. While the left remains in retreat or disarray, elec-toral apathy is a useful political resource but even where, as in most countries, political choices are minimal, the electorate as a whole is volatile. Despite, orperhaps because of, being reduced to a competition between parties of capital, electoral politics in the age of the New Right entails very large electoral costs, theextensive and often vain use of the media in elections and in politics generally, and political compromises which may clash with the high and shrilly ambitiou sdemands of the primary social base in the propertied classes. Instability, uncertainty ...

    [Sep 18, 2016] What is "Globalization" and "Free Trade" really?

    Notable quotes:
    "... What is "Globalization" and "Free Trade" really?… Does it encompass the slave trade, trading in narcotics, deforestation and export of a nation's tropical hardwood forests, environmentally damaging transnational oil pipelines or coal ports, fisheries depletion, laying off millions of workers and replacing them and the products they make with workers and products made in a foreign country, trading with an enemy, investing capital in a foreign country through a subsidiary or supplier that abuses its workers to the point that some commit suicide, no limits on or regulation of financial derivatives and transnational financial intermediaries?… the list is endless. ..."
    "... As always, the questions are "Cui bono?"… "Who benefits"?… How and Why they benefit?… Who selects the short-term "Winners" and "Losers"? And WRT those questions, the final sentence of this post hints at its purpose. ..."
    "... Yeah, how is European colonialism - starting in, what, like the 15th century, or something - not "globalisation"? What about the Roman and Persian and Selucid empires? Wasn't that globalisation? I think we've pretty much always lived in a globalised world, one way or another (if "globalised world" even makes sense). ..."
    "... Bring back the broader, and more meaningful conception of Political Economy and some actual understanding can be gained. The study of economics cannot be separated from the political dimension of society. Politics being defined as who gets what in social interactions. ..."
    "... The neoliberal experiment has run its course. Milton Friedman and his tribe had their alternative plan ready to go and implemented it when they could- to their great success. The best looting system developed-ever. This system only works with the availability of abundant resources and the mental justifications to support that gross exploitation. Both of which are reaching limits. ..."
    "... If only the Milton Friedman tribe had interested itself in sports instead of economics. They could have argued that referees and umpires should be removed from the game for greater efficiency of play, and that sports teams would follow game rules by self-regulation. ..."
    "... Wouldn't the whole thing just work out more efficiently if you leave traffic lights and rules out of it? Just let everyone figure it out at each light, survival of the fittest. ..."
    "... With increasingly free movement of people as tourists whose spending impacts nations GDP, where does it fit in to discussions on globalization and trade? ..."
    www.nakedcapitalism.com
    Chauncey Gardiner

    What is "Globalization" and "Free Trade" really?… Does it encompass the slave trade, trading in narcotics, deforestation and export of a nation's tropical hardwood forests, environmentally damaging transnational oil pipelines or coal ports, fisheries depletion, laying off millions of workers and replacing them and the products they make with workers and products made in a foreign country, trading with an enemy, investing capital in a foreign country through a subsidiary or supplier that abuses its workers to the point that some commit suicide, no limits on or regulation of financial derivatives and transnational financial intermediaries?… the list is endless.

    As always, the questions are "Cui bono?"… "Who benefits"?… How and Why they benefit?… Who selects the short-term "Winners" and "Losers"? And WRT those questions, the final sentence of this post hints at its purpose.

    diptherio

    Yeah, how is European colonialism - starting in, what, like the 15th century, or something - not "globalisation"? What about the Roman and Persian and Selucid empires? Wasn't that globalisation? I think we've pretty much always lived in a globalised world, one way or another (if "globalised world" even makes sense).

    Norb

    Bring back the broader, and more meaningful conception of Political Economy and some actual understanding can be gained. The study of economics cannot be separated from the political dimension of society. Politics being defined as who gets what in social interactions.

    What folly. All this complexity and strident study of minutia to bring about what end? Human history on this planet has been about how societies form, develop, then recede form prominence. This flow being determined by how well the society provided for its members or could support their worldview. Talk about not seeing the forest for the trees.

    The neoliberal experiment has run its course. Milton Friedman and his tribe had their alternative plan ready to go and implemented it when they could- to their great success. The best looting system developed-ever. This system only works with the availability of abundant resources and the mental justifications to support that gross exploitation. Both of which are reaching limits.

    Only by thinking, and communicating in the broader terms of political economy can we hope to understand our current conditions. Until then, change will be difficult to enact. Hard landings for all indeed.

    flora

    If only the Milton Friedman tribe had interested itself in sports instead of economics. They could have argued that referees and umpires should be removed from the game for greater efficiency of play, and that sports teams would follow game rules by self-regulation.

    LA Mike September 17, 2016 at 8:15 pm

    While in traffic, I was thinking about that today. For some time now, I've viewed the traffic intersection as being a good example of the social contract. We all agree on its benefits. But today, I thought about it in terms of the Friedman Neoliberals.

    Why should they have to stop at red lights. Wouldn't the whole thing just work out more efficiently if you leave traffic lights and rules out of it? Just let everyone figure it out at each light, survival of the fittest.

    sd

    Something I have wondered for some time, how does tourism fit into trade? With increasingly free movement of people as tourists whose spending impacts nations GDP, where does it fit in to discussions on globalization and trade?

    I Have Strange Dreams

    Other things to consider:
    – negative effects of immigration (skilled workers leave developing countries where they are most needed)
    – environmental pollution
    – destruction of cultures/habitats
    – importation of western diet leading to decreased health
    – spread of disease (black death, hiv, ebola, bird flu)
    – resource wars
    – drugs
    – happiness
    How are these "externalities" calculated?

    [Sep 15, 2016] Mark Blyth On Neoliberalism, Brexit, and the Global Revolt Against the One Percent and their Unelected

    Jun 28, 2016 | jessescrossroadscafe.blogspot.com
    "...a full 95% of the cash that went to Greece ran a trip through Greece and went straight back to creditors which in plain English is banks. So, public taxpayers money was pushed through Greece to basically bail out banks...So austerity becomes a side effect of a general policy of bank bailouts that nobody wants to own. That's really what happened, ok?

    Why are we peddling nonsense? Nobody wants to own up to a gigantic bailout of the entire European banking system that took six years. Austerity was a cover.

    If the EU at the end of the day and the Euro is not actually improving the lives of the majority of the people, what is it for? That's the question that they've brought no answer to.

    ...the Hamptons is not a defensible position. The Hamptons is a very rich area on Long Island that lies on low lying beaches. Very hard to defend a low lying beach. Eventually people are going to come for you.

    What's clear is that every social democratic party in Europe needs to find a new reason to exist. Because as I said earlier over the past 20 years they have sold their core constituency down the line for a bunch of floaters in the middle who don't protect them or really don't particularly care for them. Because the only offers on the agenda are basically austerity and tax cuts for those who already have, versus austerity, apologies, and a minimum wage."

    Mark Blyth

    Although I may not agree with every particular that Mark Blyth may say, directionally he is exactly correct in diagnosing the problems in Europe.

    And yes, I am aware that the subtitles are at times in error, and sometimes outrageously so. Many of the errors were picked up and corrected in the comments.

    No stimulus, no plans, no official actions, no monetary theories can be sustainably effective in revitalizing an economy that is as bent as these have become without serious reform at the first.

    This was the lesson that was given by Franklin Roosevelt's New Deal. There will be no lasting recovery without it; it is a sine qua non . One cannot turn their economy around when the political and business structures are systemically corrupt, and the elites are preoccupied with looting it, and hiding their spoils offshore.

    [Sep 15, 2016] Elizabeth Warren on Thursday requested a formal investigation into why the Obama administration did not bring criminal charges individuals and corporation involved in the 2008 financial crisis

    www.nakedcapitalism.com
    L

    "Massachusetts Senator Elizabeth Warren on Thursday requested a formal investigation into why the Obama administration did not bring criminal charges individuals and corporation involved in the 2007-2008 financial crisis" [International Business Times]. Why now? Liz edging her hat toward the ring if Clinton comes up lame?

    I can see two possible interpretations for this.

    First, as much as I hate to draw the analogy, she could be positioning herself to take the reigns after a loss in the way that Richard Nixon, Paul Ryan, and later Bill Clinton did. Richard Nixon sat back and concentrated on building up credibility as Barry Goldwater melted down and then quietly stepped in to take over the party after the loss to set up his eventual run. Paul Ryan quietly permitted or perhaps aided the coup against Boehner. And Bill Clinton, through the DLC teed up his control of the party after Dukakis lost.

    Second, with Wells-Fargo and bank fraud once again in the news she could be working to keep prior decisions current both to force better action this time or to nudge the Clinton and Trump into making promises of stronger action in the future.

    Lambert Strether Post author

    It seems to me that both those objectives would be served by continuing to hammer on Wells Fargo, so the question "Why now?" isn't really answered in your comment.

    But if you wanted to take out an option on running a full-throated populist campaign - and throwing bankers in jail would be wildly popular across the entire political spectrum (except Clinton's 10%-ers on up) - in the unhappy event that the party's candidate came up lame, then calling for an account of regulatory decision making in 2009 would be one way to signal that. Note also that would call Obama's "legacy" into question, too; the whole "stand between you and the pitchforks" thing. This is a big deal.

    [Sep 15, 2016] American Antitrust Is Having a Moment: Some Reactions to Commissioner Ohlhausen's Recent Views

    Sep 14, 2016 | economistsview.typepad.com
    Chris Sagers at ProMarket:
    American Antitrust Is Having a Moment: Some Reactions to Commissioner Ohlhausen's Recent Views : Over the summer, Federal Trade Commissioner Maureen Ohlhausen took me and several others to task in a speech , subsequently published as a journal article ... The theme we'd all written about is whether we in the United States have a "monopoly problem," and whether federal policy should try to do something about it. ...

    Commissioner Ohlhausen had some pretty strong words. ... Specifically, she implies a very strong presumption against public interference in private markets, as indicated by her argument that there is not yet sufficient evidence that we have a monopoly problem. The argument seems to be that we must wait until we are very, very sure, beyond any reasonable econometric doubt, apparently, that there's something wrong before we step in. ...

    She is mistaken, and she ignores roughly a library-full of well-known..., sophisticated empirical work. ...

    In the end, the irony of these remarks is captured in this point: Commissioner Ohlhausen is pretty witheringly dismissive of a certain kind of evidence of market power, and implies that it would not support increased enforcement unless it can overcome a high methodological bar. But for her own countervailing evidence that in fact American markets are "fierce[ly] competiti[ve]," she says this: "Consider the new economy, which is a hotbed of technological innovation. That environment does not strike me as one lacking competition."

    In other words, the presumption against antitrust is so strong that evidence of harm must meet the most exacting standards of social science. To prove that markets are in fact competitive, however, needs nothing more than seat-of-the-pants anecdotes. Again, I mean no disrespect, and I think we have an honest difference of opinion. But this stance is not social science, and it is not good, empirically founded public policy. It is just ideology. ...

    It's definitely true that the agencies have brought a bunch of challenges to a bunch of nasty mergers, and perhaps total enforcement numbers have gone up a bit. But that is because we are in the midst of a merger wave in which parties have been proposing breathtakingly massive, overwhelmingly consolidating horizontal deals. While there is a track record to be proud of in the administration's enforcement, especially, as the commissioner observes, in the Commission's campaign against hospital mergers, reverse-payment deals, SEP problems, and patent trolls, and who knows how many other matters, the fact remains that by and large the administration has mostly not taken action that any administration would not have taken, including the Reagan and both Bush administrations. ...

    DrDick : , Wednesday, September 14, 2016 at 11:13 AM

    If we were actually serious about antitrust, which we very much should be, we would not only block most of these mergers, but break up many of existing behemoths (like the big banks, the media giants, Comcast, and many others).
    pgl -> DrDick... , Wednesday, September 14, 2016 at 11:18 AM
    I'm all for breaking up the behemoths when they are indeed stifling competition. The Reagan Revolution to anti-trust was based on a contention that some mergers were about efficiency effects. I think this argument is sometimes overblown but it is not per se false. I do object (see below) to the weak evidence that goes like this. Collective shareholder value rose so ergo the merger is about efficiency effects. Anyone who argues that (see Don Luskin and the premium ice cream proposed merger) is not very bright.
    DeDude -> pgl... , Wednesday, September 14, 2016 at 11:49 AM
    Exactly. Corporations being able to suck more profit out of the costumers (and as a result share prices rising) is the proof that anti-trust has failed. In a fully functional competitive market companies do not make much profit.
    pgl -> DeDude... , Wednesday, September 14, 2016 at 12:07 PM
    Accounting profits? Maybe you should read that paper by the commissioner as she makes a very clear statement about what accounting profit would look like in a competitive market. And it is not zero. Return to capital? Hello?
    DeDude -> pgl... , Wednesday, September 14, 2016 at 12:30 PM
    No if it was zero the whole thing breaks down. However, a small return on capital is an indication that companies are forced to cut prices because of competition- and that is a healthy market. So yes there is (some but) not much profit in a fully functional competitive market.
    pgl -> DeDude... , Wednesday, September 14, 2016 at 12:36 PM
    Let's define "small return". Standard financial economics puts this at the risk-free rate plus a premium for bearing systematic risk. OK - the risk-free return now is quite small. Say 2%. But if the risk premium is say 4%, then we are talking about a 6% expected return to assets. If that is what you mean by small - cool.

    Of course I have seen a lot of "professionals" argue for much higher returns. Of course these professionals would flunk a Finance 101 class.

    DeDude -> pgl... , Wednesday, September 14, 2016 at 12:49 PM
    I don't think the risk premium needs to be more than about 2% unless/until the economy enter a phase where demand outstrips supply (and more investment money needs to be attracted). If there is a glut of investment money then the price of it (=risk free returns) should go down.
    pgl -> DeDude... , Wednesday, September 14, 2016 at 02:05 PM
    This is the kind of thinking that got Hassett and Glassman to tell us about DOW 36000. Some people overestimate the risk premium but 2% is what a regulated utility or a leasing company gets. And neither bears commercial risk. Dude - you can make up whatever number your heart desires but there is market evidence on these things.
    DeDude -> pgl... , Wednesday, September 14, 2016 at 06:25 PM
    Exactly - even those are hugely overcompensated for this supposed risk.
    Gibbon1 -> DeDude... , Wednesday, September 14, 2016 at 04:14 PM
    Ability to better suck profit out of a captive base of customers is an efficiency of a sort. Instead of investing in risky new business processes or technologies one merely has to buy out your competitors. This is practically risk free.
    pgl : , Wednesday, September 14, 2016 at 11:15 AM
    A comment about this:

    "Though she says that "[e]fficiencies are real"-citing no evidence for it in a speech critical of everyone else for failure to supply evidence-there is in fact no meaningful proof that consolidation generates social benefits. Especially in the case of mergers, a large and sophisticated empirical literature has been hunting for decades for evidence that mergers produce "efficiencies" or other benefits. The evidence has not been found. At least with respect to deals among publicly traded firms, the evidence tends to suggest that mergers do no good on average for shareholders of either acquiring or target firms, and if there were some efficiencies or larger social benefits, they should be measurable as benefits to shareholders. The empirical evidence has therefore confirmed the popular wisdom shared on Wall Street for years-that all this activity is not serving any good social purpose, though it might be helping executives and their bankers quite a lot."

    The conservative (Reagan) approach to anti-trust did indeed ask DOJ and FTC to consider whether the merger was about beneficial efficiency effects v. anti-competitive effects. But let's suppose two firms merged and their collective value did rise benefiting shareholders. That does not prove the efficiency effects dominate. No – mergers that lead to less competition will often raise shareholder value even if there are no efficiency effects. Those mergers should be disallowed.

    kurt : , Wednesday, September 14, 2016 at 11:21 AM
    Proof of Monopoly Power - Verizon and ATT's pricing and apparent lack of any interest in maintaining or even knowing where their physical plant is installed. Also - see directTV's recent price increases.
    pgl -> kurt... , Wednesday, September 14, 2016 at 12:07 PM
    Can you hear me now? Oh wait - the Verizon dude now works for Sprint.
    El Epicúreo Del Taco : , Wednesday, September 14, 2016 at 11:26 AM
    American markets are "fierce[ly] competiti[ve]," she says this: "Consider the new economy, which is a hotbed of technological innovation. That environment does not strike me as one lacking competition."

    In other words, the presumption against antitrust is so strong
    "

    You are assumed properly competing until proved monopoly-based. The burden of proof is on the victims. Tell me something!

    Does the government always appear as crystal clear as the mirror of Alice? When we look at local, county, state, and federal rulers, do we always see ourselves? Our own bias? Our own agenda? The government apes its voters.

    Do you see how today's polity is begging for less competition? Less free trade from our trading partners? Do you see how we want to make a monopoly out of America? Build a fence around it so that nobody is allowed to buy anything from anyone other than our monopoly?

    " We have identified the enemy, ourselves. " ~~Pogo~

    DeDude : , Wednesday, September 14, 2016 at 11:46 AM
    Yes you need at least a dozen independent businesses delivering the same (substitutable) products to ensure that there is indeed a competitive market that will not be gamed against the consumers. This is not just needed to ensure that consumers will be offered a fair price, but also to ensure that companies will be forced to continue to innovate and offer better and better products. The oversight of mergers has been a scandal and needs to be tightened by new laws. Obviously we have to make the "dozen rule" a law rather than just common sense guidance.
    pgl -> DeDude... , Wednesday, September 14, 2016 at 12:10 PM
    The dozen rule? Where did that come from? Depends on the market but I would hope we have more than 12 suppliers of beer. BTW - it would be nice to have 12 health insurance companies but we could break up this oligopoly with such one more - the government aka the public option.
    DeDude -> pgl... , Wednesday, September 14, 2016 at 12:34 PM
    Yes some products can benefit from more variation, but at least with 12 suppliers you would not have anybody able to corner the market. The dozen rule is mine, that is how I get my eggs. If Ohlhausen can just make it up - so can I.
    pgl -> DeDude... , Wednesday, September 14, 2016 at 12:37 PM
    Do you remember the 1970's? Something called OPEC? But yea - I buy my eggs by the dozen too.
    pgl -> DeDude... , Wednesday, September 14, 2016 at 12:39 PM
    Speaking of breakfast, consider the maple syrup cartel:

    http://fortune.com/2016/02/26/maple-syrup-cartel

    DeDude -> pgl... , Wednesday, September 14, 2016 at 12:52 PM
    Yes cartels (regardless of number of members) also have to be broken up - for markets and capitalism to work properly.
    Tom aka Rusty : , Wednesday, September 14, 2016 at 12:59 PM
    The FTC has ignored a many major health care mergers but has gone litigation guns a blazin' into small mergers in such less-than-major metro centers as Moscow Idaho and Toledo Ohio.

    Is there a "too big to litigate" standard?

    pgl -> Tom aka Rusty... , Wednesday, September 14, 2016 at 02:06 PM
    Rusty calling for rational regulation as in the FTC doing its job. Stop the presses!
    Tom aka Rusty said in reply to pgl... , Thursday, September 15, 2016 at 04:53 AM
    I'm just asking for coherent policy, something often missing from the Obama administration.
    Anon : , Wednesday, September 14, 2016 at 08:30 PM
    The sad fact is that the right-wing Law and Economics scholars have literally been trained to believe that the only correct null hypothesis is "free markets are good". When the null is not rejected with a 95% confidence interval, they actually think they've won the argument, while you're sitting there scratching your head saying, but when the null hypothesis is "free markets are bad", we can't reject that either. I've never seen logic get much traction with this crowd, because they are literally willing to tell you that economics demonstrates that "free markets are good", so that's the correct null.

    It's very sad, but also very common when talking to lawyers. In fact, I often wonder whether the right-wing didn't create the "Law and Economics" movement in order to slow the exposure of the legal profession to the actual tools of modern economic analysis.

    reason : , -1
    It would be a start if we would simply stop seeing hostile takeovers as something positive (you know ex-ante efficiency improvements) and start seeing them for the interference in natural selection that they actually are (no 40-40 foresight exists).

    [Sep 15, 2016] How did the proud trade consensus crumble so quickly? by Thomas Frank

    Politico

    "But part of the answer lies in something Americans have a hard time talking about: class. Trade is a class issue. The trade agreements we have entered into over the past few decades have consistently harmed some Americans (manufacturing workers) while just as consistently benefiting others (owners and professionals). …

    To understand "free trade" in such a way has made it difficult for people in the bubble of the consensus to acknowledge the actual consequences of the agreements we have negotiated over the years."

    [Sep 15, 2016] The Dysfunctionality of Slavery and Neoliberalism

    Notable quotes:
    "... Despite the neoliberal obsession with wage suppression, history suggests that such a policy is self-destructive. Periods of high wages are associated with rapid technological change. ..."
    "... On the ideological front, the South adopted a shallow, but rigid libertarian perspective which resembled modern neoliberalism. Samuel Johnson may have been the first person to see through the hypocrisy of the hollowness of southern libertarianism. ..."
    "... the famous Powell Memo helped to spark a well-financed movement of well-finance right-wing political activism which morphed into right-wing political extremism both in economics and politics. ..."
    "... In short, neoliberalism was surging ahead and the economy of high wages was now beyond the pale. These new conditions gave new force to the southern "yelps of liberty." The social safety net was taken down and reconstructed as the flag of neoliberalism. The one difference between the rhetoric of the slaveholders and that of the modern neoliberals was that entrepreneurial superiority replaced racial superiority as their battle cry. ..."
    May 18, 2015 | michaelperelman.wordpress.com

    Despite the neoliberal obsession with wage suppression, history suggests that such a policy is self-destructive. Periods of high wages are associated with rapid technological change.

    ... ... ...

    On the ideological front, the South adopted a shallow, but rigid libertarian perspective which resembled modern neoliberalism. Samuel Johnson may have been the first person to see through the hypocrisy of the hollowness of southern libertarianism. Responding to the colonists' complaint that taxation by the British was a form of tyranny, Samuel Johnson published his 1775 tract, "Taxation No Tyranny: An answer to the Resolutions and Address of the American Congress," asking the obvious question, "how is it that we hear the loudest yelps for liberty among the drivers of Negroes?" In The Works of Samuel Johnson, LL. D.: Political Tracts. Political Essays. Miscellaneous Essays (London: J. Buckland, 1787): pp. 60-146, p. 142.

    ... ... ...

    By the late 19th century, David A Wells, an industrial technician who later became the chief economic expert in the federal government, by virtue of his position of overseeing federal taxes. After a trip to Europe, Wells reconsidered his strong support for protectionism. Rather than comparing the dynamism of the northern states with the technological backward of their southern counterparts, he was responding to the fear that American industry could not compete with the cheap "pauper" labor of Europe. Instead, he insisted that the United States had little to fear from, the competition from cheap labor, because the relatively high cost of American labor would ensure rapid technological change, which, indeed, was more rapid in the United States than anywhere else in the world, with the possible exception of Germany. Both countries were about to rapidly surpass England's industrial prowess.

    The now-forgotten Wells was so highly regarded that the prize for the best economics dissertation at Harvard is still known as the David A Wells prize. His efforts gave rise to a very powerful idea in economic theory at the time, known as "the economy of high wages," which insisted that high wages drove economic prosperity. With his emphasis on technical change, driven by the strong competitive pressures from high wages, Wells anticipated Schumpeter's idea of creative destruction, except that for him, high wages rather than entrepreneurial genius drove this process.

    Although the economy of high wages remained highly influential through the 1920s, the extensive growth of government powers during World War I reignited the antipathy for big government. Laissez-faire economics began come back into vogue with the election of Calvin Coolidge, while the once-powerful progressive movement was becoming excluded from the ranks of reputable economics.

    ... ... ...

    With Barry Goldwater's humiliating defeat in his presidential campaign, the famous Powell Memo helped to spark a well-financed movement of well-finance right-wing political activism which morphed into right-wing political extremism both in economics and politics. Symbolic of the narrowness of this new mindset among economists, Milton Friedman's close associate, George Stigler, said in 1976 that "one evidence of professional integrity of the economist is the fact that it is not possible to enlist good economists to defend minimum wage laws." Stigler, G. J. 1982. The Economist as Preacher and Other Essays (Chicago: University of Chicago Press): p. 60.

    In short, neoliberalism was surging ahead and the economy of high wages was now beyond the pale. These new conditions gave new force to the southern "yelps of liberty." The social safety net was taken down and reconstructed as the flag of neoliberalism. The one difference between the rhetoric of the slaveholders and that of the modern neoliberals was that entrepreneurial superiority replaced racial superiority as their battle cry.

    One final irony: evangelical Christians were at the forefront of the abolitionist movement. Today, some of them are providing the firepower for the epidemic of neoliberalism.

    [Sep 15, 2016] Globalization and Neoliberalism

    Notable quotes:
    "... the US has been successful in dictating neoliberal policies, acting partly through the IMF and World Bank and partly through direct pressure. ..."
    "... From roughly the mid 1930s to the mid 1970s a new "interventionist" approach replaced classical liberalism, and it became the accepted belief that capitalism requires significant state regulation in order to be viable. In the 1970s the Old Religion of classical liberalism made a rapid comeback, first in academic economics and then in the realm of public policy. ..."
    "... Neoliberal theory claims that a largely unregulated capitalist system (a "free market economy" not only embodies the ideal of free individual choice but also achieves optimum economic performance with respect to efficiency, economic growth, technical progress, and distributional justice. ..."
    "... The policy recommendations of neoliberalism are concerned mainly with dismantling what remains of the regulationist welfare state. ..."
    "... This paper argues that the resurgence and tenacity of neoliberalism during the past two decades cannot be explained, in an instrumental fashion, by any favorable effects of neoliberal policies on capitalist economic performance. On the contrary, we will present a case that neoliberalism has been harmful for long-run capitalist economic performance, even judging economic performance from the perspective of the interests of capital. It will be argued that the resurgence and continuing dominance of neoliberalism can be explained, at least in part, by changes in the competitive structure of world capitalism, which have resulted in turn from the particular form of global economic integration that has developed in recent decades. The changed competitive structure of capitalism has altered the political posture of big business with regard to economic policy and the role of the state, turning big business from a supporter of state-regulated capitalism into an opponent of it. ..."
    "... Second, the neoliberal model creates instability on the macroeconomic level by renouncing state counter-cyclical spending and taxation policies, by reducing the effectiveness of "automatic stabilizers" through shrinking social welfare programs,3 and by loosening public regulation of the financial sector. This renders the system more vulnerable to major financial crises and depressions. Third, the neoliberal model tends to intensify class conflict, which can potentially discourage capitalist investment.4 ..."
    "... The evidence from GDP and labor productivity growth rates supports the claim that the neoliberal model is inferior to the state regulationist model for key dimensions of capitalist economic performance. There is ample evidence that the neoliberal model has shifted income and wealth in the direction of the already wealthy. However, the ability to shift income upward has limits in an economy that is not growing rapidly. Neoliberalism does not appear to be delivering the goods in the ways that matter the most for capitalism's long-run stability and survival. ..."
    "... Once capitalism had become well established in the US after the Civil War, it entered a period of cutthroat competition and wild accumulation known as the Robber Baron era. In this period a coherent anti-interventionist liberal position emerged and became politically dominant. Despite the enormous inequalities, the severe business cycle, and the outrageous and often unlawful behavior of the Goulds and Rockefellers, the idea that government should not intervene in the economy held sway through the end of the 19th century. ..."
    "... Small business has remained adamantly opposed to the big, interventionist state, from the Progressive Era through the New Deal down to the present. This division between big and small business is chronicled for the Progressive Era in Weinstein (1968). In the decades immediately following World War II one can observe this division in the divergent views of the Business Roundtable, a big business organization which often supported interventionist programs, and the US Chambers of Commerce, the premier small business organization, which hewed to an antigovernment stance. ..."
    "... By contrast, the typical small business faces a daily battle for survival, which prevents attention to long-run considerations and which places a premium on avoiding the short-run costs of taxation and state regulation. This explains the radically different positions that big business and small business held regarding the proper state role in the economy for the first two-thirds of the twentieth century. ..."
    "... This long-standing division between big business and small business appeared to vanish in the US starting in the 1970s. Large corporations and banks which had formerly supported foundations that advocated an active government role in the economy, such as the Brookings Institution, became big donors to neoliberal foundations such as the American Enterprise Institute and the Heritage Foundation. As a result, such right-wing foundations, which previously had to rely mainly on contributions from small business, became very wealthy and influential.10 It was big business=s desertion of the political coalition supporting state intervention and its shift to neoliberalism that rebuilt support for neoliberal theories and policies in the US, starting in the 1970s. With business now unified on economic policy, the shift was dramatic. Big grants became available for economics research having a neoliberal slant. The major media shifted their spin on political developments, and the phrase "government programs" now could not be printed except with the word "bloated" before it. ..."
    "... Globalization is usually defined as an increase in the volume of cross-border economic interactions and resource flows, producing a qualitative shift in the relations between national economies and between nation-states (Baker et. al., 1998, p. 5; Kozul-Wright and Rowthorn, 1998, p. 1). Three kinds of economic interactions have increased substantially in past decades: merchandise trade flows, foreign direct investment, and cross-border financial investments. We will briefly examine each, with an eye on their effects on the competitive structure of contemporary capitalism. ..."
    "... By the close of the twentieth century, capitalism had become significantly more globalized than it had been fifty years ago, and by some measures it is much more globalized than it had been at the previous peak of this process in 1913. The most important features of globalization today are greatly increased international trade, increased flows of capital across national boundaries (particularly speculative short-term capital), and a major role for large TNCs in manufacturing, extractive activities, and finance, operating worldwide yet retaining in nearly all cases a clear base in a single nation-state. ..."
    "... Some analysts argue that globalization has produced a world of such economic interdependence that individual nation-states no longer have the power to regulate capital. However, while global interdependence does create difficulties for state regulation, this effect has been greatly exaggerated. Nation-states still retain a good deal of potential power vis-a-vis capitalist firms, provided that the political will is present to exercise such power. For example, even such a small country as Malaysia proved able to successfully impose capital controls following the Asian financial crisis of 1997, despite the opposition of the IMF and the US government. ..."
    "... Globalization appears to be one factor that has transformed big business from a supporter to an opponent of the interventionist state. It has done so partly by producing TNCs whose tie to the domestic markets for goods and labor is limited. ..."
    "... Globalization has produced a world capitalism that bears some resemblance to the Robber Baron Era in the US. Giant corporations battle one another in a system lacking well defined rules. Mergers and acquisitions abound, including some that cross national boundaries, but so far few world industries have evolved the kind of tight oligopolistic structure that would lay the basis for a more controlled form of market relations. Like the late 19th century US Robber Barons, today's large corporations and banks above all want freedom from political burdens and restraints as they confront one another in world markets.18 ..."
    "... The existence of a powerful bloc of Communist-run states with an alternative "state socialist" socioeconomic system tended to push capitalism toward a state regulationist form. It reinforced the fear among capitalists that their own working classes might turn against capitalism. It also had an impact on relations among the leading capitalist states, promoting inter-state unity behind US leadership, which facilitated the creation and operation of a world-system of state-regulated capitalism.19 The demise of state socialism during 1989-91 removed one more factor that had reinforced the regulationist state. ..."
    "... If state socialism re-emerged in one or more major countries, perhaps this might push the capitalist world back toward the regulationist state. However, such a development does not seem likely. Even if Russia or Ukraine at some point does head in that direction, it would be unlikely to produce a serious rival socioeconomic system to that of world capitalism. ..."
    Jul 05, 2016 | people.umass.edu
    Department of Economics and Political Economy Research Institute Thompson Hall University of Massachusetts Amherst, MA 01003 U.S.A. Telephone 413-545-1248 Fax 413-545-2921 Email [email protected] August, 2000 This paper was published in Rethinking Marxism, Volume 12, Number 2, Summer 2002, pp. 64-79.

    Research assistance was provided by Elizabeth Ramey and Deger Eryar. Research funding was provided by the Political Economy Research Institute of the University of Massachusetts at Amherst. Globalization and Neoliberalism 1 For some two decades neoliberalism has dominated economic policymaking in the US and the UK. Neoliberalism has strong advocates in continental Western Europe and Japan, but substantial popular resistance there has limited its influence so far, despite continuing US efforts to impose neoliberal policies on them. In much of the Third World, and in the transition countries (except for China), the US has been successful in dictating neoliberal policies, acting partly through the IMF and World Bank and partly through direct pressure.

    Neoliberalism is an updated version of the classical liberal economic thought that was dominant in the US and UK prior to the Great Depression of the 1930s. From roughly the mid 1930s to the mid 1970s a new "interventionist" approach replaced classical liberalism, and it became the accepted belief that capitalism requires significant state regulation in order to be viable. In the 1970s the Old Religion of classical liberalism made a rapid comeback, first in academic economics and then in the realm of public policy.

    Neoliberalism is both a body of economic theory and a policy stance. Neoliberal theory claims that a largely unregulated capitalist system (a "free market economy" not only embodies the ideal of free individual choice but also achieves optimum economic performance with respect to efficiency, economic growth, technical progress, and distributional justice. The state is assigned a very limited economic role: defining property rights, enforcing contracts, and regulating the money supply.1 State intervention to correct market failures is viewed with suspicion, on the ground that such intervention is likely to create more problems than it solves.

    The policy recommendations of neoliberalism are concerned mainly with dismantling what remains of the regulationist welfare state. These recommendations include deregulation of business; privatization of public activities and assets; elimination of, or cutbacks in, social welfare programs; and reduction of taxes on businesses and the investing class. In the international sphere, neoliberalism calls for free movement of goods, services, capital, and money (but not people) across national boundaries. That is, corporations, banks, and individual investors should be free to move their property across national boundaries, and free to acquire property across national boundaries, although free cross-border movement by individuals is not part of the neoliberal program. How can the re-emergence of a seemingly outdated and outmoded economic theory be explained? At first many progressive economists viewed the 1970s lurch toward liberalism as a temporary response to the economic instability of that decade. As corporate interests decided that the Keynesian regulationist approach no longer worked to their advantage, they looked for an alternative and found only the old liberal ideas, which could at least serve as an ideological basis for cutting those state programs viewed as obstacles to profit-making. However, neoliberalism has proved to be more than just a temporary response. It has outlasted the late 1970s/early 1980s right-wing political victories in the UK (Thatcher) and US (Reagan). Under a Democratic Party administration in the US and a Labor Party government in the UK in the 1990s, neoliberalism solidified its position of dominance.

    This paper argues that the resurgence and tenacity of neoliberalism during the past two decades cannot be explained, in an instrumental fashion, by any favorable effects of neoliberal policies on capitalist economic performance. On the contrary, we will present a case that neoliberalism has been harmful for long-run capitalist economic performance, even judging economic performance from the perspective of the interests of capital. It will be argued that the resurgence and continuing dominance of neoliberalism can be explained, at least in part, by changes in the competitive structure of world capitalism, which have resulted in turn from the particular form of global economic integration that has developed in recent decades. The changed competitive structure of capitalism has altered the political posture of big business with regard to economic policy and the role of the state, turning big business from a supporter of state-regulated capitalism into an opponent of it.

    The Problematic Character of Neoliberalism

    Neoliberalism appears to be problematic as a dominant theory for contemporary capitalism. The stability and survival of the capitalist system depends on its ability to bring vigorous capital accumulation, where the latter process is understood to include not just economic expansion but also technological progress. Vigorous capital accumulation permits rising profits to coexist with rising living standards for a substantial part of the population over the long-run.2 However, it does not appear that neoliberalism promotes vigorous capital accumulation in contemporary capitalism. There are a number of reasons why one would not expect the neoliberal model to promote rapid accumulation. First, it gives rise to a problem of insufficient aggregate demand over the long run, stemming from the powerful tendency of the neoliberal regime to lower both real wages and public spending. Second, the neoliberal model creates instability on the macroeconomic level by renouncing state counter-cyclical spending and taxation policies, by reducing the effectiveness of "automatic stabilizers" through shrinking social welfare programs,3 and by loosening public regulation of the financial sector. This renders the system more vulnerable to major financial crises and depressions. Third, the neoliberal model tends to intensify class conflict, which can potentially discourage capitalist investment.4

    The historical evidence confirms doubts about the ability of the neoliberal model to promote rapid capital accumulation. We will look at growth rates of gross domestic product (GDP) and of labor productivity. The GDP growth rate provides at least a rough approximation of the rate of capital accumulation, while the labor productivity growth rate tells us something about the extent to which capitalism is developing the forces of production via rising ratios of means of production to direct labor, technological advance, and improved labor skills.5 Table 1 shows average annual real GDP growth rates for six leading developed capitalist countries over two periods, 1950-73 and 1973-99. The first period was the heyday of state-regulated capitalism, both within those six countries and in the capitalist world-system as a whole. The second period covers the era of growing neoliberal dominance. All six countries had significantly faster GDP growth in the earlier period than in the later one.

    While Japan and the major Western European economies have been relatively depressed in the 1990s, the US is often portrayed as rebounding to great prosperity over the past decade. Neoliberals often claim that US adherence to neoliberal policies finally paid off in the 1990s, while the more timid moves away from state-interventionist policies in Europe and Japan kept them mired in stagnation. Table 2 shows GDP and labor productivity growth rates for the US economy for three subperiods during 1948-99.6 Column 1 of Table 2 shows that GDP growth was significantly slower in 1973-90 B a period of transition from state-regulated capitalism to the neoliberal model in the US B than in 1948-73. While GDP growth improved slightly in 1990-99, it remained well below that of the era of state-regulated capitalism. Some analysts cite the fact that GDP growth accelerated after 1995, averaging 4.1% per year during 1995-99 (US Bureau of Economic Analysis, 2000). However, it is not meaningful to compare a short fragment of the 1990s business cycle expansion to the longrun performance of the economy during 1948-73.7

    Column 2 of Table 1 shows that the high rate of labor productivity growth recorded in 1948- 73 fell by more than half in 1973-90. While there was significant improvement in productivity growth in the 1990s, it remained well below the 1948-73 rate, despite the rapid spread of what should be productivity-enhancing communication and information-management technologies during the past decade.

    The evidence from GDP and labor productivity growth rates supports the claim that the neoliberal model is inferior to the state regulationist model for key dimensions of capitalist economic performance. There is ample evidence that the neoliberal model has shifted income and wealth in the direction of the already wealthy. However, the ability to shift income upward has limits in an economy that is not growing rapidly. Neoliberalism does not appear to be delivering the goods in the ways that matter the most for capitalism's long-run stability and survival.

    The Structure of Competition and Economic Policy

    The processes through which the dominant economic ideology and policies are selected in a capitalist system are complex and many-sided. No general rule operates to assure that those economic policies which would be most favorable for capitalism are automatically adopted. History suggests that one important determinant of the dominant economic ideology and policy stance is the competitive structure of capitalism in a given era. Specifically, this paper argues that periods of relatively unconstrained competition tend to produce the intellectual and public policy dominance of liberalism, while periods of relatively constrained, oligopolistic market relations tend to promote interventionist ideas and policies.

    A relation in the opposite direction also exists, one which is often commented upon. That is, one can argue that interventionist policies promote monopoly power in markets, while liberal policies promote greater competition. This latter relation is not being denied here. Rather, it will be argued that there is a normally-overlooked direction of influence, having significant historical explanatory power, which runs from competitive structure to public policy. In the period when capitalism first became well established in the US, during 1800-1860, the government played a relatively interventionist role. The federal government placed high tariffs on competing manufactured goods from Europe, and federal, state, and local levels of government all actively financed, and in some cases built and operated, the new canal and rail system that created a large internal market. There was no serious debate over the propriety of public financing of transportation improvements in that era -- the only debate was over which regions would get the key subsidized routes.

    Once capitalism had become well established in the US after the Civil War, it entered a period of cutthroat competition and wild accumulation known as the Robber Baron era. In this period a coherent anti-interventionist liberal position emerged and became politically dominant. Despite the enormous inequalities, the severe business cycle, and the outrageous and often unlawful behavior of the Goulds and Rockefellers, the idea that government should not intervene in the economy held sway through the end of the 19th century.

    From roughly 1890 to 1903 a huge merger wave transformed the competitive structure of US capitalism. Out of that merger wave emerged giant corporations possessing significant monopoly power in the manufacturing, mining, transportation, and communication sectors. US industry settled down to a more restrained form of oligopolistic rivalry. At the same time, many of the new monopoly capitalists began to criticize the old Laissez Faire ideas and support a more interventionist role for the state.8 The combination of big business support for state regulation of business, together with similar demands arising from a popular anti-monopoly movement based among small farmers and middle class professionals, ushered in what is called the Progressive Era, from 1900-16. The building of a regulationist state that was begun in the Progressive Era was completed during the New Deal era a few decades later, when once again both big business leaders and a vigorous popular movement (this time based among industrial workers) supported an interventionist state. Both in the Progressive Era and the New Deal, big business and the popular movement differed about what types of state intervention were needed. Big business favored measures to increase the stability of the system and to improve conditions for profit-making, while the popular movement sought to use the state to restrain the power and privileges of big business and provide greater security for ordinary people. The outcome in both cases was a political compromise, one weighted toward the interests of big business, reflecting the relative power of the latter in American capitalism.

    Small business has remained adamantly opposed to the big, interventionist state, from the Progressive Era through the New Deal down to the present. This division between big and small business is chronicled for the Progressive Era in Weinstein (1968). In the decades immediately following World War II one can observe this division in the divergent views of the Business Roundtable, a big business organization which often supported interventionist programs, and the US Chambers of Commerce, the premier small business organization, which hewed to an antigovernment stance.

    What explains this political difference between large and small business? When large corporations achieve significant market power and become freed from fear concerning their immediate survival, they tend to develop a long time horizon and pay attention to the requirements for assuring growing profits over time.9 They come to see the state as a potential ally. Having high and stable monopoly profits, they tend to view the cost of government programs as something they can afford, given their potential benefits. By contrast, the typical small business faces a daily battle for survival, which prevents attention to long-run considerations and which places a premium on avoiding the short-run costs of taxation and state regulation. This explains the radically different positions that big business and small business held regarding the proper state role in the economy for the first two-thirds of the twentieth century.

    This long-standing division between big business and small business appeared to vanish in the US starting in the 1970s. Large corporations and banks which had formerly supported foundations that advocated an active government role in the economy, such as the Brookings Institution, became big donors to neoliberal foundations such as the American Enterprise Institute and the Heritage Foundation. As a result, such right-wing foundations, which previously had to rely mainly on contributions from small business, became very wealthy and influential.10 It was big business=s desertion of the political coalition supporting state intervention and its shift to neoliberalism that rebuilt support for neoliberal theories and policies in the US, starting in the 1970s. With business now unified on economic policy, the shift was dramatic. Big grants became available for economics research having a neoliberal slant. The major media shifted their spin on political developments, and the phrase "government programs" now could not be printed except with the word "bloated" before it.

    This switch in the dominant economic model first showed up in the mid 1970s in academic economics, as the previously marginalized Chicago School spread its influence far beyond the University of Chicago. This was soon followed by a radical shift in the public policy arena. In 1978- 79 the previously interventionist Carter Administration began sounding the very neoliberal themes B deregulation of business, cutbacks in social programs, and general fiscal and monetary austerity B that were to become the centerpiece of Reagan Administration policies in 1981. What caused the radical change in the political posture of big business regarding state intervention in the economy? This paper argues that a major part of the explanation lies in the effects of the globalization of the world capitalist economy in the post-World War II period.

    Globalization and Competition

    Globalization is usually defined as an increase in the volume of cross-border economic interactions and resource flows, producing a qualitative shift in the relations between national economies and between nation-states (Baker et. al., 1998, p. 5; Kozul-Wright and Rowthorn, 1998, p. 1). Three kinds of economic interactions have increased substantially in past decades: merchandise trade flows, foreign direct investment, and cross-border financial investments. We will briefly examine each, with an eye on their effects on the competitive structure of contemporary capitalism.

    Table 3 shows the ratio of merchandise exports to gross domestic product for selected years from 1820 to 1992, for the world and also for Western Europe, the US, and Japan. Capitalism brought a five-fold rise in world exports relative to output from 1820-70, followed by another increase of nearly three-fourths by 1913. After declining in the interwar period, world exports reached a new peak of 11.2% of world output in 1973, rising further to 13.5% in 1992. The 1992 figure was over fifty per cent higher than the pre-World War I peak.

    Merchandise exports include physical goods only, while GDP includes services, many of which are not tradable, as well as goods. In the twentieth century the proportion of services in GDP has risen significantly. Table 4 shows an estimate of the ratio of world merchandise exports to the good-only portion of world GDP. This ratio nearly tripled during 1950-92, with merchandise exports rising to nearly one-third of total goods output in the latter year. The 1992 figure was 2.6 times as high as that of 1913.

    Western Europe, the US, and Japan all experienced significant increases in exports relative to GDP during 1950-92, as Table 3 shows. All of them achieved ratios of exports to GDP far in excess of the 1913 level. While exports were only 8.2% of the total GDP of the US in 1992, exports amounted to 22.0% of the non-service portion of GDP that year (Economic Report of the President, 1999, pp. 338, 444).

    Many analysts view foreign direct investment as the most important form of cross-border economic interchange. It is associated with the movement of technology and organizational methods, not just goods. Table 5 shows two measures of foreign direct investment. Column 1 gives the outstanding stock of foreign direct investment in the world as a percentage of world output. This measure has more than doubled since 1975, although it is not much greater today than it was in 1913. Column 2 shows the annual inflow of direct foreign investment as a percentage of gross fixed capital formation. This measure increased rapidly during 1975-95. However, it is still relatively low in absolute terms, with foreign direct investment accounting for only 5.2 per cent of gross fixed capital formation in 1995.

    Not all, or even most, international capital flows take the form of direct investment. Financial flows (such as cross-border purchases of securities and deposits in foreign bank accounts) are normally larger. One measure that takes account of financial as well as direct investment is the total net movement of capital into or out of a country. That measure indicates the extent to which capital from one country finances development in other countries. Table 6 shows the absolute value of current account surpluses or deficits as a percentage of GDP for 12 major capitalist countries. Since net capital inflow or outflow is approximately equal to the current account deficit or surplus (differing only due to errors and omissions), this indicates the size of net cross-border capital flows. The ratio nearly doubled from 1970-74 to 1990-96, although it remained well below the figure for 1910-14.

    Cross-border gross capital movements have grown much more rapidly than cross-border net capital movements.11 In recent times a very large and rapidly growing volume of capital has moved back and forth across national boundaries. Much of this capital flow is speculative in nature, reflecting growing amounts of short-term capital that are moved around the world in search of the best temporary return. No data on such flows are available for the early part of this century, but the data for recent decades are impressive. During 1980-95 cross-border transactions in bonds and equities as a percentage of GDP rose from 9% to 136% for the US, from 8% to 168% for Germany, and from 8% to 66% for Japan (Baker et. al., 1998, p. 10). The total volume of foreign exchange transactions in the world rose from about $15 billion per day in 1973 to $80 billion per day in 1980 and $1260 billion per day in 1995. Trade in goods and services accounted for 15% of foreign exchange transactions in 1973 but for less than 2% of foreign exchange transactions in 1995 (Bhaduri, 1998, p. 152).

    While cross-border flows of goods and capital are usually considered to be the best indicators of possible globalization of capitalism, changes that have occurred over time within capitalist enterprises are also relevant. That is, the much-discussed rise of the transnational corporation (TNC) is relevant here, where a TNC is a corporation which has a substantial proportion of its sales, assets, and employees outside its home country.12 TNCs existed in the pre-World War I era, primarily in the extractive sector. In the post-World War II period many large manufacturing corporations in the US, Western Europe, and Japan became TNCs.

    The largest TNCs are very international measured by the location of their activities. One study found that the 100 largest TNCs in the world (ranked by assets) had 40.4% of their assets abroad, 50.0% of output abroad, and 47.9% of employment abroad in 1996 (Sutcliffe and Glyn, 1999, p. 125). While this shows that the largest TNCs are significantly international in their activities, all but a handful have retained a single national base for top officials and major stockholders.13 The top 200 TNCs ranked by output were estimated to produce only about 10 per cent of world GDP in 1995 (Sutcliffe and Glyn, 1999, p. 122).

    By the close of the twentieth century, capitalism had become significantly more globalized than it had been fifty years ago, and by some measures it is much more globalized than it had been at the previous peak of this process in 1913. The most important features of globalization today are greatly increased international trade, increased flows of capital across national boundaries (particularly speculative short-term capital), and a major role for large TNCs in manufacturing, extractive activities, and finance, operating worldwide yet retaining in nearly all cases a clear base in a single nation-state.

    While the earlier wave of globalization before World War I did produce a capitalism that was significantly international, two features of that earlier international system differed from the current global capitalism in ways that are relevant here. First, the pre-world War I globalization took place within a world carved up into a few great colonial empires, which meant that much of the so-called "cross-border" trade and investment of that earlier era actually occurred within a space controlled by a single state. Second, the high level of world trade reached before World War I occurred within a system based much more on specialization and division of labor. That is, manufactured goods were exported by the advanced capitalist countries in exchange for primary products, unlike today when most trade is in manufactured goods. In 1913 62.5% of world trade was in primary products (Bairoch and Kozul-Wright, 1998, p. 45). By contrast, in 1970 60.9% of world exports were manufactured goods, rising to 74.7% in 1994 (Baker et. al., 1998, p. 7).

    Some analysts argue that globalization has produced a world of such economic interdependence that individual nation-states no longer have the power to regulate capital. However, while global interdependence does create difficulties for state regulation, this effect has been greatly exaggerated. Nation-states still retain a good deal of potential power vis-a-vis capitalist firms, provided that the political will is present to exercise such power. For example, even such a small country as Malaysia proved able to successfully impose capital controls following the Asian financial crisis of 1997, despite the opposition of the IMF and the US government. A state that has the political will to exercise some control over movements of goods and capital across its borders still retains significant power to regulate business. The more important effect of globalization has been on the political will to undertake state regulation, rather than on the technical feasibility of doing so. Globalization has had this effect by changing the competitive structure of capitalism. It appears that globalization in this period has made capitalism significantly more competitive, in several ways. First, the rapid growth of trade has changed the situation faced by large corporations. Large corporations that had previously operated in relatively controlled oligopolistic domestic markets now face competition from other large corporations based abroad, both in domestic and foreign markets. In the US the rate of import penetration of domestic manufacturing markets was only 2 per cent in 1950; it rose to 8% in 1971 and 16% by 1993, an 8-fold increase since 1950 (Sutcliffe and Glyn, 1999, p. 116).

    Second, the rapid increase in foreign direct investment has in many cases placed TNCs production facilities in the home markets of their foreign rivals. General Motors not only faces import competition from Toyota and Honda but has to compete with US-produced Toyota and Honda vehicles. Third, the increasingly integrated and open world financial system has thrown the major banks and other financial institutions of the leading capitalist nations increasingly into competition with one another.

    Globalization appears to be one factor that has transformed big business from a supporter to an opponent of the interventionist state. It has done so partly by producing TNCs whose tie to the domestic markets for goods and labor is limited. More importantly, globalization tends to turn big business into small business. The process of globalization has increased the competitive pressure faced by large corporations and banks, as competition has become a world-wide relationship.17 Even if those who run large corporations and financial institutions recognize the need for a strong nationstate in their home base, the new competitive pressure they face shortens their time horizon. It pushes them toward support for any means to reduce their tax burden and lift their regulatory constraints, to free them to compete more effectively with their global rivals. While a regulationist state may seem to be in the interests of big business, in that it can more effectively promote capital accumulation in the long run, in a highly competitive environment big business is drawn away from supporting a regulationist state.

    Globalization has produced a world capitalism that bears some resemblance to the Robber Baron Era in the US. Giant corporations battle one another in a system lacking well defined rules. Mergers and acquisitions abound, including some that cross national boundaries, but so far few world industries have evolved the kind of tight oligopolistic structure that would lay the basis for a more controlled form of market relations. Like the late 19th century US Robber Barons, today's large corporations and banks above all want freedom from political burdens and restraints as they confront one another in world markets.18

    The above interpretation of the rise and persistence of neoliberalism attributes it, at least in part, to the changed competitive structure of world capitalism resulting from the process of globalization. As neoliberalism gained influence starting in the 1970s, it became a force propelling the globalization process further. One reason for stressing the line of causation running from globalization to neoliberalism is the time sequence of the developments. The process of globalization, which had been reversed to some extent by political and economic events in the interwar period, resumed right after World War II, producing a significantly more globalized world economy and eroding the monopoly power of large corporations well before neoliberalism began its second coming in the mid 1970s. The rapid rise in merchandise exports began during the Bretton Woods period, as Table 3 showed. So too did the growing role for TNC's. These two aspects of the current globalization had their roots in the postwar era of state-regulated capitalism. This suggests that, to some extent, globalization reflects a long-run tendency in the capital accumulation process rather than just being a result of the rising influence of neoliberal policies. On the other hand, once neoliberalism became dominant, it accelerated the process of globalization. This can be seen most clearly in the data on cross-border flows of both real and financial capital, which began to grow rapidly only after the 1960s.

    Other Factors Promoting Neoliberalism

    The changed competitive structure of capitalism provides part of the explanation for the rise from the ashes of classical liberalism and its persistence in the face of widespread evidence of its failure to deliver the goods. However, three additional factors have played a role in promoting neoliberal dominance. These are the weakening of socialist movements in the industrialized capitalist countries, the demise of state socialism, and the long period that has elapsed since the last major capitalist economic crisis. There is space here for only some brief comments about these additional factors.

    The socialist movements in the industrialized capitalist countries have declined in strength significantly over the past few decades. While Social Democratic parties have come to office in several European countries recently, they no longer represent a threat of even significant modification of capitalism, much less the specter of replacing capitalism with an alternative socialist system. The regulationist state was always partly a response to the fear of socialism, a point illustrated by the emergence of the first major regulationist state of the era of mature capitalism in Germany in the late 19th century, in response to the world=s first major socialist movement. As the threat coming from socialist movements in the industrialized capitalist countries has receded, so too has to incentive to retain the regulationist state.

    The existence of a powerful bloc of Communist-run states with an alternative "state socialist" socioeconomic system tended to push capitalism toward a state regulationist form. It reinforced the fear among capitalists that their own working classes might turn against capitalism. It also had an impact on relations among the leading capitalist states, promoting inter-state unity behind US leadership, which facilitated the creation and operation of a world-system of state-regulated capitalism.19 The demise of state socialism during 1989-91 removed one more factor that had reinforced the regulationist state.

    The occurrence of a major economic crisis tends to promote an interventionist state, since active state intervention is required to overcome a major crisis. The memory of a recent major crisis tends to keep up support for a regulationist state, which is correctly seen as a stabilizing force tending to head off major crises. As the Great Depression of the 1930s has receded into the distant past, the belief has taken hold that major economic crises have been banished forever. This reduces the perceived need to retain the regulationist state.

    Concluding Comments

    If neoliberalism continues to reign as the dominant ideology and policy stance, it can be argued that world capitalism faces a future of stagnation, instability, and even eventual social breakdown.20 However, from the factors that have promoted neoliberalism one can see possible sources of a move back toward state-regulated capitalism at some point. One possibility would be the development of tight oligopoly and regulated competition on a world scale. Perhaps the current merger wave might continue until, as happened at the beginning of the 20th century within the US and in other industrialized capitalist economies, oligopoly replaced cutthroat competition, but this time on a world scale. Such a development might revive big business support for an interventionist state. However, this does not seem to be likely in the foreseeable future. The world is a big place, with differing cultures, laws, and business practices in different countries, which serve as obstacles to overcoming the competitive tendency in market relations. Transforming an industry=s structure so that two to four companies produce the bulk of the output is not sufficient in itself to achieve stable monopoly power, if the rivals are unable to communicate effectively with one another and find common ground for cooperation. Also, it would be difficult for international monopolies to exercise effective regulation via national governments, and a genuine world capitalist state is not a possibility for the foreseeable future.

    If state socialism re-emerged in one or more major countries, perhaps this might push the capitalist world back toward the regulationist state. However, such a development does not seem likely. Even if Russia or Ukraine at some point does head in that direction, it would be unlikely to produce a serious rival socioeconomic system to that of world capitalism.

    A more likely source of a new era of state interventionism might come from one of the remaining two factors considered above. The macro-instability of neoliberal global capitalism might produce a major economic crisis at some point, one which spins out of the control of the weakened regulatory authorities. This would almost certainly revive the politics of the regulationist state. Finally, the increasing exploitation and other social problems generated by neoliberal global capitalism might prod the socialist movement back to life at some point. Should socialist movements revive and begin to seriously challenge capitalism in one or more major capitalist countries, state regulationism might return in response to it. Such a development would also revive the possibility of finally superceding capitalism and replacing it with a system based on human need rather than private profit.

    [Sep 15, 2016] Whats Behind The Revolt Against Global Integration?

    Notable quotes:
    "... Elites can continue on the current path of pursuing integration projects and defending existing integration, hoping to win enough popular support that their efforts are not thwarted. On the evidence of the U.S. presidential campaign and the Brexit debate, this strategy may have run its course. ... ..."
    "... I think some fellows already had this idea: "Much more promising is this idea: The promotion of global integration can become a bottom-up rather than a top-down project" -- "Workers of the World, Unite. You have nothing to lose but your chains!" ~Marx/Engels, 1848 ..."
    "... Krugman sort of said this when he saw that apparel multinationals were shifting jobs out of China to Bangladesh. Like $3 an hour is just way too high for workers. ..."
    "... The "populists" are raging against global trade which benefits the world poor. The Very Serious economists know what is really going on and have to interests of the poor at heart. Plus they are smarter than the "populists" who are just dumb hippies. ..."
    "... And what about neocolonialism and debt slavery ? http://historum.com/blogs/solidaire/245-debt-slavery-neo-colonialism-neoliberalism.html ..."
    "... International debtors are the modern colonialists, sucking the marrow of countries; no armies are needed anymore to keep those countries subjugated. Debt is the modern instrument of enslavement, the international banks, corporations and hedge funds the modern colonial powers, and its enforcers are instruments like the Global Bank, the IMF, and the corrupt, collaborationist governments (and totalitarian regimes) of those countries, supported and propped up by these neo-colonials. ..."
    "... Cover your a$$ much Larry? No mention of mass immigration? No mention of the elites' conscious, planned attack on homogeneous societies in Western Europe, the US, and now Japan? ..."
    "... The US was 88% European as of 1960. As of 1800 it was like 90% English. So yes, it was basically a homogeneous society prior to the immigration act of 1965. Today it is extremely hard for Europeans to get into the US -- but easier for non-Europeans. Now why would that be? Hmm .... ..."
    "... The only trade that is actually free is trade not covered by laws and/or treaties. All other trade is regulated trade. ..."
    "... Here's a good rule to follow. When someone calls something the exact opposite of what it is, in all probability they are trying to hustle your wallet. ..."
    "... ISIS was invented by Wall Street who financed them. ISIS is a scam, just like Bin Laden's group, just like "COMMUNISM!!!!" to control people. To manipulate them. ..."
    "... Guys, the bourgeois state is a protection racket and always has been. It makes you feel safe, secure and "feel like man". So we can enjoy every indulgent individual lust the world has to offer. Then comes in dialectics of what that protection racket should do. ..."
    "... To me, the bourgeois state is nothing more than a protection racket for the rich, something you should not forget. ..."
    "... I find it rather precious that Summers pretends not to understand why people hate TPP. I do not think there is any real widespread antipathy toward global integration, though it does pose some rather substantial systemic dangers, as we saw in the global financial collapse. What people, including me, oppose is how that integration is structured. These agreements are about is not "free trade", but removing all restrictions on global capital and that is a big problem. ..."
    "... TPP is not free trade. It is protectionism for the rich. ..."
    "... All or most modern "free trade" agreements are like that. What people oppose is agreements which impoverish them and enrich capital. ..."
    "... More free trade arrangement are not always better trade arrangements. People have seen the results of the labor race to the bottom caused by earlier free trade agreements; and now they are guessing we're going to get the same kind of race to the bottom with TPP when we have to put all of our environmental laws and other domestic regulations into capitalist competition with backward countries. ..."
    "... progressive states (WA, OR, CA, NV, IL, NY, MD) could simply treat union busting the same way any OTHER major muscling or manipulation of the free market is treated: make it a felony. ..."
    "... Summers: "Pie in the Sky" So trade negotiations would have to be lead by labor advocates and environmental groups -- sounds great to me, but I can't for the life of me figure out why the goods and service producers (i.e. capital owners) would have any incentive to promote trade under such a negotiated trade agreement... or that trade would actually occur. You'd have to eliminate private enterprise incentives to profit I think.. not something the U.S.'s "individualism" god can't tolerate. ..."
    "... Alas, the Kaiser, the Tsar, and the Emperor did not act in accord with its tenets. Either increased global trade is irrelevant to war and peace, or World War I didn't happen. Your pick which to believe. ..."
    Apr 11, 2016 | economistsview.typepad.com
    Larry Summers:
    What's behind the revolt against global integration? : Since the end of World War II, a broad consensus in support of global economic integration as a force for peace and prosperity has been a pillar of the international order. ...

