We seem to have stepped into the fifth century--or the 15th: in the latter, economists posited that the strength of nations was measured in holdings of gold and silver. Therefore, nations tried to hoard as much as they could, beggaring their neighbors. While the Ron Paulists subscribe to the 15th century theory, most Tea Partiers are much more enamored of magical thinking--like Romans of the fifth century.
For Paulists, paper currency is anathema. Paper, or fiat money, can be managed by central banks like the Fed, whereas only the market manages gold. If you have more gold than other nations, you're rich, if not, not. If that leaves you without capital to develop your nation, tough luck, unless you sell out to the global elite.
The magical thinkers, on the other hand, believe that if you cut government spending in a recession, you create jobs. If there is even less money earned or spent in the economy, how does that create jobs? Corporations and small businesses expand and hire in response to perceived demand for their products or services. They're not hiring for lack of capital, but because people have too little money; you can't grow demand for goods and services with less consumption. As more become unemployed, there will be even less money to sustain purchases.
So, why would cutting the deficit create jobs? It requires cutting jobs, cutting programs that create jobs, and cutting payments to hospitals, seniors and poor people, making less money available to buy goods and services. If someone's Social Security is slashed, he's going to be more frugal; he may be unable to keep up his house payments: less money is spent in the economy. A default on a home even subtracts wealth. Finally, Republicans insist: you can't possibly raise taxes on the one segment of the population that is actually doing very well.
The argument (or propaganda line) is: they're "job creators," so you can't raise their taxes, or they won't create jobs. But they don't create jobs; they invest in places like China. Why? In China, there is surging demand for goods and services.
Demand creates jobs, not millionaires/billionaires; they just take advantage of demand--when it's there. They go elsewhere when it's not, or 'invest' in speculation, or, like fifth century Roman Senators, in gold. Roman Senators didn't survive long after Rome's fall.
The worst time to cut the deficit is in a recession: expenditure cuts cause lower government revenues and increase the need for government relief--thereby increasing deficits, and the nation's debt.
Yet, Obama offered devastating cuts, and puny tax increases in the debt-ceiling talks; Republicans walked out, refusing to raise taxes at all.
Only a small rump of Democrats still lives in the 21st century: they object to needless cuts and demand government jobs programs plus tax increases for the wealthy.
Sunday, July 24, 2011
Thursday, July 21, 2011
Selling Out to the Devil
I don't believe in an actual devil, but I do believe that people sell out to the one they conjure up themselves. Anyone who saw Rupert and James Murdoch probably perjure themselves in front of the British Parliament may have had some inkling of this.
What has Rupert Murdoch, and his son, done to the so-called 'information industry?' Rupert clearly has a conservative, or simply pro-Murdoch politics, but what he's specialized in is sleaze that purports to be news, so that he can titillate and horrify and excite, and appeal to the basest of instincts, like ghouls sniffing at corpses. And at the same time, he specializes in misinforming his publics so that he can make even more money with even fewer restraints.
An honest and honorable man, captain of a huge corporation, would take responsibility, like the captain of a ship. But no, Rupert and his son deny all responsibility. Funny, how hacking into phones, and bribing for information do not seem to be limited to just one publication, News of the World, or even one country, the UK. It must have been, um, someone else, one of his employees, someone who has betrayed him. Right. Rachel Maddow pointed out parallel findings for some of Murdoch's American holdings several nights ago.
It wouldn't be fair to blame Murdoch for all the trivialization of the media, the sensationalism of it, the depraved depths to which it now sinks. But Murdoch has had a marked influence on the degradation of news, which he, and his emulators, only see as "product" that can be sold; the more gruesome, disgusting or exploitative a 'true' story, the better the 'product,' because it gains more audience.
There is another side to this sordid news: it rivets the masses' attention, so they don't even care that Rupert, and others, are ripping them off, front, right and center. And Rupert's political ideas are subtly, or not so subtly driven home: the best government is the one that leaves him, or others like him, alone to prey on everyone else.
People like Murdoch, and the leaders of banks and hedge funds, are in business to seize everyone else's wealth; like Mitt Romney, they play at being "job creators."
