Tuesday, August 9, 2011
"Thinkin 'bout the gubm'mint...."
“Maggie’s in the basement mixin up the medicine, I’m on the pavement, thinking ‘bout the gubm’ment…” Robert Zimmerman
Well, looks like that handbasket we’ve all been waiting to go to hell in has finally arrived. I can’t imagine having anything to say that would improve on recent commenters on the NY Times, especially these responses to a recent column by Paul Krugman. I find it truly comforting to read that there are regular Americans out there, perusing the Times, full of rage and intelligence, with whom I can empathize and have a conversation of sorts as I read their thoughtful words and know I’m not alone. So rather than bore you with my drivel, here are some of those bright minds, everyday folk who can still manage to see the forest for the trees.
Here’s one from July 21:
July 21st, 2011 7:06 am
I'm wondering how many of those who revere Reagan as some sort of financial wizard actually remember the spending cuts - huge reductions to Social Security survivor benefits, cuts in college financial aid programs, a gradual phase-out of credit card and consumer load interest deductions - and the substantial increase in military spending enacted during his presidency. This was the beginning of the war on the poor and the middle class and should have ended the debate with regard to "trickle-down economics" and the myth of the wealthy as "job creators." Oddly enough, some fairy tales never seem to lose their appeal.....
And a few more from Krugman’s column :
The president turned 50 today. I bet 98% of the 50-year-olds out there are worried about much different things.
Worry is a very real thing for most Americans and since the inaugural speech itself, this administration has done nothing to address what people are worried about or what the country needs.
In 2008 and right now, this country needs someone who will fight for the people - for the underpaid and unemployed - someone who will fight congress and naysayers in his own administration. He is not a fighter, he is a conciliator.
This country needs someone who can lead government and is an administrator - a former governor or mayor even. He is a senator, and while super-intelligent, he is interested in the nuances and theoretical aspects of the law instead of the results.
This country needs someone who understands what most people are actually dealing with - not their reality in the washington bubble or a parochial view based on their small town, but someone who can see the forest from the trees.
The statistics you quoted, that Wall Street responded to, and that come out every week show that MOST people are looking for work or better work and better pay; most people are trying to make ends meet and most people are worried about the future.
And while most people are in bad shape, republicans are worried about the rich, the democrats are worried about the tea party, and the administration seems to be worried about making Obama look like a neutral, bipartisan, conciliator. Their biggest concern seems to be getting the independent vote.
So, when I get an email from Michelle Obama asking me to help celebrate the president's birthday, I'm sorry but I can't help. Because I'm worried about my job, my family and whether I will even make it to 50.
I am a progressive democrat, and since 2008, I've felt Obama was the wrong person for the job of fixing this country.
Bloomberg for president 2012.
Thanks to Boehner's refusal to get moderate Repulicans and Democrats to pass the Obama-Boehner grand plan, and his insistence on letting millionaires pay ONE HALF the tax rates that the middle class pays, refusing even to close $40 billion a year of the one trillion dollars each year that the rich get in exclusive loopholes, the stock market has lost a trillion dollars in valuation in one week, and our interest on the debt, the vast majority of which was from Bush and the GOP, will increase by hundreds of billions of dollars a year.
Boehner and the GOP are hacks and thugs hired by the rich -- our financial problems are as complex as brain surgery, and they tried to fix it with a chain saw-- decapitating the American economy.
Shorter version: "It's the lack of demand, stupid."
We've had 30+ years of supply side economics. We hit supply-side saturation back in the late 1990s.
When you have too much supply, relative to demand, you get deflationary recessions.
When you have too much supply, relative to demand, investors can't get get decent ROIs on ordinary, orthodox investing.
So what happens? Bubbles form in the few areas that do have decent ROIs and investors flood those sectors.
Also, Investors clamor for reduced regulation so they can do 'unorthodox' investing: like subprime mortgages, payday loans, 30% unsecured lending.
Once you hit the saturation point, as we did in 1998 or so, more supply-side bias policies are simply pushing on a string.
Unfortunately the rich and the powerful are addicted to supply-side bias policies. So are their retainees: the Republicans, blue dogs, 5/9ths of the Supreme Court, and Barach Obama, most of the time.