    This broad program of global integration has been more successful than could reasonably have been hoped. ... Yet a revolt against global integration is underway in the West. ...

    One substantial part of what is behind the resistance is a lack of knowledge. ...The core of the revolt against global integration, though, is not ignorance. It is a sense - unfortunately not wholly unwarranted - that it is a project being carried out by elites for elites, with little consideration for the interests of ordinary people. ...

    Elites can continue on the current path of pursuing integration projects and defending existing integration, hoping to win enough popular support that their efforts are not thwarted. On the evidence of the U.S. presidential campaign and the Brexit debate, this strategy may have run its course. ...

    Much more promising is this idea: The promotion of global integration can become a bottom-up rather than a top-down project. The emphasis can shift from promoting integration to managing its consequences. This would mean a shift from international trade agreements to international harmonization agreements, whereby issues such as labor rights and environmental protection would be central, while issues related to empowering foreign producers would be secondary. It would also mean devoting as much political capital to the trillions of dollars that escape taxation or evade regulation through cross-border capital flows as we now devote to trade agreements. And it would mean an emphasis on the challenges of middle-class parents everywhere who doubt, but still hope desperately, that their kids can have better lives than they did.

    Tom aka Rusty : , Monday, April 11, 2016 at 07:15 AM
    Is Summers really this naive?
    Jedgar Mihelic : , Monday, April 11, 2016 at 07:21 AM
    I think some fellows already had this idea: "Much more promising is this idea: The promotion of global integration can become a bottom-up rather than a top-down project" -- "Workers of the World, Unite. You have nothing to lose but your chains!" ~Marx/Engels, 1848
    pgl -> Jedgar Mihelic ... , Monday, April 11, 2016 at 07:28 AM
    Krugman sort of said this when he saw that apparel multinationals were shifting jobs out of China to Bangladesh. Like $3 an hour is just way too high for workers.
    pgl : Monday, April 11, 2016 at 07:32 AM
    A large part of the concern over free trade comes from the weak economic performances around the globe. Summers could have addressed this. Jared Bernstein and Dean Baker - both sensible economists - for example recently called on the US to do its own currency manipulation so as to reverse the US$ appreciation which is lowering our net exports quite a bit.

    What they left out is the fact that both China and Japan have seen currency appreciations as well. If we raise our net exports at their expense, that lowers their economic activity. Better would be global fiscal stimulus. I wish Larry had raised this issue here.

    Peter -> pgl... , Monday, April 11, 2016 at 08:12 AM
    The "populists" are raging against global trade which benefits the world poor. The Very Serious economists know what is really going on and have to interests of the poor at heart. Plus they are smarter than the "populists" who are just dumb hippies.
    likbez -> pgl... , Monday, April 11, 2016 at 04:48 PM
    pgl,

    And what about neocolonialism and debt slavery ? http://historum.com/blogs/solidaire/245-debt-slavery-neo-colonialism-neoliberalism.html

    === quote ===

    One of the most fundamental reasons for the poverty and underdevelopment of Africa (and of almost all "third world" countries) is neo-colonialism, which in modern history takes the shape of external debt.

    When countries are forced to pay 40,50,60% of their government budgets just to pay the interests of their enormous debts, there is little room for actual prosperity left.

    International debtors are the modern colonialists, sucking the marrow of countries; no armies are needed anymore to keep those countries subjugated. Debt is the modern instrument of enslavement, the international banks, corporations and hedge funds the modern colonial powers, and its enforcers are instruments like the Global Bank, the IMF, and the corrupt, collaborationist governments (and totalitarian regimes) of those countries, supported and propped up by these neo-colonials.

    In reality, not much has changed since the fall of the great colonial empires. In paper, countries have gained their sovereignty, but in reality they are enslaved to the international credit system.

    The only thing that has changed, is that now the very colonial powers of the past, are threatened to become debt colonies themselves. You see, global capitalism and credit system has no country, nationality, colour; it only recognises the colour of money, earned at all cost by the very few, on the expense of the vast, unsuspected and lulled masses.

    Debt had always been a very efficient way of control, either on a personal, or state level. And while most of us are aware of the implementations of personal debt and the risks involved, the corridors of government debt are poorly lit, albeit this kind of debt is affecting all citizens of a country and in ways more profound and far reaching into the future than those of private debt.

    Global capitalism was flourishing after WW2, and reached an apex somewhere in the 70's.

    The lower classes in the mature capitalist countries had gained a respectable portion of the distributed wealth, rights and privileges inconceivable several decades before. The purchasing power of the average American for example, was very satisfactory, fully justifying the American dream. Similar phenomena were taking place all over the "developed" world.

    Kgaard : , Monday, April 11, 2016 at 07:32 AM
    Cover your a$$ much Larry? No mention of mass immigration? No mention of the elites' conscious, planned attack on homogeneous societies in Western Europe, the US, and now Japan?
    anne -> Kgaard... , Monday, April 11, 2016 at 07:44 AM
    There is of course no reasonable answering to prejudice, since prejudice is always unreasonable, but should there be a question, when was the last time that, say, the United States or the territory that the US now covers was a homogeneous society?

    Before the US engulfed Spanish peoples? Before the US engulfed African peoples? Before the US engulfed Indian peoples? When did the Irish, just to think of a random nationality, ruin "our" homogeneity?

    I could continue, but how much of a point is there in being reasonable?

    Kgaard -> anne... , Monday, April 11, 2016 at 11:21 AM
    The US was 88% European as of 1960. As of 1800 it was like 90% English. So yes, it was basically a homogeneous society prior to the immigration act of 1965. Today it is extremely hard for Europeans to get into the US -- but easier for non-Europeans. Now why would that be? Hmm ....

    Also ... What is your definition of prejudice?

    Benedict@Large -> pgl... , Monday, April 11, 2016 at 08:56 AM
    The only trade that is actually free is trade not covered by laws and/or treaties. All other trade is regulated trade.

    Here's a good rule to follow. When someone calls something the exact opposite of what it is, in all probability they are trying to hustle your wallet.

    Has anyone been trying to hustle the wallets of the people who became ISIS? Oh please. That's a stupid question to even ask.

    So is free trade, as in regulated trade that is called the opposite of what it is, responsible for ISIS? Of course it is.

    Ben Groves -> pgl... , Monday, April 11, 2016 at 10:10 AM
    ISIS was invented by Wall Street who financed them. ISIS is a scam, just like Bin Laden's group, just like "COMMUNISM!!!!" to control people. To manipulate them.

    It is like using the internet to think you are "edgy". Some dudes like psuedo-science scam artist Mike Adams are uncovering secrets to this witty viewer............then you wonder why society is degenerating. What should happen with Mike Adams is, he should be beaten up and castrated. My guess he would talk then. Boy would his idiot followers get a surprise and that surprise would have results other than "poor mikey, he was robbed".

    This explains why guys like Trump get delegates. Not because he uses illegal immigrants in his old businesses, not because of some flat real wages going over 40 years, not because he is a conman marketer.........he makes them feel safe. That is purely it. I think its pathetic, but that is what happens in a emasculated world. Safety becomes absolute concern. "Trump makes me feel safe".

    Guys, the bourgeois state is a protection racket and always has been. It makes you feel safe, secure and "feel like man". So we can enjoy every indulgent individual lust the world has to offer. Then comes in dialectics of what that protection racket should do.

    To me, the bourgeois state is nothing more than a protection racket for the rich, something you should not forget.

    DrDick : , Monday, April 11, 2016 at 07:35 AM
    I find it rather precious that Summers pretends not to understand why people hate TPP. I do not think there is any real widespread antipathy toward global integration, though it does pose some rather substantial systemic dangers, as we saw in the global financial collapse. What people, including me, oppose is how that integration is structured. These agreements are about is not "free trade", but removing all restrictions on global capital and that is a big problem.
    pgl -> DrDick ... , Monday, April 11, 2016 at 07:57 AM
    OK - some substance finally. TPP is not free trade. It is protectionism for the rich.
    DrDick -> pgl... , Monday, April 11, 2016 at 11:10 AM
    Actually, this is my first actual response to the post itself, but you were too busy being and a*****e to notice. All or most modern "free trade" agreements are like that. What people oppose is agreements which impoverish them and enrich capital.
    Dan Kervick -> pgl... , Monday, April 11, 2016 at 03:33 PM
    This has become a popular line, and it's not exactly false. But so what if it were a "free trade" agreement? More free trade arrangement are not always better trade arrangements. People have seen the results of the labor race to the bottom caused by earlier free trade agreements; and now they are guessing we're going to get the same kind of race to the bottom with TPP when we have to put all of our environmental laws and other domestic regulations into capitalist competition with backward countries.
    Denis Drew : , Monday, April 11, 2016 at 07:38 AM
    " The promotion of global integration can become a bottom-up rather than a top-down project. "

    " ... whereby issues such as labor rights and environmental protection would be central ... "

    +1

    Now if we could just adopt that policy internally in the United States first we could then (and only then) support it externally across the world.

    Easy approach: (FOR THE TEN MILLIONTH TIME!) progressive states (WA, OR, CA, NV, IL, NY, MD) could simply treat union busting the same way any OTHER major muscling or manipulation of the free market is treated: make it a felony. FYI (for those who are not aware) states can add to federal labor protections, just not subtract.

    A completely renewed, re-constituted democracy would be born.

    Biggest obstacle to this being done in my (crackpot?) view: human males. Being instinctive pack hunters, before they check out any idea they, first, check in with the pack (all those other boys who are also checking in with the pack) -- almost automatically infer impossibility to overcome what they see (correctly?) as wheels within wheels of inertia.

    Self-fulfilling prophecy: nothing (not the most obvious, SHOULD BE easiest possible to get support for actions) ever gets done.

    Peter : , Monday, April 11, 2016 at 08:31 AM
    http://jaredbernsteinblog.com/new_path_forward/

    I'm not the only one seeking a new path forward on trade.

    by Jared Bernstein

    April 11th, 2016 at 9:20 am

    "...

    Here's Larry's view of the way forward:

    "The promotion of global integration can become a bottom-up rather than a top-down project. The emphasis can shift from promoting integration to managing its consequences. This would mean a shift from international trade agreements to international harmonization agreements, whereby issues such as labor rights and environmental protection would be central, while issues related to empowering foreign producers would be secondary. It would also mean devoting as much political capital to the trillions of dollars that escape taxation or evade regulation through cross-border capital flows as we now devote to trade agreements. And it would mean an emphasis on the challenges of middle-class parents everywhere who doubt, but still hope desperately, that their kids can have better lives than they did.

    Good points, all. "Bottom-up" means what I've been calling a more representative, inclusive process. But what's this about "international harmonization?""

    It's a way of saying that we need to reduce the "frictions" and thus costs between trading partners at the level of pragmatic infrastructure, not corporate power. One way to think of this is TFAs, not FTAs. TFAs are trade facilitation agreements, which are more about integrating ports, rail, and paperwork than patents that protect big Pharma.

    It's refreshing to see mainstreamers thinking creatively about the anger that's surfaced around globalization. Waiting for the anger to dissipate and then reverting back to the old trade regimes may be the preferred path for elites, but that path may well be blocked. We'd best clear a new, wider path, one that better accommodates folks from all walks of life, both here and abroad."

    anne : , Monday, April 11, 2016 at 09:12 AM
    "What's Behind The Revolt Against Global Integration?" -- Washington Post editors title.

    "Global trade should be remade from the bottom up" -- Lawrence Summers title.

    I find the difference in titles important in showing just how slanted Washington Post editors are.

    Longtooth : , Monday, April 11, 2016 at 01:41 PM
    Summers: "Pie in the Sky" So trade negotiations would have to be lead by labor advocates and environmental groups -- sounds great to me, but I can't for the life of me figure out why the goods and service producers (i.e. capital owners) would have any incentive to promote trade under such a negotiated trade agreement... or that trade would actually occur. You'd have to eliminate private enterprise incentives to profit I think.. not something the U.S.'s "individualism" god can't tolerate.
    pgl -> Longtooth... , Monday, April 11, 2016 at 01:46 PM
    Imagine a trade deal negotiated by the AFL-CIO. Labor wins a lot and capital owners lose a little. We can all then smile and say to the latter - go get your buddies in Congress more serious about the compensation principle. Turn the table!
    kthomas -> pgl... , Monday, April 11, 2016 at 03:01 PM
    Not being rude, but I fail to understand your response.

    AFL-CIO? turn the table?

    Peter -> kthomas... , Monday, April 11, 2016 at 03:51 PM
    It's okay. He's drunk again.
    New Deal democrat : , Monday, April 11, 2016 at 03:07 PM
    "consensus in support of global economic integration as a force for peace and prosperity " -- "The Great Illusion" ( https://en.m.wikipedia.org/wiki/The_Great_Illusion )
    That increased trade is a bulwark against war rears its ugly head again. The above book which so ironically delivered the message was published in 1910.

    Alas, the Kaiser, the Tsar, and the Emperor did not act in accord with its tenets. Either increased global trade is irrelevant to war and peace, or World War I didn't happen. Your pick which to believe.

    George H. Blackford :
    Our problems began back in the 1970s when we abandoned the Bretton Woods international capital controls and then broke the unions, cut taxes on corporations and upper income groups, and deregulated the financial system. This eventually led a stagnation of wages in the US and an increase in the concentration of income at the top of the income distribution throughout the world: http://www.rwEconomics.com/Ch_1.htm

    The export-led growth model that began in the 1990s seriously exacerbated this problem as it proved to be unsustainable: http://www.rwEconomics.com/htm/WDCh_2.htm

    When combined with tax cuts and financial deregulation it led to increasing debt relative to income in the importing countries that caused the financial catastrophe we went through in 2008, the economic stagnation that followed, and the social unrest we see throughout the world today. This, in turn, created a situation in which the full utilization of our economic resources can only be maintained through an unsustainable increase in debt relative to income: http://www.rwEconomics.com/htm/WDCh3e.htm

    This is what has to be overcome if we are to get out of the mess the world is in today, and it's not going to be overcome by pretending that it's just going to go away if people can just become educated about the benefits of trade. At least that's not the way it worked out in the 1930s: http://www.rwEconomics.com/LTLGAD.htm

    [Sep 15, 2016] How neoliberalism created an age of activism by Juan Cole

    Notable quotes:
    "... From Tunis to Tel Aviv, Madrid to Oakland, a new generation of youth activists is challenging the neoliberal state that has dominated the world ever since the Cold War ended. ..."
    "... young rebels are reacting to a single stunning worldwide development: the extreme concentration of wealth in a few hands thanks to neoliberal policies of deregulation and union busting. They have taken to the streets, parks, plazas and squares to protest against the resulting corruption, the way politicians can be bought and sold, and the impunity ..."
    "... In the "glorious thirty years" after World War II, North America and Western Europe achieved remarkable rates of economic growth and relatively low levels of inequality for capitalist societies, while instituting a broad range of benefits for workers, students and retirees. From roughly 1980 on, however, the neoliberal movement, rooted in the laissez-faire economic theories of Milton Friedman, launched what became a full-scale assault on workers' power and an attempt, often remarkably successful, to eviscerate the social welfare state. ..."
    "... "Washington consensus" meant that the urge to impose privatisation on stagnating, nepotistic postcolonial states would become the order of the day. ..."
    "... While neoliberalism has produced more unequal societies throughout the world, nowhere else has the income of the poor declined quite so strikingly. The concentration of wealth in a few hands profoundly contradicts the founding principles of Israel's Labour Zionism, and results from decades of right-wing Likud policies punishing the poor and middle classes and shifting wealth to the top of society. ..."
    "... Juan Cole is the Richard P. Mitchell Professor of History and the director of the Centre for South Asian Studies at the University of Michigan. His latest book, ..."
    "... Engaging the Muslim World , is just out in a revised paperback edition from Palgrave Macmillan. He runs the Informed Comment website. ..."
    "... A version of this article was first published on Tom Dispatch . ..."
    "... The views expressed in this article are the author's own and do not necessarily reflect Al Jazeera's editorial policy. ..."
    Nov 15, 2011 | aljazeera.com

    Decades of neoliberal economic policies have concentrated wealth and are now spurring a global backlash.

    Politics, US & Canada, Latin America, Chile, Egypt

    ANN ARBOR, MICHIGAN - From Tunis to Tel Aviv, Madrid to Oakland, a new generation of youth activists is challenging the neoliberal state that has dominated the world ever since the Cold War ended. The massive popular protests that shook the globe this year have much in common, though most of the reporting on them in the mainstream media has obscured the similarities.

    Whether in Egypt or the United States, young rebels are reacting to a single stunning worldwide development: the extreme concentration of wealth in a few hands thanks to neoliberal policies of deregulation and union busting. They have taken to the streets, parks, plazas and squares to protest against the resulting corruption, the way politicians can be bought and sold, and the impunity

    ANN ARBOR, MICHIGAN - From Tunis to Tel Aviv, Madrid to Oakland, a new generation of youth activists is challenging the neoliberal state that has dominated the world ever since the Cold War ended. The massive popular protests that shook the globe this year have much in common, though most of the reporting on them in the mainstream media has obscured the similarities.

    Whether in Egypt or the United States, young rebels are reacting to a single stunning worldwide development: the extreme concentration of wealth in a few hands thanks to neoliberal policies of deregulation and union busting. They have taken to the streets, parks, plazas and squares to protest against the resulting corruption, the way politicians can be bought and sold, and the impunity of the white-collar criminals who have run riot in societies everywhere. They are objecting to high rates of unemployment, reduced social services, blighted futures and above all the substitution of the market for all other values as the matrix of human ethics and life.

    Pasha the Tiger

    In the "glorious thirty years" after World War II, North America and Western Europe achieved remarkable rates of economic growth and relatively low levels of inequality for capitalist societies, while instituting a broad range of benefits for workers, students and retirees. From roughly 1980 on, however, the neoliberal movement, rooted in the laissez-faire economic theories of Milton Friedman, launched what became a full-scale assault on workers' power and an attempt, often remarkably successful, to eviscerate the social welfare state.

    Neoliberals chanted the mantra that everyone would benefit if the public sector were privatised, businesses deregulated and market mechanisms allowed to distribute wealth. But as economist David Harvey argues, from the beginning it was a doctrine that primarily benefited the wealthy, its adoption allowing the top one per cent in any neoliberal society to capture a disproportionate share of whatever wealth was generated.

    In the global South, countries that gained their independence from European colonialism after World War II tended to create large public sectors as part of the process of industrialization. Often, living standards improved as a result, but by the 1970s, such developing economies were generally experiencing a levelling-off of growth. This happened just as neoliberalism became ascendant in Washington, Paris and London as well as in Bretton Woods institutions like the International Monetary Fund. This "Washington consensus" meant that the urge to impose privatisation on stagnating, nepotistic postcolonial states would become the order of the day.

    Egypt and Tunisia, to take two countries in the spotlight for sparking the Arab Spring, were successfully pressured in the 1990s to privatise their relatively large public sectors. Moving public resources into the private sector created an almost endless range of opportunities for staggering levels of corruption on the part of the ruling families of autocrats Zine El Abidine Ben Ali in Tunis and Hosni Mubarak in Cairo. International banks, central banks and emerging local private banks aided and abetted their agenda.

    It was not surprising then that one of the first targets of Tunisian crowds in the course of the revolution they made last January was the Zitouna bank, a branch of which they torched. Its owner? Sakher El Materi, a son-in-law of President Ben Ali and the notorious owner of Pasha, the well-fed pet tiger that prowled the grounds of one of his sumptuous mansions. Not even the way his outfit sought legitimacy by practicing "Islamic banking" could forestall popular rage. A 2006 State Department cable released by WikiLeaks observed, "One local financial expert blames the [Ben Ali] Family for chronic banking sector woes due to the great percentage of non-performing loans issued through crony connections, and has essentially paralysed banking authorities from genuine recovery efforts." That is, the banks were used by the regime to give away money to his cronies, with no expectation of repayment.

    Tunisian activists similarly directed their ire at foreign banks and lenders to which their country owes $14.4bn. Tunisians are still railing and rallying against the repayment of all that money, some of which they believe was borrowed profligately by the corrupt former regime and then squandered quite privately.

    Tunisians had their own one per cent, a thin commercial elite, half of whom were related to or closely connected to President Ben Ali. As a group, they were accused by young activists of mafia-like, predatory practices, such as demanding pay-offs from legitimate businesses, and discouraging foreign investment by tying it to a stupendous system of bribes. The closed, top-heavy character of the Tunisian economic system was blamed for the bottom-heavy waves of suffering that followed: cost of living increases that hit people on fixed incomes or those like students and peddlers in the marginal economy especially hard.

    It was no happenstance that the young man who immolated himself and so sparked the Tunisian rebellion was a hard-pressed vegetable peddler. It's easy now to overlook what clearly ties the beginning of the Arab Spring to the European Summer and the present American Fall: the point of the Tunisian revolution was not just to gain political rights, but to sweep away that one per cent, popularly imagined as a sort of dam against economic opportunity.

    Tahrir Square, Zuccotti Park, Rothschild Avenue

    The success of the Tunisian revolution in removing the octopus-like Ben Ali plutocracy inspired the dramatic events in Egypt, Libya, Yemen, Syria and even Israel that are redrawing the political map of the Middle East. But the 2011 youth protest movement was hardly contained in the Middle East. Estonian-Canadian activist Kalle Lasn and his anti-consumerist colleagues at the Vancouver-based Adbusters Media Foundation were inspired by the success of the revolutionaries in Tahrir Square in deposing dictator Hosni Mubarak.

    Their organisation specialises in combatting advertising culture through spoofs and pranks. It was Adbusters magazine that sent out the call on Twitter in the summer of 2011 for a rally at Wall Street on September 17, with the now-famous hash tag #OccupyWallStreet. A thousand protesters gathered on the designated date, commemorating the 2008 economic meltdown that had thrown millions of Americans out of their jobs and their homes. Some camped out in nearby Zuccotti Park, another unexpected global spark for protest.

    The Occupy Wall Street movement has now spread throughout the United States, sometimes in the face of serious acts of repression, as in Oakland, California. It has followed in the spirit of the Arab and European movements in demanding an end to special privileges for the richest one per cent, including their ability to more or less buy the US government for purposes of their choosing. What is often forgotten is that the Ben Alis, Mubaraks and Gaddafis were not simply authoritarian tyrants. They were the one per cent and the guardians of the one per cent, in their own societies - and loathed for exactly that.

    Last April, around the time that Lasn began imagining Wall Street protests, progressive activists in Israel started planning their own movement. In July, sales clerk and aspiring filmmaker Daphne Leef found herself unable to cover a sudden rent increase on her Tel Aviv apartment. So she started a protest Facebook page similar to the ones that fuelled the Arab Spring and moved into a tent on the posh Rothschild Avenue where she was soon joined by hundreds of other protesting Israelis. Week by week, the demonstrations grew, spreading to cities throughout the country and culminating on September 3 in a massive rally, the largest in Israel's history. Some 300,000 protesters came out in Tel Aviv, 50,000 in Jerusalem and 40,000 in Haifa. Their demands included not just lower housing costs, but a rollback of neoliberal policies, less regressive taxes and more progressive, direct taxation, a halt to the privatisation of the economy, and the funding of a system of inexpensive education and child care.

    Many on the left in Israel are also deeply troubled by the political and economic power of right-wing settlers on the West Bank, but most decline to bring the Palestinian issue into the movement's demands for fear of losing support among the middle class. For the same reason, the way the Israeli movement was inspired by Tahrir Square and the Egyptian revolution has been downplayed, although "Walk like an Egyptian" signs - a reference both to the Cairo demonstrations and the 1986 Bangles hit song - have been spotted on Rothschild Avenue.

    Most of the Israeli activists in the coastal cities know that they are victims of the same neoliberal order that displaces the Palestinians, punishes them and keeps them stateless. Indeed, the Palestinians, altogether lacking a state but at the complete mercy of various forms of international capital controlled by elites elsewhere, are the ultimate victims of the neoliberal order. But in order to avoid a split in the Israeli protest movement, a quiet agreement was reached to focus on economic discontents and so avoid the divisive issue of the much-despised West Bank settlements.

    There has been little reporting in the Western press about a key source of Israeli unease, which was palpable to me when I visited the country in May. Even then, before the local protests had fully hit their stride, Israelis I met were complaining about the rise to power of an Israeli one per cent. There are now 16 billionaires in the country, who control $45bn in assets, and the current crop of 10,153 millionaires is 20 per cent larger than it was in the previous fiscal year. In terms of its distribution of wealth, Israel is now among the most unequal of the countries in the Organisation for Economic Cooperation and Development. Since the late 1980s, the average household income of families in the bottom fifth of the population has been declining at an annual rate of 1.1 per cent. Over the same period, the average household income of families among the richest 20 per cent went up at an annual rate of 2.4 per cent.

    While neoliberalism has produced more unequal societies throughout the world, nowhere else has the income of the poor declined quite so strikingly. The concentration of wealth in a few hands profoundly contradicts the founding principles of Israel's Labour Zionism, and results from decades of right-wing Likud policies punishing the poor and middle classes and shifting wealth to the top of society.

    The indignant ones

    European youth were also inspired by the Tunisians and Egyptians - and by a similar flight of wealth. I was in Barcelona on May 27, when the police attacked demonstrators camped out at the Placa de Catalunya, provoking widespread consternation. The government of the region is currently led by the centrist Convergence and Union Party, a moderate proponent of Catalan nationalism. It is relatively popular locally, and so Catalans had not expected such heavy-handed police action to be ordered. The crackdown, however, underlined the very point of the protesters, that the neoliberal state, whatever its political makeup, is protecting the same set of wealthy miscreants.

    Spain's "indignados" (indignant ones) got their start in mid-May with huge protests at Madrid's Puerta del Sol Plaza against the country's persistent 21 per cent unemployment rate (and double that among the young). Egyptian activists in Tahrir Square immediately sent a statement of warm support to those in the Spanish capital (as they would months later to New York's demonstrators). Again following the same pattern, the Spanish movement does not restrict its objections to unemployment (and the lack of benefits attending the few new temporary or contract jobs that do arise). Its targets are the banks, bank bailouts, financial corruption and cuts in education and other services.

    Youth activists I met in Toledo and Madrid this summer denounced both of the country's major parties and, indeed, the very consumer society that emphasised wealth accumulation over community and material acquisition over personal enrichment. In the past two months Spain's young protesters have concentrated on demonstrating against cuts to education, with crowds of 70,000 to 90,000 coming out more than once in Madrid and tens of thousands in other cities. For marches in support of the Occupy Wall Street movement, hundreds of thousands reportedly took to the streets of Madrid and Barcelona, among other cities.

    The global reach and connectedness of these movements has yet to be fully appreciated. The Madrid education protesters, for example, cited for inspiration Chilean students who, through persistent, innovative, and large-scale demonstrations this summer and fall, have forced that country's neoliberal government, headed by the increasingly unpopular billionaire president Sebastian Pinera, to inject $1.6bn in new money into education. Neither the crowds of youth in Madrid nor those in Santiago are likely to be mollified, however, by new dorms and laboratories. Chilean students have already moved on from insisting on an end to an ever more expensive class-based education system to demands that the country's lucrative copper mines be nationalised so as to generate revenues for investment in education. In every instance, the underlying goal of specific protests by the youthful reformists is the neoliberal order itself.

    The word "union" was little uttered in American television news coverage of the revolutions in Tunisia and Egypt, even though factory workers and sympathy strikes of all sorts played a key role in them. The right-wing press in the US actually went out of its way to contrast Egyptian demonstrations against Mubarak with the Wisconsin rallies of government workers against Governor Scott Walker's measure to cripple the bargaining power of their unions.

    The Egyptians, Commentary typically wrote, were risking their lives, while Wisconsin's union activists were taking the day off from cushy jobs to parade around with placards, immune from being fired for joining the rallies. The implication: the Egyptian revolution was against tyranny, whereas already spoiled American workers were demanding further coddling.

    The American right has never been interested in recognising this reality: that forbidding unions and strikes is a form of tyranny. In fact, it wasn't just progressive bloggers who saw a connection between Tahrir Square and Madison. The head of the newly formed independent union federation in Egypt dispatched an explicit expression of solidarity to the Wisconsin workers, centering on worker's rights.

    At least, Commentary did us one favour: it clarified why the story has been told as it has in most of the American media. If the revolutions in Tunisia, Egypt and Libya were merely about individualistic political rights - about the holding of elections and the guarantee of due process - then they could be depicted as largely irrelevant to politics in the US and Europe, where such norms already prevailed.

    If, however, they centered on economic rights (as they certainly did), then clearly the discontents of North African youth when it came to plutocracy, corruption, the curbing of workers' rights, and persistent unemployment deeply resembled those of their American counterparts.

    The global protests of 2011 have been cast in the American media largely as an "Arab Spring" challenging local dictatorships - as though Spain, Chile and Israel do not exist. The constant speculation by pundits and television news anchors in the US about whether "Islam" would benefit from the Arab Spring functioned as an Orientalist way of marking events in North Africa as alien and vaguely menacing, but also as not germane to the day to day concerns of working Americans. The inhabitants of Zuccotti Park in lower Manhattan clearly feel differently.

    Facebook flash mobs

    If we focus on economic trends, then the neoliberal state looks eerily similar, whether it is a democracy or a dictatorship, whether the government is nominally right of centre or left of centre. As a package, deregulation, the privatisation of public resources and firms, corruption and forms of insider trading and interference in the ability of workers to organise or engage in collective bargaining have allowed the top one per cent in Israel, just as in Tunisia or the US, to capture the lion's share of profits from the growth of the last decades.

    Observers were puzzled by the huge crowds that turned out in both Tunis and Tel Aviv in 2011, especially given that economic growth in those countries had been running at a seemingly healthy five per cent per annum. "Growth", defined generally and without regard to its distribution, is the answer to a neoliberal question. The question of the 99 per cent, however, is: Who is getting the increased wealth? In both of those countries, as in the US and other neoliberal lands, the answer is: disproportionately the one per cent.

    If you were wondering why outraged young people around the globe are chanting such similar slogans and using such similar tactics (including Facebook "flash mobs"), it is because they have seen more clearly than their elders through the neoliberal shell game.

    Juan Cole is the Richard P. Mitchell Professor of History and the director of the Centre for South Asian Studies at the University of Michigan. His latest book, Engaging the Muslim World, is just out in a revised paperback edition from Palgrave Macmillan. He runs the Informed Comment website.

    A version of this article was first published on Tom Dispatch.

    The views expressed in this article are the author's own and do not necessarily reflect Al Jazeera's editorial policy.

    [Sep 15, 2016] Global Capitalism Crisis of Humanity and the Specter of 21st Century Fascism

    Yet another response [ to globalization] is that I term 21stcentury fascism. The ultra-right is an insurgent force in many countries. In broad strokes, this project seeks to fuse reactionary political power with transnational capital and to organise a mass base among historically privileged sectors of the global working class – such as white workers in the North and middle layers in the South – that are now experiencing heightened insecurity and the specter of downward mobility. It involves militarism, extreme masculinisation, homophobia, racism and racist mobilisations, including the search for scapegoats, such as immigrant workers and, in the West, Muslims. Twenty-first century fascism evokes mystifying ideologies, often involving race/culture supremacy and xenophobia, embracing an idealised and mythical past. Neo-fascist culture normalises and glamorises warfare and social violence, indeed, generates a fascination with domination that is portrayed even as heroic.
    Notable quotes:
    "... over-accumulation ..."
    "... Cyclical crises ..."
    "... . Structural crises ..."
    "... systemic crisis ..."
    "... social reproduction. ..."
    "... crisis of humanity ..."
    "... 1984 has arrived; ..."
    "... The crisis has resulted in a rapid political polarisation in global society. ..."
    "... In broad strokes, this project seeks to fuse reactionary political power with transnational capital and to organise a mass base among historically privileged sectors of the global working class ..."
    "... It involves militarism, extreme masculinisation, homophobia, racism and racist mobilisations, including the search for scapegoats, such as immigrant workers and, in the West, Muslims. ..."
    "... Neo-fascist culture normalises and glamorises warfare and social violence, indeed, generates a fascination with domination that is portrayed even as heroic. ..."
    May 27, 2014 | The World Financial Review

    World capitalism is experiencing the worst crisis in its 500 year history. Global capitalism is a qualitatively new stage in the open ended evolution of capitalism characterised by the rise of transnational capital, a transnational capitalist class, and a transnational state. Below, William I. Robinson argues that the global crisis is structural and threatens to become systemic, raising the specter of collapse and a global police state in the face of ecological holocaust, concentration of the means of violence, displacement of billions, limits to extensive expansion and crises of state legitimacy, and suggests that a massive redistribution of wealth and power downward to the poor majority of humanity is the only viable solution.

    The New Global Capitalism and the 21st Century Crisis

    The world capitalist system is arguably experiencing the worst crisis in its 500 year history. World capitalism has experienced a profound restructuring through globalisation over the past few decades and has been transformed in ways that make it fundamentally distinct from its earlier incarnations. Similarly, the current crisis exhibits features that set it apart from earlier crises of the system and raise the stakes for humanity. If we are to avert disastrous outcomes we must understand both the nature of the new global capitalism and the nature of its crisis. Analysis of capitalist globalisation provides a template for probing a wide range of social, political, cultural and ideological processes in this 21st century. Following Marx, we want to focus on the internal dynamics of capitalism to understand crisis. And following the global capitalism perspective, we want to see how capitalism has qualitatively evolved in recent decades.

    The system-wide crisis we face is not a repeat of earlier such episodes such as that of the the 1930s or the 1970s precisely because capitalism is fundamentally different in the 21st century. Globalisation constitutes a qualitatively new epoch in the ongoing and open-ended evolution of world capitalism, marked by a number of qualitative shifts in the capitalist system and by novel articulations of social power. I highlight four aspects unique to this epoch.1

    First is the rise of truly transnational capital and a new global production and financial system into which all nations and much of humanity has been integrated, either directly or indirectly. We have gone from a world economy, in which countries and regions were linked to each other via trade and financial flows in an integrated international market, to a global economy, in which nations are linked to each more organically through the transnationalisation of the production process, of finance, and of the circuits of capital accumulation. No single nation-state can remain insulated from the global economy or prevent the penetration of the social, political, and cultural superstructure of global capitalism. Second is the rise of a Transnational Capitalist Class (TCC), a class group that has drawn in contingents from most countries around the world, North and South, and has attempted to position itself as a global ruling class. This TCC is the hegemonic fraction of capital on a world scale. Third is the rise of Transnational State (TNS) apparatuses. The TNS is constituted as a loose network made up of trans-, and supranational organisations together with national states. It functions to organise the conditions for transnational accumulation. The TCC attempts to organise and institutionally exercise its class power through TNS apparatuses. Fourth are novel relations of inequality, domination and exploitation in global society, including an increasing importance of transnational social and class inequalities relative to North-South inequalities.

    Cyclical, Structural, and Systemic Crises

    Most commentators on the contemporary crisis refer to the "Great Recession" of 2008 and its aftermath. Yet the causal origins of global crisis are to be found in over-accumulation and also in contradictions of state power, or in what Marxists call the internal contradictions of the capitalist system. Moreover, because the system is now global, crisis in any one place tends to represent crisis for the system as a whole. The system cannot expand because the marginalisation of a significant portion of humanity from direct productive participation, the downward pressure on wages and popular consumption worldwide, and the polarisation of income, has reduced the ability of the world market to absorb world output. At the same time, given the particular configuration of social and class forces and the correlation of these forces worldwide, national states are hard-pressed to regulate transnational circuits of accumulation and offset the explosive contradictions built into the system.

    Is this crisis cyclical, structural, or systemic? Cyclical crises are recurrent to capitalism about once every 10 years and involve recessions that act as self-correcting mechanisms without any major restructuring of the system. The recessions of the early 1980s, the early 1990s, and of 2001 were cyclical crises. In contrast, the 2008 crisis signaled the slide into astructural crisis. Structural crises reflect deeper contradictions that can only be resolved by a major restructuring of the system. The structural crisis of the 1970s was resolved through capitalist globalisation. Prior to that, the structural crisis of the 1930s was resolved through the creation of a new model of redistributive capitalism, and prior to that the structural crisis of the 1870s resulted in the development of corporate capitalism. A systemic crisis involves the replacement of a system by an entirely new system or by an outright collapse. A structural crisis opens up the possibility for a systemic crisis. But if it actually snowballs into a systemic crisis – in this case, if it gives way either to capitalism being superseded or to a breakdown of global civilisation – is not predetermined and depends entirely on the response of social and political forces to the crisis and on historical contingencies that are not easy to forecast. This is an historic moment of extreme uncertainty, in which collective responses from distinct social and class forces to the crisis are in great flux.

    Hence my concept of global crisis is broader than financial. There are multiple and mutually constitutive dimensions – economic, social, political, cultural, ideological and ecological, not to mention the existential crisis of our consciousness, values and very being. There is a crisis of social polarisation, that is, of social reproduction. The system cannot meet the needs or assure the survival of millions of people, perhaps a majority of humanity. There are crises of state legitimacy and political authority, or of hegemony and domination. National states face spiraling crises of legitimacy as they fail to meet the social grievances of local working and popular classes experiencing downward mobility, unemployment, heightened insecurity and greater hardships. The legitimacy of the system has increasingly been called into question by millions, perhaps even billions, of people around the world, and is facing expanded counter-hegemonic challenges. Global elites have been unable counter this erosion of the system's authority in the face of worldwide pressures for a global moral economy. And a canopy that envelops all these dimensions is a crisis of sustainability rooted in an ecological holocaust that has already begun, expressed in climate change and the impending collapse of centralised agricultural systems in several regions of the world, among other indicators.

    By a crisis of humanity I mean a crisis that is approaching systemic proportions, threatening the ability of billions of people to survive, and raising the specter of a collapse of world civilisation and degeneration into a new "Dark Ages."2

    Global capitalism now couples human and natural history in such a way as to threaten to bring about what would be the sixth mass extinction in the known history of life on earth.

    This crisis of humanity shares a number of aspects with earlier structural crises but there are also several features unique to the present:

    1. The system is fast reaching the ecological limits of its reproduction. Global capitalism now couples human and natural history in such a way as to threaten to bring about what would be the sixth mass extinction in the known history of life on earth.3 This mass extinction would be caused not by a natural catastrophe such as a meteor impact or by evolutionary changes such as the end of an ice age but by purposive human activity. According to leading environmental scientists there are nine "planetary boundaries" crucial to maintaining an earth system environment in which humans can exist, four of which are experiencing at this time the onset of irreversible environmental degradation and three of which (climate change, the nitrogen cycle, and biodiversity loss) are at "tipping points," meaning that these processes have already crossed their planetary boundaries.
    2. The magnitude of the means of violence and social control is unprecedented, as is the concentration of the means of global communication and symbolic production and circulation in the hands of a very few powerful groups. Computerised wars, drones, bunker-buster bombs, star wars, and so forth, have changed the face of warfare. Warfare has become normalised and sanitised for those not directly at the receiving end of armed aggression. At the same time we have arrived at the panoptical surveillance society and the age of thought control by those who control global flows of communication, images and symbolic production. The world of Edward Snowden is the world of George Orwell; 1984 has arrived;
    3. Capitalism is reaching apparent limits to its extensive expansion. There are no longer any new territories of significance that can be integrated into world capitalism, de-ruralisation is now well advanced, and the commodification of the countryside and of pre- and non-capitalist spaces has intensified, that is, converted in hot-house fashion into spaces of capital, so that intensive expansion is reaching depths never before seen. Capitalism must continually expand or collapse. How or where will it now expand?
    4. There is the rise of a vast surplus population inhabiting a "planet of slums,"4 alienated from the productive economy, thrown into the margins, and subject to sophisticated systems of social control and to destruction – to a mortal cycle of dispossession-exploitation-exclusion. This includes prison-industrial and immigrant-detention complexes, omnipresent policing, militarised gentrification, and so on;
    5. There is a disjuncture between a globalising economy and a nation-state based system of political authority. Transnational state apparatuses are incipient and have not been able to play the role of what social scientists refer to as a "hegemon," or a leading nation-state that has enough power and authority to organise and stabilise the system. The spread of weapons of mass destruction and the unprecedented militarisation of social life and conflict across the globe makes it hard to imagine that the system can come under any stable political authority that assures its reproduction.

    Global Police State

    How have social and political forces worldwide responded to crisis? The crisis has resulted in a rapid political polarisation in global society. Both right and left-wing forces are ascendant. Three responses seem to be in dispute.

    One is what we could call "reformism from above." This elite reformism is aimed at stabilising the system, at saving the system from itself and from more radical responses from below. Nonetheless, in the years following the 2008 collapse of the global financial system it seems these reformers are unable (or unwilling) to prevail over the power of transnational financial capital. A second response is popular, grassroots and leftist resistance from below. As social and political conflict escalates around the world there appears to be a mounting global revolt. While such resistance appears insurgent in the wake of 2008 it is spread very unevenly across countries and regions and facing many problems and challenges.

    Yet another response is that I term 21stcentury fascism.5 The ultra-right is an insurgent force in many countries. In broad strokes, this project seeks to fuse reactionary political power with transnational capital and to organise a mass base among historically privileged sectors of the global working class – such as white workers in the North and middle layers in the South – that are now experiencing heightened insecurity and the specter of downward mobility. It involves militarism, extreme masculinisation, homophobia, racism and racist mobilisations, including the search for scapegoats, such as immigrant workers and, in the West, Muslims. Twenty-first century fascism evokes mystifying ideologies, often involving race/culture supremacy and xenophobia, embracing an idealised and mythical past. Neo-fascist culture normalises and glamorises warfare and social violence, indeed, generates a fascination with domination that is portrayed even as heroic.

    The need for dominant groups around the world to secure widespread, organised mass social control of the world's surplus population and rebellious forces from below gives a powerful impulse to projects of 21st century fascism. Simply put, the immense structural inequalities of the global political economy cannot easily be contained through consensual mechanisms of social control. We have been witnessing transitions from social welfare to social control states around the world. We have entered a period of great upheavals, momentous changes and uncertainties. The only viable solution to the crisis of global capitalism is a massive redistribution of wealth and power downward towards the poor majority of humanity along the lines of a 21st century democratic socialism, in which humanity is no longer at war with itself and with nature.

    About the Author

    William I. Robinson is professor of sociology, global and international studies, and Latin American studies, at the University of California-Santa Barbara. Among his many books are Promoting Polyarchy (1996), Transnational Conflicts (2003), A Theory of Global Capitalism (2004), Latin America and Global Capitalism (2008), and Global Capitalism and the Crisis of Humanity (2014).

    [Sep 14, 2016] Yes, Donald Trump is wrong about unemployment. But he's not the only one

    Spirited defense of the establishment from one of financial oligarchy members. " The economy overall is doing just fine." Does this include QE? If the Fed is pouring billions of new money into the economy, how accurate is it to say that the economy is doing just fine?
    Notable quotes:
    "... "That was a number that was devised, statistically devised, to make politicians - and in particular, presidents - look good. And I wouldn't be getting the kind of massive crowds that I'm getting if the number was a real number." ..."
    "... In the 1950s and 1960s, for instance, organized labor was fairly convinced that the government was purposely underestimating inflation and the cost of living to keep Social Security payments low and wages from rising. George Meany, the powerful head of the American Federation of Labor at the time, claimed that the Bureau of Labor Statistics, which compiled both employment and inflation numbers, had "become identified with an effort to freeze wages and is not longer a free agency of statistical research." ..."
    "... Employment figures are sometimes seen as equally suspect. Jack Welch, the once-legendary former CEO of GE, blithely accused the Obama administration of manipulating the final employment report before the 2012 election to make the economic recovery look better than it was. "Unbelievable jobs numbers … these Chicago guys will do anything … can't debate so change numbers," he tweeted ..."
    "... His arguments were later fleshed out by New York Post columnist John Crudele , who went on to charge the Census Bureau (which works with BLS to create the samples for the unemployment rate) with faking and fabricating the numbers to help Obama win reelection. ..."
    "... The chairman of the Gallup organization, Jim Clifton, sees so many flaws with the way unemployment is measured that he has called the official rate a "Big Lie." In the Democratic presidential campaign, Bernie Sanders has also weighed in, saying the real unemployment rate is at best above 10 percent. ..."
    "... What a useless article. The author explains precisely nothing about what the official statistics do and do not measure, what they miss and what they capture. ..."
    "... I had the same impression as well. Notice he does not mention that the Gallop number is over 10% and is based on their polling data. ..."
    "... But never mentioned that Reagan changed how Unemployment was figured in the early 80's. He included all people in the military service, as employed. Before that, they was counted neither way. He also intentionally left out that when Obama, had the unemployed numbers dropped one month before the election, from 8.1% to 7.8% --because it was believed that no one could be reelected if it was above 8%. ..."
    "... U6 is 9.8% for March 2016. We still have 94 million unemployed and you want to say its 5 % what journalistic malpractice. ..."
    "... Trump has emphasized that he is looking at the percent of the population that is participating in the workforce - and that this participation rate is currently at historical lows -- and Trump has been clear that his approach to paying down the national debt is based on getting the participation rates back to historical levels ..."
    "... "The government can't lie about a hundred billion dollars of Social Security money stolen for the Clinton 'balanced budget', that would be a crime against the citizens, they would revolt. John, come one now. " ..."
    "... I didn't say it first, Senator Ernest Hollings did, on the Senate floor. ..."
    "... And here is how they did it: http://www.craigsteiner.us/articles/16 ..."
    "... There is plenty of evidence the figures are cooked, folks, enough to fill a book: Atlas Shouts. Don't believe trash like this article claims. GDP, unemployment and inflation are all manipulated numbers, as Campbell's Law predicts. ..."
    "... I can't believe the Washington Post prints propaganda like this. ..."
    "... I do remember when the officially-announced unemployment rate stopped including those who were no longer looking for work. That *was* a significant shift, and there's no doubt it made politicians (Reagan, I think it was) look better; of course, no President since then has reversed it, as it would instantly make themselves look worse. ..."
    "... Working one hour a week, at minimum wage, is 'employed', according to the government. No wonder unemployment is at 5%. ..."
    "... Add in people who are working, but want and need full time jobs, add in people who have dropped out of the labor market and/or retired earlier than they wanted to, and unemployment is at least 10%. Ten seconds on Google will show you that. ..."
    "... The writer should be sacked for taking a very serious issue and turning it into a piece of non-informative fluff. Bad mouthing Trump and Sanders is the same as endorsing Hilly. ..."
    Apr 08, 2016 | The Washington Post
    Yes, Donald Trump is wrong about unemployment. But he's not the only one. - The Washington Post

    Listen to President Obama, and you'll hear that job growth is stronger than at any point in the past 20 years, and - as he said in his final State of the Union address - "anyone claiming that America's economy is in decline is peddling fiction."

    Listen to Donald Trump and you'll hear something completely different. The billionaire Republican candidate for president told The Washington Post last week that the economy is one big Federal Reserve bubble waiting to burst, and that as for job growth, "we're not at 5 percent unemployment. We're at a number that's probably into the 20s if you look at the real number." Not only that, Trump said, but the numbers are juiced: "That was a number that was devised, statistically devised, to make politicians - and in particular, presidents - look good. And I wouldn't be getting the kind of massive crowds that I'm getting if the number was a real number."

    It's easy enough to dismiss - as a phalanx of economists and analysts did - Trump's claims as yet another one of his all-too-frequent campaign lines that have little to do with reality. But with this one, at least, Trump is tapping into a deep and mostly overlooked well of popular suspicion of government numbers and a deeply held belief that what "we the people" are told about the economy by the government is lies, damn lies and statistics designed to benefit the elite at the expense of the working class. The stubborn persistence of these beliefs should be a reminder that just because the United States is doing well in general, that doesn't mean everyone in the country is. It's also a warning to experts and policymakers that in the real world, there is no "the economy," there are many, and generalizations have a way of glossing over some very rough patches.

    Since the mid-20th century, when the U.S. government began keeping and compiling our modern suite of economic numbers, there has been constant skepticism of the reports, coming from different corners depending on economic trends and the broader political climate. In the 1950s and 1960s, for instance, organized labor was fairly convinced that the government was purposely underestimating inflation and the cost of living to keep Social Security payments low and wages from rising. George Meany, the powerful head of the American Federation of Labor at the time, claimed that the Bureau of Labor Statistics, which compiled both employment and inflation numbers, had "become identified with an effort to freeze wages and is not longer a free agency of statistical research."

    Over the decades, those views hardened. Throughout the 1970s, as workers struggled with unemployment and stagflation, the government continually tweaked its formulas for measuring prices. By and large, these changes and new formulas were designed to make the figures more accurate in a fast-changing world. But for those who were already convinced the government was trying to paint a deliberately false picture, the tweaks and innovations were interpreted as a devious way to avoid spending money to help the ailing middle class, not trying to measure what was actually happening to design policies to help address it. The commissioner of BLS at the time, Janet Norwood, dismissed those concerns in testimony to Congress in the late 1970s, saying that when people don't get the number they want, "they feel there must be something wrong with the indicator itself."

    Employment figures are sometimes seen as equally suspect. Jack Welch, the once-legendary former CEO of GE, blithely accused the Obama administration of manipulating the final employment report before the 2012 election to make the economic recovery look better than it was. "Unbelievable jobs numbers … these Chicago guys will do anything … can't debate so change numbers," he tweeted after that last October report showed better-than-expected job growth and lower-than-anticipated unemployment rate. His arguments were later fleshed out by New York Post columnist John Crudele, who went on to charge the Census Bureau (which works with BLS to create the samples for the unemployment rate) with faking and fabricating the numbers to help Obama win reelection.

    These views are not fringe. Type the search terms "inflation is false" into Google, and you will get reams of articles and analysis from mainstream outlets and voices, including investment guru Bill Gross (who referred to inflation numbers as a "haute con job"). Similar results pop up with the terms "real unemployment rate," and given how many ways there are to count employment, there are legitimate issues with the headline number.

    The cohort that responds to Trump reads those numbers in a starkly different light from the cohort laughing at him for it. Whenever the unemployment rate comes out showing improvement and hiring, those who are experiencing dwindling wages and shrinking opportunities might see a meticulously constructed web of lies meant to paint a positive picture so that the plight of tens of millions who have dropped out of the workforce can be ignored. The chairman of the Gallup organization, Jim Clifton, sees so many flaws with the way unemployment is measured that he has called the official rate a "Big Lie." In the Democratic presidential campaign, Bernie Sanders has also weighed in, saying the real unemployment rate is at best above 10 percent.

    Beneath the anger and the distrust - which extend to a booming stock market that helps the wealthy and banks flush with profit even after the financial crisis - there lies a very real problem with how economists, the media and policymakers discuss economics. No, the bureaucrats in the Labor and Commerce departments who compile these numbers aren't a cabal engaged in a cover-up. And no, the Fed is not an Illuminati conspiracy. But the idea that a few simple big numbers that are at best averages to describe a large system we call "the economy" can adequately capture the stories of 320 million people is a fiction, one that we tell ourselves regularly, and which millions of people know to be false to their own experience.

    It may be true that there is a national unemployment rate measured at 5 percent. But it is also true that for white men without a college degree, or white men who had worked factory jobs until the mid-2000s with no more than a high school education, the unemployment reality is much worse (though it's even worse for black and Hispanic men, who don't seem to be responding by flocking to Trump in large numbers). Even when those with these skill sets can get a job, the pay is woefully below a living wage. Jobs that don't pay well still count, in the stats, as jobs. Telling people who are barely getting by that the economy is just fine must appear much more than insensitive. It is insulting, and it feels like a denial of what they are experiencing.

    The chords Trump strikes when he makes these claims, therefore, should be taken more seriously than the claims themselves. We need to be much more diligent in understanding what our national numbers do and do not tell us, and how much they obscure. In trying to hang our sense of what's what on a few big numbers, we risk glossing over the tens of millions whose lives don't fit those numbers and don't fit the story. "The economy" may be doing just fine, but that doesn't mean that everyone is. Inflation might be low, but millions can be struggling to meet basic costs just the same.

    So yes, Trump is wrong, and he's the culmination of decades of paranoia and distrust of government reports. The economy overall is doing just fine. But people are still struggling. We don't have to share the paranoia or buy into the conspiratorial narrative to acknowledge that. A great nation, the one Trump promises to restore, can embrace more than one story, and can afford to speak to those left out of our rosy national numbers along with those whose experience reflect them.

    the3sattlers, 4/8/2016 1:05 PM EDT

    " The economy overall is doing just fine." Does this include QE? If the Fed is pouring billions of new money into the economy, how accurate is it to say that the economy is doing just fine?

    james_harrigan, 4/8/2016 10:14 AM EDT

    What a useless article. The author explains precisely nothing about what the official statistics do and do not measure, what they miss and what they capture.

    Derbigdog, 4/8/2016 11:40 AM EDT

    I had the same impression as well. Notice he does not mention that the Gallop number is over 10% and is based on their polling data.

    captdon1, 4/8/2016 5:51 AM EDT

    Not reported by WP
    The first two years of Obama's presidency Democrats controlled the house and Senate. The second two years, Republicans controlled the Senate. The last two years of Obama's term, the Republicans controlled house and Senate. During this six years the national debt increase $10 TRILLION and the Government collected $9 TRILLION in taxes and borrowed $10 TRILLION. ($19 Trillion In Six Years!!!) (Where did our lovely politicians spend this enormous amount of money??? (Republicans and Democrats!)

    reussere, 4/8/2016 1:43 AM EDT

    Reading the comments below it strikes me again and again how far out of whack most people are with reality. It's absolutely true that using a single number for the employment rate reflects the overall average of the economy certainly doesn't measure how every person is doing, anymore than an average global temperature doesn't measure any local temperatures.

    One thing not emphasized in the article is that there is a number of different statistics. The 5% figure refers to the U-3 statistic. Nearly all of the rest of the employment statistics are higher, some considerably so because they include different groups of people. But when you compare U-3 from different years, you are comparing apples and apples. The rest of the numbers very closely track with U-3. That is when U-3 goes up and down, U-6 go up and down pretty much in lockstep.

    It is unfortunate that subpopulations of Americans are doing far worse (and some doing far better) than average. But that is the nature of averages after all. It is simply impossible for a single number (or even a group of a dozen different employment measurements) to accurately reflect a complex reality.

    Smoothcountryside, 4/8/2016 12:04 PM EDT

    The alternative measures of labor underutilization are defined as U-1 through U-6 with U-6 being the broadest measure and probably the closes to the "true" level of unemployment. Otherwise, all the rest of your commentary is correct.

    southernbaked, 4/7/2016 11:02 PM EDT

    Because this highly educated writer is totally bias, he left out some key parts, I personally lived though. He referred back to the late 70's twice. But never mentioned that Reagan changed how Unemployment was figured in the early 80's. He included all people in the military service, as employed. Before that, they was counted neither way. He also intentionally left out that when Obama, had the unemployed numbers dropped one month before the election, from 8.1% to 7.8% --because it was believed that no one could be reelected if it was above 8%.

    Then after he was sworn in--- in January, they had to readjust the numbers back up. They blamed it on one employees mistakes-- PS. no one was fired or disciplined for fudging. Bottom line is, for every 1.8 manufacturing job, there are 2 government jobs, that is disaster. Because this writer is to young to have lived in America when it was great. When for every 1 government job, you had 3 manufacturing jobs.

    I will enlighten him. I joined the workforce -- With no higher education -- when you merely walked down the road, and picked out a job. Because jobs hang on trees like apples. By 35 I COMPLETELY owned my first 3 bedroom brick house, and the 2 newer cars parked in the driveway. Anyone care to try that now ??

    As for all this talk about education-- I have a bit of knowledge about that subject-- because I paid in full to send all under my roof through it. Without one dime of aide from anyone. The above writer is proof-- you can be heavily educated, and DEAD WRONG. There is nothing good about this economy. Signed, UN-affiliated to either corrupted party

    Bluhorizons, 4/7/2016 9:43 PM EDT

    "we're not at 5 percent unemployment. We're at a number that's probably into the 20s if you look at the real number." Trump is correct. The unemployment data is contrived from data about people receiving unemployment compensation but the people who's unemployment has ended and people who have just given up is invisible.

    "It may be true that there is a national unemployment rate measured at 5 percent. But it is also true that for white men without a college degree, or white men who had worked factory jobs until the mid-2000s with no more than a high school education, the unemployment reality is much worse "

    The author goes on and on about the legitimate distrust of government unemployment data and then tells us Trump is wrong. But the article convinces us Trump is right! So, this article its not really about the legitimate distrust of government data is is about the author's not liking Trump. Typical New Left bs

    Aushax, 4/7/2016 8:24 PM EDT

    Last jobs report before the 2012 election the number unusually dropped then was readjusted up after the election. Coincidentally?

    George Mason, 4/7/2016 8:15 PM EDT

    U6 is 9.8% for March 2016. We still have 94 million unemployed and you want to say its 5 % what journalistic malpractice.

    F mackey, 4/7/2016 7:57 PM EDT

    hey reporter,Todays WSJ, More than 40% of the student borrowers aren't making payments? WHY? easy,they owe big $ money$ & cant get a job or a well paying job to pay back the loans,hey reporter,i'd send you $10 bucks to buy a clue,but you'd probably get lost going to the store,what a %@%@%@,another reporter,who doesn't have a clue on whats going on,jmo

    SimpleCountryActuary, 4/7/2016 7:57 PM EDT

    This reporter is a Hillary tool. Even the Los Angeles Times on March 6th had to admit:

    "Trump is partly right in saying that trade has cost the U.S. economy jobs and held down wages. He may also be correct - to a degree - in saying that low-skilled immigrants have depressed salaries for certain jobs or industries..."

    If this is the quality of reporting the WaPo is going to provide, namely even worse than the Los Angeles Times, then Bezos had better fire the editorial staff and buy a new one.

    Clyde4, 4/7/2016 7:34 PM EDT [Edited]

    This article dismissing Trump is exactly what is wrong with journalism today - all about creating a false reality for people instead of investigating and reporting

    Trump has emphasized that he is looking at the percent of the population that is participating in the workforce - and that this participation rate is currently at historical lows -- and Trump has been clear that his approach to paying down the national debt is based on getting the participation rates back to historical levels

    The author completely ignored the big elephant in the room -- that is irresponsible journalism

    The author may want to look into how the unemployment rate shot up in 2008 when the government extended benefits and then the unemployment rate plummeted again when unemployment benefits were decrease (around 2011, I believe) - if I were the author I would do a little research into whether the unemployment rate correlates with how much is paid out in benefits or with unemployment determined through some other approach (like surveys

    dangerbird1225, 4/7/2016 7:25 PM EDT

    Bunch of crap. If you stop counting those that stop looking for a job, your numbers are wrong. Period. Why didn't this apologist for statistics mention that?

    watchkeptoverthewatcher, 4/7/2016 6:27 PM EDT

    Ya with a labor participation rate of 63%

    http://data.bls.gov/timeseries/LNS11300000

    AtlasRocked, 4/7/2016 5:12 PM EDT

    "The government can't lie about a hundred billion dollars of Social Security money stolen for the Clinton 'balanced budget', that would be a crime against the citizens, they would revolt. John, come one now. "

    I didn't say it first, Senator Ernest Hollings did, on the Senate floor.

    "Both Democrats and Republicans are all running this year and next and saying surplus, surplus. Look what we have done. It is false. The actual figures show that from the beginning of the fiscal year until now we had to borrow $127,800,000,000." - Senate speech, Democratic Senator Ernest Hollings, October 28, 1999

    http://www.c-span.org/video/?c3319676 at 5:30

    And here is how they did it: http://www.craigsteiner.us/articles/16

    rgengel, 4/7/2016 5:03 PM EDT

    Go to New Orleans Chicago Atlanta Los Angeles Detroit stop anybody on the street and ask if unemployment is 5% and that there is a 95% chance a guy can get a job.

    Then you will have a statistic reference point. Its not a Democratic or republican issue because both of them have manipulated the system for so long its meaningless. Go Trump 2016 and get this crap sorted out with common sense plain English

    AtlasRocked, 4/7/2016 4:37 PM EDT

    There is plenty of evidence the figures are cooked, folks, enough to fill a book: Atlas Shouts. Don't believe trash like this article claims. GDP, unemployment and inflation are all manipulated numbers, as Campbell's Law predicts.

    I can't believe the Washington Post prints propaganda like this.

    TimberDave, 4/7/2016 2:23 PM EDT

    I do remember when the officially-announced unemployment rate stopped including those who were no longer looking for work. That *was* a significant shift, and there's no doubt it made politicians (Reagan, I think it was) look better; of course, no President since then has reversed it, as it would instantly make themselves look worse.

    astroboy_2000, 4/7/2016 1:28 PM EDT

    This would be a much more intelligent article if the writer actually said what the government considers as 'employed'.

    Working one hour a week, at minimum wage, is 'employed', according to the government. No wonder unemployment is at 5%.

    Add in people who are working, but want and need full time jobs, add in people who have dropped out of the labor market and/or retired earlier than they wanted to, and unemployment is at least 10%. Ten seconds on Google will show you that.