Republican politicians are almost all either part of this predator class, or spokesmen/women for it. Democrats are a more mixed bag: there certainly are Democratic politicians who are conscientious, and who have a sense of the interests of the voters they represent; they may even share them, or they may, at least, try to represent them. There are other 'Democrats,' unfortunately, who either are, or share the interests of the predators; in subtle or not so subtle ways, they have been bought off.
Predators: the selfish class, like the Roman Senators of fifth century Rome, is like Rupert Murdoch today.
What has Rupert Murdoch, and his son, done to the so-called 'information industry?' Rupert clearly has a conservative, or simply pro-Murdoch politics, but what he's specialized in is sleaze that purports to be news, so that he can titillate and horrify and excite, and appeal to the basest of instincts, like ghouls sniffing at corpses. And at the same time, he specializes in misinforming his publics so that he can make even more money with even fewer restraints.
An honest and honorable man, captain of a huge corporation, would take responsibility, like the captain of a ship. But no, Rupert and his son deny all responsibility. Funny, how hacking into phones, and bribing for information do not seem to be limited to just one publication, News of the World, or even one country, the UK. It must have been, um, someone else, one of his employees, someone who has betrayed him. Right. Rachel Maddow pointed out parallel findings for some of Murdoch's American holdings several nights ago.
It wouldn't be fair to blame Murdoch for all the trivialization of the media, the sensationalism of it, the depraved depths to which it now sinks. But Murdoch has had a marked influence on the degradation of news, which he, and his emulators, only see as "product" that can be sold; the more gruesome, disgusting or exploitative a 'true' story, the better the 'product,' because it gains more audience.
There is another side to this sordid news: it rivets the masses' attention, so they don't even care that Rupert, and others, are ripping them off, front, right and center. And Rupert's political ideas are subtly, or not so subtly driven home: the best government is the one that leaves him, or others like him, alone to prey on everyone else.
People like Murdoch, and the leaders of banks and hedge funds, are in business to seize everyone else's wealth; like Mitt Romney, they play at being "job creators."
Republican politicians are almost all either part of this predator class, or spokesmen/women for it. Democrats are a more mixed bag: there certainly are Democratic politicians who are conscientious, and who have a sense of the interests of the voters they represent; they may even share them, or they may, at least, try to represent them. There are other 'Democrats,' unfortunately, who either are, or share the interests of the predators; in subtle or not so subtle ways, they have been bought off.
Predators: the selfish class, like the Roman Senators of fifth century Rome, is like Rupert Murdoch today.
Wednesday, July 20, 2011
A Fatal False Issue
There is something fundamentally wrong with what's going on in Washington. A false issue--the debt and debt ceiling--could trigger economic apocalypse, while the real economic issue--jobs and the housing market--are brushed aside.
The extreme right, true-believer "tea party" Republicans, the new guys on the block, are the tail wagging the dog.
Neither Obama, nor Democrats, nor the Republican leadership want to risk default. Also, Democrats know, at least, that Americans support them on not cutting Medicare, Medicaid and Social Security. But they also believe Americans want them to be reasonable, so if Republicans refuse to budge until the last minute, Democrats and Obama may compromise even on cuts to the big three--in order to avoid a default.
Such a compromise may be in the works between Senate Majority Leader Reid, and Minority Leader McConnell. Reportedly, it would cut $1.5 trillion, contains no new revenue, and is only short-term. You can bet that cuts won't be in subsidies to oil and coal, or more than token Defense cuts. That leaves the big three.
Also, there emerged the "gang of six" Senators: three from each party, who have now proposed a sweeping plan that would cut $4 trillion in ten years, while also dramatically lowering taxes for the wealthy, more so than for anyone else, but cruelly slashing funding for programs and transfer payments that help people, rather than corporations--and cutting Medicare and Medicaid.
