Monday, January 31, 2011

One Last Time: John Galt Doesn't Care About You.

When I read the solutions to our economic malaise put forward by non-economic-progressives – and especially by those on the right, but even by a few folks who identify as libertarian left – what I hear is that we, the little people, ought to want to suffer a little more in order to make sure that our reptilian corporate masters become incrementally wealthier, so that they can then build factories and office buildings and then we "parasites" can have jobs; when those factories succeed and prosper, no one but the owners can benefit, because They’re Supposed To Have All The Money (or something...I’m paraphrasing here, plus it’s been awhile since I’ve read Ayn Rand.)

Think about this: Obama cutting most people’s taxes, and raises taxes only on the rich (and that higher tax paid by the rich would still be lower than during the administration of that communist monster, Ronald Reagan) is described as "socialism."

That is glaring evidence to me that the whole game is rigged, by the people who have the means to so rig it.

My fear is that the consequences of this situation (yawning inequality, declining wages, a disintigrating safety net, and so on) will be blamed on racial and ethnic scapegoats, who will then be persecuted, rather than on those who ought to take the blame.

Of course, when things completely unravel, I imagine Our Reptilian Corporate Masters will just pull their yachts out into international waters and watch our cities burn – and then decamp for their next victims, who will then be hollowed out and bled dry.

It is the dawn of Locust Capitalism.

A Rigged Game

There is not enough purchasing power in the hands of people who will spend it.

Fix that, and you fix the economy.

The thing is, the things that will fix that (more-progressive tax rates and wealth redistribution) are labeled as communist socialist that's what Stalin did and he killed millions genocide radical (etc. etc. etc.)

The oligarchs have the whole game rigged in their favor. Until that changes, nothing else will.

Saturday, January 29, 2011

Just So We're Clear

I see the most fundamental cause of the continuing economic crisis as this: purchasing power (in the form of the median household income) hasn't been growing fast enough for the last 30 years to support economic growth.

Our Reptilian Corporate Masters came up with what they thought was a great substitute: encouraging the people who weren't getting raises to take on more and more and more debt - either the usual way (credit cards) or by encouraging them to pull hallucinated "equity" out of their inflated houses.

Now that hallucinated "wealth" is gone, the credit cards are maxed, and, since no one's gotten a raise for the last 30 years, there is nothing to support economic growth in the country. At all (exports? not when a billion Chinese will work for a fraction of a living wage in America.)

Paul Krugman has predicted that full employment won't return until some time in 2018.

That's not a recipe for social stability - to put it very, very mildly. I fear for the country.

Thursday, January 27, 2011

What is Needed

Jonathan Schell at The Nation gets at something essential, something glaringly missing, from Obama's State of the Union Speech on Tuesday:

It’s true that the United States educational system is measurably slipping. It’s also true that the country’s infrastructure has decayed badly. And yes, the United States would benefit from whatever technical innovation it can bring off, just as any country would. But none of those problems, needful of attention as they are in their own right, is the chief cause of the United States’s economic doldrums—its stubborn high unemployment, its persisting housing bust, its galloping economic inequality. These were the fruit of an economic crash brought on by a misguided, corrupt, incompetent, larcenous, unregulated financial establishment. The relevant remedies are not better technology or some contemporary equivalent of sending a man to the moon. (In any case, although Obama insisted “We do big things,” he didn’t offer one.) The remedies needed are a re-regulation and reconstruction of the financial system, plus a major, Keynesian style stimulus program to create jobs and purchasing power, and so to jar the economy out of its stupor. But none of that was in Obama’s speech. On the contrary, his proposal to freeze spending for five years threatened more economic stagnation.

(Emphases mine.)

The basic cause of the American economic predicament is that purchasing power (that is, the inflation-adjusted paychecks ordinary workers get) has not appreciably increased in over 30 years. People not making enough money to keep the economy growing means the economy can't grow.

Actually, not quite true.

The economy can still grow, but since wages aren't increasing (except for a few people at the top, who, precisely because there aren't very many of them, can't make up for the shortfall in consumer spending) the only recourse for consumers is buying things on credit cards - i.e., growth financed through debt. This is exactly what we've seen in the years since the median wage stopped growing:

The thing is, financing economic growth by increasing personal indebtedness is literally not sustainable, because eventually, the credit cards are maxed out, and then everyone needs to pay down their debts before they can begin spending again. While this is happening, the economy shrinks, since people are not spending on anything except essentials. This results in layoffs, which means some people can no longer keep up their debt payments, which results in bankruptcies, which results in the banks who are owed that money raising interest rates to cover the increased risk, which results in more bankruptcies, which means more trouble for banks, etc.