    The writer should be sacked for taking a very serious issue and turning it into a piece of non-informative fluff. Bad mouthing Trump and Sanders is the same as endorsing Hilly.

    Manchester0913, 4/7/2016 2:12 PM EDT

    The number you're referencing is captured under U6. However, U3 is the traditional measure.

    Son House, 4/7/2016 2:24 PM EDT

    The government doesn't claim that working one hour a week is employed. Google U 3 unemployment. Then google U 6 unemployment. You can be enlightened.

    Liz in AL, 4/7/2016 7:21 PM EDT

    I've found this compilation of all 6 of the "U-rates" very useful. It encompasses the most restrictive (and thus smallest) U-1 rate, though the most expansive U-6. It provides brief descriptions of what gets counted for each rate, and (at least for more recent years) provides the ability to compare at the monthly level of detail. U6 Unemployment Rate Portal Seven

    [Sep 14, 2016] The Global Economic Crisis and the Future of Neoliberal Globalization Rupture Versus Continuity by Ali Burak Güven, Ziya Öni

    papers.ssrn.com

    This article outlines the main elements of rupture and continuity in the global political economy since the global economic crisis of 2008-2009. While the current calamity poses a more systemic challenge to neoliberal globalization than genetically similar turbulences in the semi-periphery during the 1990s, we find that evidence for its transformative significance remains mixed. Efforts to reform the distressed capitalist models in the North encounter severe resistance, and the broadened multilateralism of the G-20 is yet to provide effective global economic governance. Overall, neoliberal globalization looks set to survive, but in more heterodox and multipolar fashion. Without tighter coordination between old and emerging powers, this new synthesis is unlikely to inspire lasting solutions to pressing global problems such as an unsustainable international financial architecture and the pending environmental catastrophe, and may even fail to preserve some modest democratic and developmental gains of the recent past.

    [Sep 14, 2016] Its not hard to see the thinking behind BIG from the Silicon Valley, elite perspective

    Notable quotes:
    "... A growing body of research indicates that the financial and psychological damage from a period of joblessness can be significant and long-lasting, especially for people who remain out of work for an extended period. ..."
    "... Friedman is just doing his job. The Saddam's WMDs paper endorsed Hillary on Jan 31st, and is part of the campaign of lies, deceptions and cover-ups. ..."
    "... As with television, it's healthier not to pollute one's mind with NYT propaganda. Reading the idiotic headlines is enough to realize that the "content" is crap. ..."
    "... Predictably, the comments on the NYT op-ed (by the "Suck on this, Iraq!" Friedman) are more thoughtful and reality-based than the author's column. ..."
    "... Libya and Syria and Ukraine were NOT just bad judgment calls. However, they were three consecutive bad judgment calls, with no good ones to offset. That still matters. ..."
    "... Libya and Syria and Ukraine were also lies, coming from the mouth of Hillary, and harming the country by tossing us into more wars. ..."
    "... I really wonder how Friedman and the other NYT Iraq war cheerleaders can look at themselves in the mirror each morning. And excellent point about Snowden, of course. ..."
    Jun 01, 2016 | www.nakedcapitalism.com
    diptherio , June 1, 2016 at 2:40 pm

    It's not hard to see the thinking behind BIG from the Silicon Valley, elite perspective. They understand that putting everybody out of work from robotics or out-sourcing is a sure-fire way to create massive discontent. They think this is a clever way of keeping the losers contented (enough to not revolt) while maintaining their elevated position within the system. They don't care what the system looks like, really, just so long as they get to sit on top. They think this is a way to avert the revolution that they know, from reading Marx and thinking about it a little, their actions are sure to lead to, ceteris paribus .

    However, I think they underestimate the extent to which our continual trade deficits are predicated on the US dollar being the world's reserve currency. That status may not be in danger in the short term, but I think it's doomed to extinction over the medium term, as the BRICS and other countries maneuver their way out from under the thumb of the petro-dollar.

    But the up-side is that they're mainstreaming an MMT understanding of macroeconomics and, as old John used to say, "ideas have a way of taking on a life of their own." Also, some poor people might actually end up being benefited as a side-effect of the elites trying to keep the lower orders manageable. I mean, that's really what the New Deal was about, no? FDR wasn't fighting for the working man, he just realized that exploiting them too much could crash the whole system and be much worse for his class, the elites, than a little Social Security was. FDR wasn't looking to overturn class relations, but maintain them. He just had a more nuanced understanding of self-interest than many of his class peers (that oughta get some people fuming). Still, whatever the motivation, the programs had the practical effect of making a lot of people's lives better. Why shouldn't it be the same in this situation?

    Lambert Strether Post author , June 1, 2016 at 2:53 pm

    Not that I'm foily, but if you combine the abolition of cash, BIG in the form of a digital deposit, retail tracking everywhere, and the precedent (from ObamaCare) of a mandate to participate in certain markets, you can concoct quite a dystopia….

    diptherio , June 1, 2016 at 4:00 pm

    Yeah, the "BIG Brother" jokes are just too easy.

    I think we need to have a movement to defend cash. Small business owners should lead the charge, since card fees hit them the hardest. I see a possible coalition…anti-surveillance activists and guys like the owner of the pizza joint I frequent whose register bears a sign that reads "Cards accepted, Cash preferred."

    diptherio , June 1, 2016 at 4:04 pm

    Also, a BIG would be a great excuse to start-up the Postal Bank. Everybody will get an account tied to their SSN that their BIG gets deposited in, accessible (in cash) at any post office. It might just be sell-able…at least to the public, if not to Wall Street.

    Romancing the Loan , June 1, 2016 at 4:18 pm

    Take it another step and have "consumer choice" in lieu of voting. I like it; a good sci-fi writer needs to get on this.

    ChiGal , June 1, 2016 at 4:51 pm

    Whenever I hear about TPTB doing away with cash I am reminded of Margaret Atwood's prescient (from the 80s I think!) novel about a patriarchal dystopian future, The Handmaid's Tale – freezing the bank accounts is how it all started.

    aletheia33 , June 1, 2016 at 2:51 pm

    "A growing body of research indicates that the financial and psychological damage from a period of joblessness can be significant and long-lasting, especially for people who remain out of work for an extended period."

    quelle surprise! are poor, working, and middle-class people's well-being actually closely tied to how many days in their lives they can work? hoocoodanode?

    jrs , June 1, 2016 at 3:11 pm

    I hear they have really low well being in Europe with their 6 weeks vacations and way more holidays and stuff. They throw themselves off bridges at the start of every vacation season. Nah it's tied to having an income or not, not how many days they work.

    aletheia33 , June 1, 2016 at 3:24 pm

    right, thanks!

    i always forget about that because i've always worked as in independent contractor, staying sane by pretending benefits and paid holidays and vacations are not all that important in life. and i must say, lately i do see TPTB cashing in on my idea, bigtime. i should have placed some bets on that happening…

    polecat , June 1, 2016 at 9:50 pm

    I haven't worked a paying job for about 14 years….the wife works the day gig, while I maintain the abode, do household repairs, garden, tend to the bees & chickens…..etc. …… I'm 'working' my way on the downslope of collapse…'avoiding the rush' as John M Greer is fond of saying…..

    ….still sane!

    MyLessThanPrimeBeef , June 1, 2016 at 3:26 pm

    That only happens to Sapiens humans.

    A cat's well-being is rarely tied to how many days it is out of work.

    Thus, I suspect either 1. we are not that superior or 2. we have been brainwashed.

    Or both.

    aletheia33 , June 1, 2016 at 3:35 pm

    i meant, in our current industrialized, work-ethic-based western society. which not coincidentally has had a lousy mental and physical health outcome for millions of people over time.
    but never mind. a rising water floats all boats.
    until it doesn't.

    C , June 1, 2016 at 3:01 pm

    'Hillary's fibs or lack of candor are all about bad judgments she made on issues that will not impact the future of either my family or my country. Private email servers? Cattle futures? Goldman Sachs lectures? All really stupid, but my kids will not be harmed by those poor calls. Debate where she came out on Iraq and Libya, if you will, but those were considered judgment calls, and if you disagree don't vote for her" [The Moustache of Understanding, New York Times]. You tell 'em, Tommy! Who cares about corruption? Corruption had nothing to do with Iraq!

    Of course they won't. You are well-off, well-connected, and work for a virtual organ of the state that has backed her every move. You and your framily are on the inside track and will of course be protected.

    It is everyone else that will be screwed.

    Jim Haygood , June 1, 2016 at 3:13 pm

    Friedman is just doing his job. The Saddam's WMDs paper endorsed Hillary on Jan 31st, and is part of the campaign of lies, deceptions and cover-ups.

    Journo-hos … the only surprise is that you can buy them so cheap.

    As with television, it's healthier not to pollute one's mind with NYT propaganda. Reading the idiotic headlines is enough to realize that the "content" is crap.

    MyLessThanPrimeBeef , June 1, 2016 at 3:44 pm

    Sounds like everyone should work for an organ (or a virtual organ, either way) of the state. Just make sure you're well-connected (the importance of being social – don't just bury yourself in books).

    Pavel , June 1, 2016 at 4:16 pm

    Predictably, the comments on the NYT op-ed (by the "Suck on this, Iraq!" Friedman) are more thoughtful and reality-based than the author's column. Here is a sample:

    Thomas Friedman on lies that hurt the country? Let's start that with the Iraq War.

    I agree that the emails probably didn't hurt the country, even if they were illegal and even if she does lie about them. However, Snowden did not hurt the country either, he told the truth, and Hillary goes after him with a vengeance for doing that in ways that benefited the country, that the NYT of Pentagon Papers days should support. She does that even while she lies about her emails, and that is a relevant character issue for the power she seeks.

    Libya and Syria and Ukraine were NOT just bad judgment calls. However, they were three consecutive bad judgment calls, with no good ones to offset. That still matters.

    Libya and Syria and Ukraine were also lies, coming from the mouth of Hillary, and harming the country by tossing us into more wars.

    –NYT comment by Mark Thomason

    I really wonder how Friedman and the other NYT Iraq war cheerleaders can look at themselves in the mirror each morning. And excellent point about Snowden, of course.

    [Sep 14, 2016] Bill Black We Send Teachers to Prison for Rigging the Numbers, Why Not Bankers

    Notable quotes:
    "... By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Jointly published with New Economic Perspectives ..."
    "... he's pursued abroad many also intuitively believe that there's no one who will hit back harder. There's some of that 'he may be a son-of-a-bitch but he's our son-of-a-bitch' quality to the president's support on national security issues. ..."
    "... Hence teachers weren't divisive enough and therefore are/were seen as part of the "problem". ..."
    Apr 02, 2015 | naked capitalism

    Yves here. One has to wonder if the prosecutorial investment in bringing down a public school test-cheating ring has less to do with concern about the students and more to do with charter schools.

    By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Jointly published with New Economic Perspectives

    The New York Times ran the story on April Fools' Day of a jury convicting educators of gaming the test numbers and lying about their actions to investigators.

    ATLANTA - In a dramatic conclusion to what has been described as the largest cheating scandal in the nation's history, a jury here on Wednesday convicted 11 educators for their roles in a standardized test cheating scandal that tarnished a major school district's reputation and raised broader questions about the role of high-stakes testing in American schools.

    On their eighth day of deliberations, the jurors convicted 11 of the 12 defendants of racketeering, a felony that carries up to 20 years in prison. Many of the defendants - a mixture of Atlanta public school teachers, testing coordinators and administrators - were also convicted of other charges, such as making false statements, that could add years to their sentences.

    This was complicated trial that took six months to present and required eight days of jury deliberations. It was a major commitment of investigative and prosecutorial resources. But it was not investigated and prosecuted by the FBI and AUSAs, but by state and local officials. In addition to the trial success, the prosecutors secured 21 guilty pleas.

    Atlanta's public schools, of course, did not engage in "the largest cheating scandal in the nation's history." The big banks' cheating scandals left the Atlanta educators in the dust.

    The two obvious questions are why the educators cheated and how they got caught. "High-stakes testing" cannot explain the scandal because we have had such tests for over 50 years. The article explains the real drivers – compensation, promotions, fear, and ego (aka "reputation").

    "Officials said the cheating allowed employees to collect bonuses and helped improve the reputations of both Dr. Hall and the perpetually troubled school district she had led since 1999.

    Investigators wrote in the report that Dr. Hall and her aides had 'created a culture of fear, intimidation and retaliation' that had permitted "cheating - at all levels - to go unchecked for years."

    Any reader familiar with my work should be running over in their mind Citigroup's vastly larger cheating frauds that senior managers produced by using exactly the same tactics to produce hundreds of billions of dollars in fraud.

    How did people become suspicious and decide to conduct a real investigation? They realized that the reported results were too good to be true. That too is directly parallel to Citi, where massive purchases of "liar's" loans known to be 90% fraudulent supposedly led to massive profits.

    The dozen educators who stood trial, including five teachers and a principal, were indicted in 2013 after years of questions about how Atlanta students had substantially improved their scores on the Criterion-Referenced Competency Test, a standardized examination given throughout Georgia.

    In 2009, The Atlanta Journal-Constitution started publishing a series of articles that sowed suspicion about the veracity of the test scores, and Gov. Sonny Perdue ultimately ordered an investigation.

    Wow, a newspaper did a series of articles, and documented a scandal built on deceit. Imagine if the New York Times and the Wall Street Journal were to do an "unsparing" investigation into banking fraud – and into Attorney General Eric Holder's refusal to prosecute. What if they actually looked at culpability in the C-suites?

    The inquiry, which was completed in 2011, led to findings that were startling and unsparing: Investigators concluded that cheating had occurred in at least 44 schools and that the district had been troubled by "organized and systemic misconduct." Nearly 180 employees, including 38 principals, were accused of wrongdoing as part of an effort to inflate test scores and misrepresent the achievement of Atlanta's students and schools.

    The investigators wrote that cheating was particularly ingrained in individual schools - at one, for instance, a principal wore gloves while she altered answer sheets - but they also said that the district's top officials, including Superintendent Beverly L. Hall, bore some responsibility.

    Dr. Hall, who died on March 2, insisted that she had done nothing wrong and that her approach to education, which emphasized data, was not to blame. "I can't accept that there's a culture of cheating," Dr. Hall said in an interview in 2011. "What these 178 are accused of is horrific, but we have over 3,000 teachers."

    But a Fulton County grand jury later accused her and 34 other district employees of being complicit in the cheating. Twenty-one of the educators reached plea agreements; two defendants, including Dr. Hall, died before they could stand trial.

    Of course, Hall's "approach to education" did not "emphasize data" – it emphasized faux data – like Citi's accounting alchemists under Robert Rubin who transmuted fraudulent net liabilities (liar's loans) into supposedly wondrously valuable assets that had zero risk (Super Senior CDO tranches).

    A more general point is in order. Atlanta is the culmination of destructive national trends and failing to mention Houston in the story was unfortunate. First, the "reinventing government" movement decided the public sector was bad and the private sector was magnificent and said that the public sector should adopt private sector approaches including quite specifically "performance pay" based on quantitative measures. This brought to the public sector the perverse incentives that were ruining the private sector and about to bring on Enron-era fraud epidemic and then the most recent three fraud epidemics. Second, we were assured by proponents of the change that a concern for "reputation" would trump any perverse incentives. What the proponents failed to see, of course, was that in both the private and public sectors the way to create a superb reputation was to report inflated data.

    Reputation, instead of the "trump" ensuring good conduct, was a leading motive to engage in bad conduct. Third, we were told that giving public administrators far more power to squash teachers was the key to success in education. Lord Acton warned that absolute power leads to absolute corruption whether in Atlanta or Citi's C-suite.

    Houston should have been mentioned because the modern movement toward educational fraud began in Houston under Rod Paige – who became Secretary of Education based on massive fraudulent misrepresentation of data. Paige kicked off the testing insanity, claiming it would produce objective, fact-based policies based on what educational measures actually worked. As a famous takedown of Paige's claims ends – the lesson is that it was too good to be true. President Bush, however, bought it hook, line, sinker, bobber, rod, and the boat Paige rowed out in.

    In any event, if Fulton County, Georgia can jail educators who lie and gimmick the data, Holder can send the elite bankers to prison on the same grounds.

    lakewoebegoner, April 2, 2015 at 10:41 am

    *** One has to wonder if the prosecutorial investment in bringing down a public school test-cheating ring has less to do with concern about the students and more to do with charter schools. ***

    I believe it's even simpler than that…..prosecuting teachers is perfect fodder for the local 11 o'clock news-you're prosecuting publiclly paid low-hanging fruit, the crime is understandable (versus explaining accounting fraud or intentional misvaluation of assets) and of course-my gosh, think of the children!

    NotTimothyGeithner, April 2, 2015 at 11:07 am

    Local DAs have incentive to prosecute large cases, and Holder made sure to make token plea deals with the banks. A successful state AG who brought down a major financial player would destroy the Obama Administration just by existing two years into the first term because there would be no excuse. Plenty of loyal Team Blue voters if pressed will explain the lack of prosecution as a GOP plot, but with a counter example in the papers they would be more demoralized than they are.

    RUKidding, April 2, 2015 at 12:11 pm

    Neither Team Blue or Team Red voters want to confront reality and truly see and acknowledge what's going on. The crooks in the District of Criminals have perfected their Kabuki Show of "hiding" behind each other's skirts and blaming the other side for all kinds of ills and perfidy. Tribalistic authoritarians can be lazy and not have to think for themselves and really DO something; just pass the clicker; lets all watch some "reality" tv show instead. Talk about the matrix….

    An example is my rightwing family members just recently celebrating quite a bit that Harry Reid has announced his retirement – as IF that'll be this amazingly good thing. Like: what will happen then? HOW, exactly, will "things get better" just bc they can't kick Harry Reid around anymore.

    Disclaimer: no love lost on my part vis Harry Reid. He's as much of a crook and worthless waste of space as all of the others, no matter which Team Jacket they wear. My take? What possible difference will it make if Reid retires or stays in the Senate indefinitely?

    RUKidding, April 2, 2015 at 10:59 am

    Teachers have no money. Bankers have a TON of money. Sucks to be in the 99s.

    Good comments. Right now, too, teachers have been deliberately painted to be the evilest of the vile because unions! get paid too much! can't be fired! blah de blah…. it's something easy for the masses to grasp – all those dreadful overpaid teachers who can't be fired "robbing" us of our taxes, while allegedly doing a totally shitty job. Yeah right. Of course privatized school teachers would most definitely do a "better" jawb.

    It's all "look over there!!!!!" while the bankers are the ones robbing us blind deaf dumb stupid etc.

    And yes, Charter Schools! Another way for the crooks at the top to rip off the 99s! woot!

    And the beat down goes on…..

    djrichard, April 2, 2015 at 12:09 pm

    I remember back when the Supreme Court was debating W vs Gore, I put it to my neighbors that W would be under the influence of big oil and other powers that be. One of my neighbors countered that Gore would be under the influence of teachers. I was the minority opinion in that conversation.

    RUKidding, April 2, 2015 at 12:14 pm

    No love lost on my part vis Gore, but seriously??? LIke Gore is "under the influence" of teachers??? Yeah, unions, but really? Like it's just so ridiculous. Teachers v Big Oil. Uh, er, that's pretty much like David v Goliath, but in this case Goliath/BigOil has totally crushed David/the 99s.

    djrichard, April 2, 2015 at 12:37 pm

    I'm surprised I found this, but I think this captures it.

    Bush's bully-boy campaign tactics play to his strengths, albeit unstated and unlovely ones. Many of the polls of the president have shown that while people don't necessarily agree with the specific policies he's pursued abroad many also intuitively believe that there's no one who will hit back harder. There's some of that 'he may be a son-of-a-bitch but he's our son-of-a-bitch' quality to the president's support on national security issues.

    This was from W v Kerry days. But I think the same principle was operating during W v Gore. During 2004, the idea was to continue to inflict W on the middle east. During 2000, I think the idea was to inflict W on the "deserving elements" inside the US (whatever those deserving elements are/were at the time).

    Teachers if anything represent a "big tent" mind-set, one in which there are no losers, or vice-versa one in which everyone is deserving of winning. Hence teachers weren't divisive enough and therefore are/were seen as part of the "problem".

    [Sep 12, 2016] http://krugman.blogs.nytimes.com/2009/10/09/modified-goldbugism-at-the-wsj/

    Sep 12, 2016 | blogs.nytimes.com

    October 9, 2009

    Modified Goldbugism At the WSJ
    By Paul Krugman

    So I was peacefully drinking my coffee this morning, and was accosted by someone waving the latest Wall Street Journal editorial on the dollar * in my face, demanding my reaction. Um, this is not cool. Also, with apologies to Brad DeLong, when reading WSJ editorials you need to bear two things in mind:

    1. The WSJ editorial page is wrong about everything.
    2. If you think the WSJ editorial page is right about something, see rule #1.

    After all, here's what you would have believed if you listened to that page over the years: Clinton's tax hike will destroy the economy, you really should check out those people suggesting that Clinton was a drug smuggler, Dow 36000, the Bush tax cuts will bring surging prosperity, Saddam is backing Al Qaeda and has WMD, there isn't any housing bubble, US households have a high savings rate if you measure it right. I'm sure I missed another couple of dozen high points.

    Today's editorial was in the grand tradition. A few months ago falling stock prices showed Obama's failure - never mind, we meant the falling dollar. And just to provide extra spice, the editorial cited David Malpass ** as the wise expert on all this.

    But more specifically, you need to see the Journal's fear of a weak dollar in terms of its long-term gold-bug position. The Journal has always maintained that changes in exchange rates play no useful role, that stable exchange rates - preferably enforced by some barbarous relic like the gold standard - are the essence of sound policy.

    I explained why this is all wrong a long time ago. *** But it's especially important to understand the wrongness of this view right now. If there's one overwhelming lesson from the Great Depression, it is that putting a higher priority on stabilizing your currency than on domestic recovery is utterly disastrous. Barry Eichengreen **** pointed out years ago that major economies went off gold in the following order: Japan, Britain, Germany, US, France. And here's what happened to their industrial output:

    [Slowest to leave the gold standard, slowest to recover.
    All that glitters went off gold.]

    The WSJ may not realize it, but it wants us to be France in the 1930s. Let's not.

    * http://online.wsj.com/article/SB10001424052748703746604574461473511618150.html

    ** http://bigpicture.typepad.com/comments/2008/03/malpass-ass.html

    *** http://www.pkarchive.org/cranks/goldbug.html

    **** http://braddelong.posterous.com/eichengreen-origins-and-nature

    Reply Saturday, November 14, 2015 at 05:19 PM

    anne said in reply to anne...

    http://www.pkarchive.org/cranks/goldbug.html

    November 22, 1996

    The Gold Bug Variations
    By Paul Krugman - Slate

    The legend of King Midas has been generally misunderstood. Most people think the curse that turned everything the old miser touched into gold, leaving him unable to eat or drink, was a lesson in the perils of avarice. But Midas' true sin was his failure to understand monetary economics. What the gods were really telling him is that gold is just a metal. If it sometimes seems to be more, that is only because society has found it convenient to use gold as a medium of exchange--a bridge between other, truly desirable, objects. There are other possible mediums of exchange, and it is silly to imagine that this pretty, but only moderately useful, substance has some irreplaceable significance.

    But there are many people--nearly all of them ardent conservatives--who reject that lesson. While Jack Kemp, Steve Forbes, and Wall Street Journal editor Robert Bartley are best known for their promotion of supply-side economics, they are equally dedicated to the belief that the key to prosperity is a return to the gold standard, which John Maynard Keynes pronounced a "barbarous relic" more than 60 years ago. With any luck, these latter-day Midases will never lay a finger on actual monetary policy. Nonetheless, these are influential people--they are one of the factions now struggling for the Republican Party's soul--and the passionate arguments they make for a gold standard are a useful window on how they think.

    There is a case to be made for a return to the gold standard. It is not a very good case, and most sensible economists reject it, but the idea is not completely crazy. On the other hand, the ideas of our modern gold bugs are completely crazy. Their belief in gold is, it turns out, not pragmatic but mystical.

    The current world monetary system assigns no special role to gold; indeed, the Federal Reserve is not obliged to tie the dollar to anything. It can print as much or as little money as it deems appropriate. There are powerful advantages to such an unconstrained system. Above all, the Fed is free to respond to actual or threatened recessions by pumping in money. To take only one example, that flexibility is the reason the stock market crash of 1987--which started out every bit as frightening as that of 1929--did not cause a slump in the real economy.

    While a freely floating national money has advantages, however, it also has risks. For one thing, it can create uncertainties for international traders and investors. Over the past five years, the dollar has been worth as much as 120 yen and as little as 80. The costs of this volatility are hard to measure (partly because sophisticated financial markets allow businesses to hedge much of that risk), but they must be significant. Furthermore, a system that leaves monetary managers free to do good also leaves them free to be irresponsible--and, in some countries, they have been quick to take the opportunity. That is why countries with a history of runaway inflation, like Argentina, often come to the conclusion that monetary independence is a poisoned chalice. (Argentine law now requires that one peso be worth exactly one U.S. dollar, and that every peso in circulation be backed by a dollar in reserves.)

    So, there is no obvious answer to the question of whether or not to tie a nation's currency to some external standard. By establishing a fixed rate of exchange between currencies--or even adopting a common currency--nations can eliminate the uncertainties of fluctuating exchange rates; and a country with a history of irresponsible policies may be able to gain credibility by association. (The Italian government wants to join a European Monetary Union largely because it hopes to refinance its massive debts at German interest rates.) On the other hand, what happens if two nations have joined their currencies, and one finds itself experiencing an inflationary boom while the other is in a deflationary recession? (This is exactly what happened to Europe in the early 1990s, when western Germany boomed while the rest of Europe slid into double-digit unemployment.) Then the monetary policy that is appropriate for one is exactly wrong for the other. These ambiguities explain why economists are divided over the wisdom of Europe's attempt to create a common currency. I personally think that it will lead, on average, to somewhat higher European unemployment rates; but many sensible economists disagree.

    So where does gold enter the picture?...

    Reply Saturday, November 14, 2015 at 05:21 PM

    ax

    [Sep 12, 2016] Future Economists Will Probably Call This Decade the 'Longest Depression'

    Sep 12, 2016 | economistsview.typepad.com
    Brad DeLong:
    Future Economists Will Probably Call This Decade the 'Longest Depression' : ... Back before 2008, I used to teach my students that during a disturbance in the business cycle, we'd be 40 percent of the way back to normal in a year. The long-run trend of economic growth, I would say, was barely affected by short-run business cycle disturbances. There would always be short-run bubbles and panics and inflations and recessions. They would press production and employment away from its long-run trend -- perhaps by as much as 5 percent. But they would be transitory.
    After the shock hit, the economy would rapidly head back to normal. The equilibrium-restoring logic and magic of supply and demand would push the economy to close two-fifths of the gap to normal each year. After four years, only a seventh of the peak disturbance would remain.
    In the aftermath of 2008, Stiglitz was indeed one of those warning that I and economists like me were wrong. Without extraordinary, sustained and aggressive policies to rebalance the economy, he said, we would never get back to what before 2008 we had thought was normal.
    I was wrong. He was right. ...

    [Sep 11, 2016] Trump is afraid the neoliberal imperial global order presided by the US is about to crash and thinks he will be able to steer the country into a soft landing by accepting that other world powers have interests, by disengaging from costly and humiliating military interventions, by re-negotiating trade deals, and by stopping the mass immigration of poor people. Plus a few well-placed bombs.

    Notable quotes:
    "... I think Trump is afraid the imperial global order presided by the US is about to crash and thinks he will be able to steer the country into a soft landing by accepting that other world powers have interests, by disengaging from costly and humiliating military interventions, by re-negotiating trade deals, and by stopping the mass immigration of poor people. Plus a few well-placed bombs ..."
    "... Much has been written about the internet revolution, about the impact of people having access to much more information than before. The elite does not recognize this and is still organizing political and media campaigns as if it were 1990, relying on elder statesmen like Blair, Bush, Mitterrand, Clinton, and Obama to influence public opinion. They are failing miserably, to the point of being counterproductive. ..."
    "... I don't think something as parochial as racism is sustaining Trump, but rather the fear of the loss of empire by a population with several orders of magnitude more information and communication than in 2008, even 2012. ..."
    "... No one has literally argued that people should be glad to lose employment: that part was hyperbole. But the basic argument is often made quite seriously. See e.g. outsource Brad DeLong . ..."
    "... The same thing has happened in Mexico with neoliberal government after neoliberal government being elected. There are many democratically elected neoliberal governments around the world. ..."
    "... In the case of Mexico, because Peńa Nieto's wife is a telenovela star. How cool is that? It places Mexico in the same league as 1st world countries, such as France, with Carla Bruni. ..."
    "... To the guy who asked- poor white people keep voting Republican even though it screws them because they genuinely believe that the country is best off when it encourages a culture of "by the bootstraps" self improvement, hard work, and personal responsibility. They view taxing people in order to give the money to the supposedly less fortunate as the anti thesis of this, because it gives people an easy out that let's them avoid having to engage in the hard work needed to live independently. ..."
    "... The extent to which "poor white people" vote against their alleged economic interests is overblown. To a large extent, they do not vote at all nor is anyone or anything on the ballot to represent their interests. And, yes, they are misinformed systematically by elites out to screw them and they know this, but cannot do much to either clear up their own confusion or fight back. ..."
    "... The mirror image problem - of elites manipulating the system to screw the poor and merely middle-class - is daily in the news. Both Presidential candidates have been implicated. So, who do you recommend they vote for? ..."
    "... I think you're missing Patrick's point. These voters are switching from one Republican to another. They've jettisoned Bush et. al. for Trump. These guys despise Bush. ..."
    "... They've figured out that the mainstream party is basically 30 years of affinity fraud. ..."
    "... My understanding is trumps support disproportionately comes from the small business owning classes, Ie a demographic similar to the petite bourgeoisie who have often been heavily involved in reactionary movements. This gets oversold as "working class" when class is defined by education level rather than income. ..."
    "... Layman - Why are these voters switching from Bush et al to Trump? Once again, Corey's whole point is that there is very little difference between the racism of Trump and the mainstream party since Nixon. Is Trump just more racist? Or are the policies of Trump resonating differently than Bush for reasons other than race? ..."
    "... Eric Berne, in The Structures and Dynamics of Organizations and Groups, proposed that among the defining characteristics of a coherent group is an explicit boundary which determines whether an individual is a member of the group or not. (If there is no boundary, nothing binds the assemblage together; it is a crowd.) The boundary helps provide social cohesion and is so important that groups will create one if necessary. Clearly, boundaries exclude as well as include, and someone must play the role of outsider. ..."
    "... For a time, the balkanization of American political communities by race, religion and ethnicity was an effective means to the dominance of an tiny elite with ties to an hegemonic community, but it backfired. Dismantling that balkanization has left the country with a very low level of social affiliation and thus a low capacity to organize resistance to elite depredations. ..."
    Aug 04, 2016 | crookedtimber.org

    Lupita 08.04.16 at 4:23 am 167

    I think Trump is afraid the imperial global order presided by the US is about to crash and thinks he will be able to steer the country into a soft landing by accepting that other world powers have interests, by disengaging from costly and humiliating military interventions, by re-negotiating trade deals, and by stopping the mass immigration of poor people. Plus a few well-placed bombs .

    Much has been written about the internet revolution, about the impact of people having access to much more information than before. The elite does not recognize this and is still organizing political and media campaigns as if it were 1990, relying on elder statesmen like Blair, Bush, Mitterrand, Clinton, and Obama to influence public opinion. They are failing miserably, to the point of being counterproductive.

    I don't think something as parochial as racism is sustaining Trump, but rather the fear of the loss of empire by a population with several orders of magnitude more information and communication than in 2008, even 2012.

    Layman 08.04.16 at 11:59 am

    Rich P: "Neoliberals often argue that people should be glad to lose employment at 50 so that people from other countries can have higher incomes "

    I doubt this most sincerely. While this may be the effect of some neoliberal policies, I can't recall any particular instance where someone made this argument.

    Rich Puchalsky 08.04.16 at 12:03 pm

    "I can't recall any particular instance where someone made this argument."

    No one has literally argued that people should be glad to lose employment: that part was hyperbole. But the basic argument is often made quite seriously. See e.g. outsource Brad DeLong .

    engels 08.04.16 at 12:25 pm

    While this may be the effect of some neoliberal policies, I can't recall any particular instance where someone made this argument

    Maybe this kind of thing rom Henry Farrell? (There may well be better examples.)

    Is some dilution of the traditional European welfare state acceptable, if it substantially increases the wellbeing of current outsiders (i.e. for example, by bringing Turkey into the club). My answer is yes, if European leftwingers are to stick to their core principles on justice, fairness, egalitarianism etc

    http://crookedtimber.org/2005/05/31/talking-turkey-over-welfare/

    Lupita 08.04.16 at 2:42 pm

    Large numbers of low-income white southern Americans consistently vote against their own economic interests. They vote to award tax breaks to wealthy people and corporations, to cut unemployment benefits, to bust unions, to reward companies for outsourcing jobs, to resist wage increases, to cut funding for health care for the poor, to cut Social Security and Medicare, etc.

    The same thing has happened in Mexico with neoliberal government after neoliberal government being elected. There are many democratically elected neoliberal governments around the world.

    Why might this be?

    In the case of Mexico, because Peńa Nieto's wife is a telenovela star. How cool is that? It places Mexico in the same league as 1st world countries, such as France, with Carla Bruni.

    Patrick 08.04.16 at 4:32 pm

    To the guy who asked- poor white people keep voting Republican even though it screws them because they genuinely believe that the country is best off when it encourages a culture of "by the bootstraps" self improvement, hard work, and personal responsibility. They view taxing people in order to give the money to the supposedly less fortunate as the anti thesis of this, because it gives people an easy out that let's them avoid having to engage in the hard work needed to live independently.

    They see it as little different from letting your kid move back on after college and smoke weed in your basement. They don't generally mind people being on unemployment transitionally, but they're supposed to be a little embarrassed about it and get it over with as soon as possible. They not only worry that increased government social spending will incentivize bad behavior, they worry it will destroy the cultural values they see as vital to Americas past prosperity. They tend to view claims about historic or systemic injustice necessitating collective remedy because they view the world as one in which the vagaries of fate decree that some are born rich or poor, and that success is in improving ones station relative to where one starts. Attempts at repairing historical racial inequity read as cheating in that paradigm, and even as hostile since they can easily observe white people who are just as poor or poorer than those who racial politics focuses upon. Left wing insistence on borrowing the nastiest rhetoric of libertarians ("this guy is poor because his ancestors couldn't get ahead because of historical racial injustice so we must help him; your family couldn't get ahead either but that must have been your fault so you deserve it") comes across as both antithetical to their values and as downright hostile within the values they see around them.

    All of this can be easily learned by just talking to them.

    It's not a great world view. It fails to explain quite a lot. For example, they have literally no way of explaining increased unemployment without positing either that everyone is getting too lazy to work, or that the government screwed up the system somehow, possibly by making it too expensive to do business in the US relative to other countries. and given their faith in the power of hard work, they don't even blame sweatshops- they blame taxes and foreign subsidies.

    I don't know exactly how to reach out to them, except that I can point to some things people do that repulse them and say "stop doing that."

    bruce wilder 08.04.16 at 5:50 pm

    The extent to which "poor white people" vote against their alleged economic interests is overblown. To a large extent, they do not vote at all nor is anyone or anything on the ballot to represent their interests. And, yes, they are misinformed systematically by elites out to screw them and they know this, but cannot do much to either clear up their own confusion or fight back.

    The mirror image problem - of elites manipulating the system to screw the poor and merely middle-class - is daily in the news. Both Presidential candidates have been implicated. So, who do you recommend they vote for?

    There is serious deficit of both trust and information among the poor. Poor whites hardly have a monopoly; black misleadership is epidemic in our era of Cory Booker socialism.


    bruce wilder 08.04.16 at 7:05 pm

    Politics is founded on the complex social psychology of humans as social animals. We elevate it from its irrational base in emotion to rationalized calculation or philosophy at our peril.


    T 08.04.16 at 9:17 pm

    @Layman

    I think you're missing Patrick's point. These voters are switching from one Republican to another. They've jettisoned Bush et. al. for Trump. These guys despise Bush.

    They've figured out that the mainstream party is basically 30 years of affinity fraud.

    So, is your argument is that Trump even more racist? That kind of goes against the whole point of the OP. Not saying that race doesn't matter. Of course it does. But Trump has a 34% advantage in non-college educated white men. It just isn't the South. Why does it have to be just race or just class?


    Ronan(rf) 08.04.16 at 10:35 pm

    "I generally don't give a shit about polls so I have no "data" to evidence this claim, but my guess is the majority of Trump's support comes from this broad middle"

    My understanding is trumps support disproportionately comes from the small business owning classes, Ie a demographic similar to the petite bourgeoisie who have often been heavily involved in reactionary movements. This gets oversold as "working class" when class is defined by education level rather than income.

    This would make some sense as they are generally in economically unstable jobs, they tend to be hostile to both big govt (regulations, freeloaders) and big business (unfair competition), and while they (rhetorically at least) tend to value personal autonomy and self sufficiency , they generally sell into smaller, local markets, and so are particularly affected by local demographic and cultural change , and decline. That's my speculation anyway.

    T 08.05.16 at 3:12 pm

    @patrick @layman

    Patrick, you're right about the Trump demographic. https://fivethirtyeight.com/features/the-mythology-of-trumps-working-class-support/

    Layman - Why are these voters switching from Bush et al to Trump? Once again, Corey's whole point is that there is very little difference between the racism of Trump and the mainstream party since Nixon. Is Trump just more racist? Or are the policies of Trump resonating differently than Bush for reasons other than race?

    Are the folks that voted for the other candidates in the primary less racist so Trump supporters are just the most racist among Republicans? Cruz less racist? You have to explain the shift within the Republican party because that's what happened.

    Anarcissie 08.06.16 at 3:00 pm

    Faustusnotes 08.06.16 at 1:50 pm @ 270 -

    Eric Berne, in The Structures and Dynamics of Organizations and Groups, proposed that among the defining characteristics of a coherent group is an explicit boundary which determines whether an individual is a member of the group or not. (If there is no boundary, nothing binds the assemblage together; it is a crowd.) The boundary helps provide social cohesion and is so important that groups will create one if necessary. Clearly, boundaries exclude as well as include, and someone must play the role of outsider. While Berne's theories are a bit too nifty for me to love them, I have observed a lot of the behaviors he predicts. If one wanted to be sociobiological, it is not hard to hypothesize evolutionary pressures which could lead to this sort of behavior being genetically programmed. If a group of humans, a notably combative primate, does not have strong social cohesion, the war of all against all ensues and everybody dies. Common affections alone do not seem to provide enough cohesion.

    In an earlier but related theory, in the United States, immigrants from diverse European communities which fought each other for centuries in Europe arrived and managed to now get along because they had a major Other, the Negro, against whom to define themselves (as the White Race) and thus to cohere sufficiently to get on with business. The Negro had the additional advantage of being at first a powerless slave and later, although theoretically freed, was legally, politically, and economically disabled - an outsider who could not fight back very effectively, nor run away. Even so, the US almost split apart and there continue to be important class, ethnic, religious, and regional conflicts. You can see how these two theories resonate.

    It may be that we can't have communities without this dark side, although we might be able to mitigate some of its destructive effects.

    bruce wilde r 08.06.16 at 4:28 pm

    I am somewhat suspicious of leaving dominating elites out of these stories of racism as an organizing principle for political economy or (cultural) community.

    Racism served the purposes of a slaveholding elite that organized political communities to serve their own interests. (Or, vis a vis the Indians a land-grab or genocide.)

    Racism serves as an organizing principle. Politically, in an oppressive and stultifying hierarchy like the plantation South, racism not incidentally buys the loyalty of subalterns with ersatz status. The ugly prejudices and resentful arrogance of working class whites is thus a component of how racism works to organize a political community to serve a hegemonic master class. The business end of racism, though, is the autarkic poverty imposed on the working communities: slaves, sharecroppers, poor blacks, poor whites - bad schools, bad roads, politically disabled communities, predatory institutions and authoritarian governments.

    For a time, the balkanization of American political communities by race, religion and ethnicity was an effective means to the dominance of an tiny elite with ties to an hegemonic community, but it backfired. Dismantling that balkanization has left the country with a very low level of social affiliation and thus a low capacity to organize resistance to elite depredations.

    engels 08.07.16 at 1:02 am

    But how did that slavery happen

    Possible short answer: the level of technological development made slavery an efficient way of exploiting labour. At a certain point those conditions changed and slavery became a drag on further development and it was abolished, along with much of the racist ideology that legitimated it.

    Lupita 08.07.16 at 3:40 am

    But how did that slavery happen

    In Mesoamerica, all the natives were enslaved because they were conquered by the Spaniards. Then, Fray Bartolomé de las Casas successfully argued before the Crown that the natives had souls and, therefore, should be Christianized rather than enslaved. As Bruce Wilder states, this did not serve the interests of the slaveholding elite, so the African slave trade began and there was no Fray Bartolomé to argue their case.

    It is interesting that while natives were enslaved, the Aztec aristocracy was shipped to Spain to be presented in court and study Latin. This would not have happened if the Mesoamericans were considered inferior (soulless) as a race. Furthermore, the Spaniards needed the local elite to help them out with their empire and the Aztecs were used to slavery and worse. This whole story can be understood without recurring to racism. The logic of empire suffices.

    [Sep 11, 2016] "Equity," an intelligent and enthralling thriller set in a shark tank of New York investment bankers, hedge-fund executives and tech entrepreneurs,

    Notable quotes:
    "... The film, directed by Meera Menon and written by Amy Fox , is as ruthless and hypnotic a study of a cutthroat species as the documentary I saw about the carnivorous fish. Maybe it is even more so, as it is a story of alpha females, as well as males. ..."
    "... a movie implicitly critical of Wall Street and explicitly damning of hedge funds. ..."
    truthdig.com

    Not long ago, I saw a documentary about sharks in the wild. The male bites the frisky female on her flank, both to show his interest and to subdue her as he attempts penetration. Initially the female resists; one was filmed wriggling free of a series of circling males until she becomes exhausted and an alpha male has his way with her.

    According to the narrator, shark reproduction favors the most powerful males and strongest females. Over time, the female evolves tougher skin to endure, or perhaps elude, the male love bite.

    If that's what happens in the open sea, what must it be like in tighter quarters?

    "Equity," an intelligent and enthralling thriller set in a shark tank of New York investment bankers, hedge-fund executives and tech entrepreneurs, imagines just that.

    The film, directed by Meera Menon and written by Amy Fox, is as ruthless and hypnotic a study of a cutthroat species as the documentary I saw about the carnivorous fish. Maybe it is even more so, as it is a story of alpha females, as well as males.

    This female-driven production about driven females stars Anna Gunn ("Breaking Bad") as banker Naomi Bishop, the firm rainmaker lately experiencing a drought. Sarah Megan Thomas is Erin Manning, her assistant, and Alysia Reiner ("Orange is the New Black") plays Samantha, an assistant U.S. attorney investigating Gunn's firm. That storyline provides one of the plot's conflicts. Another is that banker and assistant each want promotions and are denied.

    At the outset, it's hard to like Naomi. She announces herself as the female Gordon Gekko (the character Michael Douglas played in "Wall Street"). While he exhorted that "greed is good," she forthrightly admits that she "likes money." She likes the numbers, likes the adrenaline rush of risking it on a new venture and, most of all, she likes the power it represents.

    She makes few concessions to femininity and none to glamor. Her body is womanly, rather than girlish, her clothes purely functional. Naomi lets off steam by slipping into boxing gloves and taking the stuffing out of the punching bag. She is in control of her emotions.

    At the outset, it's easy to like Erin and Samantha, both model-slim and flirty (even though both are married). From Erin's perspective, Naomi is the boss from hell. From Samantha's, the banker is insufficiently idealistic. "Equity" asks us at first to align with the younger women because, well, they look like the sexy creatures of most Hollywood films. But as it continues, the movie asks us to question our first impressions. It's a film about not making snap judgments, in business, in love or in life.

    Is there a difference when women are behind both the camera and the story? In this case, yes and no. It's no surprise that this movie features a trio of three-dimensional women at its center. For the most part, though, its male characters are generic and cardboard-flat. There's entitled hedge-fund guy Michael (James Purefoy), Naomi's mentor and boyfriend, all about the money and the game. There's the entitled tech entrepreneur Ed (Samuel Roukin), who is all about the money and the sex. The one good guy is a warm and supportive U.S. attorney who steers Samantha toward remaining in her ethical lane. Here is a movie implicitly critical of Wall Street and explicitly damning of hedge funds.

    Despite the one-dimensional men, I was surprised by the film's deceptions and detours. The greatest asset of "Equity" is Gunn, whose face is a Kabuki mask and whose skin is impenetrable as that of a female shark. While watching her I thought once or twice that hers was a one-note performance. But by movie's end, I realized it was a symphony of invincibility and vulnerability.

    [Sep 10, 2016] Removing a governments control over currency would prevent nasty little elected officials from using Keynesian monetary and fiscal juice to pull a nation out of recession

    Notable quotes:
    "... The euro would really do its work when crises hit, Mundell explained. Removing a government's control over currency would prevent nasty little elected officials from using Keynesian monetary and fiscal juice to pull a nation out of recession. ..."
    "... He cited labor laws, environmental regulations and, of course, taxes. All would be flushed away by the euro. Democracy would not be allowed to interfere with the marketplace ..."
    "... Mundell was also the driving force for Reagan's supply side economics. ..."
    Jun 28, 2016 | www.nakedcapitalism.com
    Pookah Harvey , June 26, 2016 at 10:21 pm

    According to investigative journalist Greg Palast; Nobel winning economist Robert Mundell, who is thought to be the father of the Euro, designed the EU to take macroeconomics away from elected politicians and forcing deregulation were part of the plan .

    The euro would really do its work when crises hit, Mundell explained. Removing a government's control over currency would prevent nasty little elected officials from using Keynesian monetary and fiscal juice to pull a nation out of recession.

    "It puts monetary policy out of the reach of politicians," he said. "[And] without fiscal policy, the only way nations can keep jobs is by the competitive reduction of rules on business."

    He cited labor laws, environmental regulations and, of course, taxes. All would be flushed away by the euro. Democracy would not be allowed to interfere with the marketplace

    Mundell was also the driving force for Reagan's supply side economics.

    [Sep 05, 2016] Trump predicts landslide support from black voters if he gets to seek a second term as president

    [Dec 05, 2016] | latimes.com

    "You're living in poverty, your schools are no good, you have no jobs, 58% of your youth is unemployed. What the hell do you have to lose" by voting for Trump? the candidate asked. "At the end of four years, I guarantee I will get over 95% of the African American vote."

    The statement – highly unlikely given how poorly Republicans fare among black voters – continues a theme the GOP presidential nominee has pounded this week as he courted African American voters. He said Democrats take black voters for granted and have ignored their needs while governing cities with large African American populations.

    "America must reject the bigotry of Hillary Clinton, who sees communities of color only as votes, not as human beings worthy of a better future," he said of his Democratic opponent.

    ... ... ...

    Trump argued that Democratic presidential nominee Hillary Clinton's policies on issues such as immigration and refugee resettlement harm African Americans.

    [Sep 05, 2016] The power of neoliberal brainwashing and indoctrination of population via MSM, schools and universities.

    [Dec 05, 2016] | economistsview.typepad.com

    nikbez: August 28, 2016 at 10:06 AM

    That's simply naďve:

    === quote ===
    It has recently become commonplace to argue that globalization can leave people behind, and that this can have severe political consequences. Since 23 June, this has even become conventional wisdom. While I welcome this belated acceptance of the blindingly obvious, I can't but help feeling a little frustrated, since this has been self-evident for many years now. What we are seeing, in part, is what happens to conventional wisdom when, all of a sudden, it finds that it can no longer dismiss as irrelevant something that had been staring it in the face for a long time.
    === end of quote ==

    This is not about "conventional wisdom". This is about the power of neoliberal propaganda, the power of brainwashing and indoctrination of population via MSM, schools and universities.

    And "all of a sudden, it finds that it can no longer dismiss as irrelevant something that had been staring it in the face for a long time." also has nothing to do with conventional wisdom.

    This is about the crisis of neoliberal ideology and especially Trotskyism part of it (neoliberalism can be viewed as Trotskyism for the rich). The following integral elements of this ideology no longer work well and are starting to cause the backlash:

    1. High level of inequality as the explicit, desirable goal (which raises the productivity). "Greed is good" or "Trickle down economics" -- redistribution of wealth up will create (via higher productivity) enough scrapes for the lower classes, lifting all boats.

    2. "Neoliberal rationality" when everything is a commodity that should be traded at specific market. Human beings also are viewed as market actors with every field of activity seen as a specialized market. Every entity (public or private, person, business, state) should be governed as a firm. "Neoliberalism construes even non-wealth generating spheres-such as learning, dating, or exercising-in market terms, submits them to market metrics, and governs them with market techniques and practices." People are just " human capital" who must constantly tend to their own present and future market value.

    3. Extreme financialization or converting the economy into "casino capitalism" (under neoliberalism everything is a marketable good, that is traded on explicit or implicit exchanges.

    4. The idea of the global, USA dominated neoliberal empire and related "Permanent war for permanent peace" -- wars for enlarging global neoliberal empire via crushing non-compliant regimes either via color revolutions or via open military intervention.

    5. Downgrading ordinary people to the role of commodity and creating three classes of citizens (moochers, or Untermensch, "creative class" and top 0.1%), with the upper class (0.1% or "Masters of the Universe") being above the law like the top level of "nomenklatura" was in the USSR.

    6. "Downsizing" sovereignty of nations via international treaties like TPP, and making transnational corporations the key political players, "the deciders" as W aptly said. Who decide about level of immigration flows, minimal wages, tariffs, and other matters that previously were prerogative of the state.

    So after 36 (or more) years of dominance (which started with triumphal march of neoliberalism in early 90th) the ideology entered "zombie state". That does not make it less dangerous but its power over minds of the population started to evaporate. Far right ideologies now are filling the vacuum, as with the discreditation of socialist ideology and decimation of "enlightened corporatism" of the New Deal in the USA there is no other viable alternatives.

    The same happened in late 1960th with the Communist ideology. It took 20 years for the USSR to crash after that with the resulting splash of nationalism (which was the force that blow up the USSR) and far right ideologies.

    It remains to be seen whether the neoliberal US elite will fare better then Soviet nomenklatura as challenges facing the USA are now far greater then challenges which the USSR faced at the time. Among them is oil depletion which might be the final nail into the coffin of neoliberalism and, specifically, the neoliberal globalization.

    [Sep 04, 2016] Neoliberalism is every bit the wellspring of neofascism

    Notable quotes:
    "... It is fascinating that younger US neoliberals (e.g. Matthew Yglesias) are totally sold on the the positives of 'metrics', statistics, testing, etc, to the point where they ignore all the negatives of those approaches, but absolutely and utterly loathe being tracked, having the performance of their preferred policies and predictions analyzed, and called out on the failures thereof. Is sure seems to me that the campaign to quash the use of the US, Charles Peters version of neoliberal is part of the effort to avoid accountability for their actions. ..."
    "... If "conservative" is to be a third way to the opposition of "reactionary" and "revolutionary", the "liberals" are a species of conservative - like all conservatives, seeking to preserve the existing order as far as this is possible, but appealing to reason, reason's high principles, and a practical politics of incremental reform and "inevitable" progress. The liberals disguise their affection for social and political hierarchy as a preference for "meritocracy" and place their faith in the powers of Reason and Science to discover Truth. ..."
    "... Liberalism adopts nationalism as a vehicle for popular mobilization which conservatives can share and as an ideal of governance, the self-governing democratic nation-state with a liberal constitution. ..."
    "... It wasn't Liberalism Triumphant that faced a challenge from fascism; it was the abject failures of Liberalism that created fascism. ..."
    "... he Liberal projects to create liberal democratic nation-states ran aground in Germany, Austria-Hungary and Russia between 1870 and 1910 and instead of gradual reform of the old order, Europe experienced catastrophic collapse, and Liberalism was ill-prepared to devise working governments and politics in the crisis that followed. ..."
    "... What is called neoliberalism in American politics has a lot to do with New Deal liberalism running out of steam and simply not having a program after 1970. Some of that is circumstantial in a way - the first Oil Crisis, the breakup of Bretton Woods - but even those circumstances were arguably results of the earlier program's success. ..."
    Sep 04, 2016 | crookedtimber.org

    Cranky Observer 09.03.16 at 6:28 pm

    = = = I am actually honestly suggesting an intellectual exercise which, I think, might be worth your (extremely valuable) time. I propose you rewrite this post without using the word "neoliberalism" (or a synonym). = = =

    It is fascinating that younger US neoliberals (e.g. Matthew Yglesias) are totally sold on the the positives of 'metrics', statistics, testing, etc, to the point where they ignore all the negatives of those approaches, but absolutely and utterly loathe being tracked, having the performance of their preferred policies and predictions analyzed, and called out on the failures thereof. Is sure seems to me that the campaign to quash the use of the US, Charles Peters version of neoliberal is part of the effort to avoid accountability for their actions.

    bruce wilder 09.03.16 at 7:47 pm
    In the politics of antonyms, I suppose we are always going get ourselves confused.

    Perhaps because of American usage of the root, liberal, to mean the mildly social democratic New Deal liberal Democrat, with its traces of American Populism and American Progressivism, we seem to want "liberal" to designate an ideology of the left, or at least, the centre-left. Maybe, it is the tendency of historical liberals to embrace idealistic high principles in their contest with reactionary claims for hereditary aristocracy and arbitrary authority.

    If "conservative" is to be a third way to the opposition of "reactionary" and "revolutionary", the "liberals" are a species of conservative - like all conservatives, seeking to preserve the existing order as far as this is possible, but appealing to reason, reason's high principles, and a practical politics of incremental reform and "inevitable" progress. The liberals disguise their affection for social and political hierarchy as a preference for "meritocracy" and place their faith in the powers of Reason and Science to discover Truth.

    All of that is by way of preface to a thumbnail history of modern political ideology different from the one presented by Will G-R.

    Modern political ideology is a by-product of the Enlightenment and the resulting imperative to find a basis and purpose for political Authority in Reason, and apply Reason to the design of political and social institutions.

    Liberalism doesn't so much defeat conservatism as invent conservatism as an alternative to purely reactionary politics. The notion of an "inevitable progress" allows liberals to reconcile both themselves and their reactionary opponents to practical reality with incremental reform. Political paranoia and rhetoric are turned toward thinking about constitutional design.

    Mobilizing mass support and channeling popular discontents is a source of deep ambivalence and risk for liberals and liberalism. Popular democracy can quickly become noisy and vulgar, the proliferation of ideas and conflicting interests paralyzing. Inventing a conservatism that competes with the liberals, but also mobilizes mass support and channels popular discontent, puts bounds on "normal" politics.

    Liberalism adopts nationalism as a vehicle for popular mobilization which conservatives can share and as an ideal of governance, the self-governing democratic nation-state with a liberal constitution.

    I would put the challenges to liberalism from the left and right well behind in precedence the critical failures and near-failures of liberalism in actual governance.

    Liberalism failed abjectly to bring about a constitutional monarchy in France during the first decade of the French Revolution, or a functioning deliberative assembly or religious toleration or even to resolve the problems of state finance and legal administration that destroyed the ancient regime. In the end, the solution was found in Napoleon Bonaparte, a precedent that would arguably inspire the fascism of dictators and vulgar nationalism, beginning with Napoleon's nephew fifty years later.

    It wasn't Liberalism Triumphant that faced a challenge from fascism; it was the abject failures of Liberalism that created fascism. And, this was especially true in the wake of World War I, which many have argued persuasively was Liberalism's greatest and most catastrophic failure. T he Liberal projects to create liberal democratic nation-states ran aground in Germany, Austria-Hungary and Russia between 1870 and 1910 and instead of gradual reform of the old order, Europe experienced catastrophic collapse, and Liberalism was ill-prepared to devise working governments and politics in the crisis that followed.

    If liberals invented conservatism, it seems to me that would-be socialists were at pains to re-invent liberalism, and they did it several times going in radically different directions, but always from a base in the basic liberal idea of rationalizing authority. A significant thread in socialism adopted incremental progress and socialist ideas became liberal and conservative means for taming popular discontent in an increasingly urban society.

    Where and when liberalism actually was triumphant, both the range of liberal views and the range of interests presenting a liberal front became too broad for a stable politics. Think about the Liberal Party landslide of 1906, which eventually gave rise to the Labour Party in its role of Left Party in the British two-party system. Or FDR's landslide in 1936, which played a pivotal role in the march of the Southern Democrats to the Right. Or the emergence of the Liberal Consensus in American politics in the late 1950s.

    What is called neoliberalism in American politics has a lot to do with New Deal liberalism running out of steam and simply not having a program after 1970. Some of that is circumstantial in a way - the first Oil Crisis, the breakup of Bretton Woods - but even those circumstances were arguably results of the earlier program's success.

    It is almost a rote reaction to talk about the Republican's Southern Strategy, but they didn't invent the crime wave that enveloped the country in the late 1960s or the riots that followed the enactment of Civil Rights legislation.

    Will G-R's "As soon [as] liberalism feels it can plausibly claim to have . . .overcome the socialist and fascist challenges [liberals] are empowered to act as if liberalism's adaptive response to the socialist and fascist challenges was never necessary in the first place - bye bye welfare state, hello neoliberalism" doesn't seem to me to concede enough to Clinton and Blair entrepreneurially inventing a popular politics in response to Reagan and Thatcher, after the actual failures of an older model of social democratic programs and populist politics on its behalf.

    Rich Puchalsky 09.03.16 at 11:09 pm
    I write more about this over at my blog (in a somewhat different context).
    John Quiggin 09.04.16 at 6:57 am
    RW @113 I wrote a whole book using "market liberalism" instead of "neoliberalism", since I wanted a term more neutral and less pejorative. So, going back to "neoliberalism" was something I did advisedly. You say
    The word is abstract and has completely different meanings west and east of the Atlantic. In the USA it refers to weak tea center leftisms. In Europe to hard core liberalism.
    Well, yes. That's precisely why I've used the term, introduced the hard/soft distinction and explained the history. The core point is that, despite their differences soft (US meaning) and hard (European meaning) neoliberalism share crucial aspects of their history, theoretical foundations and policy implications.
    likbez 09.04.16 at 4:18 pm
    I would say that neoliberalism is closer to market fundamentalism, then market liberalism. See, for example:
    http://www.softpanorama.org/Skeptics/Political_skeptic/Neoliberalism/Articles/definitions_of_neoliberalism.shtml

    === quote ===
    Neoliberalism is an ideology of market fundamentalism based on deception that promotes "markets" as a universal solution for all human problems in order to hide establishment of neo-fascist regime (pioneered by Pinochet in Chile), where militarized government functions are limited to external aggression and suppression of population within the country (often via establishing National Security State using "terrorists" threat) and corporations are the only "first class" political players. Like in classic corporatism, corporations are above the law and can rule the country as they see fit, using political parties for the legitimatization of the regime.

    The key difference with classic fascism is that instead of political dominance of the corporations of particular nation, those corporations are now transnational and states, including the USA are just enforcers of the will of transnational corporations on the population. Economic or "soft" methods of enforcement such as debt slavery and control of employment are preferred to brute force enforcement. At the same time police is militarized and due to technological achievements the level of surveillance surpasses the level achieved in Eastern Germany.

    Like with bolshevism in the USSR before, high, almost always hysterical, level of neoliberal propaganda and scapegoating of "enemies" as well as the concept of "permanent war for permanent peace" are used to suppress the protest against the wealth redistribution up (which is the key principle of neoliberalism) and to decimate organized labor.

    Multiple definitions of neoliberalism were proposed. Three major attempts to define this social system were made:

    1. Definitions stemming from the concept of "casino capitalism"
    2. Definitions stemming from the concept of Washington consensus
    3. Definitions stemming from the idea that Neoliberalism is Trotskyism for the rich. This idea has two major variations:
      • Definitions stemming from Professor Wendy Brown's concept of Neoliberal rationality which developed the concept of Inverted Totalitarism of Sheldon Wolin
      • Definitions stemming Professor Sheldon Wolin's older concept of Inverted Totalitarism - "the heavy statism forging the novel fusions of economic with political power that he took to be poisoning democracy at its root." (Sheldon Wolin and Inverted Totalitarianism Common Dreams )

    The first two are the most popular.

    likbez 09.04.16 at 5:03 pm

    bruce,

    @117

    Thanks for your post. It contains several important ideas:

    "It wasn't Liberalism Triumphant that faced a challenge from fascism; it was the abject failures of Liberalism that created fascism."

    "What is called neoliberalism in American politics has a lot to do with New Deal liberalism running out of steam and simply not having a program after 1970. Some of that is circumstantial in a way - the first Oil Crisis, the breakup of Bretton Woods - but even those circumstances were arguably results of the earlier program's success."

    Moreover as Will G-R noted:

    "neoliberalism will be every bit the wellspring of fascism that old-school liberalism was."