Why can't Obama and Democrats stand up, and fight for the issues they believe in, issues supported overwhelmingly by the American public. Are Democrats in Congress and the Whitehouse as scared of the extremist fringe as German moderates were of Hitler? Moderate German politicians thought they could compromise with him, especially since Nazi (NSDAP) strength in the Reichstag was far from a majority. Yet, in less than a year, Hitler gained virtual control over all Germany.
Could it happen here? Crisis breeds authoritarianism, but Obama seems an unlikely Diocletian; he was the Emperor who took military power, and then turned the whole empire into a totalitarian state to avoid more civil war. Nevertheless, Obama's actions in Libya and the drone war confirm the tug of the imperial Presidency.
If Republican back-benchers refuse compromise on the debt ceiling, the economy could collapse with the default. American anger might explode. Either Obama emerges in 2012 as a new Diocletian who will set things right, or an extremist like Bachman will triumph; she has all the answers.
Given America's rightward turn, an imperial, Diocletian-type totalitarianism, or a fascist takeover seems more likely than a popular revolution, but either would take over a fast failing empire. We'll no longer be able to borrow to maintain it.
Do our Roman Senators, the extremely rich, think they will survive the apocalypse? They do think so, which is a big part of the problem. The Roman Senators of old did not survive, despite their huge caches of gold.
The extreme right, true-believer "tea party" Republicans, the new guys on the block, are the tail wagging the dog.
Neither Obama, nor Democrats, nor the Republican leadership want to risk default. Also, Democrats know, at least, that Americans support them on not cutting Medicare, Medicaid and Social Security. But they also believe Americans want them to be reasonable, so if Republicans refuse to budge until the last minute, Democrats and Obama may compromise even on cuts to the big three--in order to avoid a default.
Such a compromise may be in the works between Senate Majority Leader Reid, and Minority Leader McConnell. Reportedly, it would cut $1.5 trillion, contains no new revenue, and is only short-term. You can bet that cuts won't be in subsidies to oil and coal, or more than token Defense cuts. That leaves the big three.
Also, there emerged the "gang of six" Senators: three from each party, who have now proposed a sweeping plan that would cut $4 trillion in ten years, while also dramatically lowering taxes for the wealthy, more so than for anyone else, but cruelly slashing funding for programs and transfer payments that help people, rather than corporations--and cutting Medicare and Medicaid.
Why can't Obama and Democrats stand up, and fight for the issues they believe in, issues supported overwhelmingly by the American public. Are Democrats in Congress and the Whitehouse as scared of the extremist fringe as German moderates were of Hitler? Moderate German politicians thought they could compromise with him, especially since Nazi (NSDAP) strength in the Reichstag was far from a majority. Yet, in less than a year, Hitler gained virtual control over all Germany.
Could it happen here? Crisis breeds authoritarianism, but Obama seems an unlikely Diocletian; he was the Emperor who took military power, and then turned the whole empire into a totalitarian state to avoid more civil war. Nevertheless, Obama's actions in Libya and the drone war confirm the tug of the imperial Presidency.
If Republican back-benchers refuse compromise on the debt ceiling, the economy could collapse with the default. American anger might explode. Either Obama emerges in 2012 as a new Diocletian who will set things right, or an extremist like Bachman will triumph; she has all the answers.
Given America's rightward turn, an imperial, Diocletian-type totalitarianism, or a fascist takeover seems more likely than a popular revolution, but either would take over a fast failing empire. We'll no longer be able to borrow to maintain it.
Do our Roman Senators, the extremely rich, think they will survive the apocalypse? They do think so, which is a big part of the problem. The Roman Senators of old did not survive, despite their huge caches of gold.
Wednesday, July 13, 2011
The Paradox of Thrift
If I were to teach a course on Economics, or American Politics--the two most likely courses for me to teach--I'd explain why cutting the debt and the deficit now, when we're in a jobless stagnation, is certainly not going to create jobs. It is a perfect example of the Paradox of Thrift. If one family, or a small proportion are thrifty, they will thrive, and others only less so. They will be saving in an expanding economy in which most people spend too much, or almost too much, and maintain demand for goods and services. The thrifty will save more.