Eventually, confidence in the entire system begins to erode, which leads to a general panic and the entire financial system grinding to a halt.

See October 1929 and September 2008 for an idea of what that looks and feels like.

It's an experience that it is best to avoid, if at all possible. In fact, I think it would be a good idea to come up with policies designed to prevent that situation from ever happening again.

Growth through debt leads eventually to systemic crisis - we know this.

Growth from rising incomes leads to sustainable and widely-shared prosperity - we know this.

If two things happen, the United States will be poised for its greatest economic upsurge in history.

Thing Number One: Debt needs to be paid down, and the acquisition of new debt needs to be discouraged.

I propose that there is a one-time, 20% federal tax on all financial assets over $2 million - assets in IRA's and 401(k) plans would be exempt, provided the particular accounts were held on, say, September 15, 2008 (this would prevent using retirement accounts as an anticipatory shelter.) Yes, the stock and bond markets would take a hit; can't be helped, and the stock market is way over-valued anyway, by historical standards. The stock market should be there to finance capital investment, not to enrich Wall Street greedheads.

Such a tax would generate revenues sufficient to pay off the entire national debt owed by the United States government - and also enough to both balance this year's budget, and to send every taxpayer a check for $20,000. Tell them: "This is YOUR bailout."

THAT should be sufficient to get things moving in a big way.

Thing Number Two: Going forward, the aim of economic policy should be to get the real median wage growing on a consistent basis.

How? Here are some basic, proven ideas.

1. Give workers a bigger voice in how profits are distributed. A great way to do that is by encouraging union membership. Let me put this bluntly: the government ought to do everything it can to encourage unionization across all economic sectors. A good start would be repealing the Taft-Hartley act, and passing the Employee Free Choice Act.

2. Use the tax system to discourage out-sized payouts for corporate executives and banksters. Restore the tax brackets (adjusted for inflation) to what they were in 1955. Top marginal tax rate: 91.5 percent.
This will discourage the obscene paychecks Our Reptilian Corporate Masters currently award themselves, and encourage them (through deductions) to do economically beneficial things with the money.

3. Re-regulate the financial sector. Restore and strengthen the Glass–Steagall Act. Break up the big banks to the point that the insolvency of one won't threaten the economy. (While I'm at it: impose a retro-active tax of 100% on all non-salary compensation of every executive of every financial institution that received federal bailout money. It might not prevail in the ensuing litigation, but it would be fun to watch them squirm. I mean, screw these people.)

All this would, of course, cause keening howls of outrage and pain on Wall Street and the executive suites of America's corporate headquarters, and confusion and alarm amongst the Wall Street Fetishists on CNBC. There isn't a violin small enough.

Saturday, January 22, 2011

We Need a Movement

Brad DeLong:

Perhaps Washington is simply too disconnected [from the economic hardship of most Americans]: my brother-in-law observes that the only place in America where it is hard to get a table at dinner time in a good restaurant right now is within two miles of Capitol Hill.

Sometime in the late seventies, the Dems started dumping their traditional "party of labor and the common man/woman" role, and became the party of the social-libertarian/technocratic faction of the top 20% of the income scale.

This is what allowed the Republicans (starting with Reagan) to begin their destruction of the safety net. They did this in the service of their only real constituency: The Richest One Percent of Americans and their minions and courtiers.

So, you have the representatives of the top one percent of the income scale (the Republican Party) competing with the Democratic Party to be the representatives of the nineteen percent of the income scale right below them.

The problem, of course, is that the 80 percent below them haven't gotten a meaningful raise in 30 years; no one is representing their interests.

That's also why the safety net has been systematically weakened (a frightened and submissive workforce is what Our Reptilian Corporate Masters most desire).

That's why everyone has such crippling student loan debt - and this is increasingly true even of people who attend state colleges and universities - make class mobility prohibitively expensive to guard the privileges of those at the top, and keep those with student loan debt focused on educational choices that will lead to high-paying jobs, rather than the kind of education that will show them the deeply corrupt nature of the game.

This benefits the wealth and status of Our Reptilian Corporate Masters, who are the only people whose interests are being served by the current system; until and unless this changes, the current bad economic situation won't get appreciably better for the great majority of Americans.


The Circle That Will Never Be Squared is having the yawning inequality of wealth we have in the United States, having a "safety net" that is being weakened, leaving millions in the cold (and that is becoming increasingly literal) - and also having social stability. You can't have both.


History tells us that these kinds of situations can either be reformed (see TR and the trust-busters, Upton Sinclair's The Jungle, FDR and the New Deal, and so on) or, if the oligarchs have so tight a grip on the levers of power, including the means of mass communication, that they can prevent reform, then eventually the people will rise up. This can go badly wrong, and is best avoided, if possible.