    Failure of neoliberalism revives neofascist, far right movements. That's what the rise of far right movements in Europe now demonstrates pretty vividly.

    [Sep 02, 2016] The same morons that gave us "lean manufacturing" have also given us "lean logistics".

    Sep 02, 2016 | www.nakedcapitalism.com
    Paid Minion , September 2, 2016 at 3:04 pm

    The same morons that gave us "lean manufacturing" have also given us "lean logistics".

    Redundancy is "money left on the table". Excess capacity in case of Black Swans and "Plan Bs"are a big waste of money. Any law that forces you to incorporate some redundancy (in spite of yourself) is "excess regulation"

    Of course, costs must be reduced and corners must be cut, when you are competing against bankster returns of 5-6%, with any losses made good by Uncle Sugar

    GF , September 2, 2016 at 4:12 pm

    Hanjin Shipping fiasco

    Since each modern container ship holds between 3,000 and 14,000 shipping containers, 98 ships stranded with cargo is a lot of freight. S. Korea should probably think twice about not bailing them out (unless all the cargo is from China and they want to do some damage??)

    geoff , September 2, 2016 at 4:58 pm

    Re the Hanjin bankruptcy, the "2.9% of world shipping trade" figure understates Hanjin's overall share in the market that matters most to US retailers and consumers: the transpacific trade, where Hanjin handles 7.8% of the volume per Forbes.

    http://fortune.com/2016/09/02/hanjin-shipping-ports-us-firms/

    So at the very least, we're looking at a significant reduction in already falling (US) intermodal rail traffic, and quite possibly a small reduction in the trade deficit as imports are reduced. Hanjin's bankruptcy also could not possibly have come at a worse time, as Sept./ Oct. is traditionally "peak season" for US imports ahead of the holiday retail season, which will probably also take a hit.

    Personally, I'm shocked that a carrier as large and dominant as Hanjin could go under.

    [Sep 01, 2016] What will come out of neoliberalism destruction of the world economies

    Sep 01, 2016 | www.nakedcapitalism.com

    Ulysses , August 31, 2016 at 6:02 pm

    "I am the spirit that negates.
    And rightly so, for all that comes to be
    Deserves to perish wretchedly;
    'Twere better nothing would begin.
    Thus everything that that your terms, sin,
    Destruction, evil represent-
    That is my proper element."

    Johann Wolfgang von Goethe

    diptherio , August 31, 2016 at 2:17 pm

    Switzerland to vote on "circular economy strategy"

    Reason enough for the Green Party of Switzerland to call for a fundamental change in the country's economic system. Its initiative gathered about 110,000 signatures within the required 18 months and was handed in to the authorities in 2012.

    It calls for a "circular economy strategy", including measures to adopt new product regulations, encourage recycling, and promote research and innovation, thereby reducing the country's ecological footprint by two-thirds.

    The proponents want Switzerland to play a pioneering role, promoting a sustainable model for the economy, including a tax policy tied to the use of natural resources. The government is asked to define sustainability targets both for a short and medium term and present a progress report every four years.

    What a Caring Organization Looks Like

    A Facebook friend (we're barely acquaintances really) asked this question on Friday:

    "What do you think are the most critical things (I'm talking specific processes, policies, and structures rather than values) that make up non-competitive and more collaborative and caring workplaces? Spaces where people are encouraged to really praise and acknowledge someone else's work rather than hide someone else's contribution, where people want to spend time on the collective good rather than next personal gain, and where the often invisible and gendered work of caring and 'organisation culture' is prioritised and publicly valued as critically important? What are some practical things you can implement, aside from the destruction of capitalism? Ideas, you wise group of souls?"

    I've spent the last couple of years working with an incredible bunch of people to build an organisation that is exactly like that: caring, collaborative, and non-competitive, a space where we praise and acknowledge each other, where the work of caring is shared equally, regardless of gender.

    Cripes I am a lucky dude, it rules. It is a total privilege, so I'm trying to figure out if there's something about our organisation that we can share with others.

    It's a subtle thing, so I'm not sure if I can totally nail it down with words. Let's try something…

    [Sep 01, 2016] Liqudity and 401K investor

    Notable quotes:
    "... So, what benefit does society get from all this secondary market trading, besides very rich and self-satisfied bankers like Blankfein? The bankers would tell you that we get "liquidity"–the ability for investors to sell their investments relatively quickly. The problem with this line of argument is that Wall Street is providing far more liquidity (at a hefty price-remember that half-trillion-dollar payroll) than investors really need. Most of the money invested in stocks, bonds, and other securities comes from individuals who are saving for retirement, either by investing directly or through pension and mutual funds. These long-term investors don't really need much liquidity, and they certainly don't need a market where 165 percent of shares are bought and sold every year. ..."
    "... In 1976, when the transactions costs associated with buying and selling securities were much higher, fewer than 20 percent of equity shares changed hands every year. Yet no one was complaining in 1976 about any supposed lack of liquidity. Today we have nearly 10 times more trading, without any apparent benefit for anyone (other than Wall Street bankers and traders) from all that "liquidity." ..."
    Sep 01, 2016 | www.nakedcapitalism.com

    Kim Kaufman , August 31, 2016 at 6:21 pm

    Wall Street Whistle-Blower Awarded $22 Million for Revealing the Truth About Monsanto
    by Emily Jane Fox
    August 31, 2016 9:49 am

    http://www.vanityfair.com/news/2016/08/wall-street-whistle-blower-monsanto?mbid=nl_CH_57c711fb684596f3798768f7&CNDID=15621256&spMailingID=9444845&spUserID=MTMzMTgyMzgwODcwS0&spJobID=982928780&spReportId=OTgyOTI4NzgwS0

    "The easiest way to make a quick buck on Wall Street these days seems to be through loose lips."

    fresno dan , August 31, 2016 at 6:50 pm

    https://promarket.org/wall-street-gods-work-even-anything-useful/

    So, what benefit does society get from all this secondary market trading, besides very rich and self-satisfied bankers like Blankfein? The bankers would tell you that we get "liquidity"–the ability for investors to sell their investments relatively quickly. The problem with this line of argument is that Wall Street is providing far more liquidity (at a hefty price-remember that half-trillion-dollar payroll) than investors really need. Most of the money invested in stocks, bonds, and other securities comes from individuals who are saving for retirement, either by investing directly or through pension and mutual funds. These long-term investors don't really need much liquidity, and they certainly don't need a market where 165 percent of shares are bought and sold every year.

    They could get by with much less trading-and in fact, they did get by, quite happily. In 1976, when the transactions costs associated with buying and selling securities were much higher, fewer than 20 percent of equity shares changed hands every year. Yet no one was complaining in 1976 about any supposed lack of liquidity. Today we have nearly 10 times more trading, without any apparent benefit for anyone (other than Wall Street bankers and traders) from all that "liquidity."

    =====================================
    Thing of it is, the most thirsty never get a drink….

    [Aug 25, 2016] If shock market crashes we will get Trump in November, otherwise probably Hillary

    Aug 25, 2016 | jessescrossroadscafe.blogspot.com
    This market looks precarious. It may continue on higher as long as real, versus manufactured, volume remains unusually low.

    There are enough corporate buyback programs and sovereign entities, including central banks, willing to buy US equities at these levels. The general public and institutions seem to be sitting this one out.

    I suspect that when an event of sufficient magnitude or type occurs, as they do from time to time, a slide will be triggered, and the wash and rinse of the general public, their pensions and their savings, will begin once again.

    The longer this goes on, the broader the set of events that can trigger the unlikely slide of consequence seems to grow.

    Still, an outright crash would favor the orange-haired presidential contender, and not the poster child for the financial establishment. So that may be an unlikely bet to make before November. They seem to be going all out to sustain the unsustainable.

    This is exciting only if you can see the tensions growing beneath the surface, which is dullsville to the casual observer to say the least. I have to admit I have been growing jaded on this nonsense of late. But a whiff of Autumn is in the air, and after many a Summer, dies the swan.

    So let's see what happens.

    Have a pleasant evening.

    [Aug 20, 2016] It is a perplexing and sorry phenomenon that deserves the attention of a first rate pundit like Frank

    Amazon review of Thomas Frank's The Wrecking Crew... the word "conservative" was replaced by "neoliberal" as it more correctly reflect the concept behind this social process.
    Notable quotes:
    "... Neoliberal ideology is championed on behalf of corporate elites who have now secured total control, even ownership, of the federal government. ..."
    "... Elites need federal government revenue transferred to their realm via fat government contracts and juicy subsidies. They want government without regulation, and they want taxation imposed on the masses without real representation, but not on them. ..."
    "... Neoliberals drew up a long term strategy to sabotage and disrupt the liberal apparatus. There ensued a vast selling-off of government assets (and favors) to those willing to fund the neoliberal movement. The strategy was concocted as a long term plan - the master blueprint for a wholesale transfer of government responsibilities to private-sector contractors unaccountable to Congress or anyone else. An entire industry sprung up to support conservatism - the great god market (corporate globalism) replaced anti-communism as the new inspiration. (page 93) ..."
    "... But capitalism is not loyal to people or anything once having lost its usefulness, not even the nation state or the flag ..."
    "... According to Frank, what makes a place a free-market paradise is not the absence of governments; it is the capture of government by business interests. ..."
    "... Neoliberals don't want efficient government, they want less competition and more profits - especially for defense contractors. Under Reagan, civil servants were out, loyalists were in. ..."
    "... Contractors are now a fourth branch of government with more people working under contracts than are directly employed by government - making it difficult to determine where government stops and the contractors start in a system of privatized government where private contractors are shielded from oversight or accountability ..."
    "... The first general rule of neoliberal administration: cronies in, experts out. ..."
    "... Under Reagan, a philosophy of government blossomed that regarded business as its only constituent. ..."
    "... Watergate poisoned attitudes toward government - helping sweep in Ronald Reagan with his anti-government cynicism. Lobbying and influence peddling proliferated in a privatized government. Lobbying is how money casts its vote. It is the signature activity of neoliberal governance - the mechanism that translates market forces into political action. ..."
    "... Neoliberalism speaks of not compromise but of removing adversaries from the field altogether. ..."
    "... One should never forget that it was Roosevelt's New Deal that saved capitalism from itself. Also, one should not forget that capitalism came out of the classical liberal tradition. Capitalists had to wrest power away from the landowning nobility, the arch neoliberal tradition of its time. ..."
    www.amazon.com
    Russell Ferrell

    Format: Paperback

    Thomas Frank's The Wrecking Crew is another classic. This work, along with his more notable What's The Matter With Kansas?, is another ground breaking examination into a major phenomenon of American politics by one of America's foremost social analysts and critics. While What's The Matter With Kansas? looked more at cultural behavior in explaining why Red State Americans have embraced corporate elitist ideology and ballot casting that militates against their own economic self-interest, even their very survival, this title deals more with structural changes in the government, economy, and society that have come about as a result of a Republican right wing agenda. It is a perplexing and sorry phenomenon that deserves the attention of a first rate pundit like Frank.

    Neoliberal ideology is championed on behalf of corporate elites who have now secured total control, even ownership, of the federal government. The Wrecking Crew is about a Republican agenda to totally eliminate the last vestiges of the New Deal and Great Society, which have provided social safety nets for ordinary working class Americans through programs such as Social Security and Medicare. Corporate elites want to demolish only that part of government that doesn't benefit the corporation. Thus, a huge military budget and intrusive national security and police apparatus is revered, while education, health, welfare, infrastructure, etc. are of less utility for the corporate state. High taxes on the corporations and wealthy are abhorred, while the middle class is expected to shoulder a huge tax burden. Although Republicans rail against federal deficits, when in office they balloon the federal deficits in a plan for government-by-sabotage. (Page 261)

    Elites need federal government revenue transferred to their realm via fat government contracts and juicy subsidies. They want government without regulation, and they want taxation imposed on the masses without real representation, but not on them. The big government they rail at is the same government they own and benefit from. They certainly do not want the national security state (the largest part of government) or the national police system to go away, not even the IRS. How can they fight wars without a revenue collection system? The wellspring of conservatism in America today -- preserving connections between the present and past -- is a destroyer of tradition, not a preserver. (Page 267)

    Neoliberals drew up a long term strategy to sabotage and disrupt the liberal apparatus. There ensued a vast selling-off of government assets (and favors) to those willing to fund the neoliberal movement. The strategy was concocted as a long term plan - the master blueprint for a wholesale transfer of government responsibilities to private-sector contractors unaccountable to Congress or anyone else. An entire industry sprung up to support conservatism - the great god market (corporate globalism) replaced anti-communism as the new inspiration. (page 93)

    Market populism arose as business was supposed to empower the noble common people. But capitalism is not loyal to people or anything once having lost its usefulness, not even the nation state or the flag. (page 100) While the New Deal replaced rule by wealthy with its brain trust, conservatism, at war with intellectuals, fills the bureaucracy with cronies, hacks, partisans, and creationists. The democracy, or what existed of it, was to be gradually made over into a plutocracy - rule by the wealthy. (Page 252) Starting with Reagan and Thatcher, the program was to hack open the liberal state in order to reward business with the loot. (Page 258) The ultimate neoliberal goal is to marketize the nation's politics so that financial markets can be elevated over vague liberalisms like the common good and the public interest. (Page 260)

    According to Frank, what makes a place a free-market paradise is not the absence of governments; it is the capture of government by business interests. The game of corporatism is to see how much public resources the private interest can seize for itself before public government can stop them. A proper slogan for this mentality would be: more business in government, less government in business. And, there are market based solutions to every problem. Government should be market based. George W. Bush grabbed more power for the executive branch than anyone since Nixon. The ultra-rights' fortunes depend on public cynicism toward government. With the U.S. having been set up as a merchant state, the idea of small government is now a canard - mass privatization and outsourcing is preferred. Building cynicism toward government is the objective. Neoliberals don't want efficient government, they want less competition and more profits - especially for defense contractors. Under Reagan, civil servants were out, loyalists were in.

    While the Clinton team spoke of entrepreneurial government - of reinventing government - the wrecking crew under Republicans has made the state the tool of money as a market-based system replaced civil service by a government-by-contractor (outsourcing). Page 137 This has been an enduring trend, many of the great robber barons got their start as crooked contractors during the Civil War. Contractors are now a fourth branch of government with more people working under contracts than are directly employed by government - making it difficult to determine where government stops and the contractors start in a system of privatized government where private contractors are shielded from oversight or accountability. (Page 138)

    The first general rule of neoliberal administration: cronies in, experts out. The Bush team did away with EPA's office of enforcement - turning enforcement power over to the states. (Page 159) In an effort to demolish the regulatory state, Reagan, immediately after taking office, suspended hundreds of regulations that federal agencies had developed during the Carter Administration. Under Reagan, a philosophy of government blossomed that regarded business as its only constituent. In recent years, neoliberals have deliberately piled up debt to force government into crisis.

    Watergate poisoned attitudes toward government - helping sweep in Ronald Reagan with his anti-government cynicism. Lobbying and influence peddling proliferated in a privatized government. Lobbying is how money casts its vote. It is the signature activity of neoliberal governance - the mechanism that translates market forces into political action. (Page 175)

    It is the goal of the neoliberal agenda to smash the liberal state. Deficits are one means to accomplish that end.- to persuade voters to part with programs like Social Security and Medicare so these funds can be transferred to corporate contractors or used to finance wars or deficit reduction.. Uncle Sam can raise money by selling off public assets.

    Since liberalism depends on fair play by its sworn enemies, it is vulnerable to sabotage by those not playing by liberalism's rules/ (Page 265) The Liberal State, a vast machinery built for our protection has been reengineered into a device for our exploitation. (Page 8) Liberalism arose out of a long-ago compromise between left-wing social movements and business interests. (Page 266) Neoliberalism speaks of not compromise but of removing adversaries from the field altogether. (Page 266) No one dreams of eliminating the branches of state that protect Neoliberalism's constituents such as the military, police, or legal privileges granted to corporations, neoliberals openly scheme to do away with liberal bits of big government. (Page 266)

    Liberalism is a philosophy of compromise, without a force on the Left to neutralize the magneticism exerted by money, liberalism will be drawn to the right. (Page 274)

    Through corporate media and right wing talk show, liberalism has become a dirty word. However, liberalism may not be dead yet. It will have to be resurrected from the trash bin of history when the next capitalist crisis hits. One should never forget that it was Roosevelt's New Deal that saved capitalism from itself. Also, one should not forget that capitalism came out of the classical liberal tradition. Capitalists had to wrest power away from the landowning nobility, the arch neoliberal tradition of its time.

    [Aug 16, 2016] Thomas Frank One Market Under God-- Extreme Capitalism

    Notable quotes:
    "... This extreme form of market capitalism, also called neo-liberalism in economics and neo-conservatism in foreign policy, has worked its way into the mindset of the ruling elites of many of the developed nations, and has taken a place in the public consciousness through steady repetition. I has become the modern orthodoxy of the fortunate few, who have been initiated into its rites, and served and been blessed by their god. ..."
    "... The adherents become blind by their devotion to their gods. ..."
    "... This is not something new. It is a madness that has appeared again and again throughout history in the form of Mammon, the golden idol of the markets. It is a way of looking at people and the world that is as old as Babylon, and as evil as sin. ..."
    jessescrossroadscafe.blogspot.com
    There is a lack of critical assessment of the past. But you have to understand that the current ruling elite is actually the old ruling elite. So they are incapable of a self-critical approach to the past."

    Ryszard Kapuscinski

    But they maintain a firm grasp on information and power, for their own sake, and sidetrack and stifle any meaningful reform.

    In October 2000 Thomas Frank published a prescient critical social analysis titled, One Market Under God: Extreme Capitalism, Market Populism, and the End of Economic Democracy .

    In the video below from 2015, Thomas Frank looks back over the past 15 years to when he wrote this insightful book, and ends with this observation.

    "I want to end with the idea that the market is capable of resolving all of our social conflict, fairly and justly. That is the great idea of the 1990's. And we all know now what a crock that is. I think what we need in order to restore some kind of sense of fairness is not the final triumph of markets over the body and soul of humanity, but something that confronts markets, and that refuses to think of itself as a brand ."
    The book was not received well at the time in the waning days of the Clinton revolution and the birth of the era of the neo-cons in foreign policy and neo-liberals in economics.

    This religion of the markets had yet to suffer the serial failures and decimation of the real economy which it would see over the next sixteen years.

    This is an ideology, a mindset, and as Frank calls it a religion, of taking market capitalism to such an extreme that it dispenses with the notion of restraints by human or policy consideration. It comes to consider the market as a god, with its orthodoxy crafted in think tanks, its temples in the exchanges and the banks, and its oracles on their media and the academy.

    This extreme form of market capitalism, also called neo-liberalism in economics and neo-conservatism in foreign policy, has worked its way into the mindset of the ruling elites of many of the developed nations, and has taken a place in the public consciousness through steady repetition. I has become the modern orthodoxy of the fortunate few, who have been initiated into its rites, and served and been blessed by their god.

    It is the taking of an idea, of a way of looking at things, that may be substantially practical when used as a tool to help to achieve certain outcomes, and placing it in such an extreme and inappropriate place as an end in itself, as the very definition and arbiter of what is good and what is not, that it becomes a kind of anti-human force that is itself considered beyond all good and evil, like a natural law.

    It is born of and brings with it an extreme tendency that kills thought, and stifles the ability to make distinctions between things. If not unfettered capitalism then what, communism ? The adherents become blind by their devotion to their gods.

    This is not something new. It is a madness that has appeared again and again throughout history in the form of Mammon, the golden idol of the markets. It is a way of looking at people and the world that is as old as Babylon, and as evil as sin.

    youtube.com

    [Aug 08, 2016] Globalization and its New Discontents

    economistsview.typepad.com
    JohnH :

    Globalization and its New Discontents

    Stiglitz: AUG 5, 2016 8
    Globalization and its New Discontents

    NEW YORK – Fifteen years ago, I wrote a little book, entitled Globalization and its Discontents, describing growing opposition in the developing world to globalizing reforms. It seemed a mystery: people in developing countries had been told that globalization would increase overall wellbeing. So why had so many people become so hostile to it?

    Now, globalization's opponents in the emerging markets and developing countries have been joined by tens of millions in the advanced countries. Opinion polls, including a careful study by Stanley Greenberg and his associates for the Roosevelt Institute, show that trade is among the major sources of discontent for a large share of Americans. Similar views are apparent in Europe.

    How can something that our political leaders – and many an economist – said would make everyone better off be so reviled?

    One answer occasionally heard from the neoliberal economists who advocated for these policies is that people are better off. They just don't know it. Their discontent is a matter for psychiatrists, not economists.

    But income data suggest that it is the neoliberals who may benefit from therapy. Large segments of the population in advanced countries have not been doing well: in the US, the bottom 90% has endured income stagnation for a third of a century. Median income for full-time male workers is actually lower in real (inflation-adjusted) terms than it was 42 years ago. At the bottom, real wages are comparable to their level 60 years ago.

    The effects of the economic pain and dislocation that many Americans are experiencing are even showing up in health statistics. For example, the economists Anne Case and Angus Deaton, this year's Nobel laureate, have shown that life expectancy among segments of white Americans is declining.

    Things are a little better in Europe – but only a little better.

    Branko Milanovic's new book Global Inequality: A New Approach for the Age of Globalization provides some vital insights, looking at the big winners and losers in terms of income over the two decades from 1988 to 2008. Among the big winners were the global 1%, the world's plutocrats, but also the middle class in newly emerging economies. Among the big losers – those who gained little or nothing – were those at the bottom and the middle and working classes in the advanced countries. Globalization is not the only reason, but it is one of the reasons.

    Under the assumption of perfect markets (which underlies most neoliberal economic analyses) free trade equalizes the wages of unskilled workers around the world. Trade in goods is a substitute for the movement of people. Importing goods from China – goods that require a lot of unskilled workers to produce – reduces the demand for unskilled workers in Europe and the US.

    This force is so strong that if there were no transportation costs, and if the US and Europe had no other source of competitive advantage, such as in technology, eventually it would be as if Chinese workers continued to migrate to the US and Europe until wage differences had been eliminated entirely. Not surprisingly, the neoliberals never advertised this consequence of trade liberalization, as they claimed – one could say lied – that all would benefit.

    The failure of globalization to deliver on the promises of mainstream politicians has surely undermined trust and confidence in the "establishment." And governments' offers of generous bailouts for the banks that had brought on the 2008 financial crisis, while leaving ordinary citizens largely to fend for themselves, reinforced the view that this failure was not merely a matter of economic misjudgments.

    In the US, Congressional Republicans even opposed assistance to those who were directly hurt by globalization. More generally, neoliberals, apparently worried about adverse incentive effects, have opposed welfare measures that would have protected the losers.

    But they can't have it both ways: if globalization is to benefit most members of society, strong social-protection measures must be in place. The Scandinavians figured this out long ago; it was part of the social contract that maintained an open society – open to globalization and changes in technology. Neoliberals elsewhere have not – and now, in elections in the US and Europe, they are having their comeuppance.

    Globalization is, of course, only one part of what is going on; technological innovation is another part. But all of this openness and disruption were supposed to make us richer, and the advanced countries could have introduced policies to ensure that the gains were widely shared.

    Instead, they pushed for policies that restructured markets in ways that increased inequality and undermined overall economic performance; growth actually slowed as the rules of the game were rewritten to advance the interests of banks and corporations – the rich and powerful – at the expense of everyone else. Workers' bargaining power was weakened; in the US, at least, competition laws didn't keep up with the times; and existing laws were inadequately enforced. Financialization continued apace and corporate governance worsened.

    Now, as I point out in my recent book Rewriting the Rules of the American Economy, the rules of the game need to be changed again – and this must include measures to tame globalization. The two new large agreements that President Barack Obama has been pushing – the Trans-Pacific Partnership between the US and 11 Pacific Rim countries, and the Transatlantic Trade and Investment Partnership between the EU and the US – are moves in the wrong direction.

    The main message of Globalization and its Discontents was that the problem was not globalization, but how the process was being managed. Unfortunately, the management didn't change. Fifteen years later, the new discontents have brought that message home to the advanced economies.

    https://www.project-syndicate.org/commentary/globalization-new-discontents-by-joseph-e--stiglitz-2016-08

    [Aug 03, 2016] Financialization and its Discontents

    Notable quotes:
    "... We are all "banks", but we don't have the capacity to socialise costs and privatise benefits. The problem is thereby, a problem of the power structure and accountability. Of institutional decay and corruption. ..."
    "... Capitalism has always favored the few at the expense of the many. Yet there have been places and moments, like in post-WWII U.S., where effort has gone into making the financial system at least appear somewhat transparent and predictable. Today we simply suffer the unrestrained looting of kleptocrats who laugh in our faces if we dare to complain. They violate "rules" that are already tilted in their favor with impunity. Meanwhile, if you are a poor person, unable to pay a traffic ticket in a timely fashion, you may well lose your liberty, or even your life. ..."
    "... The problem we have is that the system is rigged. Bad actors in the upper class can destroy their bank for fun and profit. Individuals father down the scale cannot discharge student loans under any circumstances. This is the largest source of discontent and a problem elites refuse to address. ..."
    "... And the elites won't address it until they are jailed or guillotined. Why should they? ..."
    "... The article starts off well enough, but then loses track of the critical standpoints it initially sets out. For example, within the above idea, the author can't talk about dimensions of life that are not monetizable because they are a capitalist prerogative. For instance, if someone is forced to work mandatory overtime because their employer doesn't want to hire enough workers to cover demand without overtime, you either do the overtime or you exit. You can't buy your time off. Etc. ..."
    "... I'm not sure what point this article is attempting to make. The distinction between money and debt becomes moot if money is a debt - which if I understand his arguments correctly is what Michael Hudson argues in "Killing the Host". I do like the reading list at the bottom. I'm behind many of the rest of the commenters in not having read any of these oft cited books. ..."
    "... I agree with other comments the formula "we are each of us banks" is lame. I think it matches nicely with the oft repeated analogy between government finance and a family business. ..."
    "... Financialization is about middlemen and looters skimming off money as it flows through; whether this is good or bad in a particular case depends upon whether those middlemen add value or simply act as rentiers. ..."
    "... money is the mental construct, the idea, by which we value human labor and transport that value across spacetime. ..."
    "... Other People's Money ..."
    naked capitalism
    TomDority , August 3, 2016 at 6:55 am

    Not sure the bank thing is a good analogy. Seams when a financial system raises the cost of an asset like land through speculation to the point where a debtor has not enough income to cover outflow to provide basics of survival….. food, water, shelter, community etc……..then does the crrditor/speculator thus owe society because, it was through speculation and Mal-investment that society was damaged.

    Thomas Jefferson….I think, said something along the lines…… if banks get a hold of credit creation then, by inflation and deflation the citizens of this country will be left homeless upon the land their fathers established.

    IDG , August 3, 2016 at 7:30 am

    We are all "banks", but we don't have the capacity to socialise costs and privatise benefits. The problem is thereby, a problem of the power structure and accountability. Of institutional decay and corruption.

    Ulysses , August 3, 2016 at 9:41 am

    Very well said!

    Capitalism has always favored the few at the expense of the many. Yet there have been places and moments, like in post-WWII U.S., where effort has gone into making the financial system at least appear somewhat transparent and predictable. Today we simply suffer the unrestrained looting of kleptocrats who laugh in our faces if we dare to complain. They violate "rules" that are already tilted in their favor with impunity. Meanwhile, if you are a poor person, unable to pay a traffic ticket in a timely fashion, you may well lose your liberty, or even your life.

    washunate , August 3, 2016 at 10:55 am

    Capitalism has always favored the few at the expense of the many.

    I'm curious what makes capitalism unique for you in that regard? I agree that there are problems with market-based economics, but you seem to be suggesting that other forms of political economy don't have problems of concentration of wealth and power?

    Capitalism without democracy and individual rights absolutely favors the few at the expense of the many. That's why our intellectual enablers have spent so much energy trying to separate economics from politics: to camouflage political choices as if they are natural economic outcomes.

    Left in Wisconsin , August 3, 2016 at 11:52 am

    I'm not sure what "other forms" you have in mind for comparison. But I would suggest it is a huge failure of imagination to suggest humans have exhausted all possible forms of economic organization and are stuck with contemporary global capitalism. Time for some innovation!

    readerOfTeaLeaves , August 3, 2016 at 11:04 am

    Agreed.

    And as Mehring points out: "Focusing on what money really is – whether gold or state fiat – shifts attention away from what credit really is, which is to say away from the center of discontent." It's the quality of that debt, what it is and why, that needs far more examination. At present, it is at the root of much discontent: why should I and mine be expected to salvage bank balance sheets that are essentially fraudulent in terms of crap mortgages?

    The institutional decay is really some kind of measure of the quality of crappy debt, which is making many of us seriously discontent at being expected to cover crap bets.

    Larry , August 3, 2016 at 7:36 am

    The problem we have is that the system is rigged. Bad actors in the upper class can destroy their bank for fun and profit. Individuals father down the scale cannot discharge student loans under any circumstances. This is the largest source of discontent and a problem elites refuse to address.

    Benedict@Large , August 3, 2016 at 8:22 am

    And the elites won't address it until they are jailed or guillotined. Why should they?

    hemeantwell , August 3, 2016 at 8:42 am

    From a money view perspective, the origin of discontent seems to lie in the fact that each of us, in our interface with the essentially financial system that is modern capitalism, operates essentially as a bank, meaning a cash inflow, cash outflow entity.

    The article starts off well enough, but then loses track of the critical standpoints it initially sets out. For example, within the above idea, the author can't talk about dimensions of life that are not monetizable because they are a capitalist prerogative. For instance, if someone is forced to work mandatory overtime because their employer doesn't want to hire enough workers to cover demand without overtime, you either do the overtime or you exit. You can't buy your time off. Etc.

    Jeremy Grimm , August 3, 2016 at 9:34 am

    I'm not sure what point this article is attempting to make. The distinction between money and debt becomes moot if money is a debt - which if I understand his arguments correctly is what Michael Hudson argues in "Killing the Host". I do like the reading list at the bottom. I'm behind many of the rest of the commenters in not having read any of these oft cited books.

    I agree with other comments the formula "we are each of us banks" is lame. I think it matches nicely with the oft repeated analogy between government finance and a family business.

    The close: "fundamental misunderstanding of the nature of the system" leaves me hanging. Where is the explanation which clarifies things and repairs my misunderstanding? I missed it in the presentation above and the concluding absurdity - "… we are each of us banks, managing our daily cash inflow and cash outflow relative to the larger system which is society." - hardly serves as clarification of anything. It just makes me annoyed that I bothered to read down that far.

    JEHR , August 3, 2016 at 11:38 am

    Bad analogy: If each of us were our own bank, then we would be able to create money like banks and loan out with interest and make billions each quarter because sometimes we could speculate or gamble and make billions more while our fellow citizens become poorer because of our efforts.

    washunate , August 3, 2016 at 10:25 am

    Unlike some commenters, I do happen to like the imagery of all of us being banks. That's what we all do: our labor flows out, other people's labor flows in. Imbalances can (and in fact, almost by definition have to) occur over arbitrarily short time frames, but over longer timeframes, these inflows and outflows do have to roughly balance. It also helps lay bare the fallacy of bailing out individual banks (TBTF) as some kind of means of saving the banking system rather than those specific banks bailed out. If the USFG gave Wash a trillion buck bailout, Wash Banking Inc would be very grateful and fix lots of things in Wash Town USA and make lots of jawbs and groaf and all dat. Does that make it good policy, either for the residents of Wash Town or the residents of Dry Town across the valley?

    Where I don't quite follow the author's point is in distinguishing money/credit/financialization/etc. The easiest way to understand money at a macro level is that money is labor. Or a bit more complexly, money is the mental construct, the idea, by which we value human labor and transport that value across spacetime.

    The issue of financialization isn't market vs. non-market or money vs. non-money or something like that. Financialization is about the subset of money called currency, particularly currency units issued by a sovereign government, being used to allocate resources in areas where currency units are poor allocators of resources. Financialization is about middlemen and looters skimming off money as it flows through; whether this is good or bad in a particular case depends upon whether those middlemen add value or simply act as rentiers.

    The biggest areas of financialization in contemporary western culture, especially in the heart of the free world in DC, are not markets at all. They are government sponsored enterprises carrying out that age old quest of the Will to Power. Remove USFG policy choices to run a global empire abroad and create massive inequality at home, and our supposedly market-based financial system would shrink to a much smaller size overnight.

    JEHR , August 3, 2016 at 11:39 am

    If money were true labour then bankers would be broke!

    Robert Dannin , August 3, 2016 at 11:51 am

    "Financialization is about middlemen and looters skimming off money as it flows through; whether this is good or bad in a particular case depends upon whether those middlemen add value or simply act as rentiers."

    You hit the nail on the head here. Profits from financial transactions differ from those derived in trading commodities and services. The former are occult whereas the latter originate in the value of labor power. The claim that financial profits track interest rates doesn't work because they remain linked to credit and ultimately commodity exchange. If you listen to the Blankfeins and Dimons, they will say they are compensated for some special managerial skills that add values to the financial transaction. This is only nonsense to justify their mega-salaries, themselves only a fraction of the huge profits in finance. According to Hilferding's Finance Capital, the source of profit in finance is "sui generis" and derives from what we now call transaction fees. Whether legitimate or not, we need to understand how those rates are determined relative to the other variables.

    Left in Wisconsin , August 3, 2016 at 11:58 am

    money is the mental construct, the idea, by which we value human labor and transport that value across spacetime.

    But even this has to be qualified by tradition, power relations, etc. as there are many, many forms of human labor (often those forms traditionally performed by women) that we value but do not compensate with money. Also, who is "we?" And when did "we" decide that 2 and 20 was appropriate compensation for the "value" provided by hedge funders?

    Alejandro , August 3, 2016 at 11:10 am

    This "economist" alludes to, but fails to make the connection of the "asymmetrical" AND disproportionate power between creditors and debtors, that has been legislated, ratified and codified into the creditor castle (institution) of banking, currently run by banksters and moated with pols, judges, story-tellers masquerading as "journos"/"economists" etc….e.g.-assuming it were possible to make a sharp distinction between speculating and investing, by what reasonable definition of creditor can vultures be classified as creditors?

    Also doesn't seem to challenge the presupposition of "self-regulation" in the abstract "logic"(and language) of "markets", which is innate in thinking of "money" as a commodity. This abstract "logic"(and language) has "supplied" the fodder for neoliberal zealots to rationalize de-regulation, which many have concluded has been a major driver of the "defining issue of our time" and the disdainful polarization between the "haves" and "have-nots".

    Also seems to fail to recognize the conflict when thinking about money as a commodity and the effects of compounding interest…

    Sluggeaux , August 3, 2016 at 12:23 pm

    Thanks for this. I followed the link and have started reading Louis Brandeis' Other People's Money , which I've never read before. We've learned little in the ensuing 100 years…

    [Jul 12, 2016] Workers deserve to be compensated fairly for their work, and have generous social support programs to rely upon when economic changes that are out of their control throw them out of work or force them to accept lower paying jobs.

    www.thefiscaltimes.com

    "That empowerment must be both economic and political. Workers deserve to be compensated fairly for their work, and have generous social support programs to rely upon when economic changes that are out of their control throw them out of work or force them to accept lower paying jobs.

    We should not hesitate to ask those who have gained so much from globalization and technological change to give something back to those who have paid the costs of their success."

    All this would have been especially great, say, forty or even thirty years ago.

    [Jun 18, 2016] Greenspan Shocked Disbelief by Robert Borosage

    Greenspan phony "Shocked disbelief" reminds classic "...I am shocked - shocked, there is gambling going on in this establishment...." "...here are your winnings..." exchange between Humphrey Bogart & Claude Rains in Casablanca. Compare with "... "Those of us who have looked to the self-interest of lending institutions to protect shareholders' equity, myself included, are in a state of shocked disbelief," he said. ..."
    Notable quotes:
    "... "Those of us who have looked to the self-interest of lending institutions to protect shareholders' equity, myself included, are in a state of shocked disbelief," ..."
    "... Greenspan spurned the Republican acolytes trying desperately to defend the faith and blame the crisis on the Community Reinvestment Act and the powerful lobby of poor people who forced powerless banks to do reckless things. ..."
    "... Private greed, not public good, caused this catastrophe: "The evidence now suggests, but only in retrospect, that this market evolved in a manner which if there were no securitization, it would have been a much smaller problem and, indeed, very unlikely to have taken on the dimensions that it did. It wasn't until the securitization became a significant factor, which doesn't occur until 2005, that you got this huge increase in demand for subprime loans, because remember that without securitization, there would not have been a single subprime mortgage held outside of the United States, that it's the opening up of this market which created a huge demand from abroad for subprime mortgages as embodied in mortgage-backed securities. ..."
    "... But having admitted the failure of his faith, Greenspan could not abandon it. Credit default swaps had to be "restrained," he admitted. Those who create mortgages should be mandated to retain a piece of them to insure responsible lending. Otherwise, the old faith still applied. No new regulations were needed, because the markets "for the indefinite future will be far more restrained than would any currently contemplated new regulatory regime." ..."
    "... The only Guantanamo that the United States has any business running is a concentration camp for the hundreds of wall street executives and their cronies in Bushland that conspired to defraud the American people from their hard earned dollar. ..."
    "... There are no free markets in America, any more than there is free lunch. ..."
    "... So it wasn't the military-industrial complex that did us in after all . . . ..."
    "... It's clear from comments on this contribution that few readers of Truthout believe Alan Greenspan's sorry testimony before Congress. What has faith in something to do with enforcing the policies of fiduciary responsibility already on the books? All these so-called "experts" on capitalism are now coming out to say "I'm sorry." Well, I won't be sorry for them until they are held monetarily and criminally responsible for their actions, inept or not. ..."
    "... If it looks like class warfare, as David Harvey, author of Neoliberalism, has stated, call it class warfare and act accordingly. ..."
    "... it doesn't take a genius to understand that when financial instruments are created based on crap (subprime mortgages), that eventually problems will occur with those instruments. In fact, Greenspan and his cronies knew that, which is why they resisted these instruments being regulated by the SEC or even the CFTC. ..."
    "... Sounds like the "maestro" hit a flat note in his orchestra of greed and deregulation. ..."
    "... Did anybody even bother to consult the Math PhDs who created these instruments to run possible scenarios -- just in case? why bother when you know you can scare congress, the president and the treasury and ultimately the people into bailing your ass out of worldwide collapse? ..."
    "... Shocked Disbelief is a ploy. When they were all riding high, they didn't give a crap. They were going to come out richer than hell anyway. ..."
    "... Where's Ayn Rand when you need her? Give me a break Mr Greenspan. Never let history and reality get in the way of the big unregulated celebration of greed like we have had since "Saint Ronald Wilson Reagan", and the other "Free Market" "government is the problem" ideologues ..."
    "... What about the 1994 Act of Congress that required the Fed to monitor and regulate derivatives? The Act Greenspan ignored? ..."
    "... "...I am shocked - shocked, there is gambling going on in this establishment...." "...here are your winnings..." exchange between Humphrey Bogart & Claude Rains in Casablanca ..."
    Oct 24, 2008 | truthout.org

    by: Robert Borosage, The Campaign for America's Future

    On October 23, former Federal Reserve Chairman Alan Greenspan testified before a House Oversight and Government Reform Committee hearing on the role of federal regulators in the current financial crisis.

    It marks the end of an era. Alan Greenspan, the maestro, defender of the market fundamentalist faith, champion of deregulation, celebrator of exotic banking inventions, admitted Thursday in a hearing before Rep. Henry Waxman's House Committee and Oversight and Government Reform that he got it wrong.

    "Those of us who have looked to the self-interest of lending institutions to protect shareholders' equity, myself included, are in a state of shocked disbelief," he said.

    As to the fantasy that banks could regulate themselves, that markets self-correct, that modern risk management enforced prudence: "The whole intellectual edifice, however, collapsed in the summer of last year."

    Greenspan spurned the Republican acolytes trying desperately to defend the faith and blame the crisis on the Community Reinvestment Act and the powerful lobby of poor people who forced powerless banks to do reckless things. Greenspan dismissed that goofiness in response to a question from one of its right-wing purveyors, Rep. Todd Platts, R-Pa., noting that subprime loans grew to a crisis only as the unregulated shadow financial system securitized mortgages, marketed them across the world, and pressured brokers to lower standards to generate a larger supply to meet the demand. Private greed, not public good, caused this catastrophe:

    "The evidence now suggests, but only in retrospect, that this market evolved in a manner which if there were no securitization, it would have been a much smaller problem and, indeed, very unlikely to have taken on the dimensions that it did. It wasn't until the securitization became a significant factor, which doesn't occur until 2005, that you got this huge increase in demand for subprime loans, because remember that without securitization, there would not have been a single subprime mortgage held outside of the United States, that it's the opening up of this market which created a huge demand from abroad for subprime mortgages as embodied in mortgage-backed securities.

    But having admitted the failure of his faith, Greenspan could not abandon it. Credit default swaps had to be "restrained," he admitted. Those who create mortgages should be mandated to retain a piece of them to insure responsible lending. Otherwise, the old faith still applied. No new regulations were needed, because the markets "for the indefinite future will be far more restrained than would any currently contemplated new regulatory regime."

    Now hung over from their bender, the banks could be depended upon to remain sober "for the indefinite future." Or until taxpayers' money relieves their headaches, and they are free to party once more.


    IN ACCORDANCE WITH TITLE 17 U.S.C. SECTION 107, THIS MATERIAL IS DISTRIBUTED WITHOUT PROFIT TO THOSE WHO HAVE EXPRESSED A PRIOR INTEREST IN RECEIVING THE INCLUDED INFORMATION FOR RESEARCH AND EDUCATIONAL PURPOSES. TRUTHOUT HAS NO AFFILIATION WHATSOEVER WITH THE ORIGINATOR OF THIS ARTICLE NOR IS TRUTHOUT ENDORSED OR SPONSORED BY THE ORIGINATOR.

    "VIEW SOURCE ARTICLE" LINKS ARE PROVIDED AS A CONVENIENCE TO OUR READERS AND ALLOW FOR VERIFICATION OF AUTHENTICITY. HOWEVER, AS ORIGINATING PAGES ARE OFTEN UPDATED BY THEIR ORIGINATING HOST SITES, THE VERSIONS POSTED ON TO MAY NOT MATCH THE VERSIONS OUR READERS VIEW WHEN CLICKING THE "VIEW SOURCE ARTICLE" LINKS.

    Comments

    This is a moderated forum. It may take a little while for comments to go live.

    The only Guantanamo that the

    Sun, 10/26/2008 - 23:37 - Captain America (not verified)

    The only Guantanamo that the United States has any business running is a concentration camp for the hundreds of wall street executives and their cronies in Bushland that conspired to defraud the American people from their hard earned dollar.

    What they did dwarfs the damage caused to this country by 911, (no disrespect for the many innocents who died). However, here, every single citizen is a victim of fraud and corruption on a scale that was heretofore inconceivable. Greenspan, Bush and now Paulson have done more than Bin Laden and his hordes could do in a 100 years.

    By the way, if you protest YOU wind up locked up for being un-American. What happened America ?

    There are no free markets in

    Sun, 10/26/2008 - 19:27 - pink elephant (not verified)

    There are no free markets in America, any more than there is free lunch. The game was always fixed and Greenspan was the ultimate shill for the fixers. The past thirty years have been an orgy of greed with common sense shoved aside for the sake of uncommon expediency. Americans became infatuated by arcane formulas and dense incomprehensible mathematics to the point that they forget simple arithmetic. America wake up it was only a dream, and a bad one at that.

    So it wasn't the

    Sun, 10/26/2008 - 19:07 - Anonymous (not verified)

    So it wasn't the military-industrial complex that did us in after all . . .

    It's clear from comments on

    Sun, 10/26/2008 - 15:40 - afrothethics (not verified)

    It's clear from comments on this contribution that few readers of Truthout believe Alan Greenspan's sorry testimony before Congress. What has faith in something to do with enforcing the policies of fiduciary responsibility already on the books? All these so-called "experts" on capitalism are now coming out to say "I'm sorry." Well, I won't be sorry for them until they are held monetarily and criminally responsible for their actions, inept or not. The truth is as plain as the nose on your face: Greenspan, the Federal Reserve, the investment banks, the Bush administration and several members of Congress unobtrusively acted to consciously and knowingly to rob the national treasury for the sake of capitalism's sacred cow: capital accumulation on behalf of the nation's political and economic elite. If it looks like class warfare, as David Harvey, author of Neoliberalism, has stated, call it class warfare and act accordingly.

    We have heard statements

    Sun, 10/26/2008 - 10:11 - DJK (not verified)

    We have heard statements like "the mathematical models used for knowing the behavior of derivatives based on subprime mortgages were too difficult to understand", etc. But it doesn't take a genius to understand that when financial instruments are created based on crap (subprime mortgages), that eventually problems will occur with those instruments. In fact, Greenspan and his cronies knew that, which is why they resisted these instruments being regulated by the SEC or even the CFTC. And this is why they turned a blind eye to many of the rating agencies giving many of these instruments AAA ratings. I am sure that a real investigation will reveal numerous instances of fraudulent activity in conjunction with this debacle. Those perpetrators must be identified and brought to justice. While this will not fix our current problem, it hopefully should serve as a deterrent to those who would in the future attempt to again engage in such activities.

    Well here you have it a

    Sun, 10/26/2008 - 08:13 - Robert Iserbyt (not verified)

    Well here you have it a confessional lie from the biggest fraud perpetrator in the history of American finance Why the markets ever listened to this criminal in the first place is evidence that our entire nation should be required to take a full year of real unfettered economics just in case they don't understand what is going on now. All the pundits on MSNBC and all the talking heads should be removed from the airwaves. The Bailout what will that do? the answer lies before you.

    Sounds like the "maestro"

    Sun, 10/26/2008 - 02:02 - Anonymous (not verified)

    Sounds like the "maestro" hit a flat note in his orchestra of greed and deregulation. Come on, do you really think we are all so stupid to buy into the story that you couldn't predict a melt down knowing that those writing the subprimes held no responsibility for their actions? That's like giving a "get out of jail card" to someone who just created a felony! Did anybody even bother to consult the Math PhDs who created these instruments to run possible scenarios -- just in case? why bother when you know you can scare congress, the president and the treasury and ultimately the people into bailing your ass out of worldwide collapse?

    I'm a former real estate

    Sun, 10/26/2008 - 00:24 - two7five7one (not verified)

    I'm a former real estate broker and my son is a mortgage broker. From about 2004 through the beginning of this "greatest financial crisis since '29", we frequently talked on the phone about the disaster which would ensue when the real estate value appreciation stopped, and people were no longer fueling the economy with money borrowed against their equity, and the sub-prime loan fiasco would end. We knew it would be disastrous, and both of us were astonished that neither the FED nor congress was willing to say or do anything about it. Anyone who has witnessed over the years the cycle of boom/bust/boom/bust in the real estate market knew that after eleven years of unprecedented "boom" -- '96 through '2007 -- the "bust" would be like an earthquake. Paulson and Greenspan and their ilk now denying that they suspected this is just is just their lying to protect the GOP which was benefitting from the booming economy. They should both end up in prison, with all of the GOP members of congress who have had their hands in the cash register.

    Dance clown, dance. First

    Sat, 10/25/2008 - 23:48 - mysterioso (not verified)

    Dance clown, dance. First you were against the FED until you became head of the FED. Then you were for trickle down economics and letting the "system" regulate itself until you saw the inevitable destruction it caused. Dance clown, dance. You should be the first one sent to prison under the "Un-American activities act". The arrogance of your testimony before the committee was appalling. You honestly couldn't believe you were wrong !!!

    Shocked disbelief, my foot.

    Sat, 10/25/2008 - 23:35 - slw (not verified)

    Shocked disbelief, my foot. Many of us predicted EXACTLY this outcome.

    This is like telling the Fox

    Sat, 10/25/2008 - 22:43 - topview (not verified)

    This is like telling the Fox to watch the Hens and then walking away and trusting him to do the right thing. Government has to return to regulation and see that there is no hanky, Banky going on anymore. Monopolies have to be busted up, like the Communication industry's, the Drug industries and any other Corporations that control to much of the way the Country operates. No more Outsourcing any Government duties.

    Shocked Disbelief is a ploy.

    Sat, 10/25/2008 - 22:00 - radline9 (not verified)

    Shocked Disbelief is a ploy. When they were all riding high, they didn't give a crap. They were going to come out richer than hell anyway.

    Where's Ayn Rand when you

    Sat, 10/25/2008 - 20:53 - anglohistorian (not verified)

    Where's Ayn Rand when you need her? Give me a break Mr Greenspan. Never let history and reality get in the way of the big unregulated celebration of greed like we have had since "Saint Ronald Wilson Reagan", and the other "Free Market" "government is the problem" ideologues. We can spend trillions on war and corporate bailouts, but we can't have a single payer health system? We can't rebuild our infrastructure? Say it again- give me a break!

    What about the 1994 Act of

    Sat, 10/25/2008 - 20:41 - Jtmonrow (not verified)

    What about the 1994 Act of Congress that required the Fed to monitor and regulate derivatives? The Act Greenspan ignored?

    "...I am shocked - shocked,

    Sat, 10/25/2008 - 20:29 - Anonymous (not verified)

    "...I am shocked - shocked, there is gambling going on in this establishment...." "...here are your winnings..." exchange between Humphrey Bogart & Claude Rains in Casablanca

    This would be the same

    Sat, 10/25/2008 - 19:50 - dtroutma (not verified)

    This would be the same "shocked disbelief" expressed by Willie Sutton's mother?

    shouldn't Greenspan give his

    Sat, 10/25/2008 - 18:06 - Anonymous (not verified)

    shouldn't Greenspan give his salary and bonus back to taxpayers?

    [May 29, 2016] Goldman raised their price target (causing a rally in the stock) hours before underwriting a capital raise that cause a decline in Tesla's stock

    peakoilbarrel.com
    Brian Rose, 05/18/2016 at 6:34 pm
    Toolpush,

    I found it amusing that Goldman raised their price target (causing a rally in the stock) hours before underwriting a capital raise that cause a decline in Tesla's stock.

    Although, to be fair there are SEC rules that are very explicit, with severe consequences, if Goldman Sachs' underwriting dept talked or leaked anything to their analysts.

    Goldman Sachs does plenty of shady things to make a profit – like selling Mortgage Backed Securities as AAA investments, and simultaneously, knowing they're crap, betting on them going bad (covered in the critically acclaimed documentary "Inside Job"), or helping Greece hide their budget deficit with accounting magic… so they can sell them debt… that they know will go bad.

    However, as odd as it is, none of those actions were illegal. THIS would actually be illegal, and Goldman Sachs is smarter than that. I'd guess it is a genuine coincidence.

    On a separate note, I find it important to note that Tesla FIRST scouted out battery suppliers to supplement their battery supply 1 DAY before announcing the amount of their capital raise.

    My hypothesis, Tesla's accelerated Model 3 ramp-up meant that they will need a large supply of additional batteries as the Gigafactory will not be able to accelerate it's schedule enough to match the accelerated vehicle production ramp.

    This also tells me that Tesla is confident enough in their accelerated Model 3 production schedule that they needed to arrange a multi-million dollar contract with battery suppliers to supplement their capacity until the Gigafactory can meet demand.

    likbez, 05/18/2016 at 11:00 pm
    Although, to be fair there are SEC rules that are very explicit, with severe consequences, if Goldman Sachs' underwriting dept talked or leaked anything to their analysts.

    This is all about corruption of regulators and impunity of TBTF financial institutions under neoliberalism - which is an immanent feature of neoliberalism aka "casino capitalism"…

    Goldman's role in the growth of casino capitalism in the USA is similar to that of other players, except for one thing: Goldman didn't believe its own hype. The now famous Rolling Stone magazine article in 2009 by Matt Taibbi unforgettably referred to Goldman Sachs, the world's most powerful investment bank, as a "great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money." ( http://www.forbes.com/sites/jakezamansky/2013/08/08/the-great-vampire-squid-keeps-on-sucking/ )

    https://www.bostonglobe.com/opinion/2016/05/12/the-age-impunity/LHBxamqFENCs3W6lvWnCIJ/story.html

    Impunity is epidemic in America. The rich and powerful get away with their heists in broad daylight. When a politician like Bernie Sanders calls out the corruption, the New York Times and Wall Street Journal double down with their mockery over such a foolish "dreamer." The Journal recently opposed the corruption sentence of former Virginia governor Bob McDonnell for taking large gifts and bestowing official favors - because everybody does it. And one of its columnists praised Panama for facilitating the ability of wealthy individuals to hide their income from "predatory governments" trying to collect taxes. No kidding.

    Our major institutions, the ones that should know better, are often gross enablers of impunity. Consider my alma mater, Harvard University, and its recent nuptial with hedge-fund manager John Paulson. Paulson was the co-conspirator with Goldman Sachs of one of the most notorious scams of the recent financial bubble.

    http://www.softpanorama.org/Skeptics/Financial_skeptic/Casino_capitalism/Systemic_instability_of_financial_sector/TBTF/Goldman_Sachs/index.shtml

    Professional financial hackers have a lot of common with the organized crime. And not only in respect to common addictions to cocaine and prostitutes. But there is a subtle difference: financial hackers make it daily (and very lucrative) business to figure out ways to abide by the letter of the law while violating its spirit. Although the claim that they do not break the law has very little credibility. They do break the law, but at the same time their political influence is big enough to keep them out of jail. In 2012 Lanny Breuer, then the head of the Justice Department's criminal division openly admitted that. In a speech at the New York City Bar Association he said that he felt that it was his duty to consider the health of the company, the industry, and the markets in deciding whether or not to file charges. Which in case of Goldman represents insurmountable obstacle to criminal prosecution.
    In any case GS converted itself into a special type of TBTF company, the company that specialized in hacking financial system. And in a large company internal politic can turn really destructive both to the firm and society at large. In fact, in large companies there are people with very high IQ at the top with personal traits that makes them more dangerous in comparison with bosses of Mexican gangs. It also makes internal political battles more vicious. BTW, a lot of psychopaths have above average IQ.

    In a way the USA never had a subprime crisis. What we had was systemic, neoliberalism-induced crisis that involves FED, government, congress, banking, ratings, insurance, investment and financial industries (the banks were at the center of this crime syndicate and they were the largest beneficiaries of the crimes committed), one manifestation of which was 2008 subprime crisis. Large banks became huge, dominant political force and based on their political weight, they hacked the financial system in the same way computer hackers hack computers systems to suit their short term needs and first of all for enrichment of the brass (appetite for "make money fast" schemes was greatly raised during dot-com crisis).
    As Simon Johnson wrote in May 2009 the USA had a The Quiet Coup with banks becoming the most favored and the most protected industry of the Congress. Financial system is essentially a system of rules. If a rich and powerful organization is directed toward hacking the rules: finding weaknesses and exploiting them it is undistinguishable from mafia in a very precise meaning of the term (organize crime syndicate with strong ethnic component), only more sophisticated. Again they are not gangsters in traditional meaning of this word, they are of a hackers, and as such they are much more difficult to prosecute. As a comment to blog post at EconomistView by "Eric" (Paul Krugman The Unwisdom of Elites) aptly stated:
    Villains….who exactly? The principle reason that there have been few prosecutions of high level bankers is that not so much that got done was illegal. Reckless, maybe. But even here is it really reckless behavior if you have a belief - which turns out to be true - that public finances will bear the downside risks on your behalf?
    In hindsight it feels like these things should have been illegal, but the available serious punishments, such as not bailing out AIG, not allowing various investment firms to become bank holding entites, not backstopping the GSEs (read their debt issues and you'll see that nowhere is a claim made for public backing), not taking first loss positions on Bear Stearn assets, etc., etc., were foregone by voluntary actions by public officials.
    Make peace with the truth that there will be no sweeping prosecutions, least of all by the federal government of the USA.

    [May 24, 2016] The CEO of Goldman Sachs accidentally explained why everyone hates Wall Street

    Notable quotes:
    "... want to follow the rules ..."
    "... The only thing you can trust is that Goldman Sach's values don't include giving a damned about average Americans even if in Blankfein's delusional mind he is doing "Gods work. It would go a way toward restoring trust in the system if these rip off artists would consent to paying more taxes on their ill deserved gains in order to help bring down some of the nations debt and relieve the misery their unethical behavior created. But that will never happen voluntarily. Basically they are immoral creeps killing the golden goose that is our country. ..."
    "... Run corruption out of DC and there will be much more trust of big business. Do not buy the garbage that politicians are critical of the Wall Street crowd. Has Hillary released her speeches yet? NO. Don't expect she ever will. (aside: I do not find this article informative, and I'm dismayed by the comments I've read here.) ..."
    "... "I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. …corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed." ..."
    "... The mass of Americans are too powerless to fight back against the reign of the money powers. As Lincoln predicted, our Republic is destroyed. What awaits us now is dictatorship or even worse ... theocracy. ..."
    finance.yahoo.com

    Brilliance is often accidental, and so it was at Goldman Sachs' annual meeting on Friday.

    In an attempt to pinpoint exactly what's wrong with the global economy - why demand is weak, why growth is anemic, why jitters on one side of the planet can turn into panic all over - CEO Lloyd Blankfein happened upon why Wall Street is so hated.

    It was, as I said, an accident.

    Blankfein said that what the world needs now is confidence. In investment banking, when people are confident t here are "more financings, more equity raises, because people invest more money in their own businesses when they're confident," he said, according to Business Insider's Portia Crowe , who was on the scene.

    This explanation sounds right. When people think they can make money they put their money to work.

    The problem is that "confidence" doesn't go far enough. More than confidence, for people to invest in the world they have to trust in it - in the systems and people that make it work.

    The fact that Blankfein missed that mark, though, explains exactly why people hate Wall Street.

    The financial crisis, the scandals and the fraud and the dark headlines, have all helped erode that trust. And that lack of trust is what is holding the world back right now.

    This is not a drill

    Think of a simple trust-building exercise, the fall game. When you're the fall guy, you can be confident that everyone is going to catch you. That, after all, is how the game is completed. You have to believe that everyone understands the rules.

    What's better than knowing that everyone understands the rules, though? Trusting that everyone around you is going to catch you - believing beyond a shadow of a doubt that they want to follow the rules .

    That's the difference between trust and conviction. Trust is something you can rely on, beyond certainty.

    Now one can operate in markets without trust, with only conviction.

    Conviction doesn't demand that you, or anyone else, play by the rules, though. It just demands that you understand what's going on (and what motivates everyone around you) at all times. It's a daunting task that neither the common person nor Wall Street's all-seeing CEOs were able to accomplish before the financial crisis. It is, however, part of the latter's full-time job - mitigating risk, seeing the unforeseen.

    Of course, some of that burden would be lifted if we operated on more trust and less conviction.

    Your correspondent is hardly the only person thinking this way. This week, Andrew G. Haldane, chief economist of the Bank of England, gave an incredibly compelling speech on what's wrong with global economy. Unlike Blankfein, though, he got it right. The speech was called The Great Divide, and he argued that the only way to close that divide is with trust.

    "Evidence has emerged, both micro and macro, to suggest trust may play a crucial role in value creation. At the micro level, there is now ample evidence the degree of trust or social capital within a company contributes positively to its value creation capacity," said Haldane.

    "At the macro level, there is now a strong body of evidence, looking across a large range of countries and over long periods of time, that high levels of trust and co-operation are associated with higher economic growth. Put differently, a lack of trust jeopardizes one of finance's key societal functions - higher growth."

    Watchers on the wall

    Back in 2014, when the market was roaring and everyone thought we were on the road to recovery, Dylan Grice, a portfolio manager at Aeris Capital, put forth the same idea. He saw in declining relations between the US and China, between Russia and the world, and between citizens and corporations what could only be perceived as our descent into the trough of a cycle of trust.

    And, as he pointed out, credit - one of the main forces for moving money from place to place - comes from the Latin word for trust.

    Over at HSBC, economist Stephen King wrote a note called Unhappy Families: The Case for International Policy Coordination in which he argued that the global economy could actually be saved quite easily if we trusted each other. If the countries that could save us - the US, China, and Germany - acted unselfishly and in coordination and simply did.

    But they won't, because there is no trust.

    "Yet it would be easy, too easy, to point the finger at finance alone," Haldane said in his speech. "For this Great Divide exists not just between the financial elites, but between elites generally and wider society. It is not just bankers who have suffered a loss of public trust. In varying degrees, this is also true of big business, government and, yes, politicians and central banks."

    Man, see this mirror

    This brings us back to Goldman Sachs, which happened to have had a very embarrassing little incident last week when one of its analysts recommended buying Tesla just before the bank announced that it would be helping the automaker with an equity offering.

    Business Insider's Myles Udland described why that looks shady:

    The stock upgrade is a detailed argument for why you, the investors, should buy the shares. As a result, investors buy.

    This report is delivered just as Goldman's sales force is about to hit the phones to push $1.4 billion of those very shares for a nice fat fee for Goldman and a dilutive hit to the shareholders.