When everyone is thrifty, or simply isn't spending because they don't have any money, even less will be sold; there will be fewer transactions of any kind. To cut spending by governments, laying off workers, closing parks, doubling up in classrooms, even laying off police, is only going to compound the problem: even more people who did have jobs, no longer have them. How is this going to create jobs?
Why would the investor class, what the GOP calls "job creators," hire more workers, when demand is sagging even further?
Perhaps it's counter-intuitive, but if government spends more money now, in targeted ways, to employ the unemployed--there's much to do with our crumbling infrastructure that's falling far behind the world standard, for example--it will more likely erase deficits sooner than if it cut back expenditures and reinforced the "beggar thy neighbor and thyself" process that Obama has caved to. His strength was not economics.
It's very simple: if people are already spending too little to maintain the kind of demand--for goods and services--that will employ the unemployed, then cutting jobs and programs in the government sector will only make things worse. This is especially true because the investor class ("job creators") are sitting on huge piles of cash, or are investing it in places like China, so it's not a lack of capital that stymies the US--and Europe; it's low demand.
Only the Federal Government can create money, and only the government can create demand when there is none: by employing people, and paying them. Despite all the anti-government sentiment in the US, governments do a lot of positive things, when it's creating demand. In the Depression, the CCC restored land destroyed by the dustbowl, roads were built, even, the WPA hired painters to paint murals for our central post offices; they are still there today. Now, a new WPA could build high-speed rail lines, or rehab neighborhoods blighted by defaults, install insulation in public or private buildings, teach smaller classes; there are lots of things the unemployed could do. Americans are among the most highly skilled of workers, but they will be decreasingly so, the longer large portions of the workforce remain out of work.
Rome tried the "beggar thy neighbor" policy in the 3rd Century: it never recovered.
When everyone is thrifty, or simply isn't spending because they don't have any money, even less will be sold; there will be fewer transactions of any kind. To cut spending by governments, laying off workers, closing parks, doubling up in classrooms, even laying off police, is only going to compound the problem: even more people who did have jobs, no longer have them. How is this going to create jobs?
Why would the investor class, what the GOP calls "job creators," hire more workers, when demand is sagging even further?
Perhaps it's counter-intuitive, but if government spends more money now, in targeted ways, to employ the unemployed--there's much to do with our crumbling infrastructure that's falling far behind the world standard, for example--it will more likely erase deficits sooner than if it cut back expenditures and reinforced the "beggar thy neighbor and thyself" process that Obama has caved to. His strength was not economics.
It's very simple: if people are already spending too little to maintain the kind of demand--for goods and services--that will employ the unemployed, then cutting jobs and programs in the government sector will only make things worse. This is especially true because the investor class ("job creators") are sitting on huge piles of cash, or are investing it in places like China, so it's not a lack of capital that stymies the US--and Europe; it's low demand.
Only the Federal Government can create money, and only the government can create demand when there is none: by employing people, and paying them. Despite all the anti-government sentiment in the US, governments do a lot of positive things, when it's creating demand. In the Depression, the CCC restored land destroyed by the dustbowl, roads were built, even, the WPA hired painters to paint murals for our central post offices; they are still there today. Now, a new WPA could build high-speed rail lines, or rehab neighborhoods blighted by defaults, install insulation in public or private buildings, teach smaller classes; there are lots of things the unemployed could do. Americans are among the most highly skilled of workers, but they will be decreasingly so, the longer large portions of the workforce remain out of work.
Rome tried the "beggar thy neighbor" policy in the 3rd Century: it never recovered.
Monday, July 11, 2011
Debt Ceiling Chicken
The debt ceiling debate is degenerating into a game of chicken. Each side is waiting for the other to cave. Obama says we have to set a long-term deficit/debt reduction in process, and wants to shoot for $4.5 Trillions in cuts over ten years; the Republicans, until recently, were saying they'd work for a $2 Trillion cut, because, frankly, they're scared of taxes. Scared that if they vote for any increase in taxes for the wealthy (they call them "job creators," which they definitely are not, especially now in this jobless "recovery"), they'll suddenly lose all the huge corporate campaign contributions they're counting on to gain the majority and the Presidency in 2012.