What's needed is sustained demand-side bias policies.
In the short term it can mean only government spending. Howabout working that list of infrastructure investment that some national society of engineers keeps telling us about: something like $2 trillion. That's a start. But that's only repairs. So lets add another $2 trillion for new stuff. We can pay for it by borrowing at the low low recession price of 2.5% and pay it off with the trillions of extra money we get when the Bush tax cuts finally retire.
Longer term, it means taxing the rich, empowering workers thru stricter regulations and collective bargaining to give consumers more bargaining power. Good luck getting more of that in the era of Citizens United.
The fact is, we are on a down word spiral because those people with supply-side interests have too much power. Bush gave it them in tax cuts & Supreme Court nominees. The Citizens United decision cemented it.
Without demand side policies, we're going down. Citizens United means no tru demand side policies-ever.
Among the real true facts: 85 percent of all new college graduates are being forced to move back in with their parents. Of the 8.7 million jobs lost since January 2008, only 1.8 million have been recovered. Of all the G-7 nations, the USA has the lowest labor force participation rate of men aged 25-54. And the White House answer this week was to hold a live stream of its Jobs & Competitiveness Council. The CEOs heading it are still into trickle-down: let them "repatriate" their overseas profits for near zero tax and they will create jobs. Look how well that worked last time.
I think we are way past the point of wondering whether the president and his corporatist team are lacking in integrity, or simply inept. But since centrism is all the rage these days, I will compromise and say they are probably a little of both: cluelessly corrupt.
Republicans actually have a much easier job than Democrats. All they need to do is to keep spouting the same disingenuous dogma about the evils of taxation, and about how we can cut our way to prosperity. The only prerequisites for being a Republican are to have no sense of shame and a complete lack of empathy as they dismantle the social contract that millions of people depend upon. Willful ignorance of the facts and a short memory for the causes of the economic meltdown also give the Republicans an edge.
Washington was held hostage by a small and uneducated minority. Nonetheless they won. The battle was never about deficits; it was about placating a group of 55-year old white men who are disenfranchised.
If we convert our $600B a year trade deficit to jobs at say $60K a piece (which is a decent middle-class job in most of the country, even if the benefits are included in these $60K) we get about 10 mln which is enough to largely resolve the unemployment problem. To do this, we need to have the government on the side of the American worker rather than the company searching worldwide for the cheapest labor. Unfortunately we've bound ourselves by signing NAFTA and WTO treaties; however there are many non-tariff ways of getting a breathing room for the American worker - and rest assured, similar ways are widely exploited by our competitor nations. For example, U.S. steel industry and paper mills will re-hire hundreds of thousands if the export of recycled paper and scrap metal would require payment of substantial environment-related fees... Pharmaceutical industry will bring jobs back home if FDA extends overseas the same level of plants inspections' thoroughness it exercises domestically, and charges its expenses to the inspected facility... Call-centers will bloom stateside in no time if we slap a $0.05/min charge on all international phone calls (whether standard or VOIP); we can even rebate this charge to the private parties... but extra $3 per hour expense will immediately destroy the business model of having a cheap but clueless person on the line for an hour... There are many ways to move in the right direction that require creativity and changing paradigm, not necessarily throwing money at a problem - everything I suggested generates revenue, as well...
I have compared the steady exponential increases in GDP and government outlays from 1960 through 2008 (constant 2005 dollars for both). GDP has increased at a greater rate than outlays, on average ~12.7% greater per year. It is just that we are too mean to pay from that economy the revenue necessary in taxes. Our overall taxes referenced to GDP is only 4th up from the bottom of 34 countries recently compared. Our mouths are full of talk and no money -- "useless, pontificating Americans" is a nice quote that comes to mind
What happens when large parts of the world which are adding real output and are net exporters do not spend at nearly the same rate they could and the majority of those in the rest of the world who are net importers decided to spend down previously borrowed money?Basically the U.S. has borrowed from saving nations and run up debt which now must be paid back. However China, Japan, Germany... the various nations with net exports are consuming less than their economies could support. Which leads to a sharp drop in demand worldwide. If the U.S. is not the engine of demand it once was even if its a relative drop that affects jobs disproportionally in the service sector which are where the majority of U.S. jobs have moved.