    So then there are investors who, based on Archambault's note, bought the shares in the morning only to learn by that afternoon that Goldman would have a hand in diluting their newly acquired ownership stake.

    And the popular view says Goldman knew this was going to happen the whole time.

    If you're thinking the worst, this snafu was a breach of Wall Street's famous Chinese Wall between research and investment banking. What's more, because of this trust deficit, most people were thinking the worst because that's what they do when they think of Goldman Sachs.

    View gallery

    . Goldman Vampire Squid
    Lloyd on a vampire squid. Sorry bro, too easy.

    And because of that some people don't trust, or put their money in, the market.

    And because of that the market doesn't move.

    Haldane sees this fear as a loss of social capital arising from the crisis.

    "Social capital is inextricably linked to trust," he said in his speech. "And banking is quintessentially a trust business. At root, it involves swapping promises to pay. These promises rely on trust."

    It's the belief that these promises will be kept that the market is lacking, not necessarily that they can be kept. This is the difference between trust and confidence. And with every scandal and fraud, every dark headline telling of financial ruin that comes from the financial sector, some of that trust is lost.

    Haldane thinks that recreating the local bank, a bank with the kind of accountability that comes from knowing someone by name and looking them in the eye, is part of the solution. But banking isn't moving that way. Every day we hear about how it's becoming more automated.

    He acknowledges this, recognizing that banking must "seek new ways to nurture generalized, or anonymous, trust on the part of the public. Technology may be a great enabler here."

    But in the end it doesn't matter how we fix this. We just have to fix it.

    "Whatever business model is adopted, success will hinge on whether the public have faith in banks pursuing a purpose aligned with their needs, that they are fulfilling their fiduciary function. There is a mountain to climb on this front, not just for banking but for business generally," he said.

    "If not at an all-time low, public trust in big business is plumbing the depths. And the chorus of criticism of business is not confined to the general public. It is shared by politicians, academics, investors and indeed sometimes by companies themselves."

    Everyone is holding on to their money. Everyone is trying to look someone the eye and finding their counterparties' gaze shifting to wherever self-interest guides them. The counterparties are confident they'll find money there, sure, but the trust that makes the market go around is being lost in the process.

    It takes so much more to build it up than to break it down.

    NOW WATCH: THE STORY OF GOLDMAN SACHS: From foot peddlers to a powerhouse

    rey Q 25 minutes ago
    GS, Chase ,BofA,Wells Fargo.....,and some others big banks created the crisis past 2008-09.

    Any one of the executives pass a day in prison, they pay cents on the dollars and happy cumballa until the next scam. Gov it's corrupt with a "revolving door" infiltrating the key position, every official working in White House or with the executive branch did work for a big bank first or going to work after!!!

    They want trust, trust they themselves self smash, hundreds of case in courts from US citizens right now vs Government Why?

    Because Gov. trying to steal ,expropriating private property without compensation and ignoring constitution. The rest of the population are worring about what wearing Kardashian!!! Our next election will be a show top level globally!!! Our founding fathers will be revolting in their tombs for now

    PhilOSophocle

    What the world needs now --- is love, sweet love. It's the only thing that there's just too little of, or so Burt Bacharach, Hal David & Jackie DeShannon said. But seriously folks . . . people hate Wall Street because of the unbridled greed everywhere. The Great Recession wasn't caused by real estate speculation --- it was caused by easy money from Wall Street when they packaged together risky mortgages & investment bankers sold them to banks as great investments, and then betting on them to fail on the side using Credit Default Swaps. It's very similar to what Joe Kennedy and his cronies did in the 1920's using market manipulation by cornering stocks & then doing a bear raid on it, which is illegal now. What the Wall Streeters did in 2000-2007 is still not illegal.

    ey02kdv98

    I agree. Trust needs to be restored. This requires Wall Street firms to be honest, and to weed out the greedy, psychopathic and sociopathic brokers, bankers, CEOs and chiefs, and assorted other criminals. By running firms honestly to a fault, investors would at first shy away because they'd think it was some kind of trick. Over a short period, good experiences will increase business to the point that it would exceed current sales many times over, even beyond your wildest imagination. There is a lot of $$$$$$$$$$$$ to be made in honestly run business. It's never to late to start.

    Mark14

    The only thing you can trust is that Goldman Sach's values don't include giving a damned about average Americans even if in Blankfein's delusional mind he is doing "Gods work. It would go a way toward restoring trust in the system if these rip off artists would consent to paying more taxes on their ill deserved gains in order to help bring down some of the nations debt and relieve the misery their unethical behavior created. But that will never happen voluntarily. Basically they are immoral creeps killing the golden goose that is our country.

    DavBG

    The repeal of Glass Stegal (which Roosevelt put in place after the last great depression) which prevented banks from investing depositors money in the stock market, is the root cause here. Banks were only allowed to make loans on real property, like businesses and mortgages. This put the money in savings back to work. Money placed in the house of cards, ponzi scheme, stock market, just sits there. Like a giant sponge sucking up the spare capital so that a 1% few can reap the benefit. Then insiders can cause booms and busts which slowly siphon the life out of a country and enslave it. The mortgage rate is now the lowest it has ever been in the US. Now with everyone's money in the stock market the next crash will bankrupt us since all the banks will have is worthless paper stock certificates.

    Rp

    Trust is not created through slick marketing and strategic press releases about speeches made by banking insiders, to other insiders, intended to convince those outside their cozy system, that they get it now, no more underhanded dealings, really this time, partners 50-50. We promise, no fingers crossed, everything above board from now on, you can trust us, really this time. That bs is played out, to ask for trust, is to confirm the fact that they should not, can not, be trusted. Trust, if it ever returns, to any degree, in any form, will be created by the numbers. The real numbers. The ones written under our names. The ones that stick. Trust is not a marketing concept, it can't be put where it doesn't belong, it can't grow where it isn't planted, protected, and nurtured.

    Pat

    Wall Street manipulators could not succeed without the complicity of Government. STOP REGULATING WALL STREET AND START DEMANDING THAT POLITICIANS CANNOT BE CONTROLLED BY LOBBYISTS. There should be a law that politicians bought by lobbyists WILL be prosecuted. It is Government that is guilty of capitulation. GOVERNMENT WRITES THE LAWS AND THE TAX CODES.

    Run corruption out of DC and there will be much more trust of big business. Do not buy the garbage that politicians are critical of the Wall Street crowd. Has Hillary released her speeches yet? NO. Don't expect she ever will. (aside: I do not find this article informative, and I'm dismayed by the comments I've read here.)

    Freethinker

    It's so simple: the bank robbers have been given (or have taken) the combination to the bank vault and looted it. Then they were given raises and bonuses for this heist.

    Doubt me? That canny corporate lawyer Abraham Lincoln anticipate our modern condition as far back as 1864, when he wrote:

    "I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. …corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed."

    The mass of Americans are too powerless to fight back against the reign of the money powers. As Lincoln predicted, our Republic is destroyed. What awaits us now is dictatorship or even worse ... theocracy.


    [May 20, 2016] Goldman Responds To Goldman's Stock Offering of A Goldman-Upgraded Tesla Zero Hedge

    www.zerohedge.com

    Goldman Responds To Goldman's Stock Offering of A Goldman-Upgraded Tesla

    Submitted by Tyler Durden on 05/19/2016 09:59 -0400

  • Chinese Wall
  • Investor Sentiment
  • Restricted Stock
  • Twitter
  • Twitter
  • In what many considered to be a flagrantly criminal abuse of investment bank "restricted lists", yesterday Goldman underwrote a $2 billion equity offering for Tesla (to find its amusing expansion strategy) just hours after Goldman upgraded the stock to a Buy.

    We have done our best to alert the regulators...

    Hey @SEC_News here it is in terms even you can understand pic.twitter.com/Yprw3GZDMm

    - zerohedge (@zerohedge) May 18, 2016

    Hey @GoldmanSachs do you use restricted lists and was Tesla on it?

    - zerohedge (@zerohedge) May 18, 2016

    ... however we are confident the regulators are paid far better to remain unalerted.

    So for those curious what Goldman's research analyst who upgraded Tesla, Patrick Archambault, had to say about this "odd, very odd coincidence", here it is straight from the mouth of the horse which obviously remains stabled safely on the other side of the Chinese wall located at 200 West.

    Commentary: Tesla announces equity offering and provides further details on Model 3 reservations

    News

    After the close on May 18, Tesla announced a 6.8mn primary share offering. The offering includes a greenshoe option which, if exercised, would increase the number of shares sold to approximately 8.2mn. Based on the May 18 closing price of $211.17, this would result in a total value of $1.4bn for the offering, or $1.7bn if the greenshoe option is exercised. In addition, Elon Musk, CEO, will sell 2.8mn shares to satisfy tax implications from exercising 5.5mn in stock options that expire at year-end. The company noted that Mr. Musk also plans to donate 1.2mn shares to charity and that the net result of these actions will be to increase his holdings to 31.1mn shares from 29.6mn. All said, based on the latest closing share price and including the primary offering, greenshoe, and Mr. Musk's sale, the total size of the transactions would be $2.3bn.

    In the preliminary prospectus, the company also provided an update on Model 3 reservations and announced that it had 373k deposits as of May 15, 2016. This is net of 8k (approx. 2% of total) in customer cancelations and 4.2k (approx. 1% of total) reservations deemed to be duplicates.

    Implications

    Adjusting for the announced transaction and the supplemental stock options outstanding, and for restricted stock units (RSU) information, our EPS estimates would be unchanged for 2016-2017. Including the greenshoe, our 2016-2017 EPS estimates would decline by less than 1% on average.

    Our take

    We maintain our Buy rating and EPS estimates following the announcement . Additionally, our 6-month price target of $250 remains unchanged, derived from five probability-weighted automotive scenarios plus stationary storage optionality , all of which embed a 20% cost of capital. While the announced capital raise of $1.4bn (or $1.7bn with the greenshoe) is ultimately higher than our $1bn estimate, after factoring in the updated supplemental RSU and option information, dilution to our estimates would be immaterial. Consistent with our previously published research (see Putting in our reservation for the Model 3; upgrading TSLA to Buy, May 18) we believe the funding level is adequate for the Tesla Model 3 roll-out. The reservations of 373k are in line with the company's recent comments of "approaching 400k", though they imply slowing growth (even adding back the cancellation and duplicates) as reservations had already hit 325k one week after the Model 3 unveil.

    Risks: Decline in overall investor sentiment impacting the appetite for concept stocks, further delays in the Model X production ramp which could force a guidance reduction as well as exacerbate FCF burn, and higher-than-forecast operating expenses and/or capex investments.

    Actually the biggest risk factor, and what is most hilarious about this whole incident is that in the Goldman upgrade, which was clearly rushed, and in which Goldman itself admitted there is a two-thirds likelihood the stock will plunge to $125 or lower and the only upside is due to a "key man provision" and a ridiculous thesis that Musk alone is worth tens of billions in market cap (somehow excluding tens of billions in taxpayer grants)...

    ... is that all those who bought TSLA on the Goldman report (and/or Goldman stock offering) will actually read it.

    A Pimp's love i...

    God's Work

    greenskeeper carl , Thu, 05/19/2016 - 10:04

    Would it really be that surprising if it did hit 250? I wouldn't be the least bit surprised. It makes no sense where it is now, another 20% up would be par for the course for this "market". It's probably just more muppet slaying by Goldman, but I could see them releasing those cars that will of course get stellar reviews and have a full retard price spike. Dumber shit has happened.

    ParkAveFlasher , Thu, 05/19/2016 - 10:04

    "It feels good, doesn't it Muppet? You want more, don't you?!"

    Stackers , Thu, 05/19/2016 - 10:11

    ZH is dead on. This is CFA Level 1 stuff.

    http://www.investopedia.com/exam-guide/cfa-level-1/ethics-standards/stan...

    How to Comply
    The Standards of Practice Handbook provides a number of operational suggestions that one should recommend for adoption by the compliance department.

    Establish a restricted list - This is to limit research on those firms that have a business relationship with that company. If an adverse opinion would hurt this business relationship, the company stock should be restricted from the research universe, and only factual information on the company should be disseminated.

    TradingIsLifeBrah , Thu, 05/19/2016 - 10:14

    I bet Goldman believes its valuation is "factual" lol

    OrangeJews , Thu, 05/19/2016 - 11:22

    The worst part in my opinion is that by keeping Musk going makes him look like a God to all of the sheeple when in reality he's just using other people's money and other people's ideas to become famous. Basically the definition of the current United States.

    JamaicaJim , Thu, 05/19/2016 - 10:23

    Ah yes...Pacino.....in one of his finest works....plus excellent writing....

    His God speech;

    https://www.youtube.com/watch?v=RGR4SFOimlk

    asteroids , Thu, 05/19/2016 - 10:23

    Obviously something is broken. It's up to the SEC to act. If it doesn't then the SEC is broken. If the SEC is broken then it's up to .....

    ShorTed , Thu, 05/19/2016 - 10:24

    Yes something is broken... must be the porn filters at the SEC again. Don't expect people who's future (once they pass thru the revolving door) depends on them not finding any malfeasance, to do the right thing.

    JamaicaJim , Thu, 05/19/2016 - 10:10

    Goldman Sucks Ass should be Lehman-nized

    Shut Down

    Arrests made

    Convictions

    Lengthy prison senten.....

    ...wha.....huh.....I was having a dream?

    FUCK!

    quadraspleen , Thu, 05/19/2016 - 11:09

    Yeah. Dreaming. I actually spat water at "arrests made"

    Dream on

    nibiru , Thu, 05/19/2016 - 10:10

    Everything i in order guys, don't worry it's temporary technical glitches... carry on, nothing to see here. Oh and sell gold! Listen to Gartman!

    TradingIsLifeBrah , Thu, 05/19/2016 - 10:11

    They should have added in a 1% chance that TSLA goes to $1,000,000,000 per share to pull the target price up a little higher.

    Farmer Joe in B... , Thu, 05/19/2016 - 10:24

    Having worked in a mid-sized IB, I can tell you there is no such thing as a fucking Chinese wall. Cheesecloth at best.

    This cocksucker absolutely knew that a deal was cooking...

    ptoemmes , Thu, 05/19/2016 - 10:24

    Who are these "many" you speak of? Clearly does not include the financial and regualtory elite.

    Similar to politicians and one D Trump claiming they could shoot someone on the Senate floor - or Times Square - and not get arrested I think that CNBC should have a reality hour where finanial elites and regulators carry out obvious fraud on live TV. You know, just to see what happens...

    The Daily Fraud

    Fraudish

    Spungo , Thu, 05/19/2016 - 10:25

    Should I even care about this? The people who own Tesla shares are functionally retarded. If it wasn't Tesla stealing their money for the sake raising capital, some other questionablle enterprise would get their money just as quickly. I'm thinking horse racing and lottery tickets.

    bamawatson , Thu, 05/19/2016 - 11:03

    oh man, please don't equate seasoned pari-mutual investors with the "functionally retarded" tesla shareholders

    Dadburnitpa , Thu, 05/19/2016 - 10:28

    Anyone can be "brilliant" if they're festooned with enough free government money. But once the tit dries up, you're no better than the rest.

    rosiescenario , Thu, 05/19/2016 - 10:33

    While Tesla's cars may be a rare sight for others in the U.S. if you drive around the SF Bay Area they are as common as anyother make of car. While the stock is at a nutty value, I'd bet you'd find that 80% of individual owners of it reside around Silicon Valley and are convinced this is the next Apple.

    Personally I see no appeal to a car which has such a limited driving range....you really cannot take a trip with it.

    [May 18, 2016] Two-thirds of the directors at the New York Fed are hand-picked by the same bankers that the Fed is in charge of regulating

    jessescrossroadscafe.blogspot.com
    "Two-thirds of the directors at the New York Fed are hand-picked by the same bankers that the Fed is in charge of regulating.

    Today, the United States is No. 1 in corporate profits, No. 1 in CEO salaries, No. 1 in childhood poverty, and No. 1 in income and wealth inequality in the industrialized world.

    Today, the top one-tenth of 1% owns nearly as much wealth as the bottom 90%. The economic game is rigged, and this level of inequality is unsustainable. We need an economy that works for all, not just the powerful.

    I think what the American people are saying is enough is enough. This country, this great country, belongs to all of us. It cannot continue to be controlled by a handful of billionaires who apparently want it all."

    Bernie Sanders

    The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery.

    [May 05, 2016] How European Union Fiscal Rules Subverted Democracy and Institutionalized Neoliberalism

    Notable quotes:
    "... By John Weeks, a member of the Union for Radical Political Economics (URPE) in London, one of the founders of the UK-based Economists for Rational Economic Policies, and part of the European Research Network on Social and Economic Policy. Receive podcasts of his weekly radio program by Twitter, @johnweeks41. Originally published at Triple Crisis ..."
    "... I have dear friends from H to VI, but sleep walking through life, while natural resources are needlessly strip mined for the sake of maintaining artificial scarcity, is a good way to put it. ..."
    "... The dual mandate is a fiction. There's nothing the Fed can do to lower unemployment (though it can raise it by mistake.) The unemployment rate is set by the fiscal policies of Congress and the Executive. The unemployment rate, should they desire, can even be set to zero. That it is not should be sufficient cause for the guillotines. ..."
    "... primum non nocere ..."
    "... I think the process of corporate control of the EU was so slow and gradual plenty of left wingers in Europe still haven't really grasped what has happened. From the beginning, there was always a tension within Europe between pressure from corporations for more business friendly policies and the generally social democrat lite views of the original founders. I think though to call it 'neoliberal' is not quite correct – for me 'neoliberal' implies a specific set of policies associated with the Anglosphere – I think in Germany what we've seen is the takeover by a more German flavoured right of centre view – it is similar, but is more generally corporatist and mercantilist in nature with a strong dash of Austrian economics. ..."
    "... Well of course the 'competition' is a myth. As anyone who has witnessed what has happened in electricity markets can see, it has, if anything, raised prices of electricity for consumers. But various powerful interests have done very well indeed. you can see the same process in water and waste services and pretty much anything that has been directly regulated and privatised. The only areas where I think it can be shown that consumers have benefited from competition are in telecommunications and in air travel. And in the former, I suspect the consolidation of the telecom industry will reverse those gains. ..."
    "... "To render the rule Kafkaesque, after the EC bureaucracy calculates that a government will not meet the hypothetical target, it then mandates contractionary policies that guarantee that the target cannot be achieved. The problem is imaginary and the solution contradictory." ..."
    "... "The "independent institutions" include the European Commission itself, which adds a distinctly Orwellian character to the already Kafkaesque Treaty." ..."
    "... "Thus, not restricting surpluses carries an implicit mercantilist message." EU guidelines fix trade surplus at 6%, Germany is, I believe, in its seventh year of violation and should be fined. That it doesn't happen maybe shows that the elite ruling the EU is German. ..."
    naked capitalism
    Yves here. Anyone who has paid attention to how the various sovereign debt crises have played out in Europe can't help noticing that a bureaucratic elite is calling the shots and riding roughshod over popular will. But what are the mechanisms which allow these perverse outcomes to come to pass? This post describes the major steps that enabled neoliberalism to become the ruling doctrine.

    By John Weeks, a member of the Union for Radical Political Economics (URPE) in London, one of the founders of the UK-based Economists for Rational Economic Policies, and part of the European Research Network on Social and Economic Policy. Receive podcasts of his weekly radio program by Twitter, @johnweeks41. Originally published at Triple Crisis

    The EU: Hold Your Nose and Vote "Stay"

    Most Americans and many U.S. progressives hold a favorable view the European Union. This positive assessment persists despite the crushing of the Greek challenge to austerity conditionalities set by the European Commission and European Central Bank aided and abetted by the International Monetary Fund.

    The primary basis for pro-EU sentiments may be that Americans consider the European Union a bastion of social democracy in contrast to the neoliberal ideology of the Republican and Democratic parties, which Bernie Sanders has so eloquently attacked. However, the institutions of the European Union, especially its executive the European Commission practice a neoliberal ideology and pro-business policies as aggressive as counterparts in the United States.

    This is not a recent change, but a long-maturing trend going back at least to when Helmut Kohl of the right-wing Christian Democratic Union replaced the Social Democrat Helmut, Schmidt, as chancellor of Germany. The misplaced belief that Jacques Delors , EC president for ten years, was committed to social democracy perpetuated the illusion of a progressive EU. While no reactionary like Kohl, the French socialist politician supported market oriented "reform" of the European Union's economic policies.

    By the 2000s neoliberals had taken firm control of the European Commission, manifested most obviously in the 1992 Maastricht Treaty. The step-by-step legal codification of EU reactionary economic policies goes far beyond legislation enacted in the United States. As a result, it should surprise no one that in Britain and on the continent support for membership in the European Union splits progressives. In Britain the issues looms large, with a referendum on continued membership scheduled for 23 June.

    The progressive case of membership is a hard row to hoe.

    Loss of Democracy in the European Union

    History provides many examples of authoritarian rule achieved through formally democratic procedures. To these we should add the 2012 EU Treaty on Stability, Coordination and Governance ( TSCG ), adopted by 25 democratically elected EU governments (the Czech Republic and the United Kingdom took opt-outs ). On an EU website we find the overall purpose of the TSCG boldly highlighted :

    The European Union's economic governance framework aims to detect, prevent, and correct problematical economic trends such as excessive government deficits or public debt levels, which can stunt growth and put economies at risk.

    This bureaucratically bland sentence asserts the power of the unelected European Commission, as the executive of the European Union, to monitor ("detect") whether the public budget of an elected member government conforms to EU fiscal rules. If it does not, the Commission claims the power to prevent the implementation of that budget and to specify the changes ("corrections") required.

    No one can miss the ideological asymmetry of the "governance framework" – deficits can be excessive, but not surpluses. In practice a budget surplus usually goes along with a trade surplus, so that the contractionary effect of the former will be offset the expansionary impact of the latter. Thus, not restricting surpluses carries an implicit mercantilist message.

    The EU website goes on to explain "detection" or "monitoring" as follows ,
    Each year, the EU countries that share the euro as their currency submit draft budgetary plans to the European Commission. The Commission assesses the plans to ensure that economic policy among the countries sharing the euro is coordinated and that they all respect the EU's economic governance rules. The draft budgetary plans are graded as either compliant, partially compliant, or at risk of non-compliance.

    When the EC implements this paragraph literally as it did in Greece, the role national legislatures is to endorse what the Commission judges as "compliant." The TSCG de facto makes member governments formulate their budgets for the Commission not their legislatures, because there would be little point and considerable embarrassment by submitting to parliament a budget that the EC would reject. After the Commission judges the budget as satisfactory the national legislature goes through a pro forma approval process. It will be a small step to require, as in Greece , approval by the EC before revealing the budget to the public.

    The TSCG transfers sovereignty from democratic institutions to an unelected bureaucracy. Were it the case that the EU parliament possessed substantial control over the Commission (which it does not), the TSCG would still be profoundly authoritarian because of the power of the EC bureaucracy over what should be decided democratically.

    Treaty-Protected Mismanagement

    EU fiscal rules, from the Maastricht Treaty to the TSCG are anti-democratic, as well as inflexible to change. The Treaty specifically commits the adopting government to embed the fiscal rules in law in a manner ensuring their "permanent character, preferably constitutional." Embodied in treaties, they can only change through repeal or adoption of additional treaties. Both involve extremely cumbersome and time consuming processes.

    Were the fiscal rules theoretically and practically sound their anti-democratic and inflexible nature would still discredit them. Far from sound, they are technically flawed, mandating macroeconomic mismanagement. The Treaty mandates specific limits to fiscal policy.

    [The Treaty] requires contracting parties to respect/ensure convergence towards the country-specific medium-term…with a lower limit of a structural deficit (cyclical effects and one-off measures are not taken into account) of 0.5% of GDP; (1.0% of GDP for Member States with a debt ratio significantly below 60% of GDP).

    Before considering the wisdom of the 0.5% deficit target, two major technical mistakes standout, 1) the Treaty uses an unsound measure of the fiscal deficit; and 2) the key concept, "structural deficit," is theoretical nonsense.

    The TSCG adopts the Maastricht deficit specification, total revenue minus total expenditure, which is the overall deficit. As the IMF explains in its guidelines for fiscal management , the appropriate measure for sound fiscal management is the primary deficit, which excludes interest payments on the public debt (which if reduced would imply partial default).

    When the TSCG specifies the 0.5% as a "structural deficit" we go from the inappropriate to the absurd. The Commission as well as the usually competent OECD defines "structural deficit" as the deficit that would appear by eliminating cyclical effects; i.e., the deficit when an economy operates at normal capacity.

    Making this concept operational requires an analytically sound method of eliminating cyclical effects, then a clear and consistent measure of normal capacity. The EU structural deficit fails on both criteria. In practice the EC bean-counters make no attempt to eliminate cyclical effects. The method of calculation of normal capacity ignores the cycle altogether by defining normal capacity to the level of output at which the rate of unemployment implies stable inflation (the "non-accelerating inflation rate of unemployment," NAIRU ). Again, the EC bureaucrats reveal their ideology by taking inflation not output or unemployment as measure of economic health.

    The NAIRU would be sufficiently problematical were attempt made to adapt it to the specific institutional characteristics of each country at specific time periods. For example, if the concept has operational validity, it is extremely unlikely that it would assume the same value before and after the 2008-10 global recession. An inspection of the eurostat tables for the actual and "structural" deficits shows no evidence of estimations with country specific adjustments.

    The decidedly dubious nature of the NAIRU is indicated by its nom de guerre , "the natural rate of unemployment." This phrase betrays an underlying ideology that 1) unemployment is a natural phenomenon to which all economies automatically adjust; and 2) inflation always results from excess demand. If the first were true the global recession would not have occurred. The second ignores price pressures arising from traded goods and services, petroleum being the most obvious and price-volatile.

    The possibility of calculating country and time specific normal capacity would not save the 0.5% rule the realm of ideological nonsense. First and foremost, it represents static analysis applied to a dynamic process. The formal statement of the 0.5% would be as follows:

    Economy A operates below normal capacity with a fiscal deficit of 2.5% (for example). Other things unchanged, were economy A at normal capacity the deficit would be 1.5% (for example), above the 0.5% requirement. Therefore, the government of country A must now take steps to reduce expenditure or raise taxes, so if the economy were at full capacity the hypothetical deficit would be 0.5%.

    The 0.5% rule is a hypothetical outcome based on analytically unsound calculations. This "what if" calculation by statisticians is used by an undemocratic bureaucracy to force elected governments to implement contractionary economic policies. The technically unsound, hypothetical 0.5% target mandates a pro-cyclical macroeconomic policy. To render the rule Kafkaesque, after the EC bureaucracy calculates that a government will not meet the hypothetical target, it then mandates contractionary policies that guarantee that the target cannot be achieved. The problem is imaginary and the solution contradictory.

    The wording of the TSCG makes it clear that deviant fiscal behavior by a member country will not be tolerated,
    Correction mechanisms should ensure automatic action to be undertaken in case of deviation from the [structural deficit target] or the adjustment path towards it, with escape clauses for exceptional circumstances. Compliance with the rule should be monitored by independent institutions.

    The "independent institutions" include the European Commission itself, which adds a distinctly Orwellian character to the already Kafkaesque Treaty.

    Painted into a Recessionary Corner

    Market economies pass through cycles of recession and expansion. They suffer from fiscal deficits in recessions, because falling or slow-growing output results in falling or slow-growing revenue. Such circumstances typically result from a drop in private investment or exports. Economies most effectively overcome recessions by the public sector using its spending powers to compensate for the inadequate private demand.

    The TSCG legally prohibits the implementation of this effective countercyclical fiscal policy. It forces member governments to apply policies analogous to the practice 200 years ago of bloodletting to restore health to the ill. It is a Treaty designed to maintain perpetual stagnation across the European continent.

    The term "Six-Pack", the secondary legislation linked to the treaty, is frequently used as synonymous with the TSCG. This is a singularly appropriate nickname for the enabling legislation. The Six-Pack contains the economic equivalent of a pernicious snake oil, a witch's brew to turn minor fiscal problems into recessionary downturns. For those dedicated to a prosperous and harmonious European Union, repeal or replacement of the TSCG stands out as an urgent priority. Fiscal integration on the basis of the TSCG would be disastrous.

    ke , April 20, 2016 at 11:03 am

    What most Americans know about Europe is on a postcard, or the propaganda they were taught in school. The vast majority on this planet is dependent on a MAD money laundering scheme built by Wall Street, copied globally, and automated by WS of the West, silly valley, now strip mining the planet, on auto pilot, with a belief in political discourse, among completely insulated, puppet politicians.

    Back in the day, before joining, Robert R actually said some intelligent things about labor. The crashing actuarial ponzi has been in operation so long it is an assumption. On the one hand money enslaves future generations to the present, and on the other we are all supposed to seek a feudal pension. The casino wins in both directions.

    I have dear friends from H to VI, but sleep walking through life, while natural resources are needlessly strip mined for the sake of maintaining artificial scarcity, is a good way to put it.

    We don't even need oil, but the economy is leveraged on that contract price, to maintain subservient populations. We are choking on excess oil, storing it all over the ocean, and preventing iran/iraq from putting its product on the market, all to confirm a psychology of dependence, like an ant farm, assuming that individual humans can only wander randomly without the benefit of the collective, serving the sociopathic psychologist writing the scripts.

    Funny, there is a shortage of private demand for more incompetent government.

    RabidGandhi , April 20, 2016 at 11:53 am

    Another fundamental difference between the US and EU is the difference in central bank mandates, with the Fed having its dual inflation/employment mandate in its bylaws, but under Maastricht the ECB only has a mandate for low inflation.

    That said, the Fed has a dual way for getting around the dual mandate: playing fast and loose with what is defined as unemployment, and just straight out ignoring it (eg, raising interest rates at the first whiff of possibility that there might be a rumour that someone's uncle's cousin's best-friend's roommate thinks there could eventually be a slight uptick in the CPI). This means, yes there are differences in the founding documents, but is there anywhere in US economic governance that NAIRU is not assumed either?

    Benedict@Large , April 20, 2016 at 3:00 pm

    The dual mandate is a fiction. There's nothing the Fed can do to lower unemployment (though it can raise it by mistake.) The unemployment rate is set by the fiscal policies of Congress and the Executive. The unemployment rate, should they desire, can even be set to zero. That it is not should be sufficient cause for the guillotines.

    RabidGandhi , April 20, 2016 at 4:13 pm

    I definitely agree w/r/t fiscal policy, but I think the point is that at least in the US there is a nominal (but ignored) primum non nocere written into the Fed's by-laws. It is supposed to take actions that will "promote effectively the goals of maximum employment, stable prices and moderate long-term interest rates." What this means is that raising interest rates at the mere rumour of inflation is going against the Fed's mandate– not that anyone in power cares. Meanwhile in Europe they just dispense with the whole fiction of not having a monetary policy that kills employment.

    PlutoniumKun , April 20, 2016 at 12:10 pm

    I think the process of corporate control of the EU was so slow and gradual plenty of left wingers in Europe still haven't really grasped what has happened. From the beginning, there was always a tension within Europe between pressure from corporations for more business friendly policies and the generally social democrat lite views of the original founders. I think though to call it 'neoliberal' is not quite correct – for me 'neoliberal' implies a specific set of policies associated with the Anglosphere – I think in Germany what we've seen is the takeover by a more German flavoured right of centre view – it is similar, but is more generally corporatist and mercantilist in nature with a strong dash of Austrian economics.

    I see the results every day when I step outside my apartment in Dublin. Thats to a focus on privatisation and 'competition', what was once a fully functioning waste collection service in my city has now become a chaotic privatised service, with competing companies driving down the quality. No more proper wheelie bins collected on the same day, instead there are plastic bin bags everywhere, there to be torn apart by seagulls and foxes, scattering rubbish everywhere. All in the name of 'competition', driven by EU Directives. The focus on 'internal competition' is gradually eroding sensible regulation in energy, waste and telecommunications. Supposedly in the interest of the consumer, but we all know who really benefits.

    Fajensen , April 20, 2016 at 5:09 pm

    I don't think all this "competition" really benefits anyone, I believe it's just there for the principle.

    PlutoniumKun , April 21, 2016 at 5:55 am

    Well of course the 'competition' is a myth. As anyone who has witnessed what has happened in electricity markets can see, it has, if anything, raised prices of electricity for consumers. But various powerful interests have done very well indeed. you can see the same process in water and waste services and pretty much anything that has been directly regulated and privatised. The only areas where I think it can be shown that consumers have benefited from competition are in telecommunications and in air travel. And in the former, I suspect the consolidation of the telecom industry will reverse those gains.

    Barry Fay , April 21, 2016 at 10:15 am

    The airlines are a terrible example – in fact, there was a great article treating the airlines as a classic example of "crapification". The seating has become ridiculously cramped (as a way to then "sell" seats that someone can actually sit in!), the service has been basically reduced to the bare minimum, luggage charges are outrageous and ticket prices continue to climb even though one of the major expenses (i.e. fuel!) has become cheaper by 50 per cent. No, the airlines were a bad example.

    financial matters , April 20, 2016 at 1:14 pm

    Nice to read such an excellent analysis. And with very appropriate metaphors.

    "To render the rule Kafkaesque, after the EC bureaucracy calculates that a government will not meet the hypothetical target, it then mandates contractionary policies that guarantee that the target cannot be achieved. The problem is imaginary and the solution contradictory."

    "The "independent institutions" include the European Commission itself, which adds a distinctly Orwellian character to the already Kafkaesque Treaty."

    JEHR , April 20, 2016 at 2:56 pm

    The World is really messed up!

    rfam , April 20, 2016 at 6:34 pm

    I would suggest that any country that doesn't like these rules failed to read the agreement and should exit the EU and start issuing worthless currency. In doing so they can feel free to devalue, run large deficits, borrow all they want and then leave the "neo-liberals" to it. When the banks and hedge funds that over-lend to fund these deficits fail or demand collateral ( http://www.npr.org/sections/money/2012/10/22/163384810/why-a-hedge-fund-seized-an-argentine-navy-ship-in-ghana ) you will discuss their predatory nature.

    Hansrudolf Suter , April 21, 2016 at 6:46 am

    "Thus, not restricting surpluses carries an implicit mercantilist message." EU guidelines fix trade surplus at 6%, Germany is, I believe, in its seventh year of violation and should be fined. That it doesn't happen maybe shows that the elite ruling the EU is German.

    Schofield , April 21, 2016 at 4:43 pm

    Given half a chance some human beings who never got much loving as a child will seek to correct the imbalance by "weaponizing" money and using it against the interests of the majority. For those who've read the psychoanalyst Alice Miller books they will recognize her argument that resentment builds up in the child and needs expression in the form of subconsciously motivated vengeance as an adult!

    [May 05, 2016] Robert Reich Why Is One of Sanders Most Important Proposals Being Ignored

    Notable quotes:
    "... By Robert Reich. Originally published at his website ..."
    "... "it would cost me $500-$1000 maybe more a year" ..."
    April 20, 2016 | naked capitalism
    Yves here. I want to clarify one key issue about a transaction tax. Its purpose is not to raise revenue. Its purpose is to discourage excessive trading, which is socially unproductive. Recently, many studies have found that an outsized financial sector is as drag on growth. The finer-grained ones have identified too many resources devoted to secondary market trading as the cause. "Secondary market trading" is all the buying and selling that happens after a company raises money, as in among investors, not sales of newly-issued securities from a company to investors to raise money. A certain level of secondary market trading is necessary and desirable so that an investor can sell if he wants to (as in he needs liquidity). But overly cheap liquidity makes it attractive to trade for purely speculative purposes, as the collapse in average holding times of NYSE stocks attests.

    Now a transaction tax may indeed raise a lot of revenue. But the intent is to discourage undesirable activity, and it's hard to estimate in advance how much trading volumes would fall with a well-designed transaction tax.

    By Robert Reich. Originally published at his website

    Why is there so little discussion about one of Bernie Sanders's most important proposals – to tax financial speculation?

    Buying and selling stocks and bonds in order to beat others who are buying and selling stocks and bonds is a giant zero-sum game that wastes countless resources, uses up the talents of some of the nation's best and brightest, and subjects financial market to unnecessary risk.

    High-speed traders who employ advanced technologies in order to get information a millisecond before other traders get it don't make financial markets more efficient. They make them more vulnerable to debacles like the "Flash Crash" of May 2010.

    Wall Street Insiders who trade on confidential information unavailable to small investors don't improve the productivity of financial markets. They just rig the game for themselves.

    Bankers who trade in ever more complex derivatives – making bets on bets – don't add real value. They only make the system more vulnerable to big losses, as occurred in the financial crisis of 2008.

    All of which makes Bernie Sanders's proposal for a speculation tax right on the mark.

    He wants to tax stock trades at a rate of 0.5 percent (a trade of $1,000 would cost of $5), and bond trades at 0.1 percent.

    The tax would reduce incentives for high-speed trading, insider deal-making, and short-term financial betting. (Hillary Clinton also favors a financial transactions tax but only on high-speed trading.)

    Another big plus: Given the gargantuan size of the financial market and the huge volume of trading occurring within it every day, this tiny tax would generate lots of revenue.

    Even a 0.01 percent transaction tax (a basis point is one-hundredth of a percentage point, or 0.01 percent) would raise $185 billion over 10 years, according to the nonpartisan Tax Policy Center.

    Sanders's 0.5 percent tax could thereby finance public investments that enlarge the economic pie rather than merely rearrange its slices – like tuition-free public education.

    After all, Americans pay sales taxes on all sorts of goods and services yet Wall Street traders pay no sales taxes on the stocks and bonds they buy.

    Which helps explain why the financial industry generates about 30 percent of America's corporate profits but pays only about 18 percent of corporate taxes .

    Naysayers led by the financial industry's lobbyists (the Financial Services Roundtable and Financial Markets Association) warn that even a small tax on financial transactions would drive trading overseas, since financial trades can easily be done anywhere.

    Baloney. The U.K. has had a tax on stock trades for decades yet remains one of the world's financial powerhouses. Incidentally, that tax raises about 3 billion pounds yearly (the equivalent of $30 billion in an economy the size of the U.S.), which is pure gravy for Britain's budget.

    At least 28 other countries also have such a tax, and the European Union is well on the way to implementing one.

    Industry lobbyists also claim the costs of the tax will burden small investors such as retirees, business owners, and average savers.

    Wrong again. The tax wouldn't be a burden if it reduces the volume and frequency of trading – which is the whole point.

    In fact, the tax is highly progressive. The Tax Policy Center estimates that 75 percent of it would be paid by the richest fifth of taxpayers, and 40 percent by the top 1 percent.

    It's hardly a radical idea.

    Between 1914 and 1966, the United States itself taxed financial transactions. During the Great Depression, John Maynard Keynes urged wider use of such a tax to reduce excessive speculation by financial traders. After the Wall Street crash of October 1987, even the first President George Bush endorsed the idea.

    Americans are fed up with Wall Street's financial games. Excessive speculation contributed to the near meltdown of 2008 – which cost millions of people their jobs, savings, and homes.

    So why is it only Bernie Sanders who's calling for a financial transactions tax? Why aren't politicians of all stripes supporting it? And why isn't it a major issue in the 2016 election?

    Because a financial transactions tax directly threatens a major source of Wall Street's revenue. And, if you hadn't noticed, the Street uses a portion of its vast revenues to gain political clout.

    So even though it's an excellent idea championed by a major candidate, a financial transactions tax isn't being discussed this election year because Wall Street won't abide it.

    Which maybe one of the best reasons for enacting it.

    vlade , April 20, 2016 at 5:58 am

    important point – UK has FTT on stocks, it's called stamp duty. despite that, footsie is considered one of the most important non us markets worldwide… so cries of how it would kill the sector are a bit overdone..

    mind you, the rise of cfds and similar to bypass sd led to issues of its own

    Anonymous , April 20, 2016 at 6:06 am

    Need a tax on the derivatives market.

    Yves Smith Post author , April 20, 2016 at 6:36 am

    I would think that would be part of the plan, particularly given the volumes. Sanders tends to do himself a disservice by staying at the 30,000 foot level, which is where execs generally are anyhow. But he doesn't have enough surrogates going into the weeds on his behalf.

    JeffC , April 21, 2016 at 12:13 pm

    Sanders' plan includes a smaller tax on bond trades-0.1%? unreliable memory here-and a smaller one yet on derivatives trades.

    Teddy , April 20, 2016 at 6:42 am

    I'm more of a right winger, but this is one Sanders proposal I can fully support. There's something seriously wrong with an economy that spends gigantic sums on building tunnels for optic cables so transactions can be processed two miliseconds faster. This automated flash trading is against everything financial markets are supposed to be about, it's even against everything that speculation is supposed to be about. I also agree with Yves's assessment that this isn't about revenue extraction, but about curtailing harmful activities. However, given high levels of corruption in US politics and huge profits this new industry enjoys, is such an idea even feasible?

    hemeantwell , April 20, 2016 at 10:49 am

    an idea even feasible?

    I believe I can appreciate why your statement took that discouraged turn. But the next move would be to say that, if such a good idea is made infeasible by a corrupt political order, doesn't that then contribute to its indictment? That's one reason why the current political situation is so changed from ten years ago.

    Paul Jurczak , April 20, 2016 at 7:25 am

    I would add underclocking the stock exchange to augment the effect of transaction tax. It is perfectly sufficient for healthy economic activity to settle the transactions only in equal discrete time intervals, say once every minute. This would starve all HFT parasites, reduce the size of financial sector and its rent extraction from productive economic activity.

    EndOfTheWorld , April 20, 2016 at 7:52 am

    Why is this important proposal being ignored? Bribery.

    RUKidding , April 20, 2016 at 11:25 am

    Possible.

    Sanders' campaign has been mostly kept dark by the M$M (which includes National Propaganda Radio). If one hears/reads much about Sanders in the usual sources, it's usually to patiently explain why he simply cannot win.

    It's exceedingly rare to hear/read much of what the substance of Sanders' campaign compromises, and mostly then, what you'll hear is fatuous twaddle about Sanders' proposal (which isn't fatuous but is presented that way) about free college.

    So one has to come to blogs, such as this one, to learn more. Too bad most citizens don't do that, but that's the way it is. And there's a reason for it. Clearly Sanders, at least, annoys the .01%. They don't want his message getting out. There's a reason for that, as well.

    HotFlash , April 20, 2016 at 8:07 am

    Hmm, I took this as another mark of Bernie's genius. I figure that the 'free public college education' was not only a demonstrable and desirable social good but also a nice carrot to sell the FTT.

    Agree w/Teddy and others about the unfairness of a market that permits nano-second trading for the suitably connected. Secondary market trading beyond basic liquidity does not benefit the real economy. The beneficiaries are speculators and managers whose remuneration is tied to share prices - that is, useless eaters.

    Melk39 , April 20, 2016 at 8:54 am

    The reason it is being ignored is because Bernie touted the tax as way to pay for college for all. The tax on financial transactions makes most people's eyes glaze over, but they are very interested in the idea of free college. So I get the hook, but this means the the tax debate never occurs, all the discussion is about free college. Now both ideas have merit, but each should have its own debate. It would be also a way to build a consensus around a broader policy of finally reigning in Wall Street, including bring back the best parts of Glass Stegall. That's how you get the discussion going. Decouple and debate.

    gadawson , April 20, 2016 at 9:09 am

    The benefits of free academic tuitions are so large they are inestimable due to the myriad of benefits that would cascade throughout the economy. Why would anyone oppose such and how is such a plan pushed aside? Only through the greatest imbalance of invisible intransigent power the world has ever known.

    Doctor Duck , April 20, 2016 at 9:33 am

    This is an important idea, but I don't think I've ever heard at what point such a tax would be imposed. If a large majority of high-speed automated trading results in cancelled trades, it would be of little use in curbing that if it were only applied to completed transactions.

    HotFlash , April 20, 2016 at 12:23 pm

    The point is not necessarily to raise revenue (please, MMT anyone?) but to control behaviour. Putting a drag on HST would in itself be a public good. As I have said before, free tuition is a way to sell a tax on financial transactions. Debate all you like, but decoupling will lose the tax.

    Doctor Duck , April 20, 2016 at 12:59 pm

    I concur that a drag on HFT would be a public good. But my question doesn't imply raising revenue, rather how such a tax would be a drag on HFT in particular. A tax on transactions would (by definition it seems) not apply to cancelled transactions. So how would it impact the behavior of HFT, which relies heavily on cancelled trades, any more than it would any trading?

    Probably "quantized" settling as proposed in another comment would have a greater effect.

    steelhead23 , April 20, 2016 at 1:59 pm

    You are right. If the purpose of the tax is to discourage HFT, the tax should be levied on each and every bid, not just completed transactions. According to Eric Hunsader HFT traders pay big bucks so they can have millisecond faster access to the market – which they use to place multiple bids they never intend to complete, thereby manipulating price, creating volume interest where little exists, etc. To end HFT you would have to tax each bid (at an very small rate, say .01%).

    JSR , April 20, 2016 at 9:52 am

    Are things like ETF's included in this? I understand the need to curb many of the dangerous games of all the value detracting speculation and trading etc,. What I'm struggling with is I may make a few trades a year simply to rebalance my portfolio (amount of trades depends on whether markets are volatile or steady) once certain levels of over/under are reached. My rough calculation of this .05% tax, is it would cost me $500-$1000 maybe more a year. Not outrageous but a sizable enough increase for an infrequent trader/investor and I'm pretty sure, not part of the problem that is trying to be solved here. Plus, as if I'm not angry enough at Wall Street (I used to work in the industry, left of my own volition) it makes me wonder if I'm not being financially penalized for their greed and criminality. I want to support this but I hope there will be a little nuance (not too much though to ruin the whole purpose) to not ensnare everyone who makes a trade once in awhile.

    FluffytheObeseCat , April 20, 2016 at 3:16 pm

    "it would cost me $500-$1000 maybe more a year"

    Unlikely. I suspect the 0.5% mark is an initial bargaining position. What everyone seems to be anxious to forget (or have forgotten) is that Sen. Bernie "amendment king" Sanders has been in Congress for a loonnng time. If he's floating 0.5% in position papers, policy proposals, etc., it's because he's aiming to get 0.1 – 0.2% enacted. 200 bucks a year won't injure anyone who can manage to maintain a brokerage account.

    If the guy were truly the absent-minded, flyaway-haired nutty old dodderer the MSM wants him to be, he'd never have made it this far in life.

    Pat , April 20, 2016 at 9:57 am

    I realize that probably most of the objection to this is being fueled by the large houses own high frequency trading. I mean when you finance your own algorithms to figure out how to micro trade at high volume…you are talking about a lot of money. But I would also bet that some of it is the mutual fund and individual trader sector of the market. It isn't really about hurting the small investor, it is about discouraging the small investor from trading as frequently. They are seeing their commissions get cut, because Mom and Pop don't like the tax and put the brakes on. The stability of our economy and of our markets be damned, not to mention customer service.

    Jim A. , April 20, 2016 at 10:23 am

    My worry is that the financial giants would put enough lawyers on this to try and try to create a way to avoid paying this financial tax in pretty much the same way that they figured out how to not pay title recording fees. They would create an exchange (no doubt called something different) that would own large numbers of shares and trade some sort of "future" or agreement to transfer amongst each other. Can you have a 1 second future contract? .01 second?

    RUKidding , April 20, 2016 at 11:19 am

    You echo a concern I have about this as well. These parasites and their shyster lawyers are very good at finding or creating loopholes that benefits them, alone.

    That said, it's worth investigating and attempting to implement. It's equally worth more wide-spread discussion about why it's needed and what's happening, but I won't hold my breath on that score.

    There have been one or two programs highlighting these high speed transactions on NPR, fwiw, albeit I don't believe – no surprise – that any solution was suggested.

    RN , April 20, 2016 at 10:24 am

    More practical solutions will be (1) to delink capital gains tax from income tax and (2) to collect capital gains tax at source.

    Benedict@Large , April 20, 2016 at 11:14 am

    Correct. No tax by the sovereign issuer of the currency has as it's purpose the raising of revenue, of which the sovereign issuer already has an infinite supply. Taxes by the sovereign issuer merely serve to regulate demand.

    Of course, try to explain to anyone inside the beltway how their currency actually works, and they'll think you are crazy. They've been told incorrectly for 40 years, and DAMMIT! That's enough to make it right.

    Beniaminio , April 20, 2016 at 11:21 am

    Forgive my ignorance, but I don't see why a blanket transaction tax of 0.5% or whatever would be preferable to a transaction tax of 5-10% applicable to the actual bad actors, i.e., the high-frequency traders. It seems like it would be easy enough to assess a genuinely punitive tax against the actual "speculators" who are flipping shares over the course of single trading session, i.e., to tax both HFT and day-trading out of existence. I also fail to see how a transaction tax of general application would significantly inhibit insider trading.

    I think Reich is being a bit tone-deaf here. In a ZIRP environment, conservative investors are effectively foisted into the stock market, and are then reviled as speculators. Is it no longer politically acceptable for the little people to invest accumulated capital? We can't all live off of political consulting and paid speeches like former Clinton-era cabinet ministers.

    FluffytheObeseCat , April 20, 2016 at 3:30 pm

    Oh, please. I've been "in the market" in mutual funds and lesser amounts of directly held stock for 20 years. If I traded enough to generate +$200 in transaction taxes, it would be a sign that I was getting bad advice, & was stupid enough to take it. If Bernie's transaction tax were enacted, it would eradicate most institutional HFT efforts in under a year. Over a decade, it's greatest benefit may be in slowing the erosion of middle class wealth by reducing excessive trading and associated fee skimming.

    The guys in dress shirts in your local MSSB office in flyover are not actually your friends, and their service fees are much, much larger than they need to be in this era of electronic trading.

    Beniamino , April 20, 2016 at 11:07 pm

    Guys in dress shirts in flyover country? Uh …. what? I'm not sure I'm following but you appear to be saying that you've conducted less than $40,000 in stock & mutual fund trades over the course of twenty years; in other words you don't care about the actual merits of this transaction-tax proposal because you don't have any money to invest anyway. Not a particularly compelling argument. At any rate, I thought the point of the proposal was to curb rank speculation, not to discourage old ladies from buying utility stocks. So why not target the actual speculators?

    Chauncey Gardiner , April 20, 2016 at 11:30 am

    Sanders' proposal of a securities transaction tax is being ignored for the same underlying reason proposals to tax accumulated wealth have been ignored.

    "Behind every great fortune there is a great crime." -Balzac

    Carly , April 20, 2016 at 2:11 pm

    The bottom line of why this tax is ignored is the majority of people who vote doesn't understand how the markets work. So they don't understand how this would work and help. They keep voting for people who won't make any significant changes to our society. Hillary won't be any different she is going to be the same old horse leading the way. Sheeple --

    F. Korning , April 20, 2016 at 2:31 pm

    Cancelled and no-op trades wielded with impunity are the root of the HFT problem. I'm not sure why many here are claiming a tax wouldn't affect cancellations. The tax should be punitive especially for order cancellations under a reasonable holding period. It should also be much higher for non-listed OTC derivatives, repos, and all manner of exotic structured products, special vehicles, and dark pool (un)liquidity. The point is to force skin in the game.

    The Infamous Oregon Lawhobbit , April 20, 2016 at 2:43 pm

    Our gentle host wrote, "I want to clarify one key issue about a transaction tax. Its purpose is not to raise revenue. Its purpose is to discourage excessive trading, which is socially unproductive."

    Makes perfect sense – it's the old adage, "If you tax something, you get less of it. The more you tax, the less you get."

    And if the revenue generated covers enforcement costs, that's weevils in the porridge!

    Angry Panda , April 20, 2016 at 3:25 pm

    The bond part puzzles me to some extent. At least as applied to below investment grade stuff, because obviously Treasuries and IG are different animals.

    First, the whole "high speed, high frequency" thing. Much of the time, it really isn't. I mean, these are instruments that still trade through humans (via the phone or Bloomberg chat), and many of even $500 million plus issues don't trade very often, period. In many bonds probably the most volume you see is immediately after issuance, and that's more a matter of people either flipping a small allocation or topping up to get to their target, with the dealer often pretty much setting up the trades with their allocation strategy. So that's a different animal than straight-up speculation (high frequency or otherwise).

    Second, ok, you're "taxing" bonds effectively 1/8 (0.1%, but I'm rounding as bonds are actually quoted in eighths, maybe sixteenths sometimes), presumably paid by one or both counterparties (split equally between buyer and seller?). I…don't see how that is going to alter much of the trading that goes on. The bid-ask is effectively a bit wider, your mark when you buy something is a little lower (if you use bid-side), people complain more than usual. But High Yield is generally not something where paying up 1/8 is going to make or break your trading strategy, unlike with equities (where the high frequency guys play on fractions of fractions). At most you're looking at trades in "on the margin" issues having a tougher time getting done in stable markets (because in a hot market everyone pays up anyway, while in a rout there is often no bid, period).

    All a long way of saying, bonds – fine. Define the word "bonds". Treasuries? IG? HY? Structured? And you want to realize how much in revenues from that?

    Equities, on the other hand – no brainer. Tax away. If anything, tax them more than is currently proposed, because the point – to me – is not to raise revenue, but to severely disincentivize speculation (of either the high frequency or the regular kinds). Imagine, for example, if the tax was at 10% of the pre-commission trade value (i.e. just shares times price), payable by both buyer and seller. "But Panda, you'll destroy secondary equity trading!" Precisely, children, because at the end of the day most of such contributes absolutely nothing productive to either the society or the economy. Now, maybe I'm much more extreme than the consensus, but my point is that what Sanders is currently proposing is well within what the industry can "eat" without changing its behaviour too much, in my opinion.

    Lyle , April 20, 2016 at 3:55 pm

    Of course before deregulation of commissions the US had a private version of the financial transaction tax in terms of the fixed commissions. One way to compare is to look at commissions compared to the modern commission+ ftt. If the commissions were greater than unless you believe the market 30 years ago was defective it won't make a lot of difference.

    [May 01, 2016] Why I (Belatedly) Blew the Whistle on the SECs Failure to Properly Investigate Goldman Sachs

    Notable quotes:
    "... By James A. Kidney, former SEC attorney. Originally published at Watch the Circus ..."
    "... Pro Publica ..."
    "... Pro Publica's ..."
    "... The New York Times ..."
    "... The New York Times ..."
    "... The New York Times ..."
    "... The New York Times ..."
    "... Dodd-Frank at best imposes generalized rules about bank size and other generic issues, rather than addressing the kinds of fraudulent actions that actually occurred. It is appropriate for the SEC or Federal Reserve to impose narrower changes in corporate practice to address specific kinds of fraud. They are called "undertakings" and are often imposed by civil settlements with the SEC or in litigated relief. It did not happen with the Big Bank frauds. ..."
    "... The only reason to keep the information secret is to prevent embarrassment to the SEC or to those people who made decisions for the agency. Most of them left the SEC years ago. For public consumption, I have tried to redact all names of the non-supervisory personnel in the Division of Enforcement who worked on Goldman. I also must add that, as the emails show, for a period of time those dedicated investigators were excited about the notion of bringing at least a slightly broader action than their supervisors wanted. As is the case with much of the Division of Enforcement, the worker bees try hard and usually are fearless. It is their bosses who frequently suppress their enthusiasm for policy, political, or personal reasons. ..."
    "... The author is trying very hard to be nice to the point of being delusional. This is criminality and corruption through and through, and it didn't end in '08. Don't be sad… get mad. ..."
    "... This man has risked a lot to do what he did. He's lost more than many of you will realize. If he can't just crap on the old life and the old profession, please, cut the man a little slack. You don't want to be him. ..."
    "... James A. Kidney, former trial attorney with the Securities and Exchange Commission, retired from the SEC in 2014 at the age of 66 after 24 years working there. Looks like he had a full career, although had to put up with a lot of bullshit, and possibly soured some relationships on his way out. ..."
    "... Very similar situation here. Going on 50, unemployed in my chosen field, etc. And yes, its hard to just walk away sometimes… I have to keep my mind focused ahead instead of looking back. ..."
    "... I know other whistleblowers and internal dissenters who wound up losing their jobs who initially blame themselves, than come to accept that the system in which they operated was fundamentally corrupt, that even if some people locally really were trying to do the right thing, it was bound to either 1. go nowhere, 2. be allowed to proceed to a more meaningful level if it was cosmetic or served some larger political purpose or 3. got elevated because the organization was suddenly in trouble and they needed to burnish their cred in a big way (a variant of 2, except with 3, you might have a something serious take place by happenstance of timing). ..."
    "... (other whistleblowers) ..."
    "... (other whistleblowers) ..."
    "... (other whistleblowers) ..."
    "... (other whistleblowers) ..."
    "... the system in which they operated ..."
    "... (some employees) ..."
    "... 'investigating fraud' ..."
    April 24, 2016

    Yves here. Two things struck me about Jim Kidney's article below. One is that he still wants to think well of his former SEC colleagues. I know other whistleblowers and internal dissenters who wound up losing their jobs who initially blame themselves, than come to accept that the system in which they operated was fundamentally corrupt, that even if some people locally really were trying to do the right thing, it was bound to either 1. go nowhere, 2. be allowed to proceed to a more meaningful level if it was cosmetic or served some larger political purpose or 3. got elevated because the organization was suddenly in trouble and they needed to burnish their cred in a big way (a variant of 2, except with 3, you might have a something serious take place by happenstance of timing). Kidney does criticize corrosive practices, particularly the SEC stopping developing its own lawyers and becoming dependent on the revolving door, but his criticisms seem muted relative to the severity of the problems.

    Number two, and related, are the class assumptions at work. The SEC does not want to see securities professionals at anything other than bucket shops as bad people. At SEC conferences, agency officials are virtually apologetic and regularly say, "We know you are honest people who want to do the right thing." Please tell me where else in law enforcement is that the underlying belief.

    By James A. Kidney, former SEC attorney. Originally published at Watch the Circus

    The New Yorker and Pro Publica websites today posted an article by Pro Publica's Jesse Eisinger about the de minimis investigation by the Securities and Exchange Commission into the conduct of Goldman Sachs in the sale of derivatives based on mortgage-backed securities during the run-up to the Great Recession of 2008. The details of the SEC's failure to aggressively pursue Goldman in the particular investigation, Abacus, and its refusal to investigate fully misconduct by Goldman and other "Too Big to Fail" banks, stands not only as a historic misstep by the SEC and its Division of Enforcement, but undermines the claim that the Obama Administration has been "tough on Wall Street." The Pro Publica version contains links to a few of the documents I provided.

    No one in authority who was involved in the Goldman investigation ever gave me an explanation for why the effort was so slight. Mr. Eisinger's article doesn't offer any explanation from the one investigation participant brave enough to comment. The details of the investigation into Abacus at my level as trial counsel, which I provided to Pro Publica earlier this year, compels the conclusion that the SEC, its chairman at the time, Mary Schapiro, and the leadership of the Division of Enforcement were more interested in a quick public relations hit than in pursuing a thorough investigation of Goldman, Bank of America, Citibank, JP Morgan and other large Wall Street firms.

    Although the emails and documents I produced to Pro Publica stemming from my role as the designated (later replaced) trial attorney for the Division of Enforcement are excruciatingly boring to all but the most dedicated securities lawyer, even a lay person can observe that the Division of Enforcement was more anxious to publicize a quick lawsuit than to follow the trail of clues as far up the chain-of-command at Goldman as the evidence warranted. Serious consideration also never was given to fraud theories in any of the Big Bank cases stemming from the Great Recession that would better tell the story of how investors were defrauded and who was responsible, due either to dereliction or design.

    Instead, the SEC restricted its investigation to the narrowest theory of liability, had to be pressed (by me) to go even one short rung above the lowest level Goldman supervisor in its investigation (which took months to push through, though investigative subpoenas are frequently issued on far less in far smaller cases) and finally dropped other investigations of Goldman in return for a $550 million settlement announced July 15, 2010. To my knowledge (I retired in March 2014), the SEC never again pursued Goldman for its mortgage securities fraud or other major fraud. There is no evidence on the SEC website that it did so.

    Nearly six years later, long after the statute of limitations for securities fraud expired and individuals, pension funds and corporate entities are no longer able to bring private actions against the Big Banks, the Department of Justice announced another settlement with Goldman for its deceptive conduct in the sale of mortgage-backed securities. In this one, Goldman agreed to pay more than $5 billion "in connection with its sale of residential mortgage-backed securities."

    At a minimum, it can be said that the SEC left 90 percent of the money on the table at a time when a more aggressive investigation of the company, as well as others, could have counted for something by disclosing, in a detailed court complaint, Wall Street wrongs that might have helped policy makers better address the subject and allow damaged individuals and entities to bring their own lawsuits.

    It is very important to emphasize emphatically several points. First, I have zero evidence, and would be very surprised, if any of the individuals at the Division of Enforcement, including senior supervisors or the SEC chairman or associate commissioners, acted unlawfully or were motivated principally to protect Goldman and other big banks. All of these people appeared well-intentioned from their point of view, even they never really explained, to me, or to many others at the Commission, their motives in limiting investigations. The most senior level supervisors left more lucrative jobs in the private sector to head the Division of Enforcement, taking plum jobs but at significant personal sacrifice. (They then returned to even more lucrative employment or even more high-profile public positions.) All of them were gentlemen. These factors make it all the more surprising that I never got a clear answer as to why the investigation was so constipated, as it obviously was. Its range was clearly limited from the outset: we will sue the bank and not look hard for evidence of individual participation beyond the lowest levels.