Perhaps the Republican leaders do get it, that a default would be bad, very bad, but both Boehner and McConnell have as much as said, more than once, that their real mandate is to insure that Obama fails, and is not re-elected. If they do force a default, however, it's not clear that Obama wouldn't be able to campaign against them for causing it, and for opening the way for other unpleasant things: like the dollar no longer being the reserve currency, our huge debt becoming hugely more expensive and our freedom to import whatever we want whenever we want it going away.
I think Obama knows this, so he's playing chicken, too. No short-term fixes, he asserts: this is America; we don't fix our books for 3 months at a time.
Some tea party types do actually argue that a default would be a good thing, and I could, too, from one perspective. They argue, and I wouldn't agree, that we'll have to cut back on all those senseless 'consumption' programs like Medicare and Social Security (say insurance), and that as far as Medicaid is concerned, the recipients are mostly no-goods, anyway.
I argue that a default would mean we'd no longer be able to afford our costly military and its world empire. We actually can't afford it anyway. And, ultimately, we'd be much better off without it: all those things we "can't afford," like high quality education and Medicare for all, we'd easily be able to pay for--if we weren't spending almost three-quarters of a trillion yearly on "Defense" and its relatives, like Intelligence, Energy and "Homeland" Security.
And we'd be freer, too. No longer would our police forces try to emulate (and get funds from) the military, for things like tanks and armored cars. No longer would the military be so sacrosanct. And no longer would the rest of us be treated as if we were potential terror suspects.
However, a default would be painful for everyone but bond and currency traders; for them it could create fortunes. A default would mean: the beginning of the end of American Empire. Bankruptcy caused the "Fall of Rome."
Perhaps the Republican leaders do get it, that a default would be bad, very bad, but both Boehner and McConnell have as much as said, more than once, that their real mandate is to insure that Obama fails, and is not re-elected. If they do force a default, however, it's not clear that Obama wouldn't be able to campaign against them for causing it, and for opening the way for other unpleasant things: like the dollar no longer being the reserve currency, our huge debt becoming hugely more expensive and our freedom to import whatever we want whenever we want it going away.
I think Obama knows this, so he's playing chicken, too. No short-term fixes, he asserts: this is America; we don't fix our books for 3 months at a time.
Some tea party types do actually argue that a default would be a good thing, and I could, too, from one perspective. They argue, and I wouldn't agree, that we'll have to cut back on all those senseless 'consumption' programs like Medicare and Social Security (say insurance), and that as far as Medicaid is concerned, the recipients are mostly no-goods, anyway.
I argue that a default would mean we'd no longer be able to afford our costly military and its world empire. We actually can't afford it anyway. And, ultimately, we'd be much better off without it: all those things we "can't afford," like high quality education and Medicare for all, we'd easily be able to pay for--if we weren't spending almost three-quarters of a trillion yearly on "Defense" and its relatives, like Intelligence, Energy and "Homeland" Security.
And we'd be freer, too. No longer would our police forces try to emulate (and get funds from) the military, for things like tanks and armored cars. No longer would the military be so sacrosanct. And no longer would the rest of us be treated as if we were potential terror suspects.
However, a default would be painful for everyone but bond and currency traders; for them it could create fortunes. A default would mean: the beginning of the end of American Empire. Bankruptcy caused the "Fall of Rome."
Thursday, July 7, 2011
Cuomo & Obama Both Betray Us
Governor Cuomo asked, how do we protect New Yorkers who are vulnerable to abuse. It occurred to me that one of his apparent decisions would make many New Yorkers vulnerable to an ultimate abuse: allowing big corporations to put their drinking water at risk, polluted by natural gas fracturing (fracking).
Now, why would he do that?
Frackers have a lot of money to spend on politics, on lobbying and campaign funds. Vulnerable New Yorkers do not. Most of western New York will be put at risk and Cuomo's decision will make it impossible for them to protect themselves. Here's why.