If there were a real, actual "Left" in this country, there would be mass protests and agitation about the glaring injustices of the current plutocracy. The tea party (not the astroturfing financiers; I'm speaking here of the rank-and-file) is a worrying sign that the character of the eventual reckoning may be racist, nativist and involve scapegoating of the weak and vulnerable.

If this comes to pass, the Tea Party's astroturfing rich will have the bulk of the responsibility for the consequences; but the scandalous silence of what passes for the American "Left" will be seen as having helped enable the disaster.

We need a mass movement from the left, for social and economic justice. We need a left-ish answer to the Tea Party.

Thursday, January 20, 2011

Lady Day

Billie Holiday, in a live performance that shines with her greatness.

Wednesday, January 12, 2011

On President Obama's Remarks in Tucson

This is one of the most remarkable speeches I've seen him give. I have my issues with Obama, but this was simply masterful.

I hope this can bring some sobriety to the discussion.

I believe we can be better. Those who died here, those who saved lives here – they help me believe. We may not be able to stop all evil in the world, but I know that how we treat one another is entirely up to us. I believe that for all our imperfections, we are full of decency and goodness, and that the forces that divide us are not as strong as those that unite us.

That’s what I believe, in part because that’s what a child like Christina Taylor Green believed. Imagine: here was a young girl who was just becoming aware of our democracy; just beginning to understand the obligations of citizenship; just starting to glimpse the fact that someday she too might play a part in shaping her nation’s future. She had been elected to her student council; she saw public service as something exciting, something hopeful. She was off to meet her congresswoman, someone she was sure was good and important and might be a role model. She saw all this through the eyes of a child, undimmed by the cynicism or vitriol that we adults all too often just take for granted.

I want us to live up to her expectations. I want our democracy to be as good as she imagined it. All of us – we should do everything we can to make sure this country lives up to our children’s expectations.

Christina was given to us on September 11th, 2001, one of 50 babies born that day to be pictured in a book called “Faces of Hope.” On either side of her photo in that book were simple wishes for a child’s life. “I hope you help those in need,” read one. “I hope you know all of the words to the National Anthem and sing it with your hand over your heart. I hope you jump in rain puddles.”

If there are rain puddles in heaven, Christina is jumping in them today. And here on Earth, we place our hands over our hearts, and commit ourselves as Americans to forging a country that is forever worthy of her gentle, happy spirit.

May God bless and keep those we’ve lost in restful and eternal peace. May He love and watch over the survivors. And may He bless the United States of America.

Barack Obama


This section is especially apropos of the venomous discourse inspired by this incident:
[W]hen a tragedy like this strikes, it is part of our nature to demand explanations – to try to impose some order on the chaos, and make sense out of that which seems senseless. Already we’ve seen a national conversation commence, not only about the motivations behind these killings, but about everything from the merits of gun safety laws to the adequacy of our mental health systems. Much of this process, of debating what might be done to prevent such tragedies in the future, is an essential ingredient in our exercise of self-government.

But at a time when our discourse has become so sharply polarized – at a time when we are far too eager to lay the blame for all that ails the world at the feet of those who think differently than we do – it’s important for us to pause for a moment and make sure that we are talking with each other in a way that heals, not a way that wounds.

Tuesday, January 04, 2011

Occam Would Be Proud Of Me For This

Look: the Democratic Congress and the Democratic President didn't pass truly progressive legislation because they didn't want to. They didn't want to because doing so would cost Our Reptilian Corporate Masters power, and then Our Reptilian Corporate Masters would close the purse strings and the Democrats would drown in Republican money.

Which, you know, happened anyway.

The biggest "Progressive Victory" is that gay people will now be able to join the imperial forces and fight and die to defend the interests of Our Reptilian Corporate Masters.

The imbalances in wealth and income between Our Reptilian Corporate Masters and everyone else are manifestly unjust; this is The Only Challenge That Matters when it comes to promoting a Progressive Agenda. That is the rotten root from which grows practically everything else.

We need to find a way, from the grassroots up, to address and correct the structures that perpetuate and aggravate those imbalances - traditionally this has meant steeply progressive tax rates, support for labor and financial regulation.

Unless some countervailing power prevents it, capitalism always concentrates wealth, and thus power, in the hands of a thinner and thinner slice of folks at the top. This can either be reformed (progressive taxation, support for labor, financial regulation, etc.) or if it isn't, we need to resign ourselves to living in a society more or less constantly on the verge of armed revolution.