    By the same token, it is unfair to assume as a fact that any of the individuals at Goldman not sued, or anyone at Paulson & Co., violated the securities laws, civilly or criminally. Like any citizen, they are entitled to a day in court. Absent such opportunity, they are innocent of any wrongdoing. Arguments in my internal correspondence that evidence was sufficient to sue should be viewed only as that - arguments.

    So my point in releasing these documents to Pro Publica is not to chastise or hold up to public criticism those involved at the SEC, Paulson & Co. or Goldman, though criticism of the process and of the underlying financial conduct certainly is inevitable. All of these institutions have substantial influence in the investment industry. Rather, it is to bring to light the actual conduct of one of several SEC investigations into Big Bank fraud leading up to the 2008 financial crisis.

    As I told Mr. Eisinger when I met him, I hoped he would go to the individuals in charge of the SEC investigation at the time and find out why the investigation was so limited. I have spent six years wondering what is the true answer to that question. Perhaps there were sound reasons, other than the urge to get out a quick press release, which led experienced criminal prosecutors with histories in Wall Street to smother a major investigation by limiting it to the lowest level employee possible, to express total resistance to even investigating further up the chain of command, and ignoring without serious explanation and analysis what I and others, including my own immediate supervisors, viewed as the more appropriate theory for civil prosecution. I hope there are such reasons. As a trial attorney at the SEC for over 20 years, I bled SEC blue. I believed that the agency usually tried to do the best it could, using analog era procedures and processes to combat fraud in a digital age. I am saddened to release this information. But the notion that "the Administration was tough on Wall Street" must be addressed by facts, not press releases and self-serving interviews, else the system's problems cannot be adequately addressed and repaired to deal with the next financial crisis.

    Not only is the issue of how the financial sector enforcement agencies handled the wrongs of the Great Recession an important political issue, but it is important to history. It is important that the facts not be shielded from the public so that we can all learn for the future. And it is a melancholy thought that, presented with the opportunity for a rigorous investigation and airing of facts in civil or criminal proceedings gone, history will be denied a fairer story of both the financial crisis itself and how the government responded.

    As many news organizations have noted , the taxpayer and Goldman shareholders will pay the combination of penalties and repayments in the DOJ settlement. No individual was named as liable in the civil settlement with Goldman nor in any of the other similar, and even larger, financial settlements entered into with the Department of Justice, all of which are vastly greater than what the SEC obtained in its "quick hit, one and done" enforcement actions. DOJ must be credited with what appears to have been a far more thorough investigation of wrongdoing than the SEC performed, but the public is properly mystified that no individuals were charged, criminally or civilly, although the DOJ press releases contains the usual caveat that "the investigation continues."

    The settlements with Goldman and other Big Banks were resolved under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA), which allows the Feds to ignore the normal five-year statute of limitations for fraud, but does not permit suit by private party victims. As has been the practice with DOJ when dealing with Wall Street, no criminal charge was brought. In fact, no complaint was filed in any of these cases. Instead, DOJ entered into contractual arrangements with the banks. Failing to fulfill their obligations under the contract would subject them to civil enforcement as a breach of contract matter, not a contempt charge in federal District Court.

    Contrary to claims by politicians, it is clear that the Obama Administration has not been hard-hitting on Wall Street fraudsters. The large fines obtained by the Department of Justice, while a short-term pinch, are simply a cost of doing business. Relying on fines to penalize rich Wall Street banks, which, after all, specialize in making money and do it well, if not always honestly, is like fining Campbell Soup in chicken broth. It costs something, but doesn't change anything in the way of operations or personnel.

    Despite billions in fines representing many more billions in fraud, the enforcement agencies of the United States have been unable to find anyone responsible criminally or civilly for this huge business misconduct other than a janitor or two at the lowest rung of the companies. Nor have they sought to impose systemic changes to these banks to prevent similar frauds from happening again.

    Yessir, according to the Obama administration, Goldman Sachs, JP Morgan, Bank of America, Citibank and other institutions made their contributions to tearing down the economy, but no one was responsible. They are ghost companies. And nothing needs to be done to prevent such intent or dereliction in the future.

    Law enforcement by contract? Clearly, the banks made it a condition of settlement that no complaint, civil or criminal, be filed. That might gum up the works by requiring state regulators to take action under their own rules, or cause other collateral consequences.

    Ah, say the defenders of the status quo, don't forget about Dodd-Frank, the unwieldy legislation passed by feckless Democrats influenced by big money contributors and their own fear of appearing too aggressive (a particular Democratic Party contagion). Dodd-Frank was and is a virtual chum pool for Wall Street lawyers and lobbyists, leaving most of the substance to regulatory agencies such as the SEC and the Federal Reserve, who for years have been significantly captured by those they are supposed to regulate. The private sector lawyers and lobbyists have open doors to these places to "help" write the rules and add complexity, which they later complain about in court, challenging those same rules as too complex.

    Dear citizen, just remember this: complexity favors fraud, and certainly favors Wall Street and corporate America. You can't understand the rules and neither can Congress or all but the most dedicated experts. That's a lot of room to disguise misdeeds. To take a current example, which came to my attention just before completing this post, Congress is trying to use sentencing reform, generally thought of as intending to remove inequities from the criminal justice system, to also make it even tougher to prosecute and punish white-collar crime. Is this why the Koch Brothers suddenly show such public attention to the poor and needy by favoring such legislation? See this discussion of adding the "mens rea" requirement to such legislation. Burying an important but legalistic issue in otherwise liberal leaning legislation is a current example of disguising lax enforcement of white-collar crime in a complicated package. As one Democratic congressman suggested, how can a liberal vote against sentencing reform? The explanation of the badger buried in the woodpile is too complicated for the average voter.

    Not coincidentally, adding a requirement to the law that it is a defense to either the crime itself or to sentencing that "I didn't know my acts were against the law" is a get out of jail free card as the complexity of laws addressed to ever more sophisticated business misconduct grows. Wall Street clearly has shown no shame in using the defense that "no one knew". Can't blame them. It has worked so far. Maybe they don't even need new legislation.

    I was told repeatedly when I entered the Goldman investigation that synthetic CDOs were just too complex for me to understand. Of course, it appeared to be plain vanilla fraud selling a product designed to fail but nicely packaged for chumps to buy. Claims of complexity hide many easily understood sins.

    At least for the major sins, we don't need even more complex regulations. Instead, put leadership in place who will aggressively enforce the laws we have already. That would raise plenty of eyebrows and put some bums in prison, or at least make them pay civil and criminal penalties personally. As many have noted, prison or, at least, personal financial liability, beats corporate concessions every time and pays back in future reluctance to break the law. The country should try it sometime.

    So back to little me, a small and ineffective cog in the larger system. Why is this release of documents so long after the investigation?

    My friends know that I have been upset since 2010 about the way the SEC handled the Goldman case and, in my view (confirmed by other trial lawyers), that it became a template for other SEC civil suits against the Big Banks. In 2011 I wrote an anonymous letter to The New York Times complaining about the lack of investigative effort by the Division of Enforcement and the impact of the "revolving door" bringing Wall Street defense lawyers into the highest reaches of the SEC. This is a practice that Obama has continued at most departments and agencies having to do with the financial system, following in Bill Clinton's footsteps. The New York Times letter was based entirely on publicly available information.

    I was dismayed to not find any follow-up to my letter in The New York Times . I gave up trying to bring attention to the investigative lassitude of the agency. Interest appeared to be over.

    A year after I retired, I sent a copy of the letter to The Times , under a cover letter identifying myself. One of the addressees on the original letter called and told me the original letter never was received. The caller suggested that was because I misaddressed it to the old location of The New York Times . I felt foolish, of course, but I guess that in 2014, when the letter was finally received, The Times didn't see fit to follow-up the information even knowing its source. This was another indication to me that the time for debate over the law enforcement treatment of wrong doers on Wall Street had passed.

    Once, years earlier and only for a brief time, the SEC was an agency that was at least sometimes fearless of Wall Street institutions. In those days, the directors of the Division of Enforcement were home-grown, not imported from Wall Street law firms. After 1996, that ended. Every director since has been nurtured as a Wall Street defense lawyer. The decline in performance has followed an expected arc. No one has seemed bothered by this. It seems the phrase "lawyers represent client interests" is sufficient explanation to insulate this practice from critics. In this view (pushed by lawyers), lawyers are the only people in America who are not influenced by their work experience, including friendships and defense of client practices. They are SO exceptional! So give it up, Jim, I finally told myself. It's the nature of Washington to put foxes in hen houses and claim they are protecting the fowl.

    But in April 2015, Sen. Bernie Sanders announced his presidential candidacy, based principally on anger over how Wall Street has escaped being held seriously responsible for its misdeeds. If you credit Sanders with nothing else, praise him for not letting go of the notion of justice for those who suffered and those who caused pain and anger for millions. Yes, the banks are not solely responsible for the Great Recession, but they contributed more than their fair share and leveraged immensely the damage initially caused by others.

    Sanders was not treated seriously. The publications I read made it clear that Sanders was, like Donald Trump, a flash in the pan. Jeb Bush and Hillary Clinton would be nominated. Anger against Wall Street and inequality were issues, but not worthy vehicles for a political campaign. Nothing here. Move on.

    It turns out that the ravages caused by Wall Street are the gift that keeps on giving. As Sanders campaigned with far more success than predicted, and Secretary of State Clinton defended President Obama as "tough on Wall Street," it was evident that my small contribution to correcting the record might be timely.

    So here it is.

    Do I think Obama is responsible for the ineffective and embarrassing lay downs at the SEC and DOJ? Yes, I do. I have no idea if the President communicated to his law enforcement appointees that they should "go easy on Wall Street." Rarely is such overt instruction necessary in Washington. But it is not hard to believe that in some fashion he did send such signals, since he came into office with a mantra of letting bygones be bygones, including in the far more important arena of the false narratives for invading Iraq.

    In any event, the chairman of the SEC and the attorney general are appointed by the President. At a minimum, we can say with certainty that Obama was satisfied with their performance. It is difficult to conceive that, as a Harvard educated lawyer who also taught law at the University of Chicago, it never crossed his mind how massive civil or criminal misconduct could go on without the supervision or knowledge of at least mid-level executives. Certainly, the public criticism was brought to his attention. His response was to create a joint task force on the subject of fraud in general. Its main visible public function is to collect all the press releases on fraud prosecutions, including small-time fraud, on one website . It also offers advice to "elders" on how to avoid fraudulent scams. The pro forma mention of the task force in DOJ's announcement of the Goldman settlement signals that the Task Force doesn't do much. Again, law enforcement by press release.

    The alternative possibility, never mentioned because it is preposterous, is that big Wall Street firms so lack supervision of their lower level employees that fraud on a huge scale can be conducted without the knowledge of even mid-level executives. At the SEC, at least, such a conclusion should call for application of its "regulatory" function to impose supervisory conditions on the banks. No such action was ever undertaken. Instead, it was "pay up some money and nevermind."

    Dodd-Frank at best imposes generalized rules about bank size and other generic issues, rather than addressing the kinds of fraudulent actions that actually occurred. It is appropriate for the SEC or Federal Reserve to impose narrower changes in corporate practice to address specific kinds of fraud. They are called "undertakings" and are often imposed by civil settlements with the SEC or in litigated relief. It did not happen with the Big Bank frauds.

    I believe that the American public is entitled to accurate information about how their government works, including the important regulatory agencies. One way to do this is to fully disclose how the sausage is made, especially when the process is defective. Self-promoting press releases swallowed by a fawning business press is not sufficient. I knew I would not disclose any non-public information about the Goldman investigation while the lawsuit against Fabrice Tourre was pending. He was the one guy at Goldman the SEC sued personally. In fact, I think he was the only guy employed by any of the big banks sued personally. (Another fellow who worked with the banks - not for the banks - was sued in another case. He was found not liable, with the jury asking how come higher-ups were not in the dock and urging the investigation to continue. It wasn't.) The Tourre case concluded a few years ago with a verdict against the defendant. All appeals are exhausted. The statute of limitations has expired for private actions. Disclosure of the information I had can do no harm to the public or to pending litigation.

    The only reason to keep the information secret is to prevent embarrassment to the SEC or to those people who made decisions for the agency. Most of them left the SEC years ago. For public consumption, I have tried to redact all names of the non-supervisory personnel in the Division of Enforcement who worked on Goldman. I also must add that, as the emails show, for a period of time those dedicated investigators were excited about the notion of bringing at least a slightly broader action than their supervisors wanted. As is the case with much of the Division of Enforcement, the worker bees try hard and usually are fearless. It is their bosses who frequently suppress their enthusiasm for policy, political, or personal reasons.

    As final egotistical end note, I must say that, despite all of my personal reservations about his dedication to effective law enforcement in the financial sector, I voted for the President twice. I will vote for whoever is the Democratic nominee. But I ask myself: Is this the best that two political parties given de facto monopoly over selection of presidential candidates can do?

    Whoever is nominated and elected, Republican or Democrat, I hope that he or she will recognize the need to end the practice of hiring Wall Street personnel to run our financial enforcement agencies. They should begin by looking to home-trained personnel to lead the major departments and agencies, such as Treasury, the SEC and the Department of Justice, including the chief of the Antitrust Division. These are the people who are responsible for these institutions on a daily basis and also understand the nature and importance of their mission. They have a career stake in doing an effective job. Outsiders are, in general, more interested in resume polishing for the next private job. Additionally, much great talent leaves these agencies for their own more lucrative private careers when they see their own chances for advancement blocked by outsiders or their energies trying to fairly but aggressively enforce the law sapped by timid leadership.

    One party has chastised our government on every occasion for nearly 40 years and shows no intention of reining in Big Business or Wall Street. Directly or by implication, these attacks tarnish government employees in general, making a public service career less attractive to our most talented citizens. The other party has been indifferent or ineffective in its defense of civil service and has addressed financial sector wrongs by adding to the complexity of the system rather than cutting through it. As a result, some of our businesses are above the law.

    Something has got to change. It will. The question is, will it be for the better?

    Gaylord , April 24, 2016 at 4:40 am

    The author is trying very hard to be nice to the point of being delusional. This is criminality and corruption through and through, and it didn't end in '08. Don't be sad… get mad.

    James Levy , April 24, 2016 at 6:24 am

    When it's your career, you get sad.

    A little history: I was hired, first as an adjunct, then a tenure-track professor, by the interdisciplinary Freshman teaching unit at my old university. Two years before I would have come up for tenure (and gotten it) they axed the program and switched me, against its will, to the History Department. And they reset my tenure clock to zero. Long story short, they were never going to tenure me. So I slogged on and earned my pay and got my two kids through high school. By then, my wife wanted out of the suburbs and said she was leaving, preferably with me, but leaving. So we moved to the country. This cut me off from the academic life (and nice $72,000 a year paycheck) that I had struggled for years to enter and excel in.

    So what? So, It's gone. I'm cut off. My intended life's work is ruined. At 51 I'm an unemployed naval historian with two books and seven refereed journal articles and I can't get an interview for a full-time job at a community college. How painful is this? It's murder. Hurts all the time. No more exciting lectures to give. No more university library at my beck and call. No more access to journals. No more conferences. It's an occasional one-off course and driving a delivery van.

    This man has risked a lot to do what he did. He's lost more than many of you will realize. If he can't just crap on the old life and the old profession, please, cut the man a little slack. You don't want to be him.

    H. Alexander Ivey , April 24, 2016 at 6:58 am

    Mr Levy, I am very sympathetic to your situation – long story short, I was in the forefront of the late 70s to the present, layoffs in various industries where I found myself game-fully employed. I too, no longer believe I will ever be employed full time at any job.

    But I argue that it is not that the gods do not favour us; it is that we are the outcome of bad gov't policies and unregulated (regulated for the consumer) businesses practices. Hence, my lack of sympathy or willingness to tolerate breast beating (see my April 24, 2016 at 6:44 am posting) by those who put us here.

    ahimsa , April 24, 2016 at 7:48 am

    @James Leavy

    Not sure I follow you?

    James A. Kidney, former trial attorney with the Securities and Exchange Commission, retired from the SEC in 2014 at the age of 66 after 24 years working there. Looks like he had a full career, although had to put up with a lot of bullshit, and possibly soured some relationships on his way out.

    From Bloomberg: SEC Goldman Lawyer Says Agency Too Timid on Wall Street Misdeeds

    inode_buddha , April 24, 2016 at 7:57 am

    Very similar situation here. Going on 50, unemployed in my chosen field, etc. And yes, its hard to just walk away sometimes… I have to keep my mind focused ahead instead of looking back.

    Are there any yacht clubs nearby you? There is like 4 of them within 10 minutes of me (I'm on the Great Lakes) You could teach sailing and rigging no doubt. Bonus: Union crane operators are required to know their rigging – they may need teachers too.

    Norb , April 24, 2016 at 10:54 am

    More than ever, I am convinced the capitalist system needs to be rejected as the means determining how goods and services are delivered. The injustice and inequality generated are too great. Finding a positive expressive outlet for this dissatisfaction will require leadership- and a new vision for the future.

    The amount of social damage being inflicted by the elite is almost beyond comprehension. Since they have successfully insulated themselves form the consequences of their actions, they remain aloof and uncaring for the plight of ordinary people, not to mention the health of the planet. This system will continue to cut more and more people off from the benefits of collective social action and effort. The work of the many, supporting the desires of the few cannot stand.

    We all have to decide the level of inequality we are willing to live with. How people answer this question will naturally sort them into common communities. Leave the isolated gated communities to the elite. Careerism, like capitalism, is a dead end if your position cannot be guaranteed. The amount of talent and passion for work wasted under the current system is another undercounted fact. Sustainability and democracy are not compatible with capitalism.

    Getting mad is only the beginning. The anger must be directed in some productive fashion. Any resistance to the current order must have broad social support and that support only has strength if self-reliant. Building these self-reliant structures is what the future will hold. If the plutocrats can build a world for themselves, why can't the common man. It only takes work,discipline, and control over the means of production.

    Workers without power, influence, and the means to obtain life necessities are slaves. Is the best the human mind can conceive a life of benevolent serfdom?

    By the way, I believe I would enjoy sitting in on one of your lectures. I'm sure I would learn much- and be a better man for it.

    local to oakland , April 24, 2016 at 11:43 am

    @James Levy … sorry to hear. I know a few who have been chewed up by the academic meat grinder. I hope you can find a productive outlet for your scholarship. Exile is hard.

    I have been helped by the stoics, and Dante.

    Ben , April 24, 2016 at 10:01 am

    And now GS is caught in the middle of 1MDB bond issue scandal using fraudulent and information.

    H. Alexander Ivey , April 24, 2016 at 6:44 am

    "The explanation of the badger buried in the woodpile is too complicated for the average voter."

    That's it! Stop right there! I will not let you (speaking to the author) BS your guilty conscience over my internet link. The average voter clearly knows they are getting screwed, that Wall Street and the voter's own bank is ripping the voter off, and most clearly, that the justice department, from state and local to federal, is enabling this injustice.

    You sir, are swimming with sharks. Your morality is "is it legal?", your justification is "for the shareholder". Therefore, you refuse to see the mendacity and instead excuse it for ignorance.

    JACK SKWAT , April 24, 2016 at 7:39 am

    I know other whistleblowers and internal dissenters who wound up losing their jobs who initially blame themselves, than come to accept that the system in which they operated was fundamentally corrupt, that even if some people locally really were trying to do the right thing, it was bound to either 1. go nowhere, 2. be allowed to proceed to a more meaningful level if it was cosmetic or served some larger political purpose or 3. got elevated because the organization was suddenly in trouble and they needed to burnish their cred in a big way (a variant of 2, except with 3, you might have a something serious take place by happenstance of timing).

    Wow, that's a mouthful – and it's only one sentence. Whilst I love your pieces, I've noticed that many of the articles – at least the run up summation to the articles – tend to be written in a stream-of-consciousness style that, frankly, is hard to digest. This seems to be the case more now than in the past. I don't know if you're harried or on an impossible schedule, but could you please make your syntax easier to read? Thanks from a long-time reader and donator.

    readerOfTeaLeaves , April 24, 2016 at 3:18 pm

    Because it's a Sunday and I have time to goof off, one potential revision - b/c I believe what Mr Kidney has to say is important enough for me to spend a few minutes on one potential suggestion. I've amended and added what I hope are accurate meanings:

    ----
    Focusing on these as the key subject /verb pairs:
    I know (other whistleblowers)
    (other whistleblowers) [lost their jobs]
    (other whistleblowers) [blamed themselves – initially]

    (other whistleblowers) [finally… accept]
    the system in which they operated … [was corrupt]
    … even if… (some employees) tried to [be competent]

    (It - there's a problem with 'it' as the subject, because we are unclear what 'it' refers back to - I'll interpret 'it' as 'investigating fraud' ) was bound to…
    -------------–

    I know other whistleblowers and internal dissenters. They wound up losing their jobs.
    Initially, they blamed themselves, until they finally came to accept that the system in which they operated was so fundamentally corrupt that they could not retain a sense of their own integrity while working within the organization.

    Despite the fact that some people really were trying to do the right thing, for reasons that I will explain, investigating fraud was bound to go in one of only three directions:
    1. fraud would not be investigated at all,
    2. fraud investigation would serve the agency's need for better public relations - in other words, the appearance of fraud investigation would be allowed to proceed, but only if it was merely cosmetic (or served some larger political purpose), or else
    3. fraud investigation became temporarily elevated, but only because the organization* was suddenly in trouble – and consequently, needed to burnish its credibility by actually investigating fraud.

    (Although 3 is a variant of 2, in the third option, credible fraud investigation could occur if, and only if, political necessity enabled competent SEC employees to actually investigate fraud in order to maintain the reputation of the SEC).

    [NOTE: *It's not entirely clear here whether 'the organization' is the target business, or whether it is the SEC (which would need to burnish it's cred in the face of bad publicity)]
    ------------

    Not sure how close I came to the author's intended meanings, but I thought that I'd give it a shot.

    Yves Smith Post author , April 24, 2016 at 4:25 pm

    The sentence parses correctly even though it is long. Stream of consciousness often does not parse correctly, plus another characteristic is the jumbling of ideas or observations. The point is to try to recreate the internal state of the character.

    For instance, from David Lodge's novel "The British Museum Is Falling Down":

    It partook, he thought, shifting his weight in the saddle, of metempsychosis, the way his humble life fell into moulds prepared by literature. Or was it, he wondered, picking his nose, the result of closely studying the sentence structure of the English novelists? One had resigned oneself to having no private language any more, but one had clung wistfully to the illusion of a personal property of events. A find and fruitless illusion, it seemed, for here, inevitably came the limousine, with its Very Important Personage, or Personages, dimly visible in the interior. The policeman saluted, and the crowd pressed forward, murmuring 'Philip', 'Tony', 'Margaret', 'Prince Andrew'.

    More generally:

    The Stream of Consciousness style of writing is marked by the sudden rise of thoughts and lack of punctuations.

    The sentence may be longer than you like but this is not stream of consciousness. A clear logical structure ("first, second, third") is the antithesis of stream of consciousness.

    fiscalliberal , April 24, 2016 at 8:13 am

    I fail to see why fraud is not prosecuted. We can get cute with fancy words but fraud is clear and simple. Also – Enron results in SARBOX which seems to be clearly ignored. Yves – do we know of any SARBOX prosecutions? Clinton started deregulation, Bush implemented deregulation and Obama maintains it. No wonder the kids are mad. The financial industry makes the Koch brothers look like pikers.

    Yves Smith Post author , April 24, 2016 at 4:30 pm

    There is actually a high legal bar to prosecuting fraud.

    I have written at length re Sarbox and the answer is no. And under Sarbox, you don't need to prosecute, you can start with a civil case and flip it to criminal if you get strong enough evidence in discovery. There was only one case (IIRC, with Angelo Mozilo) where the SEC filed Sarbox claims, one in which it also filed securities law claims. The judge threw out the Sarbox claims with no explanation. I assume it was because the judge regarded that as doubling up: you can do Sarbox or securities law (the claims to have some similarity) but not both. But the SEC as it so often does seems to have lost its nerve after that one.

    afisher , April 24, 2016 at 9:22 am

    Interestingly, the SEC has been warned about more of the same type of fraud: https://www.sec.gov/comments/s7-16-15/s71615-60.pdf

    I don't know if an election would have consequences and if a new administration headed by Sanders would make it the SEC more responsible to the taxpayers and not the investors / banks.

    It only took a decade for Markopolos to have his ponzi scheme information read by SEC.

    diptherio , April 24, 2016 at 9:48 am

    I want to like this guy, I really do. But then he goes and says stuff like this:

    The most senior level supervisors left more lucrative jobs in the private sector to head the Division of Enforcement, taking plum jobs but at significant personal sacrifice. (They then returned to even more lucrative employment or even more high-profile public positions.) All of them were gentlemen. These factors make it all the more surprising that I never got a clear answer as to why the investigation was so constipated, as it obviously was.

    So he doesn't understand how the revolving door works…or he does but he's being purposefully obtuse about it. Sacrifice my ass! Gentleman my heiny! And claiming that there's no proof of criminality when, as is pointed out above, Sarbanes-Oxley was obviously violated isn't helping things either.

    Listen dude, pick a side. It's either the American people or Wall Street crooks and their abettors in government. You don't get to have it both ways. This kind of minimization and wishy-washyness is only helping the crooks. More disappointing than I exepected.

    diptherio , April 24, 2016 at 9:59 am

    I mean, at least he lays blame at Obama's feet, and calls the fraud what it is: fraud. Good on him!

    …But then he pulls out the "vote for Dems no matter what they do!" line and I just shake my head….

    polecat , April 24, 2016 at 1:37 pm

    diptherio……. excuse me for a momen--BARFFFF!!!!!!-- Whew ……… that felt better !! ……….

    yes …I agree….these kinds of articles are nothing more than defensive measures against a growing public rage !!!

    bu…bu…but Just Us !!

    diptherio , April 24, 2016 at 5:18 pm

    these kinds of articles are nothing more than defensive measures against a growing public rage !!!

    I don't actually agree. I think the guy feels a little guilty for not doing more, now he's trying to salve his conscience. Still, he can't quite bring himself to admit that the people he was working for may well have been criminals. They were just so nice!

    Self-reflection is not comfortable, and most people don't have much tolerance for it. I think this guy's legitimately trying to do the right thing (not cover up for criminality) it's just that it's really psychologically difficult to admit certain aspects of reality. It's not like he's the only one.

    polecat , April 24, 2016 at 6:07 pm

    I find it telling that suddenly now (within the last year or so) that all these people ( people in high finance, their underlings, traders, hedge funders, and other assorted enablers of massive fraud upon the general public, are suddenly having a 'come to hayzeus' epiphany! I'm not buying whatever faux sincerity they're trying to project…….

    They've screwed millions of trusting people with their fraudulent grifting!

    reslez , April 24, 2016 at 7:09 pm

    > I find it telling that suddenly now (within the last year or so) that all these people […], are suddenly having a 'come to hayzeus' epiphany!

    Especially when it comes after a fat retirement and a lengthy career of going along. I have much more respect for people who really did put their daily bread on the line, and there are plenty of those people, a lot of whom Obama sent to jail. So, yeah, great, you finally told the truth… but where were you when the country needed you to speak out?

    perpetualWAR , April 24, 2016 at 11:32 am

    How about where the guy said "until proven guilty, they are innocent." Hahahahahahaha

    Crooks, the lot of them.

    diptherio , April 24, 2016 at 12:59 pm

    Couldn't we use civil forfeiture to go after them regardless of whether we can prove any actual crime? What's good for the average citizen is surely good for the elite banker…

    polecat , April 24, 2016 at 1:42 pm

    …but you just might need some of those 'Yehadis' to back you up ;-)

    reslez , April 24, 2016 at 7:06 pm

    It's a good thing they're gentlemen. I don't know if I could handle all the looting and self-dealing if it came from common ruffians. Truly we are fortunate to be in such hands, my fellow countrymen!

    ChrisPacific , April 26, 2016 at 12:36 am

    Yes, I had trouble getting past that line as well. Either he is being ironic or he has a massive blind spot on that point.

    Lars Jorgensen , April 24, 2016 at 10:00 am

    According to Bill Black in a ted talk 2014. After the Savings and loans debacle, where the regulators went after the worst of the worst criminals, they made 30.000 criminal referrals and 1000 procecutions with a 90% succes rate.

    Now after the 2008 crisis, which was 70 times bigger causing 10 million job losses and costing 11 trillion dolllars, the Obama administration has not made one single criminal referral. https://www.youtube.com/watch?v=-JBYPcgtnGE

    Today I fell over some information about the IMF, that the organization is exempt from legal prosecutions and taxes. Can this be true?

    From the article: "The employees who bare the IMF badge are pretty much exempt from all forms of government intervention. And, according to LisaHavenNews, the IMF "law book," the Articles of Agreement lists the reasons and requirements for exclusion from government mandate."

    http://www.truthandaction.org/revealed-imf-granted-complete-immunity-form-legal-prosecution-taxation/

    polecat , April 24, 2016 at 1:45 pm

    …..criminals are, as criminals do, as criminals take…..

    Steve in Dallas , April 24, 2016 at 2:35 pm

    Thank you, I was hoping someone would mention Bill Black.

    I'm a software/hardware product/business development engineer. In 2008, after 20 years of reading the WSJ and stunned by the sellout to Murdoch, I went to the internet independent media (IM) to follow the 'economic crisis'. Within a few months it was clear to me 1) I had learned nothing of substance reading the WSJ, 2) the U.S. MSM, education system, and government are thoroughly captured/corrupt.

    Being a 'reader' (note: I don't know anyone who reads non-fiction) for me this 'worldview transition' was quite natural, nothing really surprised me, and it was a big relief to discover such good information/analysis so easily available on the internet. However, eight years later, I have yet to meet a single person who has rejected the MSM or tuned in to what's happening, via the IM or otherwise. In fact, after leaving the university in 1990, I have yet to meet a single person with any basic understanding of (or the slightest interest in, or concern about) the extreme institutional criminality of the the Savings & Loan Crisis, Asian Economic Crisis, Technology Bubble, the 2008 crisis, or the many economic/military wars-of-aggression methodically destroying one government/economy/country after another.

    To me, nothing made the global/economic/organized/mafia criminality more clear than the 2008/2009 articles by Bill Black. Back then I again foolishly assumed people would rally behind Dr. Black to reestablish basic law enforcement against yet another obvious largest-ever "epidemic" of organized crime. Looking back, the highly organized (and very successful) criminality of the Paulson/Obama/Geithner/Bernanke/etc. cabal was truly an amazing operation to behold. Perhaps the most shocking news came in 2010 when numerous studies confirmed that the top 7% of Americans had already "profited" from the economic crisis, that the criminally organized upper class had not only increased their net wealth but, more importantly, had increased their rate of wealth accumulation relative to the bottom 93%. Still, to me, infinitely more amazing, the bottom 93% didn't, and still don't, seem to care, or if they do, they've done absolutely nothing to even start to fight back.

    Today, when reading these articles, I'm astounded how completely meek and 'unorganized' the bottom 93% are compared to the extremely vicious and organized top 7%. Year after year the wealthy elite, who's core organizing philosophy is "take or be taken, kill or be killed", increasingly wallow in dangerously high and unprecedented levels of wealth accumulated by blatant/purposeful/methodical/criminal/vicious looting while their victims, the bottom 93% 'working class', do absolutely nothing (what are they doing?…. other than playing with their phone-toys, facebook, video games, movies?). At this point, the main (only?) reason I continue to 'read' is to perhaps someday 'behold' the working class 93% attempting to educate themselves and consequently 'organize' to defend themselves.

    lightningclap , April 24, 2016 at 4:48 pm

    +1

    diptherio , April 24, 2016 at 5:21 pm

    Dude, you need to move to Austin, stat!

    lyman alpha blob , April 24, 2016 at 10:11 am

    I sympathize with Mr. Kidney and applaud him for doing what he can to try to rectify this abhorrent situation. I also applaud him for placing the blame squarely on Obama and his reasons for doing so are solid.

    What I find much harder to understand is why he would vote for Obama even in 2012 after it became apparent that Obama was ultimately responsible for stonewalling his investigation, and his complete willingness to vote for the corrupt Democrat party no matter what going forward.

    As long as enough people continue to have that attitude things will never change until the whole system comes crashing down. I'd much rather see an FDR-type overhaul of the system rather than a complete collapse as I'm rather fond of civilization. But I've come to expect the latter rather than the former so I'll be reading my weekly Archdruid report for the foreseeable future.

    Carolinian , April 24, 2016 at 10:25 am

    The most senior level supervisors left more lucrative jobs in the private sector to head the Division of Enforcement, taking plum jobs but at significant personal sacrifice. (They then returned to even more lucrative employment or even more high-profile public positions.) All of them were gentlemen. These factors make it all the more surprising that I never got a clear answer as to why the investigation was so constipated, as it obviously was.

    Yes poor babies for that "significant personal sacrifice" that resulted in "even more lucrative" private employment. The author explains the problem then scratches his head over what it might be.

    In a rational world there would be a strict separation between the regulated and the regulators. The government would hire professional experts at decent salaries and they never ever would be allowed to then move on to jobs with the regulated. Clearly the assumption underlying our current–irrational–system is that these high status technocrats are "gentlemen" with a code of honor. Welcome to the 19th century. Those long ago plutocrats in their stately English mansions were all gentlemen and therefore entitled to their privileges by their superior breeding. They were the better sort.

    Meanwhile for lesser mortals it seems totally unsurprising when laws are ignored because you hire your police from the ranks of the criminal gangs. No head scratching needed.

    Alex morfesis , April 24, 2016 at 12:31 pm

    Reid Muoio (boss of kidney @ $EC) has a brother at a major tall bldg law firm whose job is to help fortune 500 companies deal with D & O insurance issues…so when in the article Muoio says "He" did not go thru the revolving door…it was fraud by omission…his brother sits on the opposite side of these private settlement agreements…

    so is Kidney unaware…leaving us to maybe accept he was never much of an investigator…or just forgot to point it out for us…

    The world is full of govt types who tell us TINA…

    The wealthy Elliott Spitzer told us he would have loved to help "the little people" but the OCC and then scotus with waters v wachovia…except scotus ruled only direct subsidiaries get protection and the OCC specifically said the trustee operations of OCC regulated entities are also not covered/protected…

    A really big shoe
    as Ed used to remind us….

    susan the other , April 24, 2016 at 1:25 pm

    Does anyone else think this was insider demolition – not just the failure to prosecute, but the whole financial implosion in the first place? Who writes up nothing but "shitty deals" – all the while saying to each other: IBGYBG and survives to slink away? They must have had a heads up that the financial system as we had known it in the 20th c. was done. They had a heads up and then they got free passes. My only question is, Wasn't there a better way to bring down the system, an honest way that protected us all? By the end of the cold war money itself had become an inconvenience because of diminishing returns. And now the stuff is just plain dangerous because everyone who got screwed (99%) wants their fair share still. It is paralyzing our thinking. Obama maintains he personally "prevented another depression". I honestly think he might be insane. What we need is a recognition that the old system was completely irrational and it isn't coming back. And most of us are SOL. Somebody is going to figure out how to maintain both the value and usefulness of money very soon, because we've got work to do.

    cnchal , April 24, 2016 at 2:03 pm

    The GFC was the first great financial crime of this millenium, and Goldman Sachs was at the epicenter. A heist of gargantuan proportions, they didn't even need a safecracker after Bernanke spun the dials and opened the door wide.

    Imagine if the FBI and the Mafia exchanged their top leaders every few months. That's what we have here with the SEC and Wall Street.

    Bernie Sanders: The business of Wall Street is fraud and greed.
    We can add to that. The business of the SEC is to provide cover.

    polecat , April 24, 2016 at 2:10 pm

    It's all about 'their protection'….not ours!

    and Obama………..

    He's a f#cking psychopathic peacock!

    KYrocky , April 24, 2016 at 2:17 pm

    In Yves intro she shares her views, first, that Kidney still wants to think well of his former SEC colleagues and his criticisms seem muted relative to the severity of the problems, and second, that there are class assumptions at work.

    The first is obvious, as the SEC is an utter failure in its responsibility to investigate and prosecute financial criminals. While Mr. Kidney devotes a fair amount of his passages pondering how it can be that no individuals within these financial institutions bear personal responsibility, Mr. Kidney fails to see the SEC through that same lens. To say Kidney's criticism of his coworkers is muted is an understatement. The individuals at the SEC are corrupt. The individuals at the Justice Department are corrupt. Probably all nice people: husbands, wives, fathers, mothers, friends, etc. Just like those folks at the financial institutions. Mr. Kidney cuts them slack because of his personal relationships with them. Mr. Kidney chooses to give them the benefit of doubt when the totality of their professional performance at the SEC make clear this cannot be true.

    With respect to class assumptions at work, Yves illustrates with the deference shown by SEC officials and investigators toward these financial criminals and their presumption that these individuals are honest. Mr. Kidney does share some of his disappointment in President Obama and Obama's administration but fails to properly connect the dots. In short, the lack of financial crime prosecutions is the result of a deliberate, planned and orchestrated effort.

    Mr. Kindney's investigations were prevented in going forward by his superiors. He was never given an explanation for this despite his asking. But Kidney believes his superiors are all good people.

    No, they are not. They are compromised people who have placed their career employment above their sworn duty. The fact that their bosses have done the same, as have those in the Justice Department as well as President Obama, should not diminish this fact. The phrase "class assumptions" is too euphemistic when describing a system where there is no justice for the victims of financial crimes, a system where the Justice Department and Administration coordinate to shield financial criminals based on where they work.

    This is America. In today's America the fact is certain individuals are above the law because our elected officials at all levels accept that this is okay. Victims of these individuals will be prevented access to their legal recourse, and that these criminals are protected from the highest level of our government down. This goes way, way beyond class assumptions.

    readerOfTeaLeaves , April 24, 2016 at 3:31 pm

    Yves has written extensively about how corporate interests have funded academic sinecures, as well as continuing legal education seminars attended by attorneys and judges. This is part of the fallout; if you want more, check out her section of ECONned where she explains how legal thinking was perverted by business interests.

    flora , April 24, 2016 at 2:37 pm

    Thanks for this post. Glad to see the SEC story is still alive. I'm sure the SEC and Obama would prefer it quietly go away.

    dk , April 24, 2016 at 2:55 pm

    As someone who has fallen on their sword more than once (and again recently), I just want to say that "placed their career employment above their sworn duty" is accurate but also oversimplifies the situation.

    People with families tell themselves that they balance performance of most (some?) of those duties, while shirking the balance in order to protect their families (a "good" (as in, expensive) college for the kids)… this actually comes down to sustaining their social status, in a culture (political as well as corporate) where loyalty is valued equal to and above performance, and honorable action is diminished, trivialized, even ridiculed; and not just within the context of the financial industry.

    This is not at all a defense of the choice, but the choice is made in a very class-stratified social context, and arises in that general context. People take out loans to buy cars and houses, they squirrel earnings away into investments (to avoid taxes) which they are reluctant to draw from… they feel less ready to abandon their addictive income streams for honor, and fudge their responsibilities. It's not isolated to regulators, or government, or even finance. It occurs so constantly and on so many fronts that addressing specific cases doesn't make a dent in the compromise of the entire culture. And that compromise is fueled and maintained by a very twisted set of ideas about money, and career, and social status (not to mention compromises in journalism, education, science, you name it).

    Synoia , April 24, 2016 at 3:37 pm

    I read Mr kidney as being very sarcastic. I could not write this with a serious sarcastic (Lawsuit Avoiding) view:

    The most senior level supervisors left more lucrative jobs in the private sector to head the Division of Enforcement, taking plum jobs but at significant personal sacrifice. (They then returned to even more lucrative employment or even more high-profile public positions.)

    taking plum jobs but at significant personal sacrifice

    Oh really? Must have hurt. And from a legal point of view does not appear libelous.

    polecat , April 24, 2016 at 6:12 pm

    Yeah…stubbed toes only…….

    [Apr 24, 2016] Theres a new parliamentary group in UK on Limits to Growth that had its first meeting this week

    Notable quotes:
    "... 'There's an interesting theory – called the 'green paradox' – that low oil prices are in part the reaction of an industry fearful of the impacts of climate change policy on its future revenues. ..."
    "... The German economist Hans-Werner Sinn has argued that "if suppliers feel threatened by a gradual greening of economic policies.. they will extract their stocks more rapidly" thus pushing their prices down' ..."
    peakoilbarrel.com
    George Kaplan , 04/22/2016 at 2:14 am
    There's a new parliamentary group in UK on Limits to Growth that had it's first meeting this week.

    'A 2015 analysis of the remaining fossil fuel resources in China, USA, Canada and Australia, which includes unconventional resources, suggests that overall oil production is in fact peaking already'

    I hadn't heard this before:

    'There's an interesting theory – called the 'green paradox' – that low oil prices are in part the reaction of an industry fearful of the impacts of climate change policy on its future revenues.

    The German economist Hans-Werner Sinn has argued that "if suppliers feel threatened by a gradual greening of economic policies.. they will extract their stocks more rapidly" thus pushing their prices down'

    http://limits2growth.org.uk/wp-content/uploads/2016/04/Jackson-and-Webster-2016-Limits-Revisited.pdf

    [Apr 23, 2016] Neoliberal Globalization Is There an Alternative to Plundering the Earth Global Research - Centre for Research on Globaliza

    Notable quotes:
    "... The following is a preview of a chapter by Claudia von Werlhof in "The Global Economic Crisis: The Great Depression of the XXI Century." (2009) ..."
    "... To read more, order the book online. Help us spread the word: "like" the book on Facebook and share with your friends -- ..."
    www.globalresearch.ca

    Excerpt from "The Global Economic Crisis: The Great Depression of the XXI Century"

    By Prof. Claudia von Werlhof Global Research, May 25, 2015 Global Research 19 April 2011 Theme: Global Economy , Poverty & Social Inequality

    Neoliberal Globalization: Is There an Alternative to Plundering the Earth?

    The following is a preview of a chapter by Claudia von Werlhof in "The Global Economic Crisis: The Great Depression of the XXI Century." (2009)

    To read more, order the book online. Help us spread the word: "like" the book on Facebook and share with your friends --

    Is there an alternative to plundering the earth?

    Is there an alternative to making war?

    Is there an alternative to destroying the planet?

    No one asks these questions because they seem absurd. Yet, no one can escape them either. Until the onslaught of the global economic crisis, the motto of so-called "neoliberalism" was TINA: "There Is No Alternative!"

    No alternative to "neoliberal globalization"?

    No alternative to the unfettered "free market" economy?

    What Is "Neoliberal Globalization"?

    Let us first clarify what globalization and neoliberalism are, where they come from, who they are directed by, what they claim, what they do, why their effects are so fatal, why they will fail and why people nonetheless cling to them. Then, let us look at the responses of those who are not – or will not – be able to live with the consequences they cause.

    This is where the difficulties begin. For a good twenty years now we have been told that there is no alternative to neoliberal globalization, and that, in fact, no such alternative is needed either. Over and over again, we have been confronted with the TINA-concept: "There Is No Alternative!" The "iron lady", Margaret Thatcher, was one of those who reiterated this belief without end.

    The TINA-concept prohibits all thought. It follows the rationale that there is no point in analyzing and discussing neoliberalism and so-called globalization because they are inevitable. Whether we condone what is happening or not does not matter, it is happening anyway. There is no point in trying to understand. Hence: Go with it! Kill or be killed!

    Some go as far as suggesting that globalization – meaning, an economic system which developed under specific social and historical conditions – is nothing less but a law of nature. In turn, "human nature" is supposedly reflected by the character of the system's economic subjects: egotistical, ruthless, greedy and cold. This, we are told, works towards everyone's benefit.

    The question remains: why has Adam Smith's "invisible hand" become a "visible fist"? While a tiny minority reaps enormous benefits from today's neoliberalism (none of which will remain, of course), the vast majority of the earth's population suffers hardship to the extent that their very survival is at stake. The damage done seems irreversible.

    All over the world media outlets – especially television stations – avoid addressing the problem. A common excuse is that it cannot be explained.[1] The true reason is, of course, the media's corporate control.

    What Is Neoliberalism?

    Neoliberalism as an economic policy agenda which began in Chile in 1973. Its inauguration consisted of a U.S.-organized coup against a democratically elected socialist president and the installment of a bloody military dictatorship notorious for systematic torture. This was the only way to turn the neoliberal model of the so-called "Chicago Boys" under the leadership of Milton Friedman – a student of Friedrich von Hayek – into reality.

    The predecessor of the neoliberal model is the economic liberalism of the 18th and 19th centuries and its notion of "free trade". Goethe's assessment at the time was: "Free trade, piracy, war – an inseparable three!"[2]

    At the center of both old and new economic liberalism lies:

    Self-interest and individualism; segregation of ethical principles and economic affairs, in other words: a process of 'de-bedding' economy from society; economic rationality as a mere cost-benefit calculation and profit maximization; competition as the essential driving force for growth and progress; specialization and the replacement of a subsistence economy with profit-oriented foreign trade ('comparative cost advantage'); and the proscription of public (state) interference with market forces.[3]

    Where the new economic liberalism outdoes the old is in its global claim. Today's economic liberalism functions as a model for each and everyone: all parts of the economy, all sectors of society, of life/nature itself. As a consequence, the once "de-bedded" economy now claims to "im-bed" everything, including political power. Furthermore, a new twisted "economic ethics" (and with it a certain idea of "human nature") emerges that mocks everything from so-called do-gooders to altruism to selfless help to care for others to a notion of responsibility.[4]

    This goes as far as claiming that the common good depends entirely on the uncontrolled egoism of the individual and, especially, on the prosperity of transnational corporations. The allegedly necessary "freedom" of the economy – which, paradoxically, only means the freedom of corporations – hence consists of a freedom from responsibility and commitment to society.

    The maximization of profit itself must occur within the shortest possible time; this means, preferably, through speculation and "shareholder value". It must meet as few obstacles as possible. Today, global economic interests outweigh not only extra-economic concerns but also national economic considerations since corporations today see themselves beyond both community and nation.[5] A "level playing field" is created that offers the global players the best possible conditions. This playing field knows of no legal, social, ecological, cultural or national "barriers".[6] As a result, economic competition plays out on a market that is free of all non-market, extra-economic or protectionist influences – unless they serve the interests of the big players (the corporations), of course. The corporations' interests – their maximal growth and progress – take on complete priority. This is rationalized by alleging that their well-being means the well-being of small enterprises and workshops as well.

    The difference between the new and the old economic liberalism can first be articulated in quantitative terms: after capitalism went through a series of ruptures and challenges – caused by the "competing economic system", the crisis of capitalism, post-war "Keynesianism" with its social and welfare state tendencies, internal mass consumer demand (so-called Fordism), and the objective of full employment in the North. The liberal economic goals of the past are now not only euphorically resurrected but they are also "globalized". The main reason is indeed that the competition between alternative economic systems is gone. However, to conclude that this confirms the victory of capitalism and the "golden West" over "dark socialism" is only one possible interpretation. Another – opposing – interpretation is to see the "modern world system" (which contains both capitalism and socialism) as having hit a general crisis which causes total and merciless competition over global resources while leveling the way for investment opportunities, i.e. the valorization of capital.[7]

    The ongoing globalization of neoliberalism demonstrates which interpretation is right. Not least, because the differences between the old and the new economic liberalism can not only be articulated in quantitative terms but in qualitative ones too. What we are witnessing are completely new phenomena: instead of a democratic "complete competition" between many small enterprises enjoying the freedom of the market, only the big corporations win. In turn, they create new market oligopolies and monopolies of previously unknown dimensions. The market hence only remains free for them, while it is rendered unfree for all others who are condemned to an existence of dependency (as enforced producers, workers and consumers) or excluded from the market altogether (if they have neither anything to sell or buy). About fifty percent of the world's population fall into this group today, and the percentage is rising.[8]

    Anti-trust laws have lost all power since the transnational corporations set the norms. It is the corporations – not "the market" as an anonymous mechanism or "invisible hand" – that determine today's rules of trade, for example prices and legal regulations. This happens outside any political control. Speculation with an average twenty percent profit margin edges out honest producers who become "unprofitable".[9] Money becomes too precious for comparatively non-profitable, long-term projects,

    or projects that only – how audacious! – serve a good life. Money instead "travels upwards" and disappears. Financial capital determines more and more what the markets are and do.[10] By delinking the dollar from the price of gold, money creation no longer bears a direct relationship to production".[11] Moreover, these days most of us are – exactly like all governments – in debt. It is financial capital that has all the money – we have none.[12]

    Small, medium, even some bigger enterprises are pushed out of the market, forced to fold or swallowed by transnational corporations because their performances are below average in comparison to speculation – rather: spookulation – wins. The public sector, which has historically been defined as a sector of not-for-profit economy and administration, is "slimmed" and its "profitable" parts ("gems") handed to corporations (privatized). As a consequence, social services that are necessary for our existence disappear. Small and medium private businesses – which, until recently, employed eighty percent of the workforce and provided normal working conditions – are affected by these developments as well. The alleged correlation between economic growth and secure employment is false. When economic growth is accompanied by the mergers of businesses, jobs are lost.[13]

    If there are any new jobs, most are precarious, meaning that they are only available temporarily and badly paid. One job is usually not enough to make a living.[14] This means that the working conditions in the North become akin to those in the South, and the working conditions of men akin to those of women – a trend diametrically opposed to what we have always been told. Corporations now leave for the South (or East) to use cheap – and particularly female – labor without union affiliation. This has already been happening since the 1970s in the "Export Processing Zones" (EPZs, "world market factories" or "maquiladoras"), where most of the world's computer chips, sneakers, clothes and electronic goods are produced.[15] The EPZs lie in areas where century-old colonial-capitalist and authoritarian-patriarchal conditions guarantee the availability of cheap labor.[16] The recent shift of business opportunities from consumer goods to armaments is a particularly troubling development.[17]

    It is not only commodity production that is "outsourced" and located in the EPZs, but service industries as well. This is a result of the so-called Third Industrial Revolution, meaning the development of new information and communication technologies. Many jobs have disappeared entirely due to computerization, also in administrative fields.[18] The combination of the principles of "high tech" and "low wage"/"no wage" (always denied by "progress" enthusiasts) guarantees a "comparative cost advantage" in foreign trade. This will eventually lead to "Chinese wages" in the West. A potential loss of Western consumers is not seen as a threat. A corporate economy does not care whether consumers are European, Chinese or Indian.

    The means of production become concentrated in fewer and fewer hands, especially since finance capital – rendered precarious itself – controls asset values ever more aggressively. New forms of private property are created, not least through the "clearance" of public property and the transformation of formerly public and small-scale private services and industries to a corporate business sector. This concerns primarily fields that have long been (at least partly) excluded from the logic of profit – e.g. education, health, energy or water supply/disposal. New forms of so-called enclosures emerge from today's total commercialization of formerly small-scale private or public industries and services, of the "commons", and of natural resources like oceans, rain forests, regions of genetic diversity or geopolitical interest (e.g. potential pipeline routes), etc.[19] As far as the new virtual spaces and communication networks go, we are witnessing frantic efforts to bring these under private control as well.[20]

    All these new forms of private property are essentially created by (more or less) predatory forms of appropriation. In this sense, they are a continuation of the history of so-called original accumulation which has expanded globally, in accordance with to the motto: "Growth through expropriation!"[21]

    Most people have less and less access to the means of production, and so the dependence on scarce and underpaid work increases. The destruction of the welfare state also destroys the notion that individuals can rely on the community to provide for them in times of need. Our existence relies exclusively on private, i.e. expensive, services that are often of much worse quality and much less reliable than public services. (It is a myth that the private always outdoes the public.) What we are experiencing is undersupply formerly only known by the colonial South. The old claim that the South will eventually develop into the North is proven wrong. It is the North that increasingly develops into the South. We are witnessing the latest form of "development", namely, a world system of underdevelopment.[22] Development and underdevelopment go hand in hand.[23] This might even dawn on "development aid" workers soon.

    It is usually women who are called upon to counterbalance underdevelopment through increased work ("service provisions") in the household. As a result, the workload and underpay of women takes on horrendous dimensions: they do unpaid work inside their homes and poorly paid "housewifized" work outside.[24] Yet, commercialization does not stop in front of the home's doors either. Even housework becomes commercially co-opted ("new maid question"), with hardly any financial benefits for the women who do the work.[25]

    Not least because of this, women are increasingly coerced into prostitution, one of today's biggest global industries.[26] This illustrates two things: a) how little the "emancipation" of women actually leads to "equal terms" with men; and b) that "capitalist development" does not imply increased "freedom" in wage labor relations, as the Left has claimed for a long time.[27] If the latter were the case, then neoliberalism would mean the voluntary end of capitalism once it reaches its furthest extension. This, however, does not appear likely.

    Today, hundreds of millions of quasi-slaves, more than ever before, exist in the "world system."[28] The authoritarian model of the "Export Processing Zones" is conquering the East and threatening the North. The redistribution of wealth runs ever more – and with ever accelerated speed – from the bottom to the top. The gap between the rich and the poor has never been wider. The middle classes disappear. This is the situation we are facing.

    It becomes obvious that neoliberalism marks not the end of colonialism but, to the contrary, the colonization of the North. This new "colonization of the world"[29] points back to the beginnings of the "modern world system" in the "long 16th century", when the conquering of the Americas, their exploitation and colonial transformation allowed for the rise and "development" of Europe.[30] The so-called "children's diseases" of modernity keep on haunting it, even in old age. They are, in fact, the main feature of modernity's latest stage. They are expanding instead of disappearing.

    Where there is no South, there is no North; where there is no periphery, there is no center; where there is no colony, there is no – in any case no "Western" – civilization.[31]

    Austria is part of the world system too. It is increasingly becoming a corporate colony (particularly of German corporations). This, however, does not keep it from being an active colonizer itself, especially in the East.[32]

    Social, cultural, traditional and ecological considerations are abandoned and give way to a mentality of plundering. All global resources that we still have – natural resources, forests, water, genetic pools – have turned into objects of utilization. Rapid ecological destruction through depletion is the consequence. If one makes more profit by cutting down trees than by planting them, then there is no reason not to cut them.[33] Neither the public nor the state interferes, despite global warming and the obvious fact that the clearing of the few remaining rain forests will irreversibly destroy the earth's climate – not to mention the many other negative effects of such actions.[34] Climate, animal, plants, human and general ecological rights are worth nothing compared to the interests of the corporations – no matter that the rain forest is not a renewable resource and that the entire earth's ecosystem depends on it. If greed, and the rationalism with which it is economically enforced, really was an inherent anthropological trait, we would have never even reached this day.

    The commander of the Space Shuttle that circled the earth in 2005 remarked that "the center of Africa was burning". She meant the Congo, in which the last great rain forest of the continent is located. Without it there will be no more rain clouds above the sources of the Nile. However, it needs to disappear in order for corporations to gain free access to the Congo's natural resources that are the reason for the wars that plague the region today. After all, one needs diamonds and coltan for mobile phones.

    Today, everything on earth is turned into commodities, i.e. everything becomes an object of "trade" and commercialization (which truly means liquidation, the transformation of all into liquid money). In its neoliberal stage it is not enough for capitalism to globally pursue less cost-intensive and preferably "wageless" commodity production. The objective is to transform everyone and everything into commodities, including life itself.[35] We are racing blindly towards the violent and absolute conclusion of this "mode of production", namely total capitalization/liquidation by "monetarization".[36]

    We are not only witnessing perpetual praise of the market – we are witnessing what can be described as "market fundamentalism". People believe in the market as if it was a god. There seems to be a sense that nothing could ever happen without it. Total global maximized accumulation of money/capital as abstract wealth becomes the sole purpose of economic activity. A "free" world market for everything has to be established – a world market that functions according to the interests of the corporations and capitalist money. The installment of such a market proceeds with dazzling speed. It creates new profit possibilities where they have not existed before, e.g. in Iraq, Eastern Europe or China.

    One thing remains generally overlooked: the abstract wealth created for accumulation implies the destruction of nature as concrete wealth. The result is a "hole in the ground" and next to it a garbage dump with used commodities, outdated machinery and money without value.[37] However, once all concrete wealth (which today consists mainly of the last natural resources) will be gone, abstract wealth will disappear as well. It will, in Marx's words, "evaporate". The fact that abstract wealth is not real wealth will become obvious, and so will the answer to the question of which wealth modern economic activity has really created. In the end it is nothing but monetary wealth (and even this mainly exists virtually or on accounts) that constitutes a monoculture controlled by a tiny minority. Diversity is suffocated and millions of people are left wondering how to survive. And really: how do you survive with neither resources nor means of production nor money?

    The nihilism of our economic system is evident. The whole world will be transformed into money – and then it will disappear. After all, money cannot be eaten. What no one seems to consider is the fact that it is impossible to re-transform commodities, money, capital and machinery into nature or concrete wealth. It seems that underlying all "economic development" is the assumption that "resources", the "sources of wealth",[38] are renewable and everlasting – just like the "growth" they create.[39]

    The notion that capitalism and democracy are one is proven a myth by neoliberalism and its "monetary totalitarianism".[40]

    The primacy of politics over economy has been lost. Politicians of all parties have abandoned it. It is the corporations that dictate politics. Where corporate interests are concerned, there is no place for democratic convention or community control. Public space disappears. The res publica turns into a res privata, or – as we could say today – a res privata transnationale (in its original Latin meaning, privare means "to deprive"). Only those in power still have rights. They give themselves the licenses they need, from the "license to plunder" to the "license to kill".[41] Those who get in their way or challenge their "rights" are vilified, criminalized and to an increasing degree defined as "terrorists" or, in the case of defiant governments, as "rogue states" – a label that usually implies threatened or actual military attack, as we can see in the cases of Yugoslavia, Afghanistan and Iraq, and maybe Syria and Iran in the near future. U.S. President Bush had even spoken of the possibility of "preemptive" nuclear strikes should the U.S. feel endangered by weapons of mass destruction.[42] The European Union did not object.[43]

    Neoliberalism and war are two sides of the same coin.[44] Free trade, piracy and war are still "an inseparable three" – today maybe more so than ever. War is not only "good for the economy" but is indeed its driving force and can be understood as the "continuation of economy with other means".[45] War and economy have become almost indistinguishable.[46] Wars about resources – especially oil and water – have already begun.[47] The Gulf Wars are the most obvious examples. Militarism once again appears as the "executor of capital accumulation" – potentially everywhere and enduringly.[48]

    Human rights and rights of sovereignty have been transferred from people, communities and governments to corporations.[49] The notion of the people as a sovereign body has practically been abolished. We have witnessed a coup of sorts. The political systems of the West and the nation state as guarantees for and expression of the international division of labor in the modern world system are increasingly dissolving.[50] Nation states are developing into "periphery states" according to the inferior role they play in the proto-despotic "New World Order".[51] Democracy appears outdated. After all, it "hinders business".[52]

    The "New World Order" implies a new division of labor that does no longer distinguish between North and South, East and West – today, everywhere is South. An according International Law is established which effectively functions from top to bottom ("top-down") and eliminates all local and regional communal rights. And not only that: many such rights are rendered invalid both retroactively and for the future.[53]

    The logic of neoliberalism as a sort of totalitarian neo-mercantilism is that all resources, all markets, all money, all profits, all means of production, all "investment opportunities", all rights and all power belong to the corporations only. To paraphrase Richard Sennett: "Everything to the Corporations!"[54] One might add: "Now!"

    The corporations are free to do whatever they please with what they get. Nobody is allowed to interfere. Ironically, we are expected to rely on them to find a way out of the crisis we are in. This puts the entire globe at risk since responsibility is something the corporations do not have or know. The times of social contracts are gone.[55] In fact, pointing out the crisis alone has become a crime and all critique will soon be defined as "terror" and persecuted as such.[56]

    IMF Economic Medicine

    Since the 1980s, it is mainly the Structural Adjustment Programs (SAPs) of the World Bank and the IMF that act as the enforcers of neoliberalism. These programs are levied against the countries of the South which can be extorted due to their debts. Meanwhile, numerous military interventions and wars help to take possession of the assets that still remain, secure resources, install neoliberalism as the global economic politics, crush resistance movements (which are cynically labeled as "IMF uprisings"), and facilitate the lucrative business of reconstruction.[57]

    In the 1980s, Ronald Reagan and Margaret Thatcher introduced neoliberalism in Anglo-America. In 1989, the so-called "Washington Consensus" was formulated. It claimed to lead to global freedom, prosperity and economic growth through "deregulation, liberalization and privatization". This has become the credo and promise of all neoliberals. Today we know that the promise has come true for the corporations only – not for anybody else.

    In the Middle East, the Western support for Saddam Hussein in the war between Iraq and Iran in the 1980s, and the Gulf War of the early 1990s, announced the permanent U.S. presence in the world's most contested oil region.

    In continental Europe, neoliberalism began with the crisis in Yugoslavia caused by the Structural Adjustment Programs (SAPs) of the World Bank and the IMF. The country was heavily exploited, fell apart and finally beset by a civil war over its last remaining resources.[58] Since the NATO war in 1999, the Balkans are fragmented, occupied and geopolitically under neoliberal control.[59] The region is of main strategic interest for future oil and gas transport from the Caucasus to the West (for example the "Nabucco" gas pipeline that is supposed to start operating from the Caspian Sea through Turkey and the Balkans by 2011.[60] The reconstruction of the Balkans is exclusively in the hands of Western corporations.

    All governments, whether left, right, liberal or green, accept this. There is no analysis of the connection between the politics of neoliberalism, its history, its background and its effects on Europe and other parts of the world. Likewise, there is no analysis of its connection to the new militarism.

    NOTES

    [1] Maria Mies and Claudia von Werlhof (Hg), Lizenz zum Plündern. Das Multilaterale Abkommen über Investitionen MAI. Globalisierung der Konzernherrschaft – und was wir dagegen tun können, Hamburg, EVA, 2003 (1998), p. 23, 36.

    [2] Johann Wolfgang von Goethe, Faust: Part Two, New York, Oxford University Press, 1999.

    [3] Maria Mies, Krieg ohne Grenzen. Die neue Kolonisierung der Welt, Köln, PapyRossa, 2005, p. 34.

    [4] Arno Gruen, Der Verlust des Mitgefühls. Über die Politik der Gleichgültigkeit, München, 1997, dtv.

    [5] Sassen Saskia, "Wohin führt die Globalisierung?," Machtbeben, 2000, Stuttgart-München, DVA.

    [6] Maria Mies and Claudia von Werlhof (Hg), Lizenz zum Plündern. Das Multilaterale Abkommen über Investitionen MAI. Globalisierung der Konzernherrschaft – und was wir dagegen tun können, Hamburg, EVA, 2003 (1998), p. 24.

    [7] Immanuel Wallerstein, Aufstieg und künftiger Niedergang des kapitalistischen Weltsystems, in Senghaas, Dieter: Kapitalistische Weltökonomie. Kontroversen über ihren Ursprung und ihre Entwicklungsdynamik, Frankfurt, 1979, Suhrkamp; Immanuel Wallerstein (Hg), The Modern World-System in the Longue Durée, Boulder/ London; Paradigm Publishers, 2004.

    [8] Susan George, im Vortrag, Treffen von Gegnern und Befürwortern der Globalisierung im Rahmen der Tagung des WEF (World Economic Forum), Salzburg, 2001.

    [9] Elmar Altvater, Das Ende des Kapitalismus, wie wir ihn kennen, Münster, Westfälisches Dampfboot, 2005.

    [10] Elmar Altvater and Birgit Mahnkopf, Grenzen der Globalisierung. Ökonomie, Ökologie und Politik in der Weltgesellschaft, Münster, Westfälisches Dampfboot, 1996.

    [11] Bernard Lietaer, Jenseits von Gier und Knappheit, Interview mit Sarah van Gelder, 2006, www.transaction.net/press/interviews/Lietaer 0497.html; Margrit Kennedy, Geld ohne Zinsen und Inflation, Steyerberg, Permakultur, 1990.

    [12] Helmut Creutz, Das Geldsyndrom. Wege zur krisenfreien Marktwirtschaft, Frankfurt, Ullstein, 1995.

    [13] Maria Mies and Claudia von Werlhof (Hg), Lizenz zum Plündern. Das Multilaterale Abkommen über Investitionen MAI. Globalisierung der Konzernherrschaft – und was wir dagegen tun können, Hamburg, EVA, 2003 (1998), p. 7.

    [14] Barbara Ehrenreich, Arbeit poor. Unterwegs in der Dienstleistungsgesellschaft, München, Kunstmann, 2001.

    [15] Folker Fröbel, Jürgen Heinrichs, and Otto Kreye, Die neue internationale Arbeitsteilung. Strukturelle Arbeitslosigkeit in den Industrieländern und die Industrialisierung der Entwicklungsländer, Reinbek, Rowohlt, 1977.

    [16] Veronika Bennholdt-Thomsen, Maria Mies, and Claudia von Werlhof, Women, The Last Colony, London/ New Delhi, Zed Books, 1988.

    [17] Michel Chossudovsky, War and Globalization. The Truth Behind September 11th, Oro, Ontario, Global Outlook, 2003.

    [18] Folker Fröbel, Jürgen Heinrichs, and Otto Kreye, Die neue internationale Arbeitsteilung. Strukturelle Arbeitslosigkeit in den Industrieländern und die Industrialisierung der Entwicklungsländer, Reinbek, Rowohlt, 1977.

    [19] Ana Isla, The Tragedy of the Enclosures: An Eco-Feminist Perspective on Selling Oxygen and Prostitution in Costa Rica, Man., Brock Univ., Sociology Dpt., St. Catherines, Ontario, Canada, 2005.

    [20] John Hepburn, Die Rückeroberung von Allmenden – von alten und von neuen, übers. Vortrag bei, Other Worlds Conference; Univ. of Pennsylvania; 28./29.4, 2005.

    [21] Claudia von Werlhof, Was haben die Hühner mit dem Dollar zu tun? Frauen und Ökonomie, München, Frauenoffensive, 1991; Claudia von Werlhof, MAInopoly: Aus Spiel wird Ernst, in Mies/Werlhof, 2003, p. 148-192.

    [22] Andre Gunder Frank, Die Entwicklung der Unterentwicklung, in ders. u.a., Kritik des bürgerlichen Antiimperialismus, Berlin, Wagenbach, 1969.

    [23] Maria Mies, Krieg ohne Grenzen, Die neue Kolonisierung der Welt, Köln, PapyRossa, 2005.

    [24] Veronika Bennholdt-Thomsen, Maria Mies, and Claudia von Werlhof, Women, the Last Colony, London/New Delhi, Zed Books, 1988.

    [25] Claudia von Werlhof, Frauen und Ökonomie. Reden, Vorträge 2002-2004, Themen GATS, Globalisierung, Mechernich, Gerda-Weiler-Stiftung, 2004.

    [26] Ana Isla, "Women and Biodiversity as Capital Accumulation: An Eco-Feminist View," Socialist Bulletin, Vol. 69, Winter, 2003, p. 21-34; Ana Isla, The Tragedy of the Enclosures: An Eco-Feminist Perspective on Selling Oxygen and Prostitution in Costa Rica, Man., Brock Univ., Sociology Department, St. Catherines, Ontario, Canada, 2005.

    [27] Immanuel Wallerstein, Aufstieg und künftiger Niedergang des kapitalistischen Weltsystems, in Senghaas, Dieter: Kapitalistische Weltökonomie. Kontroversen über ihren Ursprung und ihre Entwicklungsdynamik, Frankfurt, Suhrkamp, 1979.

    [28] Kevin Bales, Die neue Sklaverei, München, Kunstmann, 2001.

    [29] Maria Mies, Krieg ohne Grenzen, Die neue Kolonisierung der Welt, Köln, PapyRossa, 2005.

    [30] Immanuel Wallerstein, Aufstieg und künftiger Niedergang des kapitalistischen Weltsystems, in Senghaas, Dieter: Kapitalistische Weltökonomie. Kontroversen über ihren Ursprung und ihre Entwicklungsdynamik, Frankfurt, Suhrkamp, 1979; Andre Gunder Frank, Orientierung im Weltsystem, Von der Neuen Welt zum Reich der Mitte, Wien, Promedia, 2005; Maria Mies, Patriarchy and Accumulation on a World Scale, Women in the International Division of Labour, London, Zed Books, 1986.

    [31] Claudia von Werlhof, "Questions to Ramona," in Corinne Kumar (Ed.), Asking, We Walk. The South as New Political Imaginary, Vol. 2, Bangalore, Streelekha, 2007, p. 214-268

    [32] Hannes Hofbauer, Osterweiterung. Vom Drang nach Osten zur peripheren EU-Integration, Wien, Promedia, 2003; Andrea Salzburger, Zurück in die Zukunft des Kapitalismus, Kommerz und Verelendung in Polen, Frankfurt – New York, Peter Lang Verlag, 2006.

    [33] Bernard Lietaer, Jenseits von Gier und Knappheit, Interview mit Sarah van Gelder, 2006, www.transaction.net/press/interviews/Lietaer 0497.html.

    [34] August Raggam, Klimawandel, Biomasse als Chance gegen Klimakollaps und globale Erwärmung, Graz, Gerhard Erker, 2004.

    [35] Immanuel Wallerstein, Aufstieg und künftiger Niedergang des kapitalistischen Weltsystems, in Senghaas, Dieter: Kapitalistische Weltökonomie. Kontroversen über ihren Ursprung und ihre Entwicklungsdynamik, Frankfurt, Suhrkamp, 1979.

    [36] Renate Genth, Die Bedrohung der Demokratie durch die Ökonomisierung der Politik, feature für den Saarländischen Rundfunk am 4.3., 2006.

    [37] Johan Galtung, Eurotopia, Die Zukunft eines Kontinents, Wien, Promedia, 1993.

    [38] Karl Marx, Capital, New York, Vintage, 1976.

    [39] Claudia von Werlhof, Loosing Faith in Progress: Capitalist Patriarchy as an "Alchemical System," in Bennholdt-Thomsen et.al.(Eds.), There is an Alternative, 2001, p. 15-40.

    [40] Renate Genth, Die Bedrohung der Demokratie durch die Ökonomisierung der Politik, feature für den Saarländischen Rundfunk am 4.3., 2006.

    [41] Maria Mies and Claudia von Werlhof (Hg), Lizenz zum Plündern. Das Multilaterale Abkommen über Investitionen MAI. Globalisierung der Konzernherrschaft – und was wir dagegen tun können, Hamburg, EVA, 2003 (1998), p. 7; Maria Mies, Krieg ohne Grenzen, Die neue Kolonisierung der Welt, Köln, PapyRossa, 2005.

    [42] Michel Chossudovsky, America's "War on Terrorism," Montreal, Global Research, 2005.

    [43] Michel Chossudovsky, "Nuclear War Against Iran," Global Research, Center for Research on Globalization, Ottawa 13.1, 2006.

    [44] Altvater, Chossudovsky, Roy, Serfati, Globalisierung und Krieg, Sand im Getriebe 17, Internationaler deutschsprachiger Rundbrief der ATTAC – Bewegung, Sonderausgabe zu den Anti-Kriegs-Demonstrationen am 15.2., 2003; Maria Mies, Krieg ohne Grenzen, Die neue Kolonisierung der Welt, Köln, PapyRossa, 2005.

    [45] Hazel Hendersen, Building a Win-Win World. Life Beyond Global Economic Warfare, San Francisco, 1996.

    [46] Claudia von Werlhof, Vom Wirtschaftskrieg zur Kriegswirtschaft. Die Waffen der, Neuen-Welt-Ordnung, in Mies 2005, p. 40-48.

    [47] Michael T. Klare, Resource Wars. The New Landscape of Global Conflict, New York, Henry Holt and Company, 2001.

    [48] Rosa Luxemburg, Die Akkumulation des Kapitals, Frankfurt, 1970.

    [49] Tony Clarke, Der Angriff auf demokratische Rechte und Freiheiten, in Mies/Werlhof, 2003, p. 80-94.

    [50] Sassen Saskia, Machtbeben. Wohin führt die Globalisierung?, Stuttgart-München, DVA, 2000.

    [51] Michael Hardt and Antonio Negri, Empire, Cambridge, Harvard Univ. Press, 2001; Noam Chomsky, Hybris. Die endgültige Sicherstellung der globalen –Vormachtstellung der USA, Hamburg-Wien, Europaverlag, 2003.

    [52] Claudia von Werlhof, Speed Kills!, in Dimmel/Schmee, 2005, p. 284-292

    [53] See the "roll back" and "stand still" clauses in the WTO agreements in Maria Mies and Claudia von Werlhof (Hg), Lizenz zum Plündern. Das Multilaterale Abkommen über Investitionen MAI. Globalisierung der Konzernherrschaft – und was wir dagegen tun können, Hamburg, EVA, 2003.

    [54] Richard Sennett, zit. "In Einladung zu den Wiener Vorlesungen," 21.11.2005: Alternativen zur neoliberalen Globalisierung, 2005.

    [55] Claudia von Werlhof, MAInopoly: Aus Spiel wird Ernst, in Mies/Werlhof, 2003, p. 148-192.

    [56] Michel Chossudovsky, America's "War on Terrorism," Montreal, Global Research, 2005.

    [57] Michel Chossudovsky, Global Brutal. Der entfesselte Welthandel, die Armut, der Krieg, Frankfurt, Zweitausendeins, 2002; Maria Mies, Krieg ohne Grenzen. Die neue Kolonisierung der Welt, Köln, PapyRossa, 2005; Bennholdt-Thomsen/Faraclas/Werlhof 2001.

    [58] Michel Chossudovsky, Global Brutal. Der entfesselte Welthandel, die Armut, der Krieg, Frankfurt, Zweitausendeins, 2002.

    [59] Wolfgang Richter, Elmar Schmähling, and Eckart Spoo (Hg), Die Wahrheit über den NATO-Krieg gegen Jugoslawien, Schkeuditz, Schkeuditzer Buchverlag, 2000; Wolfgang Richter, Elmar Schmähling, and Eckart Spoo (Hg), Die deutsche Verantwortung für den NATO-Krieg gegen Jugoslawien, Schkeuditz, Schkeuditzer Buchverlag, 2000.

    [60] Bernard Lietaer, Jenseits von Gier und Knappheit, Interview with Sarah van Gelder, 2006, www.transaction.net/press/interviews/Lietaer 0497.html .

    The original source of this article is Global Research Copyright © Prof. Claudia von Werlhof , Global Research, 2015

    [Apr 13, 2016] The dead end of neoliberal transformation of the USA society

    economistsview.typepad.com

    Economist's View

    New Deal democrat : , Monday, April 11, 2016 at 03:07 PM
    "consensus in support of global economic integration as a force for peace and prosperity "

    "The Great Illusion" ( https://en.m.wikipedia.org/wiki/The_Great_Illusion )
    That increased trade is a bulwark against war rears its ugly head again.

    The above book which so ironically delivered the message was published in 1910.

    Alas, the Kaiser, the Tsar, and the Emperor did not act in accord with its tenets. Either increased global trade is irrelevant to war and peace, or World War I didn't happen. Your pick which to believe.

    RC AKA Darryl, Ron -> New Deal democrat... , Tuesday, April 12, 2016 at 03:06 AM
    Awesome, Dude!
    George H. Blackford : , Monday, April 11, 2016 at 03:20 PM
    Our problems began back in the 1970s when we abandoned the Bretton Woods international capital controls and then broke the unions, cut taxes on corporations and upper income groups, and deregulated the financial system. This eventually led a stagnation of wages in the US and an increase in the concentration of income at the top of the income distribution throughout the world: http://www.rwEconomics.com/Ch_1.htm

    The export-led growth model that began in the 1990s seriously exacerbated this problem as it proved to be unsustainable: http://www.rwEconomics.com/htm/WDCh_2.htm

    When combined with tax cuts and financial deregulation it led to increasing debt relative to income in the importing countries that caused the financial catastrophe we went through in 2008, the economic stagnation that followed, and the social unrest we see throughout the world today. This, in turn, created a situation in which the full utilization of our economic resources can only be maintained through an unsustainable increase in debt relative to income: http://www.rwEconomics.com/htm/WDCh3e.htm

    This is what has to be overcome if we are to get out of the mess the world is in today, and it's not going to be overcome by pretending that it's just going to go away if people can just become educated about the benefits of trade. At least that's not the way it worked out in the 1930s: http://www.rwEconomics.com/LTLGAD.htm

    RC AKA Darryl, Ron -> George H. Blackford ... , Tuesday, April 12, 2016 at 03:13 AM
    Totally excellent, Dude!
    Dan Kervick : , Monday, April 11, 2016 at 06:26 PM
    Global integration and the liberalization of capital flows outside of national boundaries, and outside of the constraints of national solidarity, has pushed Americans further into a ruthless capitalist struggle for strictly individual measures of "success", and intensified economic insecurity and the gaps between winners and losers. Economists find the resistance to these trends mysterious; others not so much.
    RC AKA Darryl, Ron -> Dan Kervick... , Tuesday, April 12, 2016 at 03:14 AM
    Priceless!
    Adamski : , Tuesday, April 12, 2016 at 07:10 AM
    The prospect of an international recession has me feeling down but then I read this sniping timewasting comments section and it doesn't seem so bad
    Ashok Hegde : , Tuesday, April 12, 2016 at 02:07 PM
    Economic leaders after WW2 had a Colonialist attitude entrenched within. They made a plan for global economic integration, which only considered the economic needs and realities of developed western nations. China/India/Indonesia/etc...were never at the conceptual table.

    Now, the tides have turned. The China-India nexus historically accounted for roughly 40% of the global economy. That 'normal' state was eclipsed for 1.5 centuries, and we may regress to that norm. If so, a ton of jobs, and economic activity, may shift from the West, to Asia. If so, the western middle classes are screwed.

    BILL ELLIS -> Ashok Hegde ... , Tuesday, April 12, 2016 at 03:02 PM
    It's not a zero sum problem
    BILL ELLIS : , Tuesday, April 12, 2016 at 02:56 PM
    Up till now globalism has mostly been conducted by laissez faire neo liberal elite...for the needs of the elite.
    That's not entirely a bad thing. Wars are started over the needs and desires of our elites. Common folks left to their own, won't find reason to go off and kill their counterparts... it only after "the other" has been dehumanized and demonized by the elite that common people will allow themselves to be organized to kill one another.

    By allowing and encouraging the world's elite to operate within a system of mutual dependence, we decrease the incentive for the elite to marshal and deploy their captive populations against one another.

    But once that international system has been solidified...as it has now... The objective should be to tear it down...it should be to make it democratized, unionised, and transparent .

    We need to move from laissez faire neo liberalism to social democratic neo liberalism.

    BILL ELLIS -> BILL ELLIS... , -1
    Should " not" be torn down...

    [Apr 11, 2016] Paul Krugman: Snoopy the Destroyer

    Notable quotes:
    "... "Judge Collyer repeatedly complained that the regulators had failed to do a cost-benefit analysis." What Professor Krugman omits here is that so-called "cost-benefit analysis" has been corrupted by the fallacious Kaldor-Hicks compensation principle. The house cleaning has a lot further to go than "Republicans." ..."
    economistsview.typepad.com
    Systemically important presidential elections:
    Snoopy the Destroyer, by Paul Krugman, NY Times : Has Snoopy just doomed us to another severe financial crisis? Unfortunately, that's a real possibility, thanks to a bad judicial ruling that threatens a key part of financial reform. ...
    At the end of 2014 the regulators designated MetLife , whose business extends far beyond individual life insurance, a systemically important financial institution. Other firms faced with this designation have tried to get out by changing their business models. For example, General Electric ... sold off much of its finance business. But MetLife went to court. And it has won a favorable ruling from Rosemary Collyer , a Federal District Court judge.
    It was a peculiar ruling. Judge Collyer repeatedly complained that the regulators had failed to do a cost-benefit analysis, which the law doesn't say they should do, and for good reason. Financial crises are, after all, rare but drastic events; it's unreasonable to expect regulators to game out in advance just how likely the next crisis is, or how it might play out, before imposing prudential standards. To demand that officials quantify the unquantifiable would, in effect, establish a strong presumption against any kind of protective measures.
    Of course, that's what financial firms want. Conservatives like to pretend that the "systemically important" designation is actually a privilege, a guarantee that firms will be bailed out. Back in 2012 Mitt Romney described this part of reform as "a kiss that's been given to New York banks"..., an "enormous boon for them." Strange to say, however, firms are doing all they can to dodge this "boon" - and MetLife's stock rose sharply when the ruling came down.
    The federal government will appeal..., but even if it wins the ruling may open the floodgates to a wave of challenges to financial reform. And that's the sense in which Snoopy may be setting us up for future disaster.
    It doesn't have to happen. As with so much else, this year's election is crucial. A Democrat in the White House would enforce the spirit as well as the letter of reform - and would also appoint judges sympathetic to that endeavor. A Republican, any Republican, would make every effort to undermine reform, even if he didn't manage an explicit repeal.
    Just to be clear, I'm not saying that the 2010 financial reform was enough. The next crisis might come even if it remains intact. But the odds of crisis will be a lot higher if it falls apart.

    jonny bakho : Monday, April 11, 2016 at 06:54 AM

    The free market needs government intervention to save the market from itself.
    pgl said in reply to jonny bakho... , Monday, April 11, 2016 at 07:25 AM
    Yes - and we need to get the corporate lawyers out of the way.
    Sandwichman -> pgl... , Monday, April 11, 2016 at 07:47 AM
    10,000 at the bottom of the ocean would be a good start.
    DrDick -> jonny bakho... , Monday, April 11, 2016 at 07:36 AM
    Markets cannot even exist without government regulation.
    anne : , Monday, April 11, 2016 at 07:02 AM
    http://krugman.blogs.nytimes.com/2015/04/11/a-victory-against-the-shadows/

    April 11, 2015

    A Victory Against the Shadows
    By Paul Krugman

    There are two big lessons from GE's announcement * that it is planning to get out of the finance business. First, the much maligned Dodd-Frank financial reform is doing some real good. Second, Republicans have been talking nonsense on the subject. OK, maybe point #2 isn't really news, but it's important to understand just what kind of nonsense they've been talking.

    GE Capital was a quintessential example of the rise of shadow banking. In most important respects it acted like a bank; it created systemic risks very much like a bank; but it was effectively unregulated, and had to be bailed out through ad hoc arrangements that understandably had many people furious about putting taxpayers on the hook for private irresponsibility.

    Most economists, I think, believe that the rise of shadow banking had less to do with real advantages of such nonbank banks than it did with regulatory arbitrage - that is, institutions like GE Capital were all about exploiting the lack of adequate oversight. And the general view is that the 2008 crisis came about largely because regulatory evasion had reached the point where an old-fashioned wave of bank runs, albeit wearing somewhat different clothes, was once again possible.

    So Dodd-Frank tries to fix the bad incentives by subjecting systemically important financial institutions - SIFIs - to greater oversight, higher capital and liquidity requirements, etc. And sure enough, what GE is in effect saying is that if we have to compete on a level playing field, if we can't play the moral hazard game, it's not worth being in this business. That's a clear demonstration that reform is having a real effect.

    Now, the more or less official GOP line is that the crisis had nothing to do with runaway banks - it was all about Barney Frank somehow forcing poor innocent bankers to make loans to Those People. And the line on the right also asserts that the SIFI designation is actually an invitation to behave badly, that institutions so designated know that they are too big to fail and can start living high on the moral hazard hog.

    But as Mike Konczal notes, ** GE - following in the footsteps of others, notably MetLife *** - is clearly desperate to get out from under the SIFI designation. It sure looks as if being named a SIFI is indeed what it's supposed to be, a burden rather than a bonus.

    A good day for the reformers.

    * http://www.nytimes.com/2015/04/11/business/dealbook/the-lessons-for-finance-in-the-ge-capital-retreat.html

    ** http://www.nextnewdeal.net/rortybomb/how-end-ge-capital-also-kills-core-conservative-talking-point-about-dodd-frank

    *** http://dealbook.nytimes.com/2015/01/13/metlife-to-fight-too-big-to-fail-status-in-court/

    Sandwichman : , Monday, April 11, 2016 at 07:14 AM
    "Judge Collyer repeatedly complained that the regulators had failed to do a cost-benefit analysis." What Professor Krugman omits here is that so-called "cost-benefit analysis" has been corrupted by the fallacious Kaldor-Hicks compensation principle. The house cleaning has a lot further to go than "Republicans."
    anne said in reply to Sandwichman ... , Monday, April 11, 2016 at 07:23 AM
    https://en.wikipedia.org/wiki/Kaldor%E2%80%93Hicks_efficiency

    A Kaldor–Hicks improvement, named for Nicholas Kaldor and John Hicks, also known as the Kaldor–Hicks criterion, is a way of judging economic re-allocations of resources among people that captures some of the intuitive appeal of Pareto improvements, but has less stringent criteria and is hence applicable to more circumstances.

    A re-allocation is a Kaldor–Hicks improvement if those that are made better off could hypothetically compensate those that are made worse off and lead to a Pareto-improving outcome. The compensation does not actually have to occur (there is no presumption in favor of status-quo) and thus, a Kaldor–Hicks improvement can in fact leave some people worse off.

    Sandwichman -> anne... , Monday, April 11, 2016 at 07:31 AM
    There are no stable "units" in which compensation could be paid.

    http://econospeak.blogspot.ca/2014/11/numeraire-shmoo-meraire-nature-doesnt.html

    David Ellerman:

    "Consider a transfer of an apple from Mary to John and a transfer of $0.75 from John to Mary. Use Kaldor-Hicks to evaluate each part as a "project" with the other part as the "compensation". Using money as the numeraire and the apple transfer as the "project", we see under the assumptions that the transfer of the apple increases social wealth measured in dollars so that is the recommendation based on "efficiency", and the payment of the "compensation" of $0.75 is a matter of "equity" of concern to politician, theologians, and philosophers but not to the professional economist. Now reverse the numeraire taking apples as the numeraire and the transfer of the $0.75 as the "project". Then the transfer of the apple (= "compensation") does not change social wealth = size of the apple pie, but the transfer of the $0.75 increases the size of the social apple pie by 3/4 of an apple so it is the transfer of the $0.75 that is recommended on efficiency grounds by hard-nosed economists while the transfer of the apple is left to politicians, theologians, and the like as a matter of "equity." Thus the outcome of the KH analysis is reversed by a change in the numeraire used to describe the exact same pair of transfers."

    anne said in reply to Sandwichman ... , Monday, April 11, 2016 at 07:50 AM
    November 22, 2014

    #NUM!éraire, Shmoo-méraire: Nature doesn't truck and barter

    The commodity in terms of which the prices of all the others are expressed is the numéraire. -- Leon Walras, Elements of Pure Economics.

    But the numéraire is a purely technical device, introduced simply for the purpose of making exchange values explicit. In no way does the introduction of a standard of value alter the fundamental nature of the economy in question. It remains a barter economy, since goods are exchanged solely for other goods. -- André Orléan, The Empire of Value.

    -- Sandwichman

    anne said in reply to Sandwichman ... , Monday, April 11, 2016 at 07:26 AM
    http://en.wikiquote.org/wiki/Catch-22

    1961

    Yossarian looked at him soberly and tried another approach. 'Is Orr crazy?'

    'He sure is,' Doc Daneeka said.

    'Can you ground him?'

    'I sure can. But first he has to ask me to. That's part of the rule.'

    'Then why doesn't he ask you to?'

    'Because he's crazy,' Doc Daneeka said. 'He has to be crazy to keep flying combat missions after all the close calls he's had. Sure, I can ground Orr. But first he has to ask me to.'

    'That's all he has to do to be grounded?'

    'That's all. Let him ask me.'

    'And then you can ground him?' Yossarian asked.

    'No. Then I can't ground him.'

    'You mean there's a catch?'

    'Sure there's a catch,' Doc Daneeka replied. 'Catch-22. Anyone who wants to get out of combat duty isn't really crazy.'

    There was only one catch and that was Catch-22, which specified that a concern for one's own safety in the face of dangers that were real and immediate was the process of a rational mind. Orr was crazy and could be grounded. All he had to do was ask; and as soon as he did, he would no longer be crazy and would have to fly more missions. Orr would be crazy to fly more missions and sane if he didn't, but if he was sane, he had to fly them. If he flew them, he was crazy and didn't have to; but if he didn't want to, he was sane and had to. Yossarian was moved very deeply by the absolute simplicity of this clause of Catch-22 and let out a respectful whistle.

    'That's some catch, that Catch-22,' he observed.

    'It's the best there is,' Doc Daneeka agreed.

    -- Joseph Heller

    Sandwichman -> anne... , Monday, April 11, 2016 at 07:42 AM
    Also known as the double-bind in Gregory Bateson's analysis.

    And why the big fuss about the Panama Papers? Doesn't the Laffer Curve tell us that if the 1% evade taxes by hiding their money in off-shore accounts, it will cause so much economic growth that government tax revenues will actually increase?

    Laffer curves, Kaldor-Hicks cost-benefit swindles and lump-of-labor fantasies are not "incidentals" of an otherwise sound economic discipline. They are symptoms of an ideology that is rotten to the core.

    William said in reply to Sandwichman ... , Monday, April 11, 2016 at 08:54 AM
    Yes, those supply-siders must love it when companies hide their income offshores. Just think how many more jobs they must be creating with their lower tax rate!
    ilsm said in reply to Sandwichman ... , Monday, April 11, 2016 at 09:59 AM
    BCA's or CBA's start with assumptions and ground rules.

    Neither do anything but give "foundation" to preferences.

    pgl : , Monday, April 11, 2016 at 07:24 AM
    "The federal government will appeal the MetLife ruling, but even if it wins the ruling may open the floodgates to a wave of challenges to financial reform. And that's the sense in which Snoopy may be setting us up for future disaster."

    As soon as Dodd-Frank was passed the large financial institutions got their legal teams busy trying to undermine it. One would think all progressives would rally behind enforcing Dodd-Frank. Of course Rusty wants us to believe enforcing Dodd-Frank is just too complicated. It is complicated only because the lawyers for the financial sector get paid big bucks to obscure what is sensible regulation.

    DrDick -> pgl... , Monday, April 11, 2016 at 07:39 AM
    Rusty is well paid not to understand that it is people like him and his employers who are responsible for the complexity of federal regulations.
    pgl said in reply to DrDick ... , Monday, April 11, 2016 at 09:02 AM
    I bet Rusty will protest this by saying he is not being paid that much. Which would be cool but the notion that we should just trash Dodd-Frank strikes me as bad financial economics. Now if we can improve on Dodd-Frank, that would be awesome if it makes Jamie Dimon really mad.
    Peter said in reply to pgl... , Monday, April 11, 2016 at 10:36 AM
    "One would think all progressives would rally behind enforcing Dodd-Frank."

    What is that supposed to mean?

    JohnH : , Monday, April 11, 2016 at 08:05 AM
    LOL!!! "A Democrat in the White House would enforce the spirit as well as the letter of reform"...just like the incumbent Democrat sent bankers to jail for rampant mortgage fraud.

    Oh, right! Obama and Holder actually made the investigation of mortgage fraud JOD's lowest priority and brought no criminal indictments...undermining the rule of law, giving bankers a 'get out of jail free' card, and encouraging them to commit yet more fraud.

    Krugman is becoming just ridiculous, a partisan hack on steroids.

    Peter said in reply to JohnH... , Monday, April 11, 2016 at 08:51 AM
    "The episode showed that traditional financial regulation, which focuses on deposit-taking banks, is inadequate in the modern world."

    What Krugman fails to inform his reader - one can only say so much in a column is that Bill Clinton repeatedly reappointed Alan Greenspan as regulator in chief.

    The shadow-banking system was created during Greenspan's tenure and he saw no need to regulate it b/c free markets are awesome! And so the shadow-banking system promptly had a bank run.

    Eric Blair -> Peter... , Monday, April 11, 2016 at 09:02 AM
    Not "promptly"--it took fifteen years. That was Clinton's biggest weakness--he was good at dealing with urgent obvious problems, but he would sometimes let longer-term issues fester. This is why Obama will be remembered as a better president than Clinton--he plays the long game.
    Peter said in reply to Eric Blair ... , Monday, April 11, 2016 at 09:10 AM
    15 years? No. Clinton ended in 2000 with a tech stock bubble. Less than a decade later we had the mother of all bank runs.

    "he was good at dealing with urgent obvious problems, "

    Like what? Balancing the budget?

    Eric Blair -> Peter... , Monday, April 11, 2016 at 09:29 AM
    Notable examples of urgent problems that Clinton addressed effectively included the Mexico crisis of 1994, the East Asian crisis of 1997, and the collapse of Long Term Capital Management in 1998. Any one of these crises could have turned into a broader meltdown and spawned a depression similar to the 2008 one, but Clinton and his appointees (including Greenspan) did a good job of containing the damage. Unfortunately they did nothing to address the underlying problems that had made it necessary for them to act in the first place.
    ilsm said in reply to Eric Blair ... , Monday, April 11, 2016 at 10:11 AM
    Clinton pandered to the Sunnis sending USAF to do their work sundering Serbia. Bombing the Chinese embassy was par for the military industry complex.

    Permanently stationed US funded mechanized brigade to keep the Sunnis happy with NATO over Serbia.

    Peter said in reply to Eric Blair ... , Monday, April 11, 2016 at 10:13 AM
    Dean Baker has a good critique of their handling of the East Asian Crisis, if you aren't familiar with it.
    Peter said in reply to JohnH... , Monday, April 11, 2016 at 08:52 AM
    "Oh, and yes, the episode also showed that making the breakup of big banks the be-all and end-all of reform misses the point."

    *sends more money to Sanders campaign*

    Peter said in reply to Peter... , Monday, April 11, 2016 at 09:12 AM
    http://readersupportednews.org/opinion2/277-75/36222-focus-why-the-banks-should-be-broken-up

    Why the Banks Should Be Broken Up

    By Matt Taibbi, Rolling Stone

    09 April 16

    Bernie or no Bernie, 'Times' columnist Paul Krugman is wrong about the banks

    Paul Krugman wrote an op-ed in the New York Times today called "Sanders Over the Edge." He's been doing a lot of shovel work for the Hillary Clinton campaign lately, which is his right of course. The piece eventually devolves into a criticism of the character of Bernie Sanders, but it's his take on the causes of the '08 crash that really raises an eyebrow.

    ...

    Peter said in reply to JohnH... , Monday, April 11, 2016 at 08:56 AM
    "It doesn't have to happen. As with so much else, this year's election is crucial. A Democrat in the White House would enforce the spirit as well as the letter of reform - and would also appoint judges sympathetic to that endeavor. A Republican, any Republican, would make every effort to undermine reform, even if he didn't manage an explicit repeal.

    Just to be clear, I'm not saying that the 2010 financial reform was enough."

    The Republicans are going to lose so Krugman's lesser evil argument doesn't really work.

    Does Krugman discuss Hillary's reforms? No of course not.

    Eric Blair -> JohnH... , Monday, April 11, 2016 at 08:59 AM
    Your comment only makes sense if you believe that either
    (1) designating a financial institution "systemically important" is trivial or totally meaningless compared to criminal indictments for previous actions, or (2) a Republican would enforce this designation just as much as Obama has. Which is it?
    pgl said in reply to Eric Blair ... , Monday, April 11, 2016 at 09:04 AM
    Uh oh - a tough question for JohnH. Careful as he might say you are "not qualified" or something like that.

    Republicans want a laissez faire financial system. After all - 2008 was such a great year (not).

    Peter said in reply to pgl... , Monday, April 11, 2016 at 09:11 AM
    Hey buddy! Getting feisty again?
    JohnH said in reply to Eric Blair ... , Monday, April 11, 2016 at 09:20 AM
    LOL!!! Eric Blair asserts that it is "totally meaningless" to sending bankers to prison for fraud that threatened systemically threatened the economy!

    And he assumes that Obama would behave less deferentially to Wall Street banks when it comes to enforcing any regulation that bankers don't approve of.
    Republicans have no monopoly on servility to the interests of Wall Street and their wealthy clientele, but Krugman obviously prefers Democratic corruption to its Republican cousin...

    Eric Blair -> JohnH... , Monday, April 11, 2016 at 09:36 AM
    No, I did not say what you claim that I said. And whether Obama is being deferential to someone is at most a side issue. The important questions are first, does the rule help make the financial system more stable, and second, would it be enforced less by Republicans. I believe the answer to both questions is yes.
    pgl said in reply to Eric Blair ... , Monday, April 11, 2016 at 10:43 AM
    JohnH does this a lot. Cross his serial nonsense and you become Jamie Dimon's enabler.
    JohnH said in reply to Eric Blair ... , Monday, April 11, 2016 at 03:21 PM
    "would it be enforced less by Republicans?"

    LOL!!! How can it get less than zero...which is the number of bank fraud indictments Obama issued against prominent Wall Street bankers?

    It's hilarious how Wall Street Democrats try to claim that the Democratic Party is less corrupt than Republicans, when both parties feed from the same trough.

    MIB said in reply to JohnH... , Monday, April 11, 2016 at 10:43 AM
    Sandwichman says:

    "The house cleaning has a lot further to go than "Republicans."

    How about the leader of the Democrats, President Obama?

    Real Democrats can hardly wait for good ol authentic, honest Bernie Sanders to start attacking President Obama – he's certainly not qualified to be president, taking all that Wall Street cash and letting the big banks off scot-free, like he and Holder did back 2009 -- unqualified.

    But good ol straight shootin Bernie aint gona do that, is he? Nope, because even Bernie understands that Democrats actually like, maybe even love President Obama.

    Bernie probably even understands that most Democrats like their democratic representatives, senators, governors, mayors, city councilors, etc as well. So railing against the establishment is not nearly as effective for Bernie as it is for Trump, Cruz and the tea party railing against the Republican establishment. You see this in most Sanders surrogates carefully leaving "democratic" off when criticizing the establishment, heck they might be confused with Republicans or Independents. Even the more excitable online Berniacs rarely use the term democratic establishment, instead invoking the generically ominous and evil "establishment."

    It would have been much better (and honest) if Bernie had not turned his back on 28 years as a proud Independent and run for president as a proud Independent instead of his gimmick to garner more media attention by running as a Democrat.

    His ego trip would have been much shorter, and Bernie certainly wouldn't be able to raise as much cash running as an independent, he'd likely struggle to exceed Nader's 3% general election vote in 2000, but he could have honestly taken on the real leader of the (democratic) establishment, President Obama.

    JohnH said in reply to MIB... , Monday, April 11, 2016 at 03:25 PM
    Nonetheless, Bernie is bringing critical economic issues into public discourse, issues that Wall Street Democrats have long tried to suppress or occasionally pay lip service to...issue such as minimum wages, trade policy, etc.

    Even better, Bernie is showing socialist Democrats how to campaign and win against corrupt, incumbent Wall Street Democrats.

    Antoni Jaume : , Monday, April 11, 2016 at 10:36 AM
    That looks suspiciously just what Charles Murray proposed in his book "By the People: Rebuilding Liberty Without Permission", to litigate against norms that regulate corporations.

    http://americablog.com/2015/05/by-the-ruling-class-charles-murrays-anti-democratic-revolution.html

    dd : , -1
    Well not all SI's are equal. The drubbing AIG took even as it was used to launder cash to more favored institutions is no doubt seen as the template. There's that nowhere to be found independent insurance guy with no clout on FSOC that's another message. Woodall,a former insurance regulator from Kentucky is the definition of outsider.
    Last there's Jack Lew lecturing everyone on financial stability,truly a nice irony given Citi's illegal Traveler's deal and the horrific consequences.
    No doubt the lawsuit is about positioning and they'll be more by other players who worry about being sacrificed to save the clout-heavy.
    This is totally predictable given the power structure of FSOC.

    [Apr 11, 2016] #panamapapers Offshore Funds: On the Run With (Almost) Nowhere to Go?

    Notable quotes:
    "... NY banking rules ..."
    "... Nicholas Shaxson's Treasure Islands: Tax Havens and the Men Who Stole the World ..."
    www.nakedcapitalism.com
    Posted on April 11, 2016 by Yves Smith As strange as it may seem, a confluence of developments in the banking industry means the Panama Papers revelations looks likely make it a lot more difficult for offshore money, as tax evasions and tax secrecy are often politely called, to stay hidden. This would serve as a marked contrast to the last international-headlines-gripping leaks, the Snowden revelations. Even though Snowden gave a big window into the reach of the surveillance state, not all that much has changed, save the Chinese making more active efforts to avoid cloud computing and US technology vendors, and the Europeans bashing US concerns over violations of their privacy laws.

    By contrast, the massive Mossack Fonseca records haul feeds into trends in banking that mean that a lot of these funds are going to find it hard remain secret. We'll summarize them below.

    Tax base expansion initiatives . The US and European Union have been working on a program to expand the base of income that is subject to tax. Budget-starved European member states have been moving the plan forward ahead of schedule. This is one of the few positive developments to come of of governments failing to understand the implications of having a fiat currency (you can and typically need to run deficits, since the private sector sets unduly high return targets and chronically underinvests; the constraint on deficit spending is creating too much inflation).

    Increasingly tough "know your customer" rules . The US going aggressively after foreign banks that have falsified records as a part of money-laundering has led to increased compliance. Even Standard Chartered, which thought the US had no business telling it not to do business with Iran, was brought to heel and its CEO forced to resign for his continued intransigence.

    Now the US can throw its weight around only as far as dollar-based transactions are concerned, since those ultimately clear through US facilities. But the UK has also adopted stringent "know your customer" rules. It now takes weeks to open a new account that is not a personal account, say for your rugby club.

    As John Dizard in the Financial Times reports :

    There is a new urgency in the tone of the lawyers and advisers for offshore asset holders. The essential message is that you are the Shah of Iran, this is 1979, and you and your money will find yourselves hopscotching from one unwelcoming landing place to another…

    If you or your clients think this is about tax cheats or the merely middle rich, they should think again…

    As this column and others have noted, by next year Switzerland, along with Luxembourg, the Channel Islands and other European offshore investment management centres, will start exchanging tax information with their counterparts.

    There are a very large number of beneficiaries, ie globalised rich people, who have until the end of this year to get their money safely onshore. The one Western country that does not have a deadline for complying with the Common Reporting Standard is the US.

    Almost everyone who has non-criminally sourced capital would like to have at least some of it accessible within the dollar-based clearing system. But the clerical and legal checklists to set up accounts for legitimate money have become so long that it will take months to accomplish this even for those willing to pay the transaction costs.

    And before you think the US banks are therefore the answer…. US banks are shunning money from the rich these days. . Dizard again:

    The largest US banks do not really want to take more deposits, or even do the cursory know-your-customer due diligence work to open new special purpose accounts for old customers. Americans I know with legitimately acquired nine- or ten-figure investment portfolios now have to scrounge around to open accounts in midsize US banks.

    Those rich Americans do not have the logistical or legal problems that Panama Papers-related flight capital will have in "onshoring" their money.

    Moreover, US legislators are calling for the US tax havens like Delaware corporations and Wyoming limited liability companies, to report on who their ultimate beneficiaries are. Given the tone of his Guardian op-ed, Carl Levin sound like he is warming up for hearings:

    Global revulsion against shell company abuses, offshore tax havens, and the lawyers that promote them has generated new public pressure to tackle these problems. Here are three steps to consider.

    Outlaw corporations with hidden owners

    ….G20 world leaders have made a start with a joint commitment to increase corporate transparency. The United Kingdom is leading the way, mandating public disclosure of the true owners – the "beneficial owners" – of UK companies. The European Union has followed…

    The United States is far behind. We now require more information to get a library card than to form a US corporation. ….The biggest impediment is opposition from the secretaries of state of our 50 states, who financially benefit from forming new corporations and don't want to ask questions that might jeopardize their revenue. Our states need to wake up to the damage they are doing and stop forming corporations with hidden owners.

    Get tough on offshore tax abuse

    Tax authorities should use existing tax information exchange agreements, including the US-Panama agreement, to go after tax cheats and determine whether Mossack Fonseca facilitated illegal conduct.

    Offshore tax abuse goes beyond individuals. Some multinational corporations use tax havens to arrange secret tax deals or declare earnings offshore. The international community is finally demanding that large multinationals file reports disclosing the profits they make and the taxes they pay on a country-by-country basis. The United States has proposed regulations requiring those reports; the next step is to finalize them. A bigger issue: making those reports public.

    Get tough on lawyers promoting misconduct

    ….Lawyers should be subject to the "know your client" requirements of anti-money laundering laws. In addition, banks should scrutinize suspicious accounts of law firms and require them to certify that they will not use those accounts to help clients circumvent the bank's own anti-money laundering controls.

    Note that Levin doesn't seem to have a good answer about what to do about states that find it attractive to act as secrecy jurisdictions, but in the past, the Feds have used cutting off various Federal funds as a stick to force cooperation, Moreover, if Congress were to pass laws with "know your client" requirements with criminal sanctions and tough fines, that in and of itself would choke off a lot of domestic activity.

    Information technology risk . Mossack Fonseca exposed in a very dramatic way that secrecy isn't just a function of the design of legal arrangements and the choice of jurisdiction and bank, but also of the integrity of the registered agent's IT security. There's no way to do due diligence on that. Those with offshore accounts must already be nervous that they could be exposed by a similar hack. Dizard's fallback remedy for the rich who want to keep their money hidden, "…you and your money will find yourselves hopscotching from one unwelcoming landing place to another," might work for the relatively small and fleet of foot to stay ahead of the taxman and the bank transparency moves, but it won't reduce IT risk.

    Dizard's article, despite being informative, weirdly rails against crackdown on large-scale international capital transactions" as populist and ill-informed, due to limiting the mobility of international capital. Someone needs to clue him on the research by Ken Rogoff and Carmen Reihart, who are hardly of the pinko persuasion, who found that high levels of international capital movements are powerfully correlated with more severe and frequent financial crises. Dizard also tries to depict reducing capital movements as being Smoot-Hawley revisited. First, the notion that Smoot-Hawley caused the Depression had been well debunked. Second and more important, international capital flows these days are at such high levels (over 60 times trade flows) that the Bank of International Settlement has said that large international transactions are not about facilitating trade, and that excessive financial "elasticity" was the cause of the crisis.

    He also depicts banks as winding up being beneficiaries, which contradicts his message that they regard onshored money as more hassle (which means cost) that its worth:

    This will, within the next two years or so, lead to a one-time transfer from the global rich to the staff and owners of US financial institutions. But that will be followed by a long drought for new business, as the global wealth that did not move quickly enough gets slotted into endless holding patterns in the mid-Atlantic or mid-Pacific.

    It's hard to see what good it will do someone to have money moving around the few finessable locations and banks that remain. Pray tell, how does it spent? Money you can't readily touch, or get into a jurisdiction where you'd like to spend it, does not seem terribly useful.

    And the big point that Dizard misses is that onshoring these funds will make the future investment income on them subject to tax. Hidden untaxed wealth has contributed to rising inequality; Gabriel Zucman of UC Berkeley has estimated that 6% to 8% of global wealth is offshore, and most of that not reported to tax authorities. So the more the rich are discomfited by their overly-clever machinations, the better.

    Northeaster , April 11, 2016 at 7:34 am

    Well, if you live in a state where you can name an LLC for your nominee trust, it doesn't get any better. File the off shore LLC in Nevada where they don't ask any questions, and use it for your real estate vehicle to launder your monies. Any question to why high end real estate is on fire? The opaqueness in some states is intentional, as it took me about 10 minutes of random searching of properties (over $2 million) to find the off shore LLC owner, with people and entities that did not exists in the SoS filings. The activity index for RE sales over $750K is almost equal to the index under $400K and below combined. If you add the $500K and above sales, it crushes the entire index below $500K.

    https://research.stlouisfed.org/fred2/graph/?g=47×5

    Alex morfesis , April 11, 2016 at 10:30 am

    Owning an entity does not open a bank account…a party almost always has to be vetted for a new enterprise…wired in funds for the benefit of an entity helps break the corporate veil…govt officials rambling to the public that this corporate charade is just "impossible" to deal with or stop are just laughing at the public (or need to hand back their law license to the bar)…money can Always be traced…a real estate closing will have closing instructions and in those instructions will be to whom to send back the funds and to what name if the transaction is not concluded….since title companies are state regulated enterprises….and there are basically only four major title insurance umbrella companies….this myth that a state title insurance investigator could not walk in and obtain the beneficiary of the source of funds is one big second city improv skit

    Northeaster , April 11, 2016 at 11:33 am

    All they have to do is have real estate fall under FinCen Suspicious Activity Reporting (SAR) requirements, but the NAR is simply too powerful and well funded with a more than accepting sold out CONgress,

    Alex morfesis , April 11, 2016 at 12:52 pm

    Not defending nar but state title insurance investigators have the absolute right to walk in unannounced and spot audit files…a new corp will not have all these closing funds in hand and for a proper corp veil to stand and hold, the funds had to be in a bank account in the name of corp…might I suggest that the funds do not arrive from a source matching the corporate name…thus revealing the actual party in interest….

    susan the other , April 11, 2016 at 2:25 pm

    After this amazing seminar from Yves MERS is making much more sense… and as always Utah stands squarely behind the banks by ruling in appeals court that you can make a ham sandwich your agent.

    JTMcPhee , April 11, 2016 at 8:36 am

    Another piece of the problem is the difficulty of "piercing the corporate veil" in so many legal domains (almost said "states and nations," but those are mostly convenient fictions themselves). There's been a long tail of effort by the Few and the Corrupt and the Criminal to make it very difficult, ever increasingly difficult, to hang liability for what little remains of proscriptions and penalties for vicious and renter-driven personal (from "behind the veil") actions that offend what are supposed to be police-powers (health, safety, welfare, nuisance and environmental destruction, etc.), hang it where it belongs, with penalties that actually matter to the sociopath, if behaviors are going to change - around the necks of the individual rotten humans that plot and plan and operate all the stuff that is killing ordinary people and the planet.

    Corporate "beneficial owners" get to hide behind the screen of opacity and deflection that comes from the perversion of the notion that "business" needs require immunity of individuals from the consequences of "corporate" behavior. "Piercing the veil" requires meeting an extreme burden of proof that the corporation is a fraudulent shell, or merely an alter ego of the individual officer/owner. And if course the Wealthy and their advisers and facilitators and wholly owned political actors are still in the game, with huge resources even if currently under some increasing and likely temporary constraints, and they will be doing their damndest to preserve existing moats and walls and veils and find new ways to pervert the legitimacy-granting functions of law-making to protect their pleasure palaces and "specialness."

    Eat the Rich, reads the old bumper sticker from Hippier days… With a plate of fava beans, and a nice sauce of Retribution and a side of Restitution…

    inode_buddha , April 11, 2016 at 12:00 pm

    I have seen one case in particular, where the CEO made one set of sworn statements to the SEC in the 10k, and said the exact opposite in Federal court in the same month. Neither legal team picked up on this or mentioned it, and neither did the judge. It was incredibly aggravating to watch. In this case he rode the company into the ground while pumping and dumping like mad, and got away with it. The lawsuit was simply another vehicle to pump the stock, it didn't matter if it even had any merit - which it didn't. Years later, the company imploded ithe only a few employees left, the execs walked away with millions, etc. and they made a lot of enemies along the way.

    divadab , April 11, 2016 at 8:36 am

    Hopefully greater regulation and international cooperation will surface the tax evaders and capture their previously unpaid taxes. But it will also drive many of them deeper into organized crime-style hiding schemes. For example, using squeaky-clean nominees acting as beards: here's how it works in many communities – one guy "owns" many rental properties for which there are long-term tenants, and the rent equals exactly the carrying cost of the property. The tenants happen to be businessmen and their families who run pretty close to the wind and whose assets are thereby continually at risk – effectively, they protect their houses from creditors by holding them in a trustworthy nominee name – the "legal owner" is a hidden agent for the actual owners. Totally undetectable. But enforcement of this type of contract is extra-legal – organized crime-style – and communal.

    This type of setup is also a classic money-laundering vehicle – involving property flips between ostensibly unrelated parties but in reality coordinated. Hence distorted real estate markets as noted by Northeaster above. First $500,000 of profit on a principle residence sale is non taxable. I'd suggest the IRS focus on auditing house sales for which the principle residence exemption has been claimed, especially when people make close to the limit several times over (say) a ten-year period.

    Synoia , April 11, 2016 at 10:26 am

    $250,000 exemption for each individual on title every 2 years.

    weinerdog43 , April 11, 2016 at 9:01 am

    Way back when dinosaurs roamed the Earth, and I was taking Income Tax in law school, I couldn't shake the feeling that the whole point of the class was to assist people (corporations are people, my friend) to scam the government. While no one likes to pay taxes, these taxes provide services that people do, in fact like. It's all I can do to resist slapping folks who complain about the condition of the roads, and then in the next breath, whine about their tax burden.

    Anyway, cheating the government out of one's fair share of the tax burden means 2 things:
    1.) The remaining burden falls more heavily on those who DO pay; and
    2.) Unpunished cheating encourages more people (and corporations) to cheat. "If they're not paying, why should I pay?"

    After that class, I couldn't run fast enough away from tax law as it seemed to attract classmates I rather loathed. I couldn't agree more that tax lawyers who encourage cheating should face disbarment and fines. Apologies to my tax law brethren who try to do the right thing. I know some fine CPAs and tax guys. It just wasn't my calling.

    Whine Country , April 11, 2016 at 10:03 am

    I began my career as a CPA in the early '70s in the SF Bay area and virtually all of the lawyers I came in contact with had the same thoughts about taxes as you did. One of my accounting professors used to go on about how it was incredible that an attorney could pass the bar and practice law without ever having taken one tax course.

    Particularly when you consider that there is very little that a lawyer does that does not in some way involve taxes. So for us CPAs this was just an opening for us to specialize in an area where lawyers had little or no interest.

    In those days I recall that when you actually needed a tax attorney he was usually – I won't say loathsome – but kind of an odd sort. Recently I spoke to my ex-partner who took over our practice and the subject of tax attorneys came up. He reported to me that in the Bay Area tax attorneys are now billing $900 to $1,000 per hour. I guess you can call this supply side economics at work. As the number of mega zillionaires grows in the SF/Silicon Valley area, demand has apparently been created for a new category of super lawyer. The Free Market really can do some wonderful things when manipulated properly.

    Yves Smith Post author , April 11, 2016 at 5:40 pm

    You have to have your brain turned inside out to understand tax well enough to be a tax lawyer. Most regular lawyers have some antipathy for tax lawyers (I've sensed this and confirmed it). The logic of tax is extremely arcane, non-intuitive, and pedantic. Plus it does not have commercial value added.

    perpetualWAR , April 11, 2016 at 10:46 am

    Too bad the bar associations protect the scheming, lying cheats. Most bar associations have been infiltrated and are run by the bank lawyer scum.

    polecat , April 11, 2016 at 1:47 pm

    this is thing…..nearly every establishment related profession seems, in my mind at least, to be corrupted by fraud and graft……be it Pharma, Financials, Medical, MIC, Education, Agriculture, Law & Judicature, Transportation & Energy, National social policy, Foreign & National & Security policy……..

    ….hence… all phony & all illegitimate !!!

    Alex V , April 11, 2016 at 9:04 am

    I'm an American citizen living overseas. For me an "offshore account" is not an option, it's a fact of life. Creating fair laws to control tax evasion are therefore of interest to me.

    One example of the opposite of fair law is FATCA. This is quite a terrifying bit of poorly conceived legislation; intended to go after blatant tax evaders and sanction evaders, but instead creating penalties that can be life ruining for a middle class expat that makes an honest mistake in their reporting. The penalties on banks (and by extension foreign countries) that did not want to subject themselves to US law are also overly aggressive. So aggressive that many financial institutions refused to deal with any Americans, even for things as simple as a savings account. "Knowing your customer" became discrimination based on citizenship.

    I'm just hoping that any changes to enforcement or regulation that come about from the PPs take this into account.

    Regarding Standard Chartered, I'm not quite sure it's absolutely clear cut that they were in the wrong:

    http://www.exportlawblog.com/archives/4584
    http://www.exportlawblog.com/archives/4266

    They may have settled just to make the problem go away, and to maintain access to the US financial system. The US has a habit of imposing it's laws on the rest of the world, or ignoring international law it doesn't like. In my opinion, the sanctions on Iran were in many ways outright bullying, very much like with those on Cuba.

    Yves Smith Post author , April 11, 2016 at 5:45 pm

    Buh? Standard Chartered defied the advice of its US outside counsel and falsified wire transfer documents in a systematic manner after having been previously sanctioned for handling the transfer of funds to Iran for its oil sales, and to Sudan and other prohibited jurisdictions. You clearly have not read Benjamin Lawsky's order against the bank. Standard Chartered had a branch in New York to do dollar operations, and all dollar transactions ultimately clear (have to clear) through that branch.

    These were clear-cut violations of NY banking rules and Lawsky could have yanked Standard Chartered's NY banking license, which would have been a cataclysmic event for the bank. And after Federal regulators initially acting offended that Lawsky had end run and embarrassed them, they stepped up and issued big fines against Standard Chartered of their own.

    You also omit that Standard Chartered got yet another round of fines for failing to comply with the changes required! That led to the ouster of CEO Peter Sands, who had been defiant all along. From the New York Times in 2014, Caught Backsliding, Standard Chartered Is Fined $300 Million :

    It took $667 million in fines and a promise to behave for the British bank Standard Chartered to emerge from the regulatory spotlight. All it took to return there was its failure to fully keep that promise.

    In a settlement announced on Tuesday by New York State's financial regulator, Standard Chartered will pay a $300 million fine and suspend an important business activity because of its failure to weed out transactions prone to money-laundering, a punishing reminder of settlements in 2012. Those settlements with state and federal authorities resolved accusations that Standard Chartered, in part through its New York branch, processed transactions for Iran and other countries blacklisted by the United States.

    The New York regulator, Benjamin M. Lawsky, has now penalized Standard Chartered for running afoul of the 2012 settlement, which he said required the bank to "remediate anti-money-laundering compliance problems."

    An independent monitor, hired as part of Mr. Lawsky's 2012 settlement, recently detected that the bank's computer systems failed to flag wire transfers flowing from areas of the world considered vulnerable to money-laundering, according to Mr. Lawsky's order. The order did not specify the number of transactions that the bank's filters failed to identify, but a person briefed on the matter said that it was "in the millions."

    Please stop defending crooked bank behavior. Plus this is agnotology, which is against our house rules.

    DJG , April 11, 2016 at 9:08 am

    Thanks for this. The problem with the Panama Papers for those of us outside economics and finance is that we don't understand the mechanisms and regulations that ease all of this movement of money. Even though I have stocks in my IRA, it isn't as if the companies report their financial messes in the proxy statements. Au contraire, it's all the glory of Jeffrey Immelt all the time.

    "Finessable": I kind-a like it. Your coinage?

    readerOfTeaLeaves , April 11, 2016 at 4:22 pm

    You may want to check McClatchy's website as they have some explanatory videos and terrific reporting.
    I got started on all the tax haven skullduggery by reading Yves, so it's wonderful to see this getting a far wider, fully documented exposition.

    http://www.mcclatchydc.com

    Also, Nicholas Shaxson's Treasure Islands: Tax Havens and the Men Who Stole the World is one of the best books that I've ever read. His blog is here: http://treasureislands.org

    Earlier this week, a friend said, "Is it a good day?" I said, "It's an AWESOME day! All the sleaze is finally coming out into the sunlight."

    Yves Smith Post author , April 11, 2016 at 8:01 pm

    Yes, Treasure Islands is a terrific book. Highly readable but still covers many of the important technical issues.

    Jim Haygood , April 11, 2016 at 1:46 pm

    'It now takes weeks to open a new account that is not a personal account, say for your rugby club.'

    … which is why workarounds, both old school (gold) and new (anonymous digital currencies), will be found to sidestep the politicization of government currencies, which now come bundled with odious surveillance that makes their use increasingly unattractive.

    Yves Smith Post author , April 11, 2016 at 8:04 pm

    These are both property, not money, and not at all workable for anyone who needs them for transactions. Both are volatile and bitcoin with its blockchain makes its entire history of past holders accessible. That's not a desirable feature for someone hiding from the taxman.

    Micky9finger , April 11, 2016 at 1:56 pm

    the constraint on deficit spending is creating too much inflation).

    Huh?

    Yves Smith Post author , April 11, 2016 at 5:32 pm

    That is correct for fiat currency issuers. This is not any secret if you've been reading about how monetary operations work.

    RBHoughton , April 11, 2016 at 8:25 pm

    Good grief. What's the world coming to? Are we now expected to visit our offshore paradise and suitcase money home? The gentlemen in Customs will be checking every flight from the Caymans.

    "The one Western country that does not have a deadline for complying with the Common Reporting Standard is the US." – Ahh ha – is this part of the solution to falling inwards investment?

    [Apr 10, 2016] Follow the money

    Notable quotes:
    "... Perhaps that's the problem with economics: the economists are so wrapped up in politics they can't tell where one starts and the other ends. Economics becomes nothing more than politics with math thrown in to lend authority to "very serious" agendas. ..."
    "... Much like theology, it's a matter of culture and clique. Fitting they break up the field into Orthodox and Heterodox. Perhaps they should have economic cardinals that elect an economic pope. ..."
    "... "When economic power became concentrated in a few hands, then political power flowed to those possessors and away from the citizens, ultimately resulting in an oligarchy or tyranny." John Adams ..."
    "... Politics and economic matters cannot be separated. Most politics are an expression of economic interests; in fact almost all - things that appear to be about "power", social dominance, and social mores are also mostly motivated by arranging or sustaining an environment where certain groups get to decide matters of the economy at the expense of others. ..."
    "... Have you heard the phrase "follow the money", and even older "cui bono"? It's the same principle. Most motivations are based in economic affairs and conflicts. ..."
    economistsview.typepad.com

    Ron Waller -> Alain Sherter...

    ...Krugman may be an economist, but this politicking op-ed has nothing to do with economics.

    Perhaps that's the problem with economics: the economists are so wrapped up in politics they can't tell where one starts and the other ends. Economics becomes nothing more than politics with math thrown in to lend authority to "very serious" agendas.

    BTW, how are economic ideas established, in any case? We know with science, falsifiable hypotheses are put forward and put to the test. Economists know enough about statistics to hide behind the ethics problem of running economic experiments. Even though they ARE running economic experiments with their Aristotelian notions that almost always get it wrong: from "efficient" taxation nonsense that gives the rich big tax breaks, to investor-protecting inflation targeting that ran the economy into the ground -- which they call the Great Moderation; etc.

    Much like theology, it's a matter of culture and clique. Fitting they break up the field into Orthodox and Heterodox. Perhaps they should have economic cardinals that elect an economic pope.

    likbez -> Ron Waller ...
    Politics is deeply connected to economics. Especially under neoliberalism. It is actually difficult to distinguish two and many economic issues are highly political ("role of the market in the society").

    Moreover:

    "When economic power became concentrated in a few hands, then political power flowed to those possessors and away from the citizens, ultimately resulting in an oligarchy or tyranny." John Adams

    cm -> Ron Waller ...
    Politics and economic matters cannot be separated. Most politics are an expression of economic interests; in fact almost all - things that appear to be about "power", social dominance, and social mores are also mostly motivated by arranging or sustaining an environment where certain groups get to decide matters of the economy at the expense of others.

    Have you heard the phrase "follow the money", and even older "cui bono"? It's the same principle. Most motivations are based in economic affairs and conflicts.

    [Apr 10, 2016] The Repercussions of Financial Booms and Crises by Joseph Joyce

    March 29, 2016 | Angry Bear

    Financial booms have become a chronic feature of the global financial system. When these booms end in crises, the impact on economic conditions can be severe. Carmen M. Reinhart and Kenneth S. Rogoff of Harvard pointed out that banking crises have been associated with deep downturns in output and employment, which is certainly consistent with the experience of the advanced economies in the aftermath of the global crisis. But the after effects of the booms may be even deeper and more long-lasting than thought.

    Gary Gorton of Yale and Guillermo Ordońez of the University of Pennsylvania have released a study of "good booms" and "bad booms," where the latter end in a crisis and the former do not. In their model, all credit booms start with an increase in productivity that allows firms to finance projects using collateralized debt. During this initial period, lenders can assess the quality of the collateral, but are not likely to do so as the projects are productive. Over time, however, as more and more projects are financed, productivity falls as does the quality of the investment projects. Once the incentive to acquire information about the projects rises, lenders begin to examine the collateral that has been posted. Firms with inadequate collateral can no longer obtain financing, and the result is a crisis. But if new technology continues to improve, then there need not be a cutoff of credit, and the boom will end without a crisis. Their empirical analysis shows that credit booms are not uncommon, last ten years on average, and are less likely to end in a crisis when there is larger productivity growth during the boom.

    Claudio Borio, Enisse Kharroubi, Christian Upper and Fabrizio Zampolli of the Bank for International Settlements also look at the dynamics of credit booms and productivity, with data from advanced economies over the period of 1979-2009. They find that credit booms induce a reallocation of labor towards sectors with lower productivity growth, particularly the construction sector. A financial crisis amplifies the negative impact of the previous misallocation on productivity. They conclude that the slow recovery from the global crisis may be due to the misallocation of resources that occurred before the crisis.

    How do international capital flows fit into these accounts? Gianluca Benigno of the London School of Economics, Nathan Converse of the Federal Reserve Board and Luca Forno of Universitat Pompeu Fabra write about capital inflows and economic performance. They identify 155 episodes of exceptionally large capital inflows in middle- and high-income countries over the last 35 years. They report that larger inflows are associated with economic booms. The expansions are accompanied by rises in total factor productivity (TFP) and an increase in employment, which end when the inflows cease.

    Moreover, during the boom there is also a reallocation of resources. The sectoral share of tradable goods in advanced economies, particularly manufacturing, falls during the periods of capital inflows. A reallocation of investment out of manufacturing occurs, including a reallocation of employment if a government refrains from accumulating foreign assets during the episodes of large capital inflows, as well as during periods of abundant international liquidity. The capital inflows also raise the probability of a sudden stop. Economic performance after the crisis is adversely affected by the pre-crisis capital inflows, as well as the reallocation of employment away from manufacturing that took place in the earlier period.

    Alessandra Bonfiglioli of Universitat Pompeu Fabra looked at the issue of financial integration and productivity (working paper here). In a sample of 70 countries between 1975 and 1999, she found that de jure measures of financial integration, such as that provided by the IMF, have a positive relationship with total factor productivity (TFP). This occurred despite the post-financial liberalization increase in the probability of banking crises in developed countries that adversely affects productivity. De facto liberalization, as measured by the sum of external assets and liabilities scaled by GDP, was productivity enhancing in developed countries but not in developing countries.

    Ayhan Kose of the World Bank, Eswar S. Prasad of Cornell and Marco E. Terrones of the IMF also investigated this issue (working paper here) using data from the period of 1966-2005 for 67industrial and developing countries. Like Bonfiglioli, they reported that de jure capital openness has a positive effect on growth in total factor productivity (TFP). But when they looked at the composition of the actual flows and stocks, they found that while equity liabilities (foreign direct investment and portfolio equity) boost TFP growth, debt liabilities have the opposite impact.

    The relationship of capital flows on economic activity, therefore, is complex. Capital inflows contribute to economic booms and may increase TFP, but can end in crises that include "sudden stops" and banking failures. They can also distort the allocation of resources, which affects performance after the crisis. These effects can depend on the types of external liabilities that countries incur. Debt, which exacerbates a crisis, may also adversely divert resources away from sectors with high productivity. Policymakers in emerging markets who think about the long-term consequences of current activities need to look carefully at the debt that private firms in their countries have been incurring.

    cross posted with Capital Ebbs and Flows<

    Warren March 31, 2016 11:14 am
    And therein lies the half of Keynesian Economics that is ignored - running surpluses during the booms to tamp them down, and to have a reserve to pump into the economy during the busts.

    [Mar 23, 2016] Cruz Seeks Economic Wisdom in the Wrong Place

    Notable quotes:
    "... Gramm seems pretty firmly in free market ideologue territory. Cruz deciding to bring him in as an economic advisor is certainly noteworthy. ..."
    "... The short version: the Glass Steagall repeal allowed the banks to become "Too Big To Fail" and gave them enormous political leverage. It's the political leverage - the ability to count on Uncle Sam to come to the rescue, and provide easy terms for rent-seeking - that GLB provided. If they were separated, and only the investment banks could make risky investments, we would let the investment banks fail while protecting the boring old payments system. You won't get an argument on CFMA, however: it was worse. And that has Gramm's fingerprints all over it. And it might not have passed if the SIFIs were smaller. ..."
    "... When I think of the villains of the Great Recession, Phil Gramm is always Public Enemy #1. ..."
    "... The Glass Steagall repeal was not my biggest problem with Phil Gramm. My big problem is he wanted to have a completely deregulated financial sector. Sort of like when Newt Gingrich talked about "rational regulation" which was code for no regulation. But anyone who understands financial economics and our financial system knows that no regulations whatsoever is a recipe for a complete melt down. Which is what happened. ..."
    economistsview.typepad.com
    Barry Ritholtz:

    Cruz Seeks Economic Wisdom in the Wrong Place :

    Some people look at subprime lending and see evil. I look at subprime lending and I see the American dream in action. -- former U.S. Senator Phil Gramm, Nov. 16, 2008

    ...Gramm has been brought on as a senior economic adviser to Republican presidential candidate Ted Cruz. This isn't a promising development for Cruz... Not to put too fine a point on it, but I believe -- as do many others -- that Gramm was one of the major figures who helped set the stage for the crisis. ...

    Gramm was a key sponsor of the ... Gramm-Leach-Bliley Act , which effectively repealed the piece of the Glass-Steagall Act... The damage caused by rolling back Glass-Steagall pales compared with ... the Commodity Futures Modernization Act of 2000 . Gramm was a co-sponsor of the legislation, which exempted many derivatives and swaps from regulation. Not only was the law problematic, but it veered into potential conflict-of-interest territory. ...

    We got a chance to see those consequences a few years later when American International Group failed, thanks in part to swaps ... on $441 billion of securities that turned out to be junk. AIG wasn't required to put up much in the way of collateral, set aside capital or hedge its risk on the swaps. Why would it, when the law said it didn't have to? The taxpayers were then called upon to bailout AIG to the tune of more than $180 billion.

    Maybe it isn't too surprising that Cruz would seek advice from Gramm. Cruz, after all, seems to want to hobble modern economic policy by returning to the gold standard. ... We have seen these movies before, and they end in tragedy and tears.

    He also talks about Gramm's sad performance in his brief appearance as one of McCain's advisors in 2008.

    pgl :

    Phil Gramm says he got his economic degree from the University of Georgia. Well - it was from the Terry College of Business which is a business school. Not the graduate program of economics of the University of Georgia. I guess this makes Gramm one notch above Stephen Moore, Donald Luskin, and Lawrence Kudlow (aka the three stooges).

    pgl :

    The LA Times on Gramm's record on economics:

    http://www.latimes.com/business/hiltzik/la-fi-hiltzik-cruz-gramm-20160321-snap-htmlstory.html

    "Gramm's most notable moment in that position came on July 10, 2008, when he dismissed the developing economic crisis as "a mental recession" in an interview -- and video -- released by the conservative Washington Times. "We've never been more dominant," he said. "We've never had more natural advantages than we have today. We've sort of become a nation of whiners." McCain immediately disavowed the remarks, and a few days later Gramm stepped down as his campaign co-chairman."

    OK that was July. Menzie Chinn always notes that Luskin was saying the same thing as late as September 2008.

    sanjait :
    Gramm seems pretty firmly in free market ideologue territory. Cruz deciding to bring him in as an economic advisor is certainly noteworthy.

    Though I'm still struck by how determined some people seem to lump Graham Leach Bliley in as a cause/major contributor to the crisis.

    The CFMA very plausibly serves that purpose. If we want to mark Gramm as a villain, his sponsorship of that bill should be sufficient, as well as his abject refusal to acknowledge the crisis in real time.

    But for whatever reason people have picked up Glass Steagall as a Very Important rule, and seem to be pushing to rationalize that by claiming it is a big part of the crisis story.

    Ritholtz, to his credit, is qualified and nuanced about this. He notes that CFMA is the big story, and says GLB wasn't didn't "cause" the crisis.

    But following through the links to his WaPo piece, he still looks like he is reaching for a reason to label it a major contributor to the crisis.

    He claims that removing G-S restrictions caused the major banks to in turn cause the shadow banking entities like AIG, Bear, etc. to "bulk up" their holdings of subprime, based on ... nothing that I can see.

    Sure, the major banks were customers and counterparties for those shadow banks, but Ritholtz seems to assume that if G-S weren't in place that demand would somehow have been less. Why?

    Take a major bank with mixed commercial and investment banking activity and split the parts. Would that have changed their activities? Not much. The commercial banking side still would have held MBS (and purchase insurance on them) and the I-banks would still make speculative investments of various types.

    No one, as far as I've seen, ever bothers to tell a complete story where the structural incentives in the financial sector changed as a result of Glass Steagall in a way that materially impacted the depth or serverity of the housing crisis. How would splitting megabanks into separate big C- and I-banks have changed anything? Bueller?

    Instead I see a great many people, including well credentialed economists, just assume or hand waive the claim that it made a big impact without bothering to model or specify it. I'm not saying such an explanation couldn't exist that I'm not aware of ... but at this point I do see the absence of explanation as evidence of absence.

    pgl -> sanjait...
    Gramm dismissing the concern over a recession in the summer of 2008 is the kicker for me!
    Charlie Baker -> sanjait...
    sanjait:

    "But for whatever reason people have picked up Glass Steagall..."

    No need to speculate: Simon Johnson and James Kwak wrote a whole book about it. It's called 13 Bankers:

    https://13bankers.com/

    The short version: the Glass Steagall repeal allowed the banks to become "Too Big To Fail" and gave them enormous political leverage. It's the political leverage - the ability to count on Uncle Sam to come to the rescue, and provide easy terms for rent-seeking - that GLB provided. If they were separated, and only the investment banks could make risky investments, we would let the investment banks fail while protecting the boring old payments system. You won't get an argument on CFMA, however: it was worse. And that has Gramm's fingerprints all over it. And it might not have passed if the SIFIs were smaller.

    When I think of the villains of the Great Recession, Phil Gramm is always Public Enemy #1.

    pgl -> Charlie Baker ...
    The Glass Steagall repeal was not my biggest problem with Phil Gramm. My big problem is he wanted to have a completely deregulated financial sector. Sort of like when Newt Gingrich talked about "rational regulation" which was code for no regulation. But anyone who understands financial economics and our financial system knows that no regulations whatsoever is a recipe for a complete melt down. Which is what happened.
    The Rage :
    Cruz just wants to make money for his buddies while waving the bible. JDR was there 100+ years before that "Ted".

    [Mar 23, 2016] It's not a bull or a bear market, it's a bunny

    finance.yahoo.com

    "Unlike an enthusiastic bull or a scary bear, a bunny market hops about a bit but really doesn't go anywhere, and bunnies have often dominated the stock market during the latter stages of past economic recoveries," Paulsen said in a report this week for clients.

    [Mar 03, 2016] Barriers to Productivity Growth

    economistsview.typepad.com
    Chris Dillow:
    Barriers to productivity growth : "The limits to productivity growth are set only by the limits to human inventiveness" says John Kay. This understates the problem. There are other limits. I'd mention two which I think are under-rated.
    One is competition. Of course, this tends to increase productivity in many ways. But it has a downside. The fear of competition from future new technologies can inhibit investment today: no firm will spend Ł10m on robots if they fear a rival will buy better ones for Ł5m soon afterwards. ...
    The second is that, as Brynjolfsson and MacAfee say , "significant organizational innovation is required to capture the full benefit of…technologies."
    For example, Paul David has described (pdf) how the introduction of electricity into American factories did not immediately raise productivity much, simply because it merely replaced steam engines. It was only when bosses realized that electric motors allowed factories to be reorganized – dispensing with the need for machines to be close to a central power source – that productivity soared, as workflow improved and new cheaper buildings could be used. This took many years.
    It's not just organizational change that's needed, though..., I suspect that if IT is to have (further?) productivity-enhancing effects, they require socio-organizational change. ...
    However, there are always obstacles to the social and organizational change necessary for technical change to lead to productivity gains. These might be cognitive – such as the Frankenstein syndrome or "not invented here " mentality. Or they can be material. Socio-technical change is a process of creative destruction, the losers from which kick up a stink; think of taxi-drivers protesting against Uber.
    Worse still, these losers aren't always politically weak Ludditites. They can be well-connected bosses of incumbent firms, or managers seeking to maintain their power base. ...
    The big question facing us is, therefore: do we have the right set of institutions to foster the socio-organizational change that beget productivity growth? These require a mix of healthy markets, to maximize ecological diversity; a financial system which backs risky new-comers; property rights which incentivise innovation; and state intervention that facilitates all these whilst not being captured by Luddites. If our politics weren't so imbecilic, this question would be getting a lot more attention than it is.

    Related: How concerned should we be about business investment and productivity growth? - Nick Bunker .

    Posted by Mark Thoma on Thursday, March 3, 2016 at 10:51 AM in Economics , Productivity | Permalink Comments (97)

    [Feb 27, 2016] Gazprom plant weitere Pipeline nach Europa

    Google translation.
    welt.de
    Gazprom is under time pressure

    Since the Gazprom long-favored pipeline project South Stream by the end of 2014 due to the European resistance was abandoned, Russia tirelessly seeks for new Pipelinevarianten to secure its dominant position in the lucrative European market. It also tries to hedge supplied. But suppied to Chinese market are not so quick to occur.

    From the point of view of the Russians, time is short, because the Kremlin and Gazprom have decided, the problematic gas transit through Ukraine to Europe from 2019 to shut down, and on other routes to redirect. The fundamental plan does not change, even if Russia's energy Minister last week in an Interview with the "world" did not exclude "that part of the deliveries to continue over the Ukraine is running".

    As a substitute for South Stream was Russia has been an Alternative at the ready: the "Turkish Stream" Pipeline should Gas through the Black sea and via Turkey to the EU border. But it has not been more than a flash in the pan, because the project since the Russian-Turkish upheavals of the past few months has been put on hold.

    New Pipeline plans to increase the pressure on Brussels

    The revival of the Poseidon Pipeline is therefore to become more important. Also as a Signal to the Mediterranean countries. The namely were recently very angry about the Gazprom group, the majority of its energy in the intended Expansion of the Nord Stream Baltic sea pipeline (Nord Stream 2) to Germany to invest in it.

    Nord Stream 2 should the Plan to the existing capacity of 110 billion cubic meters of double, which the majority of Europe in particular Russian gas in Germany would arrive. For comparison: ITGI Poseidon has the original concept after only eight billion cubic meters of capacity, equal to one tenth of the German annual consumption. In total, Gazprom delivered in the previous year 158,56 billion cubic meters of Gas to Europe and, thus, eight percent more than in the weak Exportjahr 2014.

    For Nord Stream 2 has Gazprom, with Shell, BASF, E. on, very interesting to count and OMV five leading European gas companies for a consortium and won the support of individual EU member States. The EU Commission is, however, resists this project, because it is a violation of the EU energy Package, and sees the dependence on Russian Gas supplies anyway would rather like to reduce. With the Poseidon project would have Gazprom at least a small lever to the participants of Nord Stream 2 to get your pressure in Brussels to increase.

    [Feb 20, 2016] US shale gas bluff: combined net natural gas exports from the US and Australia to Europe would be approximately zero.Such a replacement for Russian gas

    Notable quotes:
    "... And as I commented on another post, a couple of years ago Citi Research put the gross decline rate from existing US gas production at about 24%/year. This would be the rate of decline in the absence of new wells. Note that Louisiana showed a 20%/year net rate of decline in total marketed gas production from 2012 to 2014 (this was the net rate of decline after new wells were put on line). So, the Louisiana case history would seem to confirm the CIti estimate. ..."
    "... The estimated volumetric loss of US gas production from existing wells, about 17 BCF/day per year, matches or exceeds the 2014 annual dry gas production of every country in the world, except for the US Russia (2014 BP data). ..."
    peakoilbarrel.com

    Jeffrey J. Brown , 02/20/2016 at 12:31 pm

    Oilpro.com had an article about the EU importing LNG from the US and Australia, in order to reduce their reliance on Russian gas. My response:

    Based on production and consumption data through 2014 (BP), and ignoring changes in storage volumes, in 2014 Russia had net natural gas exports of 16 BCF/day, Australia had net natural gas exports of 2.5 BCF/day and the US had net natural gas imports of 3 BCF/day. So, as of 2014 anyway, combined net natural gas exports from the US + Australia would be approximately zero.

    And as I commented on another post, a couple of years ago Citi Research put the gross decline rate from existing US gas production at about 24%/year. This would be the rate of decline in the absence of new wells. Note that Louisiana showed a 20%/year net rate of decline in total marketed gas production from 2012 to 2014 (this was the net rate of decline after new wells were put on line). So, the Louisiana case history would seem to confirm the CIti estimate.

    The estimated volumetric loss of US gas production from existing wells, about 17 BCF/day per year, matches or exceeds the 2014 annual dry gas production of every country in the world, except for the US & Russia (2014 BP data).

    So, while the Marcellus/Utica Play has some very impressive wells, in round numbers it seems likely that we need the productive equivalent of a new Marcellus Play every year, or the productive equivalent of all of Qatar's gas production every year, just to offset the declines from existing US wells–as the overall US rig count has declined about 70% from the rig counts we have seen in recent years.

    [Feb 13, 2016] Armenia-Iran Deal May Threaten Russia's Natural Gas Market

    11 February 2016 | OilPrice.com
    By Eurasianet

    Economic hopes are rising in Armenia that the country can serve as a trade conduit for Iran now that international sanctions against Tehran are being lifted.

    Armenia has long-standing ties to Iran, and is a member of the Russia-led Eurasian Economic Union (EEU), a factor that potentially increases its attractiveness as a trade partner for Tehran. Yerevan is "an important avenue for both Iran to export through Armenia into that large combined market [EEU], and as a platform for Western engagement in the now opening Iranian market," noted Richard Giragosian, director of the non-governmental Regional Studies Center in the Armenian capital, Yerevan.

    The World Bank's country director for Armenia, Laura Bailey, told RFE/RL's Armenian service in January that stalled energy partnerships between Iran and Armenia could be the first sector to take off.

    Indeed, National Iranian Gas Exports Company Managing Director Alireza Kameli announced on February 7 that Iran is considering increasing five-fold the 1 million cubic meters of gas it sends daily to Armenia, state-run Iranian media reported. At the same time, plans for a new power line to increase Armenia's electricity exports to Iran are developing.

    The gas deal appears to fit into a larger, regional scheme. In December, quadripartite talks took place during which Armenia, Iran, and the Black Sea countries of Georgia and Russia agreed to establish a coordinating group on establishing an energy corridor linking the four countries.

    "We should spare no efforts to connect the Persian Gulf with the Black Sea [via Georgia, Armenia's northern neighbor]," Iranian President Hassan Rouhani told his Armenian counterpart, Serzh Sargsyan in a January 24 phone conversation, Iran's MehrNews agency reported.

    Negotiations already have occurred between Iran and the Georgian government about sending Iranian gas to Georgia via Armenia, Iranian state media reported Kameli, the Iranian gas official, as saying in early January.

    Some Armenian experts are tempering their optimism with caution. Russian-owned companies control an estimated 80 percent of Armenia's energy sector. Energy giant Gazprom runs the gas pipelines from Iran and on to Georgia, and it tends to look askance at competitors who might try to muscle in on their markets. At the same time, no clear sign has emerged that Moscow opposes an increase in Iranian gas exports to Armenia. The Sputnik news agency, a Kremlin mouthpiece, promptly reported Kameli's announcement on February 7.

    Iranian affairs specialist Armen Vardanian at Yerevan's Armenian Institute of International and Security Affairs believes that "Russia will embrace the projects that will not contradict its national interests."

    [Feb 09, 2016] Stability breeds instability

    Economist's View

    New Deal democrat :

    On the specific point of the artilce, this strikes me as a similar theory to Minsky's "stability breeds instability" theory. Also I seem to recall Prof. Thoma posted an article showing that the tightness or looseness of credit conditions were a good long leading indicator of conditions about 2 years later.

    As an expansion goes on, both businesses and consumers take increasing risks, having been previously rewarded for risks taken. Thus they leave less and less of a margin of safety. This makes it easier for any given shock to overcome that margin, causing both businesses and consumers to retrench. Thus a recession begins.

    I'm not sure about businesses, but consumers have been playing it safe throughout most of this recovery, with the personal savings rate increasing over the last few years. So, relatively speaking, for now consumers have a decent margin of safety.

    Ben Groves -> New Deal democrat...
    Right, but the personal savings rate fell well out of line in the 00's and actually contracted in 2007-8. More like restocking than playing it safe.
    likbez -> New Deal democrat...
    In addition gas prices are still low.
    likbez -> New Deal democrat...
    On the specific point of the article, this strikes me as a similar theory to Minsky's "stability breeds instability" theory.


    And that is deeply true. Minsky (actually this is Hegel) was and still is right.

    Hyman Minsky simply stressed that people's response to stability in financial markets always engenders instability as it encourages more risky behavior. Such behavior is not necessarily irrational, as there are profits to be earned and bonuses to collect as long as the good times last.

    In fact, the cycle may extend as long as credit flows and people are hungry for risk. Yet according to Minsky's casino capitalism credit cycle always heads inexorably toward a bust.

    At some point risk and reward became out of whack and people start reposition their portfolios defensively, increasing cash allocations. At this point house of cards folds.

    [Feb 09, 2016] All this obsession with miniscule rate changes has obscured the need for the Fed and politicians to make significant changes

    February 08, 2016 | economistsview.typepad.com

    JohnH said...

    It is certainly appropriate to question the condition and longevity of this 'recovery,' which was never experienced by most Americans, whose incomes are mired back where they were two decades ago.

    Can we infer by all this that liberal economists are finally becoming reflective about the Fed's failure to ignite growth? Old nostrums die hard.

    Unfortunately, all this obsession with miniscule rate changes has obscured the need for the Fed and politicians to make significant changes, so that the benefits of low rates are felt throughout society, not just by Wall Street, the wealthy, and affluent homeowners with mortgages.

    And, instead of constantly arguing against austerity, why not aggressively tout high taxes on the wealthy to pay for stimulus, which would generate economic growth and address inequality in one fell swoop!

    JohnH said in reply to djb...

    djb is obsessed with "the rate."

    Why not get obsessed with the fact that the Fed could not stimulate new rental housing, despite historically low mortgage rates? As a result of the housing shortage, rents are skyrocketing, sucking up incomes, already hit hard by the unending recession. Result: less money available for consumption, more money into the pockets of real estate moguls.

    Why not obsess about real credit card rates, which are higher than they were in 2007? Result: less money available for consumption, more money to VISA and its share holders.

    But no, 'liberal' economists obsess only about "the rate," which affects almost nobody but Wall Street banks, their wealthy clientele, and affluent mortgagees.

    Let's face it, the Fed has failed in part because low rates and their effects failed to trickle down much. But 'liberal' economists could care less about this. All they care about is "the rate!"

    If 'liberal' economists cared half as much about why low rates are not diffusing throughout the economy as they care about "the rate" for Wall Street, then we could believe that they care about the general welfare, not the interests of the 1%.

    [Feb 08, 2016] Tech stock collapse sure looks like bubble popping

    finance.yahoo.com

    Almost all technology stocks are getting hammered yet again on Monday. Salesforce.com (CRM) was down 6% while Facebook (FB) and Microsoft (MSFT) had lost 3%, for example, in morning trading.

    And while many see it as a continuation of Friday's rout sparked by LinkedIn's (LNKD) weak outlook for the rest of the year, the damage has been piling up for weeks. Investors are fleeing almost all tech names over concerns about the slowing global economy in general and a reassessment of the potential growth of online and "cloud" markets more specifically.

    LinkedIn, pummeled by an unprecedented 44% one-day loss Friday, was one of the few tech stocks rising on Monday, as bargain hunters pushed its shares up 3% in early trading. Still, the shares have lost more than half of their value since the end of 2015.

    The widespread tech crash is all the more surprising because almost everyone thought there was no bubble in the tech sector. Last year's market for initial public offerings of tech companies was the slowest since 2009 (and performed poorly throughout the year), slightly more seasoned public tech companies appeared to have already crashed last spring and most of the big tech companies, such as Apple (AAPL), IBM (IBM) and Cisco Systems (CSCO), trailed the market and appeared undervalued by historical measures. Only the so-called FANG stocks -- Facebook, Amazon (AMZN), Netflix (NFLX) and Google's Alphabet (GOOGL) -- did well, with an average return of 83% each in 2015.

    But, it turns out, there was still plenty more downside risk to go around. LinkedIn is still off by more than 40% since it reported earnings after the market closed on Feb 4. Although fourth quarter adjusted earnings per share of 94 cents and revenue of $862 million beat the average Wall Street analyst estimate, the professional social networking company said it would earn only 55 cents on revenue of $820 million in the next quarter. And for the full year of 2016, revenue of $3.6 billion to $3.65 billion was less than the $3.9 billion Wall Street had been expecting.

    Such a modest disappointment has sparked a massive reassessment of the potential for many Internet stocks. With investors in a panicky mood, the carnage has spread across much of the tech sector but stocks with online business strategies similar to LinkedIn's have been hit especially hard. Workday (WDAY), which provides online software for human resources, was down 7% midmorning on Monday and 37% for the year. Twitter (TWTR) lost 4% and was down 35% for the year. And Adobe Systems (ADBE) was off 5% on Monday and 20% for the year. A daily index compiled by venture capital firm Bessemer Venture Partners of 47 publicly traded cloud software stocks lost 17% just on Friday.

    And those famous FANG stocks? They're all down in 2016, as well. After its 3% Monday drop, Facebook was still best of the bunch, showing a modest 4% loss for the year. Amazon was also down 3% on Monday but carries a crushing 28% loss for the year. Netflix was a rare gainer, up 1%, but still off 27% for the year. And Google was down 1% on Monday and 11% for the year.

    [Feb 08, 2016] Momo Bad News JPMs Quant Guru Kolanovic Confirms Tech Bubble Has Burst... Again

    Zero Hedge
    Just over two weeks ago, JPM's Marko Kolanovic, whose unprecedented ability to predict short-term market moves is starting to seem a little bizarre, warned that the next "significant risk for the S&P500" was the bursting of the "macro momentum bubble." Specifically, he said that there is an emerging negative feedback loop that is "becoming a significant risk for the S&P 500" adding that "as some assets are near the top and others near the bottom of their historical ranges, we are obviously not experiencing an asset bubble of all risky assets, but rather a bubble in relative performance: we call it a Macro-Momentum bubble ."

    In retrospect, following tremendous valuation repricings of several tech stocks, last week's LinkedIn devastation being the most notable, he was once again right. And over the weekend, he did what he has every right to do: take another well-deserved victory lap.

    This is what he said in his February Market Commentary: " Tech Bubble Burst ?"

    In our 2016 outlook and recent reports, we identified a macro momentum bubble that developed over the past years. We explained its drivers (central banks, passive assets/momentum strategies, etc.) and called for value to outperform momentum assets. We also highlighted the risk of a bear market and recommended increasing exposure to gold and cash as well as increasing exposure to nondollar assets relative to the S&P 500 (EM Equities, Commodities, Value Stocks, etc.). Our view was that a likely catalyst would be the Fed converging toward ECB/BOJ (rather than proceed with planned ~12 rate hikes by end of 2018). In line with these published forecasts, the best performing assets YTD have been Gold (+9%) and VIX (+20%) while S&P 500 and DXY are down (-7%, and -2%, respectively). Momentum stocks are down more than 10% with an acceleration of the selloff in last days. Emerging Market and Energy stocks are starting to outperform the S&P 500 (MSCI Latin America by +5% and Energy by +1% vs. S&P 500 YTD). This specific pattern of asset moves is consistent with a Value-Momentum convergence. We think the outperformance of value assets over momentum assets is likely to continue .

    Investors often ask us how significant are distortions and risks in equity sectors that are related to a "macro momentum bubble." Specifically, the question is that of valuations in the Technology sector, i.e., "is there a Tech bubble"? Before we share our views, let's first review how passive investing and momentum strategies may have impacted performance of various equity sectors.

    Imagine a world in which most of the assets are passively managed and investors are focused on liquidity and short-term risk/reward. Companies that increased in size recently would keep on increasing, and those that got smaller would see further outflows. Past winners would also be considered low-risk holdings compared to past losers. The most successful managers would be those that replace fundamental valuation with a simple rule: buy what went up yesterday and sell what went down. Passive funds would do the same. It is hard to imagine this makes economic sense long term, but it is close to what equity markets experienced over the past several years. In 2013, the Sharpe ratio of the S&P 500 was ~2.7. Assuming a normal distribution of active asset returns, one could (incorrectly) conclude that being just an average (passive) investor one will outperform ~95% of all active investors. In 2014 and 2015, various momentum strategies delivered Sharpe ratios >2. The winning strategy was not just to go with the crowd, but to do what the crowd did yesterday. This type of trend following does not only apply to extrapolating price trends, but also extrapolating trends in fundamental stock data such as growth and earnings. Beyond a certain point, passive investing and trend following are bound to result in distorted equity valuations and misallocation of capital.

    While some parts of the Technology sector certainly have reasonable and even low valuations (see our US equity strategy outlook), segments of the Tech sector disproportionally benefited from momentum investing as well as investing based on extrapolation of past growth rates . For instance, a popular group of stocks held by investors is known by the abbreviation "FANG" (Facebook, Amazon, Netflix, Google). We use these stocks as an illustration for a broader group of similar stocks that have the highest rankings according to momentum and growth metrics (and surprisingly in some cases even low volatility metrics). Given that traditional value metrics look expensive when applied to this group, one can compare these momentum/growth companies on a new set of metrics. For instance, one can look at the ratio of current price to earnings that the company delivered over all of its lifetime (instead of just the past year). Another metric could be a ratio of CEO or founder's net worth to total company earnings delivered during its lifetime (see below):

    Aggregating all FANG earnings since these companies were listed, one arrives at a ratio of current price to all earnings since inception of ~16x. This can be contrasted to a ratio of price to last years' earnings for all other S&P 500 companies also at ~16x. We think this is extraordinary given that FANGs are neither small nor new companies. In fact, these are some of the largest companies in the S&P 500 and among the largest holdings of US retirees. Given that the three largest FANG stocks are now twice more valuable than the entire US S&P small-cap universe (600 companies), a legitimate question to ask would be " is such a high allocation by long-term investors to these stocks prudent?" Statistically, over a long period of time smaller companies outperform mega-caps ~75% of times. Note also that the current size ratio of mega-cap stocks to small-cap stocks is at highest level since the tech bubble of 2000. Furthermore, such allocation is also questionable from a risk angle . For example, the idiosyncratic risk of holding three stocks in one sector is certainly much higher than the risk of owning, e.g., ~1,000 medium- or small-cap companies diversified across all sectors and industries.

    Investors in high-growth stocks expect innovations to drive growth and sustain high valuation. They may even put their hopes in moonshot projects such as cars built by electronics makers, car makers building spaceships, or internet companies building drones. While many of these could result in important technological breakthroughs, they may also be signs of excess and destruction of shareholders' capital in the future. Recent examples of capital impairment in the tech sector are illustrated here and here, and more peculiar examples of past excess can be found here and here. In addition to extrapolated and often optimistic growth forecasts, some of the tech sub-industries have high idiosyncratic risks that are likely underappreciated by the market. Standard valuations models incorporate revenue, growth, and profit forecasts but often do not discount for the lifecycle risk of a business. To illustrate: while we are still traveling in aircraft designed over 40 years ago, social network users' preferences have changed drastically over the past decade (e.g., Friendster and Myspace). A shorter lifecycle is related to low barriers to entry and rapid changes in what is deemed fashionable by young generations (e.g., one cannot build a jetliner in a dorm room, and they don't go out of fashion as apps do).

    In summary, we think that the biases of momentum investing and passive indexation have resulted in valuation distortions across assets as well as equity segments including Technology . Over the past years this trend has picked winning assets, sectors, and stocks often with less regard to fundamental valuation and more regard to momentum and extrapolated growth. We believe that 2016 may result in a reversion of this trend that will give an opportunity to active and value investors to outperform passive indices and momentum investors . Even if this rebalancing comes as a result of market volatility and broader equity declines, long term it will benefit capital markets and the efficient allocation of capital .

    * * *

    Only problem is that this capital reallocation will means countless momentum chasers 'smart money managers' will be out of a job in very short notice.

    Then again, judging by some initial reactions, even formerly steadfast believers in the FANGs are starting to bail: moments ago CNBC reported that Mark Cuban announced that he purchased options to sell against his entire stake in Netflix, to wit: "For those of following my stock moves, I just bought puts against my entire Netflix position. "

    Cuban posted comments on Cyber Dust social media platform on Friday. Result: NFLX already down -4%, with FB and other tech momos hot on its heels.

    [Feb 03, 2016] Global gas market braced for price war

    Do FT honchos know that the USA is importer of natural gas and will stay as such in foreseeable future due to decimation of shale oil/gas sector. See http://www.eia.gov/dnav/ng/ng_move_impc_s1_a.htm
    Notable quotes:
    "... Finally, like Saudi Arabia in oil, Gazprom is one of the lowest-cost gas producers. According to calculations by Mr Henderson at OIES, the cost to Gazprom of delivering its gas to Germany is $3.5 per mmbtu (million British thermal unit) - compared with an estimated $4.3 per mmbtu break-even for US LNG supplies despite US gas prices trading near 16-year lows. ..."
    "... Gazprom's contract prices, which are largely tied to oil prices, have kept pace with the spot gas market decline and are likely to fall further in the next six to nine months. ..."
    FT.com

    ... ... ...

    Just as Saudi Arabia is the main swing producer for the global oil market thanks to its ability to ramp up production if needed, Gazprom is the main holder of spare capacity in the global gas market.

    According to Gazprom executives, the company has about 100bn cu m of spare production capacity - thanks largely to investments made on over-optimistic assumptions about future gas demand - equivalent to almost a quarter of its production and about 3 per cent of world output.

    And just as Saudi Arabia has been unnerved by the prospect of US shale oil producers eroding its market share, Gazprom faces a similar prospect in the gas market. The flood of cheap gas unleashed by the US shale boom has prompted a wave of US LNG projects in recent years. The first cargo of LNG from the "lower 48" contiguous states of the US is due to be shipped in the next two months, and the total export capacity under construction is equivalent to two-thirds of Gazprom's exports to Europe.

    Finally, like Saudi Arabia in oil, Gazprom is one of the lowest-cost gas producers. According to calculations by Mr Henderson at OIES, the cost to Gazprom of delivering its gas to Germany is $3.5 per mmbtu (million British thermal unit) - compared with an estimated $4.3 per mmbtu break-even for US LNG supplies despite US gas prices trading near 16-year lows.

    Chart - Gazprom has the lowest production costs

    Put all those facts together, and it would seem to make sense for the Russian company to push down prices to keep US LNG out of the market.

    "Now the market is getting excited about it; but also the Russians have done their maths and they know they can win if it happens," says Thierry Bros, European gas analyst at Société Générale in Paris.

    Such a move would be cheaper to implement now because European gas prices have already fallen dramatically - spot UK gas prices are down 50 per cent in the past two years. Gazprom's contract prices, which are largely tied to oil prices, have kept pace with the spot gas market decline and are likely to fall further in the next six to nine months.

    Mr Bros estimates it would cost Gazprom $1.3bn in lost revenues to price US LNG out of the market this year - less than 1 per cent of its historical annual sales.

    Gazprom executives have studied the economics of the price war approach and are discussing the issue, according to people familiar with the company's thinking.

    At a meeting with investors in New York this week, Alexander Medvedev, Gazprom's deputy chief executive, argued that low spot prices in Europe had already made US LNG supplies uneconomical. "Despite the prevailing view on the market that North American LNG can change the current pricing model in Europe, in reality this is not the case at all," he said.

    ... ... ...

    [Jan 26, 2016] Saving the Banks and Fabulously Enriching a Few On the Back of the Real Economy

    Notable quotes:
    "... It has become a machine for transferring income, wealth, ownership, and power to the very top. This is not the new normal. This is financial corruption and the erosion of systemic integrity. Are there any markets that have not been shown to have been systematically manipulated, for years? This is just institutionalized looting. ..."
    Jesse's Café Américain
    "Give a small number of people the power to enrich themselves beyond everyone's wildest dreams, a philosophical rationale to explain all the damage they're causing, and they will not stop until they've run the world economy off a cliff."

    Philipp Meyer

    "Wall Street is not being made a scapegoat for this crisis: they really did this."

    Michael Lewis

    "My daughter asked me when she came home from school, "What's the financial crisis?" and I said, it's something that happens every five to seven years."

    Jamie Dimon

    "The greatest tragedy would be to accept the refrain that no one could have seen this coming, and thus nothing could have been done. If we accept this notion, it will happen again."

    Financial Crisis Inquiry Commission (2009–2011)

    The US has been in a cycle of bubbles, busts, and crashes since at least 1995, and more likely since Alan Greenspan became the Chairman of the Federal Reserve in August, 1987.

    The cycle is the same, only the depth and duration seems to change in a continuing 'wash and rinse' of the public money and the real economy.

    It has become a machine for transferring income, wealth, ownership, and power to the very top. This is not 'the new normal.' This is financial corruption and the erosion of systemic integrity. Are there any markets that have not been shown to have been systematically manipulated, for years? This is just institutionalized looting.

    [Jan 03, 2016] Irving Berlin on Taxes

    Notable quotes:
    "... I am always struck by the difference between the oligarchs of today and those (a very small group) who ran the uk in the late 17 and 18 century. Proud, brutal but they taxed themselves as necessary to build effective institutions and instruments in the service of common goals ..."
    "... in this culture we recognize the Midas touch as a positive good, rather than the curse the Greeks knew it to be. ..."
    "... My feeling has always been that taxes are the price you pay to live in a civilized society. Conservatives are obviously opposed to that. ..."
    "... An even more commercially successful writer, J. K. Rowling, has expressed similar enlightened views. There ought to be a hall of fame for such folks. ..."
    "... To become a hedge fund billionaire you can have no heart and you can have no soul. You must be a ruthless predatory bastard with no concern for morality or justice. So it is not surprising that the question of whether you owe something to others doesnt really register with hedge fund billionaires. ..."
    economistsview.typepad.com
    Chris Dillow on our " narcisstocracy ":
    Irving Berlin on taxes : The New York Times reports on how some of the US's richest men are dodging taxes. Compare this to the response of Irving Berlin when his lawyer offered him a tax shelter:
    I want to pay taxes. I love this country.
    He even wrote a song expressing this sentiment. He said: "I owe all my success to my adopted country." ...
    He embodied -- knowingly so -- a point made by Herbert Simon, that we westerners owe our fortunes not so much to our own efforts but to the good luck of living in societies which enable us to prosper - which have peace, the rule of law and material and intellectual resources ...
    Now, songwriting is pretty much as individualistic an activity as one can find; But even songwriters require a conducive environment such as musical traditions on which to draw and a marketplace for their work. Berlin knew this: 1930s Siberia had no equivalent of Tin Pan Alley or Hollywood.
    If even songwriters owe their wealth to social capital, how much more true is this of hedge fund managers. They would be nothing without wealthy investors or large liquid financial markets: how many billionaire fund managers are there in Burkina Faso?
    Which poses the question: why, then, don't hedge fund managers have the same attitude to paying tax as Irving Berlin? It could be that they are more motivated ... by personal greed. But there might be another reason..., they believe their wealth is the product of their own "talent" and so they are entitled to it... Others of us prefer to call it an example of one of the disfiguring diseases of our time - narcissism.
    Perhaps there's another explanation, though. Maybe hedge fund billionaires are greater geniuses than Irving Berlin who have contributed more to human happiness. But how likely is this?

    ilsm:

    More of Berlin:

    https://en.wikipedia.org/wiki/Stay_Down_Here_Where_You_Belong

    Groucho Marx did that one on Dick Cavitt.

    pgl:

    "The New York Times reports on how some of the US's richest men are dodging taxes."

    But Jay Bird just today declared corporations ARE paying their taxes. Really? There is no such thing as Base Erosion and Profit Shifting?

    pgl -> Jay...

    You need to get a life. Start with laying off the booze.

    Roland:

    I am always struck by the difference between the oligarchs of today and those (a very small group) who ran the uk in the late 17 and 18 century. Proud, brutal but they taxed themselves as necessary to build effective institutions and instruments in the service of common goals

    EMichael:

    Berlin realized that he did not build that.

    Robert Marshall:

    What is more likely is that songwriting and billionairing require very different character traits to reach the top. I wish I knew what it took to be a songwriter, but to be a billionaire, you have to think the right way to go about life is to try to get as much as you can for as little as you have to give up, and not even that if you can get out of it. And yet in this culture we recognize "the Midas touch" as a positive good, rather than the curse the Greeks knew it to be.

    SomeCallMeTim:

    Is it unseemly to infer that maybe these MOTUs hear the same dogwhistle symphony they fund? Or are they above that sort of thing, and just 'have a business to run'?

    DrDick:

    My feeling has always been that taxes are the price you pay to live in a civilized society. Conservatives are obviously opposed to that.

    Jay -> DrDick...

    You take the mortgage interest deduction?

    Tax dodger!

    DrDick -> Jay...

    I rent.

    DrDick -> DrDick...

    And I take essentially nothing except the personal deduction.

    Ken D :

    An even more commercially successful writer, J. K. Rowling, has expressed similar enlightened views. There ought to be a hall of fame for such folks.

    Benedict@Large -> Ken D ...

    Why is everyone so concerned with diagnosis? We know that great piles of money in few hands leads to no good, and that is enough. Tax it away. Then let the formerly rich use their newly-freed time writing poems describing the beauty of skimming from other people's cash flows.

    DeDude:

    To become a hedge fund billionaire you can have no heart and you can have no soul. You must be a ruthless predatory bastard with no concern for morality or justice. So it is not surprising that the question of whether you "owe" something to others doesn't really register with hedge fund billionaires.

    Recommended Links

    Google matched content

    Softpanorama Recommended

    Top articles

    Oldies But Goodies

    [Dec 15, 2017] Rise and Decline of the Welfare State, by James Petras

    [Dec 05, 2017] Controlling speculation in world financial markets Progressive Christians Uniting by Gordon K Douglass

    [Dec 03, 2017] Another Democratic party betrayal of their former voters. but what you can expect from the party of Bill Clinton?

    [Nov 29, 2017] Secular Stagnation: The Time for One-Armed Policy is Over

    [Nov 29, 2017] Michael Hudson: The Wall Street Economy is Draining the Real Economy

    [Nov 29, 2017] Positive Feedback Loops, Financial Instability, The Blind Spot Of Policymakers

    [Nov 29, 2017] Attack on Sanders Economic Plan By Former Chairs of the Council of Economic Advisors Irresponsible

    [Nov 27, 2017] College Is Wildly Exploitative Why Arent Students Raising Hell

    [Nov 05, 2017] China and the US Rational Planning and Lumpen Capitalism by James Petras

    [Oct 29, 2017] If You Look Behind Neoliberal Economists, You'll Discover the Rich: How Economic Theories Serve Big Business

    [Oct 25, 2017] Tomorrow Belongs to the Corporatocracy by C.J. Hopkins

    [Oct 24, 2017] Goldman Sachs ruling America by Gary Rivlin, Michael Hudson

    [Oct 13, 2017] Sympathy for the Corporatocracy by C. J. Hopkins

    [Oct 10, 2017] The US Economy: Explaining Stagnation and Why It Will Persist by Thomas I. Palley

    [Oct 08, 2017] Financialization: theoretical analysis and historical perspectives by Costas Lapavitsas

    [Oct 07, 2017] Finances hold on our everyday life must be broken by Costas Lapavitsas

    [Oct 06, 2017] Prof. Philip Mirowski keynote for Life and Debt conference

    [Oct 01, 2017] Neoliberal economic policies in the United States The impact of globalisation on a `Northern country by Kim Scipes

    [Sep 25, 2017] Free market as a neoliberal myth, the cornerstone of neoliberalism as a secular religion

    [Sep 18, 2017] Its always bizarre who easily neoliberals turn into hawkish and warmongering jerks

    [Sep 11, 2017] Neo-classical economics as a new flat earth cult

    [Sep 11, 2017] The only countervailing force, unions, were deliberately destroyed. Neoliberalism needs to atomize work force to function properly and destroys any solidarity among workers. Unions are anathema for neoliberalism, because they prevent isolation and suppression of workers.

    [Sep 11, 2017] Around 1970 corporate managers and professionals realized that they shared the same education, background and interests with capital owners and realigned themselves, abandoning working class and a large part of lower middle class (small business owners)

    [May 08, 2017] Karl Polanyi for President by Patrick Iber and Mike Konczal

    [May 08, 2017] Karl Polanyi for President by Patrick Iber and Mike Konczal

    [May 01, 2017] Trump: A Resisters Guide by Wesley Yang

    [Dec 14, 2018] Neoliberalism has spawned a financial elite who hold governments to ransom by Deborah Orr

    [Dec 08, 2018] Neocons Sabotage Trump s Trade Talks - Huawei CFO Taken Hostage To Blackmail China

    [Dec 03, 2018] Neoliberalism is a modern curse. Everything about it is bad and until we're free of it, it will only ever keep trying to turn us into indentured labourers. It's acolytes are required to blind themselves to logic and reason to such a degree they resemble Scientologists or Jehovah's Witnesses more than people with any sort of coherent political ideology, because that's what neoliberalism actually is... a cult of the rich, for the rich, by the rich... and it's followers in the general population are nothing but moron familiars hoping one day to be made a fully fledged bastard.

    [Nov 27, 2018] The political fraud of Alexandria Ocasio-Cortez's "Green New Deal"

    [Nov 27, 2018] American capitalism could afford to make concessions assiciated with The New Deal because of its economic dominance. The past forty years have been characterized by the continued decline of American capitalism on a world stage relative to its major rivals. The ruling class has responded to this crisis with a neoliberal counterrevolution to claw back all gains won by workers. This policy has been carried out under both Democratic and Republican administrations and with the assistance of the trade unions.

    [Nov 23, 2018] Sitting on corruption hill

    [Nov 03, 2018] Kunstler The Midterm Endgame Democrats' Perpetual Hysteria

    [Sep 27, 2018] The power elites goal is to change its appearance to look like something new and innovative to stay ahead of an electorate who are increasingly skeptical of the neoliberalism and globalism that enrich the elite at their expense.

    [Sep 25, 2018] The entire documentary "The Spider's Web: Britain's Second Empire" by Michael Oswald is worth watching as an introduction to the corruption in the global finance industry.

    [Aug 22, 2018] The US financial sector has manifestly failed at allocating capital properly and is filled with rent seeking by Anatoly Karlin

    [Aug 19, 2018] End of "classic neoliberalism": to an extent hardly imaginable in 2008, all the world's leading economies are locked in a perpetually escalating cycle of economic warfare.

    [Aug 10, 2018] On Contact: Casino Capitalism with Natasha Dow Schull

    [Jul 28, 2018] American Society Would Collapse If It Were not For These 8 Myths by Lee Camp

    [Jul 16, 2018] Five Things That Would Make The CIA-CNN Russia Narrative More Believable

    [Jul 16, 2018] Why the Media is Desperate to Reclaim its Gatekeeper Status for News Zero Hedge Zero Hedge

    [Jul 03, 2018] When you see some really successful financial speculator like Soros or (or much smaller scale) Browder, search for links with intelligence services to explain the success or at least a part of it related to xUSSR space , LA and similar regions

    [Jun 25, 2018] The review of A Brief History of Neoliberalism by David Harvey by Michael J. Thompson

    [Jun 19, 2018] How The Last Superpower Was Unchained by Tom Engelhardt

    [Jun 17, 2018] The Necessity of a Trump-Putin Summit by Stephen F. Cohen

    [Jun 17, 2018] Neoliberalism as socialism for the banks

    [May 30, 2018] How Media Amnesia Has Trapped Us in a Neoliberal Groundhog Day

    [May 29, 2018] Guccifer 2.0's American Fingerprints Reveal An Operation Made In The USA by Elizabeth Lea Vos

    [Apr 23, 2018] Neoliberals are statists, much like Trotskyites are

    [Apr 01, 2018] Does the average user care if s/he is micro-targetted by political advertisements based on what they already believe?

    [Mar 31, 2018] RFK and Nixon immediately understood the assassination was a CIA-led wet-works operation since they chaired the assassination committees themselves in the past

    [Mar 30, 2018] The Death Of The Liberal World Order by Leonid Savin

    [Mar 12, 2018] There is no democracy without economic democracy by Jason Hirthler

    [Mar 12, 2018] Colonizing the Western Mind using think tanks

    [Mar 11, 2018] Washington s Century-long War on Russia by Mike Whitney

    [Mar 02, 2018] The main reason much of the highest echelons of American power are united against Trump might be that they're terrified that -- unlike Obama -- he's a really bad salesman for the US led neoliberal empire. This threatens the continuance of their well oiled and exceedingly corrupt gravy train

    [Jan 02, 2018] Who Is the Real Enemy by Philip Giraldi

    [Dec 31, 2017] Is [neo]Liberalism a Dying Faith by Pat Buchanan

    [Sep 10, 2019] Neoliberal Capitalism at a Dead End by Utsa Patnaik and Prabhat Patnaik

    [Sep 09, 2019] What's the True Unemployment Rate in the US? by Jack Rasmus

    [Jul 29, 2019] Michael Hudson Trump s Brilliant Strategy to Dismember US Dollar Hegemony by Michael Hudson

    [Jul 24, 2019] Elizabeth Warren Seeks to Cut Private Equity Down to Size

    [Jul 12, 2019] Nine Consequences of the Upcoming US-China Trade War by Renaud Anjoran

    [Jul 05, 2019] Globalisation- the rise and fall of an idea that swept the world - World news by Nikil Saval

    [Jun 09, 2019] The looming 100-year US-China conflict by Martin Wolf

    [May 19, 2019] Some Shocking Facts on the Concentration of Ownership of the US Economy

    [May 14, 2019] Trump desperately needs a trade deal with China as he gears up for his re-election bid in 2020.

    [May 11, 2019] Has Privatization Benefitted the Public? by Jomo Kwame Sundaram

    [Mar 31, 2019] Because of the immediate arrival of the Russia collusion theory, neither MSM honchos nor any US politician ever had to look into the camera and say, I guess people hated us so much they were even willing to vote for Donald Trump

    [Mar 29, 2019] Trumps billionaire coup détat: Donald Trump is about to break the record of withdrawing his promises faster than any other US president in history

    [Feb 26, 2019] THE CRISIS OF NEOLIBERALISM by Julie A. Wilson

    [Feb 05, 2019] The bottom line is that this preoccupation with the 'headline number' for the current month as a single datapoint that is promoted by Wall Street and the Government for official economic data is a nasty neoliberal propaganda trick. You need to analise the whole time serioes to get an objective picture

    [Feb 03, 2019] Neoliberalism and Christianity

    [Jan 29, 2019] The Religious Fanaticism of Silicon Valley Elites by Paul Ingrassia

    [Jan 24, 2019] No One Said Rich People Were Very Sharp Davos Tries to Combat Populism by Dean Baker

    [Jan 13, 2019] There is no free market! It's all crooked by financial oligarchy!

    [Jan 12, 2019] Tucker Carlson Mitt Romney supports the status quo. But for everyone else, it's infuriating Fox News

    [Jan 12, 2019] Tucker Carlson has sparked the most interesting debate in conservative politics by Jane Coaston

    [Jan 11, 2019] How Shocking Was Shock Therapy

    [Jan 08, 2019] The smaller the financial sector is the more real wealth there is for the rest of society to enjoy. The bigger the financial sector becomes the more money it siphons off from the productive sectors

    [Jan 08, 2019] Rewriting Economic Thought - Michael Hudson

    [Jan 08, 2019] The Financial Sector Is the Greatest Parasite in Human History by Ben Strubel

    [Jan 08, 2019] No, wealth isn t created at the top. It is merely devoured there by Rutger Bregman

    [Jan 07, 2019] The 1920's were marked by a credit expansion, a significant growth in consumer debt, the creation of asset bubbles, and the proliferation of financial instruments and leveraged investments. Now we have exactly the same trends

    [Dec 29, 2019] The Collapse of Neoliberalism by Ganesh Sitaraman

    Sites



    Etc

    Society

    Groupthink : Two Party System as Polyarchy : Corruption of Regulators : Bureaucracies : Understanding Micromanagers and Control Freaks : Toxic Managers :   Harvard Mafia : Diplomatic Communication : Surviving a Bad Performance Review : Insufficient Retirement Funds as Immanent Problem of Neoliberal Regime : PseudoScience : Who Rules America : Neoliberalism  : The Iron Law of Oligarchy : Libertarian Philosophy

    Quotes

    War and Peace : Skeptical Finance : John Kenneth Galbraith :Talleyrand : Oscar Wilde : Otto Von Bismarck : Keynes : George Carlin : Skeptics : Propaganda  : SE quotes : Language Design and Programming Quotes : Random IT-related quotesSomerset Maugham : Marcus Aurelius : Kurt Vonnegut : Eric Hoffer : Winston Churchill : Napoleon Bonaparte : Ambrose BierceBernard Shaw : Mark Twain Quotes

    Bulletin:

    Vol 25, No.12 (December, 2013) Rational Fools vs. Efficient Crooks The efficient markets hypothesis : Political Skeptic Bulletin, 2013 : Unemployment Bulletin, 2010 :  Vol 23, No.10 (October, 2011) An observation about corporate security departments : Slightly Skeptical Euromaydan Chronicles, June 2014 : Greenspan legacy bulletin, 2008 : Vol 25, No.10 (October, 2013) Cryptolocker Trojan (Win32/Crilock.A) : Vol 25, No.08 (August, 2013) Cloud providers as intelligence collection hubs : Financial Humor Bulletin, 2010 : Inequality Bulletin, 2009 : Financial Humor Bulletin, 2008 : Copyleft Problems Bulletin, 2004 : Financial Humor Bulletin, 2011 : Energy Bulletin, 2010 : Malware Protection Bulletin, 2010 : Vol 26, No.1 (January, 2013) Object-Oriented Cult : Political Skeptic Bulletin, 2011 : Vol 23, No.11 (November, 2011) Softpanorama classification of sysadmin horror stories : Vol 25, No.05 (May, 2013) Corporate bullshit as a communication method  : Vol 25, No.06 (June, 2013) A Note on the Relationship of Brooks Law and Conway Law

    History:

    Fifty glorious years (1950-2000): the triumph of the US computer engineering : Donald Knuth : TAoCP and its Influence of Computer Science : Richard Stallman : Linus Torvalds  : Larry Wall  : John K. Ousterhout : CTSS : Multix OS Unix History : Unix shell history : VI editor : History of pipes concept : Solaris : MS DOSProgramming Languages History : PL/1 : Simula 67 : C : History of GCC developmentScripting Languages : Perl history   : OS History : Mail : DNS : SSH : CPU Instruction Sets : SPARC systems 1987-2006 : Norton Commander : Norton Utilities : Norton Ghost : Frontpage history : Malware Defense History : GNU Screen : OSS early history

    Classic books:

    The Peter Principle : Parkinson Law : 1984 : The Mythical Man-MonthHow to Solve It by George Polya : The Art of Computer Programming : The Elements of Programming Style : The Unix Hater’s Handbook : The Jargon file : The True Believer : Programming Pearls : The Good Soldier Svejk : The Power Elite

    Most popular humor pages:

    Manifest of the Softpanorama IT Slacker Society : Ten Commandments of the IT Slackers Society : Computer Humor Collection : BSD Logo Story : The Cuckoo's Egg : IT Slang : C++ Humor : ARE YOU A BBS ADDICT? : The Perl Purity Test : Object oriented programmers of all nations : Financial Humor : Financial Humor Bulletin, 2008 : Financial Humor Bulletin, 2010 : The Most Comprehensive Collection of Editor-related Humor : Programming Language Humor : Goldman Sachs related humor : Greenspan humor : C Humor : Scripting Humor : Real Programmers Humor : Web Humor : GPL-related Humor : OFM Humor : Politically Incorrect Humor : IDS Humor : "Linux Sucks" Humor : Russian Musical Humor : Best Russian Programmer Humor : Microsoft plans to buy Catholic Church : Richard Stallman Related Humor : Admin Humor : Perl-related Humor : Linus Torvalds Related humor : PseudoScience Related Humor : Networking Humor : Shell Humor : Financial Humor Bulletin, 2011 : Financial Humor Bulletin, 2012 : Financial Humor Bulletin, 2013 : Java Humor : Software Engineering Humor : Sun Solaris Related Humor : Education Humor : IBM Humor : Assembler-related Humor : VIM Humor : Computer Viruses Humor : Bright tomorrow is rescheduled to a day after tomorrow : Classic Computer Humor

    The Last but not Least Technology is dominated by two types of people: those who understand what they do not manage and those who manage what they do not understand ~Archibald Putt. Ph.D


    Copyright © 1996-2021 by Softpanorama Society. www.softpanorama.org was initially created as a service to the (now defunct) UN Sustainable Development Networking Programme (SDNP) without any remuneration. This document is an industrial compilation designed and created exclusively for educational use and is distributed under the Softpanorama Content License. Original materials copyright belong to respective owners. Quotes are made for educational purposes only in compliance with the fair use doctrine.

    FAIR USE NOTICE This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available to advance understanding of computer science, IT technology, economic, scientific, and social issues. We believe this constitutes a 'fair use' of any such copyrighted material as provided by section 107 of the US Copyright Law according to which such material can be distributed without profit exclusively for research and educational purposes.

    This is a Spartan WHYFF (We Help You For Free) site written by people for whom English is not a native language. Grammar and spelling errors should be expected. The site contain some broken links as it develops like a living tree...

    You can use PayPal to to buy a cup of coffee for authors of this site

    Disclaimer:

    The statements, views and opinions presented on this web page are those of the author (or referenced source) and are not endorsed by, nor do they necessarily reflect, the opinions of the Softpanorama society. We do not warrant the correctness of the information provided or its fitness for any purpose. The site uses AdSense so you need to be aware of Google privacy policy. You you do not want to be tracked by Google please disable Javascript for this site. This site is perfectly usable without Javascript.

    Last modified: April, 01, 2020