I think Dr. Krugman is correct in saying this is a demand issue but I am not sure if the government has the credibility to stimulate demand the amount that would be necessary as its not only U.S. demand which is low, but the net exporting nations as well. Capitalism depends for its survival on constant growth. It must continue to sell us more to generate the momentum for further investment and selling. When some societies consume and produce at different rates yet compete in the same market a problem arises. Especially when credit and debt enters the picture so that the society which consumes less lends back its extra saving to the society that consumes more. Capitalist theory assumes that the differences in consumption will fade away as expectations to higher standards of living and ability to afford more rises with the growth in income of the lower consumers. However factor in efficiency growth from technology and the fact that there might be more than considerable lag in the growth of demand from the low consuming society there can arise a serious problem where a generation of time passes as the high consumers realize they cannot afford to consume as much as before and the low consumers realize they can actually afford more.
We are taking the wrong path. The United States congress lacks the intenstinal fortitude to do this but a one time tax on all assests people own above 25 million dollars of 20% would solve the United States economic problems. It would stabilize our market hence much of the world. These are the same people who over the course of the last thirty one years amassed over 42 trillion dollars in net increase in their wealth and most only paid 15% capital gains taxes when in reality it was earnings ie' income.
Social unrest is always a corollary of increasing disparities in a society and a slow erosion of benefits to the poor.
I do fear the London riots are merely a precursor to the shape of things to come. In the US, even the word "poor" is banished from political dialogue, and there's no discussion on about how to deal with poverty.
Everyone talks about "middle class" which is also ravaged by stagnating incomes, whose fringes are falling into poverty. The rich are called "job creators" who are seen to be in dire need of more tax breaks, tax shelters and havens, while employee rights are curtailed and there are repeated calls for the elimination of minimum wage and reduction in Medicare and SS.
US got out of the Great Depression by having massive programs for the poor and the highest marginal taxes to become the most prosperous nation in history. There was a time when US had marginal income tax rates above 70% AND a strong economy with job growth.
There's a lesson in that.
And, as always, I’ve saved the best for last. From
August 5th, 2011
It's an old story, but worth remembering and retelling for its relevance today. Two hunters in the woods encounter a large, hungry bear. One tells the other: "Run!" Assessing the advice to be wrongheaded, the hunter says, "we can't out run him." His friend replies, "I just have to outrun you."
Sometimes policies make no sense, violate every rule of logic and experience, heap scorn on the undeserving, burden those near broken, defy the principles of a professed faith, destroy common practice, and are flat out wrong. Yet these policies march on. The only have to stay in front of the carnage they create; for if those souless vandals pick up the pieces they survive and gain greater power.
The best advice now is not to run. Turn from media and politically colluded fear, the economic bear is a chimera, an invention, a carnival creation to chill the spirit, an attempt to vandalize the land before taking the throne. It's an ancient style of attack older than the story.
Before writing this comment, I watched the funeral services for SC Judge Matthew J. Perry, Jr. on the state's ETV. Judge Perry, the first black judge appointed to the federal bench in modern times from the deep South, once scorned by those who today sat before his lifeless body to praise his work, was celebrated for his fight against those who opposed justice and constitutional fulfillment. His persistence transcended the darkest hours, and he saw a promise fulfilled. So we face the test of policy which masks its grip on power, leads to darkness and refuses to let go, shifting blame to those who speak truth to power.
Step back, then. Work together for the common good, and don't let anybody tell you to run. Instead, let them gather at our dead feet and remark wondrously on what we saved.
I don’t know who Walter Rhett is but I wish I’d met him when I was in Charleston. If we all only think of ourselves of savin our own hides, and fail to make common purpose with each other, sharing what we have, all our assets, we are doomed as a culture and as human beings. If you’re only worried about yourself, fearfully hangin on to whatever you still have, you can’t call yourself anything but a stingy Bush/Reagan Republican. And it’s that kind of me-first thinkin that got us in this mess.
So, to conclude....
“The pump don’t work cause the vandals took the handle…”
Here's a little levity from Harper's Weekly to put things in perspective, proof positive that someone somewhere is doing something right...