By the very nature of fracking--horizontal drilling--frackers can do damage to their neighbors for miles around, even if they only buy a few acres in which to place their well-head, or, they find one agreeable landowner, who sells them drilling rights. Then all the neighbors' wells can be polluted, either by the secret toxic cocktails used in fracking, or by the release of gas, which can percolate upwards into their water sources. And, of course, while the fracker, and possibly the landowner, can profit, everybody else potentially loses.
It's all about money.
If the government does not protect those vulnerable New Yorkers, there is no way they can protect themselves--unless they vote overwhelmingly against any politician, including Governor, who acquiesces in such palpable injustice, such obvious obeisance to BIG MONEY.
In Washington, Obama is now offering Republicans the enticement of substantial cuts to Social Security and Medicare, in return for closing loopholes allowing multi-millionaires and billionaires to pay lower tax rates than anyone else. Yes, you read that right: cuts to Medicare and Social Security. This is after the special election in New York's 26th Congressional District, a very Republican District, where Kathy Hochul, the Democrat won by opposing Republican plans to cut Medicare. Further, national polls show super-majorities oppose cuts to either Social Security or Medicare; even a majority of Republicans are opposed.
Why does Obama do this, i.e. hand away the store before the bargaining begins?
It's about money, and maybe character. Obama is continually trying to "split the difference" between outrageous GOP proposals and his own agenda; so the more outrageous Republicans become, the more he buys into their agenda, not his own. It's also about money, simply because multi-millionaires and billionaires have it--lots of it--and since so much of it is discretionary (i.e. surplus beyond their most extravagant dreams), they can spend it on--politics. Obama apparently believes he has to get his "fair share" of that money, or at least deny it to his opponents.
Does Obama really think voters will support him if he sells out?
Who's really in charge? If Obama gets a few symbolic loopholes plugged, in return for his proffered entitlement cuts (likely), only Republicans and our contemporary Roman Senators will gain. They may have already won.
Now, why would he do that?
Frackers have a lot of money to spend on politics, on lobbying and campaign funds. Vulnerable New Yorkers do not. Most of western New York will be put at risk and Cuomo's decision will make it impossible for them to protect themselves. Here's why.
By the very nature of fracking--horizontal drilling--frackers can do damage to their neighbors for miles around, even if they only buy a few acres in which to place their well-head, or, they find one agreeable landowner, who sells them drilling rights. Then all the neighbors' wells can be polluted, either by the secret toxic cocktails used in fracking, or by the release of gas, which can percolate upwards into their water sources. And, of course, while the fracker, and possibly the landowner, can profit, everybody else potentially loses.
It's all about money.
If the government does not protect those vulnerable New Yorkers, there is no way they can protect themselves--unless they vote overwhelmingly against any politician, including Governor, who acquiesces in such palpable injustice, such obvious obeisance to BIG MONEY.
In Washington, Obama is now offering Republicans the enticement of substantial cuts to Social Security and Medicare, in return for closing loopholes allowing multi-millionaires and billionaires to pay lower tax rates than anyone else. Yes, you read that right: cuts to Medicare and Social Security. This is after the special election in New York's 26th Congressional District, a very Republican District, where Kathy Hochul, the Democrat won by opposing Republican plans to cut Medicare. Further, national polls show super-majorities oppose cuts to either Social Security or Medicare; even a majority of Republicans are opposed.
Why does Obama do this, i.e. hand away the store before the bargaining begins?
It's about money, and maybe character. Obama is continually trying to "split the difference" between outrageous GOP proposals and his own agenda; so the more outrageous Republicans become, the more he buys into their agenda, not his own. It's also about money, simply because multi-millionaires and billionaires have it--lots of it--and since so much of it is discretionary (i.e. surplus beyond their most extravagant dreams), they can spend it on--politics. Obama apparently believes he has to get his "fair share" of that money, or at least deny it to his opponents.
Does Obama really think voters will support him if he sells out?
Who's really in charge? If Obama gets a few symbolic loopholes plugged, in return for his proffered entitlement cuts (likely), only Republicans and our contemporary Roman Senators will gain. They may have already won